Garry Bartecki The fork in the road
If you have been keeping up with our wonderful economic news you came across comments about Boomers leaving the workforce in droves because they feel they have enough of a nest egg to live on. Hope they are right.
As a result of these retirements, however, there are thousands of businesses for sale, with sellers not really aware of what they have to sell. Some do not even know that what they have is sellable. They will just unload any equipment they own and call it quits.
This scenario is especially prevalent in the construction business because if you are a contractor to whom can you sell? Not many people are not your direct competitors. And if you do that, you can guess what the pricing will be.
Many of these business owners came to that fork in the road. Either to stay the course and do what they must do to grow the business with existing as well as new customers. Or covert assets to cash and move south to warmer climates because as an owner they were not prepared nor interested in doing what you had to be done, nor able to spend the money to upgrade their operation to remain competitive.
In other words, upgrading your business is no longer an option. The digital world is taking over, your customers today grew up in the digital world and they expect to do business via the digital world. Is it any wonder why there are so many family businesses for sale?
Look how some young entrepreneurs are taking advantage of this situation can be found on YouTube. Look up a young lady named Codie Sanchez and see what she is doing to make herself rich. Right now, she owns 26 companies that she converted from their historical business practices into modern money makers. It is quite an interesting story, and every one of you could duplicate it if you wanted to. It is about an hour presentation but worth your time and your son’s or daughter’s time if they are having a tough time figuring out how to make a living so they can move out of your basement.
Why am I discussing this topic with material handling OEMs, part distributors, and dealers? Because I believe dealer networks in the good old USA will find themselves at that fork in the road sooner rather than later.
If you recall, I recently mentioned Ford and its move to sell online direct to customers. They were doing this to stop the gouging taking place concerning their new line of EV Ford 150s. And I said “here we go” with OEMs moving to sell direct.
Guess what. AED, working with McKinsey & Company prepared a paper titled THE FUTURE OF SALES AND SERVICE FOR EQUIPMENT DEALERS. McKinsey sent out surveys to dealers regarding this topic and those responding are most concerned about the interest in OEMs in direct-to-consumer sales models. They were also concerned about NEW COMPETITIVE THREATS and THE INVESTMENTS REQUIRED TO ENABLE NEW SALES MODELS.
The survey also asked what customers were currently doing and what was expected five years from now. Participants answered that currently 14-25% of new, used, and rental transactions originated online, with an expectation five years from now to be between 36- 48%. A meaningful uptick I would say. In terms of completing the purchase, online the current % is 7-15% with an expectation of 29-36 % five years from now.
Back to the fork in the road, because it seems that 57% of the survey participants responded said they made no or minimal progress on building a sales and service model for the future. Which fork will these dealers take? My guess is they will not have a choice.
Digitalization is where this is going and you will either have a program to modernize your operation to use the value of data and analytics to build a digitalized, customer-centric business. Or you will find yourself behind the eight-ball with only the option of selling your dealership to your OEM or another dealer selling similar lines.
You would think OEMs would be pushing this process, and even funding such a program since having their dealers highly digitalized would be to their own benefit.
As you can imagine this will be both a time-consuming and expensive program to develop and initiate. Only certain dealers will have the power to create a working sales and service model. The only way I see this working is for OEMs to lead the charge as is happening in the auto and truck industry where OEMs integrate digital sales programs into existing dealer management software. The other option is for a group of dealers to produce the sales and service platforms for their group.
And I have to bring up those Codie Sanchez dealers who will buy today’s dealer and transform it into a dealer of the future, and in the process become a giant in the industry.
OEMs…..wake up.
About the Columnist:
Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993. E-mail [email protected] to contact Garry.
