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.
View video interviews with Bart Sherwood and his team.