What 3 Things Dealers Must Consider for the Future
There are countless strategies for achieving your personal and business vision. Whether it is a family-operated business integrating family into leadership/ownership positions, keeping the business as a family asset but delegating operations, or selling to a third party, the key is to determine the right strategies specific to your unique goals.
Like most car dealers, you’ve probably been celebrating the performance of the last couple of years while nervous about the future due to recession, consolidation, talent shortages, etc. So often, dealer’s become frozen, unsure of what to do, and end up either avoiding key issues or making knee-jerk decisions without the necessary forethought and expert insight.
The following are three factors to consider when determining if you want to build a successful dealership for tomorrow or position your business for sale for the highest dollar:
1. Next Gen: Strategic Leaders Vs. Day to Day Operators
Next-Gen leaders need to see themselves as strategic leaders and not just day-to-day operators, shifting their focus from business caretakers to empire builders. As Pete Thiel comments from Haig Partners:
“Next-gen business owners may need to invest their entire net worth into the business to compete with the larger consolidators. This means being less of a caretaker of the business as generations pass and more focused on building an empire. Therefore, planning is critical to ensuring you have the right individual or team to carry the business forward.”
Often, dealers plop a next-gen family member into a corner office without the necessary training or development, assuming that people will fall in line and rise to the occasion.
As Champ Rawls, our very own succession planner, shares,
“sadly, these situations do not work as hoped without some intervention; key leaders leave, conflict becomes the norm, and the business underperforms.”
2. Competing Against Consolidators and National Brands
The competitive landscape for automotive retail requires dealers to think even more about competition and growth. Some think they need to get bigger or get out; however, as Champ Rawls shares, the bigger question is, what will it take to corner your market and fulfill your strategic vision? In Houston, for example, it will require much more than in small-town America.
From Haig’s perspective, Pete Theil shares:
If the goal is to compete in competitive markets, 10 locations with a diversity of brands will provide you with the critical mass to be a one-stop shop as a transportation provider. The ten most common brands cover about 75% of sales. With 10 locations, you should be able to sell fifteen to twenty thousand cars a year, providing scale to compete against the national competitors. In addition, the scale will allow dealers to recruit specialists such as new and used sales trainers, F&I trainers, Fixed Ops Director, a marketing department, and a CFO. By hiring specialists, you can outperform your local dealer competitor and the big national brands in your market.
As Champ Rawls shares:
“Operating a business is hard work, and if it happens to be family, more power to you. It takes a certain DNA to be successful in today’s day and age. The hours, competitiveness, and drive are not for everyone. The strategic planning aspect of a business is less physically demanding. It can sometimes be the more rewarding part of growing your business than being in the day-to-day operations.”
3. Build Business Value and Create Options Towards Your Vision
Even though Dealers are making money, the future is unclear; for some, the unknown creates anxiety. As a result, we see business owners considering, more than ever, if it is an excellent time to cash out. Leaning on expert, trusted advisors allows you to choose your best outcome – identifying your strategic objectives to fulfill your vision and provide for your family, not just business goals.
As Champ Rawls shares:
Suppose you are working to make the business the best it can be by department, person, or structure. In that case, you can’t go wrong if the outcome is passing the business on to your family or key manager or putting it on the market to sell and get the best possible price.
By understanding what it requires to position your business for success, whether selling or growing, you can determine the best strategies to fulfill your vision. Now more than ever, challenges are on the horizon with predictions of a recession; car dealers need to focus on the basics of good business practices and proactive planning to increase their long-term value.
Contact Us, and we can help you with insights and 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 immediately.
Succession Readiness Survey: A 7-minute investment in time will put you in an informed position of opportunities many business owners overlook, impacting business value, growth, lifestyle, and ultimately achieving your vision.
Contact Us: We can help you with insights and 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 immediately.
Vision, mission and core values are at the heart of the strategic planning process. Click the following link for more drill-down resources on Strategic Planning.