It all started in the accounting department. More specifically, errors in the accounting department.
Errors are something that businesses try to avoid at all costs, but they’re part of human nature and sometimes there’s just no getting around them. But the errors were becoming too frequent at the Van Horn dealer group—so often that a change had to be made.
Jennica Krebsbach, controller for the Van Horn dealer group, jokes that she has a doctorate from Van Horn University. Krebsbach started with the Wisconsin dealer group 32 years ago as a part-time receptionist and since then has held a number of different positions before becoming controller in 2014.
At that time, each dealership had its own accounting department, which caused inefficiencies.
“You had one person at a store doing four different jobs—and they weren’t always being done correctly,” Krebsbach says. “We found inconsistencies, and it cost us a lot of money.”
That’s when Van Horn decided to centralize and go to intercompany accounting in the middle of 2014.
If you ask Krebsbach, this move helped catapult the massive growth that the Van Horn group has seen in the past three years with the addition of five stores. This move was the first in a number of new initiatives that allowed the group to expand its horizons.
Move 1: Centralize.
When Van Horn decided to centralize its accounting department, it met with its entire accounting staff at the individual locations to join the central office, which in some cases was 30 miles away from the building in which they had been working. Even though it meant a further distance, all of the accountants made the transition, although not all are still with the company. Four employees ended up leaving, but, because the move made the team more efficient, none of the employees that left have needed to be replaced.
Each of the accountants were allowed to pick their top three choices of teams and were then interviewed, Krebsbach explains. Based on those interviews and prior knowledge of each individual’s strengths, each one was assigned to either the compliance, registration, accounts payable, inventory, products, or deal posting team. The way job roles were set up in the past, one person could have been in charge of all of these teams, which caused frequent errors. Centralizing caused Van Horn’s accounting department to become more efficient and produce better results.
“When your month ends, it’s easier to find if a mistake was made, who made it, and zero in on why,” Krebsbach says.
By having the staff in charge of specific areas, it’s also allowed the group to see where they overspent. Before, Van Horn used a number of different vendors, which didn’t make sense and caused them to overspend. By having one or two dedicated pairs of eyes on vendor spending, they were able to realize this inefficiency and correct it.
Van Horn created a vendor list and sent a letter to the vendors explaining that they would have to apply and offer a discount in order to retain their business. The ones that applied were then evaluated and a final list of vendors was created that the entire dealership group uses.
Move 2: Streamline.
Van Horn sells 1,300 new and used vehicles per month through its reconditioning shop. The reconditioning shop was constructed due to a lack of space, but has been very successful. Krebsbach says they wish they could have more but because of the location of the longer distance between the dealerships, it wouldn’t make sense.
The reconditioning shop is centralized between the four Plymouth locations and sees all of the used vehicles that are set to be sold from the Plymouth locations. The vehicles are quickly cleaned, photographed and then put online and on the lot for sale.
With the reconditioning shop, Krebsbach says the dealership has tighter control over how the vehicle is going through the process.
“You have techs where this is all they’re doing—there isn’t any pressure from waiting customers. This is their main priority,” she says.
The reconditioning shop has made selling used vehicles more efficient, which has saved Van Horn money.
“The sooner we can get them through, the faster we’re going to sell it,” Krebsbach says.
Move 3: Incentivize.
In 2015, Van Horn offered an employee stock ownership plan (ESOP) as a way to get employee buy-in. Krebsbach says it has been an effective employee retention tool in an age where good techs are golden.
“We can say, ‘We’ll pay you a dollar more,’ but chances are, their current employer will match it,” Krebsbach says. “This way, they have ownership they don’t have to pay for, they just have to help make us more profitable.”
Doing this creates a free retirement plan that’s there for employees when they leave, no matter what.
It has allowed Van Horn to attract top talent and has also gained recognition in the community for being employee owned.
Move 4: Monetize.
Rather than subletting work, Van Horn has made a number of changes that has allowed it to keep work in house, which helps increase profits and has made growth possible. An example of this is Van Horn’s dedicated paintless dent repair (PDR) vehicle. Before, the dealership group shelled out hundreds of thousands of dollars for others to perform this work, which didn’t make sense when the company could keep its money in house.
Van Horn took one of its techs and set him up with a van, invested in tools and sent him to training. At first, he just went to a few of the dealerships, but now he goes to all of the locations doing PDR work wherever needed.
In addition to the PDR van, Van Horn has also added bumper repair at its recon shop and also performs carpet and upholstery work on smaller jobs rather than hiring that out to a third party.
The Numbers
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Internal dealership practices can substantially affect performance. Dealerships with better internal dealership practices (including talent management, customer loyalty and performance planning) achieved a net profit before tax of 2.3 times that of other dealerships' profitability, according to the 2017 Used Car Industry Report from NADA.
