DC Recap: Building a Budget Recap

What did the accountant do to spice up the holiday party?

He didn’t show up.

Ha. Hahahahahahaha. 

We didn’t just drop in that joke to bag on the bean-counters, by the way. Robby Gilbert, VP of Finance at Fullbay, used it to open up the “Building a Budget” workshop at Diesel Connect. He and Jacob Findlay (yes, the Jacob Findlay) are frequent guests on our budget- and finance-related webinars and blogs, and a lot of people showed up for the workshop. 

The moral of the story: accounting might not be super exciting, but money definitely is. And a budget helps you make more of that.

The most recent State of Heavy-Duty Repair revealed that just over half of shop owners have not thought about or created some kind of financial plan for their shops. “That’s a little bit scary,” Robby said. 

This session (and last year’s equivalent) was well-attended, and our budgeting ebooks, articles, and webinars usually are, too. So we don’t think it’s that shop owners aren’t interested in financial plans—they might just not know where to start. 

Hence the workshop.

Robby and Jacob plugged in live numbers and got a lot of audience participation going. We can’t duplicate all of that in the blog (well, we could, but without context it just sounds like numerical chaos), but we can share the philosophy behind creating a financial plan, as well as the levers you can pull to adjust your income as necessary.

SETTING GOALS

Goals are the foundation of any financial plan. 

You can make your goal very simple: You want to go from X to Y, by a specific date. It’s timebound, it’s specific, it’s measurable. And financial plans are basically built around goals. Monetary goals!

“If you set a goal and try to write it like that, and you can’t, it’s either not an actual goal or it’s something you need to learn how to measure,” Jacob said.

They suggest limiting your goals. Actually, what Robby said was, “The fewer, the better.” Aim for no more than three. Why? The more goals you set, the more your attention will be stretched. You want to set fewer goals and know you’ll be able to reach them with excellence. 

Then, when you have your goals determined, you break them down into chunks. Think of it like slicing a cake or pizza; slicing just makes things easier to eat (and less messy). Then you stretch these goals out across the year. 

Here’s how Fullbay does it, if you’re looking for a model:

• Annual meeting towards the end of the year where leadership reviews how they’ve done and whether they’re meeting their goals. They also use this meeting to create next year’s financial plan.
• Quarterly meetings (every 90 days) where the leadership team takes a day and reviews the story so far. It gives the team a real-time look at what’s happening, how they’re doing, and what they still have to do if they want to meet their goals.
• A weekly meeting (maybe just an hour or a few hours) where they check on their status. Are they falling behind? Are they ahead? What do they need to fix before they hit the end of 90 days?

This probably sounds like a lot. And look, Fullbay is a larger operation than a lot of repair shops, so your financial meeting schedule does not need to look exactly like ours. But the meetings are there for a reason: they keep everyone—everyone!—on track and accountable. If you’re discussing a matter on a weekly basis, you aren’t just going to forget about it.

How would a weekly meeting work in a repair shop? Pretty simple: Go over yearly and quarterly goals. The weekly meeting also offers you a spot to bring up issues that might impact said goals. Things like:

• Company X is 180 days past due—we need to get that money collected so we hit our financial goals.
• Joe’s going to be out for three weeks and we need to find coverage.
• Holy crap our insurance just skyrocketed!

And so on and so forth.

Maybe you’ll have weeks where nothing goes on. Those are when you just sip your coffee, go over your goals, and feel good about the world.

FULLBAY’S SAMPLE FINANCIAL PLAN

A couple years ago, Fullbay rolled out a free sample financial plan for anyone who wanted to use it. It’s got all kinds of levers you can pull and adjustments you can make, so you can see exactly what X or Y change would do to your proposed budget. 

The second part of the workshop was dedicated to showcasing those changes and running through different budget challenges. Alas, you’ll have to wait until the video is available to see them, but you can get an idea of what the plan can do from this pirate-themed article we wrote about it. =D

(Side note: this free budget is, in fact, pretty effective. A shop came to Diesel Connect 2023 wanting to open a second location; they used the budget to figure out what numbers they’d need. “So they took this budget and they said, ‘It’s good enough. We’re gonna try it,’” Robby said. “That’s what they ran on for the first year of their new shop as they’re getting ready to open it.” So yeah. It’s effective.)

The plan is laid out like a profit and loss statement you’d run in your financial software . Basically, it answers the following questions over the period of time you have been tracking these metrics:

• How well did you juice revenue? How well did you squeeze costs?
• What are your labor costs?
• How much are you paying in tax?
• How much are parts costing you?
• What’s your actual profit on the margin of labor?
• What are you doing with shop supplies?
• Are you making money on subletting? Or are you not marketing that up correctly?
• What about your service truck(s)? Holy guacamole, what are you spending in gas?

And so on and so forth. The more information you can plop into the financial plan, the more accurate its forecasting will be.

BUILD YOUR OWN BUDGET

While financial plans may seem like magic, they’re actually not—they’re just plugging in numbers on one end and seeing what comes out the other. 

They’re also not exact. “You have to get comfortable with some ambiguity,” Jacob told the attendees. You can plug in your data, but you’ll still have to deal with vacations, sick days, and the unexpected (whether that’s your senior tech being out for a month because he fractured his femur reenacting the Charge of the Rohirrim or something more pedestrian, like COVID) that can throw off your plans. What forecasting does is give you something to work towards. And as soon as you know you’re facing an issue that will impact your financial goals, you can work around it.

So give the financial plan a try. Play with the levers. See what you can make and what you can charge.

And if you get itchy about raising rates, think about Jacob’s words: “Business is about a fair exchange of value.” You, the repair shop, are providing a critical service. You’re fixing things. You’re keeping the supply chain going.

“We need you to stay in business,” Jacob said in closing. “The fleets need you to stay in business. Let’s all have fair exchanges of value together.” 

And stay tuned for the eventual release of the budget workshop’s video—we think you’re really gonna like it!