Are You Ready for 2026?
By Walter J. McDonald
Here is a 60-question assessment of how well your business has adopted those fundamental Best Practices essential to be competitive today.
For each question, enter a “Yes” or “No” in the margin. Scoring is on the last page.
DEALER OWNER AND EXECUTIVE ISSUES
- Have you thought about your proper leadership role? Do you want to manage sales and customer relationships OR manage internal operations and financial administration? You can’t do both well.
- Is there an established set of Core Values for your company that gives guidance and inspiration to your employees and helps ensure that your organization is in constant alignment with these core values?
- Are there established quantitative “Big Hairy Audacious Goals” (BHAGs*) that are clear and compelling and that stimulate progress of your entire organization, creating immense team spirit?
*BHAGs were first introduced by Jim Collins and Jerry Porras in their pivotal text, Built to Last. - Are there mechanisms installed to create discomfort and dissatisfaction with current performance levels: to obliterate complacency, to stimulate change, and improvement before the external world demands it?
- Is the business making proper investments for the future in new technologies, human capital, technician recruitment, facilities and equipment, new management techniques and innovative practices vs. waiting for the market and industry to force you to change?
- Is leadership and supervisory management a strategic training initiative?
- Are you developing your own personal management skills?
- Is there an annual Strategic Business Plan that helps management examine marketing and business operations by Revenue Center with statements on how to improve quantitative performance metrics?
- Does the annual Strategic Business Plan support your Annual Budget and describe the strategic steps to be taken in each Revenue Center and each sales territory and in each key account to achieve your financial goals for the year?
- Does planning receive the time and attention it deserves, making it specific and realistic? In addition to having goals and measurable objectives compatible with resources, does your management team evaluate new product and market opportunities? Do your sales reps establish specific new account penetration targets?
- Do you, the ownership/senior management, have a viable succession plan?
- Are the investments in a management information system adequate, providing support for all departments including service and parts, and, generating reports on critical performance metrics in each area?
- Are all modules of your dealer management information system properly installed and employees being provided essential training?
- Are there challenging and meaningful goals for each employee and structure performance-based incentive compensation for reaching those goals?
- Does the dealership review monthly financial statements which include balance sheet, profit and loss and cash flow statements?
- Does the dealership review a daily “flash report” on sales and gross margin by department, cash position and available line of credit?
NOTE: Ask me to send you a useful example. - Does the dealership practice “Open Book” management, providing each revenue center manager his/her monthly financial results with actual performance against budget monthly?
- Does your management team review and discuss monthly variance from budgeted performance objectives in each revenue center?
- Is your management team properly managing cash and avoiding cash traps such as excessive obsolete parts, unsold new units, over-aged used machinery, and idle rental machinery?
- Does your management team have strong skills in utilizing key financial ratios, critical profit variables, and operations performance metrics daily, weekly and monthly to help identify the causes of potential problems (low cash, poor gross margins, low labor productivity, weak parts sales, drop in field sales account contacts, etc.)?
- Is the dealer leadership team improving financial management skills by learning what to ask and where to look?
- Are you working with your outside auditor to establish Fraud Protection procedures in your payroll, accounts payable and accounts receivable operations?
- Is the leadership team helping and coaching employees to understand how their actions affect the company’s ability to make money, how they can make decisions that support the company’s profit objectives and how they will benefit if the company is successful?
- Does the dealership offer special recognition and incentives for employees to suggest practical ways to increase efficiency, reduce cost, increase revenue and improve overall profitability?
- Do you set an absorption rate goal and monitor it monthly toward a long- term objective of over 100%?
Absorption Rate = Gross Profit from Parts, Service and Rentals / Dealer Fixed Operating Expenses Goal: >100% - Do you review the scores of Absorption Rate components with your management team at least monthly?
- Can Revenue Center Managers give five reasons why achieving 100% Absorption Rate is critical to the dealership’s future?
- Is the dealership making the proper investments in Service and Parts that are essential to be successful in today’s market?
- Is the dealer website current, user friendly and a useful living catalog for the business?
- Is the dealership capturing website visitors with an appropriate “Can I help you?” popups?
- When a major problem occurs do your managers first look for a process issue before seeking to blame an individual employee?
- Does your dealership formally review work processes and procedures at least every 2 years to ensure they are meeting the needs of your growing organization?
- Do your managers understand the importance of your Cash Flow Cycle and the role their department plays in optimizing generation of cash?
- Does the leadership team review critical OEM Sales and Service Agreements that drive the business at least annually and update new executives to avoid blunders that could end the business relationship?
