It’s the question every dealership needs to ask: What do you do if something happens to the owner or a key employee suddenly isn’t there anymore? The best way to handle the owner “getting hit by a bus” is to prepare and plan early and make a conscious effort to update the plan regularly.
Through the ideas dealers shared during a roundtable discussion, we came up with a few top ideas to help prepare dealerships for a sudden change in leadership.
Life Insurance & Buyout. If an owner needs to abruptly leave for one reason or another, it can be cumbersome for the dealership to try to buy out the owner’s share of the company. One dealer with a large group of owners says his dealership has an insurance plan covering each owner for the amount it would take to buy them out of the company.
The dealership regularly has a financial advisor come in and evaluate how much the company is worth as a whole, in addition to how much each share of the company is worth. That way, the dealership can accurately assess how much it would take to quickly buy out an owner.
Non-Family Successor. In another instance, the family owns the dealership, but they don’t participate in the day-to-day operations. To address this, they have selected a non-family member to be the heir to the dealership.
This works well for the dealership because if something were to happen to the owners tomorrow, the heir has already been working toward operating and owning the business.
The dealership also has a strong team of talented employees that could pick up more responsibility. Though the dealer cautions that even talented employees may not easily fit into a management position. It takes a lot of hard work to be a manager and some employees aren’t willing to commit, so you have to have a conversation with them to find out if they would be interested.
Roster Depth Chart. Another dealer discussed the dealership’s management depth chart, which tracks every employee — not just the owner — and their responsibilities. This can be used to determine who could fill in to keep the dealership running smoothly if someone suddenly leaves.
This system helps dealers identify who their key revenue generators are, which all the dealers agree is essential when creating a plan for the next stage of the dealership, whether it is implemented tomorrow or 10 years from now.
Post a comment
Report Abusive Comment