Spend a little – make a lot
There is little doubt that to be successful in the future every dealer on the planet will have to upgrade their operations to include (1) digital systems that apply to all aspects of the business (2) robotics which are sure to become part of every business (3) adopt IoT with the various new products and applications offered, and (4) supply the training to make all of this work to generate a satisfactory ROI on your investment in your business operations.
This is a big responsibility that every manager will be faced with. And it will be both time consuming and expensive.
So what do you do and how do you plan for these events? To me that will depend where you are in your transition cycle. Dealers with the option of having many years remaining at the helm have to plan for and implement these new opportunities as they become available and workable in our industry. Owners getting ready to transition out will see it another way. “A large investment I will not benefit from.” In reality, owners near the transition point should plan to either move out in the next couple of years before these new requirements are upon us, or take steps to improve the value of their dealership with minimum investments.
What can both dealers with a long-term outlook as well those with a short transition plan do to increase the value of their company with a minimum investment? I suggest you invest time and a few bucks to really get acquainted with your accounting and business system. Many dealers make the investment to install the system to get it up and running including the training that goes along with that process, but thereafter neglect addition training and review of what is available in the system that they are not using including new applications that have become available and are not being used.
I can guarantee you that if you sign up for a two-day review of your system where discussions are held with personnel from each department and especially the accounting department, you will find more efficient ways to do the accounting and generate reports needed by management to run the business. The process will both save employees a lot to time messing with paperwork and accounting issues, thus making them available to do what you are paying them to do, which is make you money. In addition, the process assists with reducing the amount of paper you use and automates many of the daily, weekly and monthly reports generated.
The return on this type of review will in the 60-day range once you implement the improvements. This includes the follow-up with employees to ensure that required changes are being made. The way it works is as follows:
- Two day review with a review of each department plus extensive conversation with accounting department personnel.
- Review of findings, a priority list prepared, assignments of responsibility delegated for each change being implemented, a timeline set.
- Weekly phone calls with the system specialist to review progress to date including review of output.
- Conversations with management to fine tune existing or new reports required.
- Check up with personnel involved to determine that they are now more efficient in their work and have better timely information on which to make decisions.
- Have all C-level management sit in on this review process and supply the buy-in to motivate employees.
After sitting in on a few of sessions I was amazed at how many times a piece of paper with picked before the accounting was finalized, how many different people were looking at the same type of transactions with each one recording the transactions a different way, how long it takes to get departments to supply timely information for the month-end close, with the biggest revelation being how much of this required data output could be automated in the system thus eliminating many of the current processes being followed.
I was also impressed by the response from employees once they learned they could use the system more effectively and spend more time on what is important.
I guess the bottom line here is that if you get data from the computer to generate reports or supply answers……that process can be automated to generate and distribute those reports without someone digging into the data every day, week or month.
So what will this cost you….maybe $3000 for the initial two-day review. Then $500 a week for follow up that will be more concentrated in the beginning of the process and disappear as the transition is finalized. A VERY MODEST INVESTMENT compared to having employees waste time because of inefficient processes, employees able to devote more time to running business and in the end reducing the need for additional admin or accounting help. The boss will love this. The accounting department will love this. The department heads will love this and your auditors will love this.
So to assess where you stand answer these questions:
- Are you closing your books within 7 days after the month end?
- Are your cash balances and bank reconciliations supplied automatically by the system?
- Are management reports generated and distributed by the system?
- Are you mailing out invoices and statements every month?
- Are use of credit cards creating havoc in the accounting department?
- Is payroll automatically transferred from the payroll service into your system?
- Are work orders properly accounted for each day and closed out timely every day?
- You can add your own problems to this list.
Whether owners are sticking around for the long haul or preparing to exit, this review process will make your company more valuable and flexible to deal with what is coming down the road.
It will be worth your time to investigate this program for your company.
Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail editorial @mhwmag.com to contact Garry.
