The auto retail industry has experienced dramatic changes and disruptions in recent years, leading to an unprecedented level of volatility and transformation. Profits have reached historic highs, dealerships have been bought and sold at a rapid rate, and a new generation of large dealers is emerging. This period of rapid change has been a source of both opportunity and instability for many dealers. To help ensure success and longevity, experts recommend the following five strategies:
Professionalizing the Family Business
In today’s market, it’s becoming more and more difficult for traditional family-owned dealerships to compete against well-financed private and public groups seeking growth. However, having a “family-first” approach can provide a distinct advantage in local communities. To ensure success, it’s crucial for the family business to have a comprehensive plan in place, especially for the successor taking over the reins. This should involve clear job responsibilities, performance guidelines, and a plan to compete against larger consolidators. With these measures in place, the family business can ensure that the successor has the necessary resources, development, and support to succeed.
Develop a Growth Plan
A strategic plan is essential for achieving future goals. Start by maximizing your current market potential before considering growth. Once you have established yourself as one of the top dealers in your area, you can explore growth options, such as adding to your existing portfolio or selling to acquire more stores. To focus your growth efforts, consider creating a Buy Box™, which strategically organizes your growth parameters and eliminates distractions. This process will help you identify the best opportunities for growth and quickly eliminate those that do not fit your strategy.
Create Scale and Efficiencies
Expanding the dealership group, or “rooftop growth,” inherently brings economies of scale and improved efficiency through stable and effective leadership. For instance, the cost of a Chief Financial Officer for a two-store group will be higher than that for a 10-store group, even though the services provided remain the same. While additional staff will be required to support ten stores versus two, there’s no need for 10 separate CFOs. Centralizing management can also promote growth and increase efficiency. Consider adding roles such as a variable or fixed operations trainer, Human Resources Director, or positions that standardize communication within the organization.
Culture plays a vital role in the growth of a business as it sets the standards, norms, expectations, and objectives that dictate decision-making and implementation. Without a clear culture, a business can easily become disarrayed and disorganized. Establishing a positive culture is critical for building a successful team and securing the future of a family-owned business. This requires focused effort and dedication, but it is essential for ensuring the longevity of the organization. By fostering a culture centered around shared values, mutual respect, and trust, employees will feel empowered and more likely to remain with the company for the long term, leading to improved productivity and creativity.
Have a Clear Vision & Strategy
A clear mission and vision are crucial for the success of a business, serving as the guiding principles that drive the company and its employees. When these are not well-defined or communicated effectively, the organization can become fragmented and lack direction, hindering its progress. To ensure that everyone is aligned and working towards the same goals, it is important to establish a clear and easily understood vision and communicate it to all employees. This creates a sense of purpose, motivation, and ownership among employees, leading to better performance and ultimately contributing to the success of the company.
Frequently assessing the vision and strategy of the group is essential for successful and timely strategic planning. Having the capacity to flexibly adjust and anticipate is crucial for a family group to sustain its goals. To stay ahead of the game, it is important to be aware of trends and take advantage of the changes in the auto retail industry. Making sure that you are up-to-date and capitalizing on new opportunities will help you remain competitive.
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The article was originally published on the Digital Dealer Magazine: Growth Strategies for the Family Business.
The Succession Planning Matrix
The Succession Planning Matrix
Many people put off succession planning because they think it means retirement, exit, and the end. However; succession planning is just the beginning. It gives the owner options in terms of what “their next” looks like, whether that be growth, philanthropy, or a new business venture. Our process focuses are addressing 10 key areas of what we call the Succession Matrix.
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We can help you with insights, other resources, and see if it makes sense to work together. At the very least, in 30 minutes, you may get some ideas you can apply to your business right away.