Make Money

Get real and get rich: a critic’s take on books for African Americans on how to foster success, make money and hold on to it

August 20th, 2007 by monies

A solid savings plan is a powerful tool. Yet as beneficial as good money habits are, too many of our folks find themselves on the wrong side of the savings equation. Our kids rooms may look like branches of Toys “R” Us or Niketown, but our savings accounts are strictly thrift shop.

A large part of the problem is that financial planning isn’t a sexy subject. Another reason for poor savings is know-how. The following crop of books by African Americans on finances and career planning can change that. And as the books listed below attest, there’s no lack of advice. The key is to find some that work for you. These books, some new and some older titles, are a good starting point.

Carrie Mason-Draffen is a reporter a workplace columnist for Newsday, a Long Island-based newspaper.

What’s Money Got to Do With It? The Ultimate Guide on How to Make Love and Money Work in Your Relationship by Cheryl D. Broussard and Michael A. Burns MetaMedia Publishing, October 2002 $23.95, ISBN 0-972-00941-8

Financial squabbles can undo the best of relationships. That’s the underlying premise of this book coauthored by Broussard, who also wrote Sister CEO: The Black Woman’s Guide to Starting Your Own Business. Much of that discord stems from money myths men and women have about each other, the authors contend. So, in an approach that is part financial adviser, part pop psychologist, the authors expose the falsehoods. For example, “Many men … consider women to be incompetent money managers,” the authors write. “Unfortunately, some women buy into this stereotype, as well.”

Written in a straightforward style, is comprehensive and offers an array of ideas on how to emulsify money and love, including a section on Dating Commandments (”Thou shall not discuss money or income on the first date”), prenuptial agreements and win-win money fights. It even has a chapter aimed squarely at those disillusioned sisters still waiting for Prince Charming to ride to their financial rescue (I thought women’s lib had finished them off). If the distressing statistics in the chapter don’t scare sense into them, nothing will.

Broussard and Burns show that love, with a clear mind, can do a whole lot with money.

Let’s Get Financial Savvy! From Debt-Free to Investing With Ease by Dr. Lois Center-Shabazz, CenNet Systems Publishing, October 2002, $16.95, ISBN 0-971-97950-2

“Break it down!” I just can imagine Center-Shabazz uttering those words to someone struggling with difficult financial concepts. Break it down is exactly what she does. Her breakdowns include the stock market, the bond market, investment clubs and real estate, all arenas where she feels African Americans should operate to create their own wealth.

This book nullifies the excuse that financial markets are rocket science. The weighty becomes light in Center-Shabazz’s hands. She includes tips on how to save money to invest and reminds you that your emergency fund is for you, not your mooching relatives. Summary lists at the end of each chapter are helpful.

Though informative, the book is a primer that requires supplements. For instance, she says you should research a company whose stock you are considering buying to see if the management has developed successful products. An example would have helped. Without a walk-through the task seems daunting.

Turn Your Passion Into Profit: Information, Inspiration and Ideas to Help You Make Money Doing What You Love by Walt F. Goodridge, January 2000, Company Called W, $39.50, ISBN 0-962-92029-0

This is honest, homey advice from a civil engineer turned financial guru with information and inspiration from a diverse array of leaders from Elijah Muhammad to Buddah. Goodrich doesn’t believe in angst-ridden debates about complex issues. “Therefore, if you are not exactly where you want to be, doesn’t it seem obvious that the thoughts you’re thinking aren’t working?” You may think you have to struggle to find where your passion and profession intersect, but for him the search boils down to a few key questions such as “Is it hiding in the compliments you give to the people you admire?”

Despite its good points, the book is too cheery. Finding your passion doesn’t cancel out the long hours you often work as your own boss. And it has an oversupply of the author’s poetry. But overall, it’s a good guide for anybody dying to jump the Corporate Ship.

The Black Enterprise Guide to Building Your Career by Cassandra Hayes John Wiley & Sons Inc., February 2002 $16.95. ISBN 0-471-41710-6

Author: Carrie Mason-Draffen

Posted in Uncategorized | No Comments »

Crown jewels: ten pneumatic staplers that will make you money - Tool test: medium crown staplers

August 19th, 2007 by monies

The strength that’s developed with staples and plywood is amazing, and, along with creating solid connections, staples are ideal for working with smaller pieces of lumber: Where an 8-penny nail might split a small wood block, the stapler fastens plywood to it securely and quickly with zero damage.

