By Champ Rawls, Succession Advisor, The Rawls Group

It has been ten years since we all went through the downfall of the economy, which has been referred to as the “Great Recession” of the 2000’s. In fact, it was a time at which one of the largest Chapter 11 filings in the U.S. had ever taken place with the fall of Lehman Brothers. The start of a time that the retail automotive space had never seen and hopes to never see again. As the economic environment in the United States continues to see fluctuations with trade wars and threats of government shutdowns, the facts are unemployment remains low and the overall confidence in buyers remains strong. Therefore, it is hard to imagine there could be a repeat of 2008.

The retail automotive industry is known for being the industry that drives us into, and out of, our country’s recessions. Its sales statistics often lead the discussion of where the economy is heading. It is an industry ripe with unique and complex challenges.  Innovations in technology, increased competition in both product and talent, generational blending, and the oversight of the federal government in many areas of operations are just a few reasons why dealerships owners and leaders must be fully engaged.

Consider how different the environment was for an owner of a dealership ten years ago, for example:

  • Apple’s iPhone was one-year-old
  • Ridesharing, Uber/Lyft were not viable businesses
  • Tesla released their first model, the Tesla Roadster
  • Cloud and other online “sharing” technology did not exist
  • Social media was not yet popular
  • Saturn was still a viable brand

In addition to these factors, the ownership makeup of dealerships had an average of two generations actively working in the dealership. In 2019, there could be up to four generations working together in the dealership, creating a leadership conundrum for the up and coming or new dealer.

Where will the industry be in the next ten years? How do we compete with lower margins and more out of the box competitors? For many new and soon-to-be dealers, there is a sense of the unknown, creating anxiety, excitement, and of course, fear.

The fear of the unknown stems primarily from newer dealers, or those that are looking to move into an ownership and leadership role in the next few years. Functionally, the reason is that outgoing dealer owners experienced the “Great Recession” and worked their hardest to keep their operations, employees, and of course families afloat. Since the economy has bounced back, there has been so much change to the industry as well as the additional economic uncertainty that continues to rear its head.

Adding to the fear is a unique change to leadership and ownership in the stores. The generational blending is forcing a change in how dealers must lead today and into the future, impacting recruiting and retaining talent, customer service and the buying experience, and overall community loyalty to the business and brand. Previous leadership styles are evolving from positions of power to being more transparent, flexible, and accommodating to their team members.

Leading today’s dealership into tomorrow takes more than just the experience from the past or
the knowledge of working in the store with the previous dealer. Today’s leaders need to search for new opportunities to develop themselves, their team, and the family they surround themselves with. The dealership of the future requires not only a change in leadership skillsets but also the ability and willingness to prepare, plan, and protect in the face of the unknown.

Here are some ways dealers can set themselves up for success:

  • Engage in a leadership development program to improve upon influence, communication, and culture building skills that lead to continued growth as a leader.
  • Consider professional coaching to help navigate some of the unique and complex situations impacting how you affect others, and how that can impact the effectiveness of your team.
  • Partner with subject matter experts (i.e. CPAs, lawyers, succession planners, etc.) who can help build plans, procedures, and protections for leadership legacy.
  • Integrate ongoing technical learning and culture building opportunities into your dealership, ensuring your team has the skills to keep your store(s) competitive while cultivating next-gen leaders.
  • Embrace up-and-coming future leaders by involving and including them in the plan to ensure bench strength is available in the time of need.
  • Invest in a strategic planning effort to determine the strengths, weaknesses, opportunities, and threats associated with your business, community, and competitive landscape.

In essence, there are some pieces of history to help with transitioning into new roles, but the reality is that there is a lot of unknown for them to pioneer. For this reason, the industry has been advancing learning, growth, and leadership opportunities for dealers.

We are also seeing an influx of dealers requesting services from CPAs, bankers, legal counsel, and succession planners, to prepare for the future.  Navigating innovations in technology and preparing through strategic planning, preparing proper estate and transition plans, setting up proper business structures and so much more.

Kris Miller, VP of Dealer Commercial Services at US Bank, shared, “The amount of innovation and advancement in technology since the 2008 financial crisis is staggering. Internet access has matured and with it, increased connectivity to one another (social media), to our devices (Bluetooth) and even from device to device (IoT) is all around us.”

Miller continued, “Similarly, banking and other financial services have also experienced this rapidly advancing technology. The movement of money has forever changed, as has the amount of data and the speed at which these transactions are taking place. Paper checks are increasingly making way for digital payments, in some instances happening real time with RTP® and Zelle®; even currency has gone digital with the advent of Bitcoin and others. Dealers who are quick to embrace these new opportunities, working with trusted financial partners, will remain relevant in the face of the changing customer experiences and expectations this evolution has created.”

The retail automotive industry will continue to see change as the economy continues to fluctuate, and of course with the 2020 election just down the road. For new and up-and-coming dealers, no time has it been more important to be prepared for the unknown of the future. Generations of experience will help navigate these times, however pioneering the unknown will require more intentional investment in self, team, and family, in order to protect the legacy of the future.

Author: Contributing Writer

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