Most Service Managers can’t read a financial statement. Yeah, you heard that right. The person running your Service Department, often the backbone of your Dealership, probably doesn’t understand the numbers that keep your business alive.
This isn’t just a problem. It’s a crisis waiting to happen, especially as Fixed Ops becomes more critical to Dealership survival.
The Scary Truth About Financial Literacy in Service Departments
Here’s a wake-up call for you: only about half of Service Managers have ever seen a financial statement. And of those, maybe 20% actually understand what they’re looking at. That’s like trying to fly a plane when you can’t read the instruments. It’s not going to end well.
We’re setting these managers up to fail. We’re asking them to win a game without telling them the rules. It’s crazy when you think about it.
Most Service Managers can’t read a financial statement. Yeah, you heard that right. The person running your Service Department, often the backbone of your Dealership, probably doesn’t understand the numbers that keep your business alive.
This isn’t just a problem. It’s a crisis waiting to happen, especially as Fixed Ops becomes more critical to Dealership survival.
The Scary Truth About Financial Literacy in Service Departments
Here’s a wake-up call for you: only about half of Service Managers have ever seen a financial statement. And of those, maybe 20% actually understand what they’re looking at. That’s like trying to fly a plane when you can’t read the instruments. It’s not going to end well.
We’re setting these managers up to fail. We’re asking them to win a game without telling them the rules. It’s crazy when you think about it.
The Sandwich Shop Example
Let me break it down for you. Imagine we’re opening a sandwich shop. We’d want to know our rent, our food costs, our profit margins, right? We’d use that info to set our prices and figure out how to make money.
Now, imagine trying to run that shop without knowing any of that. What are your chances of success? Pretty much zero.
That’s exactly what we’re doing with Service Departments all over the country.
The Perfect Storm in Car Sales
We’re heading into a time where Fixed Ops is going to be more important than ever. It already is, but it’s going to get even more obvious. New and used car sales are down. Inventories are piling up. Costs are going up, and profits are shrinking.
Fixed Ops is about to become the lifeline for many Dealerships. But here’s the problem: most Service Managers are still running things like it’s 1950.
How to Turn Things Around
So what’s the fix? It’s simple, but it’s not easy. We need to start working backwards from our goals.
The two most important things in any Service Department are making money and keeping customers happy. Period. But you can’t do either if you don’t understand the numbers.
If you’re just focused on making customers happy without watching the bottom line, you’ll go broke. And if you don’t understand the finances, you can’t create a customer experience that makes sense for your business.
Stop Playing Defense
Here’s what I see in most Dealerships: Service Managers aren’t starting the month with clear goals. They’re not saying, “We need to hit 30% net to gross and have the best customer satisfaction in the area.”
Instead, they’re just trying to keep the ship afloat. They’re playing defense when they should be on offense. In today’s market, that’s a losing strategy.
The Training Problem
Want to know why this is happening? It’s simple: we don’t train our Service Managers. All the training goes to the sales department, while Fixed Ops gets the leftovers.
I can’t tell you how many times I’ve heard, “We’ll get training once we hire a new Manager.” That’s backwards. Train the Manager you’ve got! You’d be amazed at how well people perform when they actually know what they’re doing.
The Financial Knowledge Gap
If you’re a Dealer or General Manager reading this, ask yourself: Does your Service Manager understand the financial statement? Can they tell you, right now, what your net to gross is? What about your effective labor rate (ELR)?
If the answer is no (and let’s be honest, it probably is), you’ve got a problem. A big one.
Time to Face Facts
Here’s the truth: Fixed Ops is about to become the make-or-break department for Dealerships. Some will make it, some won’t. The difference will come down to one thing: whether your Service Department is run by someone who understands the numbers.
It’s time to stop hoping for the best and start planning for success. That means investing in your people. Give them the tools and knowledge they need to win.
Wrapping It Up
I know this isn’t easy to hear. Nobody likes being told they’re doing it wrong. But if you want your Dealership to survive, you need to face facts.
Your Service Manager needs to understand financials. They need to know how to work backwards from goals to reality. And they need to learn this now, not when your Dealership is already in trouble.
If you’re ready to turn things around, if you want to see how to make these changes in your own Service Department, book a 15-minute strategy session with our team. We’ll show you how to transform your Fixed Ops from a money pit into a profit machine.
It’s time to stop playing defense and start winning. Are you ready?
