PLAN AND BUDGET FOR SUCCESS IN 2001

Planning your work and working your plan is an adage that's just as applicable today, maybe more so. With a month remaining in 2000, it's time to establish your plan and budget for 2001.

What is the established procedure for forecasting in your operation? Whom do you involve? What materials do you utilize to help ensure accuracy? How do you then monitor your progress versus your forecast? I offer the following process for your consideration.

I realize that the easiest way to get a management forecast is to have your comptroller pass out departmental forms, instruct the managers to complete the forecast and return them at a specified time. There is a problem with this though. I speak from first-hand experience.

How can you get your managers to escape their day-to-day demanding routine? How can they concentrate on the future when the present and past is telephoning and knocking on the door? How can the managers give and receive the necessary input to provide you with an accurate plan and forecast?

I recommend that you set a date when it will be possible for all departmental managers, your comptroller and yourself to be away from the dealership.

Getting started Rent a meeting room in a local hotel, gather up your past two years financial statements, new and used vehicle monthly sales recaps, parts, service and body shop sales recaps, inventory information, notations of any special sales or leasing incentives and the periods that were covered, your expense trend analysis and any industry reference materials, i.e. NCM composite and benchmarks. Armed with this information and a calculator or computer, you are ready to go to work.

Set up individual work areas in the meeting room where your management can concentrate without interruption. For example, the new and used vehicle management would be located in one section, the fixed operation in another and the dealer and comptroller in yet another. Instruct them to spend their time initially concentrating on their department's historical performance and making notes of any known changes that will impact their 2001 forecast.

While reviewing historical performance in terms of gross generation, personnel productivity and expense management, refer to the benchmarks, noting all areas of opportunity and any thoughts regarding a plan to meet or exceed them.

Now, begin forecasting Now, after reviewing and familiarizing yourself with your historical performance and your plans for improvement noted, you are ready to begin forecasting for 2001 month by month. It is much easier, and probably more accurate, to forecast by month as opposed to a year. Once the departmental forecast is completed, it should be turned over to the comptroller for inclusion in the total dealership forecast.

Next, distribute copies to all present so that the validity of the forecast can be discussed, challenged if necessary, and then agreed upon by all. Using this procedure, not only will you receive a more accurate forecast, but one where the entire management team has been involved and made a part of the total dealership big picture. In other words, you can expect a higher degree of accountability from your management staff because this is their forecast as well as that of the dealership.

One more quote: "Inspect what you expect." Monthly, during 2001, when reviewing results, always reference the forecast and where each department stands relative to it. Remember, "Where performance is measured, performance improves."

You may be familiar with many of the dealers who use the scenario outlined above when forecasting their operational performance. At NCM, we refer to them as NCM Benchmark Dealers. Try this process. I can almost guarantee that you will be pleased with the accuracy and professionalism it establishes within your organization.