Staying on the Gas: Year End Business Health Will Affect Your Success Next Year and Long After – make sure to maintain the value of your business with these useful tips.
NEW YORK – November 25, 2019 – As a business owner, the number of end-of-year tasks can make it easy to lose sight of the big picture. Yet it is precisely these tasks that can contribute to the health of your business and keep it thriving in the new year. What does your dealership’s inventory look like, and how will that affect next year’s inventory? Are you taking maximum advantage of available tax benefits? Will you be giving employee bonuses? Should you make any personnel changes in the upcoming year?
“With the business year drawing to a close, there is no better time to take stock of where things are and pinpoint areas of improvement,” says Dave Cantin, President and CEO of Dave Cantin Group. “Taking time to assess your current situation and preparing for the next year will help improve the value of your business and ensure the future success of your dealership.”
This process can quickly become overwhelming, so we have compiled a list of some best practices you will want to adopt before December 31.
One of the best ways to begin the process is to look back on the last year and make a note of your business achievements. Take a moment to reflect on these things, share them with your employees, and make sure to recognize them for their involvement. Creating an environment of teamwork and appreciation goes a long way. Plus, it’s important to understand what worked well and what didn’t in order to maximize productivity in the coming months. When reflecting on the previous year, some questions to ask yourself are:
- What milestones did you accomplish?
- And what obstacles did you overcome?
- What best practices did you implement?
- Have you been able to standardize operations across multiple stores to reduce expenses?
- Do you really understand what your customers want and need?
Next, it’s a good idea to talk with your tax advisor about getting paperwork in order and maximizing deductions. Make sure to go over your financial reports and understand your P&L statements. Have you correctly utilized manufacturer discounts? Do you need to make any major equipment purchases? Have you donated to charitable organizations? These are things to consider when coming up on the end of the year. “Make sure to speak with your tax advisor,” says Brian Brown, COO - DCG Operations. “Your advisor can help you correctly identify what qualifies as a deduction so you can take full advantage of them for the current fiscal year and be aware of how this will save you money in the future.” Also consider:
- Have you started or completed succession planning to avoid high estate taxes?
- Is your business organized the best possible way? C-Corp, S-Corp, LLC.
- Can you take advantage of 1031 exchanges?
- Can you accelerate expenses and defer income?
Evaluating current inventory is also a critical task for year end. According to the National Automobile Dealers Association, new-vehicle holding expenses are up 142% in 2019 vs. 2018. Holding too much of the wrong inventory can be costly for dealerships. Balancing used and new models is a unique challenge, however adopting inventory management best practices can help in the new year. For example, a good practice to adopt is conducting regular inventory analysis to ensure correct pricing and turn cycle. Also, finding the right mix of inventory and staying on top of aged inventory can greatly improve profitability and help maintain the value of your business. Other helpful questions to ask are:
- Have you considered utilizing the LIFO method for new vehicles?
- Do you write down new inventory at year end?
- Additionally, do you have used inventory over 60 days old that should be wholesaled?
- Do you utilize proper accounting for demo and used vehicles to take advantage of favorable tax savings?
Another important task is taking a look at your talent and resources. Who has been a great asset to your business over the last year? Should anyone on your team play a larger role in your dealership in the coming year? DCG Vice President of Sales, George Pero, believes that performing End-of-Year Reviews for your team can be effective not just to share your positive feedback and constructive critique. “It’s also a great way for your personnel to share their experiences and goals for the upcoming year. Empowering your team to help set goals for themselves and the dealership helps foster a sense of community, improving performance in the upcoming year.” If you plan to give out bonuses, this is the best time to do so because they count as a tax deduction for the current year. Other questions you may want to ask yourself are:
- What is the process for identifying and retaining top performing employees?
- Does each employee have a training path?
- Do you utilize NADA School for key employees?
- What happens to your dealership in the event of your retirement, disability, or death?
Also consider what improvements you would like to make to your showroom during the slower traffic periods in the new year. Take a look around and see what might help improve the customer experience. Is your waiting area comfortable and conducive to possible long wait times? Could your showroom use some cosmetic upgrades? These sorts of improvements are more easily done during the slower season, but can greatly improve the value of your dealership. When considering the customer experience, you may also ask:
- Do you listen to inbound and outbound sales, service and parts calls?
- And do you spend time in all departments and just watch and listen to what is going on?
- Do you ask guests/customers on what you could be doing better?
- How do you analyze/address neutral or negative customer reviews?
Value of your business with these questions
Finally, the end of the year is the perfect time to review your marketing efforts from the previous year and create a marketing plan for the upcoming year. It’s also a great time to set goals. What marketing strategies worked best? What flopped? How many vehicles would you like to move next year? Write them out and share them with your team. Creating a solid marketing strategy that carries on to future years helps establish the “Like, Know, Trust” factor for customers, keeping your name at the top of their list when they need a new car now and in years to come. Consider these questions as you review your marketing effort analysis:
- How do you track advertising effectiveness?
- Does your marketing agency cost you money or make you money?
- Causes matter. What do you do in the local community?
- Do you properly utilize social media?
A new year can be exciting, but also frustrating. “Addressing these six areas will not only make this end of year a little easier, but will establish a healthy routine for tackling these items in years to come,” says Dave. “When executing these items becomes a regular practice, your dealership will prosper now, grow in value as a business, and thrive in the future.”
About Dave Cantin Group
Dave Cantin Group (DCG) is a full-service M&A firm that manages the sale and purchase of automotive dealerships throughout the United States. With over $11.5 billion in collective dealer acquisitions and $3 billion in dealership listings, DCG is one of the world’s largest automotive dealership M&A firms. Dave Cantin personally has helped raise more than $150 million in the fight against pediatric cancer, and DCG is committed to donating a percentage of its revenue to the cause. DCG is headquartered in New York with regional offices in California, Florida, Illinois, New York, and Texas.