Many dealers have realized that diversification is a good way to supplement sales and increase your chances at success. But what happens when your supplemental business grows so much it starts to compete with your ability to manage properly?
At Engelhart Greensmith in Madison, WI, they made the decision to separate two sides of the thriving business in order to better serve each profit house. Now, the power sports and outdoor power equipment segments are managed separately and successfully on the same lot.
Separate but equal
Engelhart Greensmith is located just off a busy highway on a small lot that sees lots of traffic. They have a strong powersports business that attracts many area hobbyists. Also, as one of the only arborist supply stores in southeast Wisconsin, they see continuous growth on the outdoor power equipment side of the business.
As both sides continued to grow in sales year over year, owners Jerry and Mona Engelhart and Robert Hintz decided in 2005 that the two areas would be better served if managed apart. In the seven years since, they have seen that they made the right choice. Moving into separate buildings has allowed each product segment and respective service department to fine tune operations and better showcase their goods, increasing profitability and sales.
"Both sides have grown in sales each year since the transition in 2005," says Joe Fobes, Engelhart employee. "Moving to the other building has allowed both the dealership and powersports sides to display more products and grow sales. Sales on the power equipment side have doubled since the move."
Fobes manages the outdoor power equipment side of the business. When asked his official title, Fobes brushed it off saying: "There are no titles on our business cards. We are all a team with the same goals and that is for the business to succeed."
And succeed it has. The business has continued to grow stronger with the departments managed separately. Each side has its own individual goals, but work together on things like advertising.
"Each side of this business has its own website, but we model both after the powersports site because we consider it to be more exciting marketing," says Fobes. "The website marketing has helped traffic in the store and online. People like being able to shop from the comfort of their home, but we have to attract them."
The two sides of the business also share the cost of a delivery driver for equipment pickup and returns.
Making the most of a prosperous situation
As the two sides of the business continued to flourish, the dealership started to outgrow its small lot. Wanting to stay in the great location, management had to think of ways to build on to the facility and improve the way space was utilized.
"When it came to facility additions, we realized we had to move up and not out," says Fobes. "We are landlocked, so there was only room to move up."
The long and somewhat T-shaped building attaches the powersports showroom, powersports shop, numerous storage areas and the power equipment showroom and shop. With all areas of the business connected, staff can walk through in the winter and stay out of the cold. A very organized system for storing equipment and parts utilizes all available space.
"A large upstairs storage area houses equipment waiting for repair and pickup as well as new equipment waiting for assembly," says Fobes. "Each piece of equipment is fitted with a color-coded tag so staff can easily see what needs to be done with it."
A red tag means the equipment is waiting on parts. An orange tag means it is repaired and ready to be cleaned and sent back to the customer. Once work on the equipment is completed, it is put in a numbered bay to await pickup.
"The bays are numbered 1-9 with the numbers matching the last digit of the repair order number," explains Fobes. "It helps us find equipment fast and bring it down by elevator." For larger loads that need to be moved to or from the second floor, there is a loft gate that opens, allowing a forklift to access equipment.