IF YOU ARE A DEALER in Texas, you've no doubt heard of Morris Baker and his network of six Family PowerSports retail stores that are spread across the state.
Baker owns dealerships in Lubbock, McKinney, Weatherford, Odessa and San Angelo, which all specialize in powersports products. A second operation in San Angelo deals mostly in marine products.
In this issue of Dealernews, we take a look at Baker's San Angelo store, a location that was awarded "Business of the Year" this year by the local chamber of commerce.
Opened in 2001, San Angelo Family Power- Sports is a 21,000 sq. ft. store sitting on 2.5 acres of land adjacent to the Houston-Harte Expressway — the main loop around the city. Although the operation sells every niche of two-wheeler, much of its business comes from landowners and outdoor enthusiasts seeking utility quads and side-by-side vehicles.
"San Angelo is the ranching capital of Texas — we're talking large ranches, anywhere from 20,000 acres to 190,000 acres — and we've got cotton farming, the oil industry, military installations, a strong medical community and colleges and universities," Baker says. "With that said, business right now is good, not great. My goal has always been 8 percent annual growth, and we've been trending year-on-year growth until this year. Right now we're off 31 percent for the year, but we've been working hard on expense control for the past year and a half, so we're sitting in pretty good shape."
Designed by Retail Design Associates, the rectangular showroom features polished floors, cedar trim and 30-foot ceilings. A receptionist's desk is directly left of the front door, book-ended by floor displays and displays suspended from the ceiling that are changed seasonally. Vehicles are grouped together by type and brand, with in-season units positioned at the front of the showroom. Management offices are located along a second-floor mezzanine, while track lighting serves to attract customer attention to highlighted areas.
"We do a lot of UTVs and ATVs. Despite the open land, we have a very small off-road community," Baker says. "But, with the military operations and the colleges, we also have a good contingent of young people coming in looking at sportbikes."
Family PowerSports has been trying to build its used inventory to achieve a sales goal of one-to-one, used to new. "We haven't quite got there," Baker says. "We're running about 80 percent used at this time."
Having the right inventory at the right time is always key, and having six stores gives Baker an advantage in moving vehicles to where they are needed.
"There's a lot of trading going on," Baker says. "In fact, we just bought four new Dodge Sprinter vans, each converted to hold a 16-foot flatbed and outfitted with winches that we use to transport vehicles. They're on the road constantly hauling crated, new or used units."
The L-shaped PG&A department is divided between street and off-road gear. Racks and point-of-purchase displays are obtained from aftermarket suppliers. Employees man three desks to keep lines short during busy periods, and the area around the desks is set up to maximize impulse purchases. The PG&A team is instructed to walk the floor to further aid customers.
"Customers mostly look for anything for UTVs and ATVs, whether for utility or hunting," Baker says.
Baker says aftermarket distribution services are evenly mixed between Tucker Rocky and Parts Unlimited. "We're kind of on an island out here in west Texas, so we take care of the businesses that come out here and they take care of us," he says. "When you limit your business to a smaller number of distributors and you're able to do a lot of dollars with each of them, you tend to be put a bit higher on the list."
Located in the rear of the building, the 5,000 sq. ft. service department was completely rebuilt last winter following a fire. Baker says he took advantage of the situation by re-creating the area, building overhead storage for warranty and take-off parts, installing energy-efficient lighting and moving the dyno room to create additional work space. The area is further defined by five service lifts, a locker room for technicians to wash up and change, and a back lot that is accessed by a large roller door and serves to house customers' service units during business hours. Most of the service employees are MMI graduates.
The store operates two lifts per technician and attracts customers with its "Green Lanes" for oil changes, tire changes, and all other quick services. "There's no wait, and those services can go to the front of the line," Baker says. "That helps customers get on the road, and help us make some money on quick maintenance and high-profit work."
The dealer group previously had difficulty attracting and keeping technicians, but Baker solved that problem two years ago. "We were losing technicians over just a few dollars an hour, so I decided to be the highest paying guy in the area," he says. "I raised the labor rate to $98 an hour and then began paying technicians $18.66, $24 or $30 an hour, depending on experience. Now we don't lose techs anymore."
Family PowerSports' F&I business is run by a central office, with each dealership dictated by the guidelines it sets forth. Recent problems in the economy have made business "interesting," Baker says.
So far this year the dealer group is seeing 51 percent of its deals financed and 49 percent completed cash in hand. In comparison, the dealer group ended 2007 with a 62 percent average for finance deals.
"We've seen problems with the financing offered by the OEMs," he says. "You can get the guy with perfect credit and you can get the guy that never has paid his bills. It's that meat-and-potatoes guy with the credit score between 660 and 750 that we can't get approved. Our traffic is still strong, but we're not able to get that guy, the average American, financed as easily as we have in the past six to eight years.
"Our reaction to that was to seek more financing locally. And I think that's why we're not down as much as many other dealerships," he continues. "So, bottom line, if you don't have a strong F&I department in your dealership, I would consider you unhealthy."
Family PowerSports has 28 employees. The dealership supports cross-training between departments so team members have a full understanding of the needs of the other departments. Baker says he also strives to promote from within, so continual training for all employees is a necessary component of the work experience.
"With the economy like it has been, we've been able to find some high-quality employees," Baker says. "Sometimes it gets a little tight. You can find warm bodies, but it's sometimes hard to find talent. Then, once we discover we have some talent, we work to keep them."
Employees know they won't advance unless they can train their replacements. "Once they've done that, they have the opportunity to move up," Baker says.
As for training opportunities, Family PowerSports uses manufacturer training while also employing its own weekly training sessions. "We take advantage of any manufacturer training made available, and we provide our own training opportunities weekly," Baker says. "I hire sales and leadership trainers to come in two to three times per year at two to five days at a time. "I think that's the reason a lot of dealerships may lose their employees; there's not enough training. Our employees really respond to it."
Family PowerSports dealerships were aligned with RPM Group, before it was bought earlier this year by Grant Sutton & Associates. Now Baker says he's "holding back and taking the wait-and-see approach to learn what pans out and whom we'll ultimately go with in the future."
MARKETING & PROMOTIONS
The majority of the funds set aside for Family PowerSports' promotional activities go toward events (56 percent).
"We put one percent of gross sales into advertising," Baker says. "If we can't measure it, we don't spend the money. For instance, with our billboards we use a different number on a billboard so we know exactly who is calling in. We also work the co-op pretty hard and take any penny they'll give us."
Baker says he believes in being a good steward of the communities in which he does business, and Family PowerSports' community involvement and promotional events appear to mirror that statement.
Last December, Baker created the "Friends of the Family" event, where he earmarked $5,000 for employees at each of his powersports dealerships ($25,000 in total) to find people in need and help them with things such as buying gifts for their children, or obtaining much-needed household items. Employees could also simply make donations to charitable organizations.
Also last year, the dealership sponsored the Cheyenne Fiveash Benefit Run. Cheyenne was a 14-year-old girl who died after battling cancer for most of her life. Her parents — avid motorcyclists — have created a charity/benefit run in her honor. Family PowerSports donated $3,000 and was the primary sponsor of the event, all proceeds from which went to the Children's Miracle Network.
Other events held in San Angelo include the dealership's weekly "Thursday Night Bike Night" and annual "West Texas Biggest Buck Contest."
"With the bike nights, because we already know our current customers and have a rapport built, we've taken the approach to firm up the relationships we have with those customers rather than spending huge amounts of money trying to gain new customers," Baker says. "The hunting contest, because this is a big area for hunting, is a proven traffic driver."