I TRUST YOUR GOOD JUDGEMENT

One of my favorite statements, when people come to me seeking guidance on making specific decisions, is “I trust your good judgment.”

Granted they will sometimes make decisions I might not agree with, and that’s the best part. Why? Because it gives me a chance to coach them in a positive way.

I don’t have to tell them they were wrong. I simply ask them if they considered coming to a different conclusion by doing whatever?

I might say next time it might be better to blah, blah, blah.

Only in a rare set of circumstances would I bust them over a decision they have made.

If you want to build a powerful team of leaders look for opportunities to say, “I trust your good judgment.”

That’s all I’m gonna say, Tommy Gibbs

You Can’t Spend ROI

I’ve always encouraged dealers and managers to track ROI. I’m convinced it’s a critical piece of information that everyone needs to be aware of. By doing so the bottom line will increase.

If nothing else, it makes you aware of how important speed is when it comes to making money on used cars. (Or new for that matter.)

But let’s be clear. We pay our bills and we get paid by generating gross profit. Lots of gross profit.

It’s not about giving all your inventory away. It is about understanding which cars you can make money on and which ones need to be turned faster.

The question often comes up, “When does the clock start ticking?” Does it start with the actual day you own it, or does it start when the car goes on the lot/online?

Let me make this as clear as I possibly can. It starts the moment you own it. Period. No exceptions, no ifs, ands, or buts.

The gross profit and ROI clock is ticking from the moment you own it.

If you want to trick yourself by assigning a different date once the car’s online then go ahead; it’s your store you can do what you want. What you can’t do is change the math.

It is what it is. It’s a depreciating asset. Your ROI and Gross Profit are going south minute-by-minute, day-by-day.

Understanding the connection between ROI and Gross Profit makes you smarter. Be smart. That’s all I’m gonna say, Tommy Gibbs

It’s Getting Easier

The great Tennessee women’s basketball coach, Pat Summitt, passed away a few years ago. She will go down in history as one of the greatest coaches of any sport at any level.

In Pat Summitt’s book, “Reach for the Summitt,” she states, “Here’s how I’m going to beat you: I’m going to outwork you.”

I put myself and some of my business teammates into the category of we will outwork you.

I don’t think there’s any greater attribute that one can have than the will to outwork their fellow man/woman.

For those of us who have that mindset, we can point to person after person who had more talent, but we ate their lunch in the game of life, business and leadership. We’ve passed them on the stairway to success time and time again.

I’m seeing fewer and fewer people willing to carry the mantle of “I’ll outwork you.”

It’s getting easier and easier to outwork some of the workers of today.

Maybe we should just hand them a “participation trophy” and send them home. That’s all I’m gonna say, Tommy Gibbs

Is This Your Store?

Since you’re reading this, you’re more than likely aware that I’m in the training and software business. You can well imagine I get to see the very best performers in the industry and of course, the not so best.

Please keep reading. I’m not selling anything in this message.

When I’m reviewing our software users’ accounts there are two things that stick out when it comes to the better performers and those who struggle.

1. Discipline-I realize that sounds like a no-brainer, but you would be amazed at how many dealerships lack discipline within their management team.

I see the lack of discipline right there in the numbers and you can rest assured that it carries through into other areas of the dealership.

99.9% of the time this lack of discipline starts right at the top.

Discipline in this context means taking the time each day to analyze your most problematic units and to develop a strategy of finding a retail buyer quickly. In the most extreme cases, we’re talking about 15 minutes a day of someone’s time to improve the bottom line.

Think about it. If you can’t allocate a daily discipline of 15 minutes a day to do a few simple tasks how many other processes and disciplines are you letting slide? I know you’re busy, but you ain’t that busy.

Other examples of a lack of discipline within your organization:

A. The selling process has peaks and valleys. You do it well for a while until it erodes, and someone finally says, “We need to get back to basics.”

B. You know the importance of a save-a-deal meeting, but always seem to find an excuse as to why we’re not having one today. How many deals do you need to save in a month’s time to make it worth your time?

C. A daily trade-walk. Suppose you did it every day with all the members of your management team? Do you think you might keep a few more trades because someone sees something in that unit that your wizard used car manager didn’t?

D. A weekly lot-walk. You can’t sell something if you don’t know anything about what you’re selling. If you did a lot-walk once a week with all the salespeople and management staff, then you’re going to sell more used units because not only do they know something about the units, but they will actually know the unit is out there.

2. Accountability-As you can imagine we lose a few accounts with our software customers from time-to-time. Do you know the number one reason we lose an account? Nope, it’s not that it doesn’t work and it’s not that it doesn’t do what we said it would do.

It’s because someone doesn’t want to be held accountable.

Numbers aren’t always accurate, but by and large, they can tell the tale and hold people accountable.

Most of the time we don’t get fired by the dealer. The used car manager fires us because they don’t have the discipline to do what needs to be done each day and they don’t want to be held accountable.

The dealer doesn’t want to hold them accountable because the dealer doesn’t have the discipline to do so.

Discipline and Accountability. Two things you can do better.

That’s all I’m gonna say, Tommy Gibbs

It’s Over!

Can you believe it? The year is half over. Time really does fly, doesn’t it?

How was your June?
How have your first six months been?
It’s July.
Half the year is gone.
Kinda scary isn’t it?

Some of you have had a great first half. Some of you, not so much.

Some of you have been running full speed ahead. Some of you have been dragging through the sand.

Something has been holding you back. There may be some legitimate excuses, but maybe you just had the wrong plan in place.

Just because you had the wrong plan does

not mean it’s too late to fix it. You’ve still got 6 more months to go.

Those of you who have had a good first 6 months need to be cautious of becoming complacent.

