by John Spader and David Spader
As published in RVBusiness / July-July 2019
Finally, summer is here and the weather – and business – are heating up!
If you are like many of our clients, your days are packed: new sales, deliveries, service issues, employee issues, working on summer marketing plans and even dealing with upset customers. It seemingly never ends, with the phone ringing off the hook and a constant line of employees, customers and vendors competing for your attention. Let’s face it: this business in spring and summer can be crazy. Our best advice what to do right now?
Call a time-out!
You read that right: this is the most important time of the year for you to put that phone on Do Not Disturb, clear your calendar of appointments, and lock the office door. Forty years of collecting data from dealers has shown us that one fact is inescapably true: once about 40% of a year’s selling season has passed, dealers can very accurately predict how the other 60% is going to play out. This is a crucial time to make needed adjustments to make sure you reach your profit goals for the year-but you have to take the time to study the numbers and determine an action plan.
Hopefully you started this year with a solid budget – and that budget included seasonalized trending to predict sales and expenses by month. But budgets have a way of getting lost with your 20 Group materials, collecting dust on the shelf somewhere. If that’s true for you, it’s time to dig it out and invest the time to compare where you thought you’d be through May – and where you really are.
Your budget is a tool – and an important component of a profit plan. While a budget is static, a profit plan is not. A budget is a description of how you’d like the year to play out, prepared in advance. Profit planning, however, is a commitment to reaching the profit goals outlined in the budget – even if that means making significant changes in inventory, staffing or marketing during the year. You’ve done your budget, now is the time to execute your profit plan.
So dig out the budget and your most recent financials. If your DMS can track your budget and deviations for you, so much the better. If not, do it by hand or in a spreadsheet. The important thing is to know – not guess – where you are above, at, or below budget. If you are right on target, go ahead and throw that budget back on the shelf and keep trucking.
If you are ahead in some areas, take time to ask why; and figure out if you can do even better by doubling down on your strengths. Maybe you need more of a particular model or brand? Possibly a few employees have caught fire in terms of productivity and can be supported even more? Sometimes your efforts spent encouraging what’s going right are just as important as spending the energy fixing what’s going wrong.
If you are behind budget, now is the time to take action. If you wait until September, it will be too late for any adjustments you make in inventory or staff to change the outcome of the year. On the other hand, if you are off in some areas, it’s even more important to dig into that now. For example, if you are exceeding personnel expense targets, look to increase productivity or trim staff. Behind on a product sales target? Maybe it’s time to redouble your training on that product, or possibly cancel inventory, or rethink your pricing policies – or all of the above!
Remember, the purpose of profit planning is to ensure you meet or exceed your budgeted net profit. The key is to take time now to analyze potential speed bumps on your road to this year’s profit targets, deliberate between potential solutions, and – critically – take action.