Do Not Wait Until the Last Minute.
Think back to your school days when you were writing a paper or studying the night before “the big test!” You stayed up late cramming everything you had put off. It was always a huge gamble.
To close the year properly, you need to allow for ample time to reconcile accounts, clean-up work in progress, and so much more. Be sure to prepare now - there is no greater time than the present!
Work In Progress
We all need to focus on work in progress (WIP) and start closing all those open repair orders. Look for reasons to close them, not for excuses as to why they are still open. WIP is a balance sheet account and has a huge impact on cash flow. Adjustments end up as unapplied time or charge-offs. Either way they come “out of profits”.
Accounts Receivable Review
Review the accounts receivable schedule for customers and warranty. Anything older than 30 to 60 days is at risk. Plan now for collection or write offs.
Prepare your annual budget
A basic element of management control is the annual operating budget. The service manager should prepare his complete annual budget and monthly sales forecasts. These can be developed with advice and input from other members of the management team. The following
points should be considered when developing the new service budget:
- Market Potential
- New Expenses for Equipment or Facility Upgrades
- Capacity of Existing Facility
- Existing & Proposed Manpower Levels
- Historical Performance
- Truck Market Trends
- Operating Costs: Salaries, Equipment, Overhead Allocation, etc.
- Required Revenue/Net Profit per the Labor Rate
- Competitor’s Labor Rates & Pricing on Specials
Marketing Plan
An annual service marketing plan is a long-range campaign involving some or all of the following processes:
- Analyzing your competition and market
- Forecasting and planning program objectives
- Developing program strategy and tactics
- Implementing and controlling the program
- Modifying the current programs as needed
All activities developed in the marketing plan should be reviewed in conjunction with the financial planning of the company as they directly affect the future of the dealership. For example, one of the basic actions of the marketing plan might be the analysis of the available market and the potential for growth. This would directly affect the sales budget figures for labor and parts as well as truck sales. It is essential to consider the service marketing plan in conjunction with financial budget planning.
Performance Appraisals
All of the plans you forecast will need the right personnel in the right position to be executed effectively and efficiently. If you have not yet completed a results-oriented performance appraisal for each employee, now is the time. Personnel plans are central to linking individual accountability to organizational outcomes to your forecasts and new year plans. Given the choice, when would you rather discover that your business strategy is unrealizable - After the fact, or while the plan is still on the drawing board? The answer is obvious, yet a surprising number of managers fail to involve key staff members and stakeholders in this process.
Now is the time to get started! If we can assist you with managing Work In Progress, your accounts receivable review, preparing your annual budget, building your marketing plan, or your performance appraisal process, please drop us a line at
casey@keaadvisors.com
or
mark@keaadvisors.com
.
Additionally, we will host a webinar on Friday, September 27.
