After 30 years in the large agriculture equipment business, the Talaga family, owners of Armstrong Implements, decided to scale down to a smaller, hands-on business to serve their customers better. So, in 2005, they sold their full-line ag equipment dealership and set up a single store Kubota dealership in Swift Current, Saskatchewan, selling equipment to the rural lifestyle market and farmers. The numbers prove they made the right choice — year over year of double-digit sales growth and impressive revenue figures generated per employee. Rural Lifestyle Dealer recognizes Armstrong Implements as its 2014 Dealership of the Year.
Numbers aside, here’s how Bob Talaga, owner, explains their success: “We have a lot of competition in our trade area, all the major lines, John Deere, Massey, New Holland, Case … they all have compact tractors and they compete in all the sizes of the tractors that we sell. Our success has been because we specialize in tractors for livestock and grain farmers as well as rural lifestyle customers and sell the Kubota tractor line that is well known for high quality. We know the product and can provide the financing and service our customers expect. We try to create a one-on-one relationship.”
Seeing the Future
Armstrong Implements dates back to 1929 when it was established as a Minneapolis Moline dealership in Swift Current and later carried the White farm equipment line. Ed Talaga, Bob’s father, bought the business from Ed and Les Armstrong in 1977, keeping the recognized and trusted name. Bob joined Armstrong Implements in 1979 and purchased the dealership in 1993 from his father. His son, Brandon, joined the family business in 2006. Bob’s wife, Laurie, and his brother Mike also work there.
The dealership expanded over the years to include Massey Ferguson, Kubota Tractor, SpraCoupe, Gleaner, Willmar, AGCO Allis, New Idea, Steiger, Krause, New Noble and others. “We worked really hard for 30-plus years and knew we had to make a major investment in expanding the business. We decided to slow down and focus on Kubota and provide our Kubota customers with our 100% commitment and not be all over the map in terms of working on larger equipment like combines. We saw a real demand and need for a Kubota only dealership,” Talaga says. “I always had in mind to set up a smaller, more hands-on focused business with Kubota.”
Location: Swift Current, Saskatchewan
2013 Revenue: $7,328,653 ($6,397,050 wholegoods; $808,500 parts; $123,000 service)
2013 Parts/Service Absorption Rate: 84%
3-Year Sales Growth Figures: $6,018,435 in 2011; $6,676,635 in 2012; $7,328,653 in 2013
Lines: Kubota, Stihl, Land Pride, Traeger Wood Pellet Grills, Outback Guidance, Snapper, Yamaha golf carts, Buhler/Farm King, Wallenstein, Kuhn Krause and Westward
The opportunity to pursue that kind of dealership presented itself with the right buyer for the ag equipment business. “It was really important for us to find a buyer to service the customers we had for so many years. We wanted to make sure they had the parts and service help they would need going forward,” Talaga says.
They found that in Full Line Ag Sales and in 2005 moved forward with establishing their new dealership. Talaga already owned land in Swift Current along Trans-Canada highway number 1, the country’s main highway. They built their new 12,000 square foot facility that fall and had their grand opening in May 2006. They recently expanded to 13,000 square feet.
In addition to Kubota, Armstrong Implements also carries Outback Guidance systems, Yamaha golf carts, Stihl power products, Land Pride attachments, Traeger wood pellet grills, Snapper yard care products, Buhler/Farm King loaders and 3-point equipment, Wallenstein 3-point chippers, Kuhn Krause discs and Westward parts and equipment.
The new rural lifestyle dealership serves a familiar customer base — the area’s farmers. “We’re fortunate that we have a lot of successful farmers in this area. Our business is still made up of 80% farmers who buy rural lifestyle type products to maintain their farmyards,” Talaga says. Kubota tractors in all sizes up to 135 horsepower are the most in demand.
The area also offers a diverse customer mix that needs equipment for property maintenance and snow removal, including oil field maintenance, cattle and grain operations as well as large property owners and homeowners. The current population of Swift Current is about 17,000 and is expected to grow substantially by the year 2020.
Filling the Showroom
In the busy season, Armstrong will display up to 75 Kubota tractors, either in front of the dealership or in a lot beside it, as well as UTVs and a huge display of 3-point hitch equipment, including mowers, tillers, box scrapers, sprayers, discs and rakes.
The indoor showroom displays several more Kubotas, a complete line of Stihl equipment, Traeger grills, supplies and more. “Our goal is to always have a full display of products. That’s really helped our Stihl sales. A customer might phone and say, ‘What do you have for Stihl trimmers?’ and I’ll say, ‘We have 20 different models on display.’ They can start with a lower priced one and move up to commercial trimmers. The same with chain saws. We try to have every chain saw on display and that gives the customer a great selection. We can go through and talk about the differences in the models and they can lift them, feel them, touch them and try them. It gives them a real opportunity to see all the products that Stihl offers. All Stihl products are set up, run and the customer is trained on proper safety and proper operation. This is something a customer would never receive at a big box store,” Talaga says.
