Edited by SEMA Staff

The producers of the Global Automotive Aftermarket Symposium (GAAS) have announced that Danielle Russell, automotive industry director for Google, will serve as the closing speaker for GAAS 2013. Russell will present "Consumer Insights and Opportunities—Three Game-Changing Trends." She will explain how consumers are increasingly turning to the Internet for parts and service information and what information the aftermarket must embrace to make the customers’ experience a satisfactory one that sells more products.

In addition to the coding presentation by Russell, the 2013 GAAS will feature four practical, hands-on breakout sessions on succession planning, improving employee morale and customer loyalty, groundbreaking trends impacting the automotive aftermarket, and successfully closing the gap between strategic planning and execution. "We are excited to take attendees deeper into several important subject matters with our new breakout sessions," said GAAS Chairman Denny Welvaert. "These sessions will be a strong complement to an impressive lineup of presentations and panel discussions on important industry topics."

GAAS is co-located with the Aftermarket eForum, May 22–23, offering strategic and technical presentations addressing the business technology challenges of the aftermarket. Attendees will enjoy discount savings when they register for both events. To learn more, visit www.aftermarket.org/eforum.

The annual two-day Global Automotive Aftermarket Symposium, now in its 18th year, brings together industry leaders and experts to examine the issues and trends affecting the worldwide automotive aftermarket and influencing its future. Each year the net proceeds of GAAS are invested in the organization’s scholarship fund to help students get their automotive aftermarket career started. Additional scholarship funding comes from industry contributions from individuals, companies and foundations. To date GAAS, has awarded scholarships to more than 1,600 students representing $1.6 million in aid.

To register for GAAS 2013, visit www.globalsymposium.org.

By SEMA Staff

	The Ram 1500 was named Mopar's most accessorized vehicle in North America for 2012.

Through its Mopar service, parts and customer-care brand, Chrysler Group LLC and Fiat S.p.A now offer more than 25,000 quality-tested parts and accessories in more than 130 countries. The company has announced Ram 1500 as its most accessorized vehicle and side steps and running boards as its top-selling accessories in North America for 2012.

The following are Mopar’s most accessorized vehicles and top-selling accessories in North America for 2012:

Vehicles

1. Ram 1500
2. Jeep Wrangler
3. Dodge Challenger
4. Jeep Grand Cherokee
5. Dodge Charger

Accessories

1. Side Steps and Running Boards
2. Jeep Wrangler Tops
3. Floor Mats
4. Trailer Hitches
5. Bedliners and Tonneau Covers
6. Suspension Upgrades
7. Wheel Locks
8. Splash Guards
9. Electronic Vehicle Tracking System (EVTS)
10. Remote Start

For more information, and to view the global listing for Mopar's top vehicles and accessories, visit Chrysler's website.

SEMA News—February 2013

BUSINESS
By Steve Campbell

Wheel and Tire Trends Update

A Look at the Marketplace With Industry Pros and Media

		Anyone who walked the South Hall of the Las Vegas Convention Center during the 2012 SEMA Show understands that there is an abundance of wheel types and sizes for every vehicle and every preference. And even more variety is available through customization.

While the economy continues to influence the tire and wheel markets, the greatest impacts on the industry have resulted from the elimination of the tariffs on Chinese tires, the steady growth of lower rolling resistance tires, advances in technology and the proliferation of Internet research, according to knowledgeable wheel-and-tire pros and media. They shared their views for this latest look at trends in their segments of the specialty-equipment marketplace.

Tires

The hottest tire categories in the United States are entry-level, Chinese-made passenger and light-truck products, according to David E. Zielasko, who is the editor and publisher of Tire Business newspaper. The tariff on those imports ended in September, he said, and there has been a renewed influx, including tires, from some of the more than 50 Chinese manufacturers exhibiting at the most recent SEMA Show.

“Tire retailers are looking for entry-level products now that many of the domestic tire makers have stopped producing them,” Zielasko said. “That’s opening the door, and we have seen several Chinese tire makers looking to establish footholds in the United States with their own branded products.”

Hank Feldman, president of Performance Plus Tire and Auto Superstore, said that the end of the tariff is also placing increasing pressure on domestic manufacturers to adjust prices that had skyrocketed over the last three years. Overcapacity and surplus inventories have also contributed to the drop in prices.

“We are seeing growth with grassroots and niche marketing,” Feldman said. “Cheap tires from China are hitting our shores once again just as the crisis in Europe impacts their other important market. It will become a buyer’s market in the near term.”

Jim Smith, editor of Tire Review magazine, said that the prices of mid-line tires were decreasing anywhere from 6% to 12% around the time of the SEMA Show, and industry insiders are expecting to see those price drops to continue through 2013.

“While that is not all because of the end of the tariff, it had a domino effect in terms of pricing,” Smith said, “and the lack of business also played a large role. The propensity of the market right now is either entry-level, low-cost tires or the touring area, which is kind of a step up from there. Touring covers a broad range of minivans and upper-end sedans with primarily H and T speed-rated tires.”

Smith said that he’s seen a dramatic reduction in tuner applications. While sport compacts remain popular in some geographical locations around the country, as does the musclecar category, the tuner segment no longer exists as a broad market.

		Tire design includes a heavy focus on tread engineering, including tread block design, circumferential and lateral groove design and depth, lug design and shoulder design.

Meanwhile, ecologically themed tires are still selling, with reduced noise and reduced rolling resistance products driving tread designs in that realm, according to Feldman. But there is some question about how long that development will last simply because it is becoming less of a trend and more of an expected facet of tire construction.

