Perception Or Reality: How Much Do You Really Know About Your Dealership?

August 2006, Auto Dealer Today - WebXclusive

by Jeff Smelley - Also by this author

Everyone has a system in place whether they intended to or not. Was your system chosen wisely or did it evolve over time into something that has taken a life of its own? Before you answer the big question, let’s look at some actual recent examples of things some dealers found that even you may find surprising.
  • Dealer # 1, when reviewing his BHPH portfolio, found that the contract being used did not conform to his perception of BHPH deal structure. That late charges were not handled according to the contract terms and that the stated grace period was longer than desired. We simply read his contract and he found glaring differences between his perception and the reality of his contracts.
  • Dealer # 2, when asked how much of his inventory was not paid for, couldn’t answer the question without hours of work to piece together an approximate answer. The short term financial liabilities of his dealership were a virtual unknown.
  • Dealer # 3, found that their method of earning interest was inconsistent with the terms of the contract used for in-house financing when a customer questioned his payoff amount. The expense of correcting this inconsistency far outweighs the time required to choose an appropriate contract for his intended purpose.

None of these dealers found reality to be consistent with their perception. Now that the perception is shattered these dealers are addressing their problems. Look around, inspect the details and find out if your perception is in fact your reality. If you are uncomfortable doing such a reality check, hire a consultant. An independent party will not overlook items due to assumptions or preconceived notions.

You hire CPAs and lawyers for their expertise and because the benefits they provide you outweigh the probable cost of not retaining their services. The same is true for a quality dealership consultant.

Direct your consultant to review ALL aspects of your dealership and identify any questionable processes, practices or systems. Expect a written report of each area: sales, service, finance, accounting, procurement, management, customer relations, etc. Take nothing off the table for discussion. Get a written report of the findings and be prepared to address those findings.

Now that you have your dealership analysis, you must choose to change your reality or your perception item by item. This part of your process must be done pragmatically and without emotion in order to achieve the greatest benefit. Don’t get bogged down with the Paralysis of Analysis by trying to determine the best place to start making changes. Choose a starting point and commit to addressing every item. The commitment to addressing all items assures that you will complete the process; therefore where you start is irrelevant.

I know what you are thinking. To whom, in my dealership, can I delegate this job? No one! You are that person. You can delegate specific tasks to your staff but you must make the final decisions. Delegation should be limited to research and identification of possible solutions so you may make an informed decision. Research performed by staff is educational and clearly identifies the details to prepare them to better perform their jobs going forward. You should also find that your more knowledgeable staff will now bring things to your attention earlier in the future before a potential problem is created. Over time, your business will change due to market conditions, government intervention or other economic influences. Your business is an ever evolving entity responding to a multitude of outside influences. Involving staff in the fact finding necessary to resolve problems during this project will help assure that your perception remains tied to the reality as these changes occur.

You MUST choose to act, but remember that no decision is in fact a decision.

Vol 2, Issue 4

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