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The biggest thing that keeps business owners up at night is this question of how do I make more money? Like I'm running my business every day. I'm in the thick of it and I look at the numbers and I'm just not taking as much money to the bank. And I know exactly where you've been. I've been in business for almost 10 years now. I've built a company, we do over $50 million across over 35 auto repair shops. I'm really good at taking complicated things and breaking them down. So in this video I'm going to give you this template. I'm going to show you how it works so you can plug in your numbers and you can figure out what lever that you need to pull in your business to add more bottom line profit. Today. The things that we're going to go over don't require to move mountains. They don't require you to buy more locations or necessarily like hire any more people or spend any more money. You are sitting on a pile of diamonds. You just have to break through to get it first. As an example, just to show that like I not full of it here. For those who don't know me, here's a P and L of one of my locations. Looking at the last couple quarters through July and this was a location that was struggling. Quarter four of 24, we did $192,000 in revenue. @ the end of the day we lost $6,000. Quarter one, we got a little bit worse and we lost $11,000. And then we finally made the changes where you need to. And I'm going to talk about some of those changes that we made. Quarter two, $350,000 of revenue, we made $71,000 in quarter three, $64,000 of profit out of that single location. And you know, we're continuing kind of at, at this pace. And so this question is for all of you who are in this phase, right where I was, right where this store was, what do I need to do to get it to this level? Right? This is the dream. I've been sold. This is where my friends are at, this is where I should be at and, and I'm not there. But I don't know what to do. So let's fix that right now. So the first thing I want you to do is in this, you need to think about everything your business comes down to percentages. I think of everything in percentages. In my mind I'm like a store should do at least $125,000 in revenue and I want to make 20%, which is $25,000, which is pretty much exactly kind of where this store had that quarter. Like it is totally possible. Need to think about like this pie, right, this percentage pie to say, where are you currently at? If I went back to this numbers, I said, where is my P and L today in terms of my cost of goods, which is what I'm selling to customers. So currently I'm at 27 and a half percent because that's pretty much if I average these two together, 27 and a half. You have to know that number. Then it's your payroll number. Right? This is the second lever is payroll is going to be the largest expense for any service based business. What is your total payroll cost? For me, when I go in here, I break it out direct labor and indirect. I'm at 30% and a half. I'm at 30.8. So whatever, I put 30% here. If you want to include like payroll taxes and all that other stuff in there, you can just make sure it's like apples to apples. When you're looking at it the other way. Then you've got variable costs. So every business has a variable cost that is tied to delivering the sale. For franchises like me, it's a royalty. We have to pay a royalty. It's 10% almost on every dollar, whether I'm doing $1 Million or 10 Million. You've got credit card fees two and a half, 3% on that. You may also have some variable rebates. So we get rebated back on certain things that are volume related. So I put all that into there 13%. And then you've got your fixed cost. All the money is made in terms of diluting your fixed costs. I look at mine and say, all right, well, I'm at 31% here, fixed costs, and I'm at 36% here. So like if I average them together, I'm at 33. So 33 and a half all in. If I was to examine my P and L through my model, I'm at 104% cost, which means I'm losing 4%, which lines up very unfortunately very well with my loss of somewhere in there. And we're doing about 210 customers. Our average sale per customer is about $300. Average revenue 63. The first thing you have to do is just think about what percentages do these need to be in order for me to be left with 20% at the end. The pie is only so big, so we got to break it Down. How do we get these? Number one, if you're in a franchise, you can talk to other franchisees who just ask them, like, what's your cost of goods percentage? What's your payroll percentage? If you have stores that are performing, look at your best stores. If you own a single location, look at your best months. Like, you need to try to find a sample size to have some sort of direction on where these need to be. So for me, I want to be at 23%, because I know that's like my investors are. I want payroll at 25%. It's the number. I know what it is. That's what usually we're across. Not usually, but that's where we want to be. My variable costs, I could maybe get those down from 1%, but there's honestly not that much I can do just because of the model. And then finally, I need my fixed cost to be 20% of revenue. And if I can get my P and L and all of these four lines lined up, that gives me 80% total cost, 20% total margin, which is my target. Everything comes down to percentages. Think about your businesses in percentages. So then we need to reverse engineer this whole thing to see what it looks like, to see if this makes sense, because maybe what I'm talking about isn't even possible here. Let's just go through this. So what I want you to start is, is start with your actual fixed expenses. That is the first number that you're going to put in. So if I go back to my P and L, my fixed expenses, this is per quarter here. If I'm just trying to do a month, it's usually. That's kind of low. It's usually around 25,000. So I'm going to say 25,000. That is my