Here's your opportunity to learn how quickly your business can grow if you apply the correct buying strategies, marketing, and employee management to your business!

Mike Burns and Mike Messenger purchased their Rushford, MN, business in 1996 with their main interest in snowmobiles. Soon after, they took on Polaris ATVs and Ariens, Gravely, and Stihl power equipment and it made a big difference. When they bought the dealership, it was doing about $250,000 in gross yearly sales and within 2 1/2 years, M & M Lawn and Leisure started grossing that per month! Now, they gross $9 million yearly!

Read on to find out how Mike Burns and M & M Lawn and Leisure grew and what tips and techniques they use to continue generating profits...



Question: What do you think have been the top three keys to the success of your business?

Mike: The first thing is marketing. You always need to find the new cutting edge avenue to market your business and keep your name in front of people. Advertising also plays a role. I'm not necessarily talking about conventional advertising, but advertising in whatever way works - whether it's changing from season to season, year to year, whatever is the next big thing. The Internet is obviously another very good thing for us.

The second thing is service and always taking care of the customer. The customer may not always be right, but you need to make them feel like they are right. We always have free pick-up and delivery, even with the high gas costs and high vehicle costs. That definitely has impacted our business.

The third thing is having the ability to track what your employees are doing and knowing what is going on. We departmentalized in our business and we were only able to do that with Ideal's dealer management software. Being able to track what your employees are doing on a day-to-day basis, whether it is a mechanic or a salesman, etc. From a management standpoint, that makes my job so much easier. I spend the first four hours of my day simply looking at the different websites, supplier websites, financial website, and Ideal. I check for what happened yesterday, what we sold yesterday, efficiency codes (who is doing what, who is billing what, who sold what), our F & I (whether we are staying on track or if we need to adapt). Through that, I can see what is changing daily and it's been a huge part of our success.



Question: For you, what have been the most effective ways to generate revenue for your business?

Mike: The most effective way is purchasing. I make more money buying than I do selling. Knowing what I sold last week helps me buy for next week. I look at what will be selling 90 days into the future. Was it ATVs or was it snowmobiles? I think about what I need to have in stock.

I think the key thing a majority of people miss is looking into the future. I already have snowmobiles bought for next year. I already have about 350 sleds bought and I would like about 450, so I think about where am I going to get the other 100. Where are they going to come from? When is the right time to buy them? Well, it is in the next 90 days, so I have them for the following 90 days. It is super important to be able to tell what I need to buy.



Question: What proven tips, tricks, and techniques would you offer to anyone who wants to grow and increase the profits in their Powersports or OPE business?

Mike: I think the biggest thing that people need to understand, if they are going to be profitable in this business, is that they need to know what they've done in the past. They need to know what percentage of market share they are holding versus what others are selling in their area. They need to know what people are looking for. I have made mistakes in guessing what the market is going to do. But I think if you can make an educated guess based on past performance, put it together with a good marketing plan, and be able to purchase the proper equipment, you're in good shape.

I don't think it is that difficult, it takes having the absolute right product that your customer is looking for at the right time. When you do that, you are always going to have some wrong product too. You can't be afraid to make a mistake. The crazy thing is that so many dealers are afraid of making mistakes that they are afraid to try anything.

In marketing, you can't put all your eggs in one basket. We use T.V., we use radio, all in moderation. We use Internet and discount auction sites. They are not all working at the same time, but if 60% or 70% of what you are putting out there is working at any one given time, that is probably one of the biggest keys.

I would say the biggest other tip that people need to watch is the way the business is profitable. Whether it is the service manager or the sales manager, all those people have to be profitable. I have talked to so many dealers at dealer shows and some of those people don't know what their parts guys are selling. They don't know where the money is coming from. They know that the money is happening and they know that customers are coming to the parts counter to buy parts, but they've got to drive people to buy more. I commission and bonus my parts guys who are out selling. If a customer comes to the parts counter and wants to buy a plow, and they can get them additional stuff, they can make additional money. But they've got to be able to track that.

I would say that the one tipping point in my whole system is when I totally departmentalized and totally justified each person, whether it was a salary person or something like that. I decided that they need to be driven by something. My office manager and business manager, even though he is being paid a salary, is driven off of a percentage of sales - whatever it happens to be. A number, so that when he comes to me for more money, I'm not getting just a gut feeling of "I can or cannot pay you more money" but I can based on that number. I would say, singly, that is the thing that drove me to the point of being professional in those entities - not letting people slide, as an employee. If they come to me and tell me that we are selling tons of parts and need two parts guys, they need to show me how we are going to make more money and how we are going to sell more product doing it. I'm not just going to add $4,000 to my payroll and not get a return on my investment. I think that is one of the biggest tips and keys to it all.



