Convergent Alliance | PREPARE FOR THE RAINY DAYS AHEAD
An automotive retail development company.
Convergent Alliance, Automotive retail development company, dealership remodel, dealership assembly, dealership profits, dealership software, automotive industry, dealership construction
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PREPARE FOR THE RAINY DAYS AHEAD

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Instead of burying our heads in sand…

 

While we anticipate the fundamental upcoming change in mobility and transportation; and its long term effect in auto retailing, as retailers, you must still be prepared to continue doing business conventionally during the down turn of the industry and for the next few years.
 

Average per new vehicle incentive reached $3,805 in August 2017, sales were down 1.9% over last August for consecutive five months and SAAR adjusted to the month end is $13mm; down $341,000 from a year ago. It is now safe to say that 2017 will end up below 17mm units and continue to decline in 2018.
 

So instead of burying our heads in sand, now is the time to prepare a comprehensive business plan based on a “Minimum Revenue Forecast”.
 

10 POINTS TO CONSIDER FOR A REASONABLE FORECAST AND BUSINESS PLAN:

 

1- A comprehensive % distribution of every expense line item as a function of your total revenue departmentally. Taking into consideration “Minimum Revenue “as a result of anticipated decreased sales volume.
 

2- Hold each department accountable for individual profitability. Your forecast must reflect each of your department’s revenue and expenses to reflect bottom line profits.
 

3- Maximize your fixed operations capacity. During distressed sales, it is your service department that will carry you through. Carefully analyze your service capacity, productive times, effective labor rate and hours sold on customer repair orders. Hold individuals accountable to benchmark standards.
 

4- Avoid creative accounting. While it is a prudent practice to establish accruals to offset certain expenses, it is not a healthy practice to credit expense accounts directly with accruals to reduce expenses. This will distort your template and reflect erroneous percentage of expenses and mislead you. You need to reflect the entire expense and record the accrual as other income which will achieve the same result, reduced expense.
 

5- Review all productive pay plans. From your leadership team to sales staff, including your fixed ops sales and technicians, make sure that the pay plans define what each individual must contribute to the forecasted revenue and award them at their individual experience and efficiency level.
 

6- Demand your leadership team to track their month performance on a daily basis reduced on a report. The essence of accomplishment is the awareness of current reality to create the sense of urgency to perform before time runs out.
 

7- Don’t let creative marketing get the best of you in spending. In today’s market, it makes everyone’s head spin to even just keep track of all the creative marketing ideas that providers come up with. Keep your focus on what you essentially need to create business, measure results, avoid waste and stick to your budget every month.
 

8- Understand your potential. Driving a fast car without a defined destination will not get you anywhere on time. After spending all the money, creating resources and defining processes you must be able to measure results. Therefore knowing your market size and penetration, opportunities to do business, service capacity and efficiencies will all help you overcome deficiencies.
 

9- The future now is totally based on an unconditional customer centric process. Educate your staff to understand this philosophy not just as a matter of job requirement but as an authentic behavior in their everyday life. Selflessness is the key to rise above the competition and not the amount of metal you move.
 

10- Finally practice what you preach and treat your employees the same way you want them to treat your customers. As a leader, take individual interest in each and every employee’s happiness, prosperity and welfare and do it authentically as well. When we pretend, people notice.
 

As always, we at CONVERGENT ALLIENCE specialize in all of the above, building state of the art and most comprehensive composites customized to each client, help retailers with their choices of the upcoming mobility trends, provide effective and results oriented workshops in all of the topics above. We look forward to hearing from you. Until then; have a wonderful month end.
 

Arlan

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