By Julie Becker-Myers, Director of Dealer Consultation, Ally Academy
Dealerships are learning on the fly how to manage greater market swings than previously imagined. One fundamental action you can take now — reducing expenses — can help strengthen your dealership’s finances no matter what the future holds.
As you think through ways to manage costs and increase cash on hand, there are many places to look. As you take tighter control of your expenses, be sure to keep the following top of mind:
Re-Evaluate What’s Currently on the Table
Pausing to take a close look at your current expenses may be the most meaningful action to shore up your finances. Different departments may have separate budgets and expenses, but have you considered how those costs might be more related than you think?
Don’t just take a clean-sheet approach. Clear off an entire table and look at the physical bills to ensure that the product or service you’re paying for is what’s actually listed on the invoice. This exercise might seem time-consuming, but you may uncover some surprises —and subsequent savings.
Who’s in Charge? Oversight Is Key
Depending on the size of your dealership, you may have different managers determining what the essential expenses are for their departments, while someone else is responsible for writing the checks and balancing the books.
The table-top exercise of reviewing all your bills may involve several staffers, but oversight is key. You know where the buck stops and someone who understands the big picture has to make difficult choices, prioritize expenses and identify savings.
Don’t Pay Twice for the Same Service
You might be surprised to find you’re paying two vendors for the same service. Ask your trusted vendors about their full range of services and consider streamlining suppliers and bundling services for a lower price. Simple things to manage include software programs, dealer management systems, and memberships. When was the last time you renegotiated these contracts? While reviewing contracts, it’s good to check cancellation policies in case you need to make changes quickly.
Adapt for the Times
As you scan your invoices, you may also find that you’re paying for services that you don’t currently need while facing new pandemic-related costs — like enhanced cleaning. One way to combat this is by pulling the cost from areas of your business that might not be as critical. For example, food and beverage in your waiting room may have been important in the past, but a better investment today may be the trust that comes with a clean dealership.
Restart the Engines and Look to the Future
After having a better understanding of the current state of your finances, develop a plan that can continue to grow with you well beyond the pandemic. Reviewing your expenses at a set time every year — or even every month — can help you continue to build strong financial habits for your dealership and keep your budget from slipping through the cracks.
When your dealership is making money, it’s easy to get too comfortable. The current economic environment should remind everyone that effective expense management might seem like a simple task during the good times — but can be crucial to how a business survives a difficult stretch. Use the next few months to establish strong expense management practices to help protect your business be ready for any opportunities that may lie ahead.
Julie Becker-Myers, Director of Dealer Consultation, Ally Academy
This story appears in the 2019-2020 Issue 4 of the Utah Auto Dealer Magazine.
