Proudly serving the industry for which it was named for more than 50 years, Outdoor Power Equipment provides dealers who sell and service outdoor power equipment with valuable information to succeed in a competitive market.
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Some equipment vendors can be hesitant when it comes to providing financing to their customers. However, vendor financ- ing is a significant way to gain a strategic advantage over the competition. Particu- larly for small- and medium-size dealers, having a financing program levels the playing field by allowing them to compete against large manufacturers, particularly when a manufacturer has a captive finance unit. In addition to offering customers the service advantage of being a local, familiar contact, it is possible to offer attractive fi- nancing terms that give customers a one- stop shopping option. Many equipment dealers understand- ably do not have expertise in financing since their focus is on equipment. They also don't have the resources or time to invest in building an equipment finance program. Creating an equipment finance program is not complicated high finance, and can be a turn-key operation. A simple tool using the cost and description of the equipment is all that's needed to provide a professional quote to include in every sales proposal. With an understanding of the benefits of vendor finance for both dealers and their customers, and how to set up a program, dealers will be well positioned to land new customers and strengthen exist- ing relationships. Why is it so important to offer financ- ing to customers? To start, offering attrac- tive financing options significantly reduc- es the customers' incentive to check out competitors' prices or explore a financing option that could delay the sale or lead the customer toward a competing dealer. It's also more feasible for a customer to make a monthly payment than to make a lump sum cash outlay. Preserving cash right now is near and dear to the hearts of many small business owners, and financing gives them more flexibility to manage their cash flow. Another reason is that often custom- ers don't know if they'll want to own the equipment in three or four years. Several financing plans delay this decision, giv- ing the customer the advantage of time to see if it's worthwhile to actually own the equipment in the future. From the dealers' perspective, offering financing allows them to establish a rela- tionship of trust that enables repeat busi- ness when additional equipment is need- ed and new advances warrant equipment upgrades. The following steps outline how to set up a vendor finance program and also explain more about "why?" ESSENTIAL STEPS FOR DEALERS TO ESTABLISH A SUCCESSFUL VENDOR FINANCE PROGRAM 1. Match your sales strategy to your financial strategy. Dealers typically want to build a sustainable stable of custom- ers from whom they can get repeat busi- ness every two or three years, as well as continue to add new ones. However, they need to recognize that if they don't offer financing, they are not supporting their sales strategy. Their financing strategy should integrate with their sales strategy. Remember, cash equals a transaction, but financing equals a relationship. 2. Find the right finance partner. Once the decision has been made to offer financ- ing, it's highly recommended to find the right financing partner. When evaluating a potential financing company, some key questions to begin with are as follows: Does the company offer expertise in my industry? Is the company going to be finan- cially strong enough to support my pro- gram long term? Is it a full-service financing company? Industry expertise will ensure a knowl- edgeable partner with a proven record of success in building and maintaining pro- grams in the dealer's market. Financial stability is important to the longevity and strength of the program and will save the inconvenience of re-establishing a new program down the road. For example, some leasing divisions within larger com- panies might change their business strat- egy and no longer support existing indus- tries or dealership programs. Finally, selecting a full-service equip- ment financing company is critical to suc- cessfully executing the other steps. To find a partner, check out online resources, such as the Equipment Leasing and Finance Association's provider database at http:// equipmentfinanceadvantage.org/fp/ and industry trade shows. 3. Integrate financing into your sales process. The keys to success once a fi- nancing partner is in place are to roll the program out to the salespeople so they are comfortable with offering it, fully integrate it into their sales process, and include a finance option with every sales proposal. The equipment finance partner should be responsible for providing the time and resources to train the dealer's salespeople, whether in person, by webinar or other learning channel. They should offer coach- ing on using financing as a closing tool and to capture repeat business. The right fi- nancing partner should be an extension of the dealership's sales team and be available to assist in closing transactions with its cus- tomers. It should also be incorporated into the human resources sales training process to ensure all new sales reps can effectively present it. 4. Use financing as a marketing tool to grow your business. Take advantage of the equipment finance partner's mar- keting expertise. Dealers should leverage the resources of their financing partner to market jointly to their customer base, ■ BY MARK SCARDIGLI FEATURE STORY | Financial Solutions 24 OCTOBER 2015 OUTDOOR POWER EQUIPMENT www.outdoorpowerequipment.com Vendor Finance: Giving equipment dealers a strategic edge for growth Remember, cash equals a transaction, but financing equals a relationship.