Let’s paint a picture. A dealership is hemorrhaging money, the books are in disarray with likelihood of many pending write-offs, and employees are struggling to keep up. You might expect leadership to be deeply engaged, actively seeking solutions, and driving change to turn things around. But the reality in many cases is quite different. There is often a surprising lack of urgency to address these critical issues.
What is this mysterious phenomenon? How do otherwise decisive, action-oriented leaders manage to maintain what appears to be serenity as their stores sink faster than a poorly secured cargo ship?
A CFO’s Approach to Crisis Management
Having spent my life deeply rooted in the car business—as a former dealership CFO and now an on-demand CFO—I have zero tolerance for inaction in the face of critical challenges. When the dealership’s “house is on fire,” I don’t hesitate to step up and confront the problem head-on. My instinct is simple: find the first fire hose and start putting out the flames.
Whether it’s tough love, a sense of duty to the team who relies on leadership to keep the business afloat, or the result of seeing this scenario play out far too often, I cannot stay silent, which is why I’m writing this today. I believe it’s essential to confront these issues openly and start the necessary conversations to drive change.
Confronting Dealership Leaders’ Lack of Urgency
Let’s dive into the possible reasons for this perplexing lack of urgency:
1. The “Ignorance Is Bliss” Strategy
One of the oldest tricks in the leadership playbook is to act like the problem doesn’t exist. If you don’t look at the P&L statement, does the P&L statement even exist? Schrodinger would be so proud. Leadership often believes that by maintaining a zen-like calm, the universe will realign itself and the red ink will magically turn black. (Spoiler alert: It doesn’t.)
FACT: I once worked for a guy who, when he got a copy of the monthly dealership financial statement, would go back to his desk, open the top drawer, and pull out a bottle of White Out. On the first page of most franchise dealer financial statements, there is a summary section showing the net profit or loss for each month. He would open the bottle of White Out and paint over the “-” (negative) sign that was in front of the net loss figure for that month.
Some leaders – like this extreme real-life example – adopt the “head in the sand” approach, pretending the problem doesn’t exist. They avoid reviewing financial statements or addressing performance issues, hoping the situation will somehow resolve itself without their involvement.
2. The “We’ve Seen Worse” Excuse
Experienced leaders sometimes rely on their history of overcoming challenges as a justification for inaction. “We’ve been through worse,” they might say, believing that the current issues will resolve themselves as they believe they did in the past. Unfortunately, this mindset can prevent them from taking proactive steps to address new and unique challenges.
3. The Delusional Optimism Play
There’s always that one leader who’s convinced that the next big month is just around the corner. “Sure, we’re down 45% in sales, but January is going to be HUGE.” This optimism would be commendable if it weren’t completely detached from reality. Instead of strategizing, they’re sitting back, waiting for a miracle that’s as likely as finding a unicorn in the service drive.
A belief that better days are just around the corner often leads to complacency. Leaders may assume that the next sales month will make up for losses or that external factors will improve, rather than addressing systemic issues that require immediate attention.
4. The “Blame Game” Shuffle
When things go wrong, it’s much easier to blame someone else than to take action.
- “Accounting messed up the books.”
- “The market’s slow right now.”
- “Customers just don’t get it.”
- “It’s cloudy today.” (this is a real life excuse I personally heard from a Finance Manager)
While they’re pointing fingers, the ship is sinking. But hey, at least they’ve identified who’s holding the bucket.
It’s easier to point fingers at external factors but deflection only prolongs the pain.
5. Paralysis by Analysis
Some leaders get stuck overanalyzing the situation, spending too much time evaluating options and running numbers instead of implementing solutions. While careful planning is important, excessive deliberation can prevent timely action.
6. The “Hope is a Strategy” Doctrine
“Let’s just ride it out,” they say, as though dealerships are equipped with magical self-righting mechanisms. Hope might be a beautiful thing, but as a business strategy, it’s about as effective as using a Band-Aid to fix a blown tire.
Leaders who “hope” the situation will improve without taking concrete steps to address problems risk further financial and operational decline.
7. Avoiding Difficult Decisions
Addressing serious challenges often requires tough decisions, such as reducing expenses, restructuring teams, or changing processes. Leaders may avoid these uncomfortable choices, prioritizing short-term comfort over long-term stability.
8. Fear of the Hard Conversations
Fixing a failing dealership requires tough decisions: debt restructuring, cutting expenses, realigning staff, and rethinking processes. These conversations are uncomfortable, and let’s face it—avoiding discomfort is so much easier! Why confront the issue head-on when you can hide in your office pretending to answer emails?
