Passing the Baton
At some point, all dealership owners do a final customer ride-along and hang up their proverbial hats. But what will happen to your dealership when you retire? Or when you simply can’t work for an extended period, because of illness or injury? Having a succession plan in place is key to ensuring the business will go on.
When should you begin?
Don’t delay in lining up your successor. Many consider five years before retirement an ideal time to draw an outline of who might succeed you and how it all will take place. If you’ve already chosen a successor — for example, an employee or a family member — getting a jump start on your plan will allow ample training time.
Part of the initial process will be deciding whether your successor will be family or nonfamily. You may have a business partner who’s interested, and able, to take on the responsibilities of ownership alone. Or perhaps a daughter or son is poised to take the reins. Another option is selling the business to an outside party.
What should you look for?
Regarding qualifications, seek someone with a well-rounded business education and senior management experience. Your candidate — even if he or she is a family member — should be able to present a strong work track record.
In addition, make sure this person’s abilities match up with the complexity of your dealership’s operations. If, for instance, your son has great general business skills but isn’t the least interested in sales or marketing, this could be a deal breaker. If you’re looking internally, consider your strongest players in senior management.
If you don’t have a qualified familial or internal candidate, you’ll need to look externally. An executive search firm can help you locate and screen qualified candidates. Your trade association or Dealer 20 group also may be able to assist.
Beyond judging a candidate’s education, work history, and interests, assess his or her personal attributes, such as having an open mind that can keep pace with industry changes and consumer demands. Other desirable qualities include being able to share and delegate responsibilities while accepting responsibility for decisions and actions. Also seek someone who’ll be a good listener for employees and other managers at your store.
How should you structure the transition?
The succession process might start with your attorney and financial advisor, but you’ll want to involve everyone who’ll be affected by your succession plan, including employees and family members. Workers may fear that the changeover will result in the loss of their jobs, so it will be your job to assure them otherwise.
Your options for defining your role in the transition are numerous. They range from passing on daily management responsibilities while retaining overall control and ownership to handing over both control and ownership on an agreed-upon date.
Part of the transition’s success will rely on how well you train your successor. You’ll want to develop your successor’s know-how in a full range of dealer responsibilities across departments, including:
• Accounting and finance,
• Sales and marketing,
• Finance and insurance,
• Human resources,
• Information technology,
• Parts and service,
• Customer relations, and
• Manufacturer relationships.
Ideally, your “owner-to-be” will have hands-on experience in each functional area of your dealership. In the case of a family member, put extra effort into staying objective as you train him or her to run the show.
Your successor will likely replace some of the ways you did business with methods and procedures he or she believes will work better or be more up to date. Don’t let an injured ego cause you to lose sight of your importance as a valued advisor after you move on.