1
2
The Puget Sound Dealer Official Publication of the Puget Sound Automobile Dealers Association 16101 Greenwood Avenue N Bldg 2100 Seattle WA 98133 Phone: 206 542-3551 Fax: 206 542-7561 Email: jim@psada.com www.psada.com
President Sue Byers Bob Byers Volvo, Seattle 1st Vice President Jason Courter Honda Auto Center of Bellevue 2rd Vice President Jim Morino Acura of Lynnwood 3rd Vice President Sara Carter Carter Subaru, Shoreline Immediate Past President Craig Campbell Campbell Nelson Volkswagen, Edmonds Campbell Nelson Nissan, Edmonds Trustee Steve Klein Klein Honda, Everett Mike Scarff Mike Scarff Subaru of Auburn PSADA Staff James R. Hammond Executive Director Ron Olson A-YES State Manager Joyce Nichols Executive Assistant
A Message from the Editor What Turns Service Customers Away? Many, many years ago at the NADA Convention, one of the Super Workshops was on “How Your Service Department Answers the Telephone.” It was a startling and eye-opening session. The trainer had a live phone on the stage. He asked the dealers: “If you called your service department right now, would you like how you were received?” Then he got a lot of them to go on stage and make the call. There is nothing like a first-hand experience. He made believers out of the crowd when he said that 65-70% of people calling in won’t bring their car in for service because of the way they were treated on the phone. Is this true? Not for everyone, but, it is true for a lot of companies, not just dealerships. For over ten years PSADA’s Service Advisor class has been collecting data with its “Mystery Phone Shopper” segment. The data base, comprised of hundreds of participants, supports the data reported in that NADA Convention Super Workshop. Two out of every three people said they would not bring their car in for service because of the way they were treated on the phone. So what happened on the phone? Here are recurring comments from the research: person on the other end made me feel stupid; was transferred five times; put on hold for over ten minutes; person on phone was in a hurry, didn’t want to talk; not helpful at all; very rude and intimidating over the phone; was told gruffly, “This is not going to happen today!”; phone not answered even after 30 rings; and, not courteous. These are real answers. We have all had these experiences elsewhere, but we don’t want them to happen in our stores. The telephone is probably the most important business tool of all time. A little training with telephone and people skills can go a long way with the bottom line. So, how are your people receiving your customers on the phone? James Hammond Executive Director
Linda Halverson Office Manager Susan Leonhardi Secretary
Inside this Issue
For information on advertising in this publication contact Jim Aitkins Blue Water Publishers, LLC 360.805.6474
Cover photo by Adam Buchanan 4
7 8 13 15 17 19 23 25 27 29 33 34 37 38 43
Message from the President - Sue Byers Unraveling Overlapping Employee Leave Laws Outstanding Dealership Ideas! Improving Performance With Objectives Poorly Trained Customer Service Personnel Cost You Money! Tasks To Do Before Year-End Gary Micallef - You Gotta Come See Him Introduction to Cash Reporting Torque Certification - Why Your Techs Need It What Type of Questioner Are You? Beware of Your Default View Settings Operational Best Practices Solutions for More Secure Retirement Plans Cash Flow Timing and Best Practices Carter Subaru Recognized as AYES National Dealer of the Month
6
Message from the President
Sue Byers Bob Byers Volvo Seattle
Joyce Nichols Retires – We Will Miss You!
F
For the past 16 years one of the most familiar voices to dealers in Puget Sound has been the voice of Joyce Nichols, Jim Hammond’s Executive Assistant at PSADA. Over the years Joyce has answered thousands of phone calls from dealers and key dealership employees about their employee handbooks, the PSADA Wage and Benefit Analysis, the Seattle Auto Show and many other important association programs she helped create or improve. She has always been helpful, precise, specific and accurate. Joyce’s judgment and standard of excellence has helped PSADA become the nationally recognized association that it is today. But Joyce’s history with PSADA goes back much farther than 16 years ago. In 1978, when she was employed at Shoreline Community College, she attended the first meeting that created the partnership between PSADA and the college. As part of the college’s Continuing Education Department she was involved in the scheduling of all of PSADA’s early dealership classes like Service Advisor and Title Clerk Training. Later, as the assistant to the Vocational Director, Joyce was part of the team that planned the Professional Automotive Training Center. As the assistant to the Vice President for Academic Affairs, Joyce was involved with the development of key automotive curriculum for our technical programs. Shortly after she retired from Shoreline, she went to work for PSADA. Joyce’s contribution to PSADA and its mission to serve our dealers is extensive and exceptional. In January 2011 she will begin her well-deserved retirement. Joyce, we will miss you. Thank you for your many years of dedication and passion for our dealers. We wish you a wonderful retirement.
7
By James M. Shaker Ryan, Swanson & Cleveland
T
The authors of Family Leave Laws, Disability Laws, Workers’ Compensation Laws, Military Leave Laws, and Pregnancy Leave Laws, both federal and state, have not coordinated with each other as to how the different leave laws would interrelate with each other. Not only do the federal laws not take into account the various state laws, including those of Washington State, but employers are left with looking at each and trying to determine how to calculate leave for the affected employees. The principal federal laws are the Family Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA). In Washington we have a similar family leave act and disability leave act, namely the Washington Law Against Discrimination (relating to disability) and the Washington Family Leave Act (WFLA). In addition, in Washington we have the Washington Family Care Act (WFCA), Pregnancy Disability Leave (PDL), the Washington Military Family Leave Act (WMFLA) and Domestic Violence Leave (DVL). If you also consider our comprehensive workers’ compensation laws, employers can be easily overwhelmed when attempting to navigate the various disability, family leave and injured workers laws. The following is a brief synopsis of these laws and how employers can best consider situations involving their employees. I. Washington Law Against Discrimination/Disability The Washington Law Against Discrimination prohibits employers with eight or more employees from discriminating on the basis of disability. Washington courts have held disability discrimination contravenes a clear mandate of public policy. Accordingly, Washington courts have held an employee can bring a disability discrimination claim even when the eightemployee threshold is not met and the employer has less than eight employees.1 The Washington State Human Rights Commission (“WSHRC”) defines disability for purposes of determining whether an unfair practice under RCW 49.60.180 as follows: The presence of a sensory, mental, or physical handicap includes, but is not limited to, circumstances where a sensory, mental, or physical condition:
8
1. Is medically cognizable or diagnosable; 2. Exists as a record or history; or 3. Is perceived to exist, whether or not it exists in fact. The presence of a “disability” requires both (1) an abnormal condition and (2) employer discrimination because of that condition.2 Under Washington law, a disability is a sensory, medical or physical abnormality that has a substantially limiting effect upon the ability to perform the job.3 In contrast to the ADA, Washington law does not inquire whether the impairment substantially limits a major life function. The Washington definition of disability is much broader than the ADA’s definition and covers medical conditions that are temporary or of short duration. II. Americans with Disabilities Act (“ADA”) The ADA, 42 U.S.C. § 12101 et seq., in Title I prohibits discrimination on the basis of disability in employment. Over 43 million Americans have one or more physical or mental disabilities. Employers with 15 or more employees, governmental agencies and labor associations are prohibited from discriminating against a qualified individual with a disability based on their disability and are required to provide “reasonable accommodations” to permit the disabled to work and advance in careers. Employers covered by the ADA may not “discriminate against a qualified individual with a disability because of the disability of such individual in regard to job application procedures, the hiring or discharge of employees, employee compensation, advancement, job training, and other terms, conditions and privileges of employment.” The ADA is intended to protect both disabled applicants and employees
from unlawful discrimination. Unlike other anti-discrimination laws, where it is relatively easy to determine whether an individual is part of a protected class, such as age, gender, race or religion, determining coverage under the ADA has proven to be a complicated task. Applicants or employees are covered by the ADA if they are qualified individuals with a disability, meaning they can show that: (1) their circumstances satisfy one of three definitions of disability; and (2) they are qualified to perform the job with or without reasonable accommodation. The ADA does not require employers to hire or retain individuals who are not qualified to perform a job. The ADA defines an individual with a disability as an individual who: 1. has a physical or mental impairment that substantially limits one or more of his/her major life activities; 2. has a record of such an impairment; or 3. is regarded as having such an impairment. 42 U.S.C. § 12102(2).
