Truck Dealership
The family-owned-and-operated truck and auto dealership with 28 employees has been successful for years. However, now the family was working harder than ever. Sales were up, but the efforts were delivering little or no profit.
Initially, this dealership appeared very successful. It had very low turnover of employees, thanks in part to the fact the business compensates workers because of the "high cost of living" location. Office procedures and financial reporting systems were very good. Most of the employees were well motivated and enthusiastic.
Specific areas and departments, however, were causing the owner concern, as he tries to create a smooth-running, profitable operation to pass along to his son. Among these are space-utilization problems, a service department that needs a complete overhaul, effective sales planning, middle management that's complacent, and upper management that is working too hard and becoming frustrated.
In this situation, the owner and the family members involved in operating the dealership were very enthusiastic and interested in improving the business. The Survey Analyst from the George S. May International Company quickly gathered facts and information that presented an outline of what the business could expect from our services. The father and son management team both agreed to the need and costs of the proposed solution.
The major issue around which most of the owners' concerns centered was the need to better organize the company to achieve greater profits. The target was to increase profits from 1.3 percent to 3 to 4 percent per year.
The results of our work with the dealership included:
- Annualized savings of $165,400 per year.
- An organizational chart with compatible job descriptions and responsibilities.
- Instituted a flat labor rate system for service technicians.
- Reorganized the Service and Parts Departments.
- Returned more than $42,000 in "dead stock" from Parts Department.
- Developed an employee incentive program based on dealership profitability.
- Completed budget planning, including fully burdened overhead costs, burdened labor costs and a breakeven analysis.
CLOSING LETTER EXCERPTS
Dear Sirs:
"I want to thank your company for its critique and recommendations of our company ... I had not been happy with the overall operation of our business. Although the company had been profitable in 1999 thus far, I felt that we should be running much smoother. I felt I needed help in rejuvenating the corporate structure.
"After working many long days with your employees, we were able to uncover many inefficiencies and outline procedures to eliminate them. We were able to reveal actual dollar savings that we verified. We set up many procedures, and have started the process for our management team to make our company more profitable and efficient ... The savings that were proven to me by your employees were impressive ...
