Join a Twenty Group: Your Dealership Won’t Be Successful in a Vacuum

There are lots of great ideas out in our industry, but many shop owners don’t look to other dealerships for advice. That needs to change.

I know of two local dealerships that are operating in a vacuum. By that I mean that they are not concerned with how other powersports companies operate. One has an owner whose father founded the dealership. He’s never worked at any other shop. Things are just the way they are because he knows nothing different. The other dealership has an owner who was a successful businessman in another, unrelated industry. He loves to ride motorcycles, so of course, having the money, he bought a local motorcycle shop. We’ve all heard that story.

There was yet another local shop purchased by a fellow from the automotive industry. He loved motorcycles, so he bought a shop without having any real understanding of the powersports industry. He figured there was no difference whatsoever selling cars versus powersports. He was wrong. He used to call me and ask for advice, then he’d always do the opposite.

His shop went bankrupt in seven years. Not that I am the fountain of all knowledge, but surely he could have followed some of my advice!     

I worked for quite a number of dealerships before I bought my own. They were a collection of the Good, the Bad and the Ugly. I was always studying the industry, as I knew that someday I would have my own shop. Once I had my shop up and running, I joined a Twenty Group. I have also belonged to local business groups. I visit motorcycle stores wherever I travel. I’m always looking for ways to make my shop better and more profitable. There are lots of great ideas out there.

That said, many shop owners don’t examine anyone else. They don’t care what other dealerships do. Dad (or Grandpa) always did it this way, and things turned out all right. Or, conversely, they were very good at this other business, and so they’re sure they will do well at powersports. What could possibly be different?

As to Dad or Grandpa, things have changed considerably. Back then, you just needed a storefront and a promise to buy a few bikes from the manufacturer, and you were in business. If it didn’t work out, so be it. You weren’t really out a lot of money. Recently, one original equipment manufacturer (OEM) rep told me that unless you had $1 million cash in your bank, they wouldn’t even consider you. If you purchase an existing dealership, it’s a bit easier, but you still have to qualify for floor plan, sometimes in the millions of dollars.

I know that if I had all of these problems now, I probably would not qualify. Back then, I scraped the money together from several sources and got a $150,000 credit limit for floor plan. I did well, increasing sales tenfold relatively quickly.

Also, the powersports business is a very different animal than it was when I bought my shop or when Grandpa threw a few Hondas in the shed. It’s big business now, and the numbers are far different. You have a lot more to lose. How many shops have disappeared from your area?

You have to be aware of the numbers. You not only have to be aware of the profits that you have, but you have to be aware of the possible numbers. Those who live in the vacuum have no idea what’s possible. They may be doing all right, but what if by tweaking a few things, they could increase gross profit by 5%? Powersports margins are different than other businesses. In addition, our customers are often more than just clients who come and go. They often look at bike shops as a family they can belong to.  

The fellow I mentioned earlier who bought a shop after success in another industry will not join a Twenty Group. He says he doesn’t want to share his profit and loss (P&L) statement with others. But does it matter if you share your numbers with a dealership 3,000 miles away? I could understand if those other dealerships were 30 miles away, maybe — 300 miles, perhaps — but 3,000 miles? I don’t think it makes a difference. If you don’t think you can learn something from someone who sells three to four or more times as many units as you, you better give your head a shake.          

If you see yourself in these examples, start working to get out of the vacuum and join a Twenty Group. Learn more about the industry any way you can. Talk to other dealers, especially if they are a distance from you. Get out of the vacuum and start breathing fresh air. You’ll be far better off than you are now.

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Irv Seaver Motorcycles

Irv Seaver Motorcycles keeps its finger on the pulse of the industry and is often a trendsetter.

We recently sat down with Irv Seaver Motorcycles' General Manager David Diaz to talk all things dealership, motorcycles, powersports and BMW. Diaz has been in the industry for several decades, 30-plus years of which has been at Irv Seaver BMW, which celebrated 100 years in 2011. Don't let that history mislead you — Irv Seaver Motorcycles is keeping its finger on the pulse of the industry, and often trendsetting. Hear what Diaz had to say in this episode of Dealer Dialogue!

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