There is more to being a profitable dealership than simply doing well in both sales and service.
By first identifying inefficiencies and then putting efficient systems in place, you can add potentially tens of thousands of dollars to your profits every year.
Think of inefficiency as rat poison.
In 2017, Alabama Football Coach Nick Saban famously referred to the media hype surrounding his team as "rat poison," which prevented his team from reaching its full potential. Inefficiency is the rat poison of business, preventing you and your employees from reaching your full potential. As long as you continue to consume the poison, you will never be at full strength.
Inefficiency takes many forms. It can be time-consuming activities, bad communication practices and systems that bring no return on the time and money invested in it.
"You've got to maintain a high level of efficiency in every department at your dealership, " EverLogic Sales Manager Ryan Winter said. "Every single moment that is spent doing something that could be done better, or more efficiently, is profit that is taken out of the dealer's pocket."
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Identifying inefficiency comes down to making sure everyone who works at your dealership has what they need to make sure their job done with speed and accuracy. As an owner, it is up to you to observe what processes are not working or not working efficiently, then find the solutions to those problems.
"You're just throwing away money because your team doesn't have the tools that they need," Winter said. "I've seen dealerships that cut their inefficiency costs by a total of 100, 200 hours per week to several hundred hours a week just because they're using the right system tools."
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Before addressing all of the problems that affect your profit, know that you can't fix everything. You should identify the variables affecting your business that are out of your control like supply chain shortages and customer response time. This will make it easier to focus on what you can fix.
"What we can control though is little things like do we have to walk across a shop to work on a vehicle and then look up a part on a desktop computer?" Winter said. "Or is annoying or a hassle to do my daily tasks?"
One common inefficient practice Winter hears from dealers is the double entry of data, that is entering the same data into different systems. Winter says that if it takes two hours to put the same data in twice, at $20 an hour, a dealership could lose more than $10,000 in a year.
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An example of a double-entry of data would be end-of-day accounting. When you do your end-of-day accounting, you may realize you end up putting in the same data in both your dealership software and your accounting software. This process is not only tedious, but it is also time-consuming. It also runs the risk of an inconsistency between the DMS and accounting software if the person doing the accounting makes a typo.
In fact, the reason EverLogic began is to solve the double-entry of data problem. A dealer told a family member that his dealership spent far too much time entering accounting data in his current system as well as QuickBooks.
"That's a huge waste of time," Winter said. "So that's how EverLogic got its start: Eliminating that need to enter the data in QuickBooks and your dealership operating system."
Double-entry of data is a perfect example of an inefficiency that needs to be addressed to make more profit.
"Any dealership management system that works with all of your departments internally is going to help you become more efficient," Winter said.
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Inefficiency has many forms, much of which is up to you as the owner to identify and change. Added up, inefficiency can cost your dealership tens of thousands of dollars each year which prevents your business from growing. Time is always of the essence to fix efficiency problems.
Usually, you can find the solution to inefficiency in the systems you have in place. If a system is inefficient, it is your responsibility to invest in the systems that can ultimately save you money in the future. Regardless of what your efficiency issues are, you need to do your homework to make sure that your solution is the most efficient for your dealership.
To see how EverLogic can increase the efficiency of your dealership, click the button below to view our demo.