BY FORREST FLINN
Strategy is a word that we hear being used in dealerships all the time but what does it really mean? Terms like dealership strategy, social media strategy, growth strategy, downsizing strategy can be quite confusing and often all are used incorrectly. This month’s blog will focus on defining what dealership business strategy is and focus on three basic types of strategies that should be present in all dealerships.
First of all there is no one answer to define what business strategy is exactly. Business leaders and academics have studied business strategy for ages and what it boils down to is that business strategy means different things to different companies. For the purpose of this blog we are going to define strategy as the direction that you want to take your dealership in the future. Basically strategy is the “bigger picture” that you envision for your dealership going forward to achieve certain goals. In other words, strategy can be thought of as determining how well we will win in the future.
There are three types of strategy that you need to focus on to guide or steer your dealership into the future. Below I will describe each type of dealership strategy to give you a better understanding of what strategy is and how strategies can be developed to take your dealership to higher levels of profitability and stability.
- Dealership Strategy: This type of strategy is the overall strategy for the business that is made up of all of your dealership’s departments. It determines how the dealership as a whole is going to organize each department to add value to the organization. This type of strategy answers the unique question of how do we structure the dealership so that each department creates more value together that they would on their own. An example of a dealership strategy is to increase sales and decrease costs or to grow market share away from your competitors. Another example of an overall dealership strategy is to be the lowest price competitor in your trade market.
- Department Strategy: This type of strategy focuses on the operations of each department within the dealership. Every action in the department strategy must support the overall dealership strategy or the goals that you have set for your dealership will not be achieved. What you are trying to achieve at the department level is trying to identify how you can meet the needs of your customers in every respect whether it be in the sales, service, parts, or finance departments. People that work in each department should be able to see the “links” of what they are doing on a daily basis to the overall dealership strategy.
- Team Strategy: In order to be able to execute your dealership and departmental strategies you need to have teams throughout the dealership that work well together. Each team needs to have their own strategy to support the departmental and the dealership strategies respectively. I see way too often that departments and often teams within departments do not work well together. There is often infighting and backstabbing among team members that do not move the dealership forward. By having teams that trust each other and work well together you are in a better positon to achieve whatever goals are set. For example, if your sales team does not work well or trust your finance team then those two departments are at odds with the overall dealership strategy. Another example would be the dynamic that exists in many dealerships between the service and the parts department. In many dealerships these two departments do not like each other and blame each other for anything and everything. Again, having teams that trust each other and work well together are the key to successful team strategies.
At each of these three levels there is a different focus which requires different tools, mindsets, goals, and outcomes. Dealership strategy focuses on the dealership as a whole, while departmental strategy will focus on the individual department. And finally, team strategy helps dealerships achieve departmental and overall dealership strategies.
Think of the three levels of strategy as Russian nesting dolls where one fits inside of another. All three levels of strategy have to be linked together in order for any strategic plan to be carried out and be successful. Developing an overall strategy for your dealership one is one of the most important things that you can do for your dealership. In my opinion, operating without a strategic plan is akin to walking around in the dark and hoping to not bumping into things. Another way to look at business strategies is to compare it to a road map or GPS. How do you know where you are going if you don’t know how to get there? After all, developing a sound business strategy for the future is just good business.
Forrest Flinn, MBA, PHR, SMS has been in the motorcycle industry for more than 20 years and has been a true student and leader serving in various capacities. He previously worked as an implementation consultant for Lightspeed and as a general manager with P&L responsibility for a large metro multi-line dealership. Currently Forrest is the managing partner and chief visionary for a consulting firm that specializes in outsourced accounting, human resources, social media strategy, dealership operations consulting and Lightspeed/EVO training.