RVBusiness, January/February 2021

The Key for 2021 Make a Budget s Be Ready As in all unpredictable markets luck will favor the prepared A few hours of preparation now may save you from untold financial grief if the market moves in unexpected ways SPADER REPORT W hat a year With the holidays behind us and for most markets the selling season at our lowest seasonal trend its time to reflect on what has been in 2020 and plan for whats to come in 2021 RV dealers are blessed to be in an industry embraced by consumers as a safe and family focused activity and the value of our products and services have led to unprecedented sales margins and profitability even as the national economic situation remains uncertain It may seem counterintuitive at the close of this unprecedented year to suggest taking a few hours away from your normal routine to focus on 2021 planning but that is precisely our recommendation The frenetic market activity of 2020 may well continue into the new year but thats anyones guess As in all unpredictable markets luck will favor the prepared A few hours of preparation now may save you from untold financial grief if the market moves in unexpected ways If you are one of our clients you have already heard from us get your 2021 budget put together In some recent years it has almost been enough to just plan for a reasonable increase and keep trucking since with just a few exceptions the past decade has been characterized by stable growth in most markets But stability is hardly the word that comes to mind when considering the industry and the larger economic political climate we find ourselves in It could absolutely come to pass that 2021 resembles 2020 RVing retains its position as a favored pastime leading to strong demand while Covid related manufacturing complications constrains supply An author consultant and instructor John Spader has worked with a host of individual companies most frequently retail dealerships in a variety of industries Spader Business Management and the network of 20 Groups for which it has largely become known blends statistical analysis and hands on coaching and consulting to assist clients in formulating proven business plans and increasing revenues David Spader is a trainer and consultant for Spader Business Management Comments or suggestions can be sent to articles@ spader com 28 RVBusiness J A N U A R Y F E B R U A R Y 2 0 2 1 BY JOHN SPADER the result will be strong margins and high turns 2020 redux But it is equally easy to imagine a pandemic hobbled economy lurching into a deep recession resulting in wide unemployment and a significant dampening of demand for our products services Dealers have so much inventory on order that even with Covid induced manufacturing constraints any serious slowdown in consumer demand will quickly lead to an inventory glut and the inevitable discounting cycle will begin So why bother planning Heres why the highest performers will find a way to maintain profitability in nearly any market making adjustments according to thoughtful planning rather than hoping it all works out Rather than let the market dictate their nets these dealers are management driven They quickly adapt their staff and inventory levels to match conditions and drive needed profits The alternative is the business equivalent of hit and hope order all you can and hope the market hangs on The first step is to create not one but three plans for 2021 How much detail you apply to each plan is up to you If you want to bet your life savings on an outline rather than the detailed version thats your call Technology matters here your DMS should be able to produce detailed budget scenarios if you are a Spader client you have several options The first budget is your intuitive best guess for whats going to happen in your market in 2021 Really flesh this one out with detailed descriptions of staffing inventory by type and brand and exact overhead expenses This budget should drive a 5 6 pro forma net profit If you cant get to that net profit or dont have the time software to put this budget together call us Budget number two is the best case scenario The Covid clouds part the economy comes roaring back and demand surpasses even 2020 levels With plenty of inventory the skys the limit on sales and profitability This is probably a 15 20 sales increase from the first budget but with a net profit in the 7 9 range Where does the extra profit come from How does the extra product get delivered How are you going to hire and train the staff to take care of the extra business Do you have the physical space to manage this growth This scenario has its problems too Finally make a plan for the wheels coming off of the economy and the RV business This should be a 25 30 sales decline from the first budget with a net profit at a minimum of 3 4 How could that happen What roles would have to change What would the management structure of your company look like Who are the key performers you would keep your arms around and who would have to go What products would be eliminated Locations Plan it all out in detail Not because you think it will happen but so that you are ready if it does And thats the key for 2021 be ready Sharp operators capitalize on unstable markets because they are ready to adjust as soon as the winds shift Theyve got another great game plan all set if things change on the field and are ready to execute on demand Without well developed alternatives however dealers tend to stick with their base plan too long hoping things change before realizing way too late that they have missed a great opportunity RVB