GSA E-News
(featured article from latest edition)

Going Above and Beyond
by Mike Brunken 

I’ve seen some pretty special relationships come from 20-clubs. I’ve seen dealers get to know each other so well that they take European vacations together. Gart likes to tell the story of how a 20-club member had some health issues and fellow 20-club members took turns running the dealership for weeks until he could return.  

Recently, I found out that Bob Kee from Destination Cycle Sports (Kerrville, TX) planned a riding trip with his good friend Rob Smith from Outdoor Sports (Prescott Valley, AZ). This trip was altered when Rob Smith told Bob that he had to cancel the mini-vacation to handle some major issues at the dealership. Instead of cancelling the trip Bob Kee decided to come visit Rob at his dealership in Arizona for the weekend. Bob has an MBA and can really crunch some numbers. I will let Rob tell you what happened that weekend.
 

Mike Brunken:  How did Bob help while he was there?  

Rob Smith:  It was much like having a "mini visitation". Bob dove into my numbers, made observations in the dealership and put together recommendations for us to address our issues. I left the 20 group experience a few years back in an effort to cut expenses. It wasn't that I didn't feel it was worth it, business just got so bad I felt it wasn't really a necessity any more since so many things were now out of my control. 

I started running the business out of the check book.....that is, more reactive than proactive. I felt I had departments as lean as I could and was just trying to reduce inventories and sell. Focusing on this took my eyes of the big picture and I lost touch with the numbers. Some of the key items Bob identified were that we were holding on to things that we thought were important but were in fact sucking the life out of the dealership. For me it was a boat line that I thought would be a profit center but in fact wasn't and for my partner, it was a small second location that he couldn't let go of. By eliminating those items and establishing an alternate flooring source for aged inventory getting rid of 15+% interest, and focusing on profit centers that were producing (used boats), we could turn things around

Mike Brunken:  What have you done since?  

Rob Smith:  We have entered into a buy/sell agreement on our 2^nd location. This will also eliminate the boat line that needs to go. We have established a line of credit to flip the 15% interest units to, as well as to purchase used boats. We rearranged the accessory showroom to position the items that need more assistance in selling like jackets, helmets, etc. in the vision of the counter. Now the parts manager, who was moved from an office behind the scenes to the P&A counter, can capture more sales and keep a better eye on the floor. The thing that still needs to be done is new pay plans. I struggle with that, I don't know how to design plans in winter in a economy that work now, then in the busy season, and can adapt (hopefully) to an improving economy.

Mike Brunken:  What did this mean to you?  

Rob Smith:  It gives me confidence and hope. It got me on track. It reinforces the importance of the 20 group experience, having & knowing the numbers inside & out. On a personal level it was one of the greatest expressions of friendship I've ever received. 

We at GSA welcome Rob Smith back to membership in January.

Going forward in 2012 

I remember teaching at our Dealer Candidate School in 2005. At lunch, one of the General Manager students got to talk about business in Arizona at that time. He had a Parts Salesman who made about $40,000 a year. This employee lived in a $250,000 house that appreciated in value in one year more than 15%. When you do the math the Parts Salesman almost made more money on house appreciation (if he had sold) than his salary at the dealership.  

With hindsight being 20-20 this made no sense. Of course, we all know how this story unwound itself. 

It’s great to see motorcycle sales numbers trending in the right direction. The feeling I get from my conversations with owners is that things are opening up. No, the traffic count isn’t where it was four years ago, but dealers are primed and ready to go. Most are already in the process of hiring the salespeople needed for the coming months. They want to spend quality time with them right now to make sure that in March they hit the ground running.  

We look forward to helping you grow in 2012.