I always enjoy speaking with Dealership Managers; not just because I’m helping them, but because, for me, it is a reminder of why I do what I do.  I appreciate the stories I hear because they help me continue to improve the Profit Blueprints System and the Action Plans.  The following are three stories that reinforce why watching your numbers keeps your profits strong and why the Profit Blueprints System works to catch small problems – before they become big problems.

There are many components in Profit Blueprints that provide valuable information, but highlighting problems and opportunities using Smart-Colors is the part that saves you time—your most valuable asset.  Your financial statement shows current month and year-to-date information which is good data, just not great data.  It is easier to track a trend when you can compare your numbers to previous months’ numbers.  But the colors and clipart comments help the numbers tell a story.  It was the red that alerted Ron H., a Service Manager, to a problem.

You know how it is…you take a few days off and everything goes to hell in a hand basket.  (Okay, maybe it wasn’t that bad.)  But, it was at this time that the General Manager went to the Parts Manager to announce that the markup on sublet to their sister stores was going to be reduced from the standard markup.  Well when Ron, being astute and not color-blind, saw the sublet account that had never seen red a day in its life, suddenly appear like a hot fire ball, he got to the bottom of it. It seems there was a miscommunication and the Parts Department had reduced the markup on all sublet items.  Problem solved! Life is good and Ron can go back to being a super hero, knowing the extra set of eyes is watching to keep every account on track.

Best Practice: Changes in policies should be in writing and all involved parties should sign off that they understand the new process. 

While the red on his report helped Ron discover a problem, the same color helped Mike, a Body Shop Manager in Michigan, catch his problem with a vendor.  Mike, who is always trying to make a little more profit, watches every account like a dog guarding a new bone.  When he received his Profit Blueprints report, he saw the net of Paint and Materials percentage retained had dropped dramatically, thus it had turned red.  Mike followed one of the recommendation on the Action Plan: he had Accounting pull every invoice for supplies from the previous month and discovered that one company had over-billed him (inadvertently or intentionally) 10x the quantity he had ordered and received.  At this Dealership invoices went from directly from the Parts Department to Accounting.

Best Practice: Invoices should always be reviewed and signed by the Department Manager before they go to the Accounting Office.  Also, don’t forget to complete the purchase order with the expected total price.

Most Parts Departments hit the suggested targets for Gross Profit percentage with hardly ever getting into the yellow, let alone red.  We know if we charge too much for parts, we’ll lose Customers and if we charge too little, we’re just giving away profit.  The Parts Department is the baby bear in Goldilocks and the Three Bears and everything seems to be “just right” – most of the time.

Although the colors hadn’t gotten to red yet, the clipart comment added to the report pointed out to Jessie that the Gross Profit percentage on Counter Parts Sales had dropped two months in a row, without a huge Sales increase.  One month might be an anomaly, but two months indicated we should look into it.  The first thing Jessie did was run the detail of the Sale Account and the detail of the Cost of Sale Account…and low and behold one report was much longer than the other report.  Logic dictates that with Counter Tickets, the number of Sales and Cost of Sales entries should be the same (if there are no coupons). It seemed that a new discount had been added to Service Invoicing and was “mapped” to the wrong Account number, hitting the Parts Counter Cost of Sales instead of the Customer Pay Parts Cost of Sales.  Once corrected, Jessie was now able to see how much that new discount was reducing the Customer Pay Parts percentage, and all was right in the world of Counter Retail Parts.

Best Practice:  Monitor your Gross Profit Percentages, every month compared to previous months,  for unexplained changes. When you see something off, quickly get to the bottom of it and fix it.