When I was a district manager for a motorcycle manufacturer, many people thought spring was my busiest time of year and they were surprised when I told them winter was my busiest time of year. New model product was being released and booking programs were ready to be filled. I realized that this time was crucial in setting up my whole year. What happened during this time actually set the tone for the rest of the year. I had to have a plan and a strategy in order to reach my objectives and so do you.
February is a weak month for most dealerships across North America. Snowmobile season is finished and it’s too cold for most people to ride motorcycles. February can really be a cash flow killer and most of us can’t wait for it to be over. I’d like you to look at this period as the time to get prepared and complete your playbook for this year. Your preparation can set you up for success and lack of it can set you up for failure.
This is a great time for you to think and determine what goals you want to accomplish for the coming year and your plan on achieving them. Take some time and stand back from your business and take stock of what is working and what isn’t. It’s time to be proud of what areas are working well and honest about the ones that aren’t.
The best place to start this exercise is with your financial statements. They tell the story of positives and negatives and point you in the directions that need your attention. How are your sales trending and are department margins keeping up with industry averages? What patterns do you see and are they going in the right direction? What you see here will help you complete your playbook of strategy for the coming year. I’ll suggest a few areas for you to question based on my experience working with dealers.
Sometimes we overlook the physical location. What condition is your property in? Is it clean, bright and fresh? First impressions are so important and set the tone for a customer experience. It’s amazing what a coat of paint will do to the appearance inside and outside of your business. Would your spouse or mother mind using the washroom? Nothing can stop a buying experience as fast as when a wife or girlfriend refuses to use the washroom.
Many dealerships struggle with improving profitability in the service dept. I have found that there are still service departments that do not measure productivity and efficiency and not always understand the difference between the two. A service dept. will never begin to improve if productivity and efficiency isn’t tracked and measured consistently and then reviewed with technicians to discuss what happened and what can be done to improve these very important measurements. Warranty receivables are another area to review to make sure they aren’t being neglected. I can’t begin to count how many times I’ve seen service departments lose tens of thousands of dollars due to outdated and uncollected warranty claims.
If you aren’t satisfied with margin performance in your parts department, determine if the weakness lies in parts, accessories or both and why. Ensure that you and your parts staff understand the difference between markup and margin. Most of us have read that we need to strive for a 40% margin, with 35% being acceptable, yet some don’t understand why their margins can’t get to 30%. If you mark up your product by 40%, your margin will be just under 29%. Understand how that actually works. Another area to check on is aged stock and if you are depreciating it enough so you can reduce pricing and make it easier to retail.
Are you comfortable with your level of major unit inventory carried over from last year? If not, how are you approaching the main selling season that’s just around the corner so that you can reduce non-current stock and the additional interest expense that goes with it? Have you thought about branding and marketing for this year and how you’ll structure it? Riding communities support dealers who support them so what involvement will you participate in this year to increase door swings?
There is another important area that needs mention and that’s training. Providing training for your staff is an investment in your future growth and prosperity. Helping your staff do a better job results in your staff providing better results for you and your business. As an owner or GM, don’t be afraid to ask for help or opinions from your peers or consultants experienced in the industry. Asking for feedback from your staff promotes communication and provides a sense of empowerment which promotes loyalty. It’s not easy juggling or balancing several issues at once and no one has all the answers so a different perspective can provide clarity and balance.
Bruce Marcia is the director of Bruce Marcia and Associates, a retail management consulting firm that specializes in assisting and supporting dealerships in the RV/marine and powersports industries. As a recognized troubleshooter with over 30 years of experience in inventory finance, dealership general management and as a district manager for a major OEM, Bruce has had the unique opportunity to understand and learn from all three important fields that make these industries function.