Sherwood Tractor’s main store is 4 miles north of Rose Bud, Ark., population 482. Its second location is in a community about 68 miles away that doesn’t even post a population. The original business, Sherwood Wholesale, first started selling tractors in 2006. These may all be considered disadvantages to building a successful dealership, but not for Bart Sherwood and his 14-person team. Last year, Sherwood Tractor posted $8.3 million in sales and earned more than 10% return on assets.
Several key advantages help Sherwood achieve this level of performance, including his retail experience, personal brand and the right mix of traditional and digital marketing — all focused on the rural lifestyle market.
“In 2013, Sherwood Tractor became the largest Mahindra dealer in Arkansas and has been every year since. For the past two years Sherwood Tractor has been the largest dealer in the territory, which includes all of Arkansas, Oklahoma and North Texas. This is quite a feat for a country boy,” says Sherwood.
Sherwood downplays his background, but it’s precisely that background that helps him understand his customer base and perform beyond his goals, earning him Rural Lifestyle Dealer’s 2018 Dealership of the Year in the multi-store category.
Locations: 2 (Rose Bud and Atkins, Ark.)
Shortlines: Bad Boy, Bush-Whacker, Claas, Cub Cadet, STIHL, Vermeer and Precision Trailers
Employees: 14 (3 sales, 1 administration, 7 service, 3 parts)
2017 Revenues: $8.3 million ($7.2 million in wholegoods, $548,000 in parts and $564,000 in service) 2017 Absorption Rate: 58%
Owner: Bart Sherwood
Dealership Management System: Basic Software
Systems Website Vendor: Dealer Spike
Starting with the Numbers
Sherwood Tractor carries Mahindra, Bad Boy, Bush-Whacker, Claas, Cub Cadet, STIHL, Vermeer and Precision Trailers. In 2017, the dealership’s $8.3 million in revenue broke down this way: $7.2 million in wholegoods sales, $548,000 in parts sales and $564,000 in service revenues. Its return on assets in 2017 was nearly 11% and its absorption rate was close to 58%.
They strive for a 10% margin on new tractors; 18% margin on mowers and outdoor power equipment; and 25% on shortline equipment. They’re achieving about 30% margin on parts but would like to be closer to 35%.
“These are good numbers in this business. After I got into this business, I started researching the industry. I found that the average net profit for equipment dealers was 0-2% and very high performing dealers were achieving 2-5%. That’s a lot of work to only make 2%,” Sherwood says. The dealership is achieving 2%-5% profit now. “If I could see and maintain 5%, that is probably as good as could be expected,” he says.
Sherwood Tractor topped the nominees in the multi-store category for highest revenue generated per employee and return on assets and tied for the top in 3-year growth. “We started from humble beginnings and owning a dealership can be capital intensive and labor intensive. Out of necessity, because of not having access to capital, we’ve had to run lean and watch expenses. I’ve done a lot of things myself and do most of the selling at this store and our growth has been quick. If you keep expenses low and grow sales, then you’re going to get the ROA you want,” Sherwood says.
- Make sure you offer something unique and customers will find you, regardless of how rural or remote your location is.
- Describe your dealership’s brand advantages and turn those into marketing messages, mixing traditional and digital advertising.
- Regularly look at your expenses to make sure you’re operating as lean as possible.
The Rose Bud dealership is located on Sherwood’s own farm acreage. The area is very rural; there are only about 25,000 people in the county. Agriculture operations include cattle and hay producers and rural lifestylers, such as horse owners, large property owners and hobby farmers.
The wholesale business began in a building across the road from the current dealership and sold home décor, novelty items, flowers and tools to small stores, boutiques and flea markets. He also raised cattle (and still does) as well as broiler chickens. The wholesale business continued to grow, so they built a new 20,000 square-foot building for the wholesale operation (now the current Rose Bud location), connecting it to the 12,000 square-foot broiler house, which has since been converted into a tool store. At its height, the wholesale business sold to customers as far away as Arizona and Florida. However, the business declined as the items he carried could now be purchased online and the smaller stores and flea markets began to close.
