By Desiree Homer
Many dealers recognize that solvency in the future will depend on decisions they can make today. The current economic conditions may be a reality for the next few months, and it’s hard to predict how long it may take for consumers and businesses to get back to normal. Many dealers are making smart use of quick-thinking, cash management decisions now, to help them sustain for the long haul.
A Cash-Conservation Mindset
Accounting firms are sharing the increased uncertainty in the voices of dealership owners these days. While each region and market present different challenges, one mindset is consistent among most – it’s all about conserving cash right now. The experts suggest a calm, strategic series of decisions can keep your dealership from overreacting too far in either direction.
Evaluate Your Available Assistance
One of the first calculated steps should involve a thorough evaluation of your resources and assistance. Reach out to your lenders and inquire about any payment deferment programs. One dealer shared consideration for floorplanning the used vehicle inventory. The idea is to reach out and calculate what resources are available to you first. Read your agreements and look for available floorplan equity that might be available. Make sure you understand your working capital benchmarks and what might constitute a breach of those benchmarks. You can then prioritize which assistance channels you need to leverage first, as you stay operational for the long term. Accounting experts are suggesting that dealers seek flexible options wherever they may present themselves, to keep in your arsenal of possibilities and readily accessible.
Reducing Hours & Changing Job Descriptions
Instead of rushing to lay off employees, which may still be the only viable solution down the road, consider reworking your hours and duties first. One dealership shared his reduction of hours for the service department, to keep them working and available for parts and service customers. Carving two hours out of the workday may be all you need now to make a significant difference. Other dealers are shifting their idle sales teams into online marketers, encouraging local market engagement from home. Some sales teams are transitioning to concierge services and help with pickup and delivery of service customer vehicles. It may make sense to incorporate staff transitions to help you thoroughly disinfect vehicles on the lot. You may find team members more than willing to continue working, even outside of their normal departmental parameters.
Reduce Expenses that Make Sense
If you have operational expenses you can eliminate right now, you may be tempted to make those cuts immediately. Putting a hold on some of your advertising spending might make sense, for example. If you’re augmenting your marketing efforts with a more flagship approach to social media channels right now, you may be able to hold off on a previously scheduled radio or television campaign. Adjusting your internal controls and expenses to conserve outgoing cash can add weeks or months to your operational sustainability.
Today’s economic conditions are unprecedented, but as with past recessional ebbs and flows, it’s important to remember that quick cash flow decisions now can help better your fiscal position in the months to come. You may still need to revisit tough decisions, but you don’t have to make them all immediately. Remain calm, know your options, and recognize that the comeback will be more than enough to balance any deficiencies today. Take care of your people, shore up your cash flow. Today is that rainy day that justifies pulling out the stops to stay afloat.