In the last of our series of insights into running an efficient dealership, Thurlby Motors managing director Chris Roberts summarises some of the key issues he has covered
Having spent almost 30 years in and around the motor trade I have seen business successes and failures in quantity.
Some operators squandered fan-tastic opportunities in good markets and saw their businesses go into administration, while others bought broken businesses and turned them into fabulously successful companies.
The key to both outcomes hinges around basic business fundamentals and the purpose of this series was to focus on a few of these and additionally highlight a couple of best practices to help turn challenging situations into profit opportunities.
Here I would like to summarise.
The best advice I can give anyone running a franchised dealership is to establish a sound structure and always use solid operating practices. For me, this starts with a robust business plan.
This should take into consideration market forces, identify opportunities and contain some key objectives focused on the main areas of the plan.
It should also contain an aligned marketing strategy which should be very specific in both direction and timing.
If the business plan correctly identifies the market opportunity, the volume of potential sales for the financial plan should be easy to calculate.
Margins can be derived from historical performance or composite data. In the financial plan particular attention should be paid to costs.
This is one area where businesses allow unnecessary spending to drain the good work done at the front end.
In prior articles I have written about cost control at length, because it is such a fundamental issue and often one of the main factors when businesses run into problems.
Having the right team around you is also vital to success.
Often businesses employ the wrong person in haste.
Where this happens great performance is harder to achieve and not only is time wasted trying to get the employee up to speed, but also business opportunities are missed along the way.
Months can be lost identifying that a recruit doesn’t have the correct skills for the job and months more replacing them with someone else. Never rush recruitment, it is counterproductive.
Measuring the performance of your team is also essential and again I have stressed the importance of setting specific KPI’s for all staff, but most especially the management team.
Once set, these need to be tracked on a frequent basis. Accounts reviews are fine, but KPI’s are more immediate and effective.
On a final note, always keep a close eye on certain key financial ratios within your business.
To help there are several good industry benchmarks published in the trade press.
In addition to reviewing the bottom line of your accounts, always include some sanity checks around your balance sheet and cash flow as these will give an early indication of potential financial problems on the horizon.
To summarise this series is difficult in such a short space and everyone’s take on the content will be slightly different.
However, the one key message with which to leave you is never overcomplicate things. Get the basics right and success will happen naturally.