Vehicle revenue projections are overestimated. “What will the new owner realistically retail?” is the first concern. We’ve seen many too many dealerships fail because the customer was unable to reliably forecast future sales. We’ve seen factories and lenders authorise dealerships where the prospective buyers expected sales volumes that were higher than the area’s historical sales leaders on several occasions. Find out here Frankston Subaru, Seaford
Famous buyers believe that their names alone will turn dealerships around and sell vehicles. We can name more well-known failed former car dealers than well-known successful car dealers. One photograph depicts a prominent athlete receiving a business award from US President Barack Obama. The year before the factory closed his stores, he went to the White House and won the award. Either no one expected it or no one cared.
The dealership’s success would have been against the rules of nature for a variety of reasons, not the least of which was the store’s rent factor. The analysis of that case, on the other hand, will have to wait for another post. The takeaway for this article is that even though the factory accepts a transaction, lenders fund it, and trade publications praise it, such endorsements are no assurance that a dealership can succeed. Despite this, many consumers will continue to assume that endorsements imply success.
With today’s epidemic of litigation, factories and lenders are unable to provide business advice because if the dealership fails, the factories and lenders will be sued. As a result, one must depend on oneself as well as advisors who are not afraid to challenge the boss.
As a side note, avoid associating with those who are habitually “deal-breakers.” Since advisors are not prosecuted if they tell a client not to do a contract, others are perpetual naysayers. They are only sued when a customer enters into a bad contract, and it is never the client’s fault. Anyone other than the client is to blame: the bank, the warehouse, the accountant, the prosecutor, the business advisor.