“We’re starting to see a little softening of that whole concept among consumers,” Smith said. “It has become ingrained in the tire industry, so it is almost expected. But there are also economic pressures. People are questioning why they should pay more for a fuel-efficient tire, so you’re seeing some of the gloss come off that trend.”

Smith said that consumers are also questioning how efficient such tires really are, since there is no rating system that they can rely on. Manufacturers are thus free to say that their tires deliver 20% better fuel economy without saying 20% better than what.

Still there’s no denying that tires and wheels are being designed and constructed to be lighter to help offset stringent fuel standards, and tire compounds are being formulated for greater durability and wear.

“A lot of our readers are switching to commercial tires mounted on 19.5-in. wheels,” said Bob Carpenter, editor of 8-Lug HD Truck and Work Truck Review magazines. “It’s an expensive upgrade, but you can get close to 100,000 miles or even more on them once you’ve made the switch. A guy who hauls a heavy load all week usually gets only 20,000–30,000 miles out of a set of tires. If you use your truck to make money, you don’t want it sitting at the tire shop for half a day every few months.”

Rick Péwé, editor-in-chief of 4-Wheel & Off-Road magazine, pointed out that there is also an increasing demand for tires applicable to towing.

“Tow vehicles require a higher load rating, such as D and E,” he said. “Five years ago, there were not nearly as many tow offerings with good tread patterns in all-terrain, mild-terrain and even aggressive tires. Now we have tires that are made for trucks that tow, but the owners still want a lift kit and an aggressive stance. That can’t really be done on C-load-rated tires.”

As consumers make their choices, the search for lower prices and better wear characteristics is of paramount concern to tire manufacturers. Ken Warner, vice president of sales and marketing for Mickey Thompson Performance Tires & Wheels, pointed out that tire design includes a heavy focus on tread engineering, including tread blocks, circumferential and lateral groove design and depth, lug design and shoulder design.

“It’s important that attention be given to every aspect of the tire tread and shoulder design, depending upon the applications for the tire,” Warner said. “And, for better or worse, manufacturing tires still requires oil. Trends in materials and construction include efforts to conserve oil and use of alternative oils in the manufacturing process, along with a variety of ways to safely recycle used tires at the end of their life span.”

There is also a trend away from absurdly large tires sizes, Feldman said, with the aftermarket seeing increased sales of tires built for 16-, 17- and 18-in. wheel sizes. The exception to that trend remains in the niche markets, and he said that the truck-tire market is seeing a resurgence. Péwé concurred, noting that manufacturers are coming out with 38-, 40- and 42-in. tires with alternatives in tread patterns.

“Nitto just introduced a large tire that is available in both a soft compound for trail use and a different compound that is DOT-approved for the street,” he said. “People don’t stick with the stock 33-in. size when they replace their tires. They start moving up, and even the 35 is pretty small for a trail rig anymore.”

		Ecologically themed tires are still selling, with reduced noise and reduced rolling resistance driving most tread designs.

According to Joe Burnside, an automotive freelance writer, the hottest truck tire currently is the Toyo Open Country AT II, and its popularity hinges on the same points Péwé and Carpenter made.

“Truck owners are trying to balance performance and aesthetics,” Burnside said. “They want a tire that will perform in multiple arenas, will withstand the tortures of heavy loads and towing and will provide longevity. The era of large, lifted, flashy trucks is gone.”

There has also been a shift in vehicle construction. Zielasko pointed out that crossover vehicles continue to gain ground over sport utilities. CUVs are built, for the most part, using passenger-car platforms while SUVs tend to be truck-based, and there are resultant differences in tire requirements.

“CUVs require tires that are quieter, are optimized for rolling resistance and need less off-road capability,” he said. “And we are also seeing trends toward tires with higher speed ratings—H and V—on more vehicles.”

Péwé noted that, regardless of market or vehicle type, tire dealers must acknowledge that retailing is changing under the influence of the Internet.

“People in the middle of Iowa can now get a set of tires and wheels sent to them mounted and balanced from any of the larger mail-order companies,” he said. “National Tire & Wheel has been doing that for some time, and package deals seem to be where it’s at.”

Warner said that Mickey Thompson encourages its dealers to create packages, with the focus on value rather than on trying to be the least expensive.

“Retailers should package the sale with options such as tires and wheels, tires and alignment service, tires with a free tire rotation service every 5,000 miles,” he said. “Be creative in packaging the sale to add more value and bring the customer back. Most manufacturers are developing programs that benefit tire dealers, and that’s good business. Things such as consumer rebate programs, incentives and referral reward programs for dealers create more opportunities for growth and sales.”

Dealers also need to maintain their integrity, even in the face of economic uncertainty and those wavering prices.

“Even when the economy is down and people are scraping by, retailers still have a duty to the customer and to themselves,” said Smith. “They have a responsibility to deliver the customer the best tires possible for the application and the situation. If the customer comes in with a performance vehicle with V-rated tires on it, the retailer is obliged to replace those with V-rated tires. Not an H, not an S. If the customer insists on something cheaper, the dealer needs to walk away from that business. It is just a lawsuit waiting to happen.”

Dealers should also be ready to address and service tire-pressure monitoring systems (TPMS), many of which have come due for maintenance. Checking the TPMS prior to performing tire work will help dealers avoid disputes with customers should issues arise after the work has been completed.

“The first TPMS sensors began appearing on vehicles in significant numbers five or six years ago,” Zielasko said, “and their battery life is now coming to an end. Tire dealers need to know how to service the systems, and they should check the batteries and the functionality of the systems themselves before beginning any tire work.”

