Most Kenyan garage owners know their monthly revenue. Very few know their monthly profit. The two numbers are completely different, and confusing them is why so many garages feel busy but broke.

Here is the framework.

Start with gross profit, not revenue

Revenue is what customers pay you. Gross profit is what is left after the direct cost of the work.

For a garage, direct costs are:

Parts used on jobs
Technician wages for time spent on jobs
Subcontractor fees (e.g., specialist machine work)
Consumables (oil, rags, cleaning supplies)

Gross profit = Revenue − Direct costs

A healthy garage runs 45 to 60 percent gross margin. Below 40 percent suggests pricing is too low, or parts cost is out of control, or technicians are not productive.

Then operating expenses

From gross profit, subtract operating expenses:

Rent
Utilities
Front desk and management salaries
Marketing
Software subscriptions
Insurance
Licences
Vehicle running costs (for courtesy cars or pickup)
Bank charges and M-Pesa fees

What is left is operating profit, or EBIT.

Then financing and tax

Subtract:

Loan interest
Asset hire purchase charges
Tax (corporate tax on the profit)

What is left is net profit. That is the number that is actually yours.

Common profit leaks in Kenyan garages

Five leaks account for most of the missing money:

Parts written off as used when they were not. Track this.
Wasted labour. Technicians working on the wrong car or idle.
Discounts given informally. Every discount reduces margin by the same percentage.
Rework. Every warranty repair is pure cost.
Bad debt. Customers who never pay, or pay 90 days late.

Fixing any one of these adds 3 to 5 percentage points to net margin.

Cash flow vs profit

A garage can be profitable and still run out of cash. The two killers:

Slow-paying insurance customers
Too much cash tied up in inventory

If your receivables average 60 days and your payables are 30 days, you are financing your customers’ business with your own cash.

Track cash flow weekly, not monthly. Even a simple spreadsheet with opening balance, receipts, payments, and closing balance tells you what you need to know.

A monthly routine

On the 5th of each month:

Close the previous month’s books
Run the P&L
Compare to last month and to budget
Pick one number to improve this month

Track the improvement. Over a year, small changes compound.

How Gariclaim helps

Gariclaim generates a P&L, balance sheet, and cash flow statement automatically from your job cards, invoices, and payments. No spreadsheets, no month-end panic.

Because parts, labour, and expenses are all logged in the system, your profit number is real, not estimated.

Start a free trial and finally know your real profit.

Calculating Garage Profitability: A Simple Framework