Running a dealership

Question:

Hi Geoff, don’t know whether you remember me. My name’s Don Goodall and I met you on a 2 day General Management course all about how to run a dealership. If it helps you remember, on day 2 the fire alarm went off twice and we ended up sitting in the beer garden discussing workshop loading. Anyway, it’s still the best course I’ve ever been on and the only one in 18 years I’d like to do again! Purpose of my contact. I can’t find my course notes and can’t remember the KPI for helmets. What do you reckon? Regards, Don

Don Goodall

Answer:

Hi Don, you were sat next to a bloke called Phil who’s father had left him the shop but wouldn’t stop interfering and kept us laughing solidly for the entire course. You were the only person with an electronic diary system for the workshop too if I remember rightly. So, helmets: The difficulty is, normal margins (say 30% and up) and normal stock turn (6x) simply don’t seem to work for helmets. It’s just about achievable at the low-price end but you end up turnnng your money over nicely and selling in volume but making an insignificant amount of profit. Helmets are jewellery in a motorcycle dealership. It’s normal to display them at the back and to make sure they are well lit and mighty colourful! 3 brands is plenty unless you can manage with just 2. Have strong reasons to stock more than that, especially if with the main brands you’ve got 3 or 4 ranges between them. Follow the pyramid stocking system (contact me again if you’re unclear on that) and monitor sales carefully to avoid lost sales. Price for profit but give people reasons not to just try them on in your store and then shop on-line. Better still, get staff selling up and bundling so the shopping evolves and their basket changes so much they become less attached to whatever they’ve already seen on-line. Also, a bit of urgency can help. If there are any problems with their current helmet and they might not keep it as a spare, offer to keep it at the store and get it destroyed, otherwise some teenager might end up using it in 5 years time and it won’t perform properly. All in all, if you can vary margins (not mark-ups) from 25% to 50% and turn stock from 1x on the slowest to 6x on the fastest and end up somewhere near 2.5x – 3.5x with an ROI of about 100% then you are in the right ballpark. It’s not great, but it’s right where most people are. Finally problems occur from: i) Pilferage, ii) Damage during display iii) Over stocking the wrong stuff iv) thinking that selling lots of £60 helmets with a 30% margin will make you rich – it doesn’t. Hope that helps and nice to hear from you. Geoff

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