Dealernews Issue#5 May 2021

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the pandemic. There is, however, a planning process designed specifically to address such situations. It is called scenario planning. Scenario planning is a process designed to prepare you for economic uncertainty, unexpected events and disruptive innovation. It is robust and rigorous and, most importantly, it is practical and actionable. Scenario planning is designed to help you answer the “what if” questions you need to ready for. For example: What if the economy stalls and powersports sales go back to pre-COVID levels? What if gas prices climb above five dollars and electric bikes and electric scooters take off? What if consumer spending shifts to travel, restaurants, live entertainment and fashion and away from powersports? What if new, highly restrictive regulations – sparked by a growing fear of global warming – ban powersports vehicles from state and federal lands?

Dealernews Research By Dr. Paul Leinberger

ROARING 20s OR A DECADE OF DISAPPOINTMENT? New Normal Demands A New Approach

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n last month’s column I posed the question “Have we hit an inflection point?” Are we headed into a sustained economic rally similar to the Roaring Twenties (as the Financial Times has suggested) or are we in the beginning stages of a “decade of disappointing growth outcomes” (as the World Bank posits)? It is an important question because the future of your dealership depends on your answer and what you do about it. I went on to suggest that in order to answer that question you should monitor consumer optimism, the unemployment rate, and track COVID patterns. I also suggested that you should focus on the numbers that reflect how your core business is doing (in the context of the larger changes taking place in the economy). Monitoring those numbers will give you a good sense of your short-term future, but they are not robust enough to give you the kind of knowledge you need to respond appropriately to unexpected events – like

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Alternatively, what if a new, proprietary stability control system is introduced by a new entrant to the motorcycle industry and gains dramatic marketshare in a short period of time (ala Tesla in the auto industry)? On a smaller scale, what if a new dealer enters your market and builds a dealership twice the size of yours? Scenario planning will give you a view of what can happen in the future and provide you with the kinds of answers you will need to not only “survive” future shocks but profit from them. Scenario planning will make you more agile, resilient and innovative. When dealers first learn about scenario planning, their first instinct is to say: “Hey, I’m too small for such activities. Tools like scenario planning are for the big boys and the OEMs.” Au contraire. Scenario planning will benefit you no matter your size because it will give you a level of certainty about your business that you cannot get through other means (such as forecast planning and strategic planning). It will also give you a competitive advantage. So how is it done? Scenario planning can be complex (and sometimes it needs to be if you are developing long-range plans), but at its heart it is a rather simple five-stage process: 1) Identify the trends and driving forces affecting your dealership. What are the major factors affecting how your business functions and how your customers are making decisions? These will include such things as consumer trends, the economy and market conditions, competitive pressure, regulatory changes, technological advancements and shifting demographics. Scenario planning uses the PESTLE method to identify trends and driving forces: Political, Economic, Social, Technological, Legal and Environmental.


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