How To Recession-Proof Your Dealership

By now, everybody knows that we face extreme economic headwinds in the form of rapidly spiking interest rates, historic inflation and an ever-calamitous employment market. To be certain, we live in interesting times politically, economically and societally. The reality is that tucked inside of challenge are opportunities that represent progress, growth and huge financial gains using 3 smart and timeless strategies that always deliver perpetual improvement to the bottom-line, regardless of the economic climate. They just so happen to deliver maximum benefits during recessionary times and continue to deliver perpetual impact long after being implemented. We simply need to be willing to seek them out, make the adjustments and take action.

• Throughout the last two centuries, those who understood this often also had the ability to spot the opportunity hiding inside difficulty. The reward for those who had the courage to seek and take action was historic good fortune.

The late, great Jim Rohn was once asked by Chevron to speak to group of their executives to help them better forecast and plan their business. They posed the question, what will the next 10 years look like? His response is so simple, yet so prescient...He said, "The next 10 years are gonna be about like the last 10." He goes on to reference the last 6,000 years of human history as simply opportunity mixed with difficulty. Sometimes there is more of one than the other, but the mix never changes. It's the natural duality of life.

Here are three omnipotent examples of the value, power and results that an opportunistic mindset focused on expense reduction, contrarian thinking and courage to take action will always deliver.

SYSTEMIC COST REDUCTION

Billionaire Founder of Walmart, Sam Walton, used lessons learned surviving The Great Depression to harness the power of reducing systemic cost at scale. He focused on measures that delivered a repetitive savings and improved net profit. He knew by rooting out systemic operational expense on a repeatable basis, he could unlock additional, vital free-flowing cash.

“Every time Wal-Mart spends one dollar foolishly, it comes right out of our customers’ pockets. Every time we save them a dollar, that puts us one more step ahead of the competition—which is where we always plan to be.” - Sam Walton -

And that excess cash flow would serve as critical working capital that he could both stockpile in the form of cash reserves in the event of the unforeseen or re-deploy to out-maneuver his competitors who were bloated and bogged down by higher costs and inefficiencies. He knew that there would always be certain costs that would be difficult or impossible to control, let alone reduce, when scaling and growing a business. So, he set out to leverage the compound effect of cutting pennies on products. services and operations at scale to counter the expenses that the company couldn't necessarily control or reduce.

GROW MARKET SHARE

One of the biggest winners to emerge from the Financial Crisis of 2008-09 was Netflix. CEO, Reed Hastings, was incredibly aggressive creating strategic partnerships with big, well-known companies that had strong networks for growing the distribution of his content. It turned out to be exactly the right move.

Blockbuster, who was originally the largest distributor of private view movies was already in rapid decline. Their pivot to online digital distribution was late and lackluster, and Netflix capitalized on the opportunity to swallow up every point of market share that Blockbuster continued to hemorrhage in the process. By the end of September of 2010, Blockbuster was being crushed by more than $100M in debt and Netflix was soaring past a market cap of more than $8B while the world continued to climb out of the crisis. While the market cap of Netflix peaked during the height of the pandemic at over $305B and has since settled back to a current market cap of $131B, they are the absolute dominant player in their space, and their market share is at the heart of their astronomical market cap increase over the last decade!

Many businesses, especially dealerships, look to significantly cut marketing budgets in the face of economic downturns, but the smarter ones see it as the rare chance to dominate the attention of the market that is still there and gain vast numbers of new conquest clients that they've never seen before! If you want to insulate your dealership from the perils of recession, committing to a bold and courageous plan to grow and ultimately retain a larger market share on the other side of a bad economy is critical.

The average Technician is worth ~$300K in annual gross profit! What is the annual GP value of a Technician at your dealership?

INCREASE SERVICE CAPACITY & THROUGHPUT

Have you ever calculated the annual gross profit value of the average Technician in your Service Department? When we calculated the value of the average automotive Technician recently using very conservative metrics, we calculated an annualized value of approximately $300K in gross profit per Technician.

The ancillary long-term benefits are just as powerful as the immediate financial impact of increasing capacity and production of flat-rate hours in your shop. By adding qualified and promising Technicians to our shop, we can optimize throughput to effectively meet the demand of not just our clients, but moreover the market at-large, we also gain invaluable, high-margin market share from our competitors. And this is transformative in terms of our ability to dominate our dealer competitors and the independents alike.

What would your business feel like when you are able to say yes to virtually every request for service? Imagine the additional sales opportunities that would be created from this scenario? There are a number of strategies and principles that drive incredibly successful hiring campaigns that lead to increased shop capacity, throughput and profitability, but we have to be able to satisfy demand in a way that separates us from the competition. To do that, we need more Technicians to drive more capacity!

Recognizing the bright side and the incredible opportunities that a downturn in the economy represents propels the smart and courageous, while the rest of the market struggles to survive. For more info on recruiting top Technicians, please visit our website at sandycerami.com!

P.S. For your free calculator to analyze Technician and Stall Capacity and Value Optimization, please visit recessionproofcardealer.com dedicated to helping progressive dealerships thrive when the rest simply hope to survive!