Choosing the right advisor

Auto dealerships and major sports franchises have at least one thing in common: for both, building the right team is essential to success. When everyone in your dealership is on the same page the business runs smoothly, opportunities are identified and exploited and you achieve optimal business performance. Internally most dealerships are structured with managers of individual departments reporting to a general manager who then reports to the president/owner, but team work goes far beyond the internal structure. There are outside advisors who are part of your extended team, such as your banker, lawyer and accountant. This extended team works on your behalf with your best interest in mind.

So how do you choose the right advisors? A good place to start is referrals from contacts who share your values and operate in a similar business environment. The advisors for your best friend’s online cupcake shop may not be well-versed in the world of car dealerships. Once you have some relevant recommendations, the next step is to schedule a meeting with the prospective advisor. Think of the initial meeting as a job interview; you are interviewing the potential advisor as much as he or she is interviewing you. Key elements that you should evaluate in an advisor are: your degree of comfort with the advisor, the advisor’s knowledge, and size of the advisor’s practice.

How do I relate to this advisor?

When you are meeting a potential advisor, be it a banker, lawyer or accountant; think about whether you could see yourself in a long term relationship with them. You are embarking on a marriage of sorts and divorce is tedious and painful. The more time you spend getting to know your advisor, the less likely it is that you will need to change advisors later. The two most important questions you need to ask when considering how you relate to a potential advisor are: 

1. Would I be comfortable communicating anything to this person? 
2. Would I trust them to tell me the truth? 

Your advisors have specialized knowledge, but they cannot provide effective advice without knowing the entirety of your situation. Would you be comfortable telling your advisor about business failures? A rough spot in your marriage? Sticky situations with your employees or children? Your relationships with your family and employees can play a role in your succession plan and other planning strategies and, in order to take full advantage of your advisor’s knowledge and expertise, you must be able to talk about them. Through face to face meetings, you can quickly get a sense of how genuine the advisor is and if your personalities sync.

Your advisor shouldn’t be the person you turn to for flattery. While your advisor may pay you a compliment from time to time, it is important that he or she is honest and straight forward. You want someone who will tell it to you like it is, take time to explain your options and consequences, and provide an opinion. You also want someone who is available to answer any questions you may have throughout the year. You shouldn’t be scared that your advisor will charge you for simple questions. Your advisor is a member of your team.

Does this advisor understand my business?

Your advisor should be knowledgeable and passionate about dealerships and the auto industry as well as all the laws, standards and regulations that affect your industry. Knowledge of business is key in providing the best service and opinions to clients.

During your interview with a prospective advisor you may want to ask them how many auto dealership clients they currently work with, how long they’ve been working with dealership owners and ask them how they feel about a recent industry development. An advisor who is passionate about dealerships would be more than happy to talk shop with you and you would quickly learn how well they know your business.

Does size really matter?

We all know that fit matters more than size, and it is no different with advisors. In the professional world there are small, medium, and large firms and each has advantages and disadvantages. Many people gravitate towards larger firms as they are familiar with the brand which creates a degree of comfort, however brand names typically come with premium price tags.

Consider the size of your business compared to the firms you are considering. If you will be a relatively small fish in that firm’s pond of bigger clients, you may experience better service with a firm that caters to businesses of your size. Mid-size firms may offer a different customer service experience because your business fits their niche. You may even find yourself in the fortunate circumstance of being a big fish in a mid-sized firm’s portfolio which can lead to better customer service and a greater investment in your business.

Auto dealership owners have a niche business, and there are firms that specialize in your industry. They can provide a competitive advantage over other practices as they are more knowledgeable about your business and can therefore offer more useful advice due to their experience.

Running a dealership is complicated; having advisors who understand your business is essential for making critical decisions.

-- Bryan Redinger