Diesel Connect Recap: Managing By Numbers

One of the most anticipated presentations at the 2024 Diesel Connect conference was Peter Cooper’s “Managing By Numbers.” Y’all may remember Peter (of Merx Truck & Trailer) from his various appearances on the blog and the Shop Owner Roundtable; unsurprisingly, people were very excited to hear what he had to say about shop management.

Before launching into the meat of his presentation, Peter asked shop owners how well they knew their business. Note he didn’t ask how well they knew wrenching.

“Everyone that started the business started it because they were good at fixing trucks or equipment,” he said. “And then that grows, right? You hire more people. Now you’re spending your day doing profit and loss.”

It’s a whole different ballgame with entirely different issues and decisions. If you want to run a successful operation, you’ve got to know your numbers…y’know, hence the title.

DO YOU KNOW YOUR NUMBERS?

Before you properly manage by numbers, you’ve got to know your numbers…and understand them. That means looking at data instead of just spouting off a gut instinct.

For example: who’s your highest-billing tech?

(In this context, highest billing could mean highest billed hours, highest number of hours, and so on.)

Most managers, Peter told us, don’t know who on the floor makes the most dollars at the end of the day. They’ll default to the guy who’s been there for 35 years who can fix everything with his eyes closed. But an actual look at the numbers will reveal the highest-billing tech—the guy who makes a shop the most money—is “that kid on the floor … pushing the high-dollar tickets. He’s ambitious, he’s 20 years old, and he’ll work like a rented mule all day.”

That’s not to say the ultra-experienced tech isn’t the highest biller. But turn to data instead of gut or feeling alone. If it backs you up, great. If it doesn’t, well, you’ve got some aligning to do.

So, what data points should you be looking at?

Here’s four of them:

• Cost of direct labor with parts person(s). Peter identified this as “all your people that produce work that you sell.” The kid sweeping the floor is more of an overhead cost, not a work producer.
• Cost of service advisors. This metric is the money you pay to the people actually selling the work. “A lot of stores have a person who does parts and does service advisor [work] … some of this gets very individualized,” Peter said. “But generally speaking, most shops will have the service advisor.”
• Cost of parts. How much are your parts really costing? Are all your numbers lining up in Fullbay and your accounting software? Peter pointed out things getting grabbed from bins and not getting billed out (like brass), or parts you’ve bought and put on a truck under warranty, so you can’t bill the customer for them.
• Operating overhead w/managers. This is everything that’s left. Think electric bill, rent payment, mortgage payment (depending on how you run your business). This is the fixed costs that don’t change day to day. Just make sure any of your overhead employees (like the kid that sweeps the floors) are figured into that amount. (Side note: you can find this information in Fullbay’s All-Revenue Report!)

Peter also provided a spreadsheet and a detailed analysis of how to pull in these data points (as well as how to adjust them for forecasting). It’s a lot to go into in an article, so you’ll have to wait until we get the full video up for the public in a few months!

BOOK RECOMMENDATION

“The way you fix a truck is a system,” Peter told the audience. “You can repeat it. The truck comes in … you diagnose the complaint, quote the parts, quote the labor, you sell the job. That’s a system. You really need to think about your business as a system.”

A lot of shop owners—many of whom got started because they’re good at fixing things—have trouble getting their hands around that idea.

To help shop owners move into that mindset, Peter recommended Rocket Fuel by Gino Wickman and Mark C. Winters. “It helps you diagnose your business … figure out ‘what are we doing wrong? What do we need to do? What should we be doing?’” he explained.

Even the biggest changes begin with one small effort—like switching up how you see your business. Rocket Fuel lays out a new way of thinking about business, and it includes the “why,” so you can see how a change might genuinely benefit your biz.

WORKFLOWS AND MORE

Peter didn’t stop there—he also brought a workflow chart so attendees could see how Merx shops stay on top of business and keep customers coming back for more. The chart has a motto underneath it: “If it’s not in writing, it’s not real.”

In other words, document, document, document. Effective communication benefits everyone in the shop and lets you see exactly what’s happening at any one point in time.

Write it down!

(Or type it out, if you’re using Fullbay.)

The workflow and other elements of Peter’s presentation will be available when we push the video live to the public in a few months. (Sorry—attendees get first crack at rewatching this amazing session.) For now, check out Rocket Fuel, watch Peter on the Shop Owner Roundtable, and remember, if you’re running a business, you’ve got to manage by numbers!