Dealers, Start Your Budgets

“May you live in interesting times” is an old adage — or a curse, depending on your viewpoint.

“Interesting times” could be the understatement of 2008. It's beyond being merely interesting.

At least there is a glint at the end of the tunnel. May reason and sanity prevail and help us get the economy rolling again.

The housing and auto industries have been at the heart of our economy. Once liquidity returns to credit markets, we will see these two industries lead us out of this situation, as they have in the past and will probably do again.

Meanwhile, we have businesses to run. That requires planning and forethought. Now is the time to begin working on 2009 and the process begins in the budget stage.

First, consider what we want to accomplish. A budget is a summary of plans, quantitatively expressed.

It's simply a business plan restated in dollars and cents. Without a narrative plan with goals, objectives and strategies, there is nothing to budget. The plan indicates where a business is now, where it wants to be and how it will get there. A budget simply quantifies the “how it will get there” portion of the plan.

Before beginning the budget process, have each departmental manager prepare a narrative plan in which he or she outlines goals, realistic objectives and strategies and tactics to accomplish their plan.

A word of caution. Considering recent events and their impact, there is a danger of being driven by fear instead of looking at the situation and our prospects for the year objectively.

Don't resort to paralysis. Consider a Wall Street Journal article headlined “In Chaos Lies Opportunity.”

Like dangerous curves on a racetrack, economic downturns can create opportunities for companies to move from the middle of the pack and into leadership positions.

Unlike straight-aways where leaders can thrive on raw power alone, steep curves require strategic finesse. That often results in dramatic differences in performance as leaders steer out of the curve.

Below are a few performance measures, Benchmarks®, taken from the NCM database of dealers, based on August 2008 year-to-date performance.

These should help you as you figure out where you are and where you want to be in budgetary terms.

Next year will present our industry with challenges. But by positioning your operation properly and with confidence in your plan and your team, you can be in the inside lane coming out of this downturn.

Good selling.

Tony Noland is the president and CEO of NCM Associates, Inc. He's at [email protected].