Re: dealerships

Posted by Billy NY on December 14, 2009 at 16:42:08 from (74.67.3.238):

In Reply to: dealerships posted by olliekid on December 14, 2009 at 13:10:32:

It's hard to recommend to anyone to pursue that kind of business based on discussion or a liking of equipment. I think some of the important aspects revolving around dealing in tractors, new, used etc. have been mentioned, maybe not all, but in short, dealing in this kind of equipment can be a risky business venture, because of the potential low profit margins, markets and many other serious considerations detrimental to success.

We had a Ford Tractor dealership, late 60's-70's, I was a young kid at the time, but the tractor line was pretty good, ag equipment maybe not so good compared to competitors, also not to forget industrial and similar models, like LCG tractors for mowing by local municipalities and highway maintenance departments, we sold 3500-6500 series industrial tractors/backhoes, with a decent margin and a viable market for same, the power company was a big customer. This was the largest ford dealership in the area and was well established a good 25+ years prior, 3 full time mechanics, 2 parts counter guys, a clerk and I remember a few others at times. I found a payroll book in our old house, years back, boy the wages they earned were meager to say the least.

The hardships I recall, were more franchise like and or related to Corporate HQ, I mean you owned what was on the lot, meaning you financed it, they tried to dictate what you sold, we wanted to push the industrial line, they wanted us to push ag, and it was hard times then for farmers too, + beyond tractors, competition probably offered better equipment. Our dealership sold 29 backhoes to the power company, corporate people wanted the other dealership to sell those, they tried to sour the deal by imposing some odd financial arrangements, kind of playing us like a puppet.

We had an extensive shop, and 2 stories of parts inventory, I have some photos of the old place, years after it was defunct, sure was a nice shop, but in those days you were well equipped, and boy was the parts inventory something, there was quite a bit on hand.

In short, that's just an example, there are lots of things to consider, we got out of it, but I firmly believe that we could have diversified and found another line or mfr/mfr's to sell, industrial, construction etc., because of the leaps and bounds to what we have today, the years in between could have provided a means to get there. I have seen success stories with several business's, because the market was there in addition to other things that will contribute to success in that business. Contractors, construction and industry was not too bad around here, some outfits did well in those markets.

I can't say for sure what all the secrets are, hard work, dedication, you have to have a market and a good line, be able to support parts and service, and be able to turn around repairs when a customer needs something asap.

There's a lot of turf to cover when considering something like this. Our old competitors son, picked up the AGCO/Challenger line in '04, then M-F, 2 branches, back to one now and I don't see the inventory on hand when he first opened, and have recently heard his health and or economic times have put a damper on business, he may have closed, maybe thats a silly rumor too. He also carried a rental line of CAT equipment, with some pretty good deals, sold used, and although his fathers original business is still going, they sold off the biggest branch in '90, nice auction too, they now carry New Holland, years after Ford merged, they took Ford when we got out.

As I think about this now, it is a bit perplexing to consider getting into that business without a really well thought out plan, in addition to matching up a mfr line to a potential market. On the old site of our competitors, there is 2 equipment dealers, one Kubota, the other heavy equipment, mostly used CAT and it's really a branch of a large heavy/highway construction outfit, providing a way to dispose of equipment no longer needed, neither the kubota dealer or the used heavy equipment dealer seem to be moving equipment rapidly, though the Kubota dealer always has a lot full, + sells Stihl and other things, there sure is a lot to consider, you need a place to set up shop, one that is visible, all the financing, customer base, repeat business etc. etc.

Not sure if any of this is of any real help, nothing wrong with pursuing this, just beware, many a success story has overcome huge obstacles, might be very difficult at times, no different than most business ventures, really have to be a meticulous manager, have a good business sense and be able to sell, and sell at a profit.

Looks like they are still going, kind of a recent start up, hard to say what the bottom line is a the end of the day.

http://www.earthwormequipment.com/

This post was edited by Billy NY at 16:52:13 12/14/09.

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