As businesses, we are all facing unprecedented times.
Look at how business works. You buy land and building. You buy stuff to fill it. You pay employees, you pay taxes, insurance, utilities, everything that comes with keeping the doors open is a cost, and businesses pay these costs which are higher than what individuals would have to pay.
So how do they make any money and/or stay in business?
They pass the costs on. Place I used to work at had a $125,000/mo budget. That was what was required to see a 3.25% margin. Ideally we'd be more than that, and for the 2 years I was managing, it was, with the exception of 3 months. 2 in the dead of winter, and one where the business moved to another building, most of the month was shut down trying to ready things to be moved. Moving an entire business SUCKS!
--BUT--
every so often, the utility rate changes (always goes up). Mortgages on commercial properties are a little different than single-family residential, so that sometimes goes up. Rent/lease always goes up. Utilities never go down. Gotta pay your employees and give them a little incentive to stay, especially now. The list goes on and on and on. Insurance goes up, a lot, but not that often.
The trick is to figure out how to offset those costs by selling goods and services to the public. The public pays those bills when they're buying from your dealership. So there's another dealer across town that has a $100/hr shop labor rate, and they work on everything. Or they sell parts for everything. You have to compete with them, but you can't because your overhead is a little higher. So what do you do? You tack on little fees here and there. Shipping costs. Delivery costs. Surcharges. Document fees. Processing fees. This fee, that fee, a fee to use their restroom, you get the idea. Now, once you figure in the budget projections, you're staying above water, but still have a less expensive product or service than the other place.
ALL dealers are charging environmental fees, it's on every single repair order now. It's generally a flat fee or a flat percentage to a maximum. This covers the costs involved in shop supplies, such as but not limited to, rags, towels, rugs, oil dry, brooms, dust pans, shop gloves, or whatever. Stuff costs more now than it did 10 years ago, and YOU, the customer, are paying it whether you like it or not. It's part of doing business.
Having run a service dept, and a parts dept in a busy multiple product line dealer, I can attest to all these little costs that add up. It's very eye opening. And, as one who's run a business on their own, I can attest to how commercial properties (businesses) are taxed, fee'd, and charged differently than residential. Many compare their utility bill to a business, it can't be that bad can it? Out here, the commercial rate is almost 100% more than the residential rate....just to give you an idea. And costs, as I said, never go down, always up.
Just wages alone. You have two techs, you better pay them good. If you don't they're gonna load their stuff and be gone with little or sometimes no warning, leaving you with a bunch of mad customers because your shop can't keep up. Think about that. You pay 'em $20/hr (to throw a number out there, ain't too many who'll work for $20/hr now unless they're entry level). 160 hours a month x $20 = $3200 x 2 techs = $6400/mo-that's JUST wages, not counting any commissions, any insurances, all that. There are many "hidden" costs involved in having someone work for you, often a $20/hr wage costs the business closer to $30/hr by time they figure in the actual costs (taxes insurance, fees, etc)
I could get political, but won't. Just always ask yourself why the cost of stuff goes up. DO I agree with any of it? Not a snowball's chance, but it's the unfortunate truth of today's capitalist economy.
