The “General Manager's Boot Camp” is a week-long class conducted by Jeff Sacks and myself. Our goal and motto for this dealership management class is “Shaping Our Future Leaders.”
While much is devoted to helping attendees recognize and then act on gross opportunities within the individual operating departments, much of our time is devoted to helping enlistees focus on specific “big picture” perspectives.
There are three areas we call “The Big 3 Challenges”: Personnel Productivity, Expense Management/Control and Asset Management.
If you stay on top of these, you will succeed in the car business and other businesses, too.
Keep focused on employee productivity and the need for certain minimum departmental performance standards in your organization. If you fall below these standards, this is a symptom of a deeper issue.
The formula for determining your starting point is as follows: Take the total gross from the individual departments each month, and divide that number by the respective department's employee count.
Track this number monthly to monitor your progress toward achieving your standard, share this with your management and post the most recent 12 month's results in a conspicuous location so this number is constantly visible.
Ensure your departmental employee counts are correct using full-time equivalencies. Most likely, the departmental count will end in a fraction due to the allocation or departmental sharing of employees, e.g., your cashier and telephone operator.
As a reference, the following are the May 2006 YTD averages from the NCM database:
|Combined New & Used Dept||$10924||$10033||$15911||$|
Expense control/management requires education and discipline. There are two types of expenses, essential and non-essential. If it is an essential expense, what actions can be taken to reduce it?
Do you have an approved vendor list and, if so, are you soliciting bids on an annual basis to ensure you are receiving the best-available pricing and service? Do employees purchase only from approved vendors using company issued purchase orders?
Each expense requires a budget based on a specified percentage of gross. Track each expense category monthly using the expense-trend analysis available on your dealership computer system.
In addition, use sub-accounts to identify each component of the expense category. As an example, don't just accept that your policy expense is traditionally high. Break down the account by department by commonly included components such as customer accommodation, rental cars, lot damage, etc.
Hold monthly dedicated expense meetings with your management team and payables person to discuss specific controls and to provide education.
Many dealers routinely hold “payable parties” at which managers are given all of their department's payables. Prior to the dealer signing the check, each manager must sign the invoice approving payment. This is an excellent way to educate your personnel.
The last of the discussed three challenges is asset management. First, there must be dealership goals regarding days' supply levels. Levels must extend beyond vehicle and parts inventories to include other inventories such as work in process, contracts in transit and accounts receivables.
Suggested days' supply levels are:
|Asset||Days' Supply Goal|
|New Vehicles||45 to 60 days|
|Used Vehicles||30 days|
|Parts Inventory||55 days|
|Contracts in Transit||3 days|
|Work in Process||3 days|
|Warranty Receivables||10 days|
|Parts & Service Receivables||15 days|
Dealers and their personnel' who stay focused on these three areas of business, will be well on their way to obtaining desired results.
Tony Noland ([email protected]) is the president and CEO of NCM Associates, Inc.