Auto Dealer Monthly

FEB 2014

Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.

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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.

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