Archive for January 2015

Steal The Chairs

Would you like to have a more productive day? Are you willing to try a little experiment?

Steal the chairs. Hide the chairs. Yep, hide them. Take them away. Put them in the back room. If someone needs a rest, send them to the “chair room.”

You and your staff will have a very productive day when you can’t sit.

If you’re not sitting, then you’re gonna be moving. Moving around is a good thing. It creates action. It creates energy. It creates production. It creates sales.

Get rid of the chairs. Do it. Do it now. Get moving. You’re gonna have your best day of the year.

That’s all I’m gonna say. Tommy Gibbs

The Bank

One of the things I’m constantly encouraging my readers and clients to understand is that keeping units past 60 days is a really, really bad business plan. It borders on insanity.

If you still have 60-day-old-plus units, and/or you’re not a believer yet, I want to give you another way to frame it.

If you had $1,000,000 in the bank and each month the bank took $100,000 of your money and said “Thank you, goodbye, and have a nice day,” how long would you keep your money in the bank?

Well, well, well—hello 60-day-old units.

If you have $1,000,000 tied up in used cars, and $400,000 of it is over 60 days old, (I see numbers like this all the time) you’re losing a minimum of $40,000 month, give or take. If you want to debate the 10% idea then say goodbye to 5% and ring up a loss of $20,000.

One thing is for sure, you no longer have the $400,000 you thought you had. You do on paper, but you don’t in reality.

I have a lot of dealers who send me their GAP/ROI spreadsheet to review each month. (If you don’t know what it is, then you should find out.)

What is so shocking is when you sort the columns by days in stock or gross profit, more often than not, there isn’t any money being made after 30 days. Yep, 30 days. You don’t have to take my word for it. Just start tracking your mess and you will see.

We are all good sales people. Good sales people like to be sold. Often, someone is selling you on the idea it’s ok to keep ’em past 60 days. And even sadder, you might be selling yourself that it’s ok to do so.

A very smart man once told me that there are three places you should never put your money; in the bank, in the bank, in the bank.

Don’t be stupid. That’s all I’m gonna say. Tommy Gibbs

The Great Ponderer

Many years ago we had a CFO in our organization that I like to refer to as the “Great Ponderer.”

Any decision, including how he was going to arrange the vegetable on his salad plate, was an exercise in pondering. He had to ponder anything and everything in his life.

Without a doubt, you have to think things through and analyze the risk involved. But far too often we humans tend to over-think.

Any decision you make has an element of risk tied to it. Nothing is perfect. If you’re hitting 100%, you’re pondering things too much. If you’re hitting 100%, you’re not taking enough risk.

It’s ok not to be right all the time. As a matter of fact, it is better to be wrong once in a while.

Think about that statement, but don’t ponder it too long.

That’s all I’m gonna say, Tommy Gibbs

Planes, Trains & Automobiles

As I write this I’m headed to the NADA convention. Are you going? If not, maybe you should be.

If you’re not going, I’m wondering why? Why would you not go? Don’t have time? Don’t want to spend the money? Don’t want to leave the store? None of those are very good excuses.

Now is the time to open your mind and shoot some WD 40 into your brain to loosen things up a bit. It’s winter, it’s cold and if you’re not careful your brain will freeze up and not thaw until sometime in August.

If your mindset is “the Convention is always the same” then the only reason that would be true is because you’re always the same. You get out of something what you put into it.

It’s hard for your vision to change when you sit there and stare at those same walls and same people day after day.

That’s why you need to go. You need inspiration. You need to see the possibilities. You need to go and learn something.

If you show up and find me I’ll give you a copy of my book, “The Little Used Car Book, Volume 6.” My little book is not a cure-all for your used car business but it’s guaranteed to give you some ideas and wisdom to help your bottom line.

By helping your bottom line, it will more than pay for your little trip. I’ll be hanging out at the vAuto booth (1718S), so look me up.

I’d hate to miss you this year. That’s all I’m gonna say. Tommy Gibbs

Make It Short

Being short is good. Sometimes a short answer to a question is the best answer. Just tell me what I asked you.

I don’t need you to tell me the color of the sky and the number of clouds that you saw on the day we missed the deal. I don’t need to know how smart you are.

Just give me the answer to the question I’ve asked. Leave out the rhetoric. Leave out the “who shot John.”

I read Seth Godin’s blog each day. When it’s short I read it. When it’s not, I pass.

In case you haven’t noticed, I’ve tried to make my newsletters shorter so maybe, just maybe you might read them. Better yet, you might pay attention.

There are times when being short is the best way to go.

All those meetings you have…make them shorter.
All those cars going thru reconditioning…make them shorter.
All those deals you’re penciling…make the process shorter.

Short is good. I’ve got nothing else to say, Tommy Gibbs

Back In Style?

I’m thinking about half my readers know what a “wash out sheet” is and the other half probably don’t. For those that don’t, in the early years of the retail auto business, dealers used a “wash out sheet” to determine how much money they really made on the sale of a vehicle.

