DealerLAB: People problems continue with losses in March

DealerLAB: People problems continue with losses in March

Tuesday, May 20 2014

PUNTA GORDA, Fla. -- Last month, we discussed the importance of having the right people to execute your systems and processes. In this report, we see that people problem continued at the Destination Powersports dealership owned by Bill Shenk.

In March, the dealership lost $12,290 on total revenues of $472,480, down sharply from earnings of $32,209 on total revenues of $616,201 for March 2013. Total unit sales declined month over month, from 58 units last year to 47 units this year.

For owner Bill Shenk, the reason for the drop in earnings this year is simple: People. People. People.

“Our lack of revenues is not because the phone isn’t ringing,” Shenk said. “It’s not because we don’t have enough good customers stopping by. And it’s not because our marketplace isn’t large enough.

“We have all those things, and we’ve had them most of the time, this year, but we’re just not converting these leads into sales. We have the proven systems to do that, and we have the proven process to do it. But we just have not had the people doing the job. That was most obvious in March when we lost almost $13,000, and we were down 27.8 percent in total revenues.”

TOUGH THREE MONTHS

Shenk parted ways with the sales manager in January, and in the last week of February Shenk brought in a sales manager who had experience at another multiline dealership. That hire didn’t work out, and sales started to suffer within a month, he said. Once again, Shenk sought a replacement.

Shenk brought in a new finance manager the first week of April, and he installed his current finance manager as sales manager in mid-April. Hopefully, he said, these moves will solve the problem.

In January, the service manager took a job in the auto industry. A few weeks later, the senior service writer left to join a family business. “Our parts manager tried his best to hold service and parts together till we could find a new service manager,” Shenk said, “but that has really hurt PAC production.” A new service manager started in mid-April.

The parts manager did a pretty good job managing all the PG&A and service business in March. Total revenues for parts, accessories and service this year were $91,983, down less than 1 percent from $92,880 last March.

EXPENSES UP FROM NEW STORE

On the expense side, the new facility continues to cost more than the old one. Occupancy costs in March were almost $10,000 more ($23,068 vs. $12,555) than in March 2013.

It also should be noted that in March 2013, the dealership sold nine BRP units, generating $98,428 in revenue and $11,082 gross profit. However, those numbers went to zero this year, as the dealership no longer sells the BRP brand.

One other interesting note: The sales team wrote up 75 of 105 (71 percent) of customer log visitors, compared to 72 of 127 (57 percent) last March. But this March, the dealership closed only 48 deals (46 percent), compared to 57 deals, or 60 percent of write-ups, last March.

“This is an indicator that we weren’t in control of our customer, that we weren’t doing our job,” Shenk said. “When you record only two customers for every delivery you make, you’re not recording all of your customers. A more acceptable ratio is 5:1.”

SALES PRIORITIES

Inadequate recording of customer traffic also can be an indicator that the sales manager is spending too much time talking to customers and not enough time managing the sales staff.

It also could mean that the sales staff isn’t performing. “Getting a phone number from a person you don’t have a relationship with is very difficult,” Shenk pointed out. “If sales people aren’t building relationships, they’re not going to get the information we need. It’s that simple.”

If you’re going to grow your business, Shenk argued, you have to know who did not buy and why they did not buy. “Nothing is more important than this, and you won’t have this information if you don’t record the conversations,” he said.

While it looks as though traffic was down in the new store compared to the same month in the old store, Shenk said that’s not the case. “We’re just not recording the conversations with prospects.”

Shenk noted that phone calls are up and that in April the dealership sold 70 units, an all-time record for any month in the dealership’s history.  


EDITOR’S NOTE: The Dealer Lab project is a joint effort between Dealernews and PowerHouse Dealer Services, a consulting firm run by former dealer Bill Shenk, detailing his efforts to return a Florida powersports dealership to profitability. When he took over management of the store, located in Punta Gorda, Fla., in July 2009, it had been losing money. Shenk and a partner have since purchased the Punta Gorda store and renamed it Destination Powersports. Shenk no longer is involved in the Naples location.

The dealership has several lines, including Yamaha (MC, ATV, UTV and PWC), Kawasaki (MC, ATV, UTV, and PWC), Suzuki (MC and ATV), and Polaris (ATV, UTV and Victory).

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.

About Powerhouse Dealer Services: 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. Bill purchased his first dealership in 1987 and started PowerHouse in 2000. He purchased the "Dealer Lab" dealership to show the industry that even in these extreme times you can turn around a failing dealership by using the proper best practices. Eventually "Dealer Lab" will be used as a real world training facility for PowerHouse clients across the country. To join a PHD 20 Group and take your dealership to Top Gun status contact Bill at 877-PHD-0911 or Bill@phdservices.com.

Joe Delmont is a marketing and communications consultant with more than 40 years of experience in journalism, public relations and marketing. He regularly writes about DealerLAB, a project between Dealernews and PowerHouse Dealer Services, a consulting firm run by former dealer Bill Shenk, detailing his efforts to return a Florida powersports dealership to profitability. He can be reached at jdelmont@dealernews.com.

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