Employees may take leave for their own serious health condition, a family member’s serious health condition, parental leave, or if a family member is called to active duty (qualifying exigency or injured on active duty). The FMLA exception is that it can be increased to 26 weeks of leave to care for family members injured while on active military duty, including up to 12 weeks for any qualifying exigency related to a family member called to active duty. IV. Workers’ Compensation as it Relates to FMLA The definition of a “serious health condition” under the FMLA and the qualifications for time loss under the Washington Industrial Insurance Act (workers’ compensation) are congruent. In order to get time loss, an injured worker must be absent from the job three days or more because
The Washington definition of a disability is much broader than the ADA’s definition and covers medical conditions that are temporary.
III. Family Medical Leave Act (“FMLA”) The Family Medical Leave Act (“FMLA”) allows 12 weeks of protected time off for employees with a serious health condition, family member’s serious health condition, parental leave, or service members under a qualifying exigency leave (26 weeks). The FMLA covers employers of 50 or more employees in the United States, and all employees are counted including full-time, part-time, seasonal and temporary. However, the employee must have worked for the last 12 months a minimum of 1250 hours. In addition, there are certain requirements regarding the location of 50 employees within 75 miles of each other.
of the industrial injury and have a doctor certify the industrial injury is the cause of the absence. Under the FMLA, the definition of a “serious health condition” is one which causes the worker to be absent for more than three days and for which the worker is under the care of a physician. Therefore, when a worker is out on workers’ compensation and is out for three days or more, an employer should automatically put them on FMLA leave. The Department of Labor’s final FMLA regulations allow for this piggybacking FMLA and workers’ compensation time loss. 9
Overlapping Employee Leave Laws Americans with Disabilities Act (ADA)
Washington Law Against Discrimination (WLAD)
Family Medical Leave Act (FMLA)/Washington Family Leave Act (WFLA)
Washington Family Care Act (WFCA)
15 or more Employees
8 or more Employees
50 or more Employees
n/a
WLAD Definition of Disability: a)“Disability” means the presence of a sensory, mental, or physical impairment that: (i) Is medically cognizable or diagnosable; or (ii) Exists as a record or history; or (iii) Is perceived to exist whether or not it exists in fact.
Leave Period: 12 weeks
Eligible Employees may use paid time off to care for a sick family member
ADA Definition of Disability: A physical or mental impairment that substantially affects one or more major life activities ADA Definition of Major Life Activity: includes “the operation of a major bodily function” which includes, among other functions and systems, the following: immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions. ADA Definition of Qualified Individual with a disability: A person who can perform the essential functions of the job with or without Reasonable Accommodation
b) A disability exists whether it is temporary or permanent, common or uncommon, mitigated or unmitigated, or whether or not it limits the ability to work generally or work at a particular job or whether or not it limits any other activity within the scope of this chapter.
Circumstances 1. Employee’s serious health condition (including pregnancy disability) 2. Serious Health Condition of a Family Member 3. Parental Leave 4. “Qualifying Exigency” which relates to military leave. Active duty all up (FMLA only) 5. Care for a family member or next of kin injured or ill as a result of active military leave (FMLA only – Note: 26 weeks a year)
1. Children younger than 18 with health conditions that require treatment or supervisor, 2. Adult children incapable of self care because of mental or physical disability, and 3. Spouse, parent, parent-in-law, or grandparent who has a serious health condition or an emergency condition
Exception: “undue hardship” “direct threat to safety”
V. FMLA, ADA and Washington Law on Disabilities The definition of a serious illness under the FMLA may or may not be congruent with the ADA’s definition of a disability. The ADA defines a disability as a physical, mental or sensory impairment which significantly affects
10
a major life activity. If the worker is on FMLA leave for his/her own serious illness, rather than that of a family member, the worker’s medical condition, its permanency and its effect on major life activities will determine if it is a disability under the ADA. For example, a worker who is on FMLA leave
because she has had a hysterectomy would probably not be a person with a disability under the ADA. She does have a condition which affects a major life activity, reproduction, but it has no effect on her ability to perform the essential functions of her job in the future and it is not an “impairment.” She merely is
qualification of “with or without accommodation,” which could Pregnancy Disability Washington Military Domestic Violence Leave place the employer in a difficult Leave (PDL) Family Leave Act (WMFLA) situation under the FMLA if it tries to get the worker back to work with an accommodation. 8 or more Employees n/a n/a However, the employer is in just as much trouble under the ADA Protected leave Eligible Employees: Eligible Employee: if it does not offer a reasonable for entire duration those who work an averone who is a victim accommodation! Recent case law of incapacity due age of 20 or more hours of domestic violence, indicates an employer must go to pregnancy or per week sexual assault or through the ADA analysis even if childbirth stalking / or employees it is a futile exercise. ALL Employees (no miwho are family members nors # of Employees) of such victims. Washington law defines a person with a disability much 15 days of unpaid leave Purpose – to address more broadly than the ADA. per “military deployment legal, financial and In Washington, a person has a of a spouse” health care needs disability if he/she has a medical condition which is abnormal 15 days run separately No minimum required for WFLA but concurhours worked and diagnosable. Every worker rently with FMLA “qualion FMLA leave for his/her own fying exigency” leave serious health condition qualifies as a person with a disability, since he/she must have an abnormal, Uniformed Services Emdiagnosable condition in order to ployment and Reemployment Rights Act of 1994 receive FMLA leave. He/she is (USERRA) entitled to full time or intermittent FMLA leave and also entitled to Prohibits discrimination accommodation for the aspects of his/her illness which affects the No minimum number of ability to perform the essential employees functions of his/her job. Because of the confidentiality requirements of health information under both the FMLA and the ADA, all such information should be kept under lock and key separate from the employee’s personnel file. All health information, whether workers’ compensation related or FMLA/ ADA related, should be kept in recovering from a surgery. However, if serious health condition meets the ADA the worker’s confidential health file and the worker is on FMLA leave because definition of a disability, the FMLA reviewed only by those who need to she has breast cancer, her ability to states that a worker does not have to know. Supervisors who are not involved perform the essential functions of her job return from FMLA leave, assuming in FMLA decisions should not have in the future may be affected, depending he/she has some of the 12 weeks left, access to the files and should have only on her job and her future treatment and until he/she can perform all of the limited access when the company needs prognosis. essential functions of his/her job. The to make an accommodation. Regardless of whether the worker’s FMLA leaves out the fundamental ADA continued on page 30
11
12
By Dan Cheyney, CPA Moss Adams, Dealer Services Group
F
For the past four years, the Moss Adams Dealer Services Group has hosted a two day workshop for CFO’s and Controllers. One of the sessions that have made the workshop successful year after year is the best ideas that come from the attendees. Below is some sampling of the best ideas from the 2010 workshop:
Cost savings and procedure updates • Cell phone allowance – Replaced the company plan with a stipend to all sales staff and managers which alleviated having to scour through bills. A smaller plan was retained for the owner and a few mobile technicians (night).
Efficiencies/Technology • Dual monitors for accounting staff and optional for managers. This can increase staff efficiency and production by being able to easily work with multiple programs or pages at once.
•
Health insurance renewal/ mandatory health insurance coverage – All employees are required to have at least the catastrophic plan but can buy up to existing plan at reduced premiums.
•
Developing a system/process for tracking and monitoring discounts and coupons in the service department: A good system will include the ability to report totals and account details by service advisor for a given date range, sort or sub-sort from the highest dollar amount to lowest and check for anomalies. The key is comparing each service advisor’s total discounts to their total customer pay labor sales as a percentage and checking that it is in line with the dealership expectations or industry benchmarks.
•
Quick tips to assist with prevention of bank account fraud: o Pull the bank reconciliation from the previous month. Did all of the outstanding deposits clear the bank in the current month?
•
Remote Deposit Capture - Checks are scanned in office and uploaded to the bank account immediately.
•
ADP Scanning/Archive – Ability to retrieve bills/ documents immediately and less hard copy record retention. Used for payables, quarterly returns, repair orders, etc.
•
ACH payment structure for vendors - Allows more controls around checks, etc.
•
Implementation of a sales program which identifies customers who are eligible to trade in their existing car for a new vehicle while lowering their payment.
•
Automate accounts payable and earn reward points: Implementation of a software program/service which automates accounts payable processes that submits payments via credit card. The result is increased efficiency and accuracy along with the reward points the company receives by using a credit card which is then used for various prizes, bonuses, travel, etc.
o Review that every outstanding reconciling entry has a hard copy attached to the reconciliation for comparison (such as the sweep account). Continued on page 40
13
NEVER LOSE ANOTHER REPAIR ORDER AGAIN BECAUSE THE CUSTOMER SAYS THEY CAN’T PAY!