Here’s the way it worked. A new car comes into your inventory. You don’t know how much money you made until any and all trades are sold and thus “washed out.”

Follow the sequence. A new car creates a trade; you sell the trade. You trade in another and finally sell the last one with no trade. You then you calculate the total gross generated by the sale of that one new car plus all the trades.

It this case it took 3 transactions to determine how much total money was made. You would do the same thing if you purchased a used vehicle. If there were no trades or maybe one, the wash out occurs much sooner.

Some dealerships didn’t pay the sales person his/her full commission until the deal “washed out.” Do you think the sales person had a vested interest in seeing that the trades got sold? You betcha!

As I see the industry struggling with gross profit I have to wonder if maybe we’d be better off to go back to the old way of thinking. With technology being as sophisticated as it is today, why not calculate the total gross generated by one new car sale or one purchased used car sale?

We can all agree that to improve front gross profit, we need to work harder to sell the value of the vehicle and our organization. Most would also agree the key to long term success is going to be to improve volume.

If you’re going to improve volume it might be wise to look at the big picture by thinking about how much total “wash out gross” we are generating rather than just the sale of one unit.

It’s kind of like suits and ties. Keep them around long enough and they will come back in style. That’s all I’m gonna say, Tommy Gibbs

When It’s Not Working

If what you’re doing isn’t working, why do you keep doing what you’re doing?

Maybe you don’t know it’s not working? Nah. Could it be you know it’s not working, but keep thinking if you stay the course that it eventually will work?

I’m all for staying the course, but how long can you stand to stay the course? The sad part of this story is there are those around you, some not even as smart as you, and they know it’s not working.

They are embarrassed for you, but they are afraid to speak up. They know you already know it’s not working, but they don’t want to make you mad by telling you something they think you already know.

Only an idiot stays the course when they know it’s the wrong course. You’re not an idiot. For gosh sakes, do the right thing and change directions.

The worst that can happen is it doesn’t work. What you’re doing ain’t working. Changing the miserable course that you are on will energize the team and when you energize the team anything is possible.

I’m energizing you. It’s working. That’s all I’m gonna say Tommy Gibbs

The Devil Is Gonna Get You

My parents and grandparents lived through the Great Depression. Their lives and the way they think about money and how they spend it was dramatically changed forever.

In the last 10 years or so many dealers went through their own great depression. No doubt, many learned some very valuable lessons.

It’s funny how a few good years in the car business can make one forget life’s valuable teaching moments. I get to see a lot from where I sit, and what I’m seeing is dealers feeling a great deal of temptation right now.

You might fit one of these two categories:

1. You’ve done a good job of selling down for the winter season. Inventory is short and you’re worried that you may not be able to keep pace with your current growth. You want to go out and buy a bunch of inventory so you can be ready.

Tommy Says: Oh stop it. You’re in the catbird’s seat. Take a look at what you sold last January, February and March. I’ll bet you if you turn your current inventory, add a little here and there that you can exceed what you did last year. You’re poised to have the best spring and summer in your entire career. You’ve gotten smarter this past year. Don’t be stupid and let the Devil turn you into a dummy.

2. You’ve got lots of inventory on hand. Lots of aged inventory, that is. The Devil is telling you to push the panic button, unload them at the auctions and start over. Prices are dropping and you are tempted to go buy some new stuff and be ready for the New Year.

Tommy Says: Oh stop it. You cannot win by dumping all that aged crap at the auction. If you’re going to do anything you’d be better off writing them down, finding retail buyers and getting yourself in position to have a big spring and summer. Now is the time to fix your mess. You’re not going to fix it by letting the temptation of unloading your crummy aged inventory in the wholesale market and loading up on more inventory.

The light you think you’re seeing at the end of that tunnel is a locomotive being driven by the “Devil of Temptation.” That’s all I’m gonna say. Tommy Gibbs

What I Wish

1. That you and your team have the most successful year in your history.
2. That you and your team understand the value of pressing your cost down.
3. That you and your team embrace becoming a stude nt of the game.
4. That you and your team turn and burn high dollar units.
5. That you and your team buy very few and selectively from the rental car companies.
6. That you and your team never miss a trade at the front door.
7. That you and your team buy more units from your customer base.
8. That you and your team utilize my “Life Cycle Management Program.”
9. That you and your team realize you don’t make money on units 30 days and older. Yep, 30 days.
10. That you and your team re-think recon cost and packs.
11. That you and your team get your vehicles in and out of recon down to 3 days or less.
12. That you and your team continue to move to “one-price” by learning how to say “no” to the customer and “yes” to selling the value of your product and your store.
13. That you and your team realize paying on gross makes no sense.
14. That you and your team pick up your intensity and make things happen.
15. That you and your team become a team.
16. That you and your team add me to your team.

That’s all I’m gonna wish, Tommy Gibbs