Does your shop start to slow down this time of year? Tech’s start to run out of work as it gets later in the day? Expenses start to feel like they’re piling up?
Here are 5 things I’d do right now to curb this – if you’re in this boat;
a) Get your Controller to pull the financial statement for last month review each expense, line-by-line. Not just by category line, but by each individual expense entered by vendor invoice by the accounting dept. Get on a granular level – keypoint.
b) Download all your revenue and grosses. Look at every line item that is less than your target gross profit and ELR. It will go quickly when you start to see some commonalities that you’ve already reviewed.
- An old DP of mine taught us a trick to re-think what we are spending on. “Pretend we hit a recession, and had to cut 20% of your expenses tomorrow. What would you cut, what could you optimize RIGHT NOW”. Not that you need to do this, but it allows you to reframe how you look at things. He got us to come up with a plan (in writing) – and that was during a growth period for us – no recession was looming. But it was great practice for the management team, and was great for us to have at least some working mental knowledge on what we’d do in case something crazy ever did happen, instead of freaking out, or freezing up.
- I’d designate someone to go through all the Outstanding recall customers, and call every one of them right now. If you can dedicate someone, that’s most ideal. Then repeat by going through the entire list again in 2 weeks – hit a100% of them.
- I’d look up what isn’t at NADA/NCM Guide. Write down the reasons why they are not at guide. (ex. Gross, Expense line, ELR, etc.). Write down ALL the reasons on paper. Now – if you were looking for another job, and the Dealer Principal said they needed to fix all the items you listed that were not at guide – would you say you can fix it, or would pull out these excuses? Meaning – you’re not special. There are no excuses not to be at guide, unless you have someone above you forcing the mandate (ie. Gross % to Sales, or free oil changes still being honoured, etc.)
- You need to build revenue, instead of just cutting expenses and looking to charge more. Wacking expenses, and just charging more is an easy way out. The skill comes from actually growing the business. You can’t grow by shrinking.
When I was at NADA, Bob Atwood taught; “If you have an expense problem, look at Sales first”. In Fixed Ops, that means look at revenue. Your expenses are there for a reason. You just lost ground somewhere, and over time, now you need more. So, go get more customers. Get a hold of all your lost customers, starting with the most recent. Then the aged customers – even up to ten years old. There are laws on how you communicate with these lost customers – but talk to either your DP/GM/GSM – they cold call your customer database often enough. They are aware enough on what is/isn’t allowed.
- In the Parts Dept, beyond these items above, I’d pull all my aftermarket parts that are 3 in 12 or more (ie. stocking status, or should/could be stacking status) for a phase-in period. Now – I’d group these all together, and renegotiate with your current vendors, and with new potential vendors. I’d get them to price anything of volume, and see where they stack up against each other.
Key point, is to tell them, that you’re not looking for 1-time pricing where they get all the business you migrate. Tell them, if that was to happen you’ll pull 100% of your business. You’re looking for the most competitive vendor, not the most gamey vendor. You have to tell them this out of the gate when doing this aftermarket competitive study.