“Keeping it Lean” …a Discussion on Expense Control
"Expenditures rise to meet income.”~ C. Northcote Parkinson
What a profound statement! Don’t we find when operating any type of business, the more we make, the more we spend? Years ago, I worked with a General Manager who named his boat, “Just One More Deal” and this was because when a vendor came in to solicit a program or a service, after an enthusiastic presentation, he would sign up with the justification “Just one more deal will cover the cost”. Well, when we entered a recession in the 80’s and the unit sales fell off, we found ourselves bound in all these contractual agreements and could not get out of the terms.
I will start with my first question regarding expense control…Who in your business is responsible for opening the mail??? It really should be the President, Operator, Comptroller, or someone with authority who will question each invoice, each piece of correspondence and ask the questions: What are we purchasing here? Do we really need it? Can we get the same value cheaper from another vendor? Have we negotiated the price with this vendor lately? Does it have a purchase order? Was it authorized? Are we in a contract with this vendor? When does the contract come up for renewal and do we have to write a letter of intention to terminate ahead of time? And so on…..
Okay…I started it…Let’s keep it rolling!!!!!
Replies to This Discussion
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Permalink Reply by Bobby Compton on
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Great points Nancy.
I consulted with a dealer about a year ago who had 3 different G.M's working for him within a 4 year time span. Little did he realize, he was paying for 3 different CRM's - ouch!
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Permalink Reply by Ernie Kasprowicz on -
Perhaps it is because we are a consumer based society. Is it in the effort of progress? A newer, better, profit producing, cost effective widget to enable business growth? Buying can feed the ego. All of us want to feel good. Feel like we are at the front of technology and the benefits that come forth. Heck, we are surrounded by the newest and latest in most dealerships. A careful understanding of just what dollar amount of return vs investment compared to staying the course must be considered.
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Permalink Reply by NANCY SIMMONS on
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Yikes!!! My point exactly!!!! That is a perfect example Bobby! Thanks for sharing!
Bobby Compton said:Great points Nancy.
I consulted with a dealer about a year ago who had 3 different G.M's working for him within a 4 year time span. Little did he realize, he was paying for 3 different CRM's - ouch!
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You are so right Ernie...Purchasing Power builds egos...The American Express Gold Card based it's marketing platform on that!!! The accountability factor, when you are spending someone else's money is the issue!!!!
Ernie Kasprowicz said:Perhaps it is because we are a consumer based society. Is it in the effort of progress? A newer, better, profit producing, cost effective widget to enable business growth? Buying can feed the ego. All of us want to feel good. Feel like we are at the front of technology and the benefits that come forth. Heck, we are surrounded by the newest and latest in most dealerships. A careful understanding of just what dollar amount of return vs investment compared to staying the course must be considered.
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