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Develop a Multi-State Survival Mode

A few wrong decisions today and even those dealers fortunate enough to have old family money could easily be gone. This is not a revelation for many of you, as fear for financial survival has savagely ripped through every U.S. market and every industry-related business in the past 90 days.

Many of today’s dealers have never had to face what stands before them today. The financial crisis has the potential to end dealers’ livelihoods and brings with it little belief that recovery will arrive within the foreseeable future.

Have any or all of the following questions gone through your mind recently? (More like every day, right?)

• Will my manufacturer survive?

• Can I survive until the market rebounds?

• If my manufacturer survives, will I still have a store if the manufacture reduces its number of franchised dealerships by 25 percent to 50 percent?

A large percentage of “Big 3” stores have downsized their overall operations by at least 20 percent over the past two years, and many by much more than that. This storm has been brewing for a long time. Most are on their third wave of substantial personnel restructures or cuts. The problem remains that many are still far from profitable, and without question, the worst is yet to come.

Yet, even as dark as times appear today, dealers are a very resilient group of entrepreneurs who normally find ways to continue their existence because they are driven by the optimistic, risk-taking, never-say-die spirit of American capitalism.

In today’s dealership, we have found the Achilles-heel to be one of the following:
1.  Dealerships are failing to respond quickly enough or measurably enough to stem their losses, resulting in irreversible financial demise.

2.  An entrepreneurial spirit (in this case, pride) refuses to, or reluctantly accepts, collaborative guidance that could lead to a successful survival solution. Many times an asset can become a liability.

I would contend that like the manufacturers, many dealerships are just two or three bad decisions away from complete financial collapse. Conversely, the same dealerships may be just two or three good decisions away from a survival model that will allow them to not only stay in business, but to prosper in a future market with a significant percentage of their competitors gone.

 What must every dealership do or understand today to improve their chances of being around tomorrow?

• Improve today’s revenues by maximizing your current opportunities.

• Develop a survival model that ensures you will be able to succeed tomorrow, if not today.

• A survival model is not one-size-fits-all. Your survival model can utilize best practices and successful pieces of survival models from other dealerships, but it will still need to be tailored specifically to your store’s needs.

• A multi-stage survival model should be developed before things get critical in your store. Panic can lead to less-than-perfect decision making.

What does a dealership survival model need to include or at least take into consideration? Again, there is no one-size-fits-all, but listed below are many of the things you need to address today. A percentage of dealers will not be able to stomach what they need to do to survive. My experience is that developing a survival model does not come without varying levels of grief, anger and humility, but a survival model is essential.

• What will the consequences of inaction be?

• Am I in it for the long haul, or should I quit/sell?

• Who should be included in planning the survival business model?

• Should I make a business model presentation to stakeholders?

• What is the value of experienced guidance?

• How do I balance staff and compensation reductions?

• Are there associated internal and external image concerns?

• Who are my most valuable employees?

• Which employees will remain loyal to me, and how can I know?

• Which survival compensation model will work best in my store?

• How will I implement a successful survival model?

• If employees share the pain, should they share the gain?

• What can I do to improve staff perceptions to increase success and performance?

• Do we return to old business models in the future, or can a survival model be a long-term success model with superior team benefits?

These are just a few of the decisions and thoughts you need to consider today. Don’t wait too long to developed your survival model. Time is not your friend if you are not properly prepared.

Vol 6, Issue 2

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