Dealers’ Domain

Question: What have you done over the past two years to improve your dealership’s profitability?

In order to increase profitability this past two years, I’ve reduced to zero the number of employees I have to train from scratch, do my own pickups and deliveries (usually after supper), and requested that customers pick up parts from distant suppliers. They seem to be happy to do this chore to save me time and travel.
I found when I spent a lot of time training new hires, my own efficiency and production dropped to 25 percent. It seems that if I were to have a big repair shop, I’d use a dedicated mechanic to train.
Several advantages accrue from doing my own pickups and deliveries: 1) I more often find customers at home; 2) I can explain, in person, the repairs; and 3) The customer often thinks of other equipment that needs to be diagnosed, which I can do immediately.
Since I don’t stock more than basic popular engine parts, I often need body parts for John Deere, Simplicity, Ariens, etc. I look up the part numbers online, order the part from the nearest dealer, and request that the customer pick up and pay for the part after it arrives. In the case when the customer refuses, I have the parts mailed.
— Flute Snyder
Hudson Mower Doctor
Hudson, Wis.

It’s the little things times 10,000 that make all the difference! (The devil is in the details.) It’s hard to make over 17 percent on handheld equipment with [one particular manufacturer] setting up every OPE dealer in town, so you have to look at all the other stuff — charging for freight, shop supplies, proper disposal of waste gas and oil, etc. We also chart every expense category because a 1-percent expense reduction is worth a 2-percent sales increase. Even charging $1.40 for a bottle of two-cycle mix that lists at $1.35 makes a big difference to the bottom line at the end of the year.
— Dean Davis
Dogwood Inc.
Carbondale, Ill.

Some of the things that we have done to improve profitability in the last two years…
We have reduced our “on-the-shelf” parts inventory and ordered a greater number of parts as we need them, using suppliers with the best margins and fastest service.
We are continuing to reduce our hard good inventory and are restricting re-stock orders to the more popular, faster-moving models. Some lines have been discontinued completely.
We have eliminated some customer service items, like pickup and delivery, which were a drag on our bottom line.
We have moved the bulk of our floor plan from the large financial giants to our local banks and significantly reduced financing costs.
We have cancelled subscriptions for parts lookup services and are using the free Illustrated Parts Breakdowns available online.
We have terminated our dealer status with some short lines. The cost of required annual updates and travel to sales meetings was excessive for the volume of business we did with those companies. It is more cost effective to buy the occasional parts that are not available from our aftermarket suppliers, at retail.
We have changed our hours. This season, we will be working four 10-hour days (staying open later in the evenings), but shortening our Saturday hours and closing Monday. This move reduces our total hours open each week slightly, makes us more accessible to our customers, gives our employees a 2-1/2-day “weekend,” and seems more in fitting with our current business environment.
— Roger Zerkle, owner
ZDE, LLC
Flat Rock, Ill.

I remodeled my showroom and displayed product much better with pricing on each item. I didn’t realize how I was so used to my surroundings and how drab they had become. My Stihl rep brought that to my attention one day; sometimes, our reps give us good ideas. So, after 30 years of looking one way, I gave it a complete facelift. Now when my customers walk in, they are in awe of the changes. I must say that it is a huge improvement. Sometimes, we need to look at ourselves through our customers’ eyes. I’ve noticed the ladies view it much cleaner and brighter, and stay and shop longer now.
— Tony Nation
Nation’s Small Engine, Inc.
Hot Springs, Ark.

We knew the economy was ready to shift and restructure. Sticking to our business plan and not expanding too rapidly was a huge plus. We lowered our wholegood stocking numbers, and we pay for any units that come due. We changed our two-cycle line and now sell Stihl; the name just brings people in. The last thing we did was close in-house charges to the slow-paying customers.
— Matt Borden, owner
Ed & Matt Equipment
Greenville, R.I.

For years, we never charged for setup or delivery of new equipment; now we do. We also charge an estimate fee on any equipment we look at. We take a lot of trade-ins, and we started giving a gift card (to be used for future purchases) instead of dollars off when they purchase new equipment. We also do a lot on barter with our used equipment through ITEX and Barter Works. It’s a great way to trade off used equipment for other things we use like advertising, paper towels, printer paper, pizza, hotels, auto repairs, etc.
— Ken Stoller, president
Stoller Lawn & Garden Inc.
Orrville, Ohio

There are only two ways I know to improve profitability: cut expenses or increase sales margins. We watch all our utility prices — electric, gas, water, etc. This winter, we have been very conscientious about turning down the heat and shutting off the lights. It is a Catch-22 with sales margins — try to make more margin and risk fewer sales? I do believe that I will do more pickup and delivery after hours during the coming season and more setup work in my spare time. This should help to eliminate a part-time summer position.
— John P. Moon
Moon’s Farm-Yard Center, Inc.
Ulysses, Pa.