Wheels

Wheel manufacturers, distributors and dealers must pay heed to innovations that include not only TPMS, but also electronic stability controls and how wheels and tires might affect computerized systems. 

Read the complete story in the February issue of SEMA News. 

SEMA News—February 2013

BUSINESS
By Steve Campbell

Wheel and Tire Trends Update

A Look at the Marketplace With Industry Pros and Media

		Anyone who walked the South Hall of the Las Vegas Convention Center during the 2012 SEMA Show understands that there is an abundance of wheel types and sizes for every vehicle and every preference. And even more variety is available through customization.

While the economy continues to influence the tire and wheel markets, the greatest impacts on the industry have resulted from the elimination of the tariffs on Chinese tires, the steady growth of lower rolling resistance tires, advances in technology and the proliferation of Internet research, according to knowledgeable wheel-and-tire pros and media. They shared their views for this latest look at trends in their segments of the specialty-equipment marketplace.

Tires

The hottest tire categories in the United States are entry-level, Chinese-made passenger and light-truck products, according to David E. Zielasko, who is the editor and publisher of Tire Business newspaper. The tariff on those imports ended in September, he said, and there has been a renewed influx, including tires, from some of the more than 50 Chinese manufacturers exhibiting at the most recent SEMA Show.

“Tire retailers are looking for entry-level products now that many of the domestic tire makers have stopped producing them,” Zielasko said. “That’s opening the door, and we have seen several Chinese tire makers looking to establish footholds in the United States with their own branded products.”

Hank Feldman, president of Performance Plus Tire and Auto Superstore, said that the end of the tariff is also placing increasing pressure on domestic manufacturers to adjust prices that had skyrocketed over the last three years. Overcapacity and surplus inventories have also contributed to the drop in prices.

“We are seeing growth with grassroots and niche marketing,” Feldman said. “Cheap tires from China are hitting our shores once again just as the crisis in Europe impacts their other important market. It will become a buyer’s market in the near term.”

Jim Smith, editor of Tire Review magazine, said that the prices of mid-line tires were decreasing anywhere from 6% to 12% around the time of the SEMA Show, and industry insiders are expecting to see those price drops to continue through 2013.

“While that is not all because of the end of the tariff, it had a domino effect in terms of pricing,” Smith said, “and the lack of business also played a large role. The propensity of the market right now is either entry-level, low-cost tires or the touring area, which is kind of a step up from there. Touring covers a broad range of minivans and upper-end sedans with primarily H and T speed-rated tires.”

Smith said that he’s seen a dramatic reduction in tuner applications. While sport compacts remain popular in some geographical locations around the country, as does the musclecar category, the tuner segment no longer exists as a broad market.

		Tire design includes a heavy focus on tread engineering, including tread block design, circumferential and lateral groove design and depth, lug design and shoulder design.

Meanwhile, ecologically themed tires are still selling, with reduced noise and reduced rolling resistance products driving tread designs in that realm, according to Feldman. But there is some question about how long that development will last simply because it is becoming less of a trend and more of an expected facet of tire construction.

“We’re starting to see a little softening of that whole concept among consumers,” Smith said. “It has become ingrained in the tire industry, so it is almost expected. But there are also economic pressures. People are questioning why they should pay more for a fuel-efficient tire, so you’re seeing some of the gloss come off that trend.”

Smith said that consumers are also questioning how efficient such tires really are, since there is no rating system that they can rely on. Manufacturers are thus free to say that their tires deliver 20% better fuel economy without saying 20% better than what.

Still there’s no denying that tires and wheels are being designed and constructed to be lighter to help offset stringent fuel standards, and tire compounds are being formulated for greater durability and wear.

“A lot of our readers are switching to commercial tires mounted on 19.5-in. wheels,” said Bob Carpenter, editor of 8-Lug HD Truck and Work Truck Review magazines. “It’s an expensive upgrade, but you can get close to 100,000 miles or even more on them once you’ve made the switch. A guy who hauls a heavy load all week usually gets only 20,000–30,000 miles out of a set of tires. If you use your truck to make money, you don’t want it sitting at the tire shop for half a day every few months.”

Rick Péwé, editor-in-chief of 4-Wheel & Off-Road magazine, pointed out that there is also an increasing demand for tires applicable to towing.

“Tow vehicles require a higher load rating, such as D and E,” he said. “Five years ago, there were not nearly as many tow offerings with good tread patterns in all-terrain, mild-terrain and even aggressive tires. Now we have tires that are made for trucks that tow, but the owners still want a lift kit and an aggressive stance. That can’t really be done on C-load-rated tires.”

As consumers make their choices, the search for lower prices and better wear characteristics is of paramount concern to tire manufacturers. Ken Warner, vice president of sales and marketing for Mickey Thompson Performance Tires & Wheels, pointed out that tire design includes a heavy focus on tread engineering, including tread blocks, circumferential and lateral groove design and depth, lug design and shoulder design.

“It’s important that attention be given to every aspect of the tire tread and shoulder design, depending upon the applications for the tire,” Warner said. “And, for better or worse, manufacturing tires still requires oil. Trends in materials and construction include efforts to conserve oil and use of alternative oils in the manufacturing process, along with a variety of ways to safely recycle used tires at the end of their life span.”

