Top 10 Reasons Why Dealerships Fail – And How You Can Survive!   

According to The National Federation of Independent Business [NFIB] Education Foundation, over the lifetime of any small business, 30 percent will lose money, 30 percent will break even, and just fewer than 40 percent will be profitable.  Read more:

The Small Business Administration [SBA] reports that 50 percent of all small business fail after their first year, 33 percent fail after two years, and nearly 60 percent fail after four years.

Top 10 Reasons for Failure Cited by the SBA Include:

  1. inadequate business plan
  2. poor capital structure
  3. over spending
  4. lack of reserve funds or too little Free Cash Flow
  5. failure to adjust to market changes
  6. poor business execution
  7. failure to establish company goals
  8. poor market segmentation and strategy
  9. poor knowledge of the competition
  10. no management systems

Pretty scary statistics don’t you think?  

Developing and growing a small business enterprise like a dealership, either from a new venture or as an existing one, is difficult, when the economy is growing.  

However, in a slower economy, where the risk of business failure is magnified several times, the difficulty factor is increased by a significant magnitude.

We should also remember that longevity in business is not necessarily a guarantee that you won’t be one of these statistics.

Many Dealers and small business owners find themselves working in their business as opposed to working on their business.

That is, when times are tougher, a Dealer feels compelled to spend all his or her time on operations just trying to keep the boat afloat, while putting off where the boat may be going.

It is particularly critical in a tough economic cycle to spend as much time as possible on the direction of your boat, as it is on operations.

If the vision is lost or clouded, it won’t really matter how hard you try to keep things afloat, at some point you may well run aground because you weren’t watching where you were going. 

Having an extra pair of eyes to help steer your ship and keep you headed in the right direction is critical to not only maintaining your business focus, but helping you to grow it.

As the principal in your dealership, this is where you want to position yourself - at the helm, the Captain of your boat, steering your enterprise in the direction of your vision.  

Successful athletes typically hire a specialist/coach to help them achieve success. Certainly this is the case in professional golf. It is the case in the world of professional cycling. And it is the case in professional team sports, such as soccer or baseball. 

For Dealers and their small business enterprise, having a coach or specialist on the sidelines as well as in the game to provide critical objective guidance to help them attain their business objectives, can make the difference between achieving real success and serious failure! 

As your Profit Solutions Specialist, mentor and advisor, I will work with you to help you and your Dealership to avoid becoming an SBA or NFIB statistic on their list of small business failures.

From time to time we all need outside guidance, counsel, mentoring and advice and it does not have to cost you an arm and a leg.  In fact I will wager it will be the best money you spend all year.

Stay tuned for part two of this article next week where we explore the reasons why your investment in outsourced help will pay you 10 fold in enhancing your profitability and securing the future of your business.

If you think your Dealership could use a second pair of experienced eyes Contact me

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