Are You as Profitable as You Want to Be?

By Jim Moody, CAE

CSA President

Well, here we are halfway through the year. The threat of terrorism still plagues us. We are in political hell. And, global economic uncertainties make us wonder whether we are on a slippery slope back to recession.

Yet for all of this, the housing market seems to be humming along nicely. I’ve met with probably 75 different dealers over the past six months, and nearly every one has told me they are busy. Many folks are hiring again to cope with increased business.

So my question for you today is this: Are you making enough money to be happy? Are your profits sufficient to rebuild your balance sheet? Is your return on investment enough to justify the risk you take each day opening the doors to your business?

If the answer is yes, then good for you. Read no further. But if the answer is no or perhaps even maybe, then I have some more questions for you.

If not now, when will you ever be able to make enough money to hit happyland? Do you think the economic conditions are ever going to be appreciably better than they are today? If you do, you wear glasses a lot rosier than mine. I think we have come out of the recession as far as we are coming. While not quite as hot as the market was in 2005, what we have today is fairly sustainable. And many people are making good money. If you aren’t one of them, why not?

My point is this: We have to assume this is the new normal. It is possible to make decent money in this market. Many people are doing it. If you aren’t, stop making excuses and figure out how to become profitable.

I recognize it’s much easier to preach about this than to actually do it. So, I have a few suggestions.

1. Stop spending so much time working in your business. It’s time to work ON the business. You are not going to change your trajectory working on the front counter. Pull yourself out of the weeds and take a higher-level approach to your work. This may mean you have to hire someone to do the work you were doing. But you CAN hire someone to do the day-to-day stuff. It’s much harder to hire someone to do the 30,000-foot-level stuff.

2. Identify two or three areas you want to improve before the end of the year. Is it reducing inventory and increasing turns? Is it becoming more efficient with your trucking? Is it growing sales? Maybe it’s getting your employee expense in line. Perhaps it’s simply adding a point of margin to existing sales. Regardless of what your issues are, pick no more than three. Set a measureable goal for each issue. Build a sense of teamwork around reaching the goal (assuming the goal involves employees other than yourself – this is not particularly appropriate if one of your goals is getting employee expense under control). Incentivize people to reach the goal by a specific time. Track progress. Celebrate success.

3. Think about the future of your business. What is changing in your marketplace? If it’s in decline, are there other areas you could tap into and grow your company’s footprint? Could you do a better job supplying current customers with all their needs so that you aren’t just selling them the low-margin stuff? Could you invest in a sales person to bring in business your competitors are getting?

We are past the point in time that all ships are falling on an ebbing tide. While the incoming tide may not be as high as anyone would like it, many dealers have learned how to make good money (dare I say thrive?) in this marketplace. If you aren’t getting your fair share of the pie, you need to look internally and make changes. You can’t do business the way you did it in 2003. And let’s be honest, there are people in this industry still doing business today the way they did it in 1983.

And speaking of the 1980s (a decade I love), I’ll end with this little ditty:

“I’m looking at the man in the mirror. I’m asking him to change his ways. And no message could have been any clearer. If you want to make the world a better place, then look at yourself. And make that change.” --Michael Jackson