Digital Dealer - November 2019 - 8

D E A L E R OP S & M ANAGEM ENT: Sp e n d M anagement

By Doug Austin
Founder & President,
StrategicSource, Inc.

Are You Ready
for 2020?
In just a few weeks,
2020 will be here bringing some significant
opportunities and challenges for us to face. But before
planning begins for 2020,
let's look back at 2019 and
review the current environment and likely conditions
for the year ahead.
CURRENT REALITY
„ The economy is strong,

and there are no real indicators of a recession in the
near future. According to
multiple sources:
„ Unemployment is at
the lowest levels in years
„ Dealership buy-sell
activity is strong for 2019
„ Sales have been
steady in 2019, but are flattening for many dealerships
„ Expenses for most
dealerships are likely
growing a bit faster than
sales per NADA and M&A
sources
„ Profit margins are
narrow and continue to be a
challenge for most dealers
For most businesses,
including dealerships, 2019
has been a pretty good
year. And 2020 seems to
be shaping up to be just
as good based on many
economic indicators. Most
are predicting a slowing in
sales, however.
YOUR DEALERSHIP OR
GROUP - A STRATEGIC
OR TOP-LEVEL REVIEW

8

NOVEMBER 2019

How has your dealership or group performed
so far this year? As you
begin to review 2019 and
plan for 2020, you are
probably gathering up key
performance indicators and
reviewing current performance at the strategic level
of the business.
„ Are you tracking to
achieve your 2019 sales
objectives?
„ Are you tracking to
achieve your 2019 growth
objectives?
„ Are you tracking to
achieve your headcount
and retention objectives?
„ Are you tracking to
achieve your 2019 profitability objectives?
YOUR PLAN TO
IMPROVE PROFITABILITY
IN 2020

Businesses are designed to produce a good
or service that will return a
fair profit. That profit should
provide a return on investment for the significant
capital and sweat equity
invested, as well as client
satisfaction achieved over
the years.
Many factors involving
dealer profitability are being
significantly challenged by
outside influences including vehicle sales, OEM
programs, inventory levels,
interest rates, and other
macro-economic factors.

D I G I TA L D E A L E R . C O M

Dealership performance is
controllable and is a place
to focus your attention to
drive new profitability.
So how do dealers battle
these external and internal
factors to improve their
profitability and earn the
returns they were earning
years ago? Where are the
opportunities? What strategies do dealers embark on
to improve profitability?
A FEW STRATEGIES
TO CONSIDER FOR
IMPROVING 2020
PROFITABILITY
„ Acquisitions to fuel

growth
„ New tools and strategies to gain market share
„ Increased sales - new,
used, parts, service, finance
„ Improved gross to net
performance
„ Inventory optimization
„ Interest rate adjustments - new lending
options
„ Headcount adjustments - realignment
„ Centralization of key
functions and tasks within
an enterprise
„ Outsourcing of non-key
roles within the enterprise
„ Comprehensive cost
reduction - profit recovery
strategy
„ Improved operational
performance to drive out
inefficiencies and cost
FIVE FINANCE

OPERATIONAL STRATEGIES TO IMPROVE
PROFITABILITY

The following strategies, if employed correctly,
can immediately impact
organization expenses and
improve profitability.
„ Headcount Adjustments - All organizations
should take a serious look
at headcount for all of their
locations. Is there duplication in positions? Are there
positions that aren't needed
at all? Can certain positions
be shared among locations? Can some individuals
get trained to wear more
than one hat so you can fill
multiple roles with one fulltime equivalent (FTE) rather
than multiple FTE's?
„ Centralization -
Where similar tasks and
activities are performed at
multiple locations, there is
built-in inefficiency. Do you
have an accounts payable
group at each location? Are
managers at each location
performing purchasing roles
and bringing in their own
suppliers - adding to the
confusion? This represents
wasted effort, lost purchasing leverage, higher pricing,
and more complexity. Centralization of the purchasing
and payables functions
can lead to dramatic cost
savings, staff savings, and
space/equipment savings
as well, reducing the need
for multiple FTE's in many
cases.
„ Outsourcing of NonCore Responsibilities
- There are experts with
years of functional experience that can probably
perform some jobs more


