Ever thought about becoming a motorcycle dealer?

[SteveM]

I have.

The following explains a bit of why I haven't done it. I would be interested to hear from those folks who work in dealerships.

This is just one guy's opinion, but If your dealership is within 40 miles of Boston, I've probably been there.

It is a response to a thread on another forum regarding the contrast between experiences in a Japanese make vs. HD dealership. It isn't about the bike, it's about the approach to the business.

"I look at businesses, consult and teach operations management for a living. I've been thinking about this for 10 years. Every local dealer, except HD (which I have not visited), is poorly run and it is painful to try to deal with them. A long-standing Kawasaki/Suzuki/Yamaha dealer disappeared almost overnight a few years ago amidst circumstances similar to what the OP described (South Shore) and another replacement Kawi/Yam dealer 20 miles away came and went within 3 years (Brockton).

The local market consists of a multi store chain that are absolutely hideous to deal with on every level and a few smaller 1 or 2 brand stores generally staffed by morons.

Keep in mind, this is greater Boston, not east podunk.

The only conclusions I have been able to come to are:

1. The manufacturers do not care about the dealership network or do not feel the American market is worth the extra effort in the scope of their global sales.
2. The dealerships are owned by people who simply aren't very bright and haven't advanced their business practices much in the last 30 years.
3. There isn't enough money in the business to really do it right.

I've had a bunch of bikes over the last 15 years and am looking to drop my Rocket III touirng now to move back to something lighter and sportier. I have cash and the desire to buy and I cannot think of a single local dealer where I want to spend my money.

It is much more likely that I'll buy used and perhaps fly to get it and ride back.


I've often wondered how much capital it would take to get into the business and try to build a franchise based on superior customer experiences at every level."

[Pittenger5]

Good help is hard to find. Unless you want to be there 24/7 and oversee everything. Most owners do not by the looks of things.

[SteveM]

Richie,

Being there virtually all the time is an assumed part of considering this. I think you grew up in a small family business if my memory is correct, so you know this well.

It's like any other business. If you can put capital into something you will enjoy doing and run it like a good business, good things should happen.

I'm oversimplifying, but my long considered thought is that the motorcycle business doesn't seem to have worked out that way at the dealer level.

[Pittenger5]

Im guessing money has something to do with it as well. And look at the hours of business, do you really want to commit 7 days a week EVERY week all year? (not trying to discourage you if this is what you want, but owning a retail store is crazy not fun sometimes.)

[eboos]

Richie,

Being there virtually all the time is an assumed part of considering this. I think you grew up in a small family business if my memory is correct, so you know this well.

It's like any other business. If you can put capital into something you will enjoy doing and run it like a good business, good things should happen.

I'm oversimplifying, but my long considered thought is that the motorcycle business doesn't seem to have worked out that way at the dealer level.

An owner being involved in the day to day operation of a dealership could spell disaster. A smart owner will hire the right management staff that can execute the owners objectives and then step back and allow them to. Seldom do we find smart owners in the motorcycle industry. Too many have the hobbiest approach to owning a dealership. Unfortunately for the staff, this is their job, their livelyhood, not just a whimsical hobby.

[Pittenger5]

And finding good managers is NOT easy.

[eboos]

And finding good managers is NOT easy.

Fuckin A right you are.

The best managers may not be the best friend of the owner, and certainly not be a 'yes man'. The best managers are the ones who take care of both the customers and the employees as if their business, not just their salaries, depended on it. I have had the pleasure to work for 2, and a great one in the making, in my time in the motorcycle industry. Willie Hubert at Sheldons, and Mike Keehan at Percision. Joe Camp at Percision has great potential. All 3 of them no longer work at their respective dealerships. Willie left the industry all together after his experience at Sheldons, and Joe Camp followed Mike Keehan to Brothers HD in CT somewhere.

You need not guess, we have had a string of crap managers in both stores since the great ones left. They are truely few and far between. Recognize when you have a great one. A simple measure is the moral within the department/store. If you are experiencing high employee turnover, either you (the owner) or your management needs to be improved.

I might add: The great ones never leave because of money. They leave because of the ownership.

[mi1knc0okies]

I've been to a few dealerships up here and feel the same way. There is one that I will never go into ever again. I feel like some of the dealerships down south have some friendlier staff. They'll shoot the shit with you and get to know you and build enough rapport with you to want to go and buy another bike with them or buy your over priced gear with them. My girlfriend has bought three bikes from the same dealership in Charlotte. It was crunch time and needed a part for a track day at NHMS. We called them and they had it to us with days to spare! I called a few places before my girlfriend called Ricky Hendricks in Charlotte and all the dealerships up here were just like it'll get her when it gets here.

Not all dealerships down south are amazing. I feel like majority of dealerships anywhere only care about themselves and pre judge you before you get in the door. I think it really has to do with common courtesies you just don't get now a days. I've been on the side of the road with flashers on and my hood up and cops don't even stop by to ask if I need any help. Times are a changing! I not even old too!