While this test focuses on framing applications, the broad range of fastener lengths makes medium crown staplers ideal for other trades, too. Stucco contractors use the staplers’ unmatched speed for fastening metal lath with 1- to 1 1/2-inch staples. Roofers like the fact that 2-inch medium crown staples don’t split the 1×3 furring strips they run horizontally over roof decks for concrete tile installation. And, ceramic and stone tile installers use staples fasten cement board to floors, walls, and countertop blanks.

Test Criteria

I tested 10 new models: the Duo-Fast SM-7664, Fasco F45C G-55 SS(CT), Hitachi N5008AC, ISM MC716200, Max TA551/16-11, Paslode $200-S16, Porter-Cable MS200, Senco SNS40, Spotnails XS76-8650, and Stanley-Bostitch 650S5. I ran them hard for two months in sheeting applications where I nailed off 3/8-inch and 1/2-inch plywood, 7/16-inch OSB, and 1/2-inch asphalt impregnated sheeting (AIS), testing each model for speed, power, comfort, and durability. Since many of the projects I build have tough OSB comers and softer non-structural AIS infill sheeting, I was especially looking for good depth-of-drive adjustments for setting staples flush in the different materials. For pickup work like arches and shower seats, I looked for adjustable exhaust, tool maneuverability, and balance. I also considered the types of staples each model accepts, their jam-clearing features, and the general fit and finish of each tool.

Speed, Power, & Depth-of-Drive

Speed and Power. Fastening a sheet of plywood using a standard stapling schedule (6-inch o.c. edge nailing/12-inch o.c, in the field) requires approximately 77 fasteners per sheet. If you’re looking down an 80-foot-long wall, it’s easy to see why staplers must be fast. Fortunately, all of the tools in the test group satisfied this requirement and there wasn’t a single tool even my fastest guy could outrun. The same goes for power: Each unit has plenty of muscle to drive 2-inch staples consistently through plywood or OSB and into solid Douglas fir wood framing.

Depth-of-Drive. All of the tools in the test have depth-of-drive adjustments, but only the ISM, Porter-Cable, and Spotnails adjustments are tool-less, a great feature. If your sheeting specs call for OSB on the corners, you need to punch pretty hard to flush the staples. But if the nonstructural infill sheeting is AIS, you have to lighten up to prevent overdrives, and this is where the tool-less adjustments on these models can make you money.

You adjust the Duo-Fast, Hitachi, Max, Paslode, and Senco depths-of-drive by moving a U-shaped metal plate on the nose of the tool. This requires loosening a bolt and sliding a plate forward for flush-nailing or backward to countersink. These tools are easy to adjust, but the systems aren’t as fast or convenient as the tool-less adjustments on the other tools. They’re all workable, as long as you have the right Allen wrench.

Adjusting the drive depth on Fasco’s tool requires unbolting the safety assembly on the nose then adjusting the safety’s length. The process is tricky and it takes more time than the other tools. Likewise, to adjust the Stanley-Bostitch tool, you remove two bolts from the nose of the tool, remove the cover plate, turn the adjustment nut, and replace the cover plate. It’s time-consuming and not always easy to get the right setting. It took me about three minutes to adjust these two tools.

Triggers, Switches, & Comfort

Paslode’s engineers figured something out–pulling a trigger all day long can be tiring. Their solution is so simple it’s elegant: an extra long, very comfortable trigger that allows you to use two fingers instead of one to engage it. This may not sound like a big deal, but after eight hours of stapling sheeting, your fingers will be so happy they’ll want to write a thank-you note. The Duo-Fast also features a two-finger trigger, but its fit and finish don’t quite match Paslode’s.

Author: Michael Davis

Posted in Uncategorized | No Comments »

Model behavior; Raising money: Abstract number sorcery won’t cut it anymore. Investors want to know exactly how you’re going to make money - Money - business models

August 19th, 2007 by monies

But today, huge opportunity and market share are no longer enough to secure a funding deal for your growing firm. Raising money has taken a turn back to the basics. And as company earnings have come back in line with the mainstream, the real numbers game for your deal is now focused on the most elementary component in your enterprise: your business model.

