Analyzing a P&L doesn't need to be complicated
The more reps you get, the easier this becomes
Here is my simple P&L review process:
The more reps you get, the easier this becomes
Here is my simple P&L review process:
This P&L is for a single auto repair franchise. 1 of 32 locations
We setup 7 major expense categories
1. Direct Labor
2. Indirect Labor
3. Shop Operations
4. Sales Related
5. Labor Related
6. Occupancy
7. Administration
By grouping into buckets it's easier to shrink the P&L
We setup 7 major expense categories
1. Direct Labor
2. Indirect Labor
3. Shop Operations
4. Sales Related
5. Labor Related
6. Occupancy
7. Administration
By grouping into buckets it's easier to shrink the P&L
Each category has 4 to 7 sub accounts, for example:
Direct Labor has wages, payroll taxes, workers comp & PTO
Sales Related has royalties, credit card fees, local advertising, & fleet discounts
Labor Related has health insurance, 401k, uniforms, & training
Direct Labor has wages, payroll taxes, workers comp & PTO
Sales Related has royalties, credit card fees, local advertising, & fleet discounts
Labor Related has health insurance, 401k, uniforms, & training
Our benchmark is 15% net margin
Our best stores are 20-25% 🖨️ 💵
Our worst stores lose money 🔥 💵
The simple model:
+ 100% Sales
- 23% COGS
- 62% Expenses
= 15% Net Profit
Our best stores are 20-25% 🖨️ 💵
Our worst stores lose money 🔥 💵
The simple model:
+ 100% Sales
- 23% COGS
- 62% Expenses
= 15% Net Profit
In March we nailed it
Sales: $104k (nearly a store record)
COGS: 20% (2.6% better than model)
Expenses: 61.6% (0.4% better than model)
Net: 18% (3% better = 2.6% COGS + 0.4% expenses)
Sales: $104k (nearly a store record)
COGS: 20% (2.6% better than model)
Expenses: 61.6% (0.4% better than model)
Net: 18% (3% better = 2.6% COGS + 0.4% expenses)
In June we only had a 6% net margin, 9% off
Sales: $80k
COGS: 22.7% (right on target)
Expenses: 71.5% (9.5% higher than target)
Sales: $80k
COGS: 22.7% (right on target)
Expenses: 71.5% (9.5% higher than target)
A lot of our expenses are fixed
Employees have guaranteed wages
Rent, insurance, utilities don't change much
Sales related (mainly royalties) goes up & down with sales
Employees have guaranteed wages
Rent, insurance, utilities don't change much
Sales related (mainly royalties) goes up & down with sales
The more you sell the more you can "dilute" your fixed costs, driving them lower
$65k - 81%
$80k - 71%
$84k - 69%
$104k - 61%
For this store to hit 15% net we need a minimum of $100k per month in sales.
Anything less we have virtually no chance
$65k - 81%
$80k - 71%
$84k - 69%
$104k - 61%
For this store to hit 15% net we need a minimum of $100k per month in sales.
Anything less we have virtually no chance
April shows what happens if you don't sell enough
COGS was good but expenses don't change much
July we'll do close to $100k, right back on track
COGS was good but expenses don't change much
July we'll do close to $100k, right back on track
Assuming our COGS & wages percentage stay in line
Increasing sales dilutes fixed expenses
Increasing net margin
At $125k sales we'd earn 20%
At $150k sales we'd earn 23%
Increasing sales dilutes fixed expenses
Increasing net margin
At $125k sales we'd earn 20%
At $150k sales we'd earn 23%
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We've rolled up 32 franchise doing $40M/yr
Check out my newsletter on buying & scaling franchises
beers.beehiiv.com
We've rolled up 32 franchise doing $40M/yr
Check out my newsletter on buying & scaling franchises
beers.beehiiv.com
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