Key KPIs Every Auto Shop Owner Needs to Know with Jennifer Hulbert

In today’s competitive automotive industry, understanding and optimizing Key Performance Indicators (KPIs) is crucial for business success. Jennifer Hulbert, owner of Service Plus Automotive in Calcium, New York, shares her journey from joining her family’s business to becoming an expert in KPIs and growing her shop from a small, three-bay gas station to a thriving twelve-bay repair shop.

Jennifer’s story begins in 1992 when her father started the business. By 2001, Jennifer joined the company just as they were moving into a new, larger building. “We went from a three-bay old gas station to a twelve-bay facility,” Jennifer recalls. This significant expansion was not an easy feat, but it was a necessary one as the business grew.

The new facility, built from the ground up, provided the space needed to accommodate more customers and offer a wider range of services. The shop’s location next to the Fort Drum military base also played a crucial role in its success, offering better exposure and ease of access for clients.

Jennifer attributes much of the shop’s growth to a combination of strategic decisions and a commitment to understanding the business’s financial health. “We’ve grown exponentially in sales and staff. We’re busting at the seams of our building right now, so we’re considering what’s next—whether it’s expansion, multi-locations, or something else.”

The Importance of KPIs in Business Growth

As the conversation delves into KPIs, Jennifer emphasizes their importance in running a successful auto repair shop. KPIs, or Key Performance Indicators, are critical for understanding a business’s financial health and guiding its growth. “If you’re not paying attention to the financial numbers and understanding them, you may think you’re doing well, but in reality, you might not be growing,” Jennifer explains.

Jennifer highlights that understanding KPIs begins with knowing your gross profits, which include calculations for parts, labor, and total gross profit. For example, labor gross profit is calculated by subtracting labor costs from labor sales, which then gives the labor gross profit dollars. These figures can be further analyzed to determine the percentage of labor gross profit, a vital metric for maintaining profitability.

“We’re targeting 72 to 74 percent labor GP, which again is probably the top 1 percent of the market,” Jennifer notes. “But those are the shops that are going to have sustainability and be able to grow and multiply locations or expand their footprint in a current location.”

Building a Successful Business with the Right KPIs 

Jennifer’s experience and expertise extend beyond running her own shop. She’s also a facilitator with the Institute for Automotive Business Excellence, where she coaches other auto shop owners on how to optimize their businesses. One of the key lessons she teaches is the importance of understanding both expenses and profitability.

“Net profit is where I always start when I start to work with a new client,” Jennifer says. “We’re looking for 20 to 22 percent net profit, and this includes the owner’s salary as a day-to-day function in the business.” By including the owner’s salary in the expenses, Jennifer ensures that the net profit reflects the true financial health of the business.

Jennifer’s success is also rooted in the benchmarks established by industry experts like Bob O’Connor. These benchmarks, which Jennifer adheres to in her own business, have helped her invest in training, tools, technology, and other critical areas that contribute to long-term success.

Steps to Improving Labor Gross Profit 

For shops struggling to meet the high labor gross profit percentages that Jennifer targets, she offers some practical advice. The first step is to evaluate the cost and production of technicians. “Is a technician selling eight hours in an eight-hour day, or are they selling and working or doing repairs for five hours a day but being paid for eight?” she asks. This discrepancy can significantly affect labor gross profit.

Additionally, Jennifer advises shops to look at their sales processes, particularly their labor rates and effective labor rates. “You can post your labor rate, say, at $150 an hour, but if you’re doing a multitude of oil services or state inspections that you’re not allowed to charge for, your effective labor rate could be much lower,” she explains. By understanding the difference between posted labor rates and effective labor rates, shop owners can better manage their labor gross profit.

Turning Steps into Success

Jennifer’s journey from joining her family’s business to becoming an expert in KPIs and business growth is a testament to the power of understanding the numbers behind the business. By paying close attention to KPIs, Jennifer has been able to grow her shop, invest in her team, and coach other auto repair shop owners to do the same.

As Jennifer puts it, “All of these processes build upon each other to make a successful shop.” Whether you’re a seasoned shop owner or just starting, understanding KPIs is crucial for achieving long-term success in the automotive industry.

Stay connected with Jennifer Hulbert: Jennifer@wearetheinstitute.com