“Our initial test of any investment has to do with the validity and strength of the business model and how the management team’s core experience can be used in the execution of that model,” says Jeff Carmody, a bridge loan specialist with Santa Barbara, California-based Agility Capital.

“The period in time where money was raised from a flow chart drawn on a cocktail napkin has, mercifully, passed,” notes Jason Spievak, vice president of business development for Callwave, a Santa Barbara, California, next-generation software-based switching technology firm. “To be taken seriously by investors today, an entrepreneur needs to have both the long-term strategic vision as well as the practical focus on operations. A real business model that can drive sustainable revenues is a must because while there’s more capital than ever piled up in private equity funds, very little of it is available to the dreamer or the get-rich-quick entrepreneur.”

Details, Details

Your business model describes how your business goes from preparing your product or service to delivering it to your users, and how many of those transactions you need to execute to keep up with your operating costs.

You must include these details when creating or reformulating your business model:

1. Suppliers and the average price of your company’s goods

2. Labor costs per each unit your company produces

3. Selling price and the resulting gross profit margin

4. The amount your business needs to ship weekly to break even

5. Your company’s annual output and the break-even point as a percentage of total capacity

A strong business model identifies who is buying your product or service and why they choose to do business with you as opposed to your competitors. It then offers a clear rationale for why buyers will pay the price you’re charging (say, $50 per unit).

Once you give solid reasons for the buying decision, you need to report how many sales per day you make. If you say daily sales activity averages 250 customers (5,000 each month), then the revenue component of your model at $50 per unit is $12,500 each day. This metric has to make sense with respect to the scale and scope of your operation.

Next, you clarify your labor and materials costs in relation to your expenses. Perhaps your labor and materials costs for each sale are $28, leaving you with $22 per sale in gross profit, a 44 percent margin. If your overhead is $85,000 a month, that $22 profit margin needs to happen about 3,860 times every 30 days to break even with your fixed monthly costs. So the model now rests on whether you have the capability to do that kind of volume. If so, you have a sustainable business model where the first 3,860 customers each month cover all your costs, and the next 1,140 contribute $22 each ($25,000) to your pretax profit.

Take a look at this example of a poorly-thought-out business model: You have a “cool idea” that costs $60 in labor and materials to manufacture, and overhead runs $100,000 per month. You might believe a price of $75 will draw potential buyers, but with a $15 profit margin, you’ll need to sell nearly 6,700 units every 30 Days–and right now you’re doing business at an average rate of less than 125 customers per day. These metrics don’t work.

Or maybe you project a price of $100 (a 40 percent margin), which would drop your monthly volume point to 2,500 units. The problem is, there’s no way to sustain that price-point given the competitive environment. In both these cases, the numbers don’t add up, and the business model is not sustainable. There are many cases where entrepreneurs have come up with poor business models where the volume needed to cover monthly fixed costs would have to be 75 percent of the overall market share. Again, that scenario is unreasonable, and investors wont support it.

Where the Money Is

Author: David Newton

Posted in Uncategorized | No Comments »

Make Money Making Precision Parts

August 16th, 2007 by monies

Adjustments to these realities are essential -and for some, painful. Part designs are increasingly complex, and may change frequently. To be profitable making such precision parts, shops must be able to drop them complete. They must be able to go from bar to part in one operation. Handling the part more than once introduces the possibility of error, and secondaries require operator attendance. If a shop can make parts in a single operation, it will do well. This approach reduces labor, and yields faster cycle times and better quality-one machine will make concentric diameters better than will two.

It’s demonstrated every day that successful shops have developed machining strategies that permit high-precision, multiple operations in a single setup with rapid changeover and zero handling. Quick changeover part-topart and untended complete machining cycles can make CNC multispindle machines a profitable answer for turning and milling workpieces-chucked material or from bar -from less than 1” (25.4 mm) to several inches in diam-in small, medium-to-high lot sizes (starting from 15,000 to sometimes 1 million and above).These machines, equipped with six fully independent CNC spindles each capable of operating at up to 10,000 rpm, are already popular in European shops because of the full CNC capability and flexibility for production of precision parts in variable volumes with very short setup times. This design allows quick cycle times -starting around 2 sec, depending on the workpiece. In many family owned shops in Europe, you see ranks of CNC multispindles, not just one here and one there.

