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Powersports Business • September 2024 • 15

Every owner has different goals with respect to what they want to accomplish with their dealership ... Before taking any transition steps it is important to know how much money you will need to accomplish your goals .

“ Your service department and parts department may each generate a profit of 5 % to 10 %. That is not enough surplus cash to plow into growth .”

By contrast , a good F & I department returns 80 % to the bottom line as opposed to traditional margins of 5 % to 15 % on sales , service , and parts ,” says Miller . “ This is what generates the capital to grow the dealership . This is what allows you to invest in more inventory , more salespeople , and more marketing and advertising to get more customers in the door .” Like Miller , I have found that a strong reinsurance program contributes greatly to dealership valuation .

REINSURANCE AS WEALTH STRATEGY

You have worked incredibly hard to build

your business . Reinsurance is one part of the total wealth puzzle . As a member of the National Powersports Dealer Association you are entitled to a complimentary Second Opinion Service ( i . e ., Total Wealth Analysis ) about your businesses at no cost and no obligation . If you ’ re trying to determine whether it makes sense to have a reinsurance entity based on how many units you sell , how many contracts you sell , and what you might get as a net profit over the next five to ten years , then we can give you specific numbers as part of our complimentary service .

Every owner has different goals with respect to what they want to accomplish with their dealership , and what they want for themselves and their family post-exit . Before taking any transition steps it is important to know how much money you will need to accomplish your goals .

IMPORTANCE OF A WRITTEN PLAN To determine this , you will need a formal written plan to determine not only if reinsurance makes sense for you , but if you are getting a fair return on your other liquid investments ( cash , stocks , bonds , mutual funds , annuities , etc .). Further , you will want to be sure your tax pro is really helping you mitigate taxes – not just processing your tax return every year . You will also want to ensure you have no gaps in your insurance coverages , and that your wealth is protected in the event you get sued , divorced , or victimized by cybercrime .

Finally , if you are planning to exit your business , do you know what its true value is ? It may not be as much as you think . Do you know what you need to do to maximize

80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 %

UNITS DELIVERED

75 %

Finance

Count

Total Profit

Profit Per Product

Total Profit Share

Penetration

New 75

Used 25

100 Total Units

60 %

FINANCE CONTROL

75.0 %

49.0 %

its value before exiting ? Have you taken the steps to make sure your family is adequately protected if you die or become disabled unexpectedly ?

CONCLUSION Again , our complimentary Second Opinion Service can help you identify gaps in your plan and give you a specific list of actions to take to do what ’ s best for you , your family ,

25 %

RESERVE / PRODUCT MIX

50 %

51.0 %

Penetrations & MBO

25 %

INCOME PER RETAIL

$ 3,240.00

8.1 % of $ 42,501.46 ASP

Service Contract Tire & Wheel Paint & Fab Gap Theft Other

Finance Service Contract Tire & Wheel Paint & Fabric GAP Theft Other

75 60 25 50 25 40 25

40 %

PRODUCTS PER SALE

2.25

0 2.25

$ 158,769.75 $ 90,000.00 $ 6,250.00 $ 50,000.00 $ 12,500.00 $ 4,000.00 $ 2,500.00

$ 2,116.93 $ 1,500.00 $ 250.00 $ 1,000.00 $ 500.00 $ 100.00 $ 100.00

49.0 % 27.8 % 1.9 % 15.4 % 3.9 % 1.2 % 0.8 %

75.0 % 60.0 % 25.0 % 50.0 % 25.0 % 40.0 % 25.0 %

and your team . You have worked too hard to build your business . Do not leave anything to chance .

Brad Stanek is a financial advisor , executive director , and financial wealth planner of in Chicago , IL brad . stanek @ ms . com

Paulina Matel is a financial advisor in Chicago , IL paulina . matel @ ms . com

25 %

300 %

Total MBO

Totals

Income

$ 324,019.75

Products Sold

225

Source : Safe Harbor

B R O K E R A G E S E R V I C E S

PROUD PARTNERS OF :

For a confidential consultation and complimentary estimate of value on your business , please contact us :

Harley-Davidson & Powersports Division George C . Chaconas , Senior Partner , CBI / M & AMI Office : 813 . 569 . 6250 | Cell : 813 . 245 . 2535 Email : george @ performancebrokerageservices . com Address : 2102 West Cleveland Street , Tampa , Florida 33606

NORTH AMERICA ’ S HIGHEST VOLUME DEALERSHIP BROKERAGE FIRM 949 . 461 . 1372 • PERFORMANCEBROKERAGESERVICES . COM