Sarah Wolfenberg, and her husband, Jordan, have a fairly simple equation for growth at their three dealerships in Michigan: Acquisitions + System Implementation = Profitable Growth.
Growth has been aggressive — they have acquired seven stores in six years, combining them into three dealerships with $13 million in revenue and 50 percent market share in their area.
It’s an approach they learned, in part, from Bill Shenk’s 20 group, where they’ve been active members since 2006.
“It’s been a valuable experience,” Sarah says. “I’ve learned to set and track benchmarks in every area of the business, and I’ve learned the importance of a workable traffic log. I use those tools every day.”
The three stores are in Marquette, Iron Mountain and Houghton. The Iron Mountain and Marquette stores bring in about $5 million each, and Houghton adds another $3 million. Houghton was purchased in July 2010 so it’s a relatively new contributor.
Marquette and Iron Mountain are about the same size: 12,000 sq. ft. of parts, services and sales space. Houghton is at about 8,000 sq. ft. The three stores carry a full portfolio of products: snowmobiles from BRP, Polaris and Yamaha; motorcycles from Honda, Suzuki, Yamaha and KYMCO; ATVs from BRP, Honda, Yamaha, Polaris, Suzuki and KYMCO; UTVs, from BRP, Polaris, Yamaha, and KYMCO; Yamaha PWCs; KYMCO scooters; and boats from Lund, Bayliner and others.
The combined two-store operation for Marquette and Iron Mountain last year provided a nice increase in net profit, even though total unit sales were down. Combined net profit was $434,000, up from $414,000 in 2009. Houghton added another $77,000 for the last six months of 2010 for a total increase of nearly $100,000.
Unit sales dropped, however, by 145 units for the two stores. Houghton added another 112 units during last six months.
'IT HAPPENED WAY FASTER’
Sarah and Jordan, who both grew up in entrepreneurial families, began putting together the dealership group in 2004, only a few months after they started working at Iron Mountain Powersports. “We knew we wanted to be owners,” Sarah says. “But it happened way faster than we expected.”
The original owners wanted to retire, and Sarah and Jordan snapped up their offer to sell. The purchase was financed with family loans and savings. Things moved quickly after that first purchase. The same year, they bought out two local Polaris dealers to secure a large market area, and combined the operations into the one Iron Mountain store.
In 2005, they bought two more dealerships and acquired Honda, Arctic Cat, Yamaha and marine franchises. The following year they bought the Marquette dealership that had Polaris, Honda, Suzuki and BRP franchises. Then the two took a break until 2010, when they purchased the Houghton dealership.
When I asked Sarah to describe her secret for success, she replied in her characteristically candid manner:
“I don’t have a secret for success, and I don’t feel like a success — not yet. We’re a work in progress.”
That may be true, but the company’s mission statement is telling: No Shortcuts. “How do we succeed? Failure is not an option. I don’t lose,” Sarah says.
Sarah does follow several principles:
• STUDY SUCCESS. “I always look at other people who are succeeding. You go where you look. I always talk to positive dealers,” she says. “There are lots of dealers who are doing well.”
• PUSH CHANGE. “We never sit back. Every day we try to change one thing. It’s tough on our employees, but we try to make the changes as smooth as possible. A poor economy isn’t an excuse. ... We’re in constant motion. We’re constantly changing. There is no rest.”
• ACCOUNTABILITY. “Tracking and holding people accountable is important. More and more things are accountable every day.” For example, every phone call is transcribed and a call report is sent out daily evaluating the calls and offering suggestions for improvement. “We check to make sure that call information goes into the traffic log. I never did that before, but I do it now. It’s these little accountability steps that add up.”
• SHARING. Even though the stores are several hours apart, managers meet regularly through the use of Skype, the Internet-based phone and video service.
• THE FUTURE. “We’ll build up Houghton and then we’ll go where the wind takes us. We always go where there’s opportunity. I could stay with these stores and make them better, or….”
There are many ways to measure the success of a business, but perhaps Sarah’s observation about what they’ve accomplished so far works just fine:
“I know my processes and systems are bigger than they [previous dealerships] were in the gravy years, which tells me we’re doing something right. We’ve never added lines, never changed the building — only the people and the processes have changed.”
This story originally appeared in the Dealernews June 2011 issue.