The medium-to-complex workpiece market in the US, which has until now been dominated by camcontrolled multispindle automatics and simple sliding and fixed-headstock automatics, can gain more profit, and much improved competitive ability on complex, high-value parts, by converting to full-CMC multis.

Combining the speed of a cam machine with the flexibility and front-open design of CNC technology, multispindles represent a very cost-effective alternative to cam-controlled multispindle automatics because of shorter changeover times and lower piece costs. Shops can set up a front-open multispindle CNC as quickly as they can a twin-spindle two-turret lathe. And the latest multispindle machines can pay for themselves with lot sizes as small as of 5000 parts with repeat orders.

Another benefit is that the fully CNC multi machines use off-the-shelf, presettable singlepoint tooling, so shops avoid the high cost of form tools. And the CNC control frees shops from the need to make time-consuming, inherently imprecise cam adjustments as well as longterm job planning due to long lead times for form tools.

For different lot sizes, there are different CNC answers.

There is often room to consider another machine configuration that fits between single-spindle CNC twin-turret machines and CNC multispindles. There is a large middle ground where it may not be obvious which machine to use. Although some shops change-over a multispindle CNC four to five times a week, the hourly rate for a multi for some parts-depending on their complexity-may prevent using that machine. Or it may be occupied with other jobs, while the cycle time on the single may make it unprofitable for certain volumes.

The decision to invest in any machine configuration depends largely on expected production, the operations necessary, and the quality level demanded. For most, the ability to machine a part complete in one setup is an unquestioned advantage, and is in many cases essential to achieve the required precision.

To drop parts complete in one operation, today’s more advanced CNC machines are increasingly not only multitaskcapable, but also able to put more than three tools on the part simultaneously. A new machine from our company, for example, can put four tools on the part at one time -either fixed or driven tools.

These advanced production lathes are what it will take for a shop to machine complex parts quickly to high levels of quality in just one setup. And that’s the key to making money producing precision parts. By investing in the best multiaxis machinery available and building on your experience creating tight tolerance parts, your business can deliver manufacturing quality at costs comparable to those of offshore manufacturers.

Advanced production lathes support the ability of a shop to machine complex parts quickly in one setup.

Olaf Tessarzyk

CHAIRMAN AND CEO

INDEX CORP.

NOBLESVILLE, IN

Author: Tessarzyk, Olaf

Posted in Uncategorized | No Comments »

Casting your dreams: how to make money on that one of a kind job - Cover Story

August 13th, 2007 by monies

Steve Fossler has his special route. He turns left out of his gate and goes about 2 miles on Illinois state Route 25. Just past downtown, Fossler turns right onto North Avenue.

If the traffic isn’t too heavy, the crowd cheering on the little league game nearby isn’t too loud, or the time for sunset too far away, Fossler will park under the elm tree and watch the river flow by. From this perch, he views an almost pastoral scene.

The Fox River, the centerpiece of Aurora, Ill., flows southward. The river bisects Illinois’ third largest city with a green valley of flora and fauna. At the centerpiece of this particular outlook is the recently renovated North Avenue Bridge.

Long neglected by city and state highway departments, the North Avenue Bridge had fallen into disrepair. It was repaired in 2002 to its former class. And Fossler’s crew at Aurora Concrete Products provided elements that have helped return the cultural standard.

What made the job special for Fossler is that it was the first time in his 25-year career he had a chance to showcase and display his plant’s craftsmanship to the home team. In the course of the work, Fossler’s team proved craftsmanship to the local design and specifying community.

Structuring beauty

When the city fathers commissioned the North Avenue Bridge the first time in the 1930s, they opted for an aesthetic symbol of civic pride. Aurora was a town on the rise, a center of commerce and transportation. The bridge with its two strong curving arches, ornate sidewalls, and decking dramatically displayed strength.

So a key element in the repair was to not only return the structure to current engineering standards, but also to its original look. The bid specs called for a complete rebuilding of the structure, from the foundation to the decking.

