Your 10-Step Survival Guide To An Economic Crisis

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All indications point to fewer dealerships, either by consolidation, termination or resignation. So, if you're not thinking strategically and proactively now, you may wind up in the dealership morgue.

Sound a little pessimistic? Anyone who knows me knows that my glass is usually half full. But this is gut-check time, regardless of your geographic location or the brand(s) you carry. Hope won't get you through this one — but change will. So let's get to work.

Sit down today and start crafting your near-term action plan. I'll outline 10 must-do's for you, but unless I am sitting in your dealership, I can't craft the plan or the priorities that are right for you. That's your job.

Here's your survival guide short list:

1. Craft your 2009 Business Plan. Google Business plans and a dozen or more sites will walk you through plans from the simple to the complex. Pick one that suits your dealership. Remember, a bad plan is better than no plan at all. Don't get too complicated — keep it simple and easy to understand for your core team (and your banker, if needed). Getting lean is the overriding strategy of the day.

2. Evaluate your local market conditions. Is it a good economy or soft? Are housing and autos still brisk or on the decline? Your answers here will help you determine your dealership's unique strategic path.

3. Study your local competition. Are they high grossers or giveaway artists? If they give products away a at low margin, your job will be more difficult. But it's not impossible if you maintain lower overhead, a sharp sales team, or a solid service department with a good reputation.

4. Remember, cash is king. It always has been and always will be in retail. Watch your spending. It's not about profits right now — it's about cash flow. Have your payables party (see my column in the July 2008 issue of Dealernews) this week. Look at every invoice for every item purchased at your dealership and ask two questions: "Do I need this item at all?" If the answer is yes, then ask, "Can I get it for less?"

5. Beware of debt. Now's not the time to invest in a new facility unless your market demands it and business is brisk.

6. Develop your people plan. Consider consolidating people and/or departments. Who are your core people (without whom you can't make it) and the staff members you don't need too many more of? Now is the time to weed out those marginal folks if you haven't already. If you don't, the market will weed you out.

7. Review your days-of-operation plan. The general rule says to remain open either five or seven days a week. If you're open for six days, some days will require a split shift, so you've already done most of the investment in overhead. You might as well be open the full seven days and reap the benefits of the extra day. But that's just the suggestion — in some cases, six days works just fine. In either case, include your "brain trust" at the dealership, plus your accountant, to help you sort out the math. While you're at it, review your hours of operation. The objective in both cases is to cut overhead and fixed costs.

8. Prepare you departmental plan. Which departments are making you cash and which ones are draining it? This is not the time to fix all that's wrong at your dealership — focus on what's working, and improve on it. When you make it through this challenging period, you will have the opportunity to maximize profitability in all departments.

9. Stay close to your customers. Now's the time to be visible, walk the floor, talk to customers, keep a smile on your face, address them by name, send a thank you to every sold customer.

10. Contingency plans. What and who can you live without? If your dealership hits rock-bottom, what would you do? Better to give that some thought now, rather than when your dealership is on a respirator. And if your dealership is already on a respirator, and your surrounding market conditions noted above are less than ideal, then face it — transitioning the store, and taking your losses might be the prudent approach.

Focus on these 10 issues, and you'll have your best shot at negotiating this economic mine field in 2009. Remember, when you started out years ago, you began with almost nothing, and somehow you survived and prospered. Go back to that time, and do it again.

Clark Vitulli is a Harley-Davidson dealer in St. Augustine, Fla. Contact him via