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

Are You Ready?

In my travels there’s always lots of conversation about where the business is heading and what should be done to get ahead of the curve. In most cases, the conversation will revolve around conventional selling vs. a more non-conventional way, such as more of the selling process being done online.

Most dealers have come to realize the majority of their customers are doing online research, but many dealers haven’t come to the realization that the consumer wants to do as much of the purchase as possible online.

We could debate this, but I believe Carvana has set the tone for online buying and the likes of CarMax, AutoNation and other big players are following their lead. Today’s buyers, and I’m not just talking the Millennials, want to spend less and less time with you jacking around about a price and a bunch of paperwork.

The consumer of today is all about their time, and it being convenient for them. If there’s one bit of inconvenience within your selling process you are either going to lose the deal or for sure you’re going to lose gross.

You may not be ready to accept this, but more time with the customer does not equal a sale and more gross. Does anyone remember the days of wearing the customer down with 2 or 3 TOs until they finally said yes? Rock star, those days are coming to a close.

Sure, there’s someone reading this thinking it still works great at my store. Good luck with that over the next five years.

Take a look at the below screenshot from a recent Facebook post. All the person posted was “Car shopping is fatiguing.” Here’s the first three recommendations from friends: CarMax, Tesla, Carvana.

Do you not see the trend here?

1. They are making it convenient.
2. Purchase can be consummated online.
3. They don’t negotiate.

We can agree that without promoting it to the public, more and more dealers are being forced into one-price selling. You can’t post great prices on the Internet and give much of a discount when they show up.

I think we can also agree that most dealers haven’t made the switch to more of the transaction happening online.

I’m going to quote a friend of mine who purchased a car from Carvana. “I found the car I liked. Did the paperwork online and the car showed up at my front door. I had to sign two more pieces of paper when they got here, and I was done. Loved it!”

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