It was this key parameter found in the state and local bid documents that challenged Fossler and Armando Sanchez, the plant manager. In the past few years, Fossler and Sanchez had been quietly transforming Aurora Concrete Products into a dynamic company focused on high-quality special projects.

Fossler’s role in the project was to cast the railings, spandrels, beams, and wing walls, in addition to the some of the underground utility pieces.

This was the first time Aurora Concrete Products had bean awarded structural bridgework for an Illinois Department of Transportation project (IDOT). “We knew we would have to prove ourselves to the local resident engineer,” says Fossler. Even though the plant had been accepted into IDOT’s QC/QA program, mix designs were reviewed very conservatively. The local engineer initially urged purchasing ready-mixed concrete from a local plant. But after Fossler’s first mixes well exceeded performance requirements, the issue was dropped.

The project was a series of special castings, according to Fossler. Each element required its own handcrafted form. Thus, each unit’s drawings required a careful review of the IDOT structural drawings. Fossler hired a retired engineer to handle the process. Along with the concerns of formwork requirements, the general contractor would also review the unit’s pieces. “We often added fasteners and inserts to speed their placement, and that would require a new round of reviews by the IDOT engineers,” says Fossler.

One part of the process that Fossler didn’t foresee was the project’s quick pace. Combined with the needed drawing revisions and approvals, the plant crew had to work long hours each week to keep up with the contractor.

The project called for a great deal of reinforcement in each element. Sanchez praises his crew’s ability to react quickly to drawing revisions. But most importantly, it was their can-do attitude that pulled the job off. No matter how difficult the steel diagram looked, the crew also had it ready for the pour the next day, says Sanchez.

Beauty and strength

Along with IDOT’s concern for strength and durability was their emphasis on surface appearance. This was an area where Fossler and Sanchez knew they would be successful in gaining acceptance. Prior to the plant’s relocation to North Aurora from Northbrook, a Chicago suburb, the producer’s main product line was architectural products. They had been casting walls and high-end planters. After the move, product focus had switched to structural elements.

Author: Rick Yelton

Posted in Uncategorized | No Comments »

How to Make Money Off Open Source

August 12th, 2007 by monies

Software vendors, though, increasingly are interested in open source as a business model.

Case in point: One such vendor wrote to me recently, in response to an editorial I wrote that compared two open-source databases: MySQL and PostgreSQL. He claimed to have “the fastest RDBMS on the planet”?a speed-demon database that runs “15-106 times faster than the commercial databases, with the functionality of a PostgreSQL and speed in excess of TimesTen.” (TimesTen is a database and software maker that markets super-revved performance that delivers “real-time” capabilities.)

Check out eWEEK.com’s Database Center at database.eweek.com for more database news, views and analysis.

The maker of this speedy database was pondering whether to put this product out using an open-source business model. Before making a move toward open source, though, his company first needed to analyze the impact on its business model, he said. While open source is a compelling means of distribution, he said, he worried that his ideas would get ripped off by the competition.

Plenty of software makers, big and small, are thinking along similar lines. That’s one reason why people who are indeed making money off open-source software will get together at LinuxWorld to present a panel discussion, “Making Money on Open Source.” On the panel will be MySQL CEO Marten Mickos, head of a company that’s making money off its namesake open-source database, and Margo Seltzer, chief technology officer of Sleepycat Software, a profitable-from-Day-One open-source database maker.

First question: What about the problem of intellectual property theft?

That’s an easy one. Just because you open up your code doesn’t mean copyright and patent law disappears. “Many people think the only way to protect intellectual property rights is to lock it up in a safe and apply as many patents as you can,” Mickos pointed out. “Our message to the world is the opposite: Get real, it doesn’t get better being locked up in a safe, and patents aren’t the way to protect it. You can open up your code and still be protected by copyright.”

MySQL works with a dual-licensing structure: They’re happy to give out the software free of charge to those who are happy to do the same. They’re also happy to sell it for a fee to those people who don’t want anything to do with such reciprocity. There are enough people who want to use the MySQL database without opening up their own, proprietary code to keep the company’s revenues consisting mostly of license payments.

