Creating a service labor budget can be a stressful and intimidating time for many service managers. In many cases, service managers are comfortable when it comes to technical product knowledge but are less familiar with financial budgeting. For some dealers, the budgeting process consists of looking at last year’s numbers, adding a percent or two and that’s about it. Others take a more in-depth approach.
In this article, I will share a way to create a conservative, basic, yet effective labor budget and provide suggestions to keep you on track throughout the year. Labor inventory has NO shelf life.
Understanding labor inventory
If we buy an oil filter at 8 a.m. and don’t sell it by 9 a.m., we still have it on the shelf to sell later in the day. However, if we pay a technician starting at 8 a.m. and don’t sell that hour of labor by 9 a.m., that hour is gone. We would not allow this to happen with our other inventory but tend to do it too often with labor inventory.
Western Equipment Dealer Magazine Fall 2018 Issue
By Kelly Mathison