Dashboard Dealership Enterprises CEO Josh Blick explains a better way for dealers to review their doc reports.

CEO Josh Blick shares which KPIs are most important when it comes to your financial statement in this video blog.

Josh Blick shares his opinion on automating the reporting process in your financial statement in this video blog.

Josh Blick shares the importance of identifying inefficiencies in F&I in this short video blog.

Josh Blick explains why dealers should adopt a "no fake news" policy in their store in order to truly understand what's going on financially.

Net cash balance is one of the best indicators of how healthy your store is. If your net cash balance is adequate to good, you are in a position to be proactive and take advantage of opportunities. For example, with plenty of cash on hand you can go to auction to buy cars and you don't have to worry about making payroll.  

On the other hand, if your net cash balance is below adequate to poor, your situation becomes precarious. You get thrown into reactive mode and you're spending time and resources chasing cash. To raise more cash you may decide to have a fire sale to get rid of some of your used car inventory. Unfortunately if you resort to this type of tactic, the end result is that you raise your net cash balance, but perhaps at a loss if you've had to sell inventory below cost. 

So how do you know what your net cash should be? An optimal net cash balance is equivalent to one month's operating expenses. So if it costs roughly $400,000 a month to run your store, your running net cash balance for the last 30 days should average around $400,000. Sounds simple, right? Not necessarily. 

Net cash can be difficult to calculate because there are so many variables. The hard and fast formula I recommend using is the following: 

[Cash in bank] - [checks outstanding] - [flooring due] + [Contracts In Transit] = Net Cash 

Of course there are other factors such as income tax due, sales tax due, accounts receivable due back to your store, etc. So the formula is not in-depth or to the penny at any given time, but overall it gives you a good idea of where you stand.  

Although net cash will be up or down on any given day, if you track it daily in a report or on a chart, you'll be able to identify negative trends occurring in as little as a week. If your net cash balance drops to less than 25 percent of your monthly operating costs, or about $100,000 in the above scenario, you'll need to take some corrective action pretty quick. 

Let's say you notice a trend downwards. What can you do? The first place to drill down is the CIT. Hopefully you're looking at this metric every day anyway. Is there anything that's causing your CIT to be lower than it should be? Check to see if any of your salespeople are delivering cars without approved contracts, or if any of your F&I managers haven't been turning deals into accounting. 

If your net cash is trending downwards, another place to look is flooring due. How much inventory do you have? Do you really need a six-month supply of new or a 75-day supply of used? If you catch this trend early enough you won't be forced to have a fire sale; you can simply stop ordering new inventory for a few weeks or months until your net cash balance rises back to where it should be. 

Last but not least, drill down to your checks outstanding. Are you tracking your expenses to see if there are any negative trends occurring? Perhaps you have a couple vendors where the inevitable "expense creep" is happening. Perhaps there have been a couple one-time, large expenses that affected your net cash but since they were just one-time, you don't really have anything to worry about.  

Checking net cash balance daily gives you a good idea of how healthy your bottom line is at any given time. It's an important metric to track because if you're constantly chasing cash, you're not really running your store--your store is running you! 

The recent devastation caused by Hurricane Harvey and Hurricane Irma is horrifying in terms of lives lost, lives affected, and the billions of dollars in property damage. If there is any silver lining to be found, it is only that things could have been much worse if not for residents taking action on data-driven early warning and storm forecasting models. The intensity of the storms, storm tracks and predicted areas of landfall were all pretty accurate.  

These predictions allowed government officials to issue evacuation orders and set up shelters for residents in affected areas. Without these warnings, undoubtedly damage would have been much greater. Thanks to the weather services' computer models, millions of citizens were warned days in advance, and were able to safely evacuate from the areas of greatest impact. For those who chose to take action, the chance for safety was dramatically increased, if not assured. 

In our small part of the world we talk a lot about 'big data' and all of its advantages, but it's not until a catastrophic event happens that you can truly appreciate the value of what data provides. When it comes to forecasting weather, balloons and satellites collect millions of data points such as temperature, humidity, wind speed and air pressure. All this data is fed into supercomputers that generate a series of computer models. When acted upon, this data literally saves lives. 

Certainly, dealership data won't save any lives, but it does provide your business the same type of prediction models, warning of a downturn or unexpected business events. 

