Page 4 - MIADA-12-2020

Are You Ready

for 2020?

By Doug Austin,
Founder & President, StrategicSource Inc.

In just a few weeks, 2020 will be here – • Are you tracking to achieve your 2019 • Interest rate adjustments – new lending
bringing some significant opportunities growth objectives? options
and challenges for us to face. But before • Are you tracking to achieve your • Headcount adjustments – realignment
planning begins for 2020, let’s look back at headcount and retention objectives? • Centralization of key functions and
2019 and review the current environment • Are you tracking to achieve your 2019 tasks within an enterprise
and likely conditions for the year ahead. profitability objectives? • Outsourcing of non-key roles within the
enterprise
Current Reality Your Plan to Improve Profitability in 2020 • Comprehensive cost reduction – profit
• The economy is strong, and there are no Businesses are designed to produce a good recovery strategy
real indicators of a recession in the near or service that will return a fair profit. • Improved operational performance to
future. According to multiple sources: That profit should provide a return on drive out inefficiencies and cost
• Unemployment is at the lowest levels in investment for the significant capital and
years sweat equity invested, as well as client Five Finance Operational Strategies to
• Dealership buy-sell activity is strong for satisfaction achieved over the years. Improve Profitability
2019 The following strategies, if employed
• Sales have been steady in 2019, but are Many factors involving dealer profitability correctly, can immediately impact
flattening for many dealerships are being significantly challenged by organization expenses and improve
• Expenses for most dealerships are likely outside influences including vehicle sales, profitability.
growing a bit faster than sales per NADA OEM programs, inventory levels, interest
and M&A sources rates, and other macro-economic factors. Headcount Adjustments – All
• Profit margins are narrow and continue Dealership performance is controllable and organizations should take a serious look
to be a challenge for most dealers is a place to focus your attention to drive at headcount for all of their locations.
new profitability. Is there duplication in positions? Are
For most businesses, including dealerships, there positions that aren’t needed at all?
2019 has been a pretty good year. And 2020 So how do dealers battle these external Can certain positions be shared among
seems to be shaping up to be just as good and internal factors to improve their locations? Can some individuals get trained
based on many economic indicators. Most profitability and earn the returns they to wear more than one hat so you can fill
are predicting a slowing in sales, however. were earning years ago? Where are the multiple roles with one full-time equivalent
opportunities? What strategies do dealers (FTE) rather than multiple FTE’s?
Your Dealership or Group – A Strategic or embark on to improve profitability?
Top-Level Review Centralization – Where similar tasks
How has your dealership or group performed A Few Strategies to Consider For and activities are performed at multiple
so far this year? As you begin to review Improving 2020 Profitability locations, there is built-in inefficiency. Do
2019 and plan for 2020, you are probably • Acquisitions to fuel growth you have an accounts payable group at each
gathering up key performance indicators • New tools and strategies to gain market location? Are managers at each location
and reviewing current performance at the share performing purchasing roles and bringing
strategic level of the business. • Increased sales – new, used, parts, in their own suppliers – adding to the
service, finance confusion? This represents wasted effort,
• Are you tracking to achieve your 2019 • Improved gross to net performance lost purchasing leverage, higher pricing,
sales objectives? • Inventory optimization and more complexity. Centralization of the

2 | MIADA MISSISSIPPI DEALER Winter 2020