Pub. 4 2015-2016 Issue 4

Spring 2016 13 Many of these questions weren’t being asked in the past. Dealerships didn’t span multiple states, didn’t calculate the impact of franchise concentrations, and generally expected that the next generation was excited about owning a piece of the family dealership business. The complexity of the business today, along with the competition that’s continuing to build its automotive groups, have created some new challenges—and those challenges are primarily centered on people. Finding Great People The discussion beyond the buzz of buying or selling was about finding people—general managers (GM), chief financial officers, and controllers who couldmanage growth and new locations. As the industry changes from somany single point or small group enterprises to 10 and 20 store groups and beyond, the management team needs to be able to cope with a different set of challenges. The need for higher level expertise in the indus- try is increasing. To that end, it was interesting to note that dealers are looking outside the automotive industry for their leaders. Some have brought in talent from other industries and provided access to formal training or used internal job shadowing. This is a costly and time-consuming process, but so is internal growth. Smart Management While the public sees dealerships as product focused, dealership owners know people are the key to growth and profitability. Smart management of franchise mix, building location, and design are arguably the results of having the right people. However, there’s plenty of evidence that a great GM can generate more net profit consistently, regardless of the franchise or other factors, such as the age of the building. We’ve seen new management and processes, brought in after a sale, increase profitability by significant multiples. Things could have gone the wrong way on those acquisitions without the right people to put those changes in place. When the next-generation family becomes involved in dealership operations, there are typically issues that arise. These center on understanding how long-timemanagers will be involved in their training, how to clearly define their roles, and how is compensation supportive of such initiatives? Family succession continues to be a recurring theme for many groups. The conversations that stretch to growth plans in the next five years aren’t about what new service department equipment to buy, what software system works better, or which F&I product is more profitable. It seems that developing and keeping the right team of people, and growing that talent to allow your organization to expand and be more sustainable and profitable was at the center of all the buzz. Sid Tobiason, a partner at Moss Adams, has practiced accounting since 1978. He advises clients on federal income tax, estate tax, entity structure, the purchase and sale of businesses, ownership transition, and succession planning. He can be reached at (858) 627-1448 or sid.tobiason@mossadams.com. Diane Anderson Murphy, a senior manager at Moss Adams, has appraised businesses and per- formed corporate financial man- agement since 1981. She provides valuationandconsulting services to dealership businesses across the country. She can be reached at (206) 302-6523 or diane.anderson@ mossadams.com. In the auto industry, competition is real—but so is partnership. Join financial leaders from other auto, truck, RV, and heavy equipment dealerships nationwide to share best practices, learn about vital accounting and tax issues, and more. Space is limited, so reserve a spot soon. June 23–24 | Vdara Las Vegas Register at www.regonline.com/2016DSWorkshop Fuel for Growth 2016 WORKSHOP FOR CFOS AND CONTROLLERS WWW.MOSSADAMS.COM/AUTOMOT I VE Certified Public Accountants | Business Consultants