Now Is The Time

Get ready to dig into your October financial statement.From a timing standpoint this is a perfect time of the year. I always looked forward to analyzing the October financial statement.

I can’t say that math was one of my best subjects, but I can divide by 10 real easy. At a glance I know what the averages are for any line item expenses, sales volume and gross profit. A Oct. Cal

What also makes October a perfect time is it sets the stage for the next year. Now is the time to start planning for 2014. Waiting until the last week in December to get your plan together is a really bad strategy.

This is the perfect time to dig in and firm up your fundamentals in all departments. This is the time to get back to basics. This is not the time to cut back on your training. This is when you need to amp up your thinking and stretch your organization.

If you don’t have a solid foundation of basic processes you will never maximize your success. This is the time to take control of the “evaporation factor” that’s been occurring all year long. This is the time to stop the “process bleeding.”

Your long term plan should include joining a Twenty Group and attending the NADA convention. Look, we all get lazy, and get caught up in our daily routines. Attending these meetings gets you revitalized. It gets you outside of your daily box and opens your eyes up to what the possibilities might be. Seems like a no brainer. This is the time to make those plans.

Teamwork is critical if you’re going to maximize your bottom line. To keep your team on the same page you have to constantly communicate to them what the expectations are and what processes they are expected to follow. There is no “shake ‘n bake” solution. You don’t fix it and walk away. You fix it and re-fix it.

What to do?

1. Ask yourself if you can improve your processes? If you focus on revamping your processes, what effect do you think it will have on your business? It is an absolute fact, that regardless of how well disciplined you are, over time your processes are going to evaporate. The best piece of advice I can give you is to lock yourself and your management team in a room and review every detail of your selling processes. Be bluntly honest with yourself. Then take the necessary action to get you back on track.

2. Can you improve your team? Got the wrong players? Now is the time to make the changes. If you already have the right team in place then it’s time to let them know what your expectations are and show them the plan and the path to achieve those expectations.

3. Don’t think of your planning as “you now having a plan.” Think of it as a “mission.” Plans can fall apart. When you’re on a mission you stay after it until you succeed.

I’m on a mission to get you to re-think what you’re doing…That’s all I’m gonna say, Tommy Gibbs

Whatcha Got?

I had great mentors when I first got in the car business. One of the first things I learned was that when a salesman was working a deal the whole world stopped.

Most of us are familiar with the tower or desk concept, the area where deals are worked, which can at times be like Grand Central station. It’s the nerve center. It’s the airplane control tower. It’s the emergency room and ICU all rolled into one.

What it’s not is a place to socialize, but socialization does happen there. With that being the reality, the management staff has to have the discipline that all silly activity stops when a sales person walks in the room. To this day when I’m in a dealership and a sales person walks in the tower I want to say “Whatcha got?”

Sometimes they have a deal. Sometimes they have a question. Sometimes they need encouragement. Sometimes they are looking for a little push. Sometimes they are just lost. But at all times I want them to know I care about them and I’m there to help them do business.

If you’re not already using the term “Whatcha got,” maybe you should. By saying “Whatcha got,” you will get a lot. That’s all I’m gonna say, Tommy Gibbs

Inventory & People

The two hot topics of conversation of late, actually all of the time, have been how to find more cars and how to hire more and better people. That same conversation occurred 20 years ago and will occur 20 years from now. The reality is that there is no simple fix to either of these problems.

If you think hiring a rock star buyer will solve your inventory problems in the end you will probably make them worse. If you think hiring a full time trainer/recruiter will be the fix-it for your need for sales people then it’s probably not going to work out all that well. But of the two, hiring the recruiter/trainer will probably work out better than the buyer. These are the two toughest problems facing all automobile dealers and there is no one fix and voila it’s done.

Finding great players is a fulltime, never ending job. It’s just like being in the coaching field. Great coaches are always scouting and recruiting. If you are looking for a magical ad to put in the paper that’s going to attract your next superstar you may be waiting quite a while.

If you are looking toward the next great job fair and think you’re going find 10 college graduates for your sales team that will carry you to the promised land you are in for a very long day. It doesn’t happen. It doesn’t work that way. If you wait to hire people when “you need” them you are never going to find the people you need.

