BEI surveyed a diverse cross-section of business owners and found that the topic of succession is tricky for just about everyone. According to their 2016 Business Owner Survey Report, although 79% of business owners plan to exit their businesses in the next 10 years, only 17% have a written plan. In light of this, it comes as no surprise that 68% of those polled said that they place exit planning as a low priority, compared to current business needs.
Succession planning is something that every dealer needs to think about sooner, rather than later. If you wait too long to plan, you could be blindsided by illness, incapacitation or death. Less severe, but certainly aggravating, is the fact that delaying your succession plan will most certainly lead to a longer and less fruitful exit. Add to this the fact that once you are ready, you may also need to wait for approval from your franchise, and you have three good reasons to start planning today.
Applying a succession mindset early will allow you the opportunity to make decisions that support the entire lifecycle of your business. Being actively prepared keeps you in the driver seat, allowing you to focus your eyes on the road ahead and maintain control about how and when you will retire from or transition your business. Your brick-and-mortar is also your bread-and-butter and protecting your assets is undeniably vital to you and your family. So, what’s preventing so many dealership owners from safeguarding their future? Below, we’ve identified a few roadblocks and offer some suggestions on how you can overcome the rocks in your path.
This obstacle can be the most challenging. Having prepared, invested, sacrificed, and reaped the reward – likely over many years – you are your dealership. You know you can’t lead the helm forever, but you’re successfully leading the helm today; which keeps your focus on…today. This short-range vision is the bane of long-term goals. Don’t let the fear of transition sabotage your future.
If your strategic plan isn’t evolving to keep pace with changing regulatory policies, manufacturer mandates, advancements in technology, and market disruption, your dealership runs the risk of becoming a devalued relic. Don’t neglect the following practices when responding to the shifting auto-dealer landscape:
These exercises will help you maintain a strategic plan that grows your business and appropriates a healthy valuation.
Most dealerships are family-run businesses, often to the second and third generation. In this environment, succession can be a bit of a popularity contest. The succession process should not be like the Wild West. Securing your business for current and future generations will depend on your ability to stick to your guns about pathways to leadership. By setting up a governance policy, you can define ideal leadership, management, and successor qualities and create a roadmap for how to get from point A to point B.
Exit planning starts with a vision for the future. The time will come to transition out of your current business and into a new endeavor. As you get serious about changing roles, make sure you have a clear goal so you can identify all the steps necessary for a successful transition. If you haven’t taken any steps toward your exit, or if you have stalled out on your progress, stop what you’re doing and call one of the professionals in our office. We’d love to hear from you.