Previously, I talked about the “Silver Tsunami” and what this meant for eager business owners that were ready and willing to grow (if you need a refresher, visit the blog here.)
While the opportunity is promising, exciting, and so close, you can taste it; there are essential steps that you need to take to prepare to grow through acquisition. Before taking that next big growth step, let’s review the five top tips you need to prepare for as a dealership owner.
Money Talks
Acquiring an additional dealership takes money—lots of it. Money can solve many problems when they arise, and more than likely, they will. You must be cautious about too much debt, which could hobble your growth for years. Set aside some extra cash to cover a sizable down payment, renovations, training, and anything else that might pop up.
Set Standards, Stick to Them
Think about and plan for how you will run your existing dealership and your acquisition, and ensure you have the support in place both in your current business and at home as you take on a much heavier load. What are your standards? Do you have a ‘way’ of doing things that works? Can your existing dealership be a training ground for your target’s staff? Do you have a few key people you can pull in to help you get the new location trained your “way”? What are your plans for the overall policies, processes, and structure of the new multi-point organization? You’ll want to have all of these details nailed down before any acquisition takes flight; this will make your growth transition that much smoother.
Plan for Development
Do you have strong staff in critical roles in your existing organization who can run your current dealership or take the helm of the new one? Use reliable staff members to your advantage—place them in more demanding positions (with better pay, of course); development works best when it happens internally. Some organizations will groom a GM at their current facility and then, when ready, find a dealership that fits their business model for the GM to take on.
Project and Anticipate Accurate Cash Flow
Project the growth in cash flow you believe you can achieve. If you have the market knowledge to project growth based on unit sales (number of unit sales or increases in the margin of the historical unit sales), then start there and build up your cash flow projections based on the unit transaction increases you believe will be realized. Alternatively, adjust revenue based on growth increases by percent of revenue/cost. Be conservative – if you expect to increase unit sales, or margins, remember time and training are needed to change the mindset of the staff who have been generating those historical results.
Partner with an Acquisition Expert
I can’t emphasize enough how crucial this step is. No matter how independent you believe you are, you will need help throughout the acquisition process. At Stacey International, we have decades of experience working with both buyers and sellers through acquisitions, leading to incredible outcomes for our clients that help to facilitate their continued growth and success.
If this is on your list for 2023, let’s get in touch.
Stacey International is a group of credentialed, knowledgeable, experienced senior executives focused on helping business owners buy and sell businesses. If you are ready to exit or just starting to think about it, give us a call. We can help you get the highest possible selling price now or in the future. Let’s connect.