After a global pandemic crippled car sales for many dealerships, owners are recognizing just how important it is to be confident about finances and be prepared for any situation.
The pandemic is just one example of how outside influences can affect profits, even when all internal factors are well managed. Things like foreign tariffs, pollution regulations, technology, and global markets can all have an impact on your dealership’s performance.
Unfortunately, statistics indicate that 25% of new dealerships will fail in their first year. In five years, that number increases to 60%. Or, to put another way, there’s less than a one in two chance that a given dealership will continue to serve its customers five years from now.1
Failure isn’t always caused by a lack of interest or poor management, either:2
In each of the above, finances play an essential role in helping you keep your doors open. Managing cash flow, having a solid business plan, and understanding your financial flexibility to compete in today’s market all contribute to a healthy, profitable dealership.
Working with a financial advisor helps allow you to maximize your capital and gain short- and long-term planning support to maintain your financial position.
The experience of a financial advisor can help you grow and scale your business in a way that makes sense for your goals. They can also help prevent you from making common mistakes that could compromise your financial position, such as overpaying yourself, not engaging in dealership succession planning, or mixing business and personal expenses.
Save time and money by tapping into a wealth of accurate, relevant financial know-how and partnering with experts to execute your business plan for an optimal outcome.
Your business plan is a blueprint for the present and future. It helps you set realistic financial and operational goals for your business and can help guide your decision-making to reach those goals. In turn, this helps to prevent you from pursuing the wrong opportunities that could drain your finances.
Managing cash flow (in and out) ensures you have funds on hand to seize key growth opportunities. Our team of financial advisors can support better cash flow with:
Paying too much or too little for insurance comes with inherent financial risks. Our team ensures your most valuable assets are protected in case critical situations arise.
Selling your business for a profit is a hallmark of success. Our team helps you develop a realistic exit strategy to ensure you’re not leaving your hard-earned money on the table.
You’ve worked hard for years and deserve to enjoy a life’s work well done. Succession planning now can ensure a smooth, seamless transition when it’s time to retire.
1Research from Fundera2Research from CBInsights
You know how to run your dealership well, but are you spending enough time working on your business rather than just in your business?
WestPac works to put you in the best position to efficiently transfer income from the business balance sheet (P&L) to your personal balance sheet.
At WestPac Wealth Partners, we’ve been helping dealership owners like you strike a harmonious balance between their business and personal planning objectives since 2007. We realize that for you, everything in your financial world begins and ends with your business. Whether it’s dealership succession planning or healthcare decisions, your situation doesn’t fit the traditional planning mold.
As a dealership owner, you have the opportunity to dictate your own financial success in a way that few others do. However, that opportunity comes at the risk of a great deal more to lose if life doesn’t unfold as planned. During the course of the WestPac Wealth Partners planning process, we will help you protect your business from loss, provide strategies to recruit, retain, and reward key employees, and most importantly guide you on when and how you can ultimately exit your business, ensuring you and your family receive the full value of your life’s work.
Have questions about the role and importance of professional financial advising for car dealerships? Review these frequently asked questions for more insight.
Businesses need cash on hand to pay debts, invest in growth activities, and provide a cushion if hardships arise. Knowing if your cash flow is positive or negative indicates the overall health of your business. A negative cash flow could mean you have more expenses than money coming in, which means you will not be profitable.
Exact cash flow amounts will depend on many things, including your daily operating expenses and debts. Working with a financial advisor can give you insightful cash flow tips for auto dealerships.
To protect cash flow, you first need to know what your ideal cash flow is. Monitor it constantly to recognize any changes in cash flow early. Build up cash reserves to help you weather rough patches. Last but not least, work with a dedicated financial advisor who can help you make impactful decisions when you most need it.
Yes, too much cash can be bad for business. That’s because it lowers your return on assets and can ultimately lower the value of your business. Working with a financial advisor can help you strike the right cash flow balance.
We all like to think of ourselves as invaluable. Some dealership owners limit their salaries to a portion of their profits. This, of course, will also depend on how profitable your dealership is. It’s best to pay yourself something, but not so much that you don’t have the means to grow or scale your business.
It’s best practice to keep your budget baseline in your dealership account. Work with your financial advisor to ensure you don’t have too much or too little cash hanging out in your account, as this limits your ROI on those funds.
Our teams of financial advisors and wealth managers assist our clients with managing finances in every aspect of their lives. We help each client shape their vision for the future and take the right steps today that will help them grow and protect their wealth over time and achieve long-term financial goals. To do this, we combine a methodical approach with a customized strategy that caters to each client’s unique needs to encourage confident decisions and generate financial stability.
To date, we have administered more than $1.8 billion in assets for more than 31,000 clients, including individuals, couples, and business owners.
Contact our team below to start a conversation. We offer complimentary valuations as part of our client planning and review process.