Sleepycat’s dual-licensing structure is similar. Sleepycat’s open-source database product, Berkeley DB, differentiates itself by the fact that it’s a library that links directly into an application. If the application into which Berkeley DB is being linked is open source, the library is open source and can be redistributed without licensing fees. If the application that links to the library is proprietary, Sleepycat retains all intellectual property rights and has the ability to grant a license so as to generate licensing revenue.

As a library, unlike other open-source products, Sleepycat’s Berkeley DB doesn’t do anything in and of itself. Database functionality is realized only once the library is bound with an application that makes calls into the library.

According to Seltzer, the product’s position as a library gives the company the leverage to make a distinction between people who embed it in open-source products vs. proprietary products. “The GPL is wonderful for the open-source community, but not necessarily sustainable commercially,” she said. “If you’re a pure GPL or a stand-alone application, it’s very difficult to be open source and generate licensing revenue. The fact that we’re a library and you have to link with us before you do anything useful turns out to be useful in making the distinction clear.”

The intricacies of open-source licensing raise far more questions than these, so consider this just a primer. To get more detailed information, I’d suggest starting at the GNU GPL site. For a real education on open-source licensing and how to make money off this model, though, stop by the panel on Wednesday morning to grill Mickos and Seltzer, who’ll be joined by other experts, including Stuart Cohen, CEO of Open Source Development Labs.

What other questions do you have about open-source licensing? Write me at lisa_vaas@comcast.net.

eWEEK.com Database Center Editor Lisa Vaas has written about enterprise applications since 1997.

Editor’s note: This story has been revised since its initial posting to correct erroneous references to PostgreSQL being on the LinuxWorld panel.

Author: Lisa Vaas

Posted in Uncategorized | No Comments »

Companies Find Ways To Make Money Go Further

August 2nd, 2007 by monies

The business travel industry is finally pulling out of the slump of the past three years as business activity accelerates and the strengthening global economy prompts multinationals to ease restrictions on corporate travel.

“Companies see their potential customers’ business growing and know they need to participate in that business growth,” says R. Mark Woodworth, executive managing director of the Hospitality Research Group of PKF Consulting in Atlanta. Woodworth adds that the uptick in travel that started in the United States in the second half of 2003 should continue throughout the year-so long as no catastrophic terrorist event occurs.

Kapila Anand, national industry director for hospitality in KPMG’s hospitality practice, sees Asia-particularly cities in China, Japan, Hong Kong, Singapore and India-emerging as the most popular business travel destination as multinationals can’t ignore the business opportunities throughout the region. “Travel budgets are starting to open up as companies want to tap into deferred business. Typically domestic business travel is the first to bounce back, then international travel,” says Anand, who works in the Chicago office of the giant audit and tax advisory firm.

Corporate travel managers haven’t forgotten the lessons they learned during the latest lean times, however. “There’s a lingering legacy of habits, adopted during the past two to three years, in which corporations are more conservative with their money,” says Woodworth. “The budgets aren’t generous yet.”

Caleb Tiller, a spokesperson for the National Business Travel Association in Alexandria,Virginia, says companies are trimming costs by managing their relationships with their vendors more efficiently as well as using low-fare airlines and mid-price hotels. Most of the association’s 1,500 members are corporate travel managers for US corporations that rank among the Fortune 1000. Tiller says about half of the association’s members have experienced slight increases in their travel budgets this year, one in five has seen a decrease, picture is better than in 2002 and 2003,” says Tiller. “We expect business travel will gain momentum in late 2004 and through 2005.”

Ralph Brown, president of RD Brown in Lake in the Hills, Illinois, says the economic downturn had opened up a “window of opportunity” for corporate travel managers to trim spending. “Companies are getting more travel for smaller dollars” by, for example, cutting back from first class to business class or from business to economy, says Brown, whose firm helps companies manage their travel costs.

Costs may be coming down, but bookings are up. “We’ve seen a dramatic increase in group bookings in the last few months,” says Marc Grossman, senior vice president for corporate affairs at Hilton hotels in Beverly Hills, California, adding that New York City and Washington, DC, in particular have experienced a jump in bookings by independent business travelers as well as business groups. Anand of KPMG maintains that Asia and the disposable incomes of the region’s swelling population will lure the most business travelers as corporate travel budgets loosen up over the next year. “The hospitality industry is going to be on an upswing for the next six months,” says Anand.