The Fallout
While leadership drifts in their haze of inaction, the employees are left to grapple with the chaos. Morale plummets, turnover spikes, and the remaining staff are so overworked they’re practically sleeping in the parts department.
Operational inefficiencies increase, and customer satisfaction declines. Customers are greeted with disorganized operations, further compounding the problems. These issues compound over time, making recovery even more difficult.
The Path Forward (If they’re ready to hear it)
It’s time for dealership leaders to wake up and smell the burning oil. The first step? Admit there’s a problem. Then, channel that sense of calm into actionable urgency. Bring in experts, involve the team, and tackle the issues head-on. Fixing a dealership isn’t about finding inner peace; it’s about rolling up your sleeves and doing the hard work.
To overcome these challenges, dealership leaders must adopt a proactive and decisive approach.
Acknowledge the Problem
I know I just mentioned this but it bears repeating. The first step is to recognize and accept the reality of the situation. Denial only delays progress. Conduct a candid and thorough assessment of the dealership’s financial health, operational inefficiencies, and market positioning. This includes reflecting on personal leadership behaviors that may contribute to the issues.
Engage in Self-Reflection
Many leaders have limiting beliefs that prevent them from acting on even the most obvious solutions. For example, the fear of failure or a reluctance to admit mistakes can stifle progress. Leaders should ask themselves questions like, “What am I avoiding?” or “What assumptions am I making that could be incorrect?” Overcoming these internal barriers is critical to effective leadership…and to improving the store’s numbers.
Seek Expert Help
Don’t hesitate to bring in outside consultants or advisors who can provide fresh perspectives and expertise. Specialists in dealership operations and financials can identify blind spots and offer tailored strategies for improvement.
Prioritize and Act
Identify the most critical issues and take immediate steps to address them. Start with high-impact areas such as cleaning up the books and fixing broken accounting systems, reducing unnecessary expenses, and streamlining operations. Use a structured approach, like implementing key performance indicators (KPIs) to track progress. One place I like to begin is doing a quick Expense to Gross Profit analysis using NADA benchmarks. If you’d like the template I use, email me: kathi@krusecontrolinc.com
Develop a Comprehensive Recovery Plan
Create a detailed roadmap that outlines specific goals, timelines, and responsibilities. Break the plan into phases to address urgent needs first while also focusing on long-term growth and stability. Regularly review and adjust the plan based on performance and market conditions.
Invest in Training and Development
Equip your team with the skills they need to excel. Offer training programs in customer service, sales techniques, and financial management. An empowered and skilled workforce is more likely to execute the recovery plan effectively.
Focus on Customer Experience
Improving customer satisfaction often drives revenue growth and builds loyalty. Who doesn’t want a repeat customer? Evaluate every touchpoint of the customer journey, from online browsing to in-store visits, and make necessary improvements. Incentivize staff to deliver exceptional service.
Enhance Communication and Transparency
Keep employees informed about the challenges and the plan to overcome them. Regular updates, open forums, and transparent leadership build trust and unity within the organization.
Embrace Accountability
- Hold managers and staff accountable for delivering results.
- Establish clear expectations, monitor progress, and address underperformance promptly. Decisiveness is key and dead weight (underperforming staff) only exacerbates the issue and sets a bad example.
- Celebrate wins to keep morale high and reinforce positive behavior.
Reevaluate Business Models
In some cases, the dealership’s business model or departmental models may need a fundamental shift. This could mean diversifying revenue streams, focusing on used cars, or expanding into digital sales channels. Explore new opportunities to stay competitive in a changing market.
Build Resilience for the Future
Once the immediate crisis is under control and the ship is moving forward, focus on building a resilient organization. Strengthen financial reserves, develop contingency plans, and cultivate a culture of adaptability to prepare for future challenges.
Final thoughts
By exploring these comprehensive solutions and taking decisive action, dealership leaders can stabilize their operations and set the foundation for lasting success.
Leadership isn’t just about surviving immediate crises—it’s about envisioning and steering toward a brighter, more secure, sustainable future. This journey demands self-awareness and the courage to confront limiting beliefs, ensuring growth for both the leader and the organization.
Is your financial health in the fast lane or stalled on the side of the road? You want experience on your side without the huge salary expense. Let’s talk and figure out if an On-Demand Automotive CFO is right for you!