How Financially Astute Are Your Managers?Written By: Gary Bartecki
Article Date: 04-04-2005
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
The financial landscape is changing; will you be able to compete?
There is a growing need for better financial training in our industry. It's required at all levels and has to be industry specific to maximize results. Dealer reps need it to understand dealer profit drivers, branch managers and department heads need it to manage their business and bring value to the entire enterprise, and even bankers and financing personnel need it to better understand this industry. In short, the financial landscape for dealers is going to change, and getting and keeping a better handle on finances is not going to be an option. There's going to be a financial battle out there, where only the financially astute will earn adequate returns, with the rest squeaking out an existence. This is evident already based on current industry activity.
Why is this happening? There are many reasons, the main one being the changing distribution channel. It's no secret manufacturers are looking at all avenues to cut the cost of distribution, from selling equipment and parts direct, to dealing with fewer distribution points.
Let's face it, with the ability to communicate with equipment users now easier than ever, parts deliveries available overnight, and rental companies exposing product to the market, traditional dealers are facing tighter margins.
The problem is tighter margins and traditional dealer operations no longer go hand in hand. Learning to be and stay a "high profit" dealer means a change in strategy along with tight financial controls.
To help dealers manage these changes means several personnel in each dealership have to be financially astute. They have to know how their departments or branches operate and generate cash flow. They have to know what impact their actions have on profit and cash flow. They have to get on-going training to stay on top of the market and business cycles.
At larger dealerships, training is part of the culture. Smaller dealers have a tough time budgeting much for training. All dealers train technicians because there is a shortage and they have no choice. But, if dealers plan to compete effectively, financial training is going to be a must. No longer can you get along with quarterly financial statements and a guess on how you are doing. Competition will not allow you to do that.
To assist all members, I am working with AED to create new affordable industry specific financial training programs to help dealers operate more effectively. These programs will be based on the following:
This is what's in the works and you'll see many of these topics made available to you this year. For example, a CFO Forum is in the works for late spring. The first one will be held in Chicago and will be limited to 25 participants. We plan on getting into the nitty-gritty so the CEO gets his money's worth. Interested in this session, let me know. I would also like to hear about specific financial issues you'd like covered, so please call or send me an e-mail.
- Using the Cost of Doing Business (CODB) balance sheet and income statement format as the basis for all program presentations. In other words, all financial programs will be tied back to the CODB, making it possible to continuously benchmark your results to your peers and other training participants.
- Interactive live and web-based training where a department head or branch manager can use their actual data during a training session.
- Annual web-based updates to bring everything into "current " status.
- Annual planning meetings for CFO's covering federal, state and local tax planning, accounting rule changes, financing updates and opportunities, system updates, insurance options, operation best practices, incentive plans, etc.
The industry cycle keeps speeding up, and training has to keep up. Get committed to providing training to every department head and branch manager.
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