CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
Disclaimer: I am not an expert in ObamaCare and I don’t want to act like one so I am going to quote some recent articles for this article.
In order for a dealership to grow in sales volume, it takes hiring more staff a lot of times. If you are selling 100 cars a month and want to push it to 150, it might require to hire more porters, mechanics and/or sales managers/staff to handle the load. But that also might put you over the 50 employee limit that can push you into the Affordable Care Act or Obamacare which can eat into your profits. Some of these new employees could be part-time workers but according to a recent article on stltoday.com, by Jim Gallagher that won’t help either, “the Small Business Administration gives this example of how the math works. “Company X has 40 full-time workers working 40 hours per week, along with 20 part-time workers working 15 hours per week. The 20 part-time employees are counted as 10 full-time employees. Company X has 50 full-time employees.”
The same article from stltoday.com says: “Lots of companies close to the limit will hesitate to go over it. Doug Simms, vice president at the Meyer Group of benefits consultants, has a maid service as a client. The company was thinking of expanding into a new area, but that would put them over the 50-worker limit. “They decided they’re not going to,” Simms said. Of course, that strategy can be self-defeating in the long run. It limits the company’s growth — and ultimately the owner’s profit.”
But outsourcing some task to independent contractors to grow your store can be the answer. Another validation for this strategy was found in a March 2013 article from Nancy E. Joerg on w-p.com that stated:
“a U.S. Department of Labor spokeswoman recently said "The ACA is going to significantly affect the way employers hire and make hiring decisions, and it definitely increases the desire to hire more independent contractors …."
INDEPENDENT CONTRACTORS DO NOT COUNT AS EMPLOYEES: Under the ACA, independent contractors do not count as employees when determining whether the employer meets the minimum threshold as a large employer.
So what other choice is left for the small to medium dealer to do if they want to grow?
Well there are several task that need to be done on a daily bases to grow your stores sales that can be out sourced to outside contractors. Let’s take used car sales and Internet management for example because these 2 departments are totally up to the dealership on the potential growth but take a lot of man hours to maintain and grow.
In used cars, you need to worry about making sure the vehicles are photo’d, priced effectively to market and described accurately in a timely manner, and that these vehicles are getting onto sites like Autotrader, cars.com, craigslist and your own website without any issues. If there are issues, the managers at the stores have to take time away from sales to manage and maintain these activities making them less productive to increase the sales volume. Managers need to do a “virtual lot walk” like they do their physical lot walk to make sure their vehicles on line stand as tall if not taller than they do on the lot. Good photo’d, good priced and good described vehicles on line will increase sales, but who is managing that process? If it is your manager, it is taking away from him selling cars on the lot. Hiring an outside contractor to handle these responsibilities will free up more time for your managers to sell more cars and work/train with your sales staff.
The internet department will also have task that are time consuming that are taking away valuable time away from the internet manager from working leads and selling more cars. They spend a lot of time updating the website, dealing with 3rd party vendors, inventory feed problems, process problems, CRM updates, social media updates, reporting plus many other task. These task are not producing sales, but take valuable time away from that manager to be more productive working internet leads, which leads to selling more cars.
Again, these types of activities can be outsourced to an independent contractor to reduce the labor force load while helping the managers at the store be more productive and free up their time to help the dealership increase sales volume without adding another “employee”. There are many other types of jobs at the dealership that can be outsourced but these two are the most dominant ones to help increase sales that can be done from any location and not necessarily at the store. And here is why that could be possible, on a recent blog by Shane Snow titled “Half of Us May Soon Be Freelancers” he states several reasons why “it's entirely plausible that more than half of the American workforce will one day log in or show up every day as independent contractors.” The most dominate statement was: “The web lets you find the best person to do anything anywhere. Would you rather work with someone awesome or someone mediocre? Companies used to not have a choice, if the awesome person lived 3,000 miles away. Now they do.”
So I am asking you to think of how you can grow and then if you have limitations on your employee count to get there, think of other ways around the problem. That is what we car guys are good at doing, working around issues and tweaking what we have to get better results.