Article

Find Lost Profits: Mind Your Dealership's Operation

August 2006, Auto Dealer Today - WebXclusive

by Jeff Smelley - Also by this author

Increasing profits is not always a matter of increased sales, higher grosses or more add-on product sales. Many dealers squander profits daily, as they seek to increase sales, because they ignore their internal operations and procedures. Inefficient daily operations in a dealership cost money, REAL MONEY, and unlike a missed sales opportunity, poor dealership operations will continue to cost money until fixed. Find the leaks, weak spots and inefficiencies, fix them, and you will realize greater net profits.

Dealership operations may be defined as any administrative tasks required to pay bills, track inventory, process titles, comply with government reporting, make tax deposits, collect payments from customers, scheduling and paying employees and much more.

Be proactive in your dealership by taking the time to review with your staff how they do their jobs and what obstacles they encounter in completing them. Meet with the staff from each department in your dealership and ask what they need to improve their work flow. Do they have the information they need when they need it? Where do they think improvements can be made that will save money and eliminate problems? You accomplish several important things during this process. You communicate your desire for efficiency, accountability and responsibility. You demonstrate that you can listen and that you are approachable by any employee at any level. You identify improvements to be made. You establish that everyone and every function in your dealership are a part of your success.

Assess the information gathered from your meetings and piece your puzzle together. Does accounting spend time chasing information because paperwork is incomplete or untimely? How do you know that all parts purchased are billed on repair orders? Are you meeting deadlines for purchase discounts programs or are you paying unnecessary penalties? Are service customers greeted with positive anticipation because your sales department informs the service department of promises in a timely manner and with respect for the service work load? These are just a few questions to ask when viewing your dealership puzzle to see that each piece of the puzzle fits together well.

Now that you have identified problem areas, what do you do about it? Regardless of the problem identified you can apply a simple methodology to solving it.

First clearly define the problem and the objective of the solution. If your problem is a lack of adequate controls, what controls need to be in place? Are we in need of cash control, inventory control (parts or vehicles), expense control, information control or work load control? Next write down all your ideas as to how to resolve the issue and achieve your goal. Then rank your ideas from the most likely resolution to the least likely resolution. Analyze each potential solution for effectiveness and to be sure it is not unnecessarily burdensome. Keep in mind that the best solutions are most often the simplest solutions. Solicit your employee’s ideas throughout this process. They are often your best resource in finding and testing possible solutions. Implement the necessary change based on your analysis. Employee involvement in the resolution process will smooth the implementation and lessen resistance to the transition.

An operational review of your dealership is most certainly not the sexiest or most exciting function you will undertake. It is, however, critically important to improving how you conduct business. It is an ongoing process. Be diligent, be persistent and realize that, like other aspects of your business, the more you perform these operational reviews the easier they become and the better your dealership will function. Less waste equals Higher Net Profits and you, the dealer, set the standard for everyone in your dealership.

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