When your customer needs an easy payment plan for a repair, its fast and easy! All they need is:
• Valid checking account with printed checks • Valid Drivers License, State ID, or Military ID • Proof of income (like a paycheck stub)
No Credit Check!
Fast and Easy Process: 1. 2. 3. 4. 5. 6.
In this payment plan multiple post dated checks are converted to ACH upon maturity. Your service writer has the customer fill out and signs a payment authorization form. Your customer writes post-dated checks for up to 90 days You verify checking account, license and proof of employment/income. You scan their post dated checks. Customer signs the receipt.
In 10 seconds you have your approval, and 93% of all customers are approved (The customer is only turned down if they have been bouncing checks or have a judgement against them for bouncing checks)
So what’s it cost to stop losing repair orders by offering OkEZpay90day? You make a one-time investment for a check imaging system and software and you own it. That’s it! No other charges and you can offer a 90 day easy payment plan to your customers. What does the easy payment plan cost the customer? The program charges the customer a 12% program fee.*
Offer your customer an easy payment plan for $250 to $5000 for the service work.
We call it OkEZpay90day
And here’s the best part: your dealership gets paid within 96 hours of the maturation of the customer’s checks…and the checks are GUARANTEED! No risk to you, and you get their repair order and profits you would have lost!
OkEZpay90day.com 877-741-7886 Or email Mike Conley at Mike@OkEZpay90day.com *Not financing or an interest charge
By John Strom
W
We know that one of the best ways to improve performance is to measure it, share the “numbers” with the performers, then have them set objectives to achieve higher “numbers.” We do this every month in Sales and Service, but what about in the other areas of the dealership? Could we effectively use “objectives” to improve performance in the office or other administrative areas? Consider having your administrative staff measure the following, post the results on the wall, then try to beat the “number” each month: •
• •
•
•
How long it takes each month to get the statement out (also look at how long it takes to get in each of the “numbers” from each of the departments that are needed to finalize the statement) How long it takes to complete the payroll How quickly accounts receivable are collected (… especially for those “overdue” accounts!) How quickly warranty claims are submitted after completion of the work …you get the idea
Not only will you want to look at establishing objectives in the “how quickly” areas, also consider all the “how much” and “how accurate” measurements. Are there areas where they could “do more” or “do it with greater accuracy”? The more you measure, share the “numbers” and work to improve, the more things you’ll improve. •
•
How many more “x” can be done in “y” time (increased numbers) How much more accurate can you be in doing “z” (fewer errors)
And do you think if you rewarded improving the “numbers,” your folks would work harder to improve them? We use “spiffs” in Sales and Service to motivate improved performance, why not do the same for the administrative support people? (Money’s always appreciated, but also consider other incentives they might want to work for – ask them what they’d like!). A little “investment” each month could really pay off! 15
Improving Knowledge and Skills One of the areas where most organizations really miss the boat is in working with individuals each month to improve their knowledge and skills. I’m not talking about the “numbers” here – “how many you’ll sell” or “how much profit will result”. I’m talking about “how capable” and “how skillful”. In addition to setting the usual monthly business objectives for sales and profits, have each person set an objective to: •
•
Learn something that will help them in their job (e.g. product knowledge, mastery of a process, how things relate to each other, generally how things are done – perhaps outside of their daily work) Increase their proficiency in a key skill set (e.g. asking better questions, reflective listening, overcoming customer concerns, explaining something technical so it can be more easily understood)
The improvement focus could be on knowledge and skills related to the job they currently hold or for a future job they (…and you) see potentially doing (this job may be a lateral move or a promotion). Obviously it’s important for them to work on improving knowledge and skills related to their current job first. It’s this second focus most organizations too often ignore. The best organizations are always preparing for growth and for turnover. They do this by constantly working with their people to have them as ready as possible to “step into” their next job. For example, many technicians see themselves becoming ASMs or Service Managers in the future. Sales Consultants want to be Finance or Sales Managers. What knowledge and skills should they be “learning now” so “they’ll be ready for the job” when it becomes available? 16
Setting the Stage for Advancement One of the areas I always stress when I work with people who want to get ahead is to have a clear picture of what they’d like to do next and to “always be working to be prepared” for that next job. •
•
What will you need to know to be successful? What are you doing to learn it? What skills will you need to have? How are you acquiring these?
I believe it is every manager’s responsibility to continuously be developing their peoples’ knowledge and skills in addition to improving their “numbers”. This means regular (at least monthly) discussions about what they’re learning and how they’re preparing for what’s ahead (…for them and for the organization). Managers need to have each person setting a “Professional Development Objective” each month, just as they set other performance objectives for the month. Discussions during the month about success achieving this objective are held just as they’re held about achievement of their business objectives. And a celebration of success is appropriate for the achievement of these objectives, just as we celebrate achievement of the business objectives. One of the side benefits of this focus on individual professional development is that people will stay with your organization. Research indicates that most young people today place a high value on this type of development and if you’re helping them be more valuable, they’ll appreciate it and you’ll both benefit. As an organizational leader, you’ll also want to be sure your managers are “developing their successor.” You (…and they) don’t want to be in a
situation where you’d love to promote them, move them to another of your dealerships, but you feel they’re too valuable where they are. As I’ve said to many a manager looking to advance,”if you’re irreplaceable, you’re also unpromotable.” (And remember, when you get promoted, you’re the one who will be charged with finding your replacement!) Be ready! John Strom has been helping retail automotive managers improve their performance for over 25 years. He has held a number of management positions in both single-point and multiple franchise operations, including General Manager. His company, Strom & Associates, is a member of the Performance Development Group. To learn more about their services, visit www.perdevgrp.com.
!
By Dave DeMontigny
A
A potential customer calling your dealership is looking to spend Money!!! The first encounter either by phone or in person can establish the quality of the customer/dealer relationship and whether the customer will spend their hard-earned dollars at your particular facility. FACT: Over 75% of potential customers call first to establish where they will bring their automobile for service. FACT: The person entrusted with taking incoming customer calls is very often the least trained and lowest paid person in the dealership. FACT: This sensitive job, if mishandled, can create serious problems, one of which is LOST POTENTIAL CUSTOMERS and SALES. FACT: In an ongoing “mystery Shopper Survey” conducted by hundreds of participating students attending the PSADA Sponsored Service Advisor Training Program at Shoreline Community College, two out of every three “Mystery Shopper” customers would NOT take their car to the facility called for service.
Who’s Answering Your Phones? It may not be something you have given a lot of thought or attention to, but it has a tremendous impact on your customers’ opinion of your organization. That’s right… the telephone and the people within your organization who answer it. A telephone call is often the first real impression a potential customer has of your organization. Sure, they might be familiar with your brand name, have driven by your dealership, or seen a vehicle with your company logo driving around town, but a phone call is typically the first real interaction a potential customer has with your organization. 17
Whether this experience is warm, positive, and memorable (for the right reasons) is highly dependent upon the individuals who answer the phones in your organization. The right people can make all the difference in the world, while the wrong people can drive customers away in droves. What to look for from someone who will be answering the phones in your organization: • People Oriented • Good Listener • Poised • Attentive to Detail • Helpful • Polite and Courteous • Positive Attitude • Ability to Multitask • Organized • Strong Problem Solving AbilitiesMost of these traits should be fairly obvious to anyone who has worked in a professional work environment. So why is it that so many people hired for positions that answer the phones do such a poor job of it? Here are some “There is no reasons why: •
18
training and orientation. Without exposure to the right telephone skills and techniques, it is difficult to expect performance excellence. •
A behavioral disconnect between the employee and the needs of the job - people who frequently answer the phone require a particular behavioral style and personality type. Some people are naturally more friendly, helpful, and courteous than others. The important thing is to identify the desirable behavioral style and personality type and hire individuals who possess these traits. Big question… Who’s answering your phones right now???
Where does your dealership rate with the hundreds of calls received weekly from potential customers looking to spend money with your dealership? Are your people responsible for answering your phones creating a great impression of your organization or driving your customers away???
single activity American business people spend more time doing (and less time improving) than using the telephone.” --George Walther
A failure to understand the importance of one’s role and the effect it has on the customer – Surprisingly, many employers are unaware of the impact their interaction with a customer or prospect over the phone can have on an organization’s bottom line.
•
An absence of clear expectations expected of someone in a position that frequently answers the phone - if an employee is unaware of the phone answering techniques that are expected of them, they will frequently come up with these techniques on their own. Sometimes they are good-- most times they are not.