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Digital Dealer - November 2019

Table of Contents for the Digital Edition of Digital Dealer - November 2019

Digital Dealer - November 2019
Become an Accredited Leader
Happy and Harmonious Holidays – are Possible!
Are You Ready for 2020?
2019: Another Strong Year for Buy/Sell Activity and Valuations
What’s Your Post-Warranty Service Retention Strategy?
What’s Your Post-Warranty Service Retention Strategy?
Interview with Jane Millman of Riverhead Chrysler Dodge Jeep Ram
Introducing Our 2020 Theme: Defy Gravity
Remove Friction in your Media Mix to Drive Profitability
Connected Cars – Whose Data is it Anyway?
Consistent Communication Strategy
Marketing That’s Moving the Metal
Google My Business: Your Secret Weapon to Boost Sales
Digital Retailing Part 3: Digital Influence
Tatton Manning: A True Patriot!
5 Ways to Modernize Your Owner Retention Program (ORP)
Digital Dealer - November 2019 - Digital Dealer - November 2019
Digital Dealer - November 2019 - Cover2
Digital Dealer - November 2019 - 1
Digital Dealer - November 2019 - Become an Accredited Leader
Digital Dealer - November 2019 - 3
Digital Dealer - November 2019 - 4
Digital Dealer - November 2019 - 5
Digital Dealer - November 2019 - Happy and Harmonious Holidays – are Possible!
Digital Dealer - November 2019 - 7
Digital Dealer - November 2019 - Are You Ready for 2020?
Digital Dealer - November 2019 - 9
Digital Dealer - November 2019 - 2019: Another Strong Year for Buy/Sell Activity and Valuations
Digital Dealer - November 2019 - 11
Digital Dealer - November 2019 - 12
Digital Dealer - November 2019 - 13
Digital Dealer - November 2019 - 14
Digital Dealer - November 2019 - 15
Digital Dealer - November 2019 - What’s Your Post-Warranty Service Retention Strategy?
Digital Dealer - November 2019 - 17
Digital Dealer - November 2019 - What’s Your Post-Warranty Service Retention Strategy?
Digital Dealer - November 2019 - 19
Digital Dealer - November 2019 - Interview with Jane Millman of Riverhead Chrysler Dodge Jeep Ram
Digital Dealer - November 2019 - 21
Digital Dealer - November 2019 - 22
Digital Dealer - November 2019 - 23
Digital Dealer - November 2019 - 24
Digital Dealer - November 2019 - 25
Digital Dealer - November 2019 - Remove Friction in your Media Mix to Drive Profitability
Digital Dealer - November 2019 - 27
Digital Dealer - November 2019 - Connected Cars – Whose Data is it Anyway?
Digital Dealer - November 2019 - 29
Digital Dealer - November 2019 - Consistent Communication Strategy
Digital Dealer - November 2019 - 31
Digital Dealer - November 2019 - Marketing That’s Moving the Metal
Digital Dealer - November 2019 - 33
Digital Dealer - November 2019 - Google My Business: Your Secret Weapon to Boost Sales
Digital Dealer - November 2019 - 35
Digital Dealer - November 2019 - 36
Digital Dealer - November 2019 - Digital Retailing Part 3: Digital Influence
Digital Dealer - November 2019 - 38
Digital Dealer - November 2019 - 39
Digital Dealer - November 2019 - 40
Digital Dealer - November 2019 - 41
Digital Dealer - November 2019 - 42
Digital Dealer - November 2019 - 43
Digital Dealer - November 2019 - Tatton Manning: A True Patriot!
Digital Dealer - November 2019 - 45
Digital Dealer - November 2019 - 5 Ways to Modernize Your Owner Retention Program (ORP)
Digital Dealer - November 2019 - 47
Digital Dealer - November 2019 - 48
Digital Dealer - November 2019 - Cover3
Digital Dealer - November 2019 - Cover4
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