Bob Clements and his team have been working with dealerships for more than 20 years. Throughout that time, Clements has identified what he believes are the 7 guiding principles that successful dealerships have embraced that gives them a competitive advantage in their marketplace. 

Clements recently shared these principles in a Rural Lifestyle Dealer webinar sponsored by Yanmar. “I have a lot of dealerships that I work with that don’t have all 7 principles in place, but generally all dealerships practice some of them. The high performing dealerships not only have all 7 in place, but they are constantly working to improve,” Clements says.

Here are highlights from the webinar to help you get started today on creating a high performing dealership.

1. Stop the bleeding.

 “There are just a handful of things that cause your bleeding — identify them and stop the flow of cash. Nothing can succeed in your dealership if you don’t have a strong flow of cash,” Clements says.

He advises that dealers should never be paying overtime, but instead improve processes, so work gets done efficiently. Also, Clements advises dealers to “clean up” their accounts receivables and bring that cash into the dealership quickly. Instead of carrying accounts, set up credit through an option like Yard Card. He also advises evaluating insurance coverage to uncover cost savings and verifying with a professional that you’re not overpaying taxes.

Clements says that having the wrong employees on staff have a direct impact on cashflow because they can damage customer relationships. He says dealers should ask themselves this question: “Are all of my employees having a positive impact on my bottom line every day?”

Create a High Performance Dealership with Bob Clements is a new series brought to you by Yanmar.

More from Bob Clements

Yanmar — Don’t settle for less when you can have more. For example, Yanmar makes all its compact tractors’ major drivetrain components – the Yanmar engine, transmission, and axles — in-house. Because they’re made to work perfectly together, you and your customers get a hardworking machine with more usable horsepower, less power loss, and a smoother, more comfortable ride. Yanmar’s tractors are designed to work as hard as you do for a lifetime. Strengthen your dealership with Yanmar today: AgMarketing@yanmar.com or call 770-877-9894.

2. Generate Instant Income

“Start picking up cash that’s laying on the floor,” Clements says. A first step is to stop underpricing parts and service. “One dealer I talked with was 15% underpriced on parts and he was dong $700,000 a year in parts sales. That means he was leaving $75,000 a year on the floor because he wasn’t tweaking his margins,” Clements says.

He says to avoid “pooling ignorance” by setting service rates based on other dealerships in the area. “You move your prices up and everyone else will follow,” he says.

Clements also advises bundling in service and parts packages and extended warranties into the original equipment purchase.

Finally, don’t negotiate with cash. Instead, negotiate with service and parts packages, for instance, or other items with margins. “You have zero margin with cash,” he says.

3. Build Your Culture

Clements says it’s up to you, as the owner or manager, to build a culture that encourages employees to grow both personally and professionally. “You have to create a culture where employees know what you expect of them and are passionate about what you’re doing — and you can only do that with weekly meetings,” he says.

And, part of having employees better understand what you want from them is to take advantage of training opportunities. Today, there are many inexpensive and valuable opportunities online and through webinars.

Then, when employees are doing a good job, find ways to reward them, such as with a gift card — but be sure those rewards are spontaneous. “Don’t set up a way to do it; don’t set up a process. Instead, get employees thinking, ‘What can I do to make this dealership better?’ It’s so inexpensive and powerful,” Clements says.

4. Define and refine your processes.

Repeatability creates profitability. The more you can repeat an action the better you become at performing it. “You have to look at every department and every process. Ultimately, you want your customers to have a positive experience, so work backward from that point and say ‘What do I have to do to make that happen?’” Clements says.

And, then keep refining those processes. “Never, ever stop refining the process,” he says

5. Create a Plan

Some dealers answer that they hope to do better than the previous year when Clements asks about their plans. “Hope is not a plan. Hope is not a strategy,” he says.

Dealers need to stop “chasing fires and chasing ghosts” and put together a detailed strategy if they hope to reach their goals.

6. Incorporate the People

Hire the right people, give them direction and then empower them to achieve your goals. “I challenge you to look at your people. For instance, walk up to your parts counter and silently say to yourself, ‘Do I have the right people in place?’ Then, do this for your service department and your sales department. Do they know what you want them to do? Have your shared your vision? Every week, when you meet you need to cast your vision. Grow your people to the point where they don’t need you anymore,” Clements says

7. Measure, Monitor and Adjust.

Clements says this is the most important step toward a high performing dealership. “Once you do the first 6 steps, your job as an owner or manager is to constantly go back and measure, monitor and adjust the process,” he says.

Weekly meetings are vital for this step as well. “Weekly meetings help us make adjustments. Let your managers know that next week you’ll be looking at the process again,” he says.

Create a High Performance Dealership with Bob Clements is a new series brought to you by Yanmar.

More from Bob Clements

Yanmar — Don’t settle for less when you can have more. For example, Yanmar makes all its compact tractors’ major drivetrain components – the Yanmar engine, transmission, and axles — in-house. Because they’re made to work perfectly together, you and your customers get a hardworking machine with more usable horsepower, less power loss, and a smoother, more comfortable ride. Yanmar’s tractors are designed to work as hard as you do for a lifetime. Strengthen your dealership with Yanmar today: AgMarketing@yanmar.com or call 770-877-9894.