Question: A simple way to increase profits is to reduce expenses and improve efficiency. What have you found to be effective ways to reduce the expenses in your business?

Mike: When your employees know that their salary is being driven off of a certain avenue, they will do it for you. They will babysit themselves and make sure that they are making me as much money as possible because they are paid off their profit. My salesmen are all paid as a cooperative group and this is something that I truly believe in. I know that nobody else in the country is probably doing this. I sell and I have two full-time salesmen and a sales manager. Between the four of us, the pay is based on our profits, as a group. So, if a guy is slacking, I don't need to monitor that, they will tell him to pull it. That, in turn, drives down costs.

The other thing is to get out of debt. Pay off debt when you have the capital. I now only purchase vehicles when I have the cash to purchase vehicles. I don't borrow money on vehicles. That is one way to eliminate costs.

If you don't know what your costs are, you can't eliminate them. That is probably another big thing. You've got to be able to monitor and you've got to be able to see what these costs are. You've got to track them, and we obviously do this with Ideal Computer Systems. We track costs, finance through our PeachTree interface with Ideal. We also use SoftWheels through Ideal, which is able to track all our deals through the point-of-sale side and purchasing.



Question: Another way to increase profits is to simply get more customers. What tactics have you found to be most effective for getting new customers and what tips do you have?

Mike: If you retain your old customers, the new customers will follow. Retain your old customers with good, old-fashioned service and give people the proper respect, and the proper products to buy that will make their sale as enjoyable as possible. Word of mouth is your single best retention in customers. I have more customers that walk through the door as new customers that say that their buddy bought a machine from me. They want the same deal that he got. That doesn't necessarily mean the same price, but it does in service. It is pick up and delivery, service at the sale, and offering all possible products that you can (financing, service products, etc.).

There are a ton of service side key points that people miss. I religiously take customers from my neighboring dealers and I retain them and their buddies. I can't imagine that we lose more than 10 or 15 customers a year, because we retain them as many as possible along with their counterparts. I think that we are destination store at this point. We have a lot of very good customers in Iowa. We are a destination store because people need to travel to northern Wisconsin and come right through our store. We provide them with the proper service on their way to their ride destination. When they get here and their snowmobile is blowing up, they will take a snowmobile of mine to go up north and ride because we have to understand, as a dealership, that the snowmobile season is very short. The more enjoyable I can make the season for the customer, the more apt they and their buddies are going to be to stop back and stay my customer.



Question: Do you have any good tips on how to get more repeat business and get customers coming back into your store?

Mike: We do two open houses a year. We do not base our open houses on looking for sales that day. We roast hogs, we serve up non-alcoholic beverages all day, and create a fun atmosphere for our customers. We give away money or door prizes and create a totally fun atmosphere for our customers and our employees. For example, last year we gave away Twins tickets and had a Vikings player come in and sign autographs. If you do that and give that to your customers that day, they will inheritably want to do business with you and want to be involved in the next open house. They want to come back to your store.

We'll send direct mailers and private invitations to customers telling them that we want them here on open house day. We don't pressure them to purchase anything, although we inheritably sell 20 or 30 units that day - but that's not our objective. The salesmen are here to just talk, not to talk price or push the issue. I believe a huge key in success is to create that fun aura for your customers. Another example is that if they come in certain times of the day, like around dinner-time, we will offer to take them for dinner or send a salesman off with them.

I know those direct mailers play a big role in getting our customers here. That is all driven off of Ideal, because we have upwards of 10,000 customers in our system. Three of four of us will run through, pull out the inactive accounts, and even if a customer is two states away, we will send them an invitation to our open house to show that we respect them and appreciate their business. Even if they can't come, we get phone calls saying, "Man, I really appreciate the invitation. I'm not going to be able to make it, but I appreciate the opportunity because I realize how much fun is going to happen that day." It's important to not let yourself decide which customers would or would not appreciate the invitation. Just assume that they will all appreciate it because chances are they will.



Question: What suggestions or tips would you give to a dealer that wants to increase the size of each sale and maximize the amount of money that each customer spends when they buy from you?

Mike: Allow enough time with each salesperson. Allow enough staff so that the salesperson can spend adequate time with the customer. Have enough promotional stuff set aside for the purchase and the ability to extend service contracts.

We have three employee sectors that the customer will go through when they come to the store. For example, if he called and purchased a Ranger over the phone, he will meet with the salesperson when he first gets here. The salesperson will discuss the purchase and the price, then pass the customer to the parts counter to at least hear what promotions we have going on in that department. Some are interested and some are not. That's okay, we at least give everyone the opportunity to talk to those guys. The parts guys might have a discount plow or something that will fit their fancy. Instead of letting the salesman decide what is important, we let that department be separate.

