Two Lines, Two Employees... Seven Figures

Kearney Lawn & Outdoor Equipment

Kearney, MO
Founded: August 2003
Owners: David & Courtney Cox
Employees: 2 full time
Annual Sales: Roughly $1 million
Sales Mix: 60% wholegoods, 20% parts,
10% service, 10% rental
Customer Sales Mix: 80% consumer,
20% commercial
Shop Labor Rate: $68 per hour
Major Lines: Grasshopper, Stihl

David and Courtney Cox are in their early-30s. Neither have roots in the power equipment industry, which is why so many of the fellow dealers they meet often ask, “Are you sure you want to be in this business?” But to the Coxes, that question has never really crossed their minds in the six years they’ve owned Kearney Lawn & Outdoor Equipment in Kearney, MO.

OK, let’s be honest—that question has crossed their minds. Owning a business, whatever that business might be, can be a nerve-wracking experience. But when the Coxes were presented with the notion to start their own power equipment dealership back in the summer of 2003, all of their advisers unanimously agreed. And that was all the encouragement they needed.

“All of the family and friends we talked to thought it sounded like a great opportunity,” Courtney says. “Yeah, almost too good to be true,” adds husband David, a former Marine. “Starting this new business was as good as you could get without buying an existing dealership that already had a great reputation and staff.”

FILLING A VOID

David and Courtney were initially prodded by a family neighbor who was once a well-known area dealer himself. He’d retired several years earlier, selling his business to another dealership. But after a few years the new owner decided to close down. Suddenly the area was left without the strong presence of a Grasshopper dealer. “We knew it was still a very popular brand in our area, so we had an opportunity to fill a void,” David says.

The Coxes started slowly—sort of. They opened Kearney Lawn & Outdoor Equipment on the back half of a typical mowing season in August 2003. Initially they operated out of a storage facility off the beaten path. “I can’t believe people even found us,” David says. “We hung a 70-foot banner out front to try and get people’s attention.”

It must have worked, because customers definitely found them. Before long David and Courtney’s slow, controlled trot turned into an all-out sprint. Equipment (Grasshopper) sales grew quickly. Soon the dealership added the Stihl and Snapper lines to expand its product offering. In 2007 they moved into a better-located facility roughly five minutes from the original location. “It’s amazing what a little bit of visibility can do for a retail business,” Courtney muses. “Walk-in repairs and parts sales soared.”

Kearney Lawn & Outdoor Equipment also started a rental department to help further increase customer traffic. “That friend of ours who initially encouraged us to open our dealership also had a thriving rental business,” David says. “He’s really been a mentor to us. It was difficult getting started, mainly because we had to invest around $130,000 in equipment. But most of it will definitely pay for itself and then some; some of it already has. And the way we look at it, having a rental department helps get more customers in the door—especially homeowners.”

The dealership rents everything from specialty power tools to a Bobcat S175 skid steer. Other popular rental items include Classen and MacKissic turf renovation equipment, a Toro Dingo mini skid loader with attachments, and even inflatable jump tents, though Courtney is quick to point out that they don’t want to get too involved in the “party rentals” market. The Coxes would much rather stick to outdoor equipment, just as the business’s name implies.

FINDING THEIR FOOTING

These days Kearney Lawn & Outdoor Equipment focuses its sales efforts on two major equipment lines: Grasshopper and Stihl. They also sell Jungle Jim’s accessory products, and have been stocking conservative amounts of Sycamore generators for the past couple of years. “Sycamore has been a nice addition for us,” David says. “We get some pretty nasty ice storms around here. But it’s so unpredictable that we’re careful not to stock too many. We tend to order three or four and then see what happens.”

By and large, though, David says Grasshopper and Stihl provide the necessary breadth of product to satisfy current customer needs. Kearney Lawn & Outdoor Equipment caters to homeowners with 3- to 5-acre yards, and small to mid-size landscape contractors.

Recent cutbacks at the local Ford Motor Company plant have led to a surge in residential business. “We’ve had a lot more homeowners looking to buy new mowers this year,” David tells. “Many accepted buyouts as Ford scaled back production, so now they’re retired with a little time on their hands. Some decided to cancel their lawn service and start mowing their own yards again. Some have even started up their own part-time lawn maintenance businesses.”

Most of the dealership’s landscape customers are smaller maintenance companies, ranging from the new start-ups described above to veteran mowing contractors. Kearney Lawn also has some large landscape accounts, although David says many have downsized their operations this year to coincide with the tightening economy. “Some of those big landscapers who’ve had their own mechanics on staff are coming back to us for service again,” David relates.

That’s good news for Kearney Lawn & Outdoor Equipment. Yeah, the additional service business is great. But more importantly, having contractors rely on them to keep machines running is how this dealer creates customers for life. “That’s probably the biggest reason I’m hesitant to take on a bunch more equipment lines,” David explains. “I think it would be difficult to provide the same level of service if we did.”

Aside from the additional technical knowledge that would be needed to support additional lines, David says managing parts inventory would be a significant challenge given the dealership’s space and personnel limitations. Next to managing cash flow, he says inventory management is the biggest challenge in this business.

A close third is what David and Courtney refer to as “following up on opportunities.” One of the unique aspects of Kearney Lawn & Outdoor Equipment is that it employs just three full-time people, one of whom is David. Courtney, a sales rep for a salon supply distributor, works only one day a week at the dealership taking care of billing and other administrative tasks. Longtime technician Alan Bray hunkers down in the shop, while new hire Brett Bieri mans the phones and parts counter.

The lean staff is something David thinks about often. “We get so bombarded with customer inquiries some days that it’s hard to get back to everyone,” David says. “Right now our focus is on our current customers, but we realize there are other opportunities out there.

“We’re sort of in a tough position,” David continues. “On the one hand, we’re really excited that we’ve made it past that pivotal five-year mark. On the other hand, we’ve grown pretty quickly, and now must figure out what we’re going to do next. Do we keep doing what we’re doing, do we scale back and quit servicing everything that comes in the door, or do we try to take the next step and grow?”

If the Coxes do decide to take that next step, it will likely involve hiring another employee or two. David would like to spend the majority of his time following up on all those opportunities that are out there, such as additional business from landscapers and other commercial customers. He’s also thinking about taking on one more equipment line; something relatively low-risk in the premium-grade walk mower category to capture another segment of the residential market. “We could also expand our rental business quite a bit,” David adds.

But those are decisions David and Courtney Cox will reserve for another day. Right now Kearney Lawn & Outdoor Equipment is as busy as ever, because generating seven-figure sales with two lines and two employees takes a lot of time and energy.

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