The Basics
- Only 15% of family businesses owned by baby boomers have a documented succession plan, yet half of all business exits happen unexpectedly.
- A strong plan requires balancing personal goals, financial planning, and business health with guidance from a collaborative team of business, wealth, tax specialists and other specialist who have proven experience working with dealerships.
- Readers will learn why dealership owners need a documented succession plan — and the key steps to building one that protects their business, finances, employees, family, and legacy, no matter when they plan to exit.
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As a dealership owner, you’ve poured years of effort, resources, and passion into building your business. But have you considered what will happen to your dealership — and to your employees, your family, your finances, and your legacy — when it’s time for you to step away?
What if you were forced to exit unexpectedly due to an accident, illness, or other unforeseen event?
Maybe you’ve thought about when. Perhaps you’ve worried about what if. But chances are, you haven’t fully planned the all-important how.
You’re not alone. According to PwC’s 2023 U.S. Family Business Survey, only 15% of family businesses owned by baby boomers today have a robust, documented, and communicated business succession plan.
The Risks of Not Having a Dealership Succession Plan
For dealership owners, the stakes are even higher. Your business is not just a livelihood — it’s a cornerstone of your community, a source of employment, and a significant financial asset. Yet, research shows that lacking a well-thought-out succession plan can jeopardize everything you’ve worked so hard to build.
Consider these findings from the Exit Planning Institute’s National State of Readiness Report:
- 50% of business exits are unexpected, triggered by one of the “5 D’s”: death, disability, divorce, disagreement, or distress.
- Of the 200,000 small businesses listed for sale each year, only 20-30% successfully sell, leaving up to 80% of businesses with uncertain futures.
- Among those who do sell, 75% of owners report profound regret within a year, often because they didn’t optimize their business’s value or plan for life after the sale.
For dealership owners, these risks are magnified by the complexities of the automotive industry — from managing inventory and manufacturer relationships to navigating market fluctuations and customer expectations. Without a plan, you risk financial instability, personal dissatisfaction, and leaving your dealership’s future to chance.
But it doesn’t have to be that way. With a solid succession plan, you can protect your dealership, your employees, and your legacy.
When Should Dealership Owners Start Planning Their Exit?
A common rule of thumb in financial planning suggests starting your exit strategy three to seven years before retirement. But in my experience working with dealership owners, there’s an even better time to start: the day you open your doors.
Why? Because the earlier you begin planning, the more time you have to:
- Maximize your dealership’s value.
- Develop future leaders within your team.
- Align your personal, financial, and business goals.
And if the unexpected happens, your family, employees, and business will be protected according to your wishes — not left to the whims of an unprepared successor or a buyer who doesn’t value the culture you’ve built.
Business Continuity or Collapse?
If you haven’t started planning yet, don’t worry — it’s never too late. Whether you’re looking to exit in 10 years or 10 months, you need a realistic, proven approach to succession planning. One that’s designed specifically for dealership owners like you, who are already managing the day-to-day demands of running a business.
Your Shortcut to Smarter Succession Planning
In the coming articles, we’ll guide you through the key elements of a successful dealership succession plan. You’ll gain actionable insights from seasoned experts who have spent decades helping dealership owners like you navigate mergers, acquisitions, and transitions — whether to family members, internal leaders, or outside buyers.
Each article will break down the critical steps to:
- Optimize your dealership’s operations and value.
- Plan for your personal financial future.
- Ensure a smooth transition for your employees and customers.
Laying the Foundation for Your Dealership’s Future
Fundamental No. 1: You Are Not Your Dealership
Many dealership owners struggle to separate their personal identity from their business. But the most successful succession plans integrate three key aspects:
- Personal Goals: What do you want to achieve post-exit? Whether it’s traveling, pursuing new ventures, or giving back to your community, your personal aspirations should guide your decisions.
- Financial Planning: Ensure you have the resources to support your desired lifestyle after exiting your dealership. This includes retirement income, tax strategies, and estate planning.
- Business Health: Strengthen your dealership’s operations, groom future leaders, and enhance its value to make it more appealing to potential buyers or successors.
Fundamental No. 2: Don’t Go It Alone
Navigating the complexities of dealership succession planning requires a team of trusted advisors. Look for professionals with deep experience in the automotive industry, including:
- Financial Advisors: For investment and retirement planning.
- Tax Advisors: To navigate tax implications and opportunities.
- Estate Planners: To ensure your legacy is protected.
- Dealership Consultants: To optimize operations, manage transitions, and maximize value.
- HR Specialists: To support employee relations and leadership development.
Fundamental No. 3: Your Exit Strategy IS a Business Strategy
Succession planning isn’t just a task to check off your to-do list — it’s a strategic tool that can drive your dealership’s growth and profitability. By integrating succession planning into your daily operations, you’ll:
- Make smarter decisions that align with your long-term goals.
- Identify opportunities to improve efficiency and value.
- Build a roadmap for a successful transition.
When you know where you’re headed, it’s easier to take the right steps today to secure your dealership’s future.
Ready to Start?
In the coming articles, we’ll dive deeper into the strategies and best practices that will help you create a succession plan tailored to your dealership. Whether you’re planning to pass the torch to the next generation, sell to a trusted buyer, or explore other options, we’re here to guide you every step of the way.
Let’s get started on building a plan that protects your dealership, your employees, and your legacy.
Investment advisory services offered through Rehmann Wealth, a Registered Investment Advisor. Securities offered through Rehmann Financial Network, LLC, member FINRA/SIPC. Insurance Services offered through Rehmann Insurance Group.