I was speaking with a neighbor this week, and I mentioned I was heading to the 2017 NADA Convention and Expo (the annual trade and education event for the National Auto Dealers Association which gets underway today in New Orleans). I attend this event because a significant number of my clients own, operate, or invest in auto dealerships and other related businesses. I was struck by how little my neighbor knew about what it actually takes to operate a dealership, much less multiple dealerships. Since we are friends and I had some time, I tried to enhance his understanding while reminding myself of why I find my work so rewarding.
The normal impression of a dealer is a person who merely “wheels and deals.” While every dealer I have met is certainly a skilled negotiator, the strong and lasting dealers are, first and foremost, managers of highly complex businesses that including many moving parts and skilled players.
In practice, a dealership is a conglomeration of several businesses
In the vast marketplace of ideas, you can easily find several concepts or key words that have staying power and typically attract attention and investment. For example:
Entire industries are built around these kinds of words. Consultants evaluate companies to determine whether they have these characteristics. If they determine the companies do not have these attributes, they generate significant income by creating plans to inculcate the business with the “missing” ideals.
At the core of these concepts is to enable a business to achieve its full potential. Improvements may take the form of operational changes or cultural shifts. The focus may be on the individual, a sector, a business unit, or the entire company.
The Goal: Eliminate Business Friction
The goal of improving trust, accountability, efficiency, and so forth is to reduce business friction — anything that blocks progress, impairs productivity, or slows the pace of innovation and business itself. In physics, friction is the resistance that one object or surface encounters when rubbing against or moving over another object or surface. In a car, friction reduces fuel efficiency. Energy needed to move the vehicle is partially used to overcome friction and is lost in the form of heat. Friction and the resulting heat cause wear and tear on the car that eventually results in the need for repairs.
In a business, friction results in a loss of focus, creativity, confidence, and direction, and negatively impacts productivity. Moreover, organizational friction inhibits innovation, which often results in decreased sales. All of these make a business less efficient and therefore less productive. Secondary effects of business friction may include
This time of year brings thoughts of change and new opportunities. If your business is looking forward to the new year with great hope and potential on the horizon, you’re not alone. According to the Conference Board, CEO confidence surged in the final quarter of 2016, reaching its highest level in nearly six years. Also, business leaders’ appraisal of current conditions in their own industries also improved significantly, with forty-six percent stating conditions in their own industries have improved versus only twenty-one percent in the third quarter.
As part of any smart business planning, CEOs and business leaders are always working to understand where to invest business capital. Capital investments can, of course, take the form of purchases to improve or expand operations, but thoughtful owners and operators think of brainpower, skills, and experience as investable assets, as well, and as keys to business success.
One of the most rewarding areas of investment is in employee retention — investment in human capital. As I work with businesses and read about what affects business operations the most, I have noticed that employees consistently have the most impact, good or bad, on the success of a business. For purposes of my thoughts here, I will focus on the benefits of retention and touch only lightly on some