Being an independent dealer

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1 38 F E B R U A R Y W W W. N I A D A. C O M

2 Being an independent dealer doesn t necessarily mean you have to operate independently of an allencompassing plan for success in the new year. The month-to-month approach of operating an independent dealership just isn t an effective way of achieving the most out of It isn t the way toward achieving the most sales, gross profit, net profit, customer retention, employee retention, unit sales, inventory turn, capital needs, Internet effectiveness and so on. C O N T I N U E D O N P A G E 4 0 W W W. N I A D A. C O M F E B R U A R Y

3 C O N T I N U E D F R O M P A G E 3 9 Being an entrepreneur certainly involves hard work and often long hours. But hard work and long hours alone is no assurance of any individual s success. There is a difference between working hard and working your business strategy hard. Your plan for success isn t meant to be overwhelming or burdensome. Rather, it s meant to give you a day-to-day, weekto-week and month-to-month strategy to help you focus on your dealership s goals, regardless of what they might be. My experience with independent dealers has shown me there are way too many dealers operating under the premise of long hours, hard work and pure sweat as their formula for success. Being an entrepreneur most certainly involves hard work and often long hours. But hard work and long hours alone is no assurance of any individual s success. There is a difference between working hard and working your business strategy hard. The challenge therefore is: The Business Strategy. Let s take a look at several areas the successful independent dealer should consider in 2014: Net profit: Profit profit after expenses and before taxes based on a fair return on your total investment in the business or as a return on investment of your inventory? Did you make sure you included enough net profit to sufficiently save for retirement, unexpected business expenses and capital improvements? Simply hoping to show a random percentage of improvement (for example, a 10 percent increase in profit over 2013) is no way to maximize your profit success. Employee performance: Did you have your employees write out their personal and business goals for the year? How do they compare to your dealership s goals and objectives? Remember, there is no way for a dealership to hit its objectives unless its employees targets are in line with the company s overall goals and objectives. How will you make up for any deficiencies between their goals and your goals? Have you considered additional training needs for your staff? Most importantly, have you evaluated whether you might need to hire (or dismiss) an employee? Hiring another employee is not just an additional expense to the company, it s an opportunity to produce more sales and prepare for an increase in market share. Simply expecting each employee to do more might or might not be the answer. Have you established performance standards for each and every employee in your dealership? Don t assume everyone knows what they have to do, or I ve got good people and we re all on the same page. Make your objectives clearly known and agreed on. Internet strategy: I seem to confuse many independent dealers when I pose the question, What is your Internet strategy? That question is frequently C O N T I N U E D O N P A G E F E B R U A R Y W W W. N I A D A. C O M

4 C O N T I N U E D F R O M P A G E 4 0 An Internet strategy means getting consumers to find you and your vehicles when they are in the market to make a used car purchase. Look at your dealership website through the eyes of a consumer, not as a dealer. followed by the response, What do you mean? When I inquire about a dealer s Internet strategy I m curious to know how many sales the dealer has forecast selling as a result of the effectiveness of his or her website. Remember, you can t manage something if you can t measure it. Keeping track of how many visitors visit your website isn t a strategy. You need to also know how much time each visitor spends on your site the bounce rate as well as how many unique visitors you have had at your site. Do you know how many inquiries you ve had on each and every vehicle listed on your site? That information is essential if you are going to maximize your online sales opportunities. I like to remind dealers of their own responsibility to tweak and critically evaluate their website for effectiveness. I once suggested to a dealer that customers rarely, if ever, go online in search of a pre-owned used vehicle. I brought it up because when I visited the dealer s web page, there in bold type were the words, Pre-Owned Used Vehicles. The dealer seriously questioned my sanity, but what I wanted to get the dealer to understand was the typical consumer goes online to search for a used car or a used truck, not a pre-owned car or truck. As it turned out, the dealer tried my idea of swapping the word pre-owned for the word used. A few months later the dealer advised me that his website hits had increased in excess of 30 percent. Be mindful that an Internet strategy means getting consumers to find you and your vehicles when they are in the market to make a used car purchase. Here is one final Internet strategy tip: The front page of your website is just like a newspaper. NO ONE cares what your dealership looks like when they link to the front page of your site. The front page of your site, just as the front page of a newspaper, should be about information vehicles and vehicle specials. NO ONE is looking for you. They re looking for a vehicle. Pictures and information about your dealership should be a tab. Only after consumers find a vehicle they are interested in will they then become interested in learning about the seller, not the other way around. The lesson: Look at your dealership website through the eyes of a consumer, not as a dealer. Invest in yourself: There really is never a good reason or excuse to neglect your own personal training and development. Too often dealers focus on the price of training rather than the cost. Remember, price is what you pay for the training, while cost is what you get for the price you pay for the training or the cost to your business C O N T I N U E D O N P A G E F E B R U A R Y W W W. N I A D A. C O M

5 C O N T I N U E D F R O M P A G E 4 2 for failing to invest in training. Profit margins are too thin, legal issues are too many, self-growth too important, the stress of being an independent dealer too great to fail in taking advantage of dealer training. Did you budget to attend this year s NIADA convention to take advantage of Profit margins are too thin, legal issues are too many, self-growth too important, the stress of being an independent dealer too great to fail in taking advantage of dealer training. the many educational sessions offered as well as the valuable ability to network with other successful independent dealers all under one roof? Have you given serious consideration of joining one of NIADA s Dealer 20 Groups so you can brainstorm with other dealers just like you and have your dealership s numbers analyzed each and every month? Have you given serious consideration to joining the ranks of many of your successful independent colleagues by becoming an NIADA Certified Master Dealer? Certified Master Dealers learn how to financially evaluate their business as well as learning the latest in Internet and marketing strategies. Inventory: How much inventory are you carrying and how much do you need to carry each month to reach your net profit goals and performance objectives? Sure, everyone knows you need enough inventory to meet the demands of tax season sales events, but what about the remainder of the year? Having a balanced inventory (the dollar value of inventory you carry matches the dollar value of inventory you sell) shouldn t be a guessing game. A balanced inventory can mean the difference between a profitable or a decidedly less profitable Have you given consideration to how many times your inventory should turn this year? Remember, the amount of profit a dealer earns, regardless of sales volume, is in direct relation to the speed of the turn of the inventory the dealer carries. A minimum target is for a dealership to turn its inventory at least nine times per year. The year 2013 was a very good one for new car sales in the U.S. It is anticipated this year will be equally good in terms of new vehicle sales volume. What that means for the independent dealer is used car prices will continue to fluctuate, and in many cases decline, as used vehicles become more plentiful as a result of more vehicles being traded in for new vehicles. You don t want to get stuck with overpriced inventory that will make you uncompetitive in a highly competitive used car market. Today more than ever it is critical for dealers to evaluate the pricing of their inventory on a daily basis. Start today: It s not too late to begin or to re-evaluate your 2014 business strategy. It s your business. It s your future. It s time to take control of your success. Don t let 2014 happen to you. Don t just hope you happen to have a good year. Make it happen. 44 F E B R U A R Y W W W. N I A D A. C O M