But are you taking action? 

In your dealership, you have access to tools right now that will tell you, with a high degree of accuracy, where you will be at the end of the month, quarter or year (DMS, CRM, Registration data, Website Analytics, etc.). You can either act on what you see or you can ignore it.  

If you choose to ignore your reporting tools, you may come through an unexpected event just fine. Most likely you will wish that you had acted on the warning signs that were there all along. 

What warning signs am I talking about? Below are example KPI warning signs from our top-performing dealers:  

New Car Inventory. Do you know what your new vehicle day supply is? This KPI is an important indicator of new vehicle sales performance. Tracking it on a daily basis allows you to see if a negative trend is developing far in advance. If this number is creeping up, that's an early warning sign. Based on seasonality, are you carrying a 60-day supply? 

Used Car Inventory. What is the average age of your used vehicle inventory? If this number trends upwards, there's a problem somewhere. The earlier you spot this warning sign, the sooner you can take action. Is 55% of your inventory under 31 days old? 

Service Department. One of the biggest challenges in service is to accurately gauge how individual service writers are performing. One effective way to do this is to track the number of open Repair Orders (ROs) for each employee. If at any given time, an advisor has more open ROs than they have the capacity to write in one day, that's an early warning sign that requires immediate investigation. Writer ‘A’ writes 17 ROs per day average but has 21 open ROs, what is the corrective action? 

Parts Inventory. If 10 percent or more of your total parts inventory is over 12 months, that's an early warning sign. What is the ‘return reserve’ being applied to if not over 12 month parts? 

Accounting. Deals should be posted within 24 business hours of completion. If accounting is consistently taking two, three or four days to get deals posted, that's an early warning sign that you have some issues within your accounting department. Does each department operate with the same ‘sense of urgency’? 

This rundown of departmental KPIs is just a sample of how you can use benchmarks to alert you to a potential storm on the horizon. The more advanced the notice, the easier it is to take corrective action.  

More than ever, business owners have the ability to see into the future and control their own destinies. When you receive an early warning, you have a choice: batten down the hatches and ride out the storm, or act immediately on the information. Weathering a storm is so much easier with data as your guide. 

Interested in giving to a charity in support of Hurricane Harvey or Hurricane Irma relief effort? Go to https://www.charitynavigator.org to find a reputable source today. 

When you first come to work every morning, do you spend time planning your day, or do you dive right in and start working? Depending upon your role in the dealership, it may not matter that much. However, service advisors really don't have a choice. Your service department opens early and it's busy as soon as it opens. Ending your day with the beginning of the next day in mind is key to starting the day off right. 
 

If you're a service advisor, jotting down a to-do list for the next day isn't really sufficient. There's so much that can be done to prepare for early appointments. Being prepared means you can deliver a stellar customer experience first thing in the morning, even if you haven't had a chance to finish your first cup of coffee. 
 

Best practice is having service writers perform a day-end checklist. Advisors that completed these tasks before they went home arrived at work every morning ready to dive in and perform at the highest level! 
  

1) Review open Repair Orders (ROs) 
 

After you've said goodbye to all the customers who picked up their vehicles, review your open ROs. Have you contacted all these customers to update them on the status of their vehicles? 
 

At the end of each day, being proactive about letting your customers know the status of their vehicles will eliminate many incoming phone calls from them the next day. This means fewer interruptions while you're with clients, and fewer phone calls to return in a game of phone tag. It also makes your customers happy because they don't have to call you to find out what's happening. 
 

One of the best ways to let customers know about their vehicle status is texting. If your service department has a texting function integrated with its DMS, encourage advisors to use it. In general people are much more responsive to texts than to phone calls. Think about it: if you're at your son's baseball game or in a meeting at work, are you going to pick up the phone? Not likely. But you can easily read and respond to a text. 
 

2) Review morning appointments 
 

Print out service histories for all of your next morning service appointments. Look at what the client is coming in for and review that vehicle's history to see if there are any recommended repairs that need to be addressed, recalls in effect for their vehicle, or other opportunities. Print out your RO estimates and attach the service histories, highlighting or otherwise noting the items you've found.  
 

Reviewing appointments ahead of time also gives you a sense of how many big jobs vs. small jobs you'll have. This allows you to form a game plan in terms of who will be working on what, and in which bays. Having a game plan in advance saves valuable time in the morning, which your clients really appreciate.  
 

