Each month, dealers and their managers conduct a review of the previous month’s business.
Included in this review are departmental gross, expense and net profit, as well as their individual contribution to the total dealership. Most meetings also incorporate a discussion of the subsequent month and address any changes that might aid the bottom line.
For many managers, these monthly review meetings are the only accounting and fixed-operations exposure they receive.
Consider incorporating formal business management training as an agenda item in these meetings to take your operation to the next higher level.
Most general managers and sales managers have worked their way into their positions due to their sales success. While conducting hundreds of seminars, one of the most common requests I’ve had from these managers is their desire to gain a better understanding of fixed operations and accounting.
I can tell you from my personal experience of not knowing what I didn’t know, I became a more effective and successful manager when I had an understanding of how all the pieces fit together.
Most of my initial education of the total dealership operation came from peers who from time to time were willing to take a few minutes to explain the inner workings of their departments.
During our General Manager’s Boot Camp, we began each class with an accounting review.
Jeff Sacks explained that our goal was not to make the attendees accountants, but to help them understand that the financial statement was for the most part simply a spread sheet detailing individual departmental performance based on monthly and annual profit and expense.
It was amazing to watch the lights go on when the students gained an understanding of how the information was presented.
Too often, our managers are afraid to ask questions or admit they aren’t familiar with something or some part of the operation because they don’t want to look bad. As a dealer operator, you will raise the professionalism of your organization if you provide this knowledge to your team members.
Would your management team not benefit from some peer training? For example, during your review, consider the benefits of having your comptroller take 30 minutes to show the departmental managers where their results are on the financial statement, and how their numbers affect the total dealership.
Rather than trying to cover the entire fixed operation in a monthly review meeting, break it into sections.
An example for the initial introduction is an explanation of the margins, how they are created and the general factors that can impact them.
Again, from a personal standpoint, once I could relate parts, body and service processes to those I used in sales, the lights began to turn on.
For example, if my service customer-pay margins are too low, it could be an indication of a pricing issue. If we often offer price discounts without having sufficient higher grosses to minimize the discounting impact, our overall margins will be below par.
It’s the same with our new- and used-car sales. Too many low gross deals impact our overall gross profit. This is just the symptom, not the illness. As we learn more about the symptoms, we can start diagnosing the illnesses.
Sure we need to be competitive in the market place, but we don’t have to discount each deal or repair order.
Do our results suffer due to a lack of service adviser training, or are we paying a specialist or higher skilled technician to perform work which could be performed equally well by a lesser skilled worker earning a lower wage?
One unexpected result I’ve experienced from these meetings is a gradual improvement in team work, communication and mutual support. Sure, there will be times when we have conflicts between departments. But having everyone understand the issues each of us face daily creates empathy. The entire organization benefits from that.
Tony Noland of Tony Noland & Associates is a veteran dealership consultant. He can be reached at tonynolandandassociates.com.