Not every dealer principal feels empowered sitting in front of a notepad or calculator feverishly crunching numbers. Ken Adams admits he’s one of them.
“I’m not a book person. I like the sales part of the business. Sometimes I go over in the shop and help the guys put a loader on a tractor,” says Adams, president of Adams Tractor Co. in Spokane, Wash., which sells Kubota tractors and equipment from Stihl, Land Pride, Billy Goat, Hustler, Scag, Kanlan and Kawasaki.
Adams was president in the 1990s when financial problems nearly closed the dealership. In addition to being sold out of trust with both his mainline suppliers, New Holland and Kubota, he endured federal audits of the dealership’s Employee Stock Ownership and 401k programs.
The dealership also faced two separate audits by the states of Washington and Idaho because of sales tax that wasn’t being charged to out-of-state customers for equipment they had purchased.
But Adams and his employees have turned around Adams Tractor Co. in the last several years by streamlining the dealership’s business model and focusing on growth in the rural lifestyle market in his region. He had $8.3 million in sales in 2008 and $5.9 million in 2009.
Adams says he needed to take a step back before going forward again. “If things aren’t working out, you really need to sit down and figure out why, and decide what direction you need to go in to make it better,” he says. “Some very, very hard decisions had to be made. I still don’t like making hard decisions, but I make them.”
Adams shared some lessons he learned while rebuilding Adams Tractor into a viable business, as well as other insights on the state of ag equipment retailing:
Watch Your Bookeeper
“You need to have a system of checks and balances. Be wary. Don’t go with cheapest accountant or retirement plan advisor. Go with a person you’re comfortable with, that you know is in the business for the long haul, and that you’ve got a good rapport with. And make sure you’re with those people twice a year. I put my banker and accountant together twice a year. It’s important that people you’re paying to take care of you are on the same page.”
What to Say When You’re in Trouble
There were times when Adams was trying to revive his dealership’s finances that creditors wanted all the money he had. Adams said a big reason he stayed in business was that he was honest and firm about his financial situation.
“I called everybody that I owed money. I called them twice a month, sometimes more. I said ‘Here’s my plan, I’m reorganizing, I’m selling some property and talking to the bank.’ I’ve always found if you communicate with people, good things happen. If you don’t communicate, things get worse.”
‘There Is No Blue Sky’
Adams is still looking for someone to take over his business when he retires. In the mean time, he’s not counting on reaping a windfall if the dealership is sold.
He advises other dealers to be realists, too. “When I was in process of looking for a partner, I had my accountant do a valuation of the dealership. I said I want something that’s real. I don’t want pie in the sky. They came back and said the land and property is worth $750,000.
“There is no blue sky. It’s worth the property, fixtures and inventory. They’re all going to take parts back and they must reimburse me for freight.”
Watch Your Spending
At Kubota’s National Dealer Meeting in San Antonio, Texas, a few years ago, Adams heard a message about business practices that resonated with him. Greg Embury, Kubota’s vice president of sales and marketing, said in his welcoming address that the booming economy wouldn’t stay that way forever, and dealers needed to make sound business decisions.
“And he got a little flack for that,” Adams says. “On the bus, on the way to the demonstration grounds, Embury said to me, ‘Do you remember the 1980s? People are doing the same thing again, building these big, fancy buildings, taking too much money out of the business, buying lake homes, buying airplanes. What goes up has got to come down.’ ”
As the Great Recession in the U.S. begins to lift, Adams likes where he is. “Since 2004, we’ve been paying down debt, fixing our buildings up and saving money. And if things get tough, we’ll re-align our business plan. We’ve got money in the bank and try to meet our budget goals.”