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On the Numbers Get Control of 2013 Strategies to help you create more financial and overall business direction for your dealership. By Garry bartecki Over the years, I have made a habit of getting together at least annually with the dealers I���ve worked with to hold an annual shareholder meeting in order to: n Review the trailing 12 months operating results n Note issues that kept us from reaching our goals n Discuss the game plan and cash requirements for the next 12 months n Determine how the tax minimization program is working n Get input how other risk factors affect the business It���s always been time well spent, giving us a follow-up list included in the meeting minutes to ensure the items listed were completed in a timely fashion. Many times, if there were important transactions to complete, we would reconvene in early July to update and adjust the program as required. The annual meeting was always attended by me, the company attorney, the tax partner working on our account, the CEO, COO and CFO, the sales manager and other professionals as required. Each of us would submit agenda items at least 30 days before the meeting and the CEO and I would finalize the agenda in time for all participants to prepare as necessary. From the financial side we reviewed at least a draft of the year-end audit report, paying close attention to the Statement of Cash Flows (the only statement that matters), the footnotes and any proposed journal entries, whether they were posted or not. This process alone provides a pretty good idea where we need to tighten up financial controls, especially if the year-end adjustments are too large to go unaddressed. We also passed out copies of the latest Cost of Doing Business Report (at the July meeting) and asked for any benchmarking data provided by the OEM or any 20 Group the dealer belongs to. These meetings last five to seven hours without considering prep time. The July meeting takes maybe half a day. You can add another day (at least) to compile the minutes, supporting documents and follow up schedules. We cover the obvious financial and tax review, but also the state of the market in terms of our territory, OEM issues, competitor issues, HR programs, manager performance and bonuses, banking relationships, terms and loan covenants, sales compensation, employee benefit plan contributions, fiduciary compliance issues, executive comp programs and payments, outstanding lawsuits, current dealership value and other risks directly related to the business. These meetings accomplish these vital functions: (1.) Getting the management team on the same page going forward (2.) Putting the shareholders in legal and fiduciary compliance (3.) Generating a list of solutions to improve operating results and cash flow One thing is for sure: Once you start having these meetings they will become a regular part of your management program. I believe gathering a group such as this provides benefits to the management team because discussion can be initiated by any member of the group, whereas they may be reluctant to do so as part of day-to-day operations. As you can tell, these types of annual meetings add a professional quality to your company and professionalism to C-level personnel. Other employees, knowing that these meetings take place, also have a level of comfort that any issues affecting personnel or the company were discussed at a formal meeting comprised of outside ���board��� members and advisors. You may want to give this process a try if you believe your company needs more direction and focus regarding financial and general business matters. Staying on Top of Your Rental Game In February, we held a financial webinar for AED dealers, and spent most of our 90 minutes discussing the new 3.8 percent tax on net investment income and the IRS request for comments on dual-use property. Next month at the semi-annual CFO/Rental conference, May 2-3, we plan to get into the details of these new tax laws using examples of how they work and how to mitigate the tax impact. There is a lot of material to cover and I encourage you to attend the conference if you need to understand how these new rules work. I believe dealers in the rental business especially need to understand these new rules if they are making decisions about the rental department and do not wish to deplete their cash position because they paid taxes they didn���t need to pay. The new tax issues are complex with the potential to add large amounts to taxable income. On the other hand, there are ways to control the tax burden if you know what you are doing. We can help with that. See our CFO Conference program line-up and sign up at aedu.org/714. Garry bartecki (gbartecki@ aednet.org) is AED���s vice president of Finance. April 2013 | Construction Equipment Distribution | www.cedmag.com | 47 47_On_the_Numbers_KP.indd 47 3/25/13 2:17 PM