Comments Off on Choose to invest in existing operations before investing in others
By Phil Villegas
For most of my automotive career I’ve been around dealership buy/sells, first as an employee at a dealership, then for a dealer group that was acquiring stores, and lastly as an advisor to dealers in these transactions. Over this time, I’ve had the opportunity to witness a wide variety of what makes some deals work and others not so much.
In circumstances where transactions went very well, I’ve found that it’s a progressive evolution of the dealer, where expansion comes on the heels of maximizing current operations. These dealers have put themselves in a situation where they have generated strong financial performance and developed a deep management bench and look for new stores to provide their capital and team members a platform for continued success.
Which raises the inherit question as to why certain dealers expand when there is still plenty of growth and opportunity at their existing stores. For most public [...]
Comments Off on The lost art of internal controls over journal entries will cost you thousands.
By Marilou Vroman, CPA, CFE
Remember a time when journal entries were hand written on green ledger paper and were reviewed and approved by the controller prior to posting? In a time when our DMS systems have enabled ease of journal adjustments through source journals we have found more opportunity for theft and income manipulation than ever before.
During our internal audits we often review adjusting journal entries very closely; we have found there is an inverse relationship between the cleanliness and “health” of a dealers financial records and the volume of journal entry adjustments that occur within the dealers books. In a perfect world, there would be very few adjustments since every transaction would be recorded correctly up front. Since we are not in a perfect world, it’s important to know who is adjusting the books, why those adjustments are being made and whether the adjustments have been properly approved by department management.
Comments Off on Your employees may row the boat fast, but are they going in the right direction?
By Sam Flores
As we close yet another year, it is important to “review and measure” your dealership’s overall performance to gain a better understanding of the things that worked and didn’t work for you and your operations, so you can make the necessary adjustments now to lead to greater success in the future. Did your company meet its goals? What objectives were missed? Were there any obstacles that kept you from succeeding? Does your team know what your objectives are?
A “review and measure” approach should be conducted annually, both for you and your employees. I cannot stress enough the importance of employee evaluations. When done correctly, the personnel evaluation should reflect a clear outline of the characteristics which make for a successful employee within your company, but not just any company – YOUR company. It should not be solely a critique of an employee’s performance on their anticipated job duties, but rather, a [...]
Comments Off on Cooling Off – Time To Build Reserves
By Phil Villegas
After many years of the stability and brand performance parity, I sense we are going into a very interesting era for automotive dealers. While in my opinion there is a lot of fuss over “Mobility” and the virtual doom it has in store for a large percentage of the dealer network, I feel there is a more traditional and imminent threat to dealers before autonomous, subscription or ride-sharing services put a dent in the industry.
My primary concern relates to what appears to be a likely recession to come within the next few years. While there are varying schools of thought of whether a recession is likely, the reality is we currently find ourselves not too far from being in longest economic recovery in US history, close to 10 years. Despite this extended economic run, we are seeing other signs that bolster recessionary concerns like:
Comments Off on How a ten-minute investment can truly help your bottom line.
By Marilou C. Vroman, CPA, CFE
The fact that you are now reading this article means you already embrace the value of this week’s tip. We’ve all been there – you start your day with a to do list a mile long and wonder how you will make it through. Deadlines, making deals, meeting objectives, pressures coming from all directions. Your day is spent just keeping up. For many months I was so busy, I would see the latest issue of Automotive News or Journal of Accountancy land on my desk only to see it be covered by the next month’s issue, and the issue after that. You’re shaking your head thinking “well that sounds familiar.”
There came a day during a business lunch where I was among several dealers discussing a hot topic stemming from an OEM playing a strong hand with the franchisee’s and I really had nothing to say. It was not [...]
Comments Off on Building Future Qualifications by Strengthening Your Current Workforce.
By Sam Flores
Are you sure you have the right people in the right seats?
It has been my experience that when people are hired, they are usually brought on board to fill a need, a specific function or set of related functions left vacant or added due to growth. But how close are these functions really related? Are they simply bundled together because these were left to delegate after the main functions were handed out? Many times, we as managers, focus on the set of tasks that need to be done, and assign them based on complexity to the most experienced employees. We tend to distribute functions according to skill set until the most basic tasks are left for the newest employees. This approach is not necessarily the best solution because I have found even the least experienced employees can excel in certain areas where even the most experienced may not.
Comments Off on Experienced Personnel can Mitigate Cost and Stress at Buy/Sell Closings
By Phil Villegas
During my career I’ve been part of dozens of dealership buy/sell closings, and they all have a common thread in that each closing is entirely unique yet will undoubtedly have a certain level of stress associated with it.
To put it simply, the largest stressor of any closing is that one or both transacting parties want to screw the other over. Call it financial discretion or competitive gamesmanship, either way, this approach by many dealers at a closing can often be counter-productive, not to mention very costly if the parties are not properly prepared.
From the calculation of vehicle credits, identification of incentives, validation of fixed assets, valuation of miscellaneous and parts inventories, to the determination of liabilities to existing customers and vehicles that have already been reported as sold, there are several areas for either a buyer or seller to easily be taken advantage of.
Comments Off on Lessons for Dealers From The Service Industry.
By Marilou C. Vroman, CPA, CFE
As I made the passage from working as a Controller / CFO in dealerships to the exciting world of automotive retail consulting, I was introduced to a concept about the quality of services early on. This concept resonated with me because it applies not only to dealer advisory services but also to every aspect and department of a dealership.
In simplest terms: “We offer three types of services – Good, Fast and Cheap, but you can only choose two. Good and Fast won’t be cheap. Fast and Cheap won’t be good. Good and cheap won’t be fast.” This is so true!
In your service department, if a technician is more concerned with flagging maximum hours without concern for the quality of their work, you will likely see more comebacks. In the accounting department if you want to save on overhead and understaff, or hire under qualified personnel, you probably [...]
Comments Off on The Importance of Employee Empowerment
By Sam Flores
What do you do when you observe, or are put into a situation that you believe is illegal or, at the very least, unethical? What if the person responsible for the situation is a superior?
A clearly defined employee handbook outlining expectations and well documented policies helps minimize ambiguity that may result in “personal interpretations” of the company’s rules and regulations. But who is ultimately responsible for ensuring that rules are followed? Most Controllers I speak to face this same dilemma. Many times, I’ve heard, “We get blamed for everything.” Although this may be a bit unfair, and at times not totally true, the accounting department is typically held to a higher standard. Controllers are, in many ways, expected to be the stop gap to rule breaking. They typically ensure the rules are followed. We have all experienced at one time or another, the penalties that can come from non-compliance. But no [...]