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March 17, 2014

DSP 20 Group members improve net profit

Dealer Strategic Planning Inc. (DSP) announced that, collectively, their existing 20 Groups averaged a 19% increase in net profit when comparing year end 2013 to the prior year.  Two groups improved their net profit by more than 60% year over year. 

“We are very excited when we see results like this, especially in such an unstable economy,” says Norm Gaither, DSP owner.  “Belonging to a 20 Group really pays off in increased profitability.  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.

Gaither says the retail tire and auto service shops currently earn between 2% to 3% net profit, and the DSP Group members’ performance far exceeded the industry average:

* one group achieved an average net profit of 7.8% or $152,000 in net profit per store reporting; 

* the second highest group average was 6.7% or $134,600 in net profit; and

* another group reported 5.9% net profit or $116,600 per store.

When a member reports their 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 or 15 stores, according to Gaither. 

Each month after the financial results are posted to the groups’ website, members are encouraged to compare their results with others in their group and if another’s results are better, the member can investigate how those results were achieved and then make similar changes in their business.

The group with the highest net profit for the year at 7.8% showed a sales increase of 6% and a gross profit increase of only 1%. 

These results were achieved by managing payroll as a percent of gross profit at 46.7% which is very near the DSP benchmark of 45%. Contributing also was control of expenses which were 14.7% of sales, which is far below the DSP benchmark. 

Mike Upton of Upton Tire Pros in Madison, Miss., has been a group member for several years.  “This group of peers, which meet three times a year, has been life changing for myself and my business. 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 many years.

“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. The three-day event 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.”

All of DSP’s independent groups are nearly full, but applications are being taken for a new group which will kick off when 15 applications are received.  Applications can be obtained on the company’s web site along with many free business support materials available to store owners:  www.dsp-20group.com.

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