•
A lack of training in the proper telephone etiquette skills and techniques - Proper phone etiquette is something that is rarely discussed in schools and is often left out of new hire
Dave DeMontigy is with the Car People Agency and is the instructor for the PSADA Service Advisor/Customer Service Training classes at Shoreline Community College. For more information on this topic, you can contact Dave at 425-952-4400.
By Kevin Allison, CPA Peterson Sullivan, LLP
I
It seems hard to believe, but the end of 2010 will be here before you know it. Before it arrives, you should review your business needs and tax strategies so you can take advantage of opportunities that may be lost for this year if you do not act. Following are several suggestions you might consider: Depreciation The President recently signed the “Small Business Jobs Act of 2010” into law which contains several favorable tax law provisions for businesses. One such provision extends the 50% bonus depreciation opportunity to 2010. To qualify, tangible personal property must be new and placed in service on or before December 31, 2010. Also, for tax years beginning in 2010 and 2011, the Act increases the annual limit for expensing qualifying property such as furniture, machinery, equipment, software and certain real property from $250,000 to $500,000. This annual limit begins to decrease as qualified property additions exceed $2,000,000. To qualify for the deduction this year,
the qualifying property must be placed in service by year-end. Customer Tax Incentives There are a number of potential tax benefits your customer can take advantage of if they purchase the vehicle before year-end. This may help motivate a potential buyer to finalize a purchase before year-end. These potential advantages include sales and excise tax deductions (if extended by Congress for 2010), depreciation deductions, and energyefficiency credits. Since a number of restrictions apply to these tax benefits, it is a good idea to advise your customer to consult their tax advisor to verify what tax benefit the customer will receive. LIFO Make sure to make your year end LIFO adjustment!!! According to published reports, a significant portion of auto dealerships already use the last-in, first-out (“LIFO”) method to account for their new vehicle inventory. A smaller number also use the LIFO method for 19
their used vehicles and parts inventories. While Congress continues to consider the repeal of the LIFO method, it still remains an effective tool to defer the payment of income tax in times of inflation. If you are currently using the LIFO method for tax purposes, you must also use this method for your dealership financial statements. What this usually means to the dealer is that a LIFO adjustment should be recorded on the last monthly financial statement for their tax year end (for a calendar year taxpayer this would be the December statement). If this adjustment is not recorded, the taxpayer will be in violation of the LIFO conformity requirement which may require the dealership to recognize the entire accumulated LIFO reserve as taxable income. Estate planning You should consider taking advantage of your annual gift exclusion before December 31 if you have not already done so. Even though changes are expected in the estate tax arena soon, it may still be a good idea to transfer your estate to the younger generation. Each taxpayer is allowed to make an annual gift of a present interest of $13,000 to each donee. To qualify as a present interest, the donee must receive the immediate rights and benefits of the property being transferred. While this is an annual exclusion, if no gift is made by the end of the year, you will permanently lose the opportunity to transfer this additional portion of your estate free of tax for this year. Wage withholding Increasing the amount being withheld from your wages or bonus before year-end may allow you to reduce or eliminate underpayment penalties. Underpayment penalties will be avoided if a taxpayer has paid the lower of 90% of the current year’s tax or 100 % of 2009 tax. For taxpayers with adjusted 20
gross income of over $150,000 ($75,000 if married filing separately) on their 2009 return, the required prior year percentage is increased from 100% to 110%. Since these payments must be paid ratably over the year, simply increasing an estimated tax payment at year-end may not reduce the penalty significantly. Alternatively, wage withholding is treated as if it was paid ratably over the year regardless of when the amount was actually withheld. Therefore, increasing withholding at year-end may be more effective in reducing or eliminating a pending underpayment penalty.
had to hold assets that had appreciated in value at the time of the conversion for ten years to avoid a “built-in gains” (“BIG”) tax at the highest corporate rate of 35%. The new act just signed by the President temporarily shortens this waiting period to five years if the fifth year in the holding period precedes the tax year beginning in 2011. For those that are currently S corporations which own appreciated property subject to the BIG tax, selling such property in 2011 may substantially reduce the amount of tax.
You should consult with your tax advisor before year-end to see if any of these tax planning suggestions apply to you.
Tax bracket planning Generally, it is a good idea to defer income and/ or accelerate deductions whenever possible to delay the payment of tax since this allows the taxpayer to have use of the funds for a longer period of time. However, if you are forecasting that you will have less taxable income in 2010 than 2011, it may be advisable to accelerate income and postpone deductions if this will result in the income being taxed at a lower tax rate. There are a number of permissible methods to accomplish this. In many cases, this can be done by simply altering the year a particular payment is made. You should also consider the potential for increased tax rates in future years. We’ve all heard about this possibility but unfortunately there has been no definite word as whether or when tax rates will be increased, making it more difficult to plan. If nothing is done, tax rates are set to revert back to their 2001 levels in 2011 when the maximum rate was 39.6% (currently 35%). S Corporation holding period shortened In the past, a C corporation that had elected to convert to an S corporation
In times such as these with pending tax rate increases and a possible state tax on the ballot, it is important to take advantage of those opportunities that still exist. You should consult with your tax advisor before year- end to see if any of these tax planning suggestions apply to you. For more information contact Kevin Allison at Peterson Sullivan, 206-382-3777.
21
22
Photo by Adam Buchanan
Gary Micallef You Gotta Come See Him By Craig Chastain
G
Gary Micallef knew he was destined for the car business before he could drive one. The gregarious voice of the iconic “you gotta come see us” commercials for Hyundai of Everett and Skagit Valley Hyundai actually launched his automotive career in high school. Every hour away from the classroom was spent on the job at the Northgate Bon Marche Auto Center. On the day of his high school graduation he was named the company’s youngest store manager – a teenager directing the work of seasoned technicians twice his age. A commitment to learning and hard work is at the heart of the Micallef story. Raised and greatly influenced by his grandparents, he developed a driving work ethic that has produced two of Hyundai’s most honored dealerships. “You have to be driven to make this business work,” he says. “I was always ambitious - never afraid of hard work – but I also had some incredible mentors along the way.”
23
Topping the mentoring list was Rocky Peterson, the legendary Ford dealer, who brought Gary into his service department and eventually moved him into sales. They worked together for the next 21 years, and when Gary sought a dealership of his own, it was Rocky who stepped up with a partnership and Hyundai of Everett was born.
With his signature “you gotta come see us” wrap and personalized style, Gary’s radio spots were an immediate hit and his expansion into television ads soon followed. The commercials also capitalized on one of Hyundai’s greatest assets – the 10 year, 100,000 mile power train warranty. “We’ve always talked about the ‘Hyundai advantage’ – that warranty was, and is, the best in the business,” he says. “Put that together with a quality product and exceptional customer service – those have been the real keys to our growth.” Adding to those keys is what Gary calls “The Process,” a style of customer engagement that focuses on integrity and a non-confrontational, low pressure environment. Their showroom is practical and efficient without the trappings of extravagance that customers might suspect they are paying for. With the confidence that comes from knowing the quality of the cars and the honesty of the marketing, Gary and his organization have put the dealership among Hyundai’s elite. “Our team is really a family,” he 24
Photo by Adam Buchanan
“One of the great things about Rocky was his willingness to try new approaches,” says Gary. “We agreed that we should start with an aggressive advertising program, and that’s how we got started with radio.”
says. “We share the same values about the business - we want the customer to have a good experience. The result has been a history of satisfied customers and team members who have stayed with us over the years.” The commitment to customer satisfaction extends to his choice of office space – his is situated up close and personal in full view of the showroom floor. He considers himself the team’s designated “fireman” and readily admits that he still loves being in the “trenches” where he can see, hear and feel the action. Central to building a strong dealership brand has been Gary’s personal and corporate commitment to community service. An alumnus and early beneficiary of the Boys and Girls Clubs, he has taken a leadership role in supporting their local programs,
donating dollars – and automobiles – to fundraising efforts and feeding programs. He’s also deeply involved as a national board member in Hyundai’s Hope on Wheels campaign, which contributes a portion of every sale to hospitals specializing in pediatric cancer care. “I couldn’t be prouder of what Hyundai does for kids with cancer,” he says in a voice full of emotion. “I’ve had a chance to see what our efforts have brought to hospitals around the country – it’s gratifying and humbling.” Gary’s leadership responsibilities have also extended into Hyundai’s corporate operations. Formally the National Dealer Council Chairman, he currently serves as chairman of the carmaker’s western region, a position that recently took him to South Korea where he met with Hyundai’s senior
management and toured their newest facilities. “Hyundai is leading the way in new technologies and innovation,” he says. “We got to drive the newest models, see how the cars are built, and everyone we met, everyone we talked to, stressed one thing above everything else – quality.” Gary’s belief in the Hyundai brand helped with his decision to expand into the Skagit Valley where their 15,000 square foot showroom opened in 2007. “Probably not the best time to open a new car store,” he concedes with a smile. “We’ve had our challenges, but we’re encouraged that people continue to want quality and value which makes us very excited about the new models coming for 2011.” Family – both corporate and personal – remains central in his busy life. He and wife Bev have three sons: Devin and J.C. work at the dealership and Eric is in the construction business. “My grandparents raised me with a great appreciation for family,” he says. “The car business has given me the opportunity to support my family, to serve the community and make a very good living.” One has the feeling that Gary Micallef knew the possibilities, even back in high school.
