Forecasting is a Waste of Time?

I’m betting you’ve either got a lot of numbers already laid out on a spreadsheet for 2020 or you’re scrambling to get it done in the next few days.

I’m a big proponent of forecasting. It lays out a map as to where we are going. Although there are detours along the way it gives us a chance to get to our final destination.

I’m an even bigger proponent of department head meetings. I believe your job as a leader should be to teach, educate, coach and encourage your team to seek ways to improve your operations.

I tend to take a common-sense approach to most things in life and I approach forecasting and monthly management meetings no differently.

Dealers, or any business for that matter, tend to forecast based on what they would like to do in the upcoming year.

Often it’s based on statements such as “we need to increase our sales by 10%” and/or “we need to reduce expenses by 15%.”

Saying you want to increase your business by 10% sounds good, but if you don’t have a plan to get there what good is it?

I’ve always been baffled by annual forecasting.

One of two things usually happens:
1. Someone is overly optimistic and/or they are blowing smoke up someone’s butt.

2. Someone serves up a low ball because they don’t want the pressure of hitting an unrealistic number.

Although dealers want to see an improvement in the next year’s numbers, what they really want is a number they can take to the bank.

In order to do a realistic forecast, you have to take into account staffing, inventory, and market conditions. How can anyone do a forecast and predict what those three pieces of the equation are going to look like 3, 6 or 12 months down the road?

I’m not saying you shouldn’t do an annual forecast, but doesn’t it make more sense to adjust that forecast monthly or quarterly based on those three fundamental elements?

Because most leaders don’t make those adjustments it frustrates the management team and defeats whatever good intentions there might have been. Everyone eventually loses respect and confidence in any type of forecasting and concludes “Why bother?”

While it makes good sense to do a monthly or quarterly review of the actual numbers, managers become disillusioned with these reviews in that they become a “beat up” session rather than trying to figure out what went wrong and how “we” can fix it.

People know when they didn’t perform. What they want from upper management is leadership that gives well-defined ideas and direction on how to “fix it” or make it better.

Using more common sense with your forecasting and monthly management meetings will help you grow a solid organization that generates consistent profits and sustained growth.
That’s all I’m gonna say, Tommy Gibbs

Showing Up

Showing up” is a term that is sometimes used in sports when a player performs well, has an exceptional game, or makes ESPN’s top ten plays.

In reality, it doesn’t actually mean what it says.
Anybody can “show up.” People show up every day. Sometimes you wonder why they even bothered to show up.

Showing up and performing, excelling, kicking butt and taking names is a whole different kettle of fish.

Great players and great leaders “show up” every day for every play. The great ones don’t pick and choose which day or which game they intend to excel in. It’s ingrained in their DNA to “show up.”

They don’t say to themselves, “Hey, I like this day, I think I’ll show up.” They say, “I’m here, let’s get on with it.”

Of course, they have days when they don’t feel like giving 110%, but they dig in, they grind it out, they push through the mess and they make it happen.

The automobile business is a tough game. If you’re going to have sustained success you have got to show up every day and “get after it.”

Getting after it means guarding the processes.

Getting after it means creating high energy.

Getting after it means holding yourself and others accountable.

Getting after it means removing those obstacles that keep your team from reaching their goals.

Getting after it means making those tough personnel decisions that you know you need to make.

Getting after it means amping up your training to be the best you can be.

Getting after it means paying attention to what’s going on around you.

Getting after it means not ignoring “the elephant” in the
room.

If you’ve not been showing up, maybe it’s time you did. That’s all I’m gonna say, Tommy Gibbs

Is It Your Fault?

Frequently in my training sessions, I’ll ask the question, “How many of you agree that we do a lousy job of holding people accountable in the automobile business?” Without exception, they will all raise their hands.

Leaders that have figured out how to hold people accountable are the most successful when it comes to developing a culture of leaders and achieving high results.

Holding people accountable doesn’t have to be a negative experience. When people understand the expectations, they will seek to achieve those expectations, goals, objectives, culture or however you might want to frame it.

People tend to do the right thing when they know it’s in their best interest, not when you have to hit them over the head
with a baseball bat.

Your job as a leader is to sell the team the idea that the things the organization deems to be in the best interest of the organization is actually in their best interest too. Achieving expectations means they win, we win and we all have more success.

Easy tips:

1. Make sure everyone is reminded of the expectations. Yes, that seems elementary, but the evaporation factor is always in play. Either as a direct message or subliminally, leaders must constantly remind the troops of what’s expected and what’s important.

2. Get on it right now. Far too often when there’s a lapse in achievement, leaders let things drag on and on. The more things are allowed to slip, the more those things become a habit, and the more the expectations are lowered.

