Are You Responsible?

Seth Godin one of my favorite writers recently wrote:

“Accountability is done to you. It’s done by the industrial system, by those that want to create blame.

Responsibility is done by you. It’s voluntary. You can take as much of it as you want.”

I like the way Seth has stated this in such simple terms. If you’re in a leadership position, it’s your responsibility to hold yourself and those around you accountable. To Seth’s point, you get to pick just how responsible you’re going to be and that applies to holding people accountable.

Not taking responsibility for what goes on in your dealership is one of the biggest flaws of people in leadership positions. I stated it that way for a reason.

Some people are in leadership positions and they aren’t leaders. In some cases, they got there by default, family, next in line, or other reasons you would be familiar with. There are times when the decision makers have convinced themselves they can’t do better.

The reality is you can do better. You just have to take the responsibility to do so. That’s all I’m gonna say, Tommy Gibbs

Inventory Up-Volume Not?

I’m often asked by dealers, “Why hasn’t my volume increased in proportion to my increased inventory levels?”

More than likely your house wasn’t in order when you went off the deep end. You probably had aged units and didn’t address the problem before you amped up your inventory levels.

Your sales staff are putting all their efforts into selling the fresher pieces and letting all your old crap sit. Grosses will continue to erode.

The reality is your volume isn’t increasing and you’ve only made your problem worse.

Before you increased your inventory, you should have looked at a couple years history to see where the peaks and valleys were with volume. Had you done so, you would have discovered trends that would have served you well.

Dealers often increase their inventories based on the past couple months sales. Let’s say you had good sales in August and September and you live in the northeast. If you carry that same amount of inventory into the fall and early winter, you’re going to get crushed. You should have been paying attention to your sales history and cutting back vs. adding to.

Unless you’ve decided to be a total market disrupter, you have to be realistic about how much you can actually increase your sales.

You didn’t analyze your inventory based on turn. If you’re not getting close to 12 turns a year, you need to follow Dale Pollak’s advice and go on a diet. One out. Zero in. Or one out, one in until you get it squared away.

Until you increase your turn, you shouldn’t increase your inventory. Once you get to the 12 turn mark, you can add a few units.

Here’s another way to think about it; stock about what you’ve been selling over the last 60 days running average but be aware of your annual sales trends.

When you start adding inventory, the odds are likely that most of it will come from outside purchases. You cannot treat purchase units like you treat a nice trade. It’s likely that what you’re buying has a high cost to market and a high day’s supply.

One of the reasons you’ve not gotten the results you wanted when you increased your inventory is you weren’t willing to price those outside purchases competitive to the market.

You cannot expect to make as much gross on them as you would with a nice trade. My life-cycle process and UpYourGross software are great tools to help you take control of your inventory, increase turn, increase gross, and eliminate wholesale losses.

Isn’t it funny how common sense isn’t so common? That’s all I’m gonna say. Tommy Gibbs

Are You Running a Business or Democracy?

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.

Who’s deciding how your used car department is going to be run? It’s your money.

That’s all I’m gonna say, Tommy Gibbs