If They Come, Then You Can Build It

Wait until the recovery is full-blown to expand

‘I’ve been watching," said Larry Davis, the general manager of my dealership. "The commuter parking lots are full again. Last January, the lots were a third full at most. Now, the lots are at least two-thirds full. I’d say that’s a promising sign."

Larry and I try to meet up at least once per week. I’ve been busy with our other companies and, to be honest, there hasn’t been a flood of overwhelming traffic at the dealership, so I’m pretty comfortable with my trusted friend running the show in my absence right now. However, our weekly meetings are a great way for me to review the numbers with him, discuss marketing strategies, define inefficiencies within the company and identify areas of missed revenue. This particular meeting’s focus was primarily to identify any trends that may point toward the future.

Larry’s idea of watching the commuter parking lots was a good one. I thought about it for a minute and decided that it had to indicate that more people were working.

"What about credit turn-downs? Have you seen an increase?" I asked. The answer was yes. This seemed to justify my suspicions. "Think about it," I said. "I’m not sure how excited we can be about the increase in commuter lot usage. You said that the volume was really low a year ago. Of course, with the Chrysler plant closing, the GM plant laying off and the vast decrease in home building, that makes sense. But, that’s an awful lot of union-wage jobs that were lost.

"First off," I continued, "those people spent a lot of time out of work. That means that they maxed-out their credit cards and probably barely stayed afloat during the time that they were unemployed. I’m sure a great deal of them ruined their credit. Second, even though they’re back to work now, they probably had to take much lesser-paying jobs. So, while they again have money coming in, they probably don’t have anything that’s expendable. Sorry to be a buzz-kill. What else do you have?"

I really didn’t want to ruin Larry’s outlook on the future, but, as you know, in business we have to be realistic. We can’t hire another salesperson or stock up on product in anticipation of a traffic increase that may never happen. Hopefully most of us have learned recently that it pays to be proactive in reductions and reactionary in growth. Unlike Kevin Costner, we must build it after they come, not before.

In the past several months, we’ve looked at all kinds of indicators in search of potential market rebounds. Fluctuations in classified "Help Wanted" ads, the number of homes that have sold in the area, credit-worthiness percentages, local car dealer sales volumes, new business openings and old business closings — you name it, we’ve tracked it. Unfortunately, traffic and sales numbers have continued to be cyclic, no matter what else seems to be happening around us.

As I’ve told every salesperson I’ve ever hired, "There is absolutely nothing that we sell in this dealership that someone has to have." Let’s face it, we’re in the business of fun. When someone is coming out of a hard financial time, there are certain things that they have to spend money on. A guy will purchase a new car if he needs it. He’ll purchase a new refrigerator or washer and dryer if the old ones die — his wife will make sure of that. If the water heater or furnace go on the fritz, you can bet that he’ll write that check. But a new ATV? Not so much.

So, while it’s not what anyone wants to hear, I have to remain skeptical about the market growth in this season. Yes, people are finding new jobs here and there, but the federal economic recovery programs have been a huge failure. High-paying jobs have been replaced by low-paying jobs, and, for those of us in the powersports industry, you can expect the "have-to-have" industries to grow sooner than ours will.

Of course, I’d love to be proven wrong. But for now, you may want to wait to regrow your business until you notice that you can’t handle the increased volume, no matter how many cars are stacked up in commuter parking.

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