There is also a trend away from absurdly large tires sizes, Feldman said, with the aftermarket seeing increased sales of tires built for 16-, 17- and 18-in. wheel sizes. The exception to that trend remains in the niche markets, and he said that the truck-tire market is seeing a resurgence. Péwé concurred, noting that manufacturers are coming out with 38-, 40- and 42-in. tires with alternatives in tread patterns.

“Nitto just introduced a large tire that is available in both a soft compound for trail use and a different compound that is DOT-approved for the street,” he said. “People don’t stick with the stock 33-in. size when they replace their tires. They start moving up, and even the 35 is pretty small for a trail rig anymore.”

		Ecologically themed tires are still selling, with reduced noise and reduced rolling resistance driving most tread designs.

According to Joe Burnside, an automotive freelance writer, the hottest truck tire currently is the Toyo Open Country AT II, and its popularity hinges on the same points Péwé and Carpenter made.

“Truck owners are trying to balance performance and aesthetics,” Burnside said. “They want a tire that will perform in multiple arenas, will withstand the tortures of heavy loads and towing and will provide longevity. The era of large, lifted, flashy trucks is gone.”

There has also been a shift in vehicle construction. Zielasko pointed out that crossover vehicles continue to gain ground over sport utilities. CUVs are built, for the most part, using passenger-car platforms while SUVs tend to be truck-based, and there are resultant differences in tire requirements.

“CUVs require tires that are quieter, are optimized for rolling resistance and need less off-road capability,” he said. “And we are also seeing trends toward tires with higher speed ratings—H and V—on more vehicles.”

Péwé noted that, regardless of market or vehicle type, tire dealers must acknowledge that retailing is changing under the influence of the Internet.

“People in the middle of Iowa can now get a set of tires and wheels sent to them mounted and balanced from any of the larger mail-order companies,” he said. “National Tire & Wheel has been doing that for some time, and package deals seem to be where it’s at.”

Warner said that Mickey Thompson encourages its dealers to create packages, with the focus on value rather than on trying to be the least expensive.

“Retailers should package the sale with options such as tires and wheels, tires and alignment service, tires with a free tire rotation service every 5,000 miles,” he said. “Be creative in packaging the sale to add more value and bring the customer back. Most manufacturers are developing programs that benefit tire dealers, and that’s good business. Things such as consumer rebate programs, incentives and referral reward programs for dealers create more opportunities for growth and sales.”

Dealers also need to maintain their integrity, even in the face of economic uncertainty and those wavering prices.

“Even when the economy is down and people are scraping by, retailers still have a duty to the customer and to themselves,” said Smith. “They have a responsibility to deliver the customer the best tires possible for the application and the situation. If the customer comes in with a performance vehicle with V-rated tires on it, the retailer is obliged to replace those with V-rated tires. Not an H, not an S. If the customer insists on something cheaper, the dealer needs to walk away from that business. It is just a lawsuit waiting to happen.”

Dealers should also be ready to address and service tire-pressure monitoring systems (TPMS), many of which have come due for maintenance. Checking the TPMS prior to performing tire work will help dealers avoid disputes with customers should issues arise after the work has been completed.

“The first TPMS sensors began appearing on vehicles in significant numbers five or six years ago,” Zielasko said, “and their battery life is now coming to an end. Tire dealers need to know how to service the systems, and they should check the batteries and the functionality of the systems themselves before beginning any tire work.”

Wheels

Wheel manufacturers, distributors and dealers must pay heed to innovations that include not only TPMS, but also electronic stability controls and how wheels and tires might affect computerized systems. 

Read the complete story in the February issue of SEMA News. 

SEMA News—February 2013

BUSINESS
By Mike Imlay

Exit Stage Right

Why Every Business Owner Needs a Plan

	It’s inevitable: Sooner or later, every business owner must exit his enterprise. Will you do it on your terms? Preparing an exit plan today not only safeguards your future but increases profit, cash flow and success in the here and now.

It’s as inevitable as death and taxes: If you’re a business owner, one way or another, you’ll eventually leave your enterprise. The only question is how—and whether you’ll do so on your own terms.

Will you retire gracefully? Pass your company on to family? Opt for a management buyout? Go for a merger or acquisition? Or will unforeseen circumstances force your exit sooner than expected?

Having an exit plan to cover every contingency is like insurance for you and your company’s future. Unfortunately, as the U.S. Small Business Administration (SBA) noted in its website article “Getting Out,” many small-business owners lack an exit strategy addressing such events as financial hardship, disability, retirement or even death.

“Given the current economy, it isn’t surprising small-business owners focus their energies on business survival, future growth and even remaining active in business after retirement,” conceded the SBA.

However, according to Rick Schwartz, managing partner of Schwartz Advisors LLC in La Jolla, California, a solid exit plan is actually a key ingredient in promoting business survival, operational efficiency, growth and profits in the here and now.

“Just like you want to be thinking about your sales, marketing and product line, it’s very useful for business owners to at least give some thought every year to what they want to do with their business in the next three, five or 10 years,” said Schwartz, who recently led a 2012 SEMA Show educational seminar on the topic. “Sometimes you know what you want to do, which makes it easier to plan a course of action, and sometimes you’re not sure. But that shouldn’t stop you from at least being proactive about setting your business up for success.”

Increasing Value

In other words, a good exit strategy gives a business owner long-term goals to work toward. It helps you evaluate your business and its true worth the way a potential buyer might—and sets you on a course to increase its value through everything from hiring talented, success-oriented people to improving day-to-day operations.

“Sometimes as business owners, it’s easy to do things just because they’ve always worked that way,” continued Schwartz. “But it’s important to step back once a year and look at your business and ask how it can be more efficient, more effective.”

