I’m looking for some guidance, My grandfather has run a very successful in terms of sales dealership for 57 years, however the financial part hasn’t been as successful, he has left a lot of “loose ends” He passed away a couple weeks ago and my grandmother has asked me to take over and run the company, I’m 24, been in the business since I was a kid, but have always had the “family cover”. I’m looking to run this successfully both sales and financially, I’m looking for some information on setting up a “back office” and looking for some accounting ideas/procedures, any information to help me get the company on track and back in the game so to speak. The dealership is in a small town in Maine, with 3 other used dealerships with in 10 miles, we average 30-50 sales a month with just him as the sales person. Any forms, current procedures/operations would be very helpful! Thank you for your time in advance!
Just how "involved" have you been in the business? What is your experience in that dealership? Knowing this will help answer your questions.
Where to start? Here are a few questions to answer to determine the next step:
1. Where are the 30 to 50 sales a month coming from? You want to make sure to keep the revenue coming in.
2. Do you have a DMS? Our dealership uses a very inexpensive software that does everything a small dealership needs it to do. http://www.frazer.biz/
3. Do you have a floorplan? If so, how familiar are you with the terms of your contract?
4. Who handles your tax and license?
5. Where does your inventory come from?
I will be happy to help you in any way I can. I spent 17 years in retail before opening up a marketing company for dealers then in December, opened up our first used car dealership with location two opening next month. A lot of what you are looking for is probably stuff we have had to learn on the job over the last few months since my partner and I have always worked at big dealerships.
What part of Maine are you in? I just moved back home to Louisiana from NH. Let me know.
If you use any lenders for financing your customers, you should reach out to them as well. They can make sure you understand any policies and procedures that they have so you can continue to use them as a resource. I would also recommend a desking management system (Frazer or Wayne Reaves are good ones for independent stores) where all of your inventory and sales can be tracked.
The very first place I would turn to would be your grandparents accountant. They will or should have records and methods that they have used. Next, 30-50 sales in a month for 1 person seems high to me unless it is a wholesale operation. How is the dealership operated? By the way, sorry for the loss of your grandfather.
What operating system are you using now? Quicken, Quickbooks, Peachtree, ADP, Reynolds and Reynolds? You may need to bring in a consultant, but give us an idea of the day to day 1st.
What a great opportunity and challenge you have. If you can answer some of the questions Rob asked we can give you some better advice. Share with us some more details and we will help anyway we can.
Winners Circle Auto Center
90% I would say are repeat customers, my grandfather had a great following and had the tag "walking mans friend", we did a celebration of his life and we had over 500 people. The other 10% would be walk ins, recommendations and advertising, I think we need to look at some ways of new advertising and kind of brand our self. We currently are using frazer but there are so many things that are incorrect we're going to have them start us from scratch as if we just downloaded it and I think that will help some of my frustrations. We do have a floorplan, we don't really use it, some big ticket items might be put on it from time to time. We handle our own taxes, they're sent to the state monthly along with our license being done yearly, this is something that in the past Frazer did for us, but because my grandfather didn't know how to use a computer he would hand right some deals if I wasn't here. Our Inventory comes from auctions and new car dealer trades. I would like to strengthen our relationship with dealers and see if we can get more inventory there, if we buy everything it tends to leave more room for profit. I was involved but never to the point where I ran it, my dad has been involved for 30 years, but he does more of the buying of inventory and handling service. I'm in central Maine, Brunswick area. I've handled the paperwork aspect in the past and do have a good relationship with the lenders, I should go out and see them and just chat with the managers. Shawn, my grandfathers accounting was a night mare, our account charges around 5-6k a year to do our corporate taxes, all sales are retail we do very very little wholesaling unless it's junk going to the auction. Maine doesn't have the competition that a lot of other states have, we have about 5 dealers in a 2 miles radius and we're the oldest dealer in the area that has helped. We also stand by what we sell warranty on most items is 30 days or 1000 miles, we will stand by longer and than if something major like a tranny in a dodge/chrysler caravan 6 months down the road we fix it. You keep your customers happy they come back. I've answered multiple questions in one segment, I just would like some pointers in structure, a chart of accounts and how you guys handle the "process" from open to close. Thank you so much in advance.
Timothy, it sounds like your "process" will be unique to most. If 90%of your business comes from repeat, referral and walk ins, I would say limit your ad spending until you get a handle on things.
We spend nothing on advertising because of our location on a high traffic highway. We do have a website but it needs to be managed a lot better but the company we use has a lot of capabilities that we are not taking advantage of. For $99 per month, you can't beat it in my opinion. http://www.carsforsale.com/
We average about 35 to 45 cars a month but do that with myself and two salespeople so I am not sure how you can do everything on a deal and sell that kind of volume.
95% of our business is sub prime so we try to get a credit application or as we call it "quick pre approval form" as early in the deal as possible. That way, we can make recommendations on vehicles to customers.
With any DMS, its all about the data input. Put good info in, good info will come out. Account for everything including gas, buy fees, transportation fees, recon, etc.
I will add more later but hope this helps.
You remind me of me a few years ago only it wasn't my grandfather. When I came in, we hand wrote bankers systems contracts after the bank faxed it to us. The very first thing I would do is get Quickbooks. They have a usable chart of accounts. For a DMS we use Wayne Reaves which I highly recommend simply because they integrate my website, Craiglist, Auto Trader etc.... with my inventory. I suppose Fazer is good too as they have been around for a while.
I was going to say find a new accountant, but then I realized you are out on the East Coast. Sometimes spending the accounting money now might save you from re doing it differently later.
Do you have an office manager? Do you trust him/her? Get their input.
We also kept our records in a program called 1st choice which was a DOS based program. Eventually we converted it to Works, then Office. Basically, we ran it as a cash based business for a time, keeping track of the monthly front end and back end gross, an Inventory database with expenses and repairs, A purchase sale and trade log, in other words things that make it crystal clear to you so you can explain your business to the accountants.
Process- I am not sure of what you're asking. Sales process, or accounting process from the time the car is purchased?
I wouldn't spend a dime on advertising.
I would call Joe Lescoda at NIADA and enroll in the next available Certified Master Dealer class he has available.
You are in a great place and I am soo jealous, you see 20 years ago I was in the same place. You will find that everyone has good ideas but not all will fit your business or customers. Hopefully you will learn to research and trust your gut. Feel free to call me if you have any questions.
Tim, with 32 years in the auto industry, I would be happy to answer your questions, I was a dealer up till 2000 and recently completed 7 years being a GM with 5 locations, 2 which were preowned, 3 with Mazda,Hyundai,Buick, GMC, There are a variety of systems new and preowned dealers are involved with, the key is your process, from the sale, finance, accounting, service and parts department, all have to flow together.
You may contact me by e-mail and cell