Does your business value time? Admin In the Media (0) We are all given the same amount of time each day to set out and achieve what we desire. The difference is what each of us do with our time, that’s a separator between people.Once an opportunity has been missed or a moment wasted, we cannot get it back. However, each day we’re given the opportunity of more time to make the most of.Various factors can happen in people’s lives that leave them appreciating time at a different level to the next person. The measurement of time is the same for everyone. It comes down to what you’re capable of doing, what you decide to do, and how much you value its importance.Understanding the value of time in your dealership is something many businesses don’t know how to tackle, or don’t see there’s a need to.That said, not appreciating the value of time and what’s done in the amount you have during the day, is an area that can really make a difference to your dealership.Being traders, it’s easier to focus on something as tangible as a vehicle you buy and then sell so you can easily measure profit or loss along the way.When you start to think about efficiencies within dealerships, your return on investment of time – and how staff apply themselves during the day to make best use of the time that’s available – can be daunting when you aren’t quite sure where to begin.I like to look at time at a dealership in two ways. One is what cost does each hour of time during the day have to your business.The other is what the opportunity value of time is – being what can we generate or need to generate in gross profit as each hour goes by.Where this one plays a huge roll is when nothing has been done to proactively drive or compliment the business in the minutes and hours that have just passed.When nothing is done, you still have a cost, but you make no progress towards generating value that helps cover costs, especially with sales people. They shouldn’t sit still, you can’t afford for them to, and they can’t afford to either.There are many ways to do this and various aspects to factor in. However, to keep it simple and easy to apply are the following two calculations any business can run if you’re interested in understanding what your time cost-value is.COST OF TIMEWhat does it cost to run my dealership, what are my operating expenses? For this example, we will use $1 million per annum, 52 weeks in the year, seven days per week, nine working hours per day.$1m total operating expenses divided by 52 weeks = $19,230 per week$19,230 per week divided by 7 days = $2,747 per day$2,747 per day divided by 9 hours = $305 per hour Therefore, for every person with every hour they are unproductive, inefficient and not contributing positively towards the dealership, is costing the business significantly.Do the maths with your own dealership and identify your “cost of time”. This is applicable in various ways across every role, but two areas of the most unproductive time tends to be with sales people and administration.GROSS TIME PROFITThis one can be significantly variable. You can drive this up or down, base it on historic or future forecasts. But keeping things simple, we will look at in a sense of going forward. This is what we need to make to ensure the business is at least profitable.$1.5m total gross profit needed divided by 52 weeks = $28,846 per week$28,846 per week divided by 7 days = $4,120 per day$4,120 per day divided by 9 hours = $457 per hourWhat’s scary is when you combine the two together – ongoing cost to the business, and gross profit needed to operate and be profitable – it forms a significant hourly number.Whichever way you cut it and whatever the figures are, it will be relevant to your business and provide you with a real cost of time.This should be enough to drive you to make changes and identify how each employee can ensure they’re making the best use of their time.As part of doing this evaluation, you start to place more value on inefficiencies and the way you do things.- Will you really allow sales people to sit around, and only be productive when a customer walks in? Unlikely, as for every hour they are unproductive it’s costing the business significantly.- Will you continue to allow admin staff to waste time replicating multiple areas of data entry with the same information that could’ve been handled once?- Will you allow cars to come back from customers because what was promised to be ready for delivery wasn’t?- Will you allow ongoing poor processes to keep affecting other staff and be employing them to tidy up work that should’ve been done right in the first place?Use time wisely to identify how you and your staff can maximise every minute, hour and day to its fullest potential. Because once that day has gone, you cannot get it back.