Garage KPIs: the handful of numbers that tell you how your business really works

Your garage system is full of numbers. Average invoice value, hours sold, parts sales. Most owners can see them. Far fewer know what they’re saying.

That matters. If we don’t understand our numbers, what they’re telling us and where they come from, we can’t make a sensible commercial decision to drive the business forward.

KPIs, key performance indicators, are basically financial performance ratios. I could create hundreds of them. But they have to mean something. Here are the ones I think are crucial for a garage, in under three minutes.

Start with what it costs to open your doors

The first one is your cost of doing business. What does it cost me to open my doors? That’s the fundamental key, and I’ve written more about it in the golden ticket most garages never work out.

Right next to it: what am I charging? That’s a KPI too, and it only makes sense measured against what it costs you.

The core set

After those two, these are the ones I want every owner to understand:

• Overall workshop efficiency. Obviously huge. How much of the time your workshop is open is turned into time you sell.
• Profit margin on labour and on parts. Two separate numbers. You have to understand both.
• Average invoice value. What the average invoice comes to over a period.
• Labour mix. The percentage of an invoice that’s labour, and how much is parts.
• Recovery rate. The average rate you actually get back for each hour you sell.

Average invoice value: what do you do with it?

I introduced what I call the average invoice value years ago. Everyone talks about it now, and it’s on their garage systems. But what do you do with it?

Knowing the number is the start, not the end. There are another two or three measures that come out of it, and you need to understand what each one is telling you about your business. That’s what we dig into on my finance course: why it matters, and what you can do with it.

Recovery rate: the one most garages have never heard of

This one is crucial, and a lot of garages don’t understand it.

Not every hour is sold at the full retail rate. You might have different labour rates for fleet, or for certain customers. So your recovery rate, the average you actually get back per hour, is lower than the rate on your board. And that has an impact on what gets back into the tin, as I call it. The cash till.

If we don’t understand our numbers, what our numbers are telling us, where the numbers come from, we will not be able to make a sensible commercial decision to drive our business forward.

Andy Savva

A strategy for every number

These KPIs are the basis for understanding how your garage works. But knowing them isn’t the job. The job is to target a specific strategy at each one, to improve it.

That gives you focus. And it shows you the small improvements, across all of them, that add up to a stronger business.

What to do this week

• Find each of these numbers for last month. Some, like average invoice value, will already be on your garage system.
• For any you can’t find, such as recovery rate or cost of doing business, make working it out your first job.
• Pick one KPI, write down what it’s telling you, and decide one thing you’ll do to move it.