January Featured Perspective: Gary McGugan (Dealership Growth: It takes a plan)

As you know, RV Trader is always on the hunt for fresh perspectives and keen, unique insights when it comes to dealership business development. This month, we've chosen to feature a commentary from Gary McGugan, Co-Author of NEEDS Selling Solutions. 

As a professional, McGugan makes it his mission to help companies grow their profit by drawing on his experience in both the automotive and powersports industries as well as in financial services. Want your business to really grow in 2017? Check out this expert's 7 key points when it comes to building the business you know your company has the potential to achieve. 

Dealership Growth: It takes a plan.

By Gary McGugan (Originally featured on RV Dealer News)

Open houses are already underway, and the Louisville show is just around the corner. Retail seasonal doldrums will come soon, and activity around the dealership will reduce quickly. Many RV dealers have already started thinking about ways to minimize expenses over the winter months and optimize profits from available sales revenue. That’s important. But, progressive dealers have already begun a strategic planning process for the next selling season and beyond.

I understand. Planning is not the most exciting component of business leadership, but a sound strategic planning process can generate more profits for your business than any other management activity. Some companies think annual budget planning is adequate. Others focus on buying. Some dealerships choose show participation as their default sales and marketing strategy, then find ways to make shows most effective. All of these activities are certainly useful, but none of these are going to prepare you adequately to achieve your growth potential. From my vantage point, there is simply no substitute for a strategic plan that looks out more than two years and is updated annually.

Why? Leaders who plan for multiple years, give themselves a foundation to make better business decisions. And, management that re-assesses strategies annually adjusts to changing conditions most effectively. If you’re not already working on a strategic plan for your dealership, here are a few ideas to consider before you start.

First, Study The Entire RV Market

What trends are the latest data showing? Which segments are growing, which are shrinking? And more importantly, what is causing those tendencies? The goal is to understand where the industry is going – crucial knowledge to consider.
Next, carefully study what is happening with RV manufacturers.

Who’s growing, who’s not? Why are the successful growing their share of the market? And what’s causing a decline for others? Where do your brands fit? And, perhaps most important, what is the financial health of those manufacturers you represent? You’ll want to be working with suppliers who will be as successful in coming years as they have been in the past. Loyalty is important, but it’s essential to reassess the wisdom of brand loyalty every year.

Once you have a good understanding of the latest industry trends and manufacturer positions, study your competitors.

Who are they? How are their businesses faring? Have there been shifts in brand representation? How do your competitors promote their products? What are their strengths? And where are they vulnerable? How have their businesses changed over the past year? How have their facilities improved? Have their sources of revenue changed? What do customers say about your competitors? The most important advice I can offer as you go through this stage: Be completely objective. Set aside frictions or biases. Look at what your competitors are doing as analytically as possible and make no assumptions in advance.

Now, Look At Your Own Business

What were successes and failures over the past season? What trends do you see with your brands and sales results? What are trends related to replacement parts? Accessories? Service and warranty? Financial services? What contribution is each making to your profits? How does that compare with previous years? The goal is to assess your dealership’s strengths and weaknesses realistically. Later in the process, you’ll appreciate that knowledge as you seek ways to build upon your strengths and find ways to address competitive weaknesses.

How Will You Get This Business Intelligence?

For data related to the RV industry, you probably use the excellent resources of CRVA, RVDA and your provincial RV dealer association. They do a great job compiling and sharing valuable information about actual sales, trends and new developments. This data is a great pool of fact-based knowledge about the market. Customers are another indispensable resource. Questionnaires about use and preferences can provide great insights. Follow-up calls after a unit purchase or service repairs can generate outstanding information about the things your dealership is doing well, or not. But a resource often overlooked in the planning process is your team. It’s no coincidence that dealerships who plan most effectively get managers and employees involved.

Employees are an exceptionally valuable resource because they have a stake in the future of your business. They want you to succeed. They also usually know how customers are using their purchases, how they feel about their brand, and what they think about your dealership. Of course, many employees are also active RV’ers. They talk with owners at shows and campgrounds. They read magazines and articles about the business. And they usually have great ideas about the future. I’ve noticed most outstanding business leaders credit their employees for the most successful of dealership strategies and decisions.

Whether you choose to seek employee input by a few structured meetings with flip charts, or you only ask individual employees for suggestions and feedback over coffee or a meal, your business wins.

Not only will you get great information that helps you plan and prioritize action necessary to grow your dealership, you’ll also be laying the foundation for employee buy-in to whatever strategies ultimately evolve. It’s a win-win, and there is no source of information that is more cost-effective!

Now, What Will You Do With All This Information?

Effective leaders first spend time digesting and thinking about all the information they’ve compiled. They focus on data that is most important and consider different strategic directions. ‘Thinking outside the box’ is an overworked business expression, but it truly is crucial for business leaders to let their minds wander, dream a little, and try to conjure up creative approaches that at first may seem farfetched. You can always dismiss an idea that proves too costly or impractical, but it’s usually a challenge to innovate or create if we always do things the same way.

I always guide business people to think about ideas and strategies that will differentiate them from competitors. Too often, business people follow competitors and try to apply similar strategies to their own business. ‘Me too’ strategies rarely succeed for followers to the same extent they worked for the innovator. Instead, if you can find ways to be different from your competitors, strategies have a much better chance of success. Advertising works more effectively if you can focus on your difference in every ad. Word-of-mouth advertising is more impactful if your customers are talking about something you do that others don’t. Suppliers are more likely to support your strategic direction financially if they see how your differentiation from competitors can generate more sales or develop new customers. Employees are usually more excited about implementing directions that are different – especially when they know they helped form the strategy.

Test Drive Your Ideas Before You Put Pen To Paper.

“What do you think about this idea?” is the most valuable question a successful strategic planner can ask. When you think you have found the right direction, talk with people before you formulate your strategy. Position it as something you’re considering. Let people know you’re thinking about something similar to the approach you explain. Seek feedback from everyone possible. If people like a strategy, ask them for ways to make it better. If they see problems, understand the concerns and explore if tweaking or modifications might reduce discomfort.

Build your strategy considering all possible factors.

Of course, a cost-benefit analysis of any new strategy is imperative. Equally important, prudent planners try to identify and assess all the risks – including execution, reputation, and financial risks. Effective leaders spend as much time on this phase of their strategic development as they do collecting data or formulating the plan, but this is also the phase many businesses neglect. It’s the main reason a strategic plan fails or is never implemented. It will require some valuable management time. If you don’t have the time or resources within your business, considering engaging a specialist. There are good strategic planning consultants located across the country, and some will often work with you by telephone or Skype. With a few hours of consultation, a specialist can often guide you through the process and help you formulate a plan that lays a foundation for years of growth.