fixed expenses. That's rent. That's my insurance, my utilities, my dues and subscriptions. It's all the things that are kind of fixed month to month. So then put that in and then put your target percentage. And then this formula basically just takes the sales and divides it by the target. So in order to dilute your fixed costs down to 20% from, you know, 33 or wherever you're at, I need 125 minimum. Like, if I only do a hundred thousand dollars, my fixed cost at $25,000, is it literally impossible to get there? Like, it's just math. If I can lower my fixed costs to $20,000 by maybe I'm overspending here, I could renegotiate there. My sales Requirement goes down. But let's say they're actually fixed. It is what it is. That's where you got to be. The rest is just math. So it's like we need 125. It's the only possible way we can get there. And then this tells us, well, what's cost of goods need to be, that needs to be there. Payroll needs to be 31,000. We're going to get back to that one in a second. Variable cost would be 15,000 and that would leave our profit target at 25,000 dol. This is what the model would look like. But the first thing you ask is, okay, if I need 125 and I'm currently at 63, what are the levers I need to pull to drive more revenue? There are leads. So you'll have leads that come into your business however you track this. Let me just highlight a few of these things. Yellow, because that means you can change them. So let's say we get 700 people call us every month wanting to get service. And let's say right now we convert 40% of those callers into customers. Like we get them in. Let's say we convert them. So that generates 280 customers. Our average estimate. So how much do we attempt to sell per customer is 800. And if we closed 45%, that would leave an average sale of 360, which would generate a hundred thousand dollars. But we need 125. That's a problem. So then you start to think of, okay, well what if I could generate 800 leads? What if we could convert at 45%? Boom, we got it 129. Right. What if instead of that we focused on our closing rate to say, hey, what if we could close at 50%? Still not there. These are what you need to look at is how much interest is coming into your business. So that's through marketing, through referrals, through outbound. What percentage of those people interested you convert into customers? You do that through training, phone training. Specifically in my business, whoever's like setting these appointments, how much are we estimating? So that's sales process. Because if I'm only estimating $600 a car, that's not enough. Like I'd have to be a super salesman in order to like we could figure out the math here somewhere around 65%. If I'm only estimating like the bare minimum versus maybe I'm estimate $1200 a car, maybe I'm only selling 35%, whatever, but I'm getting The working those. The levers that you got to pull on your sales. And then finally, payroll. We said we have a payroll budget of 25%, $31,000 for the month. That is what we could afford to spend. In order to make all the numbers make sense, I built here just like a basic model. Like, you would enter in here your numbers. But essentially, it's like the manager. Let's say we're paying him fourteen hundred dollars a month. And let's say we paid him 2% of sales. We don't do this. But for simplicity, for the month, he would make 1400 per week, times, whatever. And then he'd make 2%. He'd make 8500. Let's say we have an assistant manager. We paid a thousand plus 1%. And let's say we had techs that we paid $30 an hour. 25, 20, 20. And they worked. Let's just put in some other numbers here. 45 hours, 43 hours, maybe. Whatever, 40 hours. That's my model. My gross wages would be 32,000, but after you added payroll taxes, which I'm assuming we have in this case, I'd be at 36,000. I'd be at 29% payroll. My budget's only 31,000. I'm over budget by $4,700. The model is broken right now. This model is broken. Like, there's no way that if this is how we're paying our people and this is the plan, we're ever going to get to 25%. I have this little thing here of culprit. Like, these are the culprits that you want to look for when your payroll is too high. You want to look if you have a. A bad model or you're overstaffed. What if the model was like, our model, quote, unquote, is maybe we're paying too much for that assistant manager. Maybe it's like, all right, we need somebody at $800 a week, and we're paying three quarters of a percent. Maybe we need to not approve any overtime. Maybe we need somebody who's like, a little bit lower here or a little bit lower here. And then, you know, now we're there, right? I'm $700 off. I'm close enough. And that's the model. Maybe another version. And this is like what you would think through as you think your business is like, maybe I don't need this whole person. Maybe three guys can do it. And maybe I do approve that overtime. So now I have less people. But I'm paying each one of them more because they have more work to do and they're able to get it done. You're going to have to put in your numbers and figure this out, but I figured this was an easy tool. This is the way that I think through PNLs when I'm breaking down a single location. When we're looking at buying my entire portfolio of 35 locations, it doesn't need to be complicated. You don't need an mba. You don't need some crazy like spreadsheets. It's really as simple. Just think of everything in percentages. Because then if you know every single week, what was my payroll and what was my cost of goods, and if those numbers are not in line and your sales aren't in line, you know you're not going to make money. Like if you only do $80,000 in revenue and your payroll came in at 28% or 35%, you know you're going to lose money. There's no possible way because of math. Hopefully you find this helpful. And if you have any questions, I'm here to help. You can drop them in the comments and I'll see you in the next one.