Building a Recession-Proof Business

A North Carolina outdoor power equipment dealer has lasted through two recessions and two fires, coming out of it with a plan for staying power.

Specialty Outdoor Equipment & Welding in Marion, NC
Founded: 2008 (current location)
Owner: Jim Davidson
Employees: 4 full time, 2 part time
Annual Sales: About $1 Million
Sales Mix: 69% Wholegoods, 14% Parts, 17% Service
Customer Mix: Commercial 60%, Consumer 40%
Shop Labor Rate (per hour): Handheld $39, Mowers $49, Commercial $79
Major Lines: Billy Goat, Echo Bear Cat, Honda, Hustler, Little Wonder, Scag, Simplicity, Snapper, Snapper Pro, Stihl, Wright

Today’s dealers have dealt with it all. Mergers, big box competition, and economic downturns have made their continuous operation challenging. Some dealers remember almost 20 years ago in the early 90s when things were just as challenging. Those same dealers, many of whom are still in business today, have learned from those challenges and face new ones with a plan for action.

Jim Davidson was challenged by recession twice, as well as tragedy in the form of two fires. One resulted in a dealership burning to the ground, the other in the loss of millions of dollars worth of inventory. He’s picked back up again many times, having five dealerships throughout his career. In fact, his current location just opened in 2008.

In his career as an outdoor power equipment dealer, Davidson has learned to focus on quality lines, stand-apart staff, and the kind of service that attracts a demanding customer. Focusing on these three things is how he has worked to make his dealership recession-proof.

Stocking Quality Lines

A dealership is only as good as the product lines it carries. Davidson has been around outdoor power equipment since his teens working at an outdoor power equipment store before ever owning one. He’s spent the last 50 years evaluating product lines. He looks for brand recognition, a reputation of quality, and dealer support. He also at one point offered motorcycles in addition to outdoor power equipment.

“Many things have changed with my business over the years: different locations and lines, different employees, even different product types,” says Davidson. “One thing has remained the same. We want products we can feel confident in and stand behind. We have weeded through many lines to get where we are, and now have what we believe is the best equipment available.”

Stihl and Ferris are two lines that Davidson has carried from the beginning and continues to offer his customers.

Davidson recently added Scag to his product offering in an attempt to support commercial cutters in the area who favor the brand. “The decision to add Scag was made after careful consideration,” assures Davidson. “There are many Scag mowers in our area, but not a service center. The line isn’t a direct competitor to any of our other products, and it offers a one-of-a-kind quality.”

Keeping the dealership well-stocked with his trusted brands is one of Davidson’s best defenses. He believes cutting too far back on inventory when sales are down can work against a dealer. Commercial cutters turn to Davidson to save on time and money, when other dealers keep them waiting on equipment and parts orders.

“During a downturned economy, we try to take advantage of the circumstances,” says Davidson. “When others cut back on inventory, we make sure to carry plenty of it.”

A Strong Staff

At Specialty Outdoor, there is a small staff of talented and dedicated employees. Each plays their role in the business well. Davidson chooses to spend thousands of dollars each year training his employees regardless of the challenges the economy has placed on finances.

“With things the way they are right now in our economy, many have cut every corner to save on expenses and reduce overhead,” says Davidson. “We are faced with the same dilemma, but some things just aren’t negotiable. Even with the way things are right now, we are still very adamant about training.”

Two certified technicians, siblings Scott and Leigh-Ann Ferree, seek ongoing training. While Leigh-Ann is a certified technician, she doesn’t spend much time in the shop. She is cross-trained throughout the business, and helps out whenever and wherever necessary.

Another employee, Julie Ceglarski, handles the inventory control while Davidson’s wife Polly manages the financials. Having such a trim and knowledgeable staff helps Davidson keep his overhead in check.

“You can be profitable if you maintain overhead, and keeping a smaller staff allows us to maintain costs,” says Davidson. “We believe in the people we have, and want to demonstrate this to them by keeping them on through the rough times as well as the easy ones.”

Davidson believes that the cost of retaining and investing in one quality employee is much less than the cost of training a new hire.

Attracting Customers

Into his second recession, Davidson understands the value of a dollar and the customers’ resistance to spend one. “We want customers to know that we understand that their money was hard-earned, and that we genuinely appreciate them spending it here,” says Davidson. “I know that even in the good times, no one owes me their business. I have to earn it.”

Attracting and keeping customers is a focus at Specialty Outdoor. Davidson attracts his customers with quality and diversity in his product and service offering. Things they offer that add to diversity include: firewood, propane, welding, and same-day tune-ups.

“We cannot control the economy, so we focus on what we can control—our business,” explains Davidson. “We can provide great service, for a practical price, by controlling productivity and efficiency.”

Shop labor rates have increased from his first year as dealer, going from $25 an hour at the beginning to currently $39 for handheld, $49 for mowers and $79 for commercial-grade equipment. However, as the rates have increased, so has the level of efficiency in the service department.

Customers save time not only by getting repairs completed efficiently, but also by cutting back on drive time. The location of Davidson’s current dealership was chosen because of the surrounding customer base.

“I opened the current location in order to provide a service to the residents of the rural community, and keep them from having to drive into the closest town,” explains Davidson. “Our store is on the border of three zip codes, giving us a chance to dip into three markets, all while making ourselves accessible.”

Whether he is focusing on his staff, products or customers, Davidson insists any success he experiences is due to determination and long hours.

“Success is rarely accidental,” says Davidson. “It comes only with hard work and relentless determination. It is the product of long hours.”