A Noble Cause

Tim Peterson is the quintessential dealer. He's been at it since he was a teenager, getting his start working on small engines. Throughout his tenure in the industry, Tim has also taken a liking to customer service, and has even developed a fondness for managing. His management approach, in many ways, mirrors his approach to technical service: tear it down and analyze it, then put it back together so it runs more efficiently.

"I like to focus on our dealership as a whole," Tim relates. "Whether a customer is dealing with our service department or looking to buy a chain saw, he's dealing with Noble Power Equipment, period. We have to be at the top of our game in every aspect of the company."

Tim says that's the reason he's not big on departmentalizing the business, although in some ways he is. "I like to monitor productivity in each department (equipment sales, parts and service)," Tim points out. "If we know that each department is operating as efficiently as possible, profits will follow."

BETTER PROCEDURES DON'T COST A DIME

To make Noble Power Equipment one of the most successful power equipment dealerships in California's Central Coast region, Tim and wife Joni are continually looking for ways to improve it. Sometimes it requires a financial investment. But in many instances, a simple change in procedure will do the trick.

For instance, a rather simple, yet incredibly effective, tagging system has been implemented in the shop. Equipment that needs to be worked on gets a blue tag, equipment awaiting parts gets an orange one, and equipment that's fixed and ready to be picked up gets green. This helps keep everything in order and remove a little stress from the techs' lives, which is especially important when the pace of equipment in and out of the shop accelerates during the busy season.

Another improvement that didn't cost much relates to blade and chain sharpening. A grinding room has been walled off within the shop, helping stifle its noise to not only the showroom, but also the other technicians' ears.

Tim and Joni are proud of the fact that they treat their employees well—and pay them well. They also charge for their services. "If a phone company had to come check out my phone, they'd probably charge me $100 or more," Tim says. "You can bet we'll charge $7 for a chain sharpening. Why would we give that away?"

Noble Power Equipment charges a respectable $65-per-hour shop labor rate; not outlandish for the affluent San Luis Obispo area, but certainly adequate to help the service department recover its costs and make a profit.

Other policies help prevent poor cash flow and lost profits, including:
• Special order parts must be pre-paid
• No returns on special order or electrical parts
• Other returns only within five days
• 25-percent restocking fee
• Equipment left over 30 days from invoicing can be sold

To help expedite repairs and get shop revenue coming in faster, Noble Power followed a trend last year that more and more leading dealers have been following themselves: They quit working on brands they do not sell. "Our techs are now faster, better, and they make more money," Tim points out. Additionally, special order parts are now placed in bins (alphabetical by customer last name) directly behind the parts counter.

TYING IT ALL TOGETHER

Procedures and policies aside, the Petersons have also continually made financial commitments to their service department to give the technicians the tools they need to perform.
Off the back of the shop into the parking lot, Tim had a roof put up so mowers could be stored out of the technicians' way, but still remain shielded from rain.

Back inside the shop, each of three full-time techs has his own work station, furnished with an equipment lift and computer loaded with PartSmart. Tim and Joni are big advocates of technology in the dealership. Without it, they're not sure where they'd be.

The Petersons buy a few new computers every three years. The new ones replace those at the parts counter, which are then moved back into the shop. So, in essence, both the sales/parts departments and service shop are getting new computers every three years.

An Ideal Computer Systems user, Tim is quick to point out that the key is tying all important components of a business system together. "It seems like a lot of dealers only want to use their system for sales transactions, or maybe parts inventory, so they're still having to double-enter a lot of information," Tim relates. "You really start seeing the benefits when you're using the system to its full capability, and all the different functions start tying together, giving you the information you need to make better decisions."

The givens, Tim says, are point of sale, parts and wholegoods inventory, basic accounting functions, and shop orders. "Every day I'm looking at what the shop billed and what the gross margin is," Tim relates. "I'm also looking at what the parts department and sales floor sold, and what that gross margin is. It goes back to my whole theory of how each department must work together to make the dealership as a whole successful. We know what each department can contribute from a profitability standpoint, and we're keeping an eye on it."

TWO SHOWROOMS ARE BETTER THAN ONE

Founded in the 1940s, Noble Power Equipment has been under the ownership of Tim and Joni Peterson since 1985. They moved into their current facility in 1996, and immediately started renovating to fit their needs.

"San Luis Obispo is a beautiful place," Tim says. "We're surrounded by mountains, which is both a blessing and a curse. The population is 50,000—so we're somewhat isolated. While it's not easy to draw people from outside the area, we do have a chance to develop really loyal customers who are in town."

Another consideration is that San Luis Obispo is not really a market for big iron. Handheld equipment and 21-inch walk mowers are the more popular products. "We really have to work for our money," Tim points out.

That said, a big part of the building renovations relate to the creation of two showrooms separated by a short
staircase. Tim doesn't like to merchandise product by brand. Rather, he displays by product category, and is careful to mix it up by season.

In the fall, chain saws and blowers are on the first floor near the main entrance and front counter, while trimmers and tillers are on the lower floor. That merchandising scheme is reversed in the spring. The faster-moving walk mowers and generators are also on the main floor, while the slower-moving big iron is down below. Wall displays have slots for manufacturer signage, which can easily be changed out at any time.

"We've had many customers come in looking for, say, a new string trimmer, and were surprised to see chain saws hanging there instead," Tim tells. "We told them, 'We have the trimmers down here right now,' and carry on with helping the customer. But now that customer is also interested in a new chain saw. Having the two showrooms has worked very well."

Maybe one of the reasons it's been effective is because Noble Power Equipment is such a nice place to spend some time. The store is clean and orderly, and the staff friendly. Antique chain saws line the walls near the ceiling, creating a sense of history and authority. Customers like coming to Noble Power Equipment. Tim and Joni Peterson have worked hard and invested a lot of money to keep them coming back. In the tight-knit community of San Luis Obispo, that's made all the difference.