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by
Robert Grant
| 21 September 2020

Defensive Driving... what's it got to do with my dealership?

Operating an RV dealership is a lot like operating a fast-moving vehicle with a trailer in tow. You always need to stay focused on the changing road conditions while checking your gauges and mirrors. Much like you use these resources in your vehicle, you have an integrated DMS in your business so you can manage the consistent changes that come your way.

It’s been a few years since I learned how to drive, so I did some research to find out how frequently one should be checking mirrors and gauges while driving. An article from a defensive driving school came up. See what parallels you can draw from operating a vehicle and operating your business:

“According to experts… you should be checking your mirrors every five seconds. …this does not mean you need to study your mirrors every five seconds, because then, frankly, you would miss what was going on ahead of you. You simply need to glance in all three mirrors every five seconds. By doing so, you are keeping yourself aware of everything going on around you, which is the key to being a successful defensive driver. For instance, let’s just say you glance in your mirrors and notice a car coming up behind. Five seconds later, that car is gone. Where did it go? If you can’t see it in your other mirrors, chances are it is in your blind spot. You also want to be aware of what cars are around you so that if you do need to react in an emergency situation, you will know which lane you can move to or if it is safe to slam on your brakes.”

Just like you should frequently check mirrors and gauges when driving, you should also frequently check your DMS to get a better idea of the health of your business. If you’re not actively monitoring your business, you can often be surprised by circumstances that may arise in the blink of an eye.

With the summer season coming to an end, there’s no better time than now to evaluate your DMS to make sure you can easily navigate the road ahead. Here are a few metrics that you should be able to check anytime to help identify where you are and where you may want to make any adjustments.

1) Dealership Health

It’s imperative to know how your business is doing as a whole. Having real-time data from your P&L and Balance Sheet will provide the information when you need it.

If you put yourself in the shoes of an investor evaluating your business, they’re going to want to look at a few key metrics that include inputs from both your P&L and BS. Four key areas they would look at include:

  • Liquidity – Measures the amount of cash and easily convertible assets you own to manage short-term debt obligations.
  • Solvency – Ability for your business to meet its ongoing debt obligations – both short and long term.
  • Operating Efficiency – Provides an indication of how well your management team controls costs and expenses, which directly affects the bottom line.
  • Profitability – Also referred to as the bottom line or net. Profit is probably the greatest indicator of your businesses health. If you’re not profitable or your net margin is slim, it’s hard to sustain and grow the business operations.

Your DMS should be able to generate your P&L and Balance Sheet on demand. It should also be able to generate a ratio report that will allow you to analyze these four metrics including your current ratio and quick ratio for liquidity, debt-to-equity ratio for solvency, operating margin for efficiency and net margin for profitability.

2) Major Unit Margins for Success

Identifying which units provide the best margins in your dealership provides you with the details behind the brands and segments that are the largest contributors to your bottom line. Knowing your top performers will also help in managing your inventory as you start placing orders for the upcoming season. The old adage of “cash is king” applies here. It’s all too easy to tie up your hard-earned cash in inventory. If that inventory doesn’t sell, it compounds the issues with ongoing flooring interest charges and ultimately cuts in to your bottom line.

Having the ability to run a quick report to identify the most profitable segments for the last 12 months as compared to the previous year’s performance will help you make those hard decisions about which units to stock and sell. Your DMS should provide this information in a concise format that is quickly accessible.

3) Service RECT for Improved Customer Experience

RECT (Repair Event Cycle Time) is a metric that measures how fast you can service a customer’s unit. This industry metric looks at two key contributors in your business: Ordering parts for service repairs and Warranty processing.

Your DMS should provide your baseline as compared to other similar dealerships. This will help you identify ways that your Service department can improve and provide the best customer experience possible.

4) P&A Profits

Depending on your dealership, this may or may not be as important. However, because of the cash investment required to maintain any level of parts and accessories inventory, it’s something that deserves attention. Being able to identify which part categories are your highest performers to ensure you’re ordering right and selling for the most profit is critical.

Your DMS should easily be able to show your highest performing categories and suppliers so you can ensure you make the most of every dollar spent for items being sold.

Just like it’s good to review your driving practices, it’s also good to have a reminder to review your dealership’s current tools to ensure they’re doing the job you need when you need them. Not having or checking them on a regular cadence may result in a catastrophic accident for your business.

To learn more about what tools and solutions can help your dealership perform at its best, reach out to CDK Global Lightspeed at lightspeed.sales@cdk.com, call 800.521.0309 or visit us at cdkglobal.com/rv

Robert Grant
Robert Grant

Robert B. Grant has over 18 years of RV, Marine and Powersports industry experience. He got his start managing the parts and service departments at local dealerships in Salt Lake City, UT. He attended the University of Utah where he received a BA in Finance. He has been employed by CDK Global Lightspeed, previously known as ADP Dealer Services, for 17 years and has worked in many different capacities in the company which provides the Lightspeed dealer management software and services for the Marine, RV and Powersports industries. He currently works as a business development engineer.