VIRGINIA BEACH, Va. (March 18, 2014) — Dealers who are members of Dealer Strategic Planning Inc.'s (DSP) 20 Groups reported higher profits last year vs. 2012, the company said recently.
Collectively, according to Virginia Beach-based DSP, its 20 Group members averaged a 19-percent increase in net profits in 2013 over the prior year, with two groups improving their net profit by more than 60 percent year over year.
“We are very excited when we see results like this, especially in such an unstable economy. Belonging to a 20 group really pays off in increased profitability,” said DSP owner and President Norm Gaither, who began the 20 Group format in 2007.
“We continually challenge our members to manage their payroll, decrease expenses and take advantage of opportunities to increase gross profit. The results are proof that our model is working.”
While retail tire and auto service shops typically earn 2 to 3 percent net profit, DSP said its dealers' performance far exceeded the industry average. One group reported an average net profit of 7.8 percent, or $152,000 in net profit per store. The second highest group average was 6.7 percent, or $134,600 in net profit, according to DSP. Another group reported 5.9 percent net profit, or $116,600 per store.
DSP said that when a 20 Group member reports its financial results, the information is compiled as an average per store so that comparisons can be made from member to member and group to group—whether they have one store or 15 stores.
Each month after the financial results are posted to the groups' website, members are encouraged to compare their results with others' in their group. If another's results are better, “the member can investigate how those results were achieved and then make similar changes in their business,” DSP said.
The group with the highest net profit for the year, at 7.8 percent, increased sales 6 percent but gross profits increased only 1 percent, DSP noted.
“These stellar results were achieved by managing their payroll as a percent of gross profit at 46.7 percent, which is very near the DSP benchmark of 45 percent,” the firm said. “Contributing also was their control of expenses, which were 14.7 percent of sales”—far below the DSP benchmark.
“This group of peers, which meet three times a year, has been life changing for myself and my business,” said Mike Upton of Upton Tire Pros in Madison, Miss., who has been a group member for several years. “For years I had looked for legitimate benchmarks where I could gauge how I was running my business in comparison to other successful tire dealerships.
“I was invited as a guest to one of the meetings and was sold that first day that this was what I'd been looking for for many years,” he said. “What was interesting to me as well was that these were all successful dealers with well-run shops, but deep down were struggling with the same recurring issues we were.”
DSP's three-day event, Mr. Upton continued, “was multi-layered with great ideas from the other dealers, a visit to the host store's location to give him an outside view of his operation, and deep evaluations of the financials of the participating members. Plus the camaraderie of a great bunch of business folks.”
Although all of DSP's independent groups are nearly full, the company said it is taking applications for a new group that will kick off when 15 applications are received.
Applications can be obtained on the company's website, www.dsp-20group.com which also has some free business support materials available to store owners.
DSP, formed in 2007, said its 20 Groups offer tire and automotive service dealers “the opportunity to share best practices, benchmark against the industry and improve financial performance.” Each group allows a maximum of 20 dealers who meet three times a year to help each other improve their business performance.