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Several months ago, a long term client-dealer admitted to me that he was finally ready to drink the water from the horse trough that I’d been continually leading him to for the last 25 years. This dealer has always had a lot of financial resources, both business and personal. Because of these extensive resources, he never felt the need to become properly trained to truly understand his balance sheet or its importance. His was one of the balance sheets that I referred to in one of my earlier articles…he was using it as a “protective cover sheet” for the income statement. It was unreadable, disfigured by coffee stains, drink rings, smudges, miscellaneous notes, etc.
“I’ve been noticing that the most profitable members of my 20-Group (those who enjoy the highest net-to-gross, net-to-sales, and ROI percentages) are also both practitioners and advocates of disciplined asset management,” he began. “I now know that there’s a valid correlation between sound asset management and superior profitability. It’s my understanding that these dealerships focus on asset levels and aging for a good part of their weekly management meeting. I know that ‘you told me so’ many times, Garry, and now I’d like your help in setting up a disciplined asset management process within my organization!”
Wow! I never thought I’d hear those words come out of his mouth. But as a wise man once said, “When the student is ready, the teacher will appear,” and after 25 years of preaching asset management to this dealer, the teacher (yours truly) was certainly ready to be engaged.
We started this new initiative by scheduling a meeting with his GM and department managers, at which the dealer introduced the concept of disciplined asset management and defended it by displaying the profitability metrics of those 20-Group members who were the advocates. The dealer and I then outlined the proposed process…1) A well-structured Weekly Managers Meeting, limited to 1-Hour, focused not only on asset levels and aging, but also on other dealership key results areas, driven by a consistent meeting Agenda, 2) In-Meeting development of Action Plans to improve all key results areas, and 3) Next-meeting follow-up on all in-process Action Plans. The dealer then talked about how this would be a “high impact, low effort” initiative, and therefore should be looked upon as a “Win-Win” program for the managers and for the dealership. He asked for and received the managers’ commitment to aggressively and sincerely pursue this new initiative.
Following this meeting, I met individually with each department manager to discuss what the “guidelines” should be for both asset levels and asset aging. These consensus guidelines were then submitted to the GM and the dealer for review, possible revision, and final approval.
For those of you who are interested, I welcome you to access and review the Excel worksheet titled Asset Management Analysis and Planning, which is located at the bottom of the web page at https://www.ghagps.com/asset-management-strategies. This application may help you better understand the importance of, and encourage you to develop your own plan for, Asset Management. I wish you much success with that endeavor. Please reach out to me if you need help.