Auto Dealer Monthly, February 2014
ACCOUNTING By David Keller Succession planning requires dealers to re evaluate their business their successors qualifi cations and their own past decisions both good and bad Some of the most frequently asked questions I hear from dealers involve succession planning Will my kids be able to run and maintain the business I built How will they survive the bad times when Im no longer around Th ese questions are not easy to answer Sure we can run projections to see if there will be enough revenue and profi ts to continue your business as a going concern But adequate fi nancing is only the fi rst item on the list Your successors will also need an in depth understanding of cash fl ow and they must demonstrate common sense good business sense and a solid work ethic Lets take a closer look at all fi ve requirements 1 FINANCING Any business would struggle without access to a credit line of some kind For dealers fi nancing is most oft en furnished by a bank the dealers personal reserves or friends family and other outside investors Succession planning ups the ante by forcing you to present your business and personal fi nancial information in some semblance of order Your successors must be aware of their fi nancial condition at all times and be able to react in advance Th ats true whether theyre seeking startup capital additional fi nancing or better loan terms 28 AUTO DEALER MONTHLY FEBRUARY 2014 2 CASH FLOW No dealership can succeed without adequate cash fl ow Your successors will at some point fi nd themselves unable to pay their bills payroll taxes or loan payments on time Most vendors understand this Th ey will oft en make concessions to help you through your fi nancial diffi culty but they cant aff ord to fi nance your business forever Th is is one aspect of dealership operations from which dealers tend to shield their kids Its time for them and you to grow up If they are not prepared the fi rst shortfall they encounter could result in the demise of the business th t tions hea ti s sion plann plan mainta surviv ey ger around around q ThThe WHO CAN TAKE YOUR PLACE ISTOCKPHOTO COM MONKEYBUSINESSIMAGES
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