		As a business owner, you never want to be in a situation where you have to do something like sell the company because maybe you were in an accident and can’t work.

As a mergers and acquisition consultant working exclusively with the automotive aftermarket, Schwartz Advisors LLC also does a lot of management consulting, helping businesses with strategic planning, sales and marketing. After all, improving a company’s performance makes it much more attractive to a potential buyer.

“In some cases, the client has no idea when any merger or acquisition activity will take place,” Schwartz pointed out. “What we’re doing is helping them think about things down the road that they might want to pursue. It’s not necessarily something that’s imminent—it’s preparing for the future. As a business owner, you never want to be in a situation where you have to do something like sell the company because maybe you were in an accident and can’t work. Or what happens if someone calls you one day out of the blue and says they want to buy your business and you’re not prepared for that?”

Perhaps as a business owner you’d rather pass your life’s work on to family or others without selling it outright. Even so, you’ll want to see it as a commodity and take appropriate steps to increase its valuation in the same manner as if you were actually putting it on the market.

“I think it’s important to be asking what buyers look for in a business,” emphasized Schwartz. “If you have a product, you know what the customers want. You know what their habits are, what they’ll buy and the price they’ll pay. You have to think of your business as a product.”

Mike Dunkle, a partner in Business Team Los Angeles, agreed. His Torrance, California-based company specializes in the sale of small businesses with gross sales ranging from $500,000 to $10,000,000.

“It makes for good business planning for an owner to be looking at how he runs his business, even if a [planned exit] is five years out,” Dunkle said. “And although he may be comfortable with the way he is, it’s good to start putting on glasses that look at his business as if he were a prospective buyer.”

Where to Begin

	Before even considering selling your business, you’ll want to take a number of crucial steps to increase its value on the mergers and acquisitions market.

There are several elements to any effective exit plan (see “Increasing Value to Buyers” sidebar), but you’ll first want to pay special attention to involving your management team or key employees in the creation of an overall strategic business plan. The process does not have to be complex—and neither does the finished product.

With many basic examples available on the Internet or through business consultants, strategic plans are “living documents” that are subject to evolution. The important thing to remember is that a company that identifies its goals and tactics in writing instantly raises its worth. More than that, a roadmap to growth is something every business should have, regardless of any future merger or acquisition considerations.

“A good strategic plan starts with articulating very concrete goals and following up with clearly thought-out tactics for achieving those goals,” said Schwartz. “Sometimes business owners are really good about saying what they intend to accomplish in the next 12 months, three years, five years. But if you don’t know what you’re ultimately aiming for, you’ll never get there.”

Both Schwartz and Dunkle emphasized diversifying the customer base and sales channels as part of that plan, since potential buyers shy away from businesses that put all their eggs in one basket. The good thing is that most companies actually see an increase in cash flow, profits and market share as they implement their plans.

Meanwhile, executing your plan will go much easier if your staff has contributed to its development along the way. And that leads to another critical element of an effective exit strategy: a separate succession and/or transition plan.

In short, your company’s value also increases through a plan to ensure continuity of business. Equally valuable are talented, well-trained employees who are ready to implement that plan. For some business owners, stepping back from responsibilities may be difficult, but a well-organized transition plan will be worth its weight in gold should something unfortunate suddenly happen to you.

“We stress efforts to have as solid a supervisory and management structure as possible,” explained Dunkle. “It’s absolutely critical to the new buyer coming in and to the owner who’s selling because he’s concerned about his employees, wants to make sure his customers are taken care of and wants to make sure the new owner can continue on.”

Doing the Paperwork

Ultimately, however, Dunkle said that the most important step in your exit strategy will be getting your company’s paperwork in order well ahead of time.

Read the complete story in the February issue of SEMA News. 

SEMA News—February 2013

BUSINESS
By Mike Imlay

Exit Stage Right

Why Every Business Owner Needs a Plan

	It’s inevitable: Sooner or later, every business owner must exit his enterprise. Will you do it on your terms? Preparing an exit plan today not only safeguards your future but increases profit, cash flow and success in the here and now.

It’s as inevitable as death and taxes: If you’re a business owner, one way or another, you’ll eventually leave your enterprise. The only question is how—and whether you’ll do so on your own terms.

Will you retire gracefully? Pass your company on to family? Opt for a management buyout? Go for a merger or acquisition? Or will unforeseen circumstances force your exit sooner than expected?

Having an exit plan to cover every contingency is like insurance for you and your company’s future. Unfortunately, as the U.S. Small Business Administration (SBA) noted in its website article “Getting Out,” many small-business owners lack an exit strategy addressing such events as financial hardship, disability, retirement or even death.

“Given the current economy, it isn’t surprising small-business owners focus their energies on business survival, future growth and even remaining active in business after retirement,” conceded the SBA.

However, according to Rick Schwartz, managing partner of Schwartz Advisors LLC in La Jolla, California, a solid exit plan is actually a key ingredient in promoting business survival, operational efficiency, growth and profits in the here and now.

“Just like you want to be thinking about your sales, marketing and product line, it’s very useful for business owners to at least give some thought every year to what they want to do with their business in the next three, five or 10 years,” said Schwartz, who recently led a 2012 SEMA Show educational seminar on the topic. “Sometimes you know what you want to do, which makes it easier to plan a course of action, and sometimes you’re not sure. But that shouldn’t stop you from at least being proactive about setting your business up for success.”

