April 25, 2005 – Transitioning a store from “Good” to “Great”

I’ve got a question for you dealer principle’s: Which of the four following categories describes your dealership? (Employees are disqualified from this question, because they’re more likely to get it correct.)
The Know-It-All dealership. They’re like the guys in the jokes women tell about men-the guys who’d drive off a cliff before they’d ask anyone for directions.
Frankly, I’ve never understood why women notice that “hate-to-ask-directions” quality in men, or why they find it so ridiculous. Could it be because they’ve also noticed that the guys who DO ask for directions tend to be richer than the ones who don’t?
Anyhow, if you’re reading this column you’re probably not a Know-It-All dealer. So let’s move on to the next category.
Many, many dealerships-good dealerships-have settled comfortably into the Even Keel rocking-chair. Things run pretty well in those stores. Customers receive prompt attention…the people in Sales are eager and pleasant…the Service Department knows its stuff…P&A is stocked with inventory…F&I does its best to make deals happen…the Administrative staff is buzzing. Management keeps a watchful eye on these activities, and the bikes in the showroom are as shiny as the Queen’s Rolls-Royce.
The dealer-owner may not be making as much money as some of his pals in the business, but he’s paying his bills and living better than he ever anticipated. He can fly off to Vegas or Hawaii once in awhile, and he never misses Bike Week. Retirement fund? Hey, he’s only in his 40s, so he’s sure things will get better before he has to hang it up.
The Even Keel dealer doesn’t see much need to change things. His motto is a pretty sensible one: “If it ain’t broke, don’t fix it.” The new discount dealer on the other side of town worries him a little, but he just shaves his prices a bit to hang onto his old customers, and he keeps his staff small so his expenses don’t eat him alive.
Each quarter, he sits down with his accountant, who tells him, “Keep an eye on those Expenses, Charlie. And it’d be good if you could raise your Sales figures a bit. But heck, it looks like you can still afford to buy me lunch! Wanna try the catfish down at Benton’s?”
Unfortunately, an Even Keel dealership can turn into a Trouble dealership overnight. Or at least it may seem like overnight to the dealer-owner.
Actually, the Shadow of Doom had probably been hiding around the corner for months, maybe years. It had sent warnings, again and again. Not pillars of fire or plagues of locusts, but numbers on Income Statements and Balance Sheets. Expenses were creaping up…Gross Margins were slowly shrinking…Inventory levels kept rising. There were other signs, too. He hadn’t been able to replenish his Accessories, so it was mostly the unpopular items. His banker had dropped by to ask him how things were going, and seemed more interested in the answer than usual.
Then comes the afternoon when his bookkeeper shows up in his office doorway to tell him, with a mixture of fear and regret, that she won’t be able to make payroll on Friday unless she holds back on paying some bills, and which ones should those be?
He’s starting to feel like a biker who missed the “Bridge Out Ahead” signs and is now in mid-air over a river. His Even Keel dealership has turned into Trouble.
Luckily, these Even Keel dealers tend to be pretty darn smart. Unlike the Know-It-All types, they realize when they’ve slipped into the Trouble category. Something’s definitely broke (or going broke), and they’re eager to fix it. They start thinking about what kind of action to take, in order to get the store back to an Even Keel.
It’s Either Growth or Death.
Getting back to an Even Keel is certainly a tempting prospect. But I humbly suggest that no dealership can survive on an Even Keel any more. Today’s business world is like one of those video-games my kids play-if you’re not constantly changing and improving, the Bad Guys will get you.
The most successful dealerships are the ones that fit into the Growth category. These are the dealers I talk to every day in my 20-clubs, because they’re the ones who are eager for a lifestyle that only Growth can deliver to them.
It’s easy to tell when you’re in a Growth dealership. For starters, it’s so clean and attractive that your grandmother would eat off the floor of every department-including Service. Also, you meet lots of smiles as you walk around…and they’re genuine, because the people love their work.
Another sign of a Growth store is that all the departments work together. Service sells P&A, and P&A sells Service. F&I sells Service and P&A. And Sales sells the whole dealership.
Nobody seems rushed, because they have simple systems in place to make life easier. If a problem arises, they handle it-then they figure how to prevent it in the future. So there aren’t many emergencies any more.
But the surest sign of a Growth store is in the office of the dealer-owner. If he happens to be there, you’ll find he has plenty of time to chat. He’s the captain of a smooth-running ship. His managers know their jobs and do them happily. They’re fully empowered to solve problems, so only the biggest ones land on his desk. He exudes the deep contentment of a successful man.
And if he’s on the golf-course or out for a ride, you might sneak a peek at his financials. You’ll see that his Gross Margins are close to twice as high as that of his Even Keel buddies, and he earns as much from Accessories, on a good day, as his Know-It-All pals earn on the sale of several new bikes. Each of his Service bays routinely bills 10 or 11 hours in an 8-hour day. And his walls are papered with spontaneous “thank you” letters from his giant list of customers.
He’s carried his dealership from “good” to “great,” and he’s enjoying life at last.
Slow Down & Be Great.
The toughest part about becoming a great dealership — rather than just a good one — is the transition. And as I teach my 20-club members, the toughest part about the transition is slowing down. Slowing down to deal with the Important instead of rushing around handling the Urgent. Slowing down to put new systems into place. Slowing down to manage and mentor your staff, so you won’t have to do all the thinking yourself.
Slow down to speed up. You may need a mentor to run alongside and hold the handlebars while you get the hang of this new way of riding. Some people prefer to have a whole group of mentors-they learn faster that way. But after that, it’s a piece of cake. psb

Bill Shenk is a former dealer and is president of Powerhouse Dealer Services. For additional information or to join a 20-group and take YOUR dealership to Top Gun status call Bill Shenk toll free at 866.896.3759 or email Bill@PhdServices.com