When you think of a board of directors, you probably think of a big corporation with shareholders and responsibilities for reporting to the SEC. While you are correct that most businesses do not require a board of directors, it does not mean that other businesses cannot take advantage of the benefits that come from a board of directors.
To be fair, you don’t even need to call it a board of directors. You can call it a board of advisors, or an advisory board. The point is, every dealership could benefit from the differing perspectives and experiences the come from such a panel.
With that in mind, board members should be chosen who have the best interest of the dealership in mind and will be committed to the long-term success of the dealership. Here are some responsibilities that a board can help with.
One trap dealership owners often fall into is that they get too close to their business to see it from any perspective other than their own. The associated risk is not responding fast enough to the changing marketplace.
In order to build a long term, profitable business, the dealership owner must artfully read the changing marketplace and develop strategies to give customers a product or service better or different than their competitors do. This is where a board of advisors can provide a competitive advantage. Outside advisors can provide sharp, incisive perspectives that often are missing from internal resources.
“A lot of business owners, especially self-made businesspeople, don’t involve their advisors as often as they should,” says Holly Swan, managing director and wealth strategist at U.S. Trust, Bank of America. “They think, ‘I grew this business myself.’ Often they don’t have a lot of liquidity; their free dollars go back into the business. So calling an attorney (or outside advisors) and watching the clock tick and the …fees accumulate is unappealing.”
But an effective, successful board of directors will require the correct set of professional advisors. That probably means advisors with expertise in legal, financial, business planning, growth strategy, marketing, and human resources.
Crisis Planning and Management
A robust board of advisors can also be extremely effective at risk oversight. In today’s volatile world, how a company prepares for and responds to major disruptive events—sometimes referred to as “resiliency”—has become increasingly critical to the protection and growth of a company’s assets.
In addition, your advisors can enable your company to better understand where risks can arise, including emerging risks like cybersecurity. The frequency of cyber-attacks—and the likelihood of more—has only served to ratchet up the pressure for every dealership to implement risk oversight.
With compliance issues and huge liability penalties for breaches of personal information, it is imperative that measures are taken to prevent such breaches. A qualified board can help you achieve this.
It happens all too often in the car business. An owner dies, or encounters personal turmoil, and the entire dealership is suddenly at stake. By designating a board of directors or advisors, you can implement non-biased plan to address issues of succession in the event the owner is no longer able to function in his or her current role.
According to Swan, “the appropriate time to start thinking about succession planning is the day after you buy the business (if not before). No one does that, but that’s the right time. Every dealer needs to ask, what is going to happen to this company if something happens to me? And then the dealer needs to plan accordingly,”
An effective board of directors or advisors can help you accomplish this. A board will also play the bad guy in cases where feelings might get hurt. A board should have the vision and the foresight to do what is in the best interest of the dealership, regardless of who is involved.