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Efficent retailing: Budget is not enough - you need an action plan too

In the latest of our series of insights into running an efficient dealership, Thurlby Motors managing director Chris Roberts looks at basic business plans

Efficient retailing is dependent on many factors.

The professionalism of the team, organisation of the business, good processes and a solid understanding of the market conditions and opportunities.

However, in planning for good performance some businesses simply prepare an annual budget and expect that to be the sole driver of activities for the year.

Well, a budget in itself is good, but a more important activity is preparing the action plan behind the numbers – a business plan.

Think about it for a second.

The numbers alone are fine and indicating that the business will sell an extra 50 used units or increase service gross in the budget is great, but what specific actions are needed to make it happen?

Writing a plan to show where opportunities exist, where improvements can be made and what key steps need to be taken, is vital.

Not only do the words justify the numbers, they also enable both the manager and dealer principal to understand the thought process behind any planned growth.

The document needn’t be lengthy, just enough to represent clear thinking on the part of the manager.

If done correctly, it is quite easy to translate the plan into a simple set of actions and goals which will make tracking budget performance much more meaningful.

How often have you been in an accounts review and discussed underperformance with a line manager without really establishing what went wrong and what changes were required to make an immediate impact on performance?

A set of concise objectives extracted from the business plan and covering the key areas of action will make reviews much more constructive and give you a clear discussion agenda for each meeting.

If, for example, a manager had documented six key objectives for the year and then broken them down into detailed measurable actions, by tracking these closely at each review, progress, or lack of it, is easy to identify.

If the correct objectives and actions are agreed and then subsequently completed, by definition the budget should be achieved.

It is often worthwhile tying in the main objectives to clearly measurable KPIs.

Industry ones are readily available from a number of sources and using these as a benchmark will take away any excuses for underperformance or the possibility that the original objectives were incorrect.

If nationally the industry is above or below a KPI you can adjust your expectations accordingly.

By tying a business plan to the budget each manager will have a road map for the year.

Tracking over- or underperformance will be simplified and the document can also be used during appraisals and employee reviews.

If a manager is consistently missing what were agreed key actions, then this can be addressed either formally or informally depending on the severity of the issue.

Good line managers will also share their plan with team members to engage their support and also give clarity to where they themselves need to focus.

Try using a simple business plan to make your budget process more robust.

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