Article

The Almost Perfect Dealership

October 2006, Auto Dealer Today - WebXclusive

by David Keller, CPA, CFE - Also by this author

Don’t you wish you could conjure up the perfect dealership? Having the perfect staff would solve so many of your day to day problems, make your business profitable and allow you more time to spend with your family, friends and hobbies. Sounds good, but seems impossible.

It seems impossible because you consider it’s crazy to think you can get your business to fire on all cylinders at the same time consistently, day after day. I have to agree that most businesses can’t achieve this, but why not try to manage your business with the goal of always winning the race you are in, not just driving the laps?

To accomplish this you must pay attention to three very basic management principles: People, Accounting and Infrastructure.

To find the perfect people, you must always be in the hiring mode, continually striving to find the best person for each job in your dealership. Quality people always make the proper first impression. They must have very good work habits, including the willingness to put in the extra time to meet deadlines and goals when necessary. They have initiative and are self-starters.

Good employees don’t need to be reminded to give 100 percent effort all the time. They are focused, and it is inherent in their personality. You must constantly “raise the bar” of expectations so good employees are challenged. Settling for mediocrity allows personnel to get so complacent that they fall asleep at the wheel, impacting your business. Keep raising your expectation levels until you have eliminated all negative minded, uninspired, lazy individuals who are only concerned with themselves and not your business.

Accounting. Well, I hope you didn’t think you could get away with avoiding the numbers and details of your dealership. Believe it or not, you can have the best people everywhere in your dealership, sell lots of cars and still go out of business very quickly if you don’t have qualified personnel in your accounting department. They don’t necessarily need a degree in accounting, but they do need to have the ability to understand the different types of transactions that must be recorded each and every month. You must, as discussed in last month’s article, have an adequate accounting software application that aids the different departments to accurately gather and process the data and then convert it to a summary view of past activity.

Accounting personnel need to understand the accrual versus cash method of accounting and which method has been elected for book versus the tax return. They need to understand what reconciling entries need to be recorded to correct posting errors that happened throughout the month. Along with that, they need to understand what standard and accrual entries need to be recorded each month to accurately show only 4 1/3 weeks of activity and expenses to match the recorded income.

Dealerships generate accounting entries that are much more complex than most other industries. That is because dealerships consist of several, very different profit centers. Each center – retail sales, BHPH sales, wholesale sales, F&I, service, parts, collections, rental vehicles and body shop sales – is a different department that must integrate itself with all of the other departments seamlessly. This is difficult to achieve because they all have different goals and agendas. You must get everyone on the same road that leads to your goals, not theirs. Once you get them on the same road, they all must travel at the same speed you are driving at to finish first in the race towards perfection.

What do we mean when we say “infrastructure”? It means you must institute the policies and procedures that are necessary for you and your employees to understand how your “perfect dealership” should operate. This means having daily meetings with all the managers to evaluate what it is going to take for you to attain a profit in the current month and year. The managers must then meet with their department personnel and relay your goals. It also means you must have first set goals for every person in your dealership, including yourself, to achieve the perfect dealership environment.

If you don’t know which road you are on, how can you direct your employees to follow your lead at the speed you want them to travel? Again, policies and procedures must be established so everyone knows their job duties, and hopefully, they are matched with work that brings out the best in them at the same time. If that happens, people don’t mind coming to work every day and giving the 100 percent effort that is needed to keep the structure and procedures in place on a consistent basis.

Don’t settle for mediocrity or negative behavior from the key people in your pit crew. They must adapt to change and work at the same speed you do, or you won’t ever finish the race. Your policies and procedures must consistently be applied. The main theme here is that you and all of your employees must work cohesively towards the same goal at the same speed while navigating the road to perfection.

Internal controls are a large part of your infrastructure. They are not normally discussed in your employee handbook, assuming you have one at all. Solid and consistent internal controls and procedures should become habitual to ensure there are no pit stops in the execution of the day-to-day activities. Everyone should know what the rules are and more importantly, why you insist they be followed at all times. You, the dealer, should constantly be looking for improvements in all the processes and transaction activities in your store.

If you focus on putting these three principals in place, you just might see the checkered flag on the road to perfection.
 
Vol 3, Issue 8

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