projections

[jagman]

It's that time where we put together our business plan for the new year. This is the formula we use for the service dept.

# of techs X 8 hours X # of working days X labor rate X efficiency % X 12 months or month to month. Gross profit based on ytd retention.
Is this the standard? Any suggestions?
thanks

[robc]

I would kind of think that is a standard, but just so I can make sure we got the calculation right, say we have 10 techs turning 110% at $75/hour

10 x 8 x 21 x $75 x 110% x 12 = $1,663,200

So we are projecting sales of $1.66 million next year? I guess that would be at least a number to start with. But I wonder what is the chance of all or any of those assumptions coming true -

1. That we'll have all ten techs all year
2. That they all work 8 hours, every day
3. Do we use our door rate, effective rate, or some other target?
4. Is efficiency booked efficiency (he was here 8 hours booked 8.8 or does it include vacations, etc.)

Also just as a side, this would then just assume we have all the work we need and then some, so if we just hire more techs our revenue goes up, or increase hours.

I generally do projections month to month and year to year. That takes into account some of the seasonal variables. Then I would look at the equation and above and see what numbers could be tweaked for greater results.

------------------
** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[partking]

There are 2 more factors you should take into account. One is productivity ..hours sold divided by clock hours available. The other is tech availability. The latter takes into account days lost to vacations, sick days, training, etc. Typically that can be 3 weeks out of the year = 95% availability.
Bottom line, tech count x availability x productivity x efficiency x 8 clock hours x working days x effective labor rate.

If you want to get really sophisticated, do it month by month to allow for changes in personnel later in the year. You can also breakout historical percentages of time allocated to CP, Warr and Int work and figure in the different effective labor rates and GPM for each entity.

I have an Excel worksheet for this. I'll share it with you if you email me at partking@verizon.net

[jagman]

Thanks for the input guys. Partking,I'll
send you an e-mail for your spreadsheet.

[DNASH99]

partsking i would love to have that excel if you can send it to me
dnash99@aol.com

thanks