Dealers who don’t plan ahead are gambling with their wealth
Dealers by their nature are gamblers. All have risk as their middle name and go to sleep every night with millions of dollars of debt. Our business is not for the faint of heart.
Dealers are often business leaders in their communities, serving as leaders for charitable organizations, hospitals, and the local Chamber of Commerce and Board of Trade.
Dealers are very community conscious, serving on long-range planning committees, municipal business improvement agencies even municipal, provincial and federal politics.
Dealers by their nature are acquirers, some more than others, but most dealers are born acquirers. Some acquire dealerships, some acquire real estate, others acquire toys and other valuable possessions. Most of all, dealers acquire relationships with employees and customers.
Dealers have opinions, values and beliefs. Dealers have a unique sense of family and responsibility.
Future won’t take care of itself
Unfortunately for the families of roughly half the dealers in Canada, that responsibility does not extend to succession planning.
The CADA Year-In-Review report contained survey results on succession. Quite honestly, they were very disappointing. No real progress has been made over the past 14 years despite the focus on this topic.
I suppose we should not be too surprised with the survey results since dealers like to gamble for a living. So why would we expect them to behave differently when it comes to gambling with family wealth?
Over my career I have found that dealers especially like to procrastinate when it comes to long-range planning. Oh, there are many reasons; kids too young, kids too old, kids not good enough, not ready to give up their role, scared to stir the emotion of the whole ordeal. There a far too many weak excuses to mention in this article.
Don’t leave a mess behind
Over my career I have had to work with far too many spouses, lawyers, sons, daughters, brothers, sisters, nieces, nephews, business partners and OEM dealer development arms when certain untimely events take place. In all these cases, little to no formal planning existed.
And in all of these cases, the folks left holding the bag were left with decisions they were not prepared or equipped to make. In most cases less value than would have been generated with proper planning was realized and a significant unnecessary emotional toll was paid by the families.
What some dealers fail to realize is that by not planning, the businesses, and in some cases empires, often crumble without them. Some dealers are quite comfortable with this but many more say they don’t want this to happen but can’t seem to get around to planning. Procrastinations cost the families of Canadian dealers millions.
Long-range planning, often called succession planning is a process that often produces unanticipated results. The unanticipated results come when those around you share what they want in the future and you’d be surprised that not everyone shares your passion for the car business.
A true team effort
It’s not about tax planning, insurance planning and will planning like most dealers think. It’s about collaboration. Just like your team of managers and employees at the dealership combine to do much more than you can do on your own, long-range planning is a team effort. You can’t do it in isolation.
Those dealers that have gone through the process will tell you that it’s hard and you hear things you did not think you would hear. Many will admit that the end result bore no resemblance to what they thought it would. Many will tell you that it is the most important decision they ever made and continue to make; long-range planning being a process that lasts a lifetime. As family and business events change, plans need to be revisited.
Think of long-range planning as rehearsing for a play. Once everyone buys into the storyline, learns their lines, develops their characters and rehearses their parts, the play in essence then operates by itself. The director sets the tone but the individual actors add their own spin and twist to develop a collaborative interpretation.
In real life you are the director. If long-range planning is done properly, everyone will know what to do when the time comes.
Long-range planning is not all about death or disability, it’s about planning the future which might mean window dressing the store for sale to a third party. More and more dealers are taking this route, albeit many by reaction rather than strategy.
This article is not meant as a primer for succession planning, the CADA booklet does a great job at that. This article is meant as a bit of a kick in the back-side for the half of you who indicated that you do not have a fully developed plan.
Like I said, it’s not just about income tax and insurance planning. Those are technical responses to your plan. Without the plan, these are often less effective than you had hoped.
Not planning is really a very selfish act. Leaving your family and business partners with no roadmap is actually quite irresponsible and contradicts many of the values and principles you use each and every day in your business.
Stop rolling the dice and playing roulette with your family’s wealth. Think about those that will be left holding the bag. Don’t be like the gambler at the casino blowing the family fortune. You are much smarter than that so start showing it.