Introduction to
Cash Reporting Every dealership that receives more than $10,000 in cash in one transaction or in two or more related transactions must file IRS/FinCEN form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, with the IRS within 15 days of the date on which the cash was received. Dealers also must notify customers in writing that a cash report was filed with the IRS. This notice must be given by January 31st of the year following the calendar year in which the cash was received. A sample form is available for this purpose at www.nada.org/regulations. Any transactions conducted between a customer (or agent) and the dealer in a 24-hour period are related transactions. Transactions are considered related even if they occur over a period of more than 24 hours if the dealer knows, or has reason to know, that each transaction is one of a series of connected transactions. Dealers should closely consider cash sales of vehicles to the same wholesaler. Depending on the facts, the sales may be related and subject to the Form 8300 filing requirement. For example, if on one day a dealer sells three vehicles to the same wholesaler, who pays cash for one of the vehicles on the day of the sale and two days later pays cash for the other two vehicles, and the total cash received is over $10,000 for the three vehicles, a Form 8300 is required. However, if that wholesaler buys one car with cash on each of three non-consecutive days, and no single transaction exceeds $10,000, the transactions are not considered to be connected and are not required to be reported even though the dealer received more than $10,000 for the three cars combined. A dealer may be subject to civil penalties for failure to file a complete and accurate Form 8300 on time if it cannot be shown that the failure was due to reasonable cause. As a general rule, dealers that are audited by the IRS for the first time for Form 8300 compliance have been subject to the lesser failure to file penalty of $50 per violation when the IRS has found substantial compliance with the Form 8300 filing requirements but occasional violations. On subsequent audits, the IRS will frequently assess the $25,000 per violation penalty for intentionally disregarding the cash reporting requirement. For a period of time, the IRS assessed the $25,000 penalty on the first audit. The penalty should be based on the nature of the violation and the facts and circumstances of each situation. Intentional disregard violations may also be subject to criminal prosecution, resulting in imprisonment and fines of up to $250,000 for individuals and $500,000 for corporations or both.
25
“THEY’RE ALWAYS KEEPING ME IN FRONT OF SHOPPERS’ EYES.” Tammy Darvish Vice President
Ronda Nassib Advertising Consultant Greater Washington, D.C.
MARKETING THAT WORKS FOR TAMMY Tammy is a people person. And the more people in the D.C. area
sponsorships of MLB on FOX, NASCAR on FOX, NFL on FOX,
who see her cars, the better. So she knows that our high-profile
BCS on FOX, as well as the NBA on TNT will attract millions
ads in the biggest shows on the biggest networks are important in
more. Hey, like Tammy says, “We are in this together.” For videos of
attracting millions of customers to her 27 dealerships. And our proud
success stories from dealers like Tammy, visit results.autotrader.com.
©2009 AutoTrader.com, Inc. All Rights Reserved. “AutoTrader.com” is a registered trademark of TPI Holdings, Inc. used under exclusive license. New England Patriots trademarks, including the Patriots logo, are the property of New England Patriots L.P., and are used pursuant to a licensing agreement with New England Patriots L.P.
CERTIFICATION
Why Your Techs Need It By Frederick Brookhouse Business and Education Partnership Manager Snap-on Industrial
A
Applying torque on a vehicle is much more than simply tightening a fastener. There are many guiding principles behind torque that automotive technicians need to recognize to ensure fasteners are properly secured.
T1:11”
B:11.25”
L:10”
Until recently there hasn’t been any formalized training for technicians that deals solely with torque. Many of the techniques or “tricks of the trade” in torque have been passed down from more veteran technicians in shops or dealerships, or briefly touched upon in trade schools. “You can find certified welders, they’ve been around for decades, but you can’t find a certified bolter,” said Bob Braun, an instructor at Gateway Technical College in Kenosha, Wis. “Think about this, you have to X-ray and certify welds, but for critical systems that must be assembled with a fastener, there’s no specialized training.” All of that’s changing thanks to a new partnership between Snap-on Industrial and the National Coalition of Certification Centers (NC3). The NC3 is a group of technical training centers, community colleges and manufacturers that have combined training resources to form a North American consortium. Shoreline Community College is a member of NC3. How it Works Torque certification is a course originally developed by Snap-on Industrial to teach technicians of all disciplines about the various aspects of fasteners and fastening. The program is designed to create a high standard for maintenance and assembly work; the curriculum emphasizes the proper procedure for applying torque, which is the twisting motion used to attach a fastener to an anchor. The 24-hour course is divided into two primary sections: Torque theory (16 hours) dives into the application of torque and corresponding safety measures; hydraulic torque study (8 hours) is an optional program. 27
In partnership with Snap-on Industrial, NC3 has worked with several community colleges and technical training centers across North America to offer torque certification as either part of an existing training program, or as a standalone course. In the near future, Shoreline will be offering this training to its students and to new car dealers at its Professional Automotive Training Center. Lube, torque and cleaning remain the cornerstones of any maintenance program that incorporates fasteners. And those three elements speak directly to safety. There is a perception that applying torque to a fastener is intuitive, anyone can do it. Well, anyone can do it per se, but the ability to do it properly is what makes the difference. And experienced
Program Basics The 16-hour theory portion of the training course provides an overview of the job a fastener must perform. This part of the curriculum goes deep into how to identify bolt grades, metal grades, hardness, thread pitch, lubrication and applying the associated science. The second part of theory – application, involves hands-on training with the proper use of tools – calibration equations, making wrench adjustments and using extension tools. These activities are guided and judged by a professional instructor.
Safety – the third part of theory – considers the importance of knowing what a tool is meant to do and then properly using that tool. The discussion ranges from protective eyewear and clothing to working near power sources. Safety Quality fastener procedures employed in drives better procedures and a important applications can be a decided methodical, stepadvantage for automotive technicians by-step approach who earn certification. to applying the right fastener to the right bolt or axis point. technicians often are the toughest audience to impress because they’ve The optional course offering – developed bad habits through their hydraulic torque study – is designed career and this course forces them to for large fasteners, such as the kind relearn the basics. found on wind turbines and other oversized equipment. The application Beyond all of the academic of hydraulic torque requires its own instruction, torque certification has a skill sets, including knowledge of physical component as well. Students hydraulic systems, proper fastener must pull a wrench on a fastener fitting for these specialized applications within a set tolerance in another pass/ and large fastener/equipment safety fail milestone. There is an element of considerations. hand-eye coordination in doing this work that’s not unlike golfing or hitting Students taking the torque a baseball. “Anyone can swing at the certification course learn the basic ball real hard,” said Braun. “But you principles behind torque and follow need to do that with a certain level of a logical process when working with accuracy. And that’s what we’re doing torque. For example, they’ll learn to with the torque wrench – pulling it recognize the kind of fastener being with the right level of finesse, the right used and the best procedures to apply amount of accuracy.” torque – e.g., determining the torque 28
value and how to apply the precise pressure on each bolt so that a strong attachment is achieved. The correct process requires that the fastener be torqued two or three times before it reaches a maximum load. But in critical applications applying torque to a given fastener may require five revolutions. The program allows students to work with common equipment they’ll be using on the job site. The advantage to employers is having a skilled workforce that can get the job done right the first time; less on-the-job training. For the technicians, receiving torque certification gives them a leg up on the competition and can make them a more polished, skilled candidate for a job. Summary The bottom line is that anybody can apply torque to a fastener; anyone can use a ratchet. But the difference is certification. Similar in scope and implementation to the Automotive Service Excellence (ASE) certification, technicians completing the torque certification course show their desire to take their skill and motivation to the next level to fully understand the intricacies of torque. And being certified in torque gives technicians the added training and awareness that will pay dividends down the road in better vehicle uptime and reduced maintenance costs.
?
