Big has become bigger

The questions that occupy Lily’s mind are the likes of “What does it take to start an auto service centre?”. She realises that the answer...

The questions that occupy Lily’s mind are the likes of “What does it take to start an auto service centre?”. She realises that the answer is no longer the same now as two or three decades ago...

A business consultant would say: determine the scope of your business, set your direction and create the business plan, plan your financing, define operation parameters, hire skilled workers, find resources, design marketing strategy, and so on. Then, find a suitable location, organise and optimize the space, establish the back-end office and, finally, draw the customers in.

Twenty or thirty years ago, you could use this blueprint of eleven (or so) steps to open an auto service centre; just follow the blueprint and maintain the daily operations, and you can slowly but surely build the business. Today, the synonyms of the adjective ‘enormous’ - hyper, giga, jumbo - are attached to everything, from scope to speed. When I first heard the term 'terabyte' some years ago, I thought it meant something 'terribly big'!

The evergreen concept of the Triple Constraint of the Project Management Triangle preaches that to establish a quality project/business, you will need to manage the constraints of cost, scope and time.

I recall of a tyre company that tried to set up service centres in 13 locations, all at once; it struggled for some years before closing the centres one by one and then fading into temporary oblivion. That project's scope was big, required significant investment and needed time to build resources and train workers in various aspects in order to maintain quality service. The failure of that project is not my focus here, but its re-genesis. A few weeks ago, the company launched an auto service centre again. This time, it was done strategically - partnering with an established auto service centre in the market - and was scaled down in terms of scope, time and cost to maintain the quality of service. After this, they will begin launching the second outlet, then the third and so on. This sounds like proper project management, by breaking down the work. I think that this time it will work.

Recent automotive news cast the spotlight on Rick Ford from Texas, whose company aims to be one of the top 25 dealership groups in the US. “One of the new breed – from 0 to 24 stores in 1 year”, the headline reads. In this project, the main constraint is time but Rick has managed to 'open' 24 stores, which would have taken years, in just one. He implied an investment cost of at least US$100 million. The scope includes acquiring 13 dealerships, one auto auction and another 11 store purchases under contract. 

And yet, Rick said, “We are not anywhere close to done.” Modern businesses have redefined the scale of enormity - to build 24 brick and mortar stores would have taken many years of toil but acquisition has transformed those “years” into several simple transactions. This may not be ‘terascope’ (terribly big!) but at least qualifies as a ‘megascope’ (bigger than big?).

So, the question again: what does it take to start an auto dealership today? More than the eleven steps, it takes an entrepreneur spirit and the right opportunity. Rick highlighted that the recession in 2008 triggered his acquisition pursuit; he witnessed the bounce back, so this time he is acting on the same strategy to acquire dealerships at reasonable prices.

image: jalopnik.com

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