Six traits of successful retail dealers

Despite the tremendous number of dealers, and the push by manufacturers to achieve uniformity among their franchises, no two dealers have exactly the same management style. Yet profitable dealers usually possess some common characteristics.

1. Solid business plan

It is important to clearly define your goals. To understand how to achieve them, the creation of a business plan is almost a necessity. A strong business plan should contain a market analysis, including sales and marketing strategies and opportunities. Additionally, it should answer the questions: Who is the target market? How fast is the segment growing? What are the opportunities and threats, and how will you deal with them? And ultimately, how is the plan going to get executed?

A dealer must know what qualifications and accomplishments employees need to bring to the table to bring the plan to fruition, and how to retain those employees. Competitive pay plans and other incentives can aid in retaining the best employees.

Employees need to know how the dealership fits within its geographic market and understand what’s expected of them to help achieve the stated goals defined in the business plan (such as becoming a service leader or a "volume king") within set time frames.

2. Strong leadership

Probably the most obvious and important characteristic all successful dealers share is an aptitude for business. Truly effective leadership entails getting into the details, most of which is readily accessible from the manufacturer National Auto Dealer Association (NADA), or your local association. Leaders must view the situation as a whole, but also possess the ability to break it down into sub parts for closer inspection, and more manageable pieces to help employees progress toward their goals.

Leaders must possess a clear vision, a vivid picture of where to go, achievements to aim for, the discipline to work toward his or her vision and the ability to lead others toward the vision.

3. Inventory management

A good manager knows their inventory at all times and how much is in the pipeline. Studying demand and movement patterns and cycles is important to have suitable inventory ‘normals’. Parts department inventory should be reviewed periodically and stocking patterns and minimums should be adjusted as needed to keep inventories as lean as possible while still promptly serving customers. Excess inventories are frozen cash. The dealer is incurring the opportunity cost of investing into other areas of the business that could provide better returns.