Cash flow is typically the lifeblood of any business. Though there are many factors that play into a dealer’s profitability, the dealers that consistently manage their operations and their floor plan loans have much better chances of success. Dealers that command a few key items in their dealership operations are in a much better shape to maintain overall profitability.
Manage Your Inventory
The infusion of funds from a floor plan loan shouldn’t cloud proper inventory management. It’s crucial to have a handle on your inventory management processes. Aged inventory can build up quickly, and unless responsibly handled, can become a suck on dealership resources. Every vehicle that comes to your lot should have an aged inventory exit strategy, with options to recoup costs at regular intervals.
Additionally, consider the types of vehicles that are in-demand in your market. Use data from tools like Stockwave to get an idea of demand. Buying with your gut doesn’t mean you won’t earn profits, but making decisions on inventory backed with reliable data gives your dealership better chances for results.
Make Moves to Sell Inventory Quickly
Ever thinning margins mean dealers can’t delay to get inventory on the lot, online, or hold out for top prices for particular vehicles. Profits are often made based on the volume of vehicles sold. Ensuring the little things in your operation run smoothly can be the difference between a successful and unsuccessful dealership.
For example, how long does it take to get vehicles retail-ready on your lot? When you buy inventory at auction, how many days does it take for a vehicle to get posted to your digital retailing platforms? Any efforts dedicated to getting your vehicles in front of consumers faster enhances chances that your inventory will turn quickly.
Control Your Floor Plan
When you first get a floor plan line of credit, it can be tempting to bring a lot of new inventory to your lot. However, it’s crucial to floor plan responsibly. If you purchase vehicles and they haven’t sold by the time your floor plan bill is due, you could be looking at a pretty serious bill. Spread your inventory purchases out over a period of time to ensure payoff dates occur at appropriate intervals.
Additionally, there are often other floor plan expenses you can avoid. Every floor planning company charges various fees. However, you can often avert some of those charges. For example, NextGear Capital dealers have the ability to avoid a variety of fees by enrolling in AutoPay.
It’s not always easy to keep your operations and inventory management in line. However, any steps your dealership takes toward a smoothing overall operations ensure you’re in a much better place to maintain profitability.