MANAGERS SHOULD SUBMIT WRITTEN PLAN

In December, most of you will be completing your budget and fore-cast for the year 2000. How many of you though, will require a detailed written plan from your departmental managers outlining how they intend to accomplish their forecast?

When your managers submit their written plans for your consideration and acceptance, require them to include not only their sales and gross forecast, but also their departmental personnel req-uirements, monthly gross per employee projections, floor plan cost, net advertising expenditure, and any anticipated capital expenditures.

Requiring the managers to submit a written plan with the 2000 calendar year budget and forecast will not only get their buy-in, but will enhance your probability of attaining or surpassing the forecasted sales and gross.

Tony Noland is director of international operations for NCM Associates. He has 30 years of automotive retail experience.

Times are good, at least for the majority of dealers, but it's never a bad idea to continually find ways to cut our expenses. This is one dealer's idea, recently shared with his 20 Group.

This dealership has been in the same location for over 30 years, and if you were to review the fixed asset depreciation schedules prior to 1998, all assets purchased during that time would still be on the books, even disposed assets.

For financial statement purposes the net asset value was not overstated because the disposed assets were fully depreciated. However, for tangible property tax assessment all assets on the books are assigned a value based on their age whether or not they are fully depreciated.

During the year 1998, they began reviewing the fixed asset schedules with the department managers to identify assets that were disposed of over the years. Based on their reviews, they removed disposed assets with acquisition costs of $1,175,000 or approximately 50% of the total fixed asset acquisition cost, other than real estate and leasehold improvements.

By doing this they reduced the assessed value for property tax purposes by $336,000 and the property tax itself by $8,000 per year.

The trick is to verify the existence (or absence) of assets on our fixed asset list. We know several things about the state of our current fixed assets and the list.

First, the descriptions are probably so brief that when we find an asset out in the shop it will be difficult to match to the description. This exercise will most likely cause us to be much more careful in the future. Many dealerships, according to the controllers in our Controller 20 Groups, now use a separate, stand-alone fixed asset program to keep track of their assets.

Secondly, if we have been at our same location for several years many of our assets with a short useful life have probably been disposed of or taken out of service without any communication to the accounting office.

Whatever your situation or the state of your fixed asset list, this is a challenge that should be met, not only for the "health" of your accounting records, but also the ongoing expense saving that will be realized year after year.

Scott Norman at NCM Associates is involved with profit skills seminars, overseas projects and works with 11 NCM Twenty Groups.