By Nancy Friedman The Telephone Doctor
W
We all ask questions. And when we ask the right way - and ask the right questions - we normally can get the best and right answers. J. Douglas Edwards, a master sales trainer from years ago, now deceased, said: “Questions ARE the answers.” And we so agree with him. To get the right answers we need to ask the right questions and in the right ‘mode.’ And there are various types of questioning techniques. It’s like your mother said, “It’s not what you say, but how you say it.” Telephone Doctor has defined several questioning techniques to help you get the right answers. Every salesperson knows that, as Mr. Edwards said, questions ARE the answers. As salespeople we are taught to ask questions, to talk less and listen more. One of the best ways to listen more is to ask good questions. From “Do you have the correct time?” to “Where did you go on your vacation?” asking questions can be the key to your success. Let’s go over them now. Which type of questioner are you? 1. The Open-Ended Question - These are questions without a fixed limit. They are questions that encourage continued conversation and help you get more information. They’re used to get people to open up and talk. Most, not all, but most open-ended questions will start with one of these words: Who, What, Where, Why, When and How. I say most, not all, because while these are well known words to begin openended questions, they can still get you one-word answers. So while not perfect, open-ended questions will normally get you much more information. 2. Closed-Ended Questions - Conversely, closed-ended questions do have a fixed limit. They’re often answered with a yes or no or a simple statement of fact. Closedended questions are usually used to direct the conversation, to get brief specific information or to confirm facts. The next time you watch a movie that has a trial scene, you’ll see lawyers using open and closed-ended questions, at the right time, to get the answers they need/ want. Pay attention to how they use them. 3. Probing Questions - These are normally used after an open-ended question to get yet more information. And that’s because we sometimes ask an open-ended question and we only get part of what we need. So it’s more of a follow up to get more information. 29
Questioner from page 29
Probing questions can start off with, “Tell me more about” Example: After you have asked, “Where did you go on your vacation?” And the customer says: “Disney World.” The probing question would be: “Tell me more about Disney World.” Probing questions are valuable in getting to the heart of the matter. Often times you need to offer “aided recall’ to help the customer along. Aided recall is part of probing. Something like: “Does the message on the screen say error, reboot or does it just freeze up?” These types of questions are helpful to the customer and will lead you to the right answer. 4. The Echo Question - This doesn’t mean you repeat the question 50 times, but it does mean you take all or part of the statement the customer made, repeat it once, and turn it into a question. Like this:
Customer: I didn’t get the right information! You: You didn’t get the right information? Customer: That’s correct. I needed all four pages and only got two. See? By using the echo question the customer gave you ‘more’ information. Good technique.
5. Leading Questions - These are the fun and favorite types of questions by salespeople. They’re often called “tie downs.” They’re used to cement the information in your favor. They’re short phrases used after a statement of fact. They invite agreement and help the customer to say, “YES.” Like this: “You’ll want to see both islands, won’t you?” or “After ten years it’s time to get new carpeting, isn’t it?” Leading questions are useful in helping someone who’s undecided make the right decision. What type of questioner are you? You should be all of them. We invite you to preview our new updated program on questioning techniques. It will help you become more proactive, don’t you agree? (That’s a leading question.) Nancy Friedman, customer service and sales expert, is available to speak at your association conference or corporate event. Click here for a complimentary DVD demo of Nancy in action. You can also contact Nancy directly via email nancy@telephonedoctor.com to discuss your specific needs.
Leave Laws from page 11
VI. The ADA, Workers’ Compensation and Washington Law The Equal Employment Opportunity Commission statistics showed that the two largest areas of ADA complaints were discharge and failure to accommodate. The cases filed by impairment, include back impairment, neurological impairment, psychological impairment, extremities, heart impairment and substance abuse. The first two categories of impairment are those common to workers’ compensation, back and neurological problems, which includes repetitive motion problems. Under Washington law, every worker who is out on workers’ compensation “time loss” is a person with a disability since he/she has a condition which is diagnosable and abnormal. Therefore, the worker is entitled to accommodation. The tension between the ADA, the Washington law regarding persons with disabilities and workers’ compensation arises from the employer’s desire to cut workers’ compensation costs by bringing the worker back as soon as possible to a modified duty/ return to work position and the worker’s expectation that the modified duty/return to work position is something he/she can do for the rest of his/her employment. Employers who fail to accommodate workrelated injuries are at substantial risk in a failure to accommodate suit under either the ADA or the Washington law protecting those with disabilities. Conclusion Employers who maintain well-documented records and who consider each case with care and deliberation will be able to navigate the laws and minimize risk. The attached brief summaries will also assist employers who encounter these issues. Understanding the differences and nuances of these overlapping employee leave laws will unravel any and all confusion for you and your business. Footnotes 1 Sedlacek v. Hillis, 104 Wn. App. 1, 3 P.3d 767 (2000). 2 Doe v. Boeing, 121 Wn.2d 8, 846 P.2d 531 (1993). 3. Pulcino v. Federal Express Corp., 141 Wn.2d 629, 9 P.3d 787 (2000).
For more information about this topic contact James Shaker at 206-654-2261 or shaker@ryanlaw.com.
30
31
a Winning team Get a CPA firm with a winning record on your team.
Peterson Sullivan LLP, one of the nation’s most successful specialists in auto dealership accounting, serves more than one hundred dealers in the Pacific Northwest. We are one of only a few CPA firms approved to perform audits for GM Motor’s Holding Division. And we are the only Washington State member of the exclusive AutoCPA Group. Following are only a few of the many areas where we are trusted advisors to our automotive industry clients: • Cash controls • Internal controls • Cost segregation • IRS reporting requirements • Dealership valuation • Sales and B&O tax consulting • Estate and succession planning • Tax planning • Financial statement analysis We believe strongly in building long-term relationships with our clients. We aim to understand your business so well that our advice becomes indispensable. Please contact Kevin Allison to see how we may assist your business needs at (206) 382-7777 or by email at kevina@pscpa.com. Peterson Sullivan. Driving your success.
Peterson sullivan llP 32
Perspective
By Scott Dreisbach
T
The past two years have been precedent setting to say the least. Never in the history of our business has there been so much turmoil, turnover, change, fear, hope and innovation at the same time. The industry we all love and depend upon has morphed into something that none of us could have predicted or have foreseen. For some, the retail automobile business has become almost unrecognizable. Having been directly involved in the retail automobile business for over 40 years, I have experienced many different cycles. Never before in our history has it been like it is now. I clearly remember Viet Nam protest marches, the National Guard shooting of students at Kent State, oil embargos, long gas lines, extended manufacturer strikes, President Reagan breaking the PATCO union, the very first rebates, 19% prime interest rates, and on and on. Needless to say, it has been a learning experience. During those years I have also come to learn something that is very important to me and has served me well. That is, every once in a while, someone comes along with an idea, product, principle, tool or some form of
something new that absolutely makes decision makers. We have conditioned sense. This new “thing,” whatever it ourselves to be thinking in terms of a is, really works and we wonder why negative default view right from the we didn’t think of it. The problem for start of the presentation, perhaps without some of us, particularly in the past two even knowing it. Many of us never years, is that we never get the chance even allow the person who wants to to actually try or even learn about some talk to us, the opportunity to present of the new products or ideas because their idea or product. Many dealership of our own personal “Default View decision makers today will not even Settings.” The recent economic climate take their call, regardless of how good has conditioned “normally optimistic their “widget” may be. We have learned decision makers” in a different way and to shield ourselves from vendors very the end result is a negative/ Our personal “Default View Setting” pessimistic limits discovering the true picture to internal such a degree that it becomes the proverbial Default View self-fulfilling prophecy. Setting. Hear me out. effectively and even more so in the past By this I mean that when we are two years. It is sort of like the cartoon in the process of listening to someone of a general telling his aide that he is present a new product, service or too busy fighting the enemy to be able concept, our mind has now become to talk to the salesman (who happens to conditioned to be thinking of the way be selling machine guns). The problem we are going to tell this person no with this practice is obvious. Our instead of really focusing on how this personal “Default View Setting” limits new “widget” might be able to make discovering the true picture to such a our operations more money. How can degree that it becomes the proverbial we get out of saying yes has become self-fulfilling prophecy. This is a vicious the new internal “Default View Setting” circle to fall into and one you must try for the vast majority of dealership to avoid. I know, first hand, how tough 33
it has been these past two years. I do sense, however, that the worst is now over. I think we all are seeing the signs. Is it time for you to rethink or reset you own personal Default View Setting? Have you missed any opportunities because you did not take the time to listen to a vendor with an open mind? Do you find yourself thinking how to say no in your one-onone conversations, particularly with vendors? Do you view vendors as an adversary, someone who you do not want to talk to? If your answer to any of the above is yes or even maybe, it might well be time to consider an alternative approach. Technology today is moving at a record pace. This technology is all designed to make life easier for you and your store. There are many great tools out there that will help you increase your bottom line. You must consider resetting your default view if any of these tools are ever going to even get a chance to appear on your radar screen, let alone have the chance of being implemented in your store. What is your “Default View Setting?” If you would like to learn more about current inventory management technology, and how it will help you increase your bottom line, please contact me. You may still be fighting the enemy and I am still selling machine guns. You can contact Scott Dreisbach, Vice President of Valuinsight, Inc. at sdrize@ valuinsight.com, 561-368-7810 X 108 direct or www.valuinsight.com.