Shared Approach to Business
Ed Talaga began his career in the equipment industry in 1951 and grandson, Brandon, joined the family-owned dealership, Armstrong Implements, more than 50 years later. Both share a similar approach to business.
“We’re really ‘hands on.’ When we deal with our customers, they deal with us directly. If someone has a problem, it’s solved instantly between myself, Bob or Brandon,” Ed says. Bob, Ed’s son and Brandon’s father, is the second generation owner.
Brandon says, “We take care of the customer from start to finish.”
Ed says, “The biggest challenge for our dealership right now is finding the right people to join our team. Our business has been increasing over the years and our unit sales are up. Kubota tractors have been out there for over 25 years and will eventually require shop work.”
Brandon says the dealership’s challenges also include competition from larger dealerships and staying progressive with technology. “Because we’re small, we feel we can focus more heavily on the customer.”
That customer interaction and selling good, quality products is what they enjoy most about the dealership. “I love selling. I love dealing with people. It’s been my life,” Ed says.
“In the next 5 years, I see continued growth. Kubota is expanding their tractor lineup with higher horsepower tractors. That’s a market that we will be able to succeed in. Many of our customers will trade up and new products create new sales,” Brandon says.
The same philosophy has increased the sales of Traeger grills. “We have a full display with all accessories, spices, rubs, tongs and pellets. Having a full display of equipment is a definite aspect of increasing sales,” he says.
Growing with Specialties
Kubota tractors are its mainstay, but unique product lines also contribute to the dealership’s success. For instance, the dealership has also found a way to tap into the growing precision ag market. Brandon Talaga oversees the sales and service of the Outback Guidance systems as well as all the equipment they sell. Its ag customers trust the dealership enough to buy the Outback products from them even though they own other makes of tractors or combines.
Yamaha golf carts are another specialty line Armstrong features. Talaga says the area boasts many golf courses, two in Swift Current alone and many within a 60-mile radius. “It’s not a massive part of our business, but we do service them and provide parts and keep new products in stock. That, in turn, creates a lot of used carts, which are surprisingly used by rural lifestylers.
They use them to drive to their barns and they are easy to get on, especially for our older clientele,” he says.
Armstrong Implements’ 13,000 square foot facility is located on the busy Trans-Canada Highway 1 that travels through Swift Current, Saskatchewan. The dealership has displays in front as well as a large display lot beside the dealership.
Leveraging Small Dealership's
Talaga says their lineup may be limited, but it’s made up of the best products available. That’s one example of where they use “small” to their advantage and this business philosophy starts at the front door. Bob, Ed and Brandon’s offices are at the dealership’s entrance and they handle all of the sales and inquiries.
“Anybody that comes in the door, anyone can serve them. Relationships are created by sales. Being a family business, there’s no rivalry. It’s all for the good of Armstrong’s. We don’t get into the conflict of ‘that’s my customer.’ That doesn’t happen at all. The focus is just to make sure everybody is served,” Talaga says.
The parts department also follows that “hands-on” approach. The parts manager, Wayne Heffley, who’s been with the dealership for more than 35 years, staffs the parts counter and his office is near the counter. He also oversees the Stihl and Traeger product displays and setups.
The service department includes the service manager, Mike Mutlow, who’s been with the dealership for 20-plus years, along with 3 other service technicians. Talaga meets with Mutlow each morning to review new sales, setup and delivery details. “Every morning I meet with him and give him a detailed spreadsheet. That way, he can take a quick look at the spreadsheet and delegate certain people to each job. There’s no confusion,” he says.
A complete display of inventory and a clean, attractive showroom help increase sales of tractors and attachments, mowers, outdoor power equipment, supplies and grills at Armstrong Implements.
The Armstrong team fills in when needed, such as helping the parts department prepare the Traeger grills, which includes setting them up, bringing them up to cooking temperatures and lining trays with foil. “We know that the product works because it goes out the door set up and working properly. People want that personal touch,” Talaga says.
In addition to being available for customers, Talaga is available for his team and believes in addressing any issues as they happen. “We’re small enough that we have coffee twice a day and once a month we have a staff lunch in our back shop or take the staff out to a restaurant. We’re a close knit team and have worked as a group from 20-30 years together. We know each individual very well and we know their families,” he says. “If you have 100 employees, the management may not know who is working in the back. They rely on somebody else to handle issues that may arise.”
Watching the Numbers
Talaga follows several key financial metrics to gauge performance and profitability. “We have to have a strong margin. You can create more margin in your business by providing service,” he says.
Judges Recognize 'Best in Class' Dealerships
Rural Lifestyle Dealer extends its appreciation to the Dealership of the Year Judging Panel. Our three experts analyzed the nominations in terms of financial performance and best practices to select Armstrong Implements as the 2014 Dealership of the Year. The judges credited their decision to the amount of revenue Armstrong generated per employee, its return on assets, succession planning, community involvement and other factors.