3. You don’t have to be mean to enforce expectations. People like to work in a well-run, well-disciplined organization. This isn’t about screaming and hollering at someone about their failures. It is about letting them know quickly we’re not on track; you and your team are not getting it done, whatever “getting it done” might mean to you.

At some point, there must be consequences for those who cannot live up to reasonable expectations. The ultimate consequence is they get to go to work someplace else.

4. Be consistent in your actions and statements. The easiest way for expectations to fall apart is that you are all over the place. You let some things slide for some people and not for others. You cannot be Dr. Jekyll and Mr. Hyde. Selective enforcement with just a few people will destroy the morale and productivity of the team.

5. There are times when you need to figure out the real root of why expectations aren’t being met. What’s the real problem? Leadership sometimes will set the wrong expectations. Setting the wrong expectations is just as bad as not having any.

6. In order to hold others accountable, we too have to hold ourselves accountable. We should make it a daily practice of looking in the mirror and being honest with ourselves.

A part of holding yourself accountable is never to forget, “Familiarity breeds contempt.” The closer you become with people the more difficult you make your responsibility of holding them accountable.

I’m holding you accountable. That’s all I’m gonna say, Tommy

What’s Next?

It’s Thanksgiving and time to give thanks. If you’re like me, for sure you have a lot to be thankful for. Among many things I’m thankful for are your friendship and support.

Thanksgiving also starts the closeout of the year. It centers around Black Friday and rolls through the last week of the year. Like it or not, 2020 is already here.

I’ve listed some very basic ideas you need to take into consideration that will help you finish strong and get ready for your best year ever.

A. Re-commit yourself- and your thinking towards being the very best you can be. Take stock of all those great ideas running around in your head. Write them down and make a commitment to get them done by certain dates. Post it on the wall in several places that you will see frequently. If you have a private restroom, put it on the mirror.

The dealers and GMs with the most successful used car operations are those who have taken ownership of the used car department. The more involved you get, the more success your dealership will have. If you’re not committed to the used car business, it’s a safe bet your team isn’t either.

B. Re-evaluate-the appearance of your inventory. Let’s do a little checklist:

1. Look at your inventory online. Are they all there? Actual photos & prices posted?
2. Take a lot walk. Are the vehicles in straight lines?
3. When was the last time the entire lot was rotated?
4. Are you using angles to display your inventory?
5. Do you have hang tags? If so, do they all have hang tags?
6. Are they nasty, dirty on the outside?

C. Refocus Your Disciplines-To be successful in the used car business you have to have daily/weekly/monthly disciplines that you live and breathe by.

One of those disciplines might be to do a weekly lot walk. Every car in your inventory must be touched. If it’s in service, touch it. If it’s in prep, touch it. If it’s in the budget center, touch it. Everybody touches it. Even if you think you have your disciplines well defined inside your head, you’d be well served to make a written list and check them off from time to time.

D. Re-Recon-Take every unit over 30 days old back
through a recon process. (You’ve already missed your best window of opportunity to make gross; that would be the first 20 days.)

E. Re-Invest-in yourself and your management team. Do something to gain some knowledge. Hire me, visit CarMax, or visit a dealer friend in another state that does a good job in used. Attend a workshop. Join a Twenty Group. Join a Used Car Twenty Group. Do something besides sitting there and waiting for something to happen.

F. Re-think- your management team. Do you have the right person running your used car operation? Yes, that person may have been with you for years. Loyalty sometimes equals mediocrity. Maybe they have some great skills, but the fact is that you may not be making the best use of their talents.

I’m thankful for lots of things this holiday season and I’m especially thankful that you’ve taken the time to read my little Zingers. That’s all I’m gonna say, Tommy Gibbs

I Don’t Hate Packs

Ok, I don’t hate them, but I’m becoming less and less of a fan of them and I question if they are working as well as you might think they are.

As a new car dealer for over 20 years I found packs to be a useful and profitable tool to increase profits and flexibility.

Dealers that have packs use them in a variety of ways.

My favorite as a dealer was to use the pack money to step up on trades when we needed to make a deal. We all think differently when it comes to how to make best use of them.

As for being against packs, if they are still working, stay with them. I just question if they are working as well
as some dealers think they are.

I believe that in the big picture they have outlived their usefulness. If you review the history of packs, they came about in part because managers worked from cost up. Dealers figured out that if the manager’s target for front gross was $1000, that they would hit that number if they had packs or not.

It’s very much in the family of why we charge full retail in the service department to the used car department. Over the course of time charging full retail and packs didn’t hurt front gross and it actually made the dealership more money. Over time packs have become their own profit center.

These theories and concepts have worked well for a long period of time. The Internet has dramatically changed the game. More and more dealers are pricing to market vs pricing based on what they have in the car.

They are not working from cost up like they did in the good old days. And, the salesperson has very little control over grosses, as the price has been set before the customer even shows up.

