Do I need more space?

A challenge that I often get asked about is whether or not to expand a shop. A challenge in the automotive service industry is that we often look at what’s going on and jump to conclusions. Many owners, managers, and service advisors don’t look any deeper than what they see on the surface for clues as to what’s really going on. Shops who are “booked two weeks out” often see this as a good thing, and somewhat often, take this as a sign that they need capital expansion. By capital expansion I mean they want to add on to the building so that more technicians can be employed, move into a new building, sometimes in a new location, or get creative and cobble together some smaller buildings to “make more space”. Generally, there are very few times when any of this is really advisable. Capital expansion, from an accounting standpoint, is expensive. Accountants don’t like to see capital expansion unless you can prove to them 1) you absolutely cannot do any more business out of what you currently have (i.e. maximized service capacity), and 2) you have enough business to absorb the increased costs of the capital expansion. I don’t always like capital expansion for a number of reasons. Some of the reasons being: service capacity is rarely maximized in any shop, efficiency cannot be created just by spending money on capital improvements, and most of the time expanding shop space just means expanding the chaos. I never tell a shop (well, never say never….most often I don’t tell a shop…) to expand their space until we have the maximum number of technicians employed, who are all at least 85% productive, total shop production is over 100%, and service advisors are handling 15 RO’s each, every day. For a four bay shop this means you’ve employed 6 technicians (yes, I wrote that right), 3 service advisors (again, I meant what I wrote), and are open a full 6 days each week. If you have these numbers, and your shop production is over 100% with your service advisors maxed out on the number of RO’s each day (15) then you probably need capital expansion. Until then, you only need to increase efficiency, improve process, and focus on shop management!

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