Laurn Rice, vice president of ADP Lightspeed, leads the industry’s largest dealer management system provider, which saw growth in an extremely challenging 2009. Rice attributes the company’s growth partly to its focus on data and tools that provide dealers an eye on their business’ day-to-day performance.
What’s the biggest challenge for the industry and what should be done about it?
Dealership consolidations: Stores closing and OEM-branded franchises that are consolidating or shutting down or another ownership coming in and buying them out. I just want to make sure each region is really populated correctly for the number of dealership points that are out there. There are some areas we’ve seen where we feel like there are probably too many franchise points. Other areas, frankly, where stores have closed and we need a franchise point
in that area because (prior dealerships) were overcapitalized and didn’t have the money to withstand the downfall. So we need to be careful as we’re growing back that we have the right number of dealer points in each area.
What has been the biggest challenge in your current position, and how have you dealt with it?
Our biggest change is similar (to the industry’s). We have dealers that are both expanding points as they’re buying dealerships or going out of business and ones that are consolidating. They may have had two or three stores before and now they have one main location. How do we get the data to them correctly? How do we allow them to get the information to see if their store is performing or not performing as it should be? And try to establish some benchmarks out there that we can use to know if we’re treating our dealerships right and also the dealers can use to see if they are really running correctly or do they need to re-evaluate their systems and do something different than they’re doing today.
What’s the best advice you can give to others in the industry?
Times have changed a lot; you need to change with them. If you’re still trying to do things the way you were doing them before, you’re probably not going to make it. We’re not growing at double digits anymore and even if we were, I think dealers need to worry about the bottom line rather than the top line, making sure they’re operating efficiently and productively. And I don’t think dealers have benchmarks to know if they’re doing things right or wrong, more than just what cash they have in the bank. Can they compare themselves to a dealer of a similar size? Are they operating better or worse than the guy up the street or down the street? That’s one thing I see a lot of our dealers doing out there is they don’t have any benchmarks to know what is good or what is bad. They just kind of go, ‘Am I busier than last year? Or do I have more or less cash in the bank?’ And neither one of those things will tell you if you’re running your business correctly. You need to be ready to change with the times. And be careful of how much capital you have every month. You need to have some free cash flow every month to stay liquid and change with the times. Cash flow is king.