“I try to be a better dealer this year than last year…”
— Bart Sherwood of Sherwood Tractor
Sherwood started looking for a backup business and a trip to the Arkansas Farm Show offered a new direction. He met a Branson dealer, learned about the tractors and thought it would be a good addition to his operations. Sherwood ordered his first 5 tractors in 2006 and sold 10 that year. At that point, he was operating tractor sales out of a 10 x 14 portable shed.
“That went on for about 3 years. I kept selling a few more each year. In 2009, I told my wife, Lorra, ‘I either need to get out of the business or get in the business.’” He decided to get in and built a 7,200 square foot building and started Sherwood Tractor. He also started searching for a more recognizable tractor brand. “I had a lot of customers in the early days say, ‘I’m going to see if you’re still here next year. If you are, I’ll come back and buy a tractor,’” Sherwood says.
In 2010, he was able to take on the Mahindra line after another area dealer closed. “There’s a lot of overlap because everybody uses a lawn mower, chainsaw or outdoor power equipment and my wholesale customers were rural shop owners, so they had needs for tractors and the products I was selling. I’ve lived here all my life and I’ve used equipment all my life and people like to buy from people they trust and people that actually use the products,” he says.
Bart Sherwood’s personal reputation among his rural community is now a recognizable and trusted brand for Sherwood Tractor.
Because of the rural location, Sherwood says he needed a “destination store” atmosphere. He downsized his wholesale business and moved his equipment business to the 20,000-square-foot facility. The 7,200-square-foot facility became the parts and service facility.
Today, the showroom displays 15-20 new Mahindra tractors, ranging from 20-125 horsepower, 6 Mahindra side-by-sides and 6 Cub Cadet utility vehicles, 40 Cub Cadet and Bad Boy zero-turn mowers and STIHL outdoor power equipment. The perimeter of the showroom displays western and home décor and more, and it all connects to the tool room. “This is the largest indoor showroom of its kind in the state. There is plenty for all customers to look at and shop when they come in or are waiting on financing,” Sherwood says.
The outside lot displays another 40 tractors and about 25 utility vehicles along with hunting stands and trailers. A rolling hill in view of the lot stores overflow inventory of about 50 tractors.
Committing to Tractor Sales
Sherwood says committing to carrying inventory helped his business transition to the next level. “I only ordered 14 tractors on my initial order and I didn’t stock a lot of tractors in my first couple of years. Then, at the national dealer meeting in 2012, they offered a trip as an incentive if you ordered 40 tractors. Being at that meeting inspired me. I saw other dealers who were selling a lot of tractors and thought, ‘If they can do this, I can do this.’ I stuck my neck out and ordered those 40 tractors,” he says.
He continued to increase his inventory and for several years, he doubled his revenues. Last year, he sold more than 220 tractors. “The old saying ‘Sales cures everything’ has a lot of truth. You have to manage expenses and everything, but if you can do enough sales, you’re going to get a return,” he says.
Highlighting Personal Brand
Promoting the Sherwood name is the promise behind the equipment he sells. Sherwood grew up in Rose Bud and was one of 12 kids and his own 9 kids attended the same elementary school as he and his siblings did. His family farm is just 7 miles from the farm he owns today, and he lives the lifestyle that his customers do — raising cattle, horses and hay.
Sherwood Tractor attracts customers from across Arkansas and surrounding states. The dealership has established a destination store atmosphere by selling tools, home items, hunting equipment and more along with rural equipment.
TV advertising has been the best medium for him to reach customers statewide. “I always write my own ads and appear on camera. I never use canned commercials. Customers want to know who their dealer is and who they are. That’s the approach we’ve always taken and it’s worked well for us. I recorded my first TV commercial in 2012 and I had each of my kids sitting on a different Mahindra tractor. I said, ‘Hi, I’m Bart Sherwood from Sherwood Tractor. Mahindra’s got a whole family of tractors to meet your needs around the home, in the garden, or on the farm. I can outfit each one of my kids with a different Mahindra tractor; I bet I can outfit you, too. So, come in to Sherwood Tractor,’” he says.
Taking a Fresh Approach
Sherwood plans to continue with TV advertising but knows the importance of digital marketing. He turned to Patrick Richardson, a friend of his son Parker for online marketing strategies and IT support. Richardson works from Utah, where he is attending college, and visits the dealership about 4 times a year.
