Numbers don’t lie. It’s a mindset that’s been at the forefront of every auto retail operation I’ve ever managed or worked with as a consultant. Numbers are the nucleus of dealership profitability.
In a softening market, being diligent about your numbers is vital to the health of your store.
When numbers are the foundation of operations, better-informed operational decisions happen. For example, have you wanted to hire someone only to stopped because it’s not financially feasible?
- How did you come to that assumption?
- Was it based on data?
- Did you perform a considered cost analysis with projected outcomes?
- Or was it because you’re fixated on expenses rising?
Smart decisions driven by data improve dealership performance.
I’ve talked a lot about how dealers need to get lean and not panic. Implementing systems and processes that keep numbers front and center eliminates panic and let’s a dealer move methodically through the creation of a leaner business model.
Numbers are the nucleus of dealership profitability
Numbers are the central and most important part of operations. Processes that stem from this nucleus form the basis for dealership activity and growth.
When I assess a dealership’s performance and opportunities for growth, I start with the numbers and determine management’s level of focus on them. If there’s a net loss happening regularly, you can bet that actions are not based on careful tracking of their financial data.
I’ve found that over the years, many dealership managers have never been properly trained to look at their numbers and fully understand what they mean.
Follow the money.
We perform what I call a Financial Statement Drill Down. We interpret what those 4-6 pages are telling us and determine where to look for profit opportunities. While digital operations are a key component, we look at the overall operation first to allow the picture to materialize for us.
I was asked to assess a dealership’s health a few years ago. It was a delicate situation with many moving parts so the client asked me to be stealth-like and come in on a Sunday. I had already interviewed the owners and arrived with a blueprint to identify whether what they believed was happening was in fact happening.
I followed the money and found a general disregard for systems and processes. The result of which, among other things, was $3.2 million in outstanding contracts in transit, with some vehicles burning gas for 18 months.*
What’s hiding in your financial statement?
Dealership operations are a melting pot that when performing well, is a harmonious ecosystem producing healthy profits.
The trouble begins when things are not harmonious.
“Numbers as the nucleus” creates harmony and drives successful dealership operations.
Diving deep reveals hidden gems or landmines, it just takes time to dig for them. We typically advise taking at least these three actions:
- Implement systems and processes to protect assets and keep the store’s performance in check.
- Regular assess liabilities to tell a deep story of how a store accounts for money it will need to pay at a future date.
- Expense analysis to uncover current or potential scenarios that directly effect net profit – often making or breaking profitability.
With an uncertain future for auto sales, now’s the time to make numbers the nucleus of your operations. Number don’t lie.
*Note: I share real life examples only without identification and with the blessing of clients.