Digital Dealer - June 2019 - 18

D E A L E R OP S & M ANAGEM ENT: F ixe d Oper at i ons

By Ed Kovalchick
CEO & Founder,
Net Profit Inc.

Should
Employees
Understand
the Company
Financial
Statement
Scoreboard?
Those who truly
understand the intimate
nature of any business
configuration know that it's
all about numbers, period.
And the "numbers measurements" are copious, which
in the case of the financial
statement puts the accounting office personnel in the
cross-hairs. That is provided anyone in the organization really cares or studies
what accounting accounts is
all about.
I am amazed sometimes
at how often the franchise
accounting manual guide
isn't utilized, although dealers are comparing numbers
in groups as if they were the
gospel of likeness. Lesson:
Don't beat yourself up till
you know the actual facts.

BUSINESS EDUCATION

One of my roles was
working with a very successful mid-sized dealer
18

JUNE 2019

AN EYE-OPENER
EXERCISE IS
DEMONSTRATING
HOW A DEALERSHIP
CAN EARN A $50,000
PROFIT AND HAVE NO
READY CASH TO MAKE
PAYROLL."
been to educate select
middle managers and
manager candidates on
their particular franchise
financial statement numbers. These employees
have been deemed as loyal
performers and influencers,
who have earned a plan
for continued growth within
this expanding organization.
The assembly may consist
of such underlings as team
service managers, parts
counter personnel, master
technicians, sales managers, F&I managers, as well

D I G I TA L D E A L E R . C O M

as their department heads.
The corporation's owners/
bosses, who have been
successfully overseeing
their highly profitable group
for many decades, believes
that financial statement
exposure, including an understanding of the realities
of cash management and
so-called profit, creates
employees who want to be
part of the solution instead
of part the problem. I make
it a point to dissect the
mostly ignored balance
sheet of their particular

franchise, including the
realities of cash flow, fat
inventories, and the many
categories of never-ending taxes, which is always
an eye-opener. I won't
say here, but you know
which other group needs a
healthy dose of this reality
regarding genuine business
workings.
Interestingly, of the
numerous dealers I have
worked with over many
years, I feel comfortable
saying this conglomerate
has the least employee
turnover of any. I am working now with most of the
same employees we started
with in the early 1990s,
except for the retirees. You
won't see that often brother
and sister.
BIG BUSINESS

One of the primary
concepts I teach is that the
size of the average division
(department) in today's
dealerships is a good-sized
multi-million dollar company
itself. Typically organizations of this volume have a
CEO or COO who studies
and knows their numbers
intimately. Unfortunately,
today's dealer department
heads are primarily driven
by daily forced reactive
management, and many
get no significant exposure to their own numbers.
Some are so uneducated
about financial statement
performance; they don't
know what they are looking
at when they get a glance.
Sadly, these same numbers are what their ultimate
performance is judged on,
and when they get chewed
out or sacked because of
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Digital Dealer - June 2019

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