In our industry, the most important area for the profitability and survival of the company stems from the recurring revenue in the service department. When considering the trends in our industry for the future, this topic deserves serious attention.—dealers that fail to secure the revenue stream properly are most at risk for failure.

What Does it Mean

When we are talking about securing the revenue stream, we are talking about creating a binding support agreement for the duration of the equipment lease. I know some dealers do not like to build the service into the lease, but failing to do so diminishes the value of the dealership and does not provide any future security for the company.

I am not suggesting pre-funding the service component of the lease, and most leasing companies no longer offer that as an option. When valuing your dealership, a pre-funded service contract is viewed as a liability rather than as an asset.

Building Value

When you build your service contract...

What the Manufacturer Is

When talking to dealers and attending trade shows, I often hear the manufacturer referred to as their partner.  Manufacturers love to position themselves as the dealer’s partner.  We are going to discuss the relationship between you and the manufacturer.

Not Your Partner or Friend

When you think about a partnership, typically you think about a mutually beneficial arrangement where both parties are concerned about the well-being and success of the other.  This would be a true partnership.

In the same manner, a true friend would want what is best for you.  A friend would not be solely concerned with how they benefit from the relationship.

Your Vendor

The manufacturer is interested in selling you product.  They have a factory, and they sell what the factory produces.  They sell this to you whether you need it or want it.  They have a warehouse that they want to empty into your warehouse. 

If they make an effort to...