It is time to take a strategic look at our 2006 business plans. Obviously 2005 has seen its share of challenges. In 2006, well, who knows?
I foresee cost increases in the form of higher interest rates, a continued upward pricing pressure on health care and other employee benefits, increased business insurance costs and rising wages.
Consumers will continue to feel pinched by rising fuel prices as well as increases in home heating costs and essential consumer goods.
One resource I have found helpful is the Summary Report prepared by the Federal Reserve Board. It is an overview of economic conditions by district. It could help as you begin your forecasting process. This report can be accessed online at www.federalreserve.gov/FOMC/BeigeBook/2005.
A detailed forecast and sound business plan will help you attain desired level of success. Take your management team to an off-site location for the forecasting exercise. By being away from everyday interruptions, your team can focus better.
Begin with a review of your 2005 results. If there are areas where you fell short and changes need to be made, list those items on a flip chart. After completing the review, revisit the flip-chart. Discuss why changes need to be made and what created the situation. Openly exchange ideas to reverse the trend.
A process many dealers use successfully is to have each member of the management team identify five items or areas where they can make a difference and be individually accountable.
Examples for your variable managers might include proper staffing levels, staff turnover, sales personnel productivity and minimum production standards.
Examples your fixed managers might consider: monthly customer traffic, repair order counts, technician and service advisor productivity and facility utilization.
It is important to remember industry-accepted best practices and include these in all discussions relating to individual performance goals.
After review and discussion of the key success criteria, the variable managers and fixed operations managers break into separate groups to establish their forecasts.
Everyone should reconvene once the teams have agreed on the numbers and, equally important, a plan of action to attain the numbers.
Each departmental manager should give verbal reports outlining their business plans and finally their forecasts. Once all plans are presented, your comptroller will total the forecasted numbers.
Obviously, after reporting and discussing the numbers, the dealer principal retains the right to make adjustments.
The true benefits of this exercise are: 1) having the total buy in from your management team and 2) improving the individual levels of cooperation between managers by virtue of their involvement in the planning process.
To assist you in planning and forecasting, below are selected benchmarks from the NCM client database:
Should you have any questions, please contact me.
Tony Noland ([email protected]) is the president and CEO of NCM Associates, Inc.
|Category||Domestic||Regular Import||Highline Import||My Dlrshp|
|Productivity - Gross Per Employee Avg Mo||$7414||$8604||$11998||$|
|Productive Employee % Total Employees||55.6%||58.2%||50.8%||%|
|Gross PNVR Excluding F&I||$1536||$1311||$3426||$|
|Net F&I/Access Pre-Compensation PNVR||$858||$792||$970||$|
|Gross PUVR Excluding F&I||$1879||$1648||$2397||$|
|Gross PUV Wholesale||$78||$110||$143||$|
|Net F&I/Access Pre-Compensation PUVR||$735||$795||$892||$|
|Advertising As % Retail Gross New (Net)||13.3%||13.7%||6.4%||%|
|Advertising As % Retail Gross Used (Net)||14.2%||15.3%||11.1%||%|
|Floor Plan Int. (Net)- As % N/V Retail Gross||1.6%||0.7%||-1.4%||%|
|Total Expense as % Total N/V Gross||87.9%||79.0%||60.8%||%|
|Total Expense as % Total U/V Gross||77.8%||77.9%||81.8%||%|
|Total Expense as % Total Parts Gross||58.6%||64.9%||55.2%||%|
|Total Expense as % Total Service Gross||86.5%||76.4%||77.3%||%|
|Total Expense as % Total Body Gross||94.9%||87.0%||96.1%||%|