Store shot of Bend Euro Moto.
Kathy Jo Porter, and her husband, David Bingham, are the former owners of Bend Euro Moto in Bend, Ore. Due to a number of circumstances, they were forced to close their store in March 2010. This is Porter's story.
Since 2010 marked the closing of our store, we have a unique perspective in this discussion. In all honesty, our demise was not as much a result of our desire to leave the business as it was the loss of our financial partner. We were in the process of moving our Ducati franchise to another location, which had greater market potential. We would have needed a crystal ball to see it coming; his withdrawal was the last thing we anticipated.
Having said that, and being able now to look back with extreme clarity, I could write a book on what I would have done differently both to protect our business and to protect ourselves personally from exposure. But, for the purpose of addressing 2010 specifically here is my short list of missteps — although calling them missteps is an understatement — because in our case it was more like a freefall without a parachute.
• Our biggest expense was flooring costs of old inventory, and it literally ate us alive. I should have campaigned harder (I should have insisted) to redistribute bikes within the dealer network with my sales reps. Everyone bought in 2008 what eventually became too much inventory in 2009/2010 based on their volume at the time, so it was really no one’s fault that dealers were overstocked. Did anybody see a 60 to 70 percent decrease in volume? Probably not, but when it happened, there should have been more protection for those hardest hit by the economy. No one wins when a dealer has to close its doors and send all of the inventory back.
• Take your heart out of the equation. I think (hope) that most dealer principles are still enthusiasts to some degree, but when you are an enthusiast first and a business owner second, it can cloud your judgment. If an exit strategy is something you only think about when you’re about to get off of the interstate, you may need to explore your options.
• Don’t be afraid to rethink your business model. We simply would not entertain the notion of having anything but Ducati as our focus brand. We talked about Kawasaki because it was available in our area and it would have diversified our inventory and cultivated a new customer base. Looking back, it might have been a good decision.
• If you need to solicit money and want to bring on a partner, get it all down in writing and have a meeting of the minds before you involve lawyers. Bring attorneys in only to make it official, not to reinvent the wheel, because in my experience this is where deals get broken.
Dealernews: Like many dealers, market conditions in 2010 — following a dismal 2009 — were not kind to Bend Euro Moto. We asked Porter what were those conditions?
• An over-inflated real estate market. Bend was the second fastest-growing mini metropolitan city in the nation for a time during the "boom" years. This created a disproportionate amount of jobs in construction in an area with little other economic infrastructure.
• Deflated real estate bubble. When it all came to a screeching halt, the people who still had money saw their own net worth reduced so significantly that a motorcycle seemed to be the first thing they could live without.
• Unemployment. From 4/5 percent to 14 percent in what felt like overnight.
• Lack of and tightening of consumer credit options.
DN: Would Porter and co. have done anything differently if they could?
Porter: Without a crystal ball, I don’t know. I mean, one day you have a partner and you’re looking at locations for a shop together, the next day, his attorney comes up with impossible terms to continue. It was that sudden and he had been working with us for nearly a year before it happened. I supposed I would have taken my own advice and always kept an exit strategy in the back of my mind and operated as though anything that could go wrong, would go wrong. Because it did go wrong.
Actually, we did a lot right. We saw our market implode on itself and decided to pack up the store in Bend, Ore. and move it to Olympia, Wash. It was a bold decision and we were determined to go on, but when we couldn’t come to terms with our new partner (or rather, his attorneys), the only option was to close up shop. But when things got rocky, these were the things that helped us keep it together:
• Control every single expense that you can. From payroll to parts budgets, cut it to only what is necessary to get from one day to the next.
• If you get behind with your vendors, work with them to make manageable arrangements that you arrive at based on your real ability to pay. Again, this helps them in the long run if your survival is at stake.
• Make an effort to negotiate everything, including your rent. Your landlord doesn’t want you to fail, we were able to re-negotiate our lease for the last year we occupied our building.
• Really examine your market. Before you leverage everything you own to keep your business on life support, be realistic about your location. If your success was based on a real estate boom that was artificially inflated like Bend was, it’s not likely you’ll see the same kind of volume in the next decade.
More 2010 insights:
Doug Douglas Motorcycles
House of Harley-Davidson
Indian Motorcycle Charlotte
Powersports of Joplin
Steve Seltzer Honda
The Transportation Revolution European Motorbikes
World of Powersports