- Do sales leadership track sales mix and profitability by major product line including aftermarket revenue and work toward improving overall margin contribution by each product line?
- Does the dealership conduct a formal annual product line revenue/cost analysis based on operating profit generated by each line to determine where to invest as well as what line(s) to drop?
- Does management honestly evaluate new product and market opportunities as well as branch and/or acquisition options to maintain growth and competitiveness.
NOTE: Manufacturer strengths, technology and priorities change over time and although they may not impact your business immediately, over time these small changes can have a determining impact on the ability to be competitive. Senior management can’t afford to be caught off guard. Long term success for a dealership is more than impacting current metrics.
MACHINERY SALES AND RENTAL MANAGEMENT ISSUES
- Is there an effective process in place to identify and capture at least three large never-before conquest accounts each year?
- Does the dealership maintain an accurate customer mailing list with correct names, titles, phone numbers, e-mail, etc. in a Customer Relationship Management system that is open to all departments for reference and updates?
- Does the dealership track and monitor customer purchases over time by each department to spot negative trends, especially in parts and service, flagging accounts with no purchases in 8 weeks for follow up?
- Does sales leadership track the percent of total deals your sales rep see (Deal Visibility Rate) and percent deals closed (Closure Rate) and serve more as a coach than a policeman or super salesman?
- Is the dealership carefully controlling your used equipment inventory and making certain you get at least four turns per year?
- Is the dealership achieving five annual turns on new machinery inventory?
- Is there a proactive Key Account development plan that involves sales as well as Product Support personnel?
- Does the dealership send out promotional emails at least semi-monthly that include all revenue center products and services to at least 90% of current and prospective accounts?
NOTE: For an excellent dealer marketing resource check out Winsby. - Does the dealership have a formal accelerated start-up program for new machinery and product support sales reps to get them productive in the first 90 days?
- Does the dealership provide selling skills training related to improving deal visibility to include market assessments, prospecting, referrals, bird dog leads, CRM follow-up, time & territory management, field demo programs, etc.
- Does the dealership provide selling skills training related to improving deal closure rate to include diagnostic questioning and listening techniques, feature-function-benefit product demonstration skills, handling objections, and getting commitments?
- Does the dealership have a master A-B-C-D account coverage strategy for every current customer and prospective account that defines what type of contact and frequency that includes machinery sales reps, customer support reps, field service technicians, email promotions, direct mail and telephone calls?
- Does sales leadership maintain a minimum sales velocity of at least 200 sales rep account contacts per month per rep including personal visits, phone contacts, emails and direct mail?
PRODUCT SUPPORT MANAGEMENT ISSUES
- Does the dealership conduct an annual aftermarket market potential assessment based on unit parts and service consumption factors for your primary line installed fleet to monitor and improve aftermarket market share?
- Does the dealership review service labor productivity and efficiency by technician and by the service team overall at least weekly?
Labor Productivity = Labor Hours Billed / Labor Hours Available to Work Goal: >90%
Labor Efficiency = Estimated Job Time / Actual Job Time Goal: >100% - Are scheduled maintenance and/or machine inspection programs in the aftermarket marketing strategy?
- Does the dealership have good inventory management system and controls in place for your supplies, components and spare parts?
- Is your Parts Manager trained and given the tools and time to adequately study and manage your “stock status” report?
- Does the dealership invest in adequate leadership and supervisory management training, especially for service management personnel?
- Are best practices in Shop Safety being employed?
CUSTOMER SERVICE MANAGEMENT ISSUES
- Does the dealership conduct an annual comprehensive customer census to update contact information, build email promo list, identify customer satisfaction level, uncover unresolved problems, and identify purchase/rental intentions? (8-10% of accounts can be done monthly.)
- Does the dealership make mini customer service follow-up interviews on 6 – 8 repair orders each week at each location?
- Does the dealership formally test and compare the dealer’s overall service delivery and level of customer satisfaction to key competitor’s at least every two years?
Scoring
Number of Yes Answers ____ / 60 =_____ %
A score of 90% or above indicates very strong Dealer Business Management Fundamentals.
With a score between 80 and 89%, your leadership team should review each ‘NO” issue for needed improvements.
A score under 80% indicates that your management team should focus immediate attention on strengthening the dealership’s Business Management functions, identify priorities and make needed improvements.
SUGGESTION:
Ask each of your key managers to complete the Fundamentals Assessment. Then, have a group discussion: “What are the five or six most critical issues we must address?”
If you would like to discuss any aspect of this article or to learn more about our machinery dealer development resources and capabilities, I’d welcomed hearing from you.
Walt McDonald Walt@McDonaldGroupInc.com www.McDonaldGroupInc.com