They also recognized Green Diamond Equipment, Kentville, Nova Scotia, and Lauf Equipment, Jefferson City, Mo., as “Best in Class” dealerships. Green Diamond is a John Deere dealership with 13 locations. Lauf is a Massey Ferguson and Hesston dealer with 1 location.
Dr. W. David Downey
The panel included Dr. W. David Downey, David L. Kahler and Charles R. Glass. Dr. Downey is executive director, Center for Agricultural Business (CAB), Purdue Univ., West Lafayette, Ind. Dr. Downey is responsible for the development of education programs at the CAB, which is regarded as the leading center for agribusiness education in the U.S. A distinguished agricultural marketing professor and proficient author, Dr. Downey also consults extensively throughout North America on a variety of agribusiness issues.
David L. Kahler
Kahler is a retired CEO of Ohio-Michigan Equipment Dealers Assoc., Dublin, Ohio. Kahler spent his entire 39-year career assisting equipment dealer-principals with their business affairs. He served for 22 years as CEO. He was an active industry participant who earned the respect of both dealers and manufacturers. Kahler retired from full-time employment in 2008, but still works part-time as the associate director for AMG LLC. He is now in his 45th year of serving dealers.
Charles L. Glass
is president of Glass Management Group, chairman emeritus, Farm Equipment Manufacturers Assn.’s (FEMA) Dealer Relations Committee, Arlington, Texas. With more than 4 decades in the industry, Glass produces an annual tractor and combine forecast and provides technical assistance to various investment groups. A former director of FEMA, he is also a frequent presenter and author of several white papers on the future of farm equipment distribution.
He also tracks return on investment, market share and number of products retailed. “If our sales were down a bit, but our market share is still strong, that would tell me that people backed off that year from purchasing equipment.” This year, the dealership achieved its highest market share ever.
Long-time employees include parts manager Wayne Heffley, who has worked at the dealership for more than 35 years.
Talaga also values metrics his manufacturers provide, such as their Level A status with Kubota and their Stihl Retail Readiness certification. Both certifications rate the dealership in terms of expertise, appearance, inventory, commitment to training and more. “It’s very important to strive to be a Level A dealer because it rewards you by paying a higher percentage on warranty parts and labor used in repairs,” he says. “I’m very happy with what we’ve accomplished and a lot of that has to do with the staff.”
The dealership is now investing in facilities and management tools to help it be more efficient. A new, separate wash bay and detail shop has recently been added onto the service department to replace an area of the shop they’d been curtaining off. “We’re moving the mess, noise and humidity out of the workshop area and it will be a lot better. The new 40 x 40 wash bay will have proper ventilation, plastic lining and 2 large doors to move in product,” he says.
A new, separate wash bay and detail shop has been added onto the service department to replace an area that had been curtained off.
By the end of the year, Armstrong’s will transition from its current Challenger business management system to an HBS Systems solution. “We’ve talked about it for a number of years and finally decided it was time, especially with the volume that we handle now. With all the 3-point hitch equipment, the Kubota tractor line, different tire sizes, frames and loaders, etc., we look forward to a more up-to-date wholegoods tracking system,” Talaga says.
Having easily accessible and complete customer data will help in those instances when a customer may know they need a part, like a mower blade, but are unsure of their model. “We’re all looking forward to the new system. It’s going to be a bit of a change for all involved. We’re used to the old, but always looking forward to progressing and making things easier in the long run. We chose the HBS solution because of the company’s experience with the Challenger system and its training program,” Talaga says. They plan to use equipment bar codes from the manufacturer and establish their own bar coding for certain equipment.
Ed Talaga bought Armstrong Implements in 1977 and sold the dealership to his son, Bob, in 1993. He continues to help with sales and management.
Bob Talaga is the owner of Armstrong Implements, a dealership whose history dates back to 1929. He recently transitioned the dealership to focus on the rural lifestyle market.
Brandon Talaga is the third generation to enter the dealership. He handles equipment sales and financing as well as sales and support of Outback Guidance systems.
Building the Dealership
The Armstrong team is looking ahead to what they’ll need for ongoing success, with employees and an expanded product line topping the list.
The dealership is always researching new products. They expect Kubota’s higher horsepower tractors and hay production equipment to help increase sales. Talaga also hopes that Kubota will bring back consumer products it once offered. “Kubota at one time provided us with walk-behind mowers, tillers, irrigation pumps, generators and a lot of small consumer products. I would love to see them get back into that. It’s a very high quality, dependable product compared with some of our competition. That would give us a broader line of Kubota branded equipment.”
Talaga says the future of many dealerships might include large, multi-store operations, but he doesn’t see that in the plans for Armstrong. “There’s definitely a place for a smaller, hands-on dealership and we’re proving that because we’re competing with those dealerships right now.”