Step Into the Laboratory

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dealer lab experiment column shenk

HOW WOULD YOU like to sit in on a management meeting while the team battles to turn around a faltering dealership — one that lost close to $1 million from its two stores last year? Would you find it more interesting if the managers were part of a new ownership team — one that has a proven track record of improving dealer performance?

I thought you might. I recently had the opportunity to listen in on this very scenario in an hour-long session — the first of many. It was educational and filled with surprises.

It's all part of a new, multimedia sponsor-supported dealer educational program called Dealer Lab, brought to you jointly by Dealernews (and its numerous digital outlets) and PowerHouse Dealer Services. PHD is run by Bill Shenk, and is a recognized dealer training organization and provider of powersports dealer 20 groups. EBay is a major sponsor of the project.

Here's the situation: Shenk, a former dealer, has been helping dealers improve their operations for 10 years as a consultant and as head of PHD. In July, he had an opportunity to put his ideas into practice when he purchased Florida Motorsports, which has stores in Naples and Punta Gorda, Fla. The dealership wasn't in good shape — in fact, it really did lose nearly $1 million on operations in 2008.

Last year, the Naples store generated total sales of $11.9 million but had operating losses of about $582,000. It carries Honda, Yamaha, Kawasaki, Suzuki, Sea-Doo, Can-Am and Spyder brands in its 30,000 sq. ft. facility. There are 21 employees.

The Punta Gorda store is smaller, with only 10,000 sq. ft. and seven employees, but it generated nearly $8 million in sales last year. However, it lost about $380,000 on operations. It carries Yamaha, Kawasaki, Suzuki, Sea-Doo and Can-Am.

Working with myself and other Dealernews editors, Shenk will collect and share data and commentary on the operations of his project dealership as he works to bring the business back to profitability. The reports will cover all the major dealer operations and profit activities, including but not limited to: new and used equipment sales, service, parts, apparel and accessories, F&I, personnel and marketing.

One of the keystones of Dealer Lab is that the reports will be totally transparent. They'll contain the good, the bad and the ugly of Shenk's operation. We'll show all the numbers and report on all the changes and their results. If a marketing program, for example, misses its goal, we'll report on the goal and its results. We'll also attempt to determine why the goal was not met. This is a unique approach and has never been tried, to our knowledge. Nobody likes to present his mistakes in public.

Here are the basic features of the Dealer Lab program that reflect the monthly financial reports of the dealer and the daily activities of the management team:

  • The dealership's monthly composite report will be summarized in articles and charts/graphs in Dealernews. The timing of the monthly magazine will tie directly to the monthly reporting schedule used by dealerships. You'll be able to follow Shenk's progress using detailed financial reports he's developed for his dealer 20 groups. I'll add analysis narrative describing the reasons for the month-over-month and year-to-date changes after talking with Shenk.
  • Meanwhile, interim reports will be produced for use on our blog and in our planned e-mail newsletter. Reports will be posted several times weekly. These weekly reports will be based on Shenk's weekly meeting with management. We'll start the newsletter as soon as we have enough material.
  • We'll also produce a Dealer Diary in which Shenk will record his observations each day regarding events at the dealerships. We'll post these edited comments on the website and add them to the e-mail newsletter when we launch it.
  • Later, as the project develops, we'll be adding video and Webinars, if appropriate. We'll also provide dealer online access to portions of our website through a special social media capability that will launch soon on the Dealernews site.
  • We'll also offer a special training session at the 2010 Dealer Expo.

We think this will be an educational project that takes advantage of the immediacy and flexibility of today's digital media combined with the permanence of the printed package preferred by so many of our readers. We believe this will meet the needs of many dealers during this downturn. Meanwhile, don't hesitate to let us know what you think and how we can make this project better meet your needs.

This article is from the October 2009 issue of Dealernews.

Joe Delmont can be reached at jdelmont@dealernews.com or 952-893-6876.