Every dealership in the channel has faced the COVID-19 pandemic in one form or another. And while the effects of this global event haven’t been the same for each business, there’s no denying the influence it’s had on how we manage our operations. Much of the difference from one dealership to another has been based on how each reacted. Dealerships that kept their focus and built a strong response plan weathered the storm better than those that didn’t. It’s important to note that as the COVID situation has evolved, so must your response to it.
Many people believe the vaccines are the light at the end of the tunnel, and their distribution will allow us to get back to a more normal business climate. The steps you take in the next few months can make all the difference in how well your business comes out of the COVID tunnel. So let’s take a look as some key areas on which to focus.
For starters, be sure you’re taking full advantage of all stimulus programs for which you may qualify. You’ve paid, and will continue paying, a significant amount in taxes via payroll and income over the years. Those taxes contribute to the funding source of these stimulus programs, so don’t be too proud to access all the relief for which you qualify.
Most business owners are familiar with the Paycheck Protection Program. The second round, passed into law in December, offered an opportunity for the hardest-hit businesses to get additional funds and fixed the taxability issue. It also changed the rules on how the funds may be used. Be sure you fully understand the rules to maximize forgiveness and minimize the potential of negative repercussions.
There are other lesser-known programs as well. They include employee retention tax credits (which have changed significantly for the better), reimbursement for employee paid leave related to COVID, tax deferments and more. Each program has its own eligibility criteria. Invest the time to learn them or retain an accountant or consultant who knows the programs to ensure you capitalize on all the available benefits.
As many of you know, we work with the Hubbard Management System, which uses a series of formulas that may be applied to improve any situation or condition your business is in at any time. It defines an emergency condition as one in which key statistics are either flat or down over time. The formula for handling this condition has five steps, and requires that you address these steps in sequence. Understanding this and applying it well can help you get through this crisis and maximize your results along the way.
Step 1: Promote
No one knows the full impact that things such as work-at-home orders will have on copy/print volumes. But we do know that there’s a good chance overall volumes will be down for the foreseeable future.
A business that doesn’t aggressively go after new business will come out of the pandemic smaller than they were prior to it. Having an aggressive marketing and sales plan is the best way to achieve this, and we’ve seen this firsthand. We have clients that put a great deal of time and effort into marketing, promotion and sales in 2020. Some of these clients actually had their best year ever while others were declining. The key here is to not go dark. If your competitors have pulled back, you have an opportunity to earn some net-new business.
Step 2: Change Your Operating Basis
Doing what you’ve always done won’t get you through the emergency condition. The most important action is to create a full 2021 budget that sets targets for all revenue, cost of goods and expense line items on your income statement. The budget is the score card for your business, telling you how well you’re performing. When times are tough, it’s more important than ever to react quickly to maintain a healthy business model.
Having a budget while monitoring and managing it monthly ensures you have the data to make crucial decisions quickly. For example, if service revenues are trending downward in 2021, you may need to cut back on technician head count to maintain profitability.
Budgets also provide insight into where revenues are hit the hardest so you can build a plan to bring it back. Out of necessity, most of you have likely already changed your operating basis in the sales department. Continue to look for creative ways to get in front of prospects and customers to drive revenue. In the service department, do a deep dive into contracts to determine where click volume is heading for each and what needs to be done to remain profitable.
Some dealerships are also looking to acquisitions as a means for getting revenue back on track. This can be a very good strategy when handled correctly. If you’re considering this route, be sure you’re smart about your efforts, as a bad fit won’t provide the overall revenue and profit boost you need.
Step 3: Economize
By definition, economize means to cut out waste. It makes sense that you can’t afford to waste money or resources when times are tough. What’s not always easy to spot is how important it is that you do this as step three rather than step one.
Too many dealerships have made the mistake of cutting back on marketing and sales efforts. This goes directly against step one of the formula, and there are always other areas in which you can cut out waste. In the service department, you reduce technician travel time through better routing. You may improve overall efficiency by monitoring tech time closely to be sure there is no real down time. You could focus on reducing parts usage, etc.
When reviewing operating expenses, you can identify areas where you may be overspending; perhaps in office supplies, entertainment, telephone, etc.
When times are good, you can afford some waste. But when times are tough, it’s key to keep a close eye on any area where you can minimize waste and maximize efficiency and economy.
Step 4: Prepare to Deliver
You’ve promoted your company to bring in more business. You’ve changed your operating basis to improve results. You’ve economized to remove waste wherever you can. Now you need to capitalize on these changes.
In the sales area, this can mean more role playing and drilling on how to better reach prospects remotely, or maybe working your CRM database to identify prospects. In service, it could be getting a better hold on the key production indicators such as the number of net calls per day or the amount of travel/customer time versus unaccountable time, and then reviewing and managing them weekly. If your plan includes acquisitions, your preparation could include a list of all target companies and determining how you want to reach out to them.
Step 5: Stiffen Discipline
When times are tough, everyone on your team needs to be more disciplined in their approach. You can’t afford to loosen the reins; be very focused ensuring that everyone is working to their full potential. They should be in the office early and work late. In addition, you should conduct regular coordination meetings, while also monitoring and managing exactly what is being done—without taking shortcuts—while not allowing excuses for why things can’t get done.
This disciplined approach leads to success, and is even more important for employees who work on a remote basis. It’s easy for them to get lax when there’s no one else around and they’re outside the normal work environment. As a manager, you need to stay close with your remote workers and help them remain focused and productive.
The good news is that the light at the end of the tunnel is in sight. As COVID-19 vaccines roll out across the country, we’ll be able to work our way back to a life more like the one we knew a year ago. I’m sure you’ve heard the term “COVID fatigue.” The longer the situation goes on and the closer we get to a resolution, the easier it is to let your guard down and loosen your discipline. My advice is to stay focused and follow the above steps. When we get to the other end of this situation, you’ll be happy you did. Stay well!