[DoubleRGirl]

^when i was shopping around at 250's i was in a dealership in ri getting a part and wanted to look at the bikes while i was in. there weren't any other customers in the show room and not a single sales person acknowledged me. when trying to get in for service no one can fit me in, when i need a part everyone's prices are sky high. one of the reasons i went back to charlotte for my 250, and continue to order my parts from them. i get the best price on the first try, they always take care of me, and they ship parts to me for free.

as a bonus a gentleman named dan delivers bikes for people around charlotte (he's brought me 2) and he might just be one of the sweetest older men i've ever met

[SteveM]

eboos,

While you make a lot of good points, blaming and belittling ownership is the easiest cop out in every business I have been a part of for 25 years.

While there are certainly good and bad owners, the entire attitude that owners should stay away from their business and let the pros run it is absurd unless the owner desires to be a passive investor.

For better or worse, it is the owner's money and name.

In most cases, the employees who have been owners previously have a far better appreciation for the risks of ownership.

As I have said to many owners over the years, "If this goes wrong, if you don't hire the right people and manage them the right way, only you lose. Every one of them will find work elsewhere, you lose everything."

If it wasn't for the owner, there wouldn't be a business to work in and complain about.

[Pittenger5]

Problem with most owners is it IS their money and name. Too often they refuse to listen to anything other than whats in their head. They get something in their head and thats the way it is. They allow no discussion, or floor level decisions. I think thats more what Boos is getting at.

[Garandman]

An owner being involved in the day to day operation of a dealership could spell disaster. A smart owner will hire the right management staff that can execute the owners objectives and then step back and allow them to. Seldom do we find smart owners in the motorcycle industry. Too many have the hobbiest approach to owning a dealership. Unfortunately for the staff, this is their job, their livelyhood, not just a whimsical hobby.

Most small businesses are started by technicians or enthusiasts. They are good at what they do but don't necessarily have a business plan.

Motorcycle dealerships are one of a number of businesses known as "Lifestyle Businesses." Others would be things businesses like yacht brokers, bed and breakfasts, etc. People in those businesses are usually willing to accept below-market compensation in return for perks.

I haven't looked at the financial returns of dealerships, but I suspect most businessmen would be concerned about the contraction of the industry, the fact that it's a nearly 100% discretionary purchase, and the level of competition from other similar dealerships. It's probable that the manufacturer's dealer management team is no stronger and doesn't have a business plan that would result in strong dealerships and profitable operations.

Motorcycle dealerships remind me of the old joke about boat building.

Q. How do you make a small fortune in the marine industry?
A. Start with a large one.

[Tunertype]

Yeah go check out an HD dealership.. The bikes are overpriced and unreliable and slow, but the service sales and marketing are spot on... Most dealerships will let you test drive a bike amd they always great you and ask how they can help.. They are also knowledgable and helpful. I wish I got that kind of service at a Japanese or European dealerships.. If your in the market for a new monster 1100 or street triple also consider the HD xr1200 they're pretty similar and nice.

I've also made a profit on almost every bike I've bought and sold.. There's alot of potential for profits in the used bike market if you know what your doing..

[ChicknStripEatr]

An owner being involved in the day to day operation of a dealership could spell disaster. A smart owner will hire the right management staff that can execute the owners objectives and then step back and allow them to. Seldom do we find smart owners in the motorcycle industry. Too many have the hobbiest approach to owning a dealership. Unfortunately for the staff, this is their job, their livelyhood, not just a whimsical hobby.

If I remember correctly, the book THE "E" MYTH describes how people are ethier good at one thing or the other; being an entrepreneur or skilled in an art, but can not be both. Meaning that an individual may be a master of the trade they are in. That individual believes their knowledge of the trade can make them successful as a business owner in that trade. However, subconsciously their passion for the art that they are skilled in leads to poor business decisions in the long run. In short, that is why a vast majority of small businesses fail.

It was a good read.

[Garandman]

If I remember correctly, the book THE "E" MYTH describes how people are ethier good at one thing or the other; being an entrepreneur or skilled in an art, but can not be both. //

You can be both.

The real point of E-Myth is that if you do not have a written business plan, you will not grow.

[ChicknStripEatr]

You can be both.

The real point of E-Myth is that if you do not have a written business plan, you will not grow.

...eh, I was close enough.

[DoubleRGirl]

like the car industry, the motorcycle industry buyer is changing and the dealerships need to too. some of the older dealerships might be stuck in their ways. i think regardless of the industry, you'll always be more successful selling an idea or product that you have passion for

[eboos]

eboos,

While you make a lot of good points, blaming and belittling ownership is the easiest cop out in every business I have been a part of for 25 years.

I spoke nothing negative of the ownership of either of my dealerships. To one's credit, I am thankful for them to have me back and earn a few more bucks. Take it for what it is, and apply what is applicable.

