Strategy Guide: 10-Point Economy Survival Plan
It’s pretty clear that what started as a slowdown in home sales and led to a meltdown of financial institutions, followed by a massive Federal bailout, has now begun to hit Main Street. Now, nearly 90 days later, no one is sure how long it will last or how deep the dive will be. That being the case, let’s assume that for the short term, we have to do business with the conditions we have. It’s too risky to wait it out.
The biggest change we are seeing relates to credit—both consumer credit and the ability of dealers to borrow for inventory and for operating capital. If it’s available, the cost of 12-month-no-interest promotions will probably make those events too expensive to run. We’re already seeing an increase in the turn-down rate for those seeking credit to make their purchases. Unfortunately, only those with stellar credit will be able to finance big-ticket purchases.
Companies that finance inventory have begun to scale back credit lines and require more extensive reporting from dealers. Profitable dealers will get preference until credit markets loosen. One dealer I recently spoke to was told that his floor plan company would cut his credit line and require him to own more of his inventory if he didn’t improve his profitability.
Here are 10 things that smart dealers will do in order to prosper and grow during these tough times:
1. Manage inventory closely and improve turns. Buy frequently for just-in-time delivery. Consider cutting down the number of lines you represent so that you can be more important to those suppliers you do buy from. Discount products that are in your warehouse because of duplicate ordering, panels that didn’t fit well, or merchandise that may be scratched, dented or exchanged. If it’s old, get it sold. A dealer in Hawaii raised $65,000 in cash just by focusing on his dead inventory.