In our first issue of the Dealer Success Guide, industry consultant Jim Yount shared how dealers can get past survival to focus on growth. Over a decade later, he shares how the way dealers manage their business has changed. As many dealers in recent years have worked to survive the recession, those who remain are continuing to focus on improving their profitability.
Pricing and sustainability
Pricing and survival continues to be a great challenge for dealers. Market competition and manufacturer eagerness continue to drive down pricing and pressure dealers to give up margin.
"Profitability beyond the survival mode is the greatest challenge for most independent small business owners, including outdoor power equipment retailers," says Jim Yount of consulting firm Jim Yount Success Dynamics. "The American retailer, large and small, is the target for manufacturers around the world. In their rush for a slice of the American pie, they have created consumer demand for the lowest price possible."
Dealers are constantly confronted by customers questioning price and are forced to consider losing the sale or losing their margin. Yount says dealers looking for cash flow that forfeit profit hurt their business' sustainability.
Yount urges dealers turn to financial education to help secure their place in the industry amidst these challenges. Dealers should seek education beyond that provided by manufacturers and distributors. While manufacturer education has evolved and helps dealers through programs focused on sales and marketing, dealers need to seek more financial-focused education.
"It was in the early 1990’s that I first heard the president of one of the largest distributorships in North America say to me 'Jim, you’ve got to begin addressing the financial side of business for our dealers'," shares Yount. "I knew he was right. Prior to this statement I had not known anyone who addressed the subject of profitability at the dealer level."
Tools for profitability
Dealers and all independent small business owners need to focus more on profitability and the "business side" of management. Financial education and business management tools help dealers focus more on their profitability and growth.
"In my opinion, the best tool assisting industry dealers has been computer software specifically developed for outdoor power equipment retailers," says Yount. "It was the beginning of a much-needed decision on how to track dealer profitability. This was the turning point for dealers, and a door opened for business management companies teaching on the subject of managing a business for profit and growth."
With the help of a business management system and training, dealers are able to hone their skills as businessmen. Yount warns that while dealers may have a talent for business, earning money with a business is a learned skill. Dealers shouldn’t be afraid to get outside help to further ensure their profitability and success.
"I believe a lot of dealers have survived this recession because they sought outside help," says Yount. "Dealers began learning how to fight for every dollar of profit. Growing a business should not be at the expense of sustaining profitability. However, businesses must enjoy long term growth. Without the combined strength of profit and growth, a company will not survive for the next generation."