Well, we actually sold a few new tractors this week along with some used equipment that really needed a new home. To be truthful everything we sold was getting 'a little long in the tooth' as a former salesman once told me. Counter parts sales increased and the shop is full. Our guarded optimistic view is that we may be coming out of the past year’s doldrums, feeling the winds of spring could possibly be powering our ship's sail (sic) to profitability. It is amazing how a week of shirt sleeve weather can bring out customers in numbers that were missing for the last few months. Apologies to “youse guys” way up north. According to you with whom I have conversed, our past store traffic was akin to an old Yogi Berra-ism when he stated, "The fans are staying away in droves.”
The industry of rural lifestyle dealers can come back a lot faster than the full line dealerships. Our inventory dollars are nowhere near the numbers of some full line dealer friends who are still in a depression market. If one has a few minutes, go to some of the mega dealers' websites and start writing down the asking price of the used equipment plus the new items whose price is 'call.” We did this exercise and on one multistore dealership, totaled the asking dollars, then multiplied that amount by .8 and we approached an estimated 400 million... If all that is floor planned somewhere at 5%, this yields 20 million in interest annually. That is $50,000 a day in interest - divided by the # of stores they had and that is about $1500 per day in interest. To pay that, each store has to ring up $30,000 in total sales at a 5% bottom line just to break even on each day - that is before all the other overhead as in salary, insurance, utilities and the other stuff that bites us daily is added in. Sustainable?
I have been hoping someone would tell me how wrong I am on these figures. We have heard of Cotton Picker deals that fell through, and the units are on dealer's lots. Folks, that's a million dollars a unit if true. I know few actually follow the cotton market, but today cotton was 67 cents /lb. When I graduated high school in 1972 cotton was close to one dollar a pound and a cotton picker was way under $100,000. My dad always said figures do not lie, but liars are always figuring - I sometimes am mistaken, but do not lie, so I am going to stop figuring here..
Speaking of 'If that's true…’ we hear rumors that farmers will get the promised disaster payments based on acres planted last year of corn, wheat, soybeans and cotton. We think the deadline is this month (March). That will be substantial money flowing to row crop farmers. Will that make a difference in the depressed machinery market for big ticket items, or will the dollars go elsewhere? Will the DOGE arm reel in those dollars or will a president who says he loves farmers let the money flow through?
Cattle farmers are doing really well, but those dollars are not making the hay market stellar in performance. I talked at length to a local banker about his business and its connection with the agricultural community. One takeaway was most banks who made farm loans, if the loan was less than a million, the loan officer could approve the loan. This year ALL ag loans in our local banks have to have board approval no matter the amount. That is a pretty big change in policy, again due to the economics of our business.
Those of us who sit behind desks who have to make decisions in these uncertain times have a lot to consider in making our plans and making them work. I appreciate all you dealers who have these desks of responsibilities and feel your weight of being the captain and officers of these aforementioned ships of commerce. We are a rare breed and as I tell my wife, whenever I see her, so underappreciated. Until next time, keep the finger in the wind, run a tight ship, make up the leeway, stay on the right track, batten down the hatches at times but most importantly, turn the corner to more sales, sails and profitability.
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Told from the perspective of an in-the-trenches owner/operator — Tim Brannon of B&G Equipment, Paris, Tenn. — Equipment Dealer Tips, Tales & Takeaways shares knowledge, experiences and tips/lessons with fellow rural equipment dealerships throughout North America. Covering all aspects required of an equipment dealership general manager, Brannon will inform, entertain and provide a teachable moment for current — and future — leaders within equipment dealerships. |
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