3) Update closed and work-in-progress ROs 
 

Review all closed and work-in-progress ROs, and update notes in the CRM and/or DMS. During the rush of the day, notes are often scribbled by hand onto ROs but never transferred into the DMS. Also notes from conversations that you've had with clients should be recorded that day before you forget the details. 
 

All items such as declined services and attempts to reach a client should be recorded. If you've made a repair recommendation, record the price quoted. If the customer is a possible candidate for a trade-in, make a note and alert the appropriate sales contact. 
 

4) Have loaner cars ready 
 

Last but not least, review how many of the next day's service appointments are in need of a loaner car. Make sure you have enough to meet the demand, and go out to physically inspect them. The cars should be vacuumed, washed, gassed up and ready to go. This is one of those no-brainer items that often gets overlooked, but makes a huge difference in the customer experience. When your customer is eager to get to work in the morning, making them wait for a loaner car is unacceptable. 
 

Taking care of these details at the end of your day will ensure that you're prepared for tomorrow. Trying to tackle these tasks at the beginning of the day, when cars are pulling into the service lane and customers are waiting, increases the likelihood of mistakes, missed opportunities and unhappy customers. 
 

What tips do you have for ending the day with the beginning of the next day in mind? 

What is profit? Quite simply, it's the difference between what you spend and what you make. Most dealers, when they think about profit, immediately think about how they can make more. They strategize how to increase revenue, increase gross margins, increase sales or increase customer pay ROs.  

However, spending less is an important part of creating profit. Dealers know this too. When times are tough, they've had to go through their operating expenses, line by line, and find areas to cut.  

But what about when times aren't tough? The last few years have been good for dealerships. As a result, many dealers have become a little lackadaisical when it comes to expenses. When times are good, they don't believe they have to cut. And they're right: they're still making plenty of profit.  

But as we all know the economy is cyclical. There are good times and bad times. If you don't prepare for the bad times during the good times, the effect can be tumultuous. During bad times sales plummet, employees are laid off and expenses have to be slashed to the point where it can compromise your ability to recover or even survive. 

It doesn't have to be this way.  

What if, during the good times, dealers focused on increasing sales while simultaneously reducing expenses? Not slashing expenses; but managing them in a way that insulates their dealerships from the economic boom-bust cycle. 

Analytics can help. Discovering and fixing inefficiencies today will protect you when sales begin to slow. Instead of having to react to a slowdown with drastic measures, you will be prepared to proactively implement a plan that mitigates the negative effects on your business. 

Here are a couple examples of how this works: 

Let's say your dealership sells $2 million in new car inventory every month, and you like to keep about $10 million in inventory on the ground. To keep that $10 million in inventory consistent, you order an average $2 million in new inventory every month. This gives you a six-month supply of inventory. Most dealers would feel pretty comfortable with that. 

But there's a significant cost associated with holding a six-month supply of inventory. That cost is pretty easy to determine. What if you could cut that cost in half by holding a 90-day supply and ordering just $1 million in new car inventory every month? 

Your initial reaction is probably negative. You're thinking no way, cut my inventory in half? The manufacturer won't be happy. Besides, the more cars we order, the more we sell. And there's a part of you that takes pride in having all that inventory on your lot. It makes your dealership look big and important. 

But we're talking hard dollars here. With analytics, you get plenty of insight as to what's selling and what's not. You can easily spot when a particular model begins to fall out of favor, just by a slight downward trend in sales volume over a three-month period. At that point, don't order any more of that model until you have sold what's on the lot. You'll also be able to see which models are trending upwards, so you can order more of those.  

Don't let your manufacturer tell you what to buy. Let your data tell what to buy. Every market is different and changes in purchasing behavior don't happen overnight. Analyzing data allows you to catch trends in the early stages, enabling better inventory management and saving thousands of dollars per month. 

Another example of where you can achieve significant savings is in employee salaries. But I'm not talking about laying employees off. I'm talking about increasing the productivity of each employee so you don't have to hire as many new ones. 

The way to do this is by analyzing your gross profit per employee. Let's say you have two stores. Store A is doing $1 million in gross profit per month and has 100 employees. That means they're averaging $10,000 in gross profit per employee, per month.  

