Each year I dedicate my November column to advice on how best to forecast for the upcoming year. A detailed forecast as well as a sound business plan will help you attain desired levels of success.
From a process standpoint, I suggest taking your team to an off-site location for the forecasting exercise. By being away from everyday interruptions, they can totally concentrate on the task at hand.
With all team members present, outline the plan for the day and then begin the process with a comprehensive review of your 2004 results.
If there are areas where you may have fallen short in 2004, and changes need to be made, list those items on a flip chart.
After the review, revisit the items you've identified on the flip chart as needing change. Discuss reason changes need to be made and what created the situation. Openly exchange ideas to reverse the trend.
There are two forces — internal and external — that you must deal with. External forces such as the economy, interest rates and fuel prices are beyond our control. Internal forces are within the control of the dealership personnel attending this meeting.
One process many dealers find useful is having the management team identify five internal items or areas where they can make a difference. These are key success criteria to which the team will be held individually accountable.
Examples for your variable managers might include such areas as proper staffing levels, staff turnover and sales personnel productivity.
Examples for your fixed managers might be service advisor productivity and facility utilization. Establish industry-accepted best practices and include these in all discussions relating to individual performance goals for department managers.
After the review and discussion of the key success criteria, the variable managers and fixed operations managers break into separate groups to establish their forecast. Once the teams have agreed on the numbers and, equally important, the plan of action required to accomplish the numbers, everyone should reassemble and give verbal reports. Then your comptroller should total the forecasted numbers. Obviously, after reporting and discussing the numbers, the dealer principal retains the right to make adjustments.
The true benefit of this exercise is having total buy-in from your management team. That fosters a commitment from each person to accomplish the goals. This exercise is the first step toward a successful new year.
To assist you in planning and forecasting for 2005, the following are selected benchmarks from the NCM client database:
| Category | Domestic | Regular Import | Highline Import | My Dealership |
|---|---|---|---|---|
| Productivity — Gross Per Employee Avg Mo | $7,438 | $8,643 | $12,577 | $ |
| Productive Employee % Total Employees | 55.1% | 57.2% | 52.2% | % |
| Gross PNVR Excluding F&I | $1,472 | $1,300 | $3,402 | $ |
| Net F&I Pre-Compensation PNVR | $796 | $727 | $788 | $ |
| Gross PUVR Excluding F&I | $1,671 | $1,490 | $2,368 | $ |
| Gross PUV Wholesale | $35 | $69 | $101 | $ |
| Net F&I Pre-Compensation PUVR | $685 | $711 | $800 | $ |
| Advertising As % Retail Gross New | 12.8% | 13.3% | 6.7% | % |
| Advertising As % Retail Gross Used | 14.7% | 15.5% | 10.6% | % |
| Floor Plan Int. (Net)- As % N/V Retail Gross | -7.0% | -2.2% | -4.2% | % |
| Total Expense as % Total N/V Gross | 82.5% | 76.3% | 56.9% | % |
| Total Expense as % Total U/V Gross | 80.0% | 82.1% | 83.0% | % |
| Total Expense as % Total Parts Gross | 57.6% | 67.0% | 55.2% | % |
| Total Expense as % Total Service Gross | 85.7% | 74.1% | 76.0% | % |
| Total Expense as % Total Body Gross | 95.0% | 86.1% | 98.1% | % |
If you have any questions or need clarification regarding any of the information, feel free to contact me. Good selling!
Tony Noland is the president and CEO of NCM Associates, Inc. He can be reached at [email protected].
