Veteran shop owner Dave Kusa speaks with PartsTech on why shops should share financial details with their staff
In the auto repair industry, understanding the nuts and bolts of vehicles is crucial, but comprehending the shop’s financial mechanics is equally important. PartsTech spoke with Dave Kusa, owner of Autotrend Auto Repair in Campbell, Calif., and a shop coach for the Automotive Coaching & Training (ACT) Group. Kusa champions the idea that auto repair shop owners should share their shop’s financial details with their employees.
Though this approach may seem counterintuitive, it clarifies the business’ financial operations for the team and encourages a more engaged and responsible workforce focused on driving profits for the business.
Why You Should Share Your Shop’s Financials with Your Staff
Kusa recalls his early days as a technician, noting the disparity between labor charges billed to customers and his wages — a common misunderstanding among technicians. “I remember when labor rates were around $50 an hour, technicians were getting paid $10 or $12 an hour and I believed the owner was taking home the rest.” As a shop owner, you know this isn’t true, but your employees might still hold this belief. How do you change that misconception?
Join Dave Kusa, Aug. 1, for a webinar, “How to Create a Profit-Driven Team in Your Auto Shop”
Kusa chose years ago to share his shop’s finances, including P&L statements, with his team. He has never regretted this choice. He wants every employee to understand how revenue is used — covering everything from equipment and operational expenses to salaries and business growth. This transparency also shows how net profit allows his shop to handle unforeseen expenses like equipment breakdowns or necessary tool upgrades without resorting to debt financing.
As a shop coach, Kusa encourages other shop owners to start sharing their business’ financials with their entire staff to create clarity and build a profit-focused team that is on the same page. He believes that there are many benefits to having financial transparency in your shop, including:
- Demystifying Business Operations: When employees understand where the money from their labor goes, they are more likely to appreciate the shop’s pricing and cost management strategies.
- Increasing Accountability: Transparency leads to a sense of ownership. Employees who see the financial impact of their actions are more motivated to adhere to best practices and optimize their performance.
- Fostering a Profit-Driven Culture: Regular discussions about financial goals and performance can cultivate a culture where everyone aims for profitability and efficiency.
Getting Started with Financial Transparency
Implementing financial transparency can be a significant shift. Here are some practical tips from Kusa to help you get started:
- Decide Who Will Present the Data to the Team: Kusa recommends having a financial advisor, shop coach, or accountant present the information instead of the shop owner.
- Prepare for Challenging Questions: Sharing financials requires openness about your shop’s financial health. Make sure you are comfortable with your understanding of the financials and prepared to discuss both successes and challenges openly. Prepare for sensitive questions and potentially skeptical responses.
- Introduce the Data with Hypothetical Numbers: Begin by explaining the basic principles of P&L statements using hypothetical scenarios with easy-to-understand numbers. This helps set a comfortable foundation for understanding the elements of a P&L statement and the math within it.
- Share the Real Numbers Thoughtfully: Once the team is familiar with the basics, introduce your shop’s actual financial data. This may feel uncomfortable, especially if your numbers are not where you want them to be. Highlight strengths and improvement areas, focusing on how each team member’s actions influence these outcomes. If your shop isn’t making money, explain why and how the team can work together to fix it.
- Set Clear Financial Goals: Clearly articulate the shop’s financial targets and how these align with day-to-day operations. Explain how reaching these goals benefits everyone, from job security to potential bonuses.
- Review Regularly: Establish a routine with the team of reviewing key financial metrics monthly, with weekly checks on critical areas like parts gross profit and technician productivity. This keeps everyone aligned and allows for course correction to achieve goals.
- Use Transparent Communication: Encourage open discussions about financials, where employees can ask questions and express concerns. This fosters an environment of trust and continuous learning.
Practical Implications of Financial Transparency
Kusa illustrates the importance of every team member driving toward profitability. Here are some examples of actions the team can take:
Ensure Everything Goes on the Repair Order: It’s crucial that everything used on the car gets added to the repair order. Overlooked items like brake cleaner and nuts and bolts may not cost much individually, but when they are consistently not added to repair orders, these costs add up and directly impact net profit.
Return Parts Promptly: Failing to return a part like an alternator core means losing the refund and incurring additional costs. These small losses accumulate, significantly affecting the shop’s bottom line over time.
Complete Thorough Inspections on Every Single Vehicle: Incomplete inspections not only mean you may not be catching something on the vehicle that needs urgent repair, but you’re also losing sales opportunities. Every vehicle that comes in the door needs to receive a 100% complete inspection to be thorough in findings. All findings should be estimated and presented to the customer.
Maintain Strong Internal Communication: Service advisors and technicians must work closely to ensure everything is included in the repair order. This includes understanding how long the technician thinks the job will take and making sure all parts and labor are accounted for accurately.
Discount Less: Minimizing discounts helps maintain profitability and ensures that the shop is adequately compensated for the services provided.
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