Dealer LAB: YTD income falls in September

Publish Date: 
Dec 6, 2012
By Joe Delmont

“Even though we are considerably above the national average, there is still more than $100,000 per year in gross pro­fit available,” Shenk says. “That alone would increase our sales team’s payroll by $40,000 and add $60,000 to the dealership’s bottom line on the same sales volume.”

Nine-month revenue losers were Accessories, down 12.6 percent, and Service, down 32 percent. “If you recall in 2010, when we were installing processes and people, we were over payroll budget to allow our team to become efficient,” Shenk notes. “That is also an issue now as we rebuild the P&A and Service management teams. If we had been on payroll budget this September, our expenses would have been $8,800 less.

“At the same time, our flooring was double what it should have been. Just these two items, if corrected, would have created a store net pro­fit of double last year without doing a penny more business,” Shenk adds. “I’m con­fident, based on the new team members in place, we are making good progress in getting our expenses back in line and also will be once again increasing revenues to well above Top Gun averages,” he continues. There were three big changes in expenses during the nine-month period, year-over year:

Total payroll in Sales was up in 2012 over 2011 by nearly $40,000, but down as a percent of profit, from 34.2 percent of pro­fit created to 33.1 percent. Total flooring was up $32,000 in 2012 over 2011, more than double from $78 PVS (below Top Gun) to $206 (above Top Gun) of $137. Advertising was down by $21,000 in 2012 compared to 2011 because Shenk spent less money trying to get the dealership visible electronically.

In September, gross profit was up nicely, climbing to $89,949 from $80,593, a $9,356 or 11.6 percent gain. This, even though Service revenues declined by 37 percent, dropping to $18,043 from $28,994. The biggest cause of the Service decline has been getting the right people. “But it seems as though we are getting across that hurdle,” Shenk says. Unfortunately, total expenses were up this September over last year by nearly $30,000 — $106,312 from $78,460. The increased costs were led by increases in Sales payroll ($5,000), Parts/Accessories payroll ($4,000), flooring ($13,000), administration ($5,000) and occupancy ($6,000).

Looking ahead to the fourth quarter, the dealership has to make up about $36,000 in Net Income to break even with last year, a goal that Shenk says is realistic. “Based on the actions of the current management staff,” Shenk says, “I feel con­ dent we will make up the difference.”


 

Editor’s note: The Dealer LAB project is a joint effort between Dealernews and PowerHouse Dealer Services, a consulting firm run by Bill Shenk, detailing his efforts to return a Florida powersports dealership, renamed Destination Powersports, to profitability.

The financial information in this report is taken from the dealership’s Composite Report supplied by Shenk and is prepared as part of the dealership’s participation in the PowerHouse Dealer 20 Group. The Composite Report is produced from the store’s monthly financial report.In preparing these Dealer LAB reports, Dealernews reviews the dealership’s unaudited P&L statement and Balance Sheet and its Composite Report.

Bill Shenk is owner and 20 Group moderator of PowerHouse Dealer services, a dealership 20 Group provider and consulting/training company. He has worked full time in the powersports industry since 1976. To join a PHD 20 Group and take your dealership to Top Gun status, contact Shenk at 877-PHD-0911 or Bill@phdservices.com