You and your assistant coaches have to be recruiting every minute of every day. You should be recruiting your customers, the sales clerk at the shoe store, your next-door neighbor, the waiter or waitress you meet at lunch or the enthusiastic hostess you met at Applebee’s. One of the most successful General Managers I know was working at Wendy’s when he started selling cars.

I love college graduates. It’s not so much what they actually learn, but it does show they can stick to something. However, the odds of them sticking with you are not very good. Most college graduates don’t see selling cars as a “step up” in their life.

What you should be looking for is someone who feels they missed the boat and this is their big chance. Someone with a year or two of college is a great selection. They think they screwed up by not finishing school and they see what you offer as a super opportunity. And of course it they have a sports background all the better. They are used to getting knocked down and getting up.

As for finding more inventory…Hey coach it’s the same thing. It’s a constant thing. There is no one answer. If you are going to succeed in finding used car inventory you cannot leave any stone unturned. Trades, mining your customer base, online auctions, auctions, for sale by owner and any other brilliant idea you can come up with. But, none of them in and of themselves will give you the inventory you need. If you are only looking for cars when you need them you are going to end up with a lot of cars you don’t need.

When it comes to finding people and finding inventory they both require an ongoing effort by the entire management team. When you dabble in finding people and cars when you most need them, it’s like plowing a field uphill with a mule.

When you can convince your management team that we all have to look for inventory and people in multiple ways then you will at least have some control over your destiny.

It still won’t be easy, but the alternative is far more frustrating and a lot less rewarding. That’s all I’m gonna say, Tommy Gibbs

Management By Committee

I’m a big fan of making the team inclusive of what’s going on. I’m a big fan of educating the team. I’m a big fan of getting insight from those who are in the trenches. I’m a big fan of listening to the troops.

But, I’m not a big fan of rule by committee. Ruling by committee is an easy way to avoid accountability. Ruling by committee allows us to blame no one when it fails. Ruling by committee is a sickness designed to allow those in charge to accept responsibility for nothing.

Ruling by committee is a way to hide in the back room. Ruling by committee is peeking through the closet door.

Step out of the closet, come into the room and be counted. If you’re ruling by committee, stop it! You’re not running a democracy, you’re running a business.

That’s all I’m gonna say, Tommy Gibbs

Kids Say The Darndest Things

We have no doubt become enamored by the numbers. We track this and that and a little bit of everything. There was a time many moons ago when the two most important things we tracked were how many ups we had and how many we sold. In some ways we may have over complicated things and in other ways not so much.

I would strongly argue the point that it is the simpler things we need to pay the most attention to. There are some people in this business who make it much more complicated than it needs to be.

There is a number, a very important number, yet a simple number, that I find the most ignored in my travels and that’s “look-to-book.” Book A

Before I go any further, let’s make sure we all agree on what “look-to-book” actually is. It is: How many cars did you appraise (look at) and how many did you get. It doesn’t get any simpler than that.

I cannot tell you the number of times I ask the question, “What is your look-to-book?” And most people don’t have a clue. At best they state a guessed number because they have heard that’s what it should be.

Maybe it’s ignored for the same reason the number of ups and the number closed is often ignored…because it’s not always accurate. If you don’t get all your ups logged then you are misleading yourself with an amazing closing ratio. If you log all your ups, then you get upset that your closing ratio is too low. Oh, whatever. Get it right. Demand that it be done correctly.

And maybe it’s the same for look-to-book. Or is it? Is it that you really don’t understand the importance of look-to-book? Look-to-book is a powerful tool to help you make more deals. The more units you can capture at the front door the more gross per unit you end up making.

The question often comes up as to what your look-to-book percentage should be. Most would answer the question by saying in the 40 to 50% range. (It means nothing if you don’t put them all in the system.) My answer to the question is there is no specific number it should be. What it should be is better than you were yesterday.

You should always be thinking press it up:

The more you press it up, the more deals you are making.
The more you press it up, the more your average gross will go up. (You always make more on trade-ins.)
The more you press it up, the less of a need you have to go out and purchase cars.

Do you remember the Art Linkletter program, “Kids Say The Darndest Things?”

That happens in the car business too. Managers often say the darndest things, such as “We Never Miss a Trade.”

