Get paid for your waste oil
Over the past 30 years, we've watched waste oil go through various legal and economic changes. What we once sold to be re-refined became a liability we paid to have hauled away.
Recently, with oil prices rising, several companies have been bidding to purchase waste oil. Some pay up to 25 cents per gallon. Although this doesn't seem like a lot of money, you can save thousands depending on your volume.
If you are not already receiving money for the “black gold” you should be!
How to generate a healthy gross profit %
How do you determine the amount of mark up percentage needed to generate an acceptable gross profit percentage?
Let's assume we have a part with a cost of $5 and want to realize a 30% gross profit margin when we sell it. Do we simply take $5 times 130% to arrive at a selling price? The answer is no. So how do we determine the selling price?
Knowing that our part has a cost of $5, we would divide the $5 by the difference between 100% and our desired gross profit margin, in this case 30%. Thus, 100% less 30% leaves 70% as our divisor. So, we divide the $5 cost by 70% to arrive at a selling price of $7.14. Our gross profit is $2.14, which is the selling price less cost, and the resulting gross profit margin, which is the gross profit divided by the selling price, is 30%, which was our target.
Knowing the difference between markup percentage and gross profit percentage will help keep those margins and profits at desired levels.
Challenge your used-car manager with this data
How do you look at net profit in the used-vehicle department? Do you include income from the F&I department? Many factory statements do.
If you have a strong finance department, it may cause the used-vehicle manager to relax on each deal and not get he extra gross.
Next month subtract out the finance income from the department net profit. Don't be surprised if you have a negative number. Divide this result by the number of retail units for the month.
Show your results to the used-vehicle department manger and challenge him or her to increase the gross average by that amount. Your profit will quickly increase.
How to reach benchmark status
Webster's defines a ‘benchmark” as a standard or point of reference in measuring or judging quality or value.
Years ago, NCM recognized the need for a standard or point of reference with regard to the automobile industry based not on guides, but on actual performance. NCM developed real-time benchmarks for the industry.
This is how they are calculated: Based on certain criteria, the top performers by franchise are chosen and entered into a database. The average of this group becomes the benchmark. How then can you incorporate benchmarks into your operation? First, examine your operation compared to your current franchise benchmarks and determine areas of opportunity that might exist. Once you have identified these opportunities, you can begin improving the level of performance and your move toward attaining benchmark status.
Money-making minutes is provided by NCM Associates in conjunction with the Automotive Satellite Television Network (ASTN).