Even though things have been going well, you would be very smart to review how you can make things better as you tackle the second half.

Everything we do is about choices. You can choose to let things be as they are, or you can choose to dial it up a notch or two or even three.

To do so means to review your plan and the strategies you have in place. And, make the changes that are necessary to get you where you know you need to go.

Your other choice is to do nothing. Go sit in your office and stare at the wall. Enjoy your seat and pretty soon it will all be over.

That’s all I’m gonna say, Tommy Gibbs

7 Ways To Defeat Mental Muscle Memory

Most of us understand the concept of muscle memory. An example of muscle memory is when you throw a ball, you don’t think about all the mechanics of doing so. Your body, mind and arm just make it happen.

“Mental muscle memory” works much the same way. Whenever we need to make any decision in our personal or business life, our brain will go into what we have stored in its “hard drive” to decide what to do. The brain is going to go where we have the most experience and where we are the most comfortable. This dated information becomes what we rely on because it’s what we know.

I like to refer to this as actually “Bad Mental Muscle Memory.” Relying on “Bad Mental Muscle Memory” is like a drug. The more you rely on it the more you want to do it.

“Bad Mental Muscle Memory” is the future on hold. Opening up your thinking is the future on steroids. It grows and grows.

Invest more time, energy and resources in the training and development of you and your staff.

Here’s 7 ideas to help you defeat “Bad Mental Muscle Memory.”

1. Look for greatness and ideas in others. Instead of showing up to let everyone know how great you are, show up to find out how great everyone else is. You don’t have all the answers and even if you’ve had some good ones in the past, maybe it’s time to let others help you tweak them up a notch or two.

2. Set up an Executive Committee. A few years ago a good friend of mine came back into the automobile business to do some re-organizing of his group of stores. The first thing he did was to set up an Executive Committee to help guide the team toward the future. He knew that the team knew that he had a lot to get his arms around. What a brilliant move to get the team involved in the decision-making process.

3. Add some fear to your diet. Fear is a great motivator. You should be fearful of falling behind. You should be fearful of the competition getting ahead. You should be fearful of what’s around the corner. Fear will force you to get out of your box and get on with it.

4. Read and study the best. Apple, Starbucks,
CarMax. Do you understand what they do? Do you understand how they do it? Have you spent any time studying these top performers? Being a leader is like being a great football coach. To be a great football coach you have to have a great scouting report. If you’ve not studied these top players then you should.

5. Inspire those around you. You may think this is overplayed but it’s not. The more you inspire others the more it creates enthusiasm for change and growth.

6. Avoid the easy. Go after the impossible. My good friend, great author and speaker, Dave Anderson, often speaks of stretching yourself and stretching your organization. You can’t stretch if you don’t reach for the impossible. You will soon find out that what you thought was impossible is very doable. And then you will say “next.”

7. Eliminate what you think are obstacles. Sometimes it’s people, sometimes it’s stinky thinking. The only thing in life you have total control over is your thinking. If you think you can you are right. If you think you can’t you are right.

Ralph Waldo Emerson said, “Nothing great was ever achieved without enthusiasm.” I’m going to add to his quote. “Nothing great was ever achieved without enthusiasm for change”

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

Rocket Science?

Nope, it’s not rocket science. It’s easy stuff you can do that will make you better.

1. Press Your Cost Down-This is probably the simplest and most effective thing you can do to improve your business. Know what your average cost per unit is every day and do what you can to reduce it. If you are at $19,000 today, do what you can to get it to $18,500 and so on. There is no magical number. It’s about keeping the less expensive units and making sure the more expensive ones turn fast.

2. Know Your ROI-Every deal should be tracked for ROI. As you are working a deal you not only need to know how much gross you have, but what the ROI is. Go to FixROI.com and plug in three numbers. Your cost, your gross, and the number of days the unit has been in stock. Bingo, you have your ROI. Shoot for 110% ROI. By knowing your ROI you will know what’s working and what’s not.

3. Attack the 10 Most Expensive Units in Stock-Make a list each day of your 10 most expensive units in stock. With one exception make sure they are priced really, really right. The one exception is if you know you always make money on a unit that’s on the list then use some common sense, don’t give it away. Consider putting bonus money on those 10 units regardless of the number of days they have been in stock. Sooner rather than later. Make sure the service manager gets a copy of the list each day and create a sense of urgency to get any of those through the shop quickly.

4. Focus on Look-to-Book-When you improve your look to book you improve your odds of selling more cars. You sell a car and you get a car. Maybe this is rocket science.

5. Life Cycle Management-There is nothing, absolutely nothing, you can do that will improve all aspects of your used car business more than understanding my process of “Life Cycle Management.”

Utilizing life-cycle management will help you quickly identify profitable units and problematic units. It’s critical to know which units create the most risk for you.

There are certain “Trigger Points” you need to focus on during your daily “Trade Walk.” Knowing how to use EWR (Early Warning Radar) pays big dividends.

6. Lot Walk-If you do a lot walk once a week with all the members of your sales and management team then without a doubt you will sell more units. The lot walk gets your entire team to know and understand your used car inventory. The more knowledge they have the more they sell. (Einstein, this is different than the trade walk.)

7. Analyze Your Wholesale Pieces-Look at the numbers. How many units are you wholesaling each month? Go over each unit. How many of them could you have retailed if you opened your mind a bit either relative to pricing and/or the type of product you’re willing to keep? You would sell a lot more of these wholesale pieces if you had more flexibility from your parts and service department on what they charge to your used car department. Is it time for two-tiered pricing?

Yep, this stuff is definitely rocket science. That’s all I’m gonna say, Tommy Gibbs