I’m thinking you do. Actually I know you do. We all miss trades. If you aren’t paying attention to look-to-book you have no idea what you might be missing and I’m thinking you’re missing a lot. That’s all I’m gonna say, Tommy Gibbs

Not Self, But Others

This past weekend I had the honor of being inducted into the Ferrum College Football Hall of Fame. Actually it was the entire team from the 1965 National Championship team. Ferrum is now a four year school, but at the time we won the Championship it was a Junior College. Can you say “bad student Tommy?”

I was a defensive safety. Fast and mean. Imagine that. If you have an appreciation for football you can probably appreciate the fact that we went 10-0, had 7 shutouts and only gave up 18 points the entire year. That’s strong as goat’s breath. I (We) might have been better than I thought.

I’m not writing this to tell you about my accomplishments, as much as to tell you about a couple of observations.

First, I hadn’t seen my teammates for 47 years. Though most sounded the same, none even came close to looking the same. Many are overweight. All are aging just like me. When I look at the original team photos I sorta gasp. What the heck happened?

In a sense it seems just like yesterday we were beating and banging on each other and in a flash we’re all as old as dirt. I don’t get it. What happened to all the time? Where did it go? How did this all happen so fast?

The message here, whether it’s business or your personal lives and regardless of where you are in the cycle of life, enjoy it, try to understand that if things are good or bad that where you are today will not last forever. Enjoy where you are.

I had another great take away from the ceremonies I want to share with you.

One of the other items on the agenda was the presentation of the “Distinguished Alumni Award.”

As the master of ceremonies was going over a former tennis player’s list of accomplishments he mentioned she had won an annual “sportsmanship award” presented by the NCAA.

When she got up to speak, she told the story behind the award. She stated that her coach had always warned her to make sure she took two tennis rackets with her to every match just in case one broke. The way she put it is, “he had beat it into her head.”

In the middle of a regional NCAA tournament match her opponent broke her racket. And guess what? Her opponent didn’t have a spare. Apparently there is an amount of time they give you to come up with another racket. The other player’s coach was not present to help her find one and time was running out. She was going to have to forfeit the match. The young lady who won the award gave her opponent her spare. And guess what? You guessed it didn’t you? Her opponent beat her with her own racket.

The school’s motto is, “Not self, but others.” She obviously learned well. When you put others first, you always win. The game of life (and the game of business) is short. Putting others first always makes you and the team winners. That’s all I’m gonna say, Tommy Gibbs

Why Would You Take The Losses?

I continue to be amazed and flabbergasted by what some people are thinking when they finally decide to clean up their problem cars by dumping them at the auction. I’m not talking about the onesies or twoesies that you dump at the end of the cycle. Nor am I talking about the clunkers with no life left in them that you sell at the local auction.

I’m talking about those that surfaced when you changed used car managers. Sorta like finally finding all the dead bodies. More often than not it’s in the $100,000 range of water going over the dam. Money AA

The dealer’s famous last words are “Oh crap, all these problem cars have been hidden by the previous used car manager. I’m gonna fix this once and for all. We’re gonna dump all these problem cars and start over.”

Really, really, really…why would you do that? Why would you want to lose $100,000 in an instant?

Let me give you some basic math. Let’s suppose you have 50 cars and you’re $2000 high in each car for a total of $100,000. In your brilliant thinking and with a mindset of starting over you take them to the auction and lose $100,000.

As much as none of us like writing inventory down, let’s pretend you decide to re-appraise those aged units and take the $100,000 worth of water and eat a bit of it each month, at the end of the year or whatever.

You now own the cars for the “real money.” The best part is that prior to taking this drastic step you developed some solid strategies and put into use Tommy Gibbs’ world famous “Life Cycle Management Process.”

You take each of these re-appraised units that are now on the money and give them a new birthdate, along with a life cycle exit strategy.

Since you are now “on the money” we can safely assume that the sales people are less likely to walk around them. Also, we can safely assume that we have a much better chance of retailing them now that we can price them right using the vAuto pricing tool.

I think it’s a safe bet that on these “on the money” units you will generate $70,000 or so in front gross profit.

Ok Einstein, how much money did you really lose versus taking them to the auction? $30,000. Would you rather lose $30,000 or $100,000? But wait there’s more! You didn’t have to truck 50 units to the auction and you didn’t have to pay auction fees on 50 units. Yes, you did have to pay commission on the 50 units you retailed. Tell me how retailing more cars and paying a commission is a bad thing!

