QUESTIONS DEALERS SHOULD BE ASKING WHEN IT COMES TO PLANNING AND SECURING THEIR OWN FUTURE
It has been said many times that the windshield is 100 times larger than the rearview mirror for a reason. The driver is supposed to be watching the road ahead and not focusing on where he or she has been. It is true, looking in the rearview mirror gives you important information to help you navigate the road ahead. For others, looking in the rearview mirror allows the driver to view the chaos created by their erratic driving.
Spending too much time looking in the rearview mirror can prove disastrous.
It has also been said that if you drive around with no specific destination in mind, you’ll never get lost.
A third point I would like to make is that doing the same thing over and over expecting a different result is the definition of insanity.
These three concepts can be used to describe some auto dealers in today’s business environment, and they are equally applicable to both single-point and multi-point store owners.
LIVING DAY TO DAY
Many single-point dealers, as we know, do not have a long-term plan. Many are waiting for an unrealistic opportunity, leaving their future to fate rather than taking control of it.
Many are living day to day, wishing the good old days would come back.
In addition, many dealer groups seem, at least on the surface, to be moving erratically, acquiring for the sake of acquiring with little obvious strategic direction.
The question at the end of the day becomes: what do we do now? How do we move forward from here?
If you are a standalone dealer, you should have answers to the following questions:
- Do you want to continue owning and operating your store?
- Do you want to own but not manage your store?
- Do you want to transfer the business to someone in your family?
- Do you want to transfer the business to your management team?
- What will be the personal impact on my family if the brand I represent begins to have challenges?
- Are you enjoying being an auto dealer in today’s competitive business environment?
- Do you want to sell your dealership?
If you own more than one store, you should have answers to the following questions:
- Do you want to continue acquiring with no plan to exit?
- Do you want to acquire land and buildings with all acquisitions?
- Do you want to lease the real estate and not tie up capital?
- Do you have a pool of qualified leaders in your organization to profitably manage all the stores in your group for the foreseeable future?
- If your capital sources stop supporting you, then what?
- If one or more of your brands fail to meet your objectives, do you have a plan to exit those brands and how do those brands impact the value of your group?
- If you are heavily leveraged what happens when interest rates increase?
- Is owning more than one store creating the personal fulfillment you expect?
ASSESSING THE SITUATION
Planning is one of those management chores that must have options built in. No plan gets executed 100 per cent in line with the original objectives. Floating aimlessly however, has its risks.
To take control you must spend some time pondering the possibilities of the future. One important aspect is your assessment of the brand(s) that you represent. Where are they now? Where are they telling you they are headed? Do you believe their vision is achievable?
Perhaps your brand(s) are currently on a high. How long do you believe they will stay there? What does your runway look like? Is there enough runway to allow you to land safely? Is it time to sell high or would you prefer to wait until the brand cycle turns and values come down?
Conversely perhaps your brand currently has its challenges. Can the brand, with your significant help, work its way through those challenges in a timeframe that is suitable to you? Do you continue investing your capital with the hope of a better future sometime down the road? Or, do you liquidate your investment now and redeploy your capital to another dealership or perhaps solidify your personal net worth and create an opportunity where you might enjoy life more?
These are not easy questions to answer. In my opinion however, you should have answers to all these questions. If you don’t, then how will you know when the right opportunity presents itself to you?
CREATE YOUR OWN
I believe many dealers jump at perceived opportunities for the sake of jumping. They do this simply because they can. Sure, many dealers have strategic intent and well thought-out plans, but I believe many more do not.
Brand owners, such as OEMs have the job of selling more vehicles. Each brand has the goal of increasing their market share and each brand increases their demands and expectation on their dealer network with the goal of achieving their new vehicle sales ambitions.
On the rare occasion will you hear a brand leader say that it will be difficult to achieve any growth. These brands are to be respected for stepping outside the sales game to inject some reality into their network planning.
This is not always the case, as we all know. Normally the sum of all brand sales objectives for a given year exceeds the total market expectation. Granted, brand market shares go up and down regularly as normal competitive forces take place. New model introductions, supply issues, incentives, to name a few, can all have an impact on a brand’s market share. At the end of the day dealers are playing with their own personal money. The brand owners are not.
It is great to see the enthusiasm dealers can spread. Dealers are optimists by nature and get emotionally involved with their brands. Although this has diminished somewhat with the consolidation environment and with the introduction of professional management teams, dealers regardless of size like to live the dream.
Don’t let this optimism and brand enthusiasm get in the way of planning your future. Don’t be sold a dream, make it your own! Regardless of where you are in the ownership lifecycle, do yourself a huge favour and take some time to map out the future. Play with some “what if” scenarios. Please don’t sugar coat the options, look at the negative side as well. If you can come up with answers to the questions throughout this article, you will be well on your way to understanding what comes next.