Operational Best Practices In the first study of its kind across brands to identify and measure the activities, practices, and behaviors that drive dealership financial profitability, NADA undertook a research project with support from McKinsey & Company to define and corroborate best practices in automotive dealership management. Analyzing survey responses across all the different factors that influence profit—region and demographics, brand and origin (domestic, European import, or Asian import), dealership size (measured by volume of new-vehicle sales) and structure (stand-alone store versus part of a broader network of dealerships), and operational practices—the study found that operational best practices are the single biggest profit differentiator. Based on this study, the average-performing dealership in an average environment achieves, roughly, two percent net profit before tax. An improvement in each of the influencing factors, one by one, results in more profit. To explain step-by-step: • If the average dealership could be relocated to a better region with better demographics, net profit would be expected to increase three-tenths of a percent, to 2.3 percent. • If the dealer had a better-selling brand, profit could increase another ninetenths of a percent, to 3.2 percent. • Improvements in sales volume and structure can add a full one percent to net profit for this dealer, bringing the total to 4.2 percent.
•
But the big jump can come with implementation of operational best practices: If the dealer’s operations are consistent with best practices, net profit can increase by 2.3 percent, bringing the total for the hypothetical dealer all the way to 6.5 percent.
Obviously, most dealerships cannot change all the external factors that affect profit. They can, however, change internal factors. Therefore, finding #1 is vital to all dealerships. The analysis suggests that regardless of size, brand, or region, an average dealer who transforms average practices—not poor practices, but average practices—into best operational practices can increase operating profit by more than two percentage points. Best operational practices involve personnel management, departmental policies and processes, and relationships with the OEM.
34
DOES YOUR BENEFITS BUDGET MAKE YOU WANT TO TRY SOMETHING NEW? Like... a Defined Contribution Major Medical plan? Advantages include:
Stabilize health costs
No renewals
Eliminate high risk industry surcharges
Large claims no longer increase premium
For a reprint of the November 2009 Puget Sound Auto Dealer article “Defined Contribution Major Medical: Is it the Future?” call or email: Keith Robertson, VP/Benefits Consultant 206.962.2027 or 1.800.410.6571 x127 krobertson@clearpoint.com 35
6851 E MARGINAL WAY S SEATTLE, WA 98108 PHONE: 206.682.8427 TOLL FREE: 800.225.9666 FAX: 206.762.7203 WEB: WWW.SHULTZDIST.COM
CUSTOMIZED AUTOMOTIVE PROGRAMS CUSTOMER RETENTION PROGRAM NEW CAR DEALER PROGRAM NEW AND SERVICE CENTER CLINICS LUBRICATION EQUIPMENT PROGRAMS PROFIT DRIVEN PROGRAMS ROADSIDE ASSISTANCE AND TIRE HAZARD PROGRAMS
OUR PRODUCTS AND SERVICES FULL LINE OF SHELL AND QUAKER STATE PRODUCTS PENNZOIL PACKAGED PRODUCTS SHELL COOLANTS SHELL MARINE PRODUCTS GUMOUT CAR CARE CHEMICALS: ENGINE, TRANSMISSION AND FUEL SYSTEM CLEANERS RAIN-X PRODUCTS EXCLUSIVE NORTHWEST DISTRIBUTOR OF FORD MOTORCRAFT® OILS
Your one-stop automotive supplier, the preferred choice for lubrication supplies and service, meeting and exceeding the automotive industry’s needs in the Northwest for thirty-five plus years. “Locally Owned and Operated”
36
Small Business Owners
By Julie Wallerich, CLTC
T
There’s a fatal flaw in the retirement of many small business owners: After pouring a lifetime of sweat, time and capital into building the business, their rough-sketch strategy is to sell out someday for a ton of money… then settle back and enjoy a financially secure retirement. Many business owners are so sure this will happen that they don’t bother to make any other retirement plans.
when you’re ready to retire. Maybe this person is a current co-owner (but be careful if he or she is about the same age as you, who will be counting on retiring around the same time.) Or it could be a son or daughter active in the business, or a younger key employee.
Who is this person who, at just the right moment, is going to show up with cash in hand to buy the company… and pay a fair price? For thousands of small business owners each year, no one steps forward. Perhaps the business is too specialized or is tied too closely to the owner’s unique personality and skills. Or perhaps possible buyers equate retirement sale with distress sale and make only low-ball offers. Whatever the reason, many owners find that their company has suddenly become a white elephant that nobody wants.
They realize that there is no room for error at the point of retirement. Here are some examples of steps they might take:
One Possible Solution Groom your own replacement, someone who will buy your company
contains a termination provision. •
They fashion golden handcuffs and incentives to ensure that their replacement stays until the baton is passed. An ambitious successor needs and deserves gradually increasing authority and benefits. Options include deferred compensation or the opportunity to acquire partial ownership prior to their retirement. This provides both parties with something to win by sticking to the agreement… and something to lose if it falls apart.
•
They put it in writing, along with the help of their attorney— locking in who does and gets what, and spelling out all details and caveats, including how to establish the final valuation of the business. This formal buy/sell agreement protects everybody.
•
They build in a funding mechanism. This is crucial. No matter how good the terms of the buy/sell agreement, it will be
Business Owners Who Successfully Groom Their Own Replacements Leave Nothing to Chance
•
•
They are cautious. They make sure their heir apparent is the right person in terms of temperament, personality, competence and personal goals. They set up a probation period so they can terminate the relationship if they find this person simply will not work out. During that period, they keep everything informal, strictly verbal. At the same time, even when they go to a formal agreement, they make sure it
37
worthless if the money is not there when needed to carry out the plan. Under one option, the successor may be able to purchase the company from ongoing profits. Other options include setting up a sinking fund or allowing the successor to simply borrow the money. These options may work but they leave much to chance. Instead, consider a funding vehicle that protects your family in the event of your disability or premature death, such as life and disability income insurance. •
They have a back-up plan. As a business owner, you know that very few things go exactly as planned. What if your business hits tough times or your successor dies, becomes disabled, or—all too common—leaves because of a personality conflict? Or what if there simply is no heir apparent waiting in the wings? Sometimes, it’s simply best to dismantle the business.
Whether or not you have a possible successor for your company, you should begin mapping out your retirement strategy today. Your insurance professional or your independent professional advisors can help you develop this kind of business strategy. This educational third-party article is being provided as a courtesy by Julie Wallerich, New York Life Insurance. For additional information on the information or topic(s) discussed, please contact Julie Wallerich at (253)221-2022.
38
Cash Flow Timing and Best Practices The key element to cash flow is timing. If you receive a payment of a contract in transit before you have to pay the floor plan, lien payoff on the trade-in, and sales commission—then your cash flow is okay. Unfortunately, the timing is not always right, and it may be compounded by such circumstances as a customer using a trade-in to pay for a portion of his vehicle purchase. That trade-in can stay in your inventory for months, reducing your cash flow. Creating best practices and policies will enable you to correct the issues that harm your cash flow. The following are best practices for getting your cash into the bank faster. They might not work in every dealership, and they might require additional training and policies to be put in place, but experience has proved that many of these solutions are effective in turning your receivables and inventories into cash faster. •
Have the F&I office pull and submit the contracts.
•
Use a post office box for receiving checks in the mail. Receipt them in and deposit the same day to a deposit clearing account. Have the clerks distribute the payments to the various accounts from the receipt and check stub instead of holding the checks.
•
Have a policy for used vehicles that you will carry in stock by year, make, and model. If a unit comes into stock outside of that policy, wholesale immediately and adjust the Actual Cash Value (ACV) of the car deal that took it in trade.
