By David Keller
AC C OUNTING
©ISTOCKPHOTO.COM/MONKEYBUSINESSIMAGES
WHO
CAN
TAKE
YOUR
PLACE?
Succession planning requires dealers to re-evaluate their business, their successors'
qualifcations and their own past decisions — both good and bad.
Some of th
Some of t most frequently asked quesm
the
ti s hear
tions I hea from dealers involve succession plan
o planning. "Will my kids be able to run
a
sion plann
and mainta
d mainta
and maintain the business I built? How will
ey surviv
r v
they sur viv the bad times when I'm no lonsurvive
ger around?
r around
u
ger around?"
e q
Tese questions are not easy to answer.
Sure, we can run projections to see if there
will be enough revenue and profts to continue your business as a going concern. But
adequate fnancing is only the frst item on
the list. Your successors will also need an
in-depth understanding of cash fow, and
they must demonstrate common sense, good
business sense and a solid work ethic. Let's
take a closer look at all fve requirements.
28
1. FINANCING
Any business would struggle without access to a credit line of some kind. For dealers, f nancing is most ofen furnished by
a bank, the dealer's personal reserves or
friends, family and other outside investors. Succession planning ups the ante by
forcing you to present your business and
personal f nancial information in some
semblance of order. Your successors must
be aware of their f nancial condition at
all times and be able to react in advance.
Tat's true whether they're seeking startup
capital, additional f nancing or better loan
terms.
AUTO DE ALE R MONTHLY • FE BRUARY 2014
2. CASH FLOW
No dealership can succeed without adequate cash fow. Your successors will, at
some point, fnd themselves unable to pay
their bills, payroll, taxes or loan payments
on time. Most vendors understand this.
Tey will ofen make concessions to help
you through your fnancial difculty, but
they can't aford to fnance your business
forever.
Tis is one aspect of dealership operations from which dealers tend to shield their
kids. It's time for them — and you — to
grow up. If they are not prepared, the frst
shortfall they encounter could result in the
demise of the business.