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Sticking to your 2011 forecast

Roger Nickerson

How many weeks did you spend preparing and editing your 2001 forecast (budget)? Now that the new year is upon us, how much dust do you think that budget will collect?

Too many dealers think the annual ritual of putting together a forecast (or budget, as some of you call it), is a painful exercises that can be thankfully forgotten once the bank and the factory have received their copies.

But top producing (and coincidentally the most profitable) dealers do things differently; they get input from their department managers (a one page question and answer form), produce a draft forecast and then sit down with each manager to get a commitment on the changes in process to achieve their profitability. The edited and final annual forecast is then divided up by month and the actual financial statement results are applied each month to show effort required or congratulations for achieving your expectations.

Further, if the original quarterly forecast shows the numbers were unattainable, the final forecast should be changed to reflect higher or lower expectations in order for the next quarter to be attainable.

The key to a successful forecast is that it should be realistic, meets the demands of the owner and most importantly, be attainable.

As a department manager how would you feel if your dealer kept harping about how far behind forecast you are?

How much time would you spend trying to motivate your staff, when you know the numbers are unattainable or have been affected by outside economic conditions over which you have absolutely no control?

All publicly traded corporations produce annual and quarterly forecasts to let shareholders know how they are doing and where they are going. Why would we be any different?

A quarterly or bi-annual meeting to communicate results and expectations with departments or department managers would be motivation in itself for staff to get rejuvenated for the next quarter or half year.

Dealers should not be afraid to change an annual forecast (even if we know where it is), to reflect market condition changes. And don’t forget, changes can take the form of reductions as well as increases (in case you got sandbagged by a manager). The overall effect on your net profit will be minimal unless there are catastrophic events.

The process of allowing changes to the forecast generates new interest from all managers. And if the update involves all department staff, the new interest is generated globally.

So now that we’re a few months into the new year, do you know where your forecast is?

Roger Nickerson, Dealer Group moderator, is the founder and president of Dealer XL Inc, headquartered near Ottawa. He can be reached at rogernickerson@sympatico.ca or at (613) 222-0553.