As we head into the crazy part of the season I just wanted to reach out to dealers and remind you that your finance departments are in fact not your administrative departments. The finance department is not a support role and it should be your highest grossing profit center. But sometimes, more often that I want to admit, the fact is that some of you are using the finance function as your clerical function. This month’s blog will focus on the finance department and what you can do to transform your admin department into a truly highly profitable profit center.
What kind of employee should I have in the finance department?
To answer this question, I first want you to look at the automotive industry for part of the answer. The finance manager position in most car stores is the most coveted, highly sought after job in the dealership. To get promoted from within to be finance manager, usually the sales person has to spend years on the showroom floor showing knowledge, skill, salesmanship and most of all consistency. Usually if the finance manager is promoted from the showroom floor, he or she have proven themselves to be a consistently high producer and has earned their promotion.
Now let’s compare that to the powersports industry. In a lot of dealerships across the country the finance manager’s role is much different. In some stores people who are good at paperwork get the job. Or the new finance manager is the one who couldn’t make it on the showroom floor as a sales person. And sometimes the finance manager’s role is dual purpose spread between accounting, doing DMV work, and other administrative/clerical duties that have nothing to do with sales. The mentality of a lot of stores is that the finance manager is not a sales driven position and they just need to get the paperwork right so we get funded on deals with zero errors. Where do you think the term “business manager” came from? Most dealerships have evolved over the years, some have not.
I don’t really care how you structure the job in your powersports dealership, but the finance department needs to be staffed with a sales driven gorilla. Speaking of primates, any monkey can collect a doc fee, but selling intangibles such as finance products takes true salesmanship. The difference between your store having a good month and a GREAT month can be achieved by rethinking who is currently working in the finance role in your dealership? Is the person a good administrator or a sales gorilla or a combination of both? For a lot of dealerships out there you need to be focusing more on salesmanship instead of penmanship.
But my store doesn’t have high volume and I can’t afford a full-time finance manager.
True, smaller stores have a bigger challenge but it all comes down to how you structure the job. In some stores the finance manager does in fact have other administrative or clerical duties in their job description. Sometimes you can’t fight that. However, is the person in the role a highly skilled salesperson? Can they be trained to become one? The reality is that you have to put focus on having a highly skilled salesperson in that role, regardless of the administrative things they have to do to perform their job.
How do you transform your finance department from a support role to a true profit center? Well it all begins and ends with sales process. When you look at what successful dealerships are doing with their finance managers is that they are building the finance role into the overall sales process. If your sales department and finance department treat each other poorly everyone suffers including your customer. Who needs that right? If the sales and finance departments are strategically aligned, then you will be hitting on all cylinders.
Another way to help you transform your finance department into a sales driven machne is through training. The best training is free right? WRONG! I’m not just talking about training from your service contract providers, I’m talking about ongoing training. For example, Garage Composites, just to name one, offers onsite finance training that is considered to be one of the industry’s best. According to Sam Dantzler of Garage composites, their training “moves numbers”! And the best isn’t cheap either but consider it an investment in your dealership’s future. If your staff follows the training and practices they learn from Garage Composites, then you will recover any investment in training in one or two busy Saturdays when in season. Trust me on this, I personally have seen it happen.
What happens if the training doesn’t work? Then it is up to you Mr. and Mrs. Dealer Principal to make the decision of who is in the finance role in your dealership. When training fails, especially when there is no accountability, then the entire dealership fails. If I were the owner of a dealership, I would never let an employee/department dictate my dealership’s future—EVER. When training fails then it is time to look for a replacement. Blaming the training for failure is weak. You should not be giving up hundreds of thousands of dollars in lost sales. I don’t care how good the paperwork is. Again, remember you need the right person in the right job.
Recently, when questioning a large dealer about his finance and insurance numbers, he told me that his “girl” in the finance office has been focusing on other things like managing co-op advertising and other administrative functions instead of selling product. I about lost my stuffing but held my composure. This dealership has the volume to add an additional $900,000 per year to total sales but is choosing person over profit. That is insanity.
It is time to focus on finance and if not now than when? Quit being shortsighted and staff your finance departments with sales professionals that understand how to sell back end product. I know I couldn’t do the job personally, but I know what works and what does not and who to look for. Quit trying to staff your dealership’s finance department with clerks who can handle good paperwork. If you do not hear me, then you are currently losing hundreds of thousands of dollars each and every year.
After all, profit is not a dirty word and it is just good business.
Forrest Flinn, MBA, PHR, SMS has been in the motorcycle industry for more than 20 years and has been a true student and leader serving in various capacities. He previously worked as an implementation consultant for Lightspeed and as a general manager with P&L responsibility for a large metro multi-line dealership. Currently Forrest is the managing partner and chief visionary for a consulting firm that specializes in outsourced accounting, human resources, social media strategy, dealership operations consulting and Lightspeed/EVO training.