Key #4 True Net
Category: Gross Profit
For this key number, we want to know what percent of total sales goes to the owner – including both net profit and the gross payroll that goes to him or her.
Highlight
Last month Acme Auto had total sales of $50,000.
Total net profit plus owner’s gross pay was $13,000.
$13,000 ÷ $50,000 = 0.26
So, our key number is 26%
When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 20% and 25%.
Definitions
Gross payroll:
Total regular pay before anything is deducted. Does not include any benefits or non-regular compensation.
Total sales:
Includes sales of all parts, shop supplies, labor, sublet, and tires.