Why the bottom line is not enough
A golf cart business is several businesses in one: new carts, used carts, service, parts, and accessories, and sometimes rentals or custom builds. Each has its own margins, overhead, and seasonal pattern. Blended together, a strong department can cover for a weak one for years.
Set up the departments
- Give each department its own revenue and cost of sales accounts, or use the class or department tracking in your accounting software
- Record parts used in service as a transfer between departments, so parts gets credit for the sale and service carries the cost
- Charge floor plan interest to the new and used departments that carry the inventory
- Keep warranty and internal work visible instead of mixing them into customer pay
Assign overhead with a simple rule
Direct costs, such as a technician’s wages, belong to one department. Shared costs, such as rent, utilities, and office staff, need a rule. Square footage works well for rent; head count or revenue works for most of the rest. The exact rule matters less than using the same one every month and explaining it to your managers.
What to review each month
- Gross profit and gross margin by department
- Department net profit after assigned overhead
- The same figures for the same month last year, since seasonality makes month-to-month comparisons misleading
- Floor plan cost against new and used gross profit