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Real Forecasting & Budgeting for Auto Dealerships

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Get Managers to Set Real, Well Thought out Improvement Plans...

Most Dealership Forecasting & Budgeting Exercises are a Waste of Time!

Not enough time is spent on "how will we do better"!

There is a better way...

Should you and the Department Managers create an annual forecast?

NO! If it is just an exercise to take your current numbers and add 10% without determining how you’ll improve. NO, if you only put it in a desk drawer until next year.

YES! If you use it to evaluate the current processes and determine what improvements are needed. YES, if you regularly compare your progress to the forecast.

We traditionally think of Forecasting as something you do near the end of the year to prepare for the upcoming year, but you can do it at any time.

However, for most, all of the work to create a forecast yielded little improvement in the coming year. The Department Managers were too focused on putting together forecast numbers that would make their bosses happy. There was not enough time spent on the “how will we do better?”

These are questions that a Controller can use to expand the visions of the Managers and become a partner in strategic planning.

Use the Forecasting Process to evaluate the following:

These are questions that a Controller can use to expand the visions of the Managers so they can become a partner in strategic planning.

· Inventory Needed to Achieve Objectives?

· Staffing Needed to Achieve Objectives?

· Pay Plans in Line with Objectives?

· Training Needed?

· Cash Needed to Execute Plans?

· Facility or Equipment Upgrades Needed?

· Process Improvement strategies?

Ask each to create a "Vision of Success":

- Decide “What do I want it look like at the end of the year?”

- What do I want my staff to look like? Do I need to “upgrade?”

- Does my staff need more training?

- What do I want my processes to look like?

- What do I want my inventories to look like?

- What do I want my CSI scores to be?

- What can we do differently to improve each Department?

There are Three groups of Employees make up the forecasting pyramid:

1) Executives accept and approve the forecast,

2) Managers develop the plans to reach the forecast,

3) Productive staff does the necessary work to reach the forecast

Executives’ Role is to Guide Forecasting Process

One place to start on your forecast is to determine “How much money did we leave behind this year?” Compare your Net Profit Retention percentage to high-performance target percentages from your preferred benchmarking source: (20 Groups, NADA Data, your CPA, Industry publications, etc.)

Once you have established your desired Net Profit objectives, now comes the important question—how will you get to your forecast goals? Circle back to the challenging questions above that you will put to each manager.

Now you have a real forecast that can be used, referred to and adjusted as conditions evolve.

This post was adapted from just a small section of the DealersEdge/Profit Blueprints Accounting Guide. Information about how you can receive a copy of this popular reference guide for Controller and General Managers can be found below...


A Comprehensive Automotive Accounting Guide Puts Facts, Processes and Tools Right At

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Much more detail on all these topics:

Financial Statement

Balance Sheet

Your DMS

Expense Management

Period End Process

Efficiency Checklists

Personnel Management

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Minimizing Employee Theft

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