Increasing Value

In other words, a good exit strategy gives a business owner long-term goals to work toward. It helps you evaluate your business and its true worth the way a potential buyer might—and sets you on a course to increase its value through everything from hiring talented, success-oriented people to improving day-to-day operations.

“Sometimes as business owners, it’s easy to do things just because they’ve always worked that way,” continued Schwartz. “But it’s important to step back once a year and look at your business and ask how it can be more efficient, more effective.”

		As a business owner, you never want to be in a situation where you have to do something like sell the company because maybe you were in an accident and can’t work.

As a mergers and acquisition consultant working exclusively with the automotive aftermarket, Schwartz Advisors LLC also does a lot of management consulting, helping businesses with strategic planning, sales and marketing. After all, improving a company’s performance makes it much more attractive to a potential buyer.

“In some cases, the client has no idea when any merger or acquisition activity will take place,” Schwartz pointed out. “What we’re doing is helping them think about things down the road that they might want to pursue. It’s not necessarily something that’s imminent—it’s preparing for the future. As a business owner, you never want to be in a situation where you have to do something like sell the company because maybe you were in an accident and can’t work. Or what happens if someone calls you one day out of the blue and says they want to buy your business and you’re not prepared for that?”

Perhaps as a business owner you’d rather pass your life’s work on to family or others without selling it outright. Even so, you’ll want to see it as a commodity and take appropriate steps to increase its valuation in the same manner as if you were actually putting it on the market.

“I think it’s important to be asking what buyers look for in a business,” emphasized Schwartz. “If you have a product, you know what the customers want. You know what their habits are, what they’ll buy and the price they’ll pay. You have to think of your business as a product.”

Mike Dunkle, a partner in Business Team Los Angeles, agreed. His Torrance, California-based company specializes in the sale of small businesses with gross sales ranging from $500,000 to $10,000,000.

“It makes for good business planning for an owner to be looking at how he runs his business, even if a [planned exit] is five years out,” Dunkle said. “And although he may be comfortable with the way he is, it’s good to start putting on glasses that look at his business as if he were a prospective buyer.”

Where to Begin

	Before even considering selling your business, you’ll want to take a number of crucial steps to increase its value on the mergers and acquisitions market.

There are several elements to any effective exit plan (see “Increasing Value to Buyers” sidebar), but you’ll first want to pay special attention to involving your management team or key employees in the creation of an overall strategic business plan. The process does not have to be complex—and neither does the finished product.

With many basic examples available on the Internet or through business consultants, strategic plans are “living documents” that are subject to evolution. The important thing to remember is that a company that identifies its goals and tactics in writing instantly raises its worth. More than that, a roadmap to growth is something every business should have, regardless of any future merger or acquisition considerations.

“A good strategic plan starts with articulating very concrete goals and following up with clearly thought-out tactics for achieving those goals,” said Schwartz. “Sometimes business owners are really good about saying what they intend to accomplish in the next 12 months, three years, five years. But if you don’t know what you’re ultimately aiming for, you’ll never get there.”

Both Schwartz and Dunkle emphasized diversifying the customer base and sales channels as part of that plan, since potential buyers shy away from businesses that put all their eggs in one basket. The good thing is that most companies actually see an increase in cash flow, profits and market share as they implement their plans.

Meanwhile, executing your plan will go much easier if your staff has contributed to its development along the way. And that leads to another critical element of an effective exit strategy: a separate succession and/or transition plan.

In short, your company’s value also increases through a plan to ensure continuity of business. Equally valuable are talented, well-trained employees who are ready to implement that plan. For some business owners, stepping back from responsibilities may be difficult, but a well-organized transition plan will be worth its weight in gold should something unfortunate suddenly happen to you.

“We stress efforts to have as solid a supervisory and management structure as possible,” explained Dunkle. “It’s absolutely critical to the new buyer coming in and to the owner who’s selling because he’s concerned about his employees, wants to make sure his customers are taken care of and wants to make sure the new owner can continue on.”

Doing the Paperwork

Ultimately, however, Dunkle said that the most important step in your exit strategy will be getting your company’s paperwork in order well ahead of time.

Read the complete story in the February issue of SEMA News. 

By SEMA Staff

Randy Slawson built the Bomber Fabrication car with his own hands.	Slawson finished the Griffin King of the Hammers in first place.

Despite chilly temperatures and high winds, more than 30,000 people (60,000 over the course of the event) poured into Johnson Valley OHV area last Friday to witness Randy Slawson and his co-driver and brother Mike make history at the Griffin King of the Hammers (KOH) presented by Nitto Tire. Slawson is no stranger to KOH, but 2013 marked the first time the driver and fabricator has held the scepter in his own hands. The Grand Terrace, California, resident has been part of KOH since the beginning, navigating Jeff Reynolds to victory at the inaugural race in 2007. Since that time, Slawson has been diligently working toward his own victory behind the wheel of the Bomber Fabrication car he built with his own hands.

Slawson had the ninth-fastest qualifying time last Wednesday, battling as a Last Chance Qualifier among 62 competitors for one of only a dozen spots in the main race. Slawson has employed this strategy for the past three years; choosing to focus exclusively on the Griffin King of the Hammers instead of running the entire Ultra4 series to pre-qualify for the race through another event. Strategy played a pivotal role in the race beyond qualifying. The 182-mile course covered three laps, with the first lap through fast wide-open desert and the final two laps through the Hammer rockcrawling trails.

At the end of 50 miles, Slawson was running in the top 10, remaining patient and letting the competition fall to attrition. “There was not a lot of traffic,” Slawson commented at the finish line. “It was windy so the dust wasn’t too bad. We were able to just run our own pace and everything just came together for us.”