By the way, the hobbiest mentality thing was explained to me by my first civilian employer after I left the Marine Corps (non motorcycle industry). He could have closed the doors at any moment if it suited him, as he didn't need the money. Unfortunatly for me, he hired me as his general manager.

[SteveM]

Seldom do we find smart owners in the motorcycle industry. Too many have the hobbiest approach to owning a dealership. Unfortunately for the staff, this is their job, their livelyhood, not just a whimsical hobby.

This seems pretty critical to me?

However, we're getting off track.


Is there enough money in a dealership franchise to run the business better than what the norm is and make a reasonable, risk adjusted return on invested capital?

Owners need not be either hobbiests nor business vultures, is there room for ownership that loves the product, but puts business first and listens to good people?

The rap that owners get for not listening is somewhat true, but mostly it has been my experience that owner's listen to too many bad people. Every employee thinks they know better and wants to be heard. A smart owner keeps an open ear, but the strainer between the ear and the brain is pretty rigorous.

[jwm2k3]

I worked in dealerships for 8 years. (Surprised I survived, lol)

Dealerships dont give a fuck because theres a whole new crop if 18 year olds buying GSXR's and R6's every year.

The dealerships make less and less on the actual bike each year. They hit fucking home runs on finance and in service.

And to the orig poster, you would get the life sucked out of you as an owner in the dealership everyday. I say this because in my experience, there are a lot of motorcycle customers that are just complete fucktards.... (of course, nobody here) The manufacturers are VERY high pressure for you to stock more and more every order period, no matter what the sales trends are. Each bike costs anywhere from $30 to $80 PER MONTH when you 'floor plan' them from the manufacturer. Unless you can pay cash for them up front, then 100 bikes X $xx.xx per monht can be 3, 4, 5 maybe 8 or 10 grand a month just in finance charges. Then pay your help, utilities, parts inventory, etc, etc. Then your used inventory has to be bought and paid for. What kinda bike are you going to sell? Anything nice will cost you $3000 to $7000 to buy and hopefully some asshat dosent come in spend 5 hours looking at your stuff, taking up time, you kissing his ass, making friends, promising the world and Mr. customer gose and finds one in fucking Timbucktoo for eleven cents less.

So, unless you got like 2 million liquid, youd be out of business in like 5 months.

I realize you want to provide a 'nicer' experience. This is good, beacuse you are correct...some dealers around here suck donkey balls.

So start a dealership? Id rather punch myself in the nuts 25 times.

[CBR929RE]

I always liked South Shore cause it was a cool place to hang out but I think in the tons of times I had been there I was approached maybe once about buying a bike. Jen in parts was good but it went downhill after she left.

Brockton cycle didn't just pop up and leave in 3 years. They were around for a long time, just only in that green building for a few years. I had a mediocre experience buying my 929 there. The salesman was alright but the GM made the deal difficult.


Best dealer I've been to is Bettencourts. They could teach other places how to do business. and I've never bought a bike from there. When I was looking for my first bike in 2003 I went to look at a Hurricane 1000 there. When the salesman asked if it was gonna be my first bike and I said yes he said I couldn't have that bike. He was very nice about it and I totally respected him for it cause I knew he was just looking out for me. Couple friends of mine bought bikes from there and they were also pleasant experiences. I'd take a look at what they do and how they do business if I wanted to start a dealership.

[Garandman]

This seems pretty critical to me?

However, we're getting off track.


Is there enough money in a dealership franchise to run the business better than what the norm is and make a reasonable, risk adjusted return on invested capital?//

You are asking a question that is impossible to answer, because it would be your decision. Small business owners make from $18,000 to $500,000 a year - how much do you want to make? How much capital do you have to invest? I'd guess even a smallish motorcycle dealership has a million dollars in assets.

If the question is "Will a motorcycle dealership likely offer a high ROI?" the answer is probably not, since it is an industry driven only by discretionary income. I usually compare any business opportunity to owning a rental property of the same value, since that is arguably one of the lowest-risk businesses around. I'd bet if you do the math that would be far more profitable.

Being a dealer for industrial products purchased by for-profit corporations (because they must have them) is much better business.

[nhbubba]

Or a government contractor!

[Karaya One]

A very successful local franchise owner and I were talking about this two weeks ago. They buy Michelin and Motul from me.

He's been in this since the '80's. It was all good until about 2007.

The key phrase in that conversation - "No sane person is opening a Powersports franchise right now. You might get the rich guy who wants a place to go each day and doesn't mind losing his shirt for five years, but the investment and headaches far outweigh the profit potential."

[breakdirt916]

+1

I don't know anything about business, but even without that perspective...imho, it's all about money

and nobody needs a power sport toy, so you sell bikes and servicing to people that have the money and want it anyways, but in this economy fewer people have money and can't afford to get what they want...so then you gotta optimize the revenue in the sales/servicing you have left by making your buck go farther through reducing your controllable expenses...then your resources become fewer, and your customer service suffers