Then when we are done, we have a business office when we talk to them and find out if we are going to finance this, and how it's getting paid for to try and maximize the sale as much as possible by having the specialist of each department talk to each customer. Even going as far as when the sale is done, we might have the sales manager come out and ask, "Is there anything that I can help you with? I understand the equipment a little bit better." Most of the time the salesperson has already accomplished that feat, but there are times where my service manager, Jeremy, has an opportunity to meet the customer. So when service comes about, he knows those friendly faces and they know his.



Question: What tips would you give to a dealer that wants to increase sales conversion rates and convert a higher number of customers that come in the door?

Mike: The conversion rate is 100 percent all the time every time. Each sale is done through the store and we have a very methodical way of how the deal is going to surface through the store. It is going to go through each department every time, so we maximize by allowing each department to talk to them and we maximize the sale. Each customer may have three or four contacts in this store that they have talked to through the sale. I say 100 percent of the time, but it's actually 90+ percent. I get very upset, as the owner, when each department doesn't get the opportunity to talk to them, because it does maximize the sale and does maximize profitability in parts, accessories, or in financing or extended warranties. We don't scout for it, we don't charge dock fees so we are making our money off products.

Free pick up and delivery is also key. We make sure our customers know that if they live anywhere within in 100 miles and give us a call, we will be there to pick up their equipment in a day or two. It's very important our salespeople make sure the customer knows this.

Another thing is to stock a lot of inventory. We leave inventory out in front of the shop. People see what it is and you get additional door swings by people seeing the huge inventory and stopping. Not every one can do that, but it's a big plus and we have done that for many years. Selection of product and stocking and displaying the majority of what a dealer sells. We may have a unit that we sell one or two of a year and we may still stock two, but we at least have that selection for the customer so they can make an intelligent decision of what they want to buy.

If you provide the right service, you'll also find out that you cross-sell so many of your customers. They will buy a snowmobile and then buy an ATV. They might buy a snowmobile here and realized we have phenomenal service. So when they buy an ATV, Ranger or lawnmower, they may drive two states to get that here too. I believe that the key of service, and the customer believing that they got a good deal, is going to help you get the additional business. It is a different day and age out there, with so many people going to the Internet and increasing their proficiency by price shopping. It isn't just a local business anymore. We sold sleds into 80 different dealer territories last year. You've got to have yourself out there on the web, in local advertising, and keep the open houses brewing to keep people coming to your store for events.



Question: Do you think inventory control and the merchandise you choose for your store is important?

Mike: Absolutely! Marketing and inventory control are the two biggest things. Being able to manage what I have in stock is very difficult. When we were small and I did all the selling, I knew what I had and didn't need to look in the computer. But when you grow your business, which 2 years ago we were doing $4.5 million, and today we are doing $9.2 million, I needed to add employees. Everybody needs to know what we have in inventory, so we have a weekly sales meeting and we discuss high-load units. You are not going to go outside and physically count, you just can't do it. So you need to know exactly what you have in stock. Do you have the right product to sell? And not only do you have enough of it, but do you not have too much of it? That is certainly very important. Polaris has pricing discounts according to your quarter goals and certain settings. There are things that we order very heavy and take the discount and roll it through inventory. Without tracking that through Ideal, there is no way I could do that. I think we have $3 million of stacked inventory and I look for about 3 turns a year. I know that industry wide they are looking for about 4 1/2 turns a year, but I have not found that I can do the volume of business that I can do with trying to turn four times a year. I know that I can do it at 3 1/2. So those are numbers that I definitely need Ideal to help me track and it's definitely a huge avenue.



Question: How has Ideal's Dealer Management Software helped you accomplish the things we have discussed?

Mike: Being able to track everything and accountability. Without being able to track the past, it is impossible to guess what is going to happen in the future. We can't remember what we ate for dinner last week, how can we remember what was said or talked about with a customer last week without having it in their comments? How do we know what to order for next quarter if there is no record? When I look in our old hand-written ledgers (we did handwritten ledgers before using Ideal) and I see we gross profited 6 1/2, these are numbers that I need to run my business. The breakdown of those numbers is what I really need to run my business, because of 40% of that was lawnmowers and 60% was ATVs and Rangers. I can even break it down further from that by stating what exact models were sold. Without knowing exactly what we sold, we don't know what to order in the next session.