	With only 27 of 129 competitors able to complete the course, this year's King of the Hammers was said to be the hardest in the event's history.

Slawson chose to run the 10-ft. vertical rock wall on the Backdoor trail on his second lap to avoid traffic, while other frontrunners mistakenly waited until the last lap.

At the finish line, Slawson was followed by two-time King Shannon Campbell and newcomer Chicky Barton in third place, both in single-seat cars that required them to navigate through the maze of canyons in Johnson Valley in addition to driving. Only 27 of 129 competitors were able to complete the course, which was universally agreed to be the hardest in KOH’s history.

“The capabilities of Ultra4 vehicles grow by leaps and bounds each year,” promoter Dave Cole explained. “We added longer stretches of desert and more challenging rocks this year in order to test the abilities of these vehicles and drivers.”

Fans cheered on the competitors at various spectator areas and on two Jumbotrons providing live feeds from around the course. The live webcast was watched more than 470,000 times by 270,000 unique viewers, allowing fans from across the globe root for their favorite teams.

The top 10 finishers are listed below. View the complete results.

Finishing Order		Vehicle #		Driver		Start Time		Finish Time		Elapsed Time
1		4448		Randy Slawson		8:02:00		15:30:10		7:28:10
2		5		Shannon Campbell		8:00:00		15:48:41		7:48:41
3		144		Chicky Barton		8:05:30		16:29:20		8:23:50
4		4421		Erik Miller		8:03:30		16:40:22		8:36:52
5		4461		Ben Napier		8:03:30		17:40:42		9:37:12
6		4420		Derek West		8:02:00		18:16:32		10:14:32
7		4138		Craig Ross		8:11:00		18:36:21		10:25:21
8		27		Jon Cagliero		8:07:00		19:01:24		10:54:24
9		966		Jason Blanton		8:08:30		19:36:18		11:27:48
10		4417		Matthew Messer		8:01:30		19:51:38		11:50:08

	Mickey Thompson Performance Tires & Wheels will be the official sponsor of the Top Truck Challenge (TTC) again this year.

Mickey Thompson Performance Tires & Wheels to Sponsor 21st Annual Top Truck Challenge; Enters Long-Term Sponsorship Agreement With Brain Deegan
Mickey Thompson Performance Tires & Wheels returns to the Top Truck Challenge (TTC) again this year as an official sponsor. This year marks the 21st year for this annual event produced by Four Wheeler magazine, held in June in Hollister, California.

TTC competitors participate in the Tow Test, Frame Twister, Mud Pit, Obstacle Course, Hill Climb and Tank Trap. Plus, this year the competitors will have a new challenge called the Coal Chute—an event that utilizes a freshly renovated section of the Hollister Hills State Vehicle Recreation Area (SVRA).

Additionally, beginning with this year’s race season, Mickey Thompson Performance Tires & Wheels will enter into a long-term sponsorship agreement with four-time Lucas Oil Off Road Racing Series (LOORRS) Short Course champion and 15-time X Games medalist Brian Deegan. Mickey Thompson will act as the official car and off-road tire sponsor for Deegan, and provide support in a variety of ways, including sponsorship of his LOORRS and Global RallyCross Championship (GRC) presence. 


Deegan, a two-time Pro 2 Unlimited Class Champion and two-time Pro Lite Unlimited Class Champion, received the Pro 2 Unlimited Rookie of the Year and LOORRS Driver of the Year awards in 2011. Beginning this season, Deegan will compete in Pro 2 Unlimited Class using Mickey Thompson Baja Pro Radial tires, and in the Pro Lite Unlimited Class using both the Mickey Thompson MTZ Radial and ATZ Radial tires. Deegan will also serve as a technical consultant in the real-world testing, evaluation and development of the Mickey Thompson tire products for continued research and development of the company’s high-performance, off-road and ultra-high-performance products. He will also serve as an official spokesperson for the Mickey Thompson brand. 

Joe Charles' ’01 Ford Mustang Bullitt, built by MV Performance, has run a quarter-mile time of 10.901 at 118.87 mph.

Granatelli Motor Sports-Sponsored Racer Joe Charles Wins NMRA Strange Engineering Coyote Stock Class Championship
Granatelli Motor Sports’-sponsored racer Joe Charles won the 2012 NMRA Strange Engineering Coyote stock class championship. The class requires that the engine and computers are left stock and untouched. “HiPo Joe’s” ’01 Ford Mustang Bullitt, built by MV Performance, has run a quarter-mile time of 10.901 at 118.87 mph. The championship-winning ’Stang is powered by a stone stock ’12 5.0L Coyote engine and Granatelli Hot Street Coils.

CORSA Named Exclusive Exhaust Sponsor of Cadillac Challenge
CORSA Performance Exhausts—a TMG Performance Products company—has become the exclusive cat-back exhaust sponsor of the Cadillac Challenge race series. The sponsorship includes renaming the race group's current C1 – Showroom Race Class to CORSA Performance Exhausts Class.

As part of the exclusive sponsorship, the highest point earner at the end of every three races will be awarded a complimentary CORSA Performance Exhausts CTS-V system. CORSA will also present a Pro-Series trophy at the end of the Cadillac Challenge 12-race season to the newly named CORSA Performance Exhausts Class champion.

The CORSA Performance Exhausts Cadillac CTS-V exhaust system is 19 lbs. lighter than stock and features a nonrestrictive design that delivers a 21% gain in exhaust flow versus stock, according to CORSA's flow bench tests.

