Is More Too Many?

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Next month's column will outline the questions that must be answered at the get-go when forming a business partnership. I will also make the case that one partner should take charge. For now, here are a few specific examples of dealership partnerships to get you thinking.

Too Many Cooks

I once met a dealer who, in an honest effort to raise capital to start his business, chose multiple partners: two doctors, a dentist, a real estate broker and a successful business executive. On the surface, not a bad group.

They got past the OEM requirements via their corporate structure, but decision-making time at board meetings was a nightmare. Do we expand like so many other dealers and dealer groups are doing, or stick with one store? Do we become the "big gun" in town, or focus on margins and profits? Build that new facility now while the market is not so brisk, or stay put until the recession passes?

The partners were bright and educated, and had all the right intentions going in, but each came to the party with his own paradigms. They suffered from the absence of a clear, focused and uniform vision, failure to ask the right questions of each other from the start, and poor execution.

One wonders where the attorneys, CPAs and advisors were prior to Day One. Or was the decision made to "save a few bucks," and keep the experts out of the mix? In the end, the business survived, but it cost a couple of friendships, a fair amount of "brain damage," and tons of fun in managing the business.

Family Affair

On the other hand, one dealer I know set up a family motorcycle business with his wife and children almost two decades ago — a very delicate and risky venture, indeed. But the dealer was a sharp and prudent businessman, and he and his wife had the same vision, informal as it may have been. They ran it like a business, with each of the five family members having unique roles and responsibilities within the dealership, each having accountability to the others.

It hasn't always been pretty, but it has been effective, and they've built a very profitable and worthwhile enterprise.

They have toyed with selling, and they probably will one day, but the personal and professional bond each has had to the business and to the family has endured the trials and successes. Importantly, the children have taken steps to take care of the parents financially down the road — an all-too-rare occurrence.

Background Experts

Another successful case I'm familiar with is that of an inexperienced dealer who chose an attorney and a CPA as his partners in his corporation. The lawyer and the CPA would provide most of the seed capital to help the dealer start his business and offer their legal and accounting expertise as needed. But the dealer was clearly the ultimate decision-maker with the OEM, employees, customers, suppliers and the community. The "expert partners" had faith in the dealer to run the business properly and agreed to stay in the background. Two decades later, it's one of the most successful dealerships in the region.

You won't be able to think of and plan for every eventuality and nuance — nor should you try. Don't attempt to micro-decide how the business will be managed on a day-to-day basis. Instead, decide together how the business will be dissolved if the worst-case scenarios appear on the horizon.

The more big-picture questions you ask, the more thoughtful your approach, the more candid your vision, the odds are the more successful and satisfying the future with your partner or partners will be.

Clark Vitulli founded America's PowerSports, a large dealer group for which he served as chairman, president and CEO from 1998 to 2006. Send comments to editors@dealernews.com.