Anyone who has been watching the stock markets, bond rates, yield curves and the rest is likely wondering a bit about how 2019 is likely to go economically. A couple of months ago we did discuss the year ahead of forecasts along with bits about making more money. 

For the many years I’ve been at this article, I have had a numbers of goals in the writing. One big one is to always provide ideas of value while helping the reader increase their profitability. Today it’s all about you making more money in 2019. One caveat is that profit comes from providing our customers with value, quality work and integrity. Anything else is basically greed and that doesn’t last long in small business.

If you mean to profit, learn to please. Winston Churchill

The following thoughts come from a wide range of sources. From Inc. Magazine to others just like us and the professionals that work with us, it was an overwhelming response. In order to keep the information in some order, we’ll attack the suggestions by functional area. With that, please consider the following as a checklist of profitability is 2019:


• Develop a budget. Like goals, keep it measurable, realistic and understandable. Include some past years in your review. Most seem to suggest three to five years. This will show you quickly whether you are realistic and regularly meet your objectives. 

• KNOW your profit level as of today, see if it’s changing, and if so, for the better. As with your overall budget set an achievable, realistic but aggressive goal for a profit increase this year. Then keep this number handy at all times as a “dashboard” reading of where things are at.  And don’t fool yourself with gross margin. The money you take home is the net number. 

• Meet first with your banker and accountant and explain your profit objective. Share your budget for their review as well. Ask for their recommendations and incorporate them into your operations.

• Negotiate better pricing and/or discounts or programs from your vendors. While many spread their business around, focusing on fewer vendors often results in better deals given the increased volume. 

• Request consignment inventories for any product you keep in stock. Or, if that’s not available, possibly dating terms for payments. This will allow you to turn higher volume items more frequently with minimal or any financial investment.

• If you lease, review your terms. Check for elevator clauses. Look at any increases to be sure they were according to the terms. Ask if you do (and want) a midterm renewal for a longer term, could the rate be locked in, and could you save some dollars. 

• If you own your building it’s time to call in the folks at the gas and electric companies and have them come in to do an assessment. This will provide you with ideas as to what you might do to lower the bills. Check your property assessment to see if it’s still accurate. If not, a trip to city hall or a letter from your attorney may be in order. You could hire a company to come in for a professional assessment. However, these may be expensive. Talk to your accountant. They may offer the service or be able to direct you to someone they trust.

• Keep and check an accurate inventory of all parts, shop-owned tools, fluids and things like rags and other work items. This accomplishes two things. First, it allows you to know exactly what you have on hand and your relative investment. It also allows employees to know you understand what should be in the shop and may curtail or avoid theft.

• While speaking of theft it is amazing how many parts sprout legs and walk out the door! OK, being a bit sarcastic. But, there are a few areas to watch. Fluids that go to home shops, especially if someone is moonlighting.  Supplies such as rags, paper products tend to meet with the same fate. Really expensive are employees who order parts on your account and then take them with no payment or paper trail either for their vehicle or someone else’s. Safest bet it to simply put in place a buying program whereby the employee goes to the part store and pays directly. Hopefully they’ll receive your discounts. Then simply do not allow personal part purchases on any shop account and keep an accurate in and out with work in progress inventory. Sorry to say you may well find missing profit dollars here. And these cost you $1 for $1!

• Develop a waste reduction program. People are always quicker and more likely to toss a half used rag in the drum, allow things to go to waste or use a wasteful amount of assembly or other supplies. Garage doors stay open for a long time in the winter on other people’s nickels. 

• One huge area of waste are the shop gab fests. I always allowed for this by giving folks some time to rehash the weekend or evening before at the beginning of the day. When time came to put the brakes on I had only to walk out in the shop and start talking business. A team that gets along is a lot easier to work with, generally more productive with a higher quality level and less turnover. But, this can be taken to extremes and then it costs you big profit dollars.

• Check your various business related insurance policies. Request your insurance pro to provide a complete review and explanation of your coverage, how it works, coverage limits and premiums. Many find they have added policy forms on their shop coverages that were never or no longer needed. Your health insurance may be overly rich in benefit. Whatever, there’s often dollars in “them there policies”.

• Consider narrowing your specialty focus. Too wide and you spend money on very low volume, unprofitable services. Too narrow and the demand may not be adequate. Look for the happy place where volume supports profit. And generally, the more you do of something the more profitable it becomes.

• OK, here it comes. You know I am a colossal pain in the backside when it comes to this, but get a plan together and RAISE YOUR LABOR RATES AND PART MARGINS NOW!


• Review what you are spending on your marketing activities now. Dissect each activity and determine whether the investment is making you money. I realize sometimes we have an ad in some local club publication, possibly church or other similar type of activity that probably costs you more than you may ever see back. However, it is worthwhile to look at the telephone directory listing(s), general newspaper advertising and the rest. 

• Develop a list of low-cost, high-impact marketing activities. For example, one shop I know is in an industrial park area. Twice each week the owner will deliver a box of cookies or similar along with his specials list and coupons, specials just for those in the park and more. He figures twice each week means he is in every business at least twice each year. He also publishes a related newsletter each quarter and has a part timer drop off quantities to each business. It is critical to remember that it is often more important to be “top of mind” when the person has a need.  Especially if they are new customers. So, have your name there often enough that when there’s a problem they remember your shop!

• Look at your customer list. Usually a small number of customers make up the largest part of your profits. Then, at the bottom of the list there are some that cost you money and time every time they wander in your shop. Hard to do, and it takes a world of tact, but you may need to talk with these folks and ask why they only come in for certain repairs. And, find out what it will take to make them more profitable. All else fails, you may just have to fire them!

• Help your technicians learn how to present needed repairs to customers. Or, at the very least, if they are asked a question to respond appropriately and professionally. And if that isn’t working how to redirect them to you or your shop manager.

• It’s time to start working your social media, website and more. You may not need a big expensive workover at all. Just some basic attention, updates and maybe adding things like current specials will go a long way. Customer testimonials are also huge in bringing in the new customer.

“What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.” — Dave Thomas, Founder of Wendy’s


• Schedule people so it makes sense. A number of shops have retired techs and former owners and managers come in part time. One person covers the morning rush, the other the evening rush. The alternative is for one of you to lose much more valuable and productive time while being paid at a much higher rate. Watch your work flows and determine if there are times you are carrying too many people just so they are there for your heavier flow.

• Time to reduce your worker comp rates. Likely this effort will include training for your team, contests to see who can go the longest without a preventable injury, etc.

These are just a few of the ideas I’ve received. You are likely already doing some of this now. But where you see a possible strategy to raise your profits, go for it!  But, the bottom line has been, is now and will be the quality and integrity to bring to every transaction and the happy customers that result.

Make 2019 the year of increased profits while improving operations. That way no matter what the economy has in store, how wild the stock market gets or anything else, your shop will be the busiest and most profitable in town.