Author: Green, Paula L

Posted in Uncategorized | No Comments »

You can make money with your service department

August 1st, 2007 by monies

For decades, outdoor power equipment dealers have invested money and time, sent their technicians to service schools, spent thousands of dollars equipping the department - and at the end of the year discovered that the labor income would not pay the technicians wages. After a few years of living with losses it’s easy to begin believing “it’s impossible to earn a profit with a service department.” The end result is like eating junk food. Do it long enough it will take its toll on health. Because of conditioning from listening to “it’s impossible to earn a profit with a service department,” when exposed to the truth they walk past without hesitation. A hardening of the attitude has caused rickets of the mind.

If your dealership has struggled year after year with a dependent, non-profitable service department, and your current labor rate and department efficiency are not paying the bills, then realize:

It’s what you don’t know that’s keeping you from earning a profit.

This may be old news for some dealers, but truth is “you cannot continue to manage your service department using the same principles and produce a different result.” In simple terms, what is not written holds the key to service department success. Something must change in a process and/or policy, if a different result is expected and produced.

Success stories abound. Throughout North America we’ve seen dealerships producing exceptional profitability. I’ve seen the numbers and been told by dealers “I produce 25% of my gross profit dollars with three technicians. And my bottom line is healthy.”

If you’re ready to make some changes, seek the truth. Get the facts. There are some specific things you must know in order to manage your service department for profitability.

You’ll find them in the following principles. Use them as a guide for setting-up and/or managing the service department for efficiency and profitability.

Principle number One: Know the hard cost

The service department is responsible for its share of the rent, electricity, taxes, maintenance, etc. Additional costs are incurred in properly equipping the department: benches, lifts and tools of all kinds and sizes. This cost must be identified before it is possible to establish - a relative hourly shop labor rate. Wages and benefits are not included. Assign an equitable share of the hard cost to the service department.

Principle number Two: Establish an equitable hourly shop labor rate

Following is a scientific process to determine your shop’s equitable hourly labor rate. After assigning a share of the hard cost, add the cost of technicians to produce a total cost for operating the department. The next step includes asking and answering this question: At the present labor rate, example $50.00 per hour, how many hours must we bill to customers to pay expenses. Should the number of hours represent 75% of payroll hours, there are too few hours left in each day to earn a profit. Managing your service department as a separate profit center requires a balance between cost of operation, hours billed to the customer, payroll hours, and the hourly shop labor rate.

Principle number Three: Qualified Core Technicians

At the center of a profitable service department are technicians who are experienced, qualified and certified. Professional technicians are those who accept responsibility for personal productivity and efficiency. Inexperienced technicians cannot perform at an efficiency rate sufficient to producing equitable profits. Hire trainees for future expansion and growth.

Principle number Four: Manage the service department for efficiency and productivity

Each technician is accountable for daily performance. The service manager is accountable for the department’s daily efficiency and productivity. To receive the most from your investment, establish fair and equitable pay scales. Incentive programs are designed to maximize the profit potential by raising the performance level of the employee.

Principle number Five: Manage the service department as a separate profit center.

Due to the ever-changing mood that affects department revenues, the service department requires constant supervision throughout each day. Here are a few issues that impact revenue: The customer’s equipment is poorly maintained; encountering difficult and unusual technical problems; incomplete or lack of technical information; inability to complete the job for the need of parts or special tools; poor working conditions and minor injury can have a negative impact on hours billed. The objective is to solve the problems as they occur.

Principle number Six: Marketing and promoting the service department

Author: Yount, Jim

Posted in Uncategorized | No Comments »

Categories

Archives

Meta:

Blogroll

Recent Posts

Search

Get real and get rich: a critic’s take on books for African Americans on how to foster success, make money and hold on to it

Crown jewels: ten pneumatic staplers that will make you money - Tool test: medium crown staplers

Model behavior; Raising money: Abstract number sorcery won’t cut it anymore. Investors want to know exactly how you’re going to make money - Money - business models

Make Money Making Precision Parts

Casting your dreams: how to make money on that one of a kind job - Cover Story

How to Make Money Off Open Source

Companies Find Ways To Make Money Go Further

You can make money with your service department