Boating Industry Intelligence You Can Profit From
A detailed budget is a must for most well-run businesses, and yet it’s missing from a lot of marine dealerships. In the past, excuses like “It’s too much work,” “I don’t have time” or “I don’t have a clue where to start” might have worked, but as technology improves, a number of relatively simple solutions designed specifically for the marine industry have become available.
Like so many business tools, these applications are making the move to the Internet and becoming more convenient and easier to use in the process. The latest budgeting system to make this move comes from David Parker, a well known dealership consultant who has offered such solutions to his 20 Group clients for years, but is now making it available to all marine dealers online at parkerbusinessplanning.com.
When Parker started working in his family’s marine dealership in the ’60s, he says the business was run by gut feel and the checkbook. As his career shifted to dealer consulting, coaching and 20 Groups over the past couple of decades, he has invested his own time and money to develop a sophisticated, proprietary budgeting method to benefit his dealers.
His first budgeting program took three years to develop, was launched in the ’90s, and operated out of Microsoft Excel. That was fine in its day, but working with a series of Excel spreadsheets was ultimately not user-friendly. To remedy that, Parker, along with the same programmer who developed his online 20 Group software, spent much of last year transitioning the system out of Excel and onto the Web.
Among the resulting benefits are full automation, the ability to access it anywhere there’s an Internet connection, and a security system to protect the data that Parker says matches that of most banks. Its goal, according to Parker, is to make budgeting as simple and effective as possible.
To get started, clients export their year-end trial balance from their accounting software and fill out some basic information. Parker says once the dealer is set up, it takes as little as two to three hours to complete their budget and only five minutes to update online each month.
“The feedback I’ve gotten so far from users has been great,” he says. “It’s easy to create the budget and then the five-minute update each month allows you to see exactly where you stand. It has been a real home run.”
Using the information provided, actual data from the previous year (or years) serves as the foundation for the new budget. The program automatically generates more meaningful recast financial statements for both the balance sheet and profit and loss. Sales and expense trends are calculated based on up to five years of data, taking into account the percentage of annual business done each month.
“In a seasonal business, you can’t just divide by 12 when creating monthly budgets,” Parker says.
Then the program creates what Parker calls the three components to a great budget: an annual budget, a monthly breakdown with targets and a monthly variance report. Budgets are broken out into sales, expenses, non-operating (F&I) and personnel.
The variance report, which shows actual vs. budgeted comparisons, helps clients know when to worry, he explains. A monthly summary variance report generated by the program shows underperforming areas in red, allowing users to quickly scan for problems.
“Most dealers start to panic if they lose money in a month,” Parker says. “But if you have a budget, you know if a loss is actually good or not. A 10K loss is good if you were budgeted to lose 20K.”
During an extensive beta test last fall, Parker says any bugs in the system were worked out, and he expects to add ongoing enhancements in the days ahead.
The service is available for a one-time $750 set-up fee plus monthly dues.
The difference between what some commercially available applications offer and that of consultants like Parker is a focus on management information.
“A lot of programs out there that produce a traditional financial statement are designed to help you do your taxes,” Parker says. “Yet they don’t provide near enough management information, and in my opinion, good solid management tools are really a requirement in today’s fast-changing business environment.”
If you’ve been procrastinating on creating a budget, your excuses are starting to run out. With a new generation of tools now online, a solid financial plan might just be a click away.