A
dealer, who wishes to remain anonymous, recently sent me an email asking if a
lot of dealers who are “aging out” of actively running their businesses look to
“angels” to buy them out or do they just close up and sell off their assets,
especially when one of their kids does not want to take over and continue the business. He tells me he is the sole family survivor of
a family lawnmower shop that went out of business primarily due to a major
catastrophic act of nature, and he chose not to rebuild and reopen. Now he’s not sure that was the right step for
him to take. He’s been talking to local
and regional dealers in his area, and he says they are all asking him to buy
them out. Even the owners of the largest
dealership in his area are “aging out” and their son, for whom they kept the
business running and successful, has opted out of taking over, leaving his
parents hoping they’ll find an “angel” to buy the business or be faced with selling
their assets for what they can get.
In
the early 1970’s, when I first joined this family-owned distributorship, I
noticed right away that our dealer customers were “old” - appeared to be near
retirement age. Now my perspective was
certainly influenced by the fact that I was in my mid-20’s, but nevertheless, I
worried that our customer base was going to die-off in just a few years. Many of those older dealer owners did retire,
just like older business people do, and sold off their business assets to a
multiplicity of other dealers or in a few cases, had a relative take over
management. “Angels” were very few and
far between. But new service dealers
kept appearing, often “popping up” close to new concentrations of residential
areas. They saw a future and took a
chance, often borrowing the start-up money from a bank rather than hoping for
an “angel” backer. When they were willing
to go to the bank because they believed in themselves that much, I was motivated
to help them succeed.
For
a long time, I’ve thought that successful dealerships, especially those run by owners
who had been re-investing in them for many years, were perfect for their kids
to take over. The investment in assets
over the years meant that the son or daughter had a solid foundation that
didn’t require a huge initial investment and could be paid for over time. The business real estate might need sprucing
up, but the inventory was typically paid for, as was the building and
equipment. The kids had a head-start, in
many ways.
If
the kids choose to do other things, then the owners have to find another
successful dealer who was interested in a branch location, or an entrepreneur
who wanted a successful business to buy, not someone else’s failure. Otherwise, assets could be sold piecemeal to
different businesses and owners.
Dealerships
come and go, just like any other business.
I’ve read numerous articles on what makes one dealership successful and another
one not. Bob Clements can and will tell
you in a day’s seminar how to be successful in an OPE sales and service
operation. The information is out there
for the asking. But at the end of the
day, it still comes down to internal drive, planning and a desire to want to be
successful. It’s a challenge you can
win, but no one ever said it would be easy.
What would you tell this sole survivor of a business that was washed away
in a flood and who isn’t sure of what the right path is for him to take? I would be very interested in your thoughts. Please share them by dropping me an email.
"Bad
habits are like a comfortable bed,” a pundit once noted, "easy to get
into, but hard to get out of." Sticking with what's comfortable might be
one of the deadliest habits of all.
In
the bullfighting arena, expert matadors have long gained an edge by pinpointing
a bull's comfort zone. Former Hewlett-Packard CEO Carly Fiorina has studied
this phenomenon. "In bullfighting there is a term called querencia. The
querencia is the spot in the ring to which the bull returns," she
explains. "Each bull has a different querencia, but as the bullfight
continues, and the animal becomes more threatened, it returns more and more
often to his spot. As he returns to his querencia, he becomes more predictable."
What
are the consequences of predictability? "In the end," Fiorina says,
"the matador is able to kill the bull because instead of trying something
new, the bull returns to what is familiar (i.e. his comfort zone)."
Many
businesses retreat to their comfort zones when challenged. A new form of
competition emerges or threatening research undercuts a core product. This is
bad news, and who wants to hear that? "Bad
news isn't wine," former Secretary of State Colin Powell once said.
"It doesn't improve with age."
The key is how you take the bad news and what you do about it. Just be sure you don’t keep doing the same
thing over and over while expecting new and better results.
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