As more and more dealers move away from paying salespeople on gross it makes very little sense to add packs to your vehicles.

As my good friend Dale Pollak likes to point out, packs are
nothing but a tax on your vehicle. You are taxing yourself and making it that much more difficult to be competitive.

As more and more of the likes of CarMax, Varoom, Echo Park, Texas Direct, Carvana, Penske, Auto Nation USA get into the game, the less relevant packs (taxes) will become.

When you’re being charged full retail in service and you also have packs, you are adding additional cost to your inventory that others don’t have.

Every time you go to appraise a unit or go to the auction, those additional charges are running around in your head and are making it that much harder to acquire inventory.

I do believe that with better strategies dealers can improve their average gross profit…but, not by much…thus the only way to win the game today is to sell more used cars.

To sell more used cars you have to be able to get more used cars. To get more used cars you have to have an acquisition advantage. Packs create a disadvantage in today’s market.

If you’re still using packs keep using them if they are working.

But, you should keep asking yourself if they are really working as well as you think and if they are putting you at a disadvantage in the marketplace.

I don’t hate packs, but I do hate it when we lie to ourselves. That’s all I’m gonna say, Tommy Gibbs

If You’re In Charge…Be In Charge

Dealers are always asking “How can we sell more used cars?” The answer is “the dealer.” Yep, the dealer is the answer to selling more used cars. Always has been, always will be.

The definition I’m going to use for the dealer in this article is the PIC (Person in Charge.) In almost all cases the PIC has a used car manager or management team that they have high expectations of and continue to be frustrated with in terms of production and profits.

The common theme among dealerships is that they need a used car manager/used car department that can get the job done.

There are a few used car managers that can actually “get it done.” They understand both the technology side and the common sense side of the business and the dealer knows how to lead these special people. These are few and far between.

The answer to fixing your used car business is the PIC. The PIC is who can improve the used car numbers the fastest. Most PICs want to sit in their offices and push buttons. If you are the PIC and want to take a major leap with your used car business then you need to become the used car manager. You read that right, become the used car manager.

I don’t buy your excuse that you don’t have the time. Most dealers have a good Comptroller, a good Parts Manager, a good Body Shop Manager, a Good Service Manager, and a Good Sales Manager. Most of these departments run better when you keep your nose out of their business.

You have the time if you want to make the time. Far too often the PIC wants to be just that…the Person in Charge…they don’t want to dirty their little pawpaws with the day to day issues of the used car department and market.

In all my travels around the country, the number one common thread for the Cracker Jack used car operations is the PIC.

When you’re the PIC you know anything and everything that goes on in the used car department. When your typical used car manager makes a mistake he/she can’t always fix it without the wrath of the boss coming down on them.

If you’re the used car manager you are operating under a handicap. It’s called experience. Not your experience, but the experience of the PIC. The PIC has been burned so many times with other used car managers they have tied your hands to the point that no matter what you may think or want to do/try they just can’t turn you loose.

So, even though they themselves won’t dig in they won’t let you dig in but so much. But, they still have these grandiose expectations of what they want out of the used car department.

I can tell you until the PIC becomes the used car manager and actually takes the reins it’s never going to happen. And, knowing human nature the odds are about 90% that it’s not going to happen.

So Mr. or Ms. PIC it’s a matter of choice. You can choose to make it happen or sit around and wish for the “Superman Used Car Manager” to show up at your front door.

And even if they do show up, they will leap a few tall buildings, might even run faster than a speeding bullet, but for sure they will eventually hit a brick wall. They can’t jump as high as you and they can’t run as fast as you. That’s all I’m gonna say, Tommy Gibbs

What If You Lost Your Franchise?

You may remember when GM & Chrysler shut down a bunch of dealerships during the great auto depression in 2008 and 2009.

Odd as it may seem a lot of people have forgotten how difficult those years were. It’s amazing what a run of profitable years can do to one’s mind.

You might also remember back when GM shut down their Saturn operations.

As you may know or can imagine a lot of dealers tried to turn those empty showrooms into used car dealerships. With very few exceptions most of them failed.

Why did they fail? Because they didn’t know what they were doing.

It’s that simple. Many of them had spent their entire careers focusing on being great new car dealers with used cars being a necessary evil.

Clearly understand, the better you become in used, the more new you will sell. With the business being more competitive today than it has ever been it should be easy to understand the importance your used cars being a big part of your business model.

It should also be apparent to you that you can always survive and thrive if you know the used car business. It goes without saying, but I’ll say it, you can’t always survive and thrive with new. Just ask all those dealers that lost their franchises 10 years ago.

New car grosses continue to go south and it’s not going to get any better. If you’re not creating a massive focus on used, you’re making a big mistake.

Anybody can talk the talk. You need to start walking the walk. That’s all I’m gonna say, Tommy Gibbs

Should You Hire Athletes?

