Looking Ahead to 2016:

In our last visit, we talked about how to prepare for the end of the year. If you haven’t read that entry yet, go do it now, and get that part done. Go ahead, I’ll wait here.

Oh, you are back. Good. Now that last year is set on course, let’s look ahead.

A few things that you bring over from last year become your building blocks for this next one.

First: Your Advertising.

  • Does it meet your needs? 
  • Are you even tracking and qualifying your campaigns? 
  • Are the selections made generating leads and sales? 
  • Is there an option you are not using? 

We talked before (Here) about the Internet. Obviously, if you are reading this blog, you are familiar with it enough to be on it. That’s just step one. Next step is understanding it.
The Internet is a powerful tool for marketing. It is Thor’s Mjolnir  in a world of 16-oz claw hammers. Keep in mind, that it is the one marketing tool that is universal and instant. That means as soon as you click to submit the changes to a website, it is visible to the entire known connected world within microseconds. Even phone calls and handshakes can reach only one live person at a time.

As we said before, though, remember that the Internet can destroy just as quickly as it builds.

Financial Planning. This means taking a good look at this year’s results. Do you have a solid idea of your expected expenses for 2016? Do you have an equally decent grasp of your income? These things are important.

Staff Analysis: Do you have the Right Team? Did you read my warnings about that on THIS page?

Sales Goals: How many units (and at what markup) per month did you move this year? Was that a good number for you? If not, how do you fix that? This is the time to form your strategy.

This is also a very good time to sit down and take a long hard look at your receivables.

Look at your percentages of bad debt, slow pays, etc. Find out what your percentages of Collected vs Expected are. If your DMS gives you a monthly cash flow value for your active receivables, compare this to the average principal and interest collected each month.

If this number is not right for you, then fix it. How? First, look at your underwriting. It’s the primary cause for poor loan performance. Do you have one of those “everybody rides” signs out front? If so, go take it down. The reality is, that Everybody cant ride. Learn to read a credit report, and use the information from it to make better decisions. Go read THIS again.

Another place to look at is ease of payments. People wont make payments if its a pain. Are you one of those Cash Only dealers? Here’s a tip: Consumer Advocates have long advised people to never make payments in cash. Besides, virtually everybody has a debit card, so get yourself a card processor, and start taking payments the easy way. Yes, it costs a little bit. It’s part of the cost of operating a business in the 21st century.

One other reason for low payment performance is an over-sized payment. Yep, we are back to THIS again. Even if you made the right-size decision at the time of sale, it may not be the right size now. Pick up the phone and ask. Nicely. Be open to working with them, if they need it. Be their partner, not their enemy. The referrals will be well worth it. I tell you that, but I will also caution you not to be their patsy or doormat, either. There is a balance.

Finally, give the original sales rep an incentive to help. In their slow times, have them call some of these slow pays they originally sold, and have them use the persuasive power of sales to try to get the payment made.

I hope you have a great year.



OK, Time to close this thing out. Are you ready?

First, you have to ask yourself some questions, and this is a good time to do it.

  1.  Do my Transaction Reports match my Bank Deposits?
  2.  Is my bank account(s) ready to be reconciled?
  3.  Have I authorized all non-payment transactions?
    1. Voids
    2. Credits
    3. Other adjustments.
  4. Can I account for the entire Inventory?
    1. Does the Master Inv Report reconcile to the As Of A Date Report?
    2. Units for Sale
    3. Units on Hold (Repairs, Demos, Repo Holds)
    4. ALL Titles in hand or accounted for?
    5. Valuation Audit. (See below)    
  5. Unit Valuations (ACV) — RECHECK all valuations now! Use NADA Values.  
    1.  Does the DMS have the most accurate valuation?
    2. Are there any that seem suspiciously high or low?
      1.  Re-state value and report to CPA.  
    3. Have any units devalued significantly?
      1. Report these to CPA with original value and current value.  
    4. Has the Car Lot paid the RFC for all Repos?
  6. Are there any Sales that seem unusual?
  7. IRS Compliance:
    1. Form 8300
    2. 1099-C and 1099-Misc  
    3. Payroll ready for W2 forms? Fixed Cut-off date?
    4. Do we need updated W4 forms? (Yes, every year)    
    5. I-9 Forms on file for every employee?
  8.  Do I have outstanding Receivables that need to be settled?
  9.  Do I have outstanding Payables to be settled?
  10. Have I dealt with, or have a plan to deal with Property Taxes?
  11. Are there any questions I would have for my CPA?
  12.  RFC: Have I maintained the proper relationship distance with the car lot?
  13.  Do I have a plan to operate for next year?
    1. Sales Goals
    2. Financial Planning
    3. Staff Analysis
    4. Average unit cost to sell. (AUCS) – See discussion below)
  14. Is it time to renew my State License? 
  15.  Is my advertising fulfilling my needs? 

If you do not have a CPA, this is the time to find one. Look for one with used car dealer experience.


This is also a good time to evaluate your compliance with the FTC’s Red Flags and Privacy Acts Rules. Here’s a hint: Just printing the forms is not all there is. Download the acts and see if you are fully in compliance. Get an attorney to assist, if you need it. 

Check out your business machine inventory and see if you need to update anything. This is actually a great time of year to buy computers and technology. Remember to go for business-class equipment. Home-use printers and bargain basement computers do not belong in a business. When buying computers, look for those with the Professional Versions of Windows.
Your primary printer should be a network-based black and white Laser printer with Automatic Duplex.
If you only have one computer, consider getting a second one to have on hand in case of emergency.
Check your backup plan. I recommend physical backups (removable hard drives) as well as secure cloud-based backups.  

Do you own what you think you own? In other words, look at the equipment in the shop, such as tire machines, balances, pressure washers, etc. Make an inventory of these things, and state a valuation of each item. Evaluate the usefulness of each asset and determine if it will need replacement or major repairs during the upcoming year. Be prepared for these kinds of expenses.

If you own lot vehicles such as tow trucks or car hauling trailers, you need to value and evaluate these vehicles, also. If your shop is slow this time of the year, take the opportunity to bring these assets in for Preventative Maintenance work and inspections. Don’t let a $20 maintenance become a $2000 major overhaul.  Be prepared to evaluate your cost of ownership vs cost of replacement.

Supply Inventory: What do you have versus what do you NEED? Learning to do JIT (Just in Time) inventory management could save a lot of money. The concept is, by analyzing your usage of a supply, and considering order and delivery time, you should only maintain slightly more of a supply than you can restock. First, by controlling the availability of supplies, you can cut down on theft. By closer monitoring usage, you cut down on waste. And with JIT, you cut down on storage requirements.