It also helps in knowing what my employees' capability is. If my employee has an efficiency of 100% one month and the next month hits 60%, you wonder why did our efficiency go down? We had bill-back time, but why did we have bill-back time? I had a motor go down after I re-built it. I can address that situation with that employee today rather than let it get forgotten about and/or let it get just pushed under the rug. Every employee needs to understand accountability and they need to understand that you are watching it.

It really comes down to that you have to order based on what you sold. You can't guess; it is too big of a business to be guessing. You need to know what you are paying these employees. So many dealerships are running $50,000 a month in gross profit and they are paying out $45,000 a month in bills and saying "I've got another $5,000 in my checkbook." Well, you really don't, because you've got holdbacks and rebates and things that get piled into Accounts Receivable of cash you didn't get. You could have a negative cash flow and not know it based on what your checkbook looks like.

I've had dealers say, "Well, I don't have any money in my checkbook, I've made no money." That isn't necessarily right either. The total function of my job is to manage, track, and account for what everybody else is doing and pay them accordingly. If they are making me money, then I will pay them more. If they are losing me money, they are getting chopped or being replaced with someone who can buy into the system and understand the system. That is another good point. No employee likes change and no employee wants accountability. If I have an efficiency factor meeting going on and I go to my employees, they are going to fight me the whole way. They don't want me tracking what they are doing, so I don't allow them to tell me that "I don't want you tracking me or want you to account for this." They are not the ones that you want to look at during purchasing, because they don't want it. They don't want you to know that they are smoking a cigarette when they should be working.



Question: Are there any other specific tools, websites, software, or services that you personally use and recommend for people who are trying to get results in the Powersports business?

Mike: Ideal is the only one that I've ever used. I have looked into Lightspeed and other companies. Nothing tracks it from department to department. Ideal has done a great job by getting hooked up with SoftWheels, which has been a phenomenal piece of software for us. I venture into the Polaris website or venture into the other dealer websites. I use PeachTree only because I got started on it. I did try the RedWing and didn't care for it. We obviously also use PartSmart and Ideal is really good about sending me price updates on Part Smart.



Question: What advice would you have for a close friend or family member if they were getting started in the Powersports or OPE business today?

Mike: I was not a very detail-oriented person and believed that if you sold a product and got paid for a product and you turned around and paid for the unit and kept the money that was there, the sale was done. There is so much more to it than that. I say that you need to be a more attention to detail person, you need to follow everything, you need to watch your money, you need to pick every penny on every sale, you just need to be a more detailed-oriented and keep track of what you are selling and profitability of the unit, the floor cost. You just need to pay more attention to every little detail because there is money to be made on every swing of every door.

The day we started, we had no idea that there was the cost of stocking the floor and after that 18%, but the average person doesn't look at that. I say that labor is my biggest expense, and it is, because we've got all other costs under control. I know exactly what my floor plan expense is going to be. I can budget it at the beginning of the year and know exactly how to hit those numbers and how to roll the inventory faster so I'm not paying any more interest than I have to.

Another thing is that my salespeople pick the units they are going to sell. They are notified to pick the oldest unit possible, and that keeps your floor plan costs down. It is things like that you need to keep your eye on. It doesn't matter where it is sitting in the pile, it might be sitting behind 30 units, but if this one is coming off the floor in 30 days and this other one is coming off in two days, I'm selling the one coming off the floor in two days so I can get it paid for before it takes nickels for the juice. It is all those details that you've got to have your finger on or costs will spiral out of control.



Question: If you had to do it all over again, what would you do differently?

Mike: Nothing; I am very happy. I've been through the very good times and the days when I say that I want to just sell the thing or give it away. We run a very successful company and are ranked in the top 5 in the Central Northern states. I'm very happy with our success and very happy with our company. I wish I would have watched my costs closer. The day I started, I probably would have borrowed $400,000 more money along the way than what I needed to just to figure out that this is important to monitor and watch and control.

You need to use the dealer management software to its ability. When I learned to manage Ideal, learned to track it, and learned all the ins and outs and how I can use it and use those numbers, that is what made me money and made us successful. The hardest thing that I had to do as the owner of this dealership was relinquish control to employees and trust them to do the job, and trust myself to manage the job. That is the only thing that I wished I would have changed from day one. I wish that I would have hired people to do the job. If something is not working, not do it myself and just trust in other people. We made a huge run back in 2001 and went from making about $4 million to about $5.5 million and I was trying to run it all myself. We ended up falling back to $4 million a year later and were in worse shape than when we first hit that. When we made this last run in 2005 to try and hit the $10 million in business, we did it with employees and with trusting their judgment along with our judgment and trusted the software to track people. I wish I would have done it sooner.

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