“The amount of leads we are getting over the internet is tremendous and he has also set up an online parts store and it’s taking off. You need someone with knowledge, experience and a bright mind,” Sherwood says.
Richardson creates new content for social media and develops information for the home page and other pages but relies on the Dealer Spike platform for more than 3,000 pages of product information.
Pictured on the left is Stephen, Parker and Bart Sherwood. Bart’s sons Stephen and Parker now work in the dealership, which carries Mahindra, Bad Boy, Bush-Whacker, Claas, Cub Cadet, STIHL, Vermeer and Precision Trailers. The lines were selected because of quality, brand recognition and market differentiation.
He also adds other functionality to help the customer experience, such as chat boxes. “The online shopping experience will continue to grow online with new image and video technology,” Richardson says.
The dealership already has a head start on the virtual shopping experience with its new parts store. The online store was launched in July and in August and September they earned more than $10,000 in parts sales.
Another fresh approach is the hiring of Robin Bush as foreman/lead mechanic. She is the only female Mahindra certified technician for Mahindra North America. She attended Arkansas State University in Searcy, Ark., for training in mechanics. Sherwood hired her right out of school, about 8 years ago.
“I’ve had job offers from other dealerships, but I’m committed to Bart. I’m loyal to Bart,” Bush says.
The service department consults with Bob Clements of Bob Clements International, incorporating the triage process for inspecting equipment (diagnosis within 24 hours) as well as the staging of equipment as it moves through the repair process.
Sherwood describes his management style as laid back, but focused. “I’m easy going, but at same time I’m personally driven to achieve. I want to keep building the business, increase sales and try to be a better dealer this year than last year,” he says.
He starts his week with a Monday morning team meeting where they talk about process improvements, sales goals, customer feedback and customer service topics. Sherwood also shares year-to-year comparisons across brands, parts and service performance as well as monthly budgets.
Watch the Video Series with Sherwood Tractor
Go online to view interviews with the Sherwood Tractor team and see the dealership up close, www.RuralLifestyleDealer.com/DOYarchive. The Dealership of the Year video series is sponsored by Basic Software Systems.
The dealership uses Basic Software Systems for its dealership management system, a big step up from QuickBooks. “We could not operate without Basic with the volume of sales that we do. It’s been a lifesaver as far as being able to track our day-to-day business. It’s a complete software package that does everything — sales, parts, service, rental and accounting,” Sherwood says.
Before starting his wholesale business, Sherwood was a store manager for Walmart and he’s brought over some things he learned from the conglomerate. “One of the things I learned is that anytime you visit another store, whether it be a Walmart store or a competitor, see what you can learn from them,” he says.
Another lesson is to watch budgets and control costs. “We run pretty lean on our people. I’m looking at adding another salesman because I do a lot of the selling at this location. And it really makes it difficult to spend the time I need to in the different areas and handle management,” Sherwood says.
Running lean with staff also means cross training and pitching in. “I tell them that there’s really no such thing as, ‘That’s not my job,’” he says. Dealership employees attend classes online through Mahindra University and through Basic Software.
Sherwood consults with Bob Clements International during on-site visits and by participating in one of its dealer success groups.
Preparing for Succession
Sherwood is looking toward what’s next for growth and the next generation of family leadership. He expects to achieve $10 million in sales by 2019-2020 and then will concentrate on maintaining profits. He doesn’t expect to expand his current locations or acquire another location and says he is not being pressured to do so by his manufacturers.
“In 5 more years, I’d like to cut back on my role a bit and in another 10 years be pretty much retired,” he says. Two of his sons work in the business. Stephen works full time in operations and Parker is in college and works as inventory manager and online parts fulfillment specialist.
Sherwood has strict requirements for family members to enter the business after they first complete 2 years of missionary service. “They must earn a college degree and they must successfully complete at least 2 years of work outside the business. They must work in inventory control, parts, service, marketing and sales. Once they have completed at least 1 year of service in each of these areas and a minimum of 5 years with the company, they are eligible for management positions and stock options in the company based on company performance,” he says.
Sherwood’s son, Parker, is making his way through those requirements and shares his views about working at the family dealership as well as what the Sherwood brand means. “People think of us as honest people who follow through on what we say. I love the business and I can definitely see myself being part of it as my dad phases out,” Parker says.