Used Car Lot Overhead – The importance of paying for performance and using a DMS system
When considering a new used car lot or car dealership there are many sources of business costs or overhead you need to be aware of. These costs are generally broken up into two categories, fixed and variable costs. Fixed costs are costs that do not vary with an increase or decrease in sales. Examples are salaries, rent and property taxes. Your rent is the same whether you sell 1 car or 100 cars so this cost is “fixed” at a predictable amount.
Variable costs are costs that vary from month to month depending on use or business activity. Examples are sales commissions, electricity, gas etc.
When starting or operating a business many owners prefer to scale costs with business activity. This means owners minimize fixed costs and try to make as many costs as possible variable with sales activity. Employee pay is a good example. If business is down you may not be able to pay employees the same as when business is doing well. Commissions and profit sharing are a great ways to pay employees as it scales to your level of business activity however they can be difficult to track. A DMS system will allow your dealership to track sales, accurately reward employees and allow you to make changes necessary to maintain a productive sales staff.
A Dealer Management System will provide your car dealership with the tools you need to track salesmen productivity, minimze overhead and maximize sales. Consider taking BitBeater for a free test drive today.