Oh shucks, I failed to mention you might have some F&I income from those units. Oh darn, I also failed to mention that you might have a trade in on some of those 50 units. More darn, I almost forgot to mention the retail parts and service work that might come your way from having a retail customer. Oh, pooh, I also forgot to mention you have just captured a retail customer who might re-buy from you down the road, or they might even tell a relative or friend how awesome you are.

Yeah, go ahead and dump those 50 units at the auction. It’s faster, easier, and more fun…and you send a powerful message that you have finally gotten serious about the used car business. Works for me. That’s all I’m gonna say, Tommy Gibbs

When The Decision Is Made

I’d like to think when major decisions are made that affect your team that you are included in the decision. And that once the decision is made it’s full steam ahead to make it happen by you and the team.

Years ago at my Toyota dealership I had a parts and service director who was a retired Master Gunnery Sergeant in the Marine Corps. Since I’m a former Marine, you just know I had to love that guy. If you don’t understand military rank, just understand even though it’s an enlisted rank, officers don’t generally mess with a Master Gunnery Sergeant. A Master Gunnery Sergeant is one of the most respected ranks in the military. 

He & I would often have meetings on Parts & Service issues and we did not always agree. I knew enough about parts and service to be dangerous. Even when we did not agree, once it was all said and done and I had won, when he left that meeting with his marching orders you can be assured the mission was going to be carried out.

Far too often those in business shake their heads “yes,” as if to say “I’m all in,” and then do their best to circumvent the mission just so they can be right. It’s not about being right. It’s about carrying out the plan at hand.

Your job should be to do everything you can to make the plan work, not the opposite. You and the team will never be all they can be unless you do so.

Semper Fi is all I’m gonna say, Tommy Gibbs.

Just in case: Semper Fi means always faithful.

It’s All About The Bar

I often hear dealers complain about the quality of the people coming into the business. They complain that it’s hard to find people willing to work and who want to make some real money. Could it be that dealers are trying to hire the same type of person they were trying to hire 20 years ago?

I’m betting that many of you have experienced sales people selling less than 8 units a month. How can someone come to work every day, and only sell 8 cars a month? You have to ask yourself how is that possible? Are you making excuses for their lack of performance? Have you accepted mediocrity?

There’s a difference between showing up for work and actually coming to work. I’ve told this story before but it’s worth telling again. Many years ago I had an outstanding salesman who worked for me by the name of Sam Newsome. One of the things I always said about Sam was that when he came to work each day, he “came to work.

You never saw Sam when he wasn’t busy. He was always doing something to create business. If he didn’t have a customer he was either on the phone trying to find one, walking through the service department looking for one or he was busy in the inventory making sure he knew exactly what we had in stock and where it was parked.

I don’t think there are many Sam Newsomes out there and the problem is many dealers are still looking for Sam. And the reason you continue to look for Sam is that you’re not willing to change the way you view and want to run this business.

The best way for you to start to raise the bar is to raise your standards for the type of people you hire and the type of processes you demand that your organization embraces.

Raising the bar is exhausting and hard work. Raising the bar means being committed to the hiring and training of a different type of sales person.

Raising the bar goes against the grain. Raising the bar requires one to be a student of the game and have the willingness to change the game knowing there will be serious opposition from the masses. Raising the bar means developing new and innovative pay plans. Raising the bar means changing the selling system to fit today’s buyer.

Today’s buyer is just like you. They would much rather do the majority of their shopping online. You cannot sell cars to the online shopper the same way you sold cars 20 years ago.

Changing the game means changing the rules. Changing the rules means holding more people accountable for raising the bar. The bar does not get raised and left in that position. The bar has to be raised every day if you are going to continue to play the game and be successful.

Realize that raising the bar even just a little bit gives you an edge. It’s easy to do because so many of your competitors are locked into lowering the bar and accepting the business as it is, not as it could be.

To raise the bar:

Do It With Enthusiasm
Have No Fear
Change The Expectations
Don’t Make Exceptions
Create Accountability
Penalize Non-compliance

So, the choices are easy, you can continue to lower the bar, you can raise the bar or you can head to the bar. That’s all I’m gonna say, Tommy Gibbs