CORSA Performance CTS-V exhaust systems are available for both Coupe and Sedan models in two sound levels—Sport and Touring. The Sport system is designed to appeal to Cadillac drivers that want a wide-open, aggressive tone, while the Touring system delivers a deeper, more refined sound. CORSA also offers a CTS-V Sport system for Wagon models, and a variety of part numbers to fit late-model Cadillac Escalades.

	Mickey Thompson Performance Tires & Wheels will be the official sponsor of the Top Truck Challenge (TTC) again this year.

Mickey Thompson Performance Tires & Wheels to Sponsor 21st Annual Top Truck Challenge; Enters Long-Term Sponsorship Agreement With Brain Deegan
Mickey Thompson Performance Tires & Wheels returns to the Top Truck Challenge (TTC) again this year as an official sponsor. This year marks the 21st year for this annual event produced by Four Wheeler magazine, held in June in Hollister, California.

TTC competitors participate in the Tow Test, Frame Twister, Mud Pit, Obstacle Course, Hill Climb and Tank Trap. Plus, this year the competitors will have a new challenge called the Coal Chute—an event that utilizes a freshly renovated section of the Hollister Hills State Vehicle Recreation Area (SVRA).

Additionally, beginning with this year’s race season, Mickey Thompson Performance Tires & Wheels will enter into a long-term sponsorship agreement with four-time Lucas Oil Off Road Racing Series (LOORRS) Short Course champion and 15-time X Games medalist Brian Deegan. Mickey Thompson will act as the official car and off-road tire sponsor for Deegan, and provide support in a variety of ways, including sponsorship of his LOORRS and Global RallyCross Championship (GRC) presence. 


Deegan, a two-time Pro 2 Unlimited Class Champion and two-time Pro Lite Unlimited Class Champion, received the Pro 2 Unlimited Rookie of the Year and LOORRS Driver of the Year awards in 2011. Beginning this season, Deegan will compete in Pro 2 Unlimited Class using Mickey Thompson Baja Pro Radial tires, and in the Pro Lite Unlimited Class using both the Mickey Thompson MTZ Radial and ATZ Radial tires. Deegan will also serve as a technical consultant in the real-world testing, evaluation and development of the Mickey Thompson tire products for continued research and development of the company’s high-performance, off-road and ultra-high-performance products. He will also serve as an official spokesperson for the Mickey Thompson brand. 

Joe Charles' ’01 Ford Mustang Bullitt, built by MV Performance, has run a quarter-mile time of 10.901 at 118.87 mph.

Granatelli Motor Sports-Sponsored Racer Joe Charles Wins NMRA Strange Engineering Coyote Stock Class Championship
Granatelli Motor Sports’-sponsored racer Joe Charles won the 2012 NMRA Strange Engineering Coyote stock class championship. The class requires that the engine and computers are left stock and untouched. “HiPo Joe’s” ’01 Ford Mustang Bullitt, built by MV Performance, has run a quarter-mile time of 10.901 at 118.87 mph. The championship-winning ’Stang is powered by a stone stock ’12 5.0L Coyote engine and Granatelli Hot Street Coils.

CORSA Named Exclusive Exhaust Sponsor of Cadillac Challenge
CORSA Performance Exhausts—a TMG Performance Products company—has become the exclusive cat-back exhaust sponsor of the Cadillac Challenge race series. The sponsorship includes renaming the race group's current C1 – Showroom Race Class to CORSA Performance Exhausts Class.

As part of the exclusive sponsorship, the highest point earner at the end of every three races will be awarded a complimentary CORSA Performance Exhausts CTS-V system. CORSA will also present a Pro-Series trophy at the end of the Cadillac Challenge 12-race season to the newly named CORSA Performance Exhausts Class champion.

The CORSA Performance Exhausts Cadillac CTS-V exhaust system is 19 lbs. lighter than stock and features a nonrestrictive design that delivers a 21% gain in exhaust flow versus stock, according to CORSA's flow bench tests.

CORSA Performance CTS-V exhaust systems are available for both Coupe and Sedan models in two sound levels—Sport and Touring. The Sport system is designed to appeal to Cadillac drivers that want a wide-open, aggressive tone, while the Touring system delivers a deeper, more refined sound. CORSA also offers a CTS-V Sport system for Wagon models, and a variety of part numbers to fit late-model Cadillac Escalades.

Edited By SEMA Staff

Starting off 2013 with your sales idling instead of driving forward? A third-party financing program can jumpstart your automotive equipment sales through an easy-to-use leasing solution customized to fit your customers’ budgetary constraints and growing needs. Bill Purcell of TIP Capital and the SEMA Education Institute will host this informative webinar. Purcell will explain how fixed-rate financing has become the popular choice in the B2B marketplace to acquire automotive equipment instead of a straight cash purchase or bank loan in today’s fluctuating economic conditions.

Join Purcell Thursday, February 21, at 10:00 a.m. (PST) to learn:

• Why more than 55% of American businesses choose leasing to acquire the equipment they need.
• How to utilize monthly terms and purchase options to offer a competitive pricing quote versus cash.
• How user-friendly and customized the financing process has become for equipment manufacturers.
• How one manufacturer increased its financing sales 168% during a four-year period.

Purcell, a 30-year veteran in equipment financing, will break down the entire process, answer any questions and show automotive manufacturers, builders and WDs how a leasing program provides a viable option to help increase your profits.

Don’t miss this opportunity to learn about equipment financing solutions available for your business.

Participate live or download the webinar when it's convenient. Registration is free for everyone.