•
Use sweep accounts to move excess cash from your checking accounts into investment accounts and include the payroll account to earn on that account’s “float.”
•
Issue a daily report of all Contracts in Transit and Vehicle Receivables to the sales department. Don’t wait for accounts to become past due to collect.
•
Issue a weekly report of all Accounts Receivable and Warranty Claims to the service and parts managers. The best person to collect the funds is the department manager who created the receivable.
This article is excerpted from A Dealer Guide to Cash Flow Management, available through NADA University’s Resource Toolbox. Please visit www.nadauniversity.com to access the complete guide.
39
Dealership Ideas from page 13
o If you have a cash investment account, is there a copy of the month end balance in the reconciliation file? o Do outstanding deposits have a computer entry to match (is it posted)? o If direct deposit is used for payroll, is there a copy coming from Payroll (not a downloaded spread sheet that can be manipulated) in the payroll bank account reconciliation file? o Check payroll payable to the bank statement; did the correct amount get transferred from the general account to the payroll Account? o Check all the “Other Debits” on the bank statement; are the accounts familiar? The bank reconciliation should be prepared by a different person at least quarterly. o Perform background checks on a regular basis for employees in sensitive roles. Program Changes: Free loaner car program revamped to $10 a day payment: • Expedited return of loaner vehicles after service was completed as well as time spent following up with customers. •
Reduction in the loaner fleet and thus expenses because some customers choose to wait for their vehicles rather than pay for the loaner.
•
To mitigate resistance, all customer contact employees were trained on how to present the new loaner policy to customers in case of opposition. After a year and a half the result was less resistance than anticipated and significant decreases in expenses.
Use of Outside Vendors • Outsourcing L&I to Washington Employers saved money when the HR person was let go. •
Your regularly scheduled on-site update visits include: X Manual Inspection of Options and Accessories X Professional Vehicle Photography X Custom Window Stickers X Same-Day Server Updates
We get the Data, You get the Sale.
For More Info Call Us Today!
1.425.844.2500
Utilizing LexisNexis for background checks and locating debtors and employees or potential new hires.
Dan Cheyney is a tax partner and regional director of the Dealer Services Group for Moss Adams: 425-303-3188 or dan.cheyney@mossadams.com. 40
The more data we provide to your potential customers, the more leads you generate, and the more sales you close.
sales@i-ocom.com | www.i-ocom.com
41
42
Carter Subaru Recognized as AYES National Dealer of the Month
I
In August, AYES recognized Shoreline dealer Sara Carter and her Service Manager, Todd Coleman of Carter Subaru, for their outstanding support of AYES. Carter Subaru has mentored seven AYES students since 2002. All seven Shorewood High School AYES interns are working at the dealership. The 18-bay family-run dealership has found a unique partnership with AYES. “AYES has been a good fit for our dealership,” says Coleman, a 20-year service veteran at Carter Subaru. “AYES involvement has allowed Carter Subaru to grow young technicians the way we want to, using techniques unique to Subaru products and to the core values of Carter Subaru.”
From left to right: Todd Coleman, Service Manager; Jeff Bitzer, mentor; Chad Moore, mentor: and Ron Olson, AYES Washington State Manager.
“At Carter Subaru we do things a little differently than others,” explains Coleman. “Our AYES students don’t go directly from AYES to flat-rate. After they graduate from high school, we have them apprentice under another technician prior to deciding if they will go to flat-rate. We do not want them to burn out if it doesn’t go well. Some students are not prepared mentally for that big jump.” Carter Subaru’s philosophy is to keep a watchful eye on the mentoring process. Coleman suggests other dealerships do the same. “Make sure the mentor and AYES student understand each other,” recommends Coleman. “A disconnect at any age is difficult but especially for a young person. So you need to have the mentor carefully watching the kid and the service manager carefully watching the mentor to make sure everything is going well.” But with responsibility comes reward for the mentors and the students. “Our mentors have gained a great deal as well, not only financially but personally,” continues Coleman. “On a professional level, the mentor uses skills they have not used for long periods of time. From a personal stand point,
they are able to break from a sometimes tedious, reclusive day-to-day grind and open up and learn about someone else.” Coleman appreciates that the AYES model of technician development/recruitment helps from the get-go. “I like the fact that, at the high-school level, we’re taking students that are truly interested in the career. The AYES instructor hand-picks the students so it’s a lot less work for the service manager. I do not have to weed out or pick the students that I do not think will work out.” With this kind of success, it’s no surprise that Coleman says, “I would strongly recommend the AYES program to any dealership that is interested in the quality and longevity of their service department.” The Carter family has a reputation for innovation and excellence. Carter Subaru was the first Subaru dealer in the United States to have a fully certified female master technician. Since 2002 they have been Washington State’s leading Subaru dealer in parts, service, and sales. For the past ten years they have been Subaru’s national brand leader for parts and service. In 2009 they were awarded Subaru’s Pinnacle Award. 43
Ride with the #1 car insurer in Washington. With competitive rates and personal service, it’s no wonder more drivers trust State Farm®. Like a good neighbor, State Farm is there.® CALL FOR A QUOTE 24/7. Contact your local Puget Sound Agent at 866-495-9811.
statefarm.com®
1001144
State Farm Mutual Automobile Insurance Company State Farm Indemnity Company Bloomington, IL
Industry Insights from
Female Car Shoppers; The Purse Powers The Pedal Women Aren’t a Market Segment, They Are The Market Women influence over 95% of all vehicles purchased and are the sole buyers of more than 50% of all cars sold in the United States. The aftermarket is large as well, with women spending $300 Billion annually maintaining their vehicles. The Difference with Women? The reality is women don’t shop for vehicles much differently than men. When it comes to car shopping, women tend to feel less confident and lean towards a more practical and savvy decision making process.
WOMEN ARE LIKELY TO: Find the process nerve-wracking. 24% view shopping for a car as stressful, compared to 15% of men. Feel intimidated visiting the dealership. 3x more so than men. Want a companion. Less than 40% of women prefer to shop alone. Shop for what’s practical. 44% are fulfilling a need vs. a want (15%). Wait until the price is right. 63% say finding the best deal is very important. Have less buyer’ s remorse. Only 11% of women second guess their vehicle purchases vs. 18% of men.
95 %
of vehicles sold are influenced by women
50 %
of vehicles sold are purchased by women
WHAT DEALERS CAN DO: Increase Confidence and Appeal to the Savvy, Female Shopper 1. Recognize she’s making the decision. Many women that come into your dealership are the decision makers and /or the buyers. 2. Provide the details, especially on pricing. Women tend to be more insecure about the negotiation process. Consider providing detailed information breaking down price to model specifics. 3. Reinforce value, safety and deals. Make sure specials, sales and pricing info is up to date and well merchandised. Consider promoting more certified offers to appeal to the practical side of female shoppers. 4. Capitalize on word of mouth. Utilize positive testimonials, dealer reviews and case studies to help improve dealership perceptions. Reinforce your customer service policy for shoppers visiting your dealership.
Women Don’t Need a Different Sales Process, They Need More Information
DID YOU KNOW...
40 %
of AutoTrader.com users are Female.
95 %
are active and in-market, that’s close to 5.5 million highly interested female shoppers on AutoTrader.com every month.
AutoTrader.com women shoppers are more likely to look for specials and sales, and they are more likely to be CPO shoppers.
Sources: 2009 Shopper Segmentation Study, KS&R Inc., 2009 AutoTrader.com User Profile Study, MORPACE Int. Road and Travel Magazine
45
46
APP Car Dealer Services APP will help you fuel your business’ success with unsurpassed service and technical expertise featuring top automotive brands with Chevron and Havoline. Our Car Dealer Services will increase your revenue and Customer Satisfaction Index as we personalize our service to fit your individual dealership goals.
APP’s commitment to our car dealers as their “Single-Source Vendor” include: Dedicated Sales Representative 24-Hour, 7 Day a Week Emergency Service A-List Product Services Including: Chevron and Havoline Car Dealer Programs Co-Op Advertising Lubricant Personal Inventory Maintenance Equipment Programs and Other Financial Services Service Clinics New Car Clinics CFN® Fleetwide Cardlock Bulk Fuel Delivery Annual Business Reviews Available Serving Western Washington
47
PRSRT STD U.S. Postage
Puget Sound Automobile Dealers Association 16101 Greenwood Avenue N. Bldg. 2100 Seattle, WA 98133
PAID
Permit No. 1467 Fort Worth, Texas
Jim Rose 206.448.3156
Jamie Williams
Ann Sobil
206.448.4585
206.448.3881