Store B also does $1 million in gross profit per month, but they have 120 employees. So they're averaging $8,300 in gross profit per employee, per month. What gives? Store A's employees are 17 percent more productive than Store B's employees. 

This is where you can start drilling down into your data. Breaking out gross profit by department in both stores will give you the first clue on where to zero in your search. Is the problem in sales, fixed ops, accounting or all of the above? 

Clearly there are employees in Store B who are performing unnecessary tasks or duplication of tasks. Is there some process or technology that Store A is using that Store B isn't? Is it a manager who isn't holding their team accountable? The answers to these questions are in your data. If you can find the answers and fix the problem you should soon see a 17 percent increase in gross profit in Store B. 

These are just two examples out of dozens that illustrate the way data can be used to increase profit through increased efficiencies. Today's reporting tools make it easy to drill down and identify where inefficiencies lie. Using this data to create new disciplines will help insulate your dealership from the next sales downturn.

Big data has been a big theme for several years now, but many dealers still don't have a thorough understanding of what it can do for them. I believe that's because the term 'big data' implies a sense of overwhelm or at the very least, something that is time consuming.

I think when a lot of dealers hear the term 'big data' they imagine sitting down with piles of reports and experiencing a sort of analysis paralysis. How do you know what you're looking for, and who has time anyway?

That's why instead of 'big data' I encourage dealers to look at 'actionable data.' While big data implies a lot of data, actionable data can be a single number. While big data implies complicated, actionable data is simple. While big data tells you where you are, actionable data gets you to where you want to be.

Actionable data is empowering. Dealers who are able to harness the power of their actionable data spend less money and make more money than dealers who rely on gut instinct and/or years of experience to make business decisions.

To illustrate, I've outlined a few examples where big data may not be telling the whole story, while actionable data reveals a single version of the truth.

1) Internet Leads

At the end of each month you review your Internet sales. Your 'big data' report tells you that from a total of 200 Internet leads received, you sold 20 cars.

If your goal is to sell more cars you may conclude that you need more Internet leads. Let's say you want to sell 25 cars. Do you increase spending on your pay-per-click (PPC) campaign or buy more third-party leads?

If you drill down into your Internet lead sources, you may discover that the lead source with the highest percentage close rate is your dealership's website. Drill down a little further and you discover that most of these leads are submitted between the hours of 6:30 pm and 9:30 pm at night.

That's your actionable data. To get more leads, adjust your PPC campaign's budget to allocate the most dollars between 6:30 pm and 9:30 pm

2) Inventory

Your 'big data' report tells you that you currently have $10 million in new car inventory on your lot. Of that $10 million, approximately $4 million is over 120 days old.

What can you conclude from this data? Sure, you need to start moving metal. But which metal, and how?

To find out, drill down into that $4 million number. You may discover that you have $2.2 million worth of Silverados and that $1.5 million of those are two-wheel drive Silverados. There's your actionable data. You need to create a big incentive and build a marketing campaign for two-wheel drive Silverados, pronto!

3) Service Tech Productivity

Your 'big data' report tells you that your shop and technicians are running at 120 percent efficiency. That sounds too good to be true, doesn't it? But your service director insists it's true, because the DMS shows an average of close to 10 hours of labor per day, per tech in billing.

Just to be sure, you drill down. After all, there's no more truthful measure of a technician's productivity than their time clock. If a technician works at 120 percent efficiency, then he would be clocked in and out of various jobs to the tune of 9.6 hours per day.

But lo and behold, what you discover is that your techs are actually averaging 6.5 hours per day! This is an example of what I like to call "fake news," where big data is actually faking you out. Accepting this data is accepting the status quo, which in this case could be significantly improved.

Remember the next time you are looking at reports, the goal is not just to see where you are. The goal is to find out why you are there so you can take an action and change course.

Can the 'big data' in your manually created reports be trusted? Remember that every time there are people involved in a manual process there is room for error. People are busy. Personalities and judgments can get in the way of facts.

Finding actionable data doesn't have to be time consuming or difficult. Many of today's reporting solutions allow users to build custom reports that are run automatically at the end of each day, week or month. Drilling down is as simple as clicking on a number. A single number, or piece of actionable data, can paint a picture that's much clearer than a whole pile of big data.