December 11, 2019
The new year is only a few weeks away and the days of Netflix and relaxation are quickly approaching. But before you check out for the year, read my four end of year tips for driving schools.
#1 – Take care of your team!
The end of the year is a great time to show appreciation for your team!
But what should you do for your driving instructors, management, office, and administrative staff?
At the VERY least, show gratitude by THANKING them for their amazing work. And don’t forget to take it a step further by sharing how much you look forward to accomplishing even more together in the new year.
With such appreciation for your team comes reflection. You might be wondering, “Should I give a bonus to staff?” If you can afford to, yes!
An Amazon gift card is an easy gesture to show your appreciation, or better yet, pull out cash and hand it out directly to your team with a smile at the end of year party. 🙂
Holiday parties are a fantastic way to tie up loose ends while encouraging staff to return after the New Year with enthusiasm to exceed last year’s goals.
End of year parties can be expensive, but even something low-key like having a nice lunch at the office for the whole staff goes a long way.
I’m a big believer in reviewing employee performance throughout the year and rewarding staff with a raise in Q4. Make sure to set a cap for instructor compensation unless they are taking on more responsibility beyond teaching students.
You don’t want to run the risk of overextending your budget. Unfortunately, it does not make sense to give annual raises for individuals doing the exact same job year after year.
For example, if you have a manager who is responsible for 10 instructors and another only mange’s 5 instructors, the manager with a heavier workload should be compensated accordingly.
Keep in mind most instructors can only teach one student at a time and their ability to “automate” or be more efficient to “take on more” is limited, so their compensation ceiling needs to be set.
Ultimately, payroll is your biggest expense (and always will be), so be careful on how much you pay instructors especially.
#2 – End of year tax tips
Are you going to make around $321,000 this year in profit? If so, I highly recommend buying a few cars before the end of the year to get under $321,000. The federal tax rate at $321,000 (current rate for married filed jointly) is 32% and only 24% under $321,000.
This could save you $25,000 alone if you were to fall below $321,000 in profits before the end of the year.
You can also look into contributing to your retirement account and you have until April to make these contributions. Please do not bank on the “my business is my retirement” mentality and skip this step annually.
As for Charitable Contribution Deductions – make the last 1 or 2 stops at Goodwill and donate to your favorite causes. It’s a win-win for everyone!
#3 – Review your risk management procedures
Last month a friend of mine was scammed out of a whole $800. 😞 She had the misfortune of being contacted by someone impersonating her boss and texted them $800 worth of gift cards.
It’s sad to say, but these incidents are becoming the norm and small businesses are major targets due to a lack of awareness and an “it won’t happen to me” mentality. But in reality, small businesses are the easier targets.
So, what should you do?
#1 – Create a standard operating procedure for risk management and update it every year around the holidays.
#2 – Add Two-Factor Authentication to your most important logins (bank, email, Apple iCloud, etc..). Doing so creates an extra identity verification step. If ever your username/password is compromised, then this will significantly decrease the chances of someone accessing your accounts.
#3 – STOP sharing passwords with your staff. For every account, everyone should have their own username and password. Sure, it’s easier to just “share logins” and it’s also cheaper, but it’s risky to do this – especially with the areas of your business that are the most important.
#4 – Make sure every login has a unique password. I know it’s easier to have email@example.com and password be smith for everything but that’s just asking for trouble. If your information is compromised via one of the famous “Data breaches i.e., Equifax,” someone can now login to all of your most important accounts.
#5 – Follow these same steps for your personal accounts too.
There is WAY more to write about here and I’ll be creating an in-depth blog post on this topic soon! 🙂
#4 – Set goals for next year!
How do you know if you have arrived if you’re not sure where you’re going? The ideas for goals are endless but you should be sure to include the following:
#1) Sales Goals
A single driving school location can make $500,000 in one year. Don’t worry if you’re only at $50k (or less) per year though. Rome wasn’t built in a day and great driving schools aren’t either.
Below is a breakdown of a typical driving school’s sales for a single location that averages $500,000 in annual sales.
- January – $30,000
- February – $35,000
- March – $40,000
- April – $50,000
- May – $80,000
- June – $70,000
- July – $45,000
- August – $30,000
- September – $25,000
- October – $25,000
- November – $40,000
- December – $30,000
Set your monthly sales goals according to the ebb and flow of your business. Don’t make them too lofty, but don’t make them too low either.
At the end of each month, see if you’ve reached your goal to increase driving school revenue.
In order to analyze your overall progress, you need to be able to track your monthly sales (compared to the same time period of the previous year) to truly evaluate results.
#2) Profit Goals
A typical profit for a driving school can range from 15-18%. I’ve seen profits in the 25% range but recommend being around 18% and instead of using any extra profit to take care of your staff since you can’t grow without more people. 🙂
So, if you’re earning $500,000 in sales at an 18% profit margin that would be equal to $90,000.
Keep in mind, most driving schools are seasonal so you might lose money for some months and make a profit of 40%+ other months. What’s important is to track profit annually and to set your goals based on what your profit was for the previous year.
If your profit for this year is only 8%, perhaps it’s best to set a goal of 12% (to be realistic) instead of blindly shooting for 15+%. Also, just because the profit goals for the year are critical does not mean you should ignore monthly profit.
I still highly recommend reviewing your profit each month and comparing it to the exact month from previous years to ensure you on track for annual goals.
I’ve written a great post previously on setting goals and definitely recommend you read over it.
The end of the year can be a busy time of year personally and professionally and hopefully, you can slow down and follow of few of my tips below.
- Take care of your team!
- End of year tax tips
- Review your risk management procedures
- Set goals for next year!