12 Reasons You Should Hire Athletes:

During the course of my career, I have observed that the best team members are former athletes.

Of course, that statement isn’t an absolute, but it seems that those that have competed in team sports make the best business teammates.

If someone played sports they tend to:

1. Be goal-oriented. They understand that setting goals aren’t a one-time thing. They know the goalposts are always moving and they have to dig in and push a little harder to get there.

2. They know the basics are critical for success. They know there are lots of little pieces that have to be drilled every day.

3. They know the game is always changing and they have to change their game/skill level or get left behind.

4. They don’t quit when the going gets tough. If anything, they will amp up their efforts. Being defeated isn’t in their vocabulary and they live in fear of defeat.

5. They understand staying in shape. They get the connection between their physical fitness and their mental fitness.

6. Athletes have a never-ending work ethic. Their determination to out-work the other guy is ingrained in their DNA.

7. They can lead and follow. They understand the difference, and how and when to embrace each.

8. They understand a balanced team. They know everyone isn’t going to have the same skill levels and the importance of making sure the right players are in the right positions.

9. They are hard workers. They understand that developing skills takes hours and hours of hard work.

10. They are achievers. They have a history of achievement and determination which translates well into the business world.

11. They understand time management. They know how to manage and balance their time.

12. They are resilient. They know mistakes are going to happen and adjustments have to be made. They understand true grit and grinding it out.

You’re playing in a tough game. If you have a choice, hire an athlete. That’s all I’m gonna say, Tommy Gibbs

The Big Gamble

The car business is a game of high stakes. The highest stake is and has always been the used car department.

It doesn’t matter if your trading at the front door or buying at the auction it’s always a gamble. You’re gambling that you paid the right money for the unit.

It’s true you make money when you buy the unit. It’s even truer that you make the money when you sell the unit. You never know what a unit is worth until you sell it. It’s always a gamble.

Used cars are not an exact science. It’s more often than not a wild-ass guess. Some guess better than others, but it’s always a gamble.

Solid leadership and a savvy understanding of the business will mitigate your gamble and give you better odds of winning the game and improving your bottom line.

If you’re the Owner, Dealer or General Manager you should never turn the riskiest part of your business over to a single individual. Your leadership and experience are critical to your thriving and surviving the risky part of your business.

There’s an old Chinese proverb that says: If you must play, decide upon three things at the start:

1. The rules of the game-Upper management set the rules of the game and decide if they are going to demand accountability. Rules without accountability are just stupid. Don’t be stupid.

2. The stakes-The stakes are very high. How much money do you have invested in your used car operation? Most of the time we think about that in terms of the amount of used car inventory we’re carrying.tion? Most of the time we think about that in terms of the amount of used car inventory we’re carrying.

Often in the millions of dollars. Yes, that’s the biggest chunk of the investment, but there’s also a huge investment in time, management development and resources that go into the equation. Don’t be stupid with your investment.

3. The quitting time-At what point do we find a retail buyer at some number? Our first inclination when reading “the time to quit,” is when do we dump the unit in the wholesale market.

Dumping in the wholesale market is always a bad idea. If you want to think about it as dumping, you should be thinking about it as dumping in the retail market.

At some point, the unit should be priced at a price point that makes someone come in and take it off your hands.

All units don’t deserve the same shelf-life. To assign all units the same quitting time is a bad business strategy. Not having a solid strategy and flying by the seat of your pants is just stupid.

I’m being repetitive, but it’s worth repeating that the used car business is a gamble and you need to do everything in your power to increase the odds in your favor.

That’s all I’m gonna say, Tommy Gibbs

Are You Committed?

In October 2019 Eliud Kipchoge ran the first sub-two-hour marathon in the history of mankind. Yep, I didn’t know of him and it doesn’t mean much to me.

What it does mean is people can accomplish great things when they are committed to a cause or effort that others don’t think is achievable.

No doubt he didn’t just wish something like this in his head. He trained and trained beyond what most people are willing to do. He and a bunch of people around him that were believers and committed to making it happen.

I’m sure you think in your head that you’re committed to being the best of the best. I don’t doubt that’s true outside of your head.

Saying we are going to improve our used car business and actually doing it are very different.

Even though you may think you’re fully committed, the difficult part for you is that you’re working with a team that isn’t.

Depending on your role in your dealership, it’s understandable that you would see the world differently than those in the trenches that are expected to make things happen day to day.

Assuming your thinking is more or less correct, you need to commit to pulling more people over to your way of thinking.

That takes great salesmanship and leadership skills. Heck, even if your ideas aren’t all that brilliant, you’d still be better off if everybody was running down the same railroad track.

It takes a serious commitment to run a sub-two-hour marathon.

It takes a serious commitment to run a powerful used car department.

Are you committed? That’s all I’m gonna ask, Tommy Gibbs