Name of dealership: Custom Cycle (1996) Ltd., o/a Custom Cycle and Marine
Year founded:  1969
Location: 2634 Faithfull Avenue, Saskatoon, Sask.
Brands the dealership sells:  Suzuki, Kawasaki, BMW and Triumph motorcycles; BRP, Seadoo and Skidoo
Best sales year:  2007
Size of dealership:  5000 sq.ft. showroom;  2500 sq.ft. service area
Geographic service area:  Central Saskatchewan
Name of owner:  Rick Dobson
Number of employees: 18
Charitable activities: Saskatoon Food Bank, Multiple Sclerosis Society of Canada, and Canadian Cystic Fibrosis Foundation
Website:  www.customcycleandmarine.com
Telephone:  306.934.3717
Email:  sales.customcycle@sasktel.net

If the buying public hunkers down and slashes personal spending, that could mean a tough year ahead for the powersport sector.

With an uncertainty looming on the horizon, Rick Dobson, owner of Saskatoon’s Custom Cycle and Marine, admits he’s an optimist and after consecutive years of solid growth, he’s projecting a “flat” year for his thriving multi-line dealership.  In mid-November, Dobson had already placed his motorcycle order for 2009, and says, “I’ve ordered the same number of units as last year, and that’s the first time I’ve done that in years.”

Dobson, whose background was in the trucking/moving industry, bought Custom Cycle and Marine in 1988.  The 80s were tough times for powersport retailers, so he has experience running and sustaining an enterprise at a time when most other powersport dealers were failing.  In the early years, Dobson says his trucking business subsidized the motorcycle dealership.  But the motorcycle business finally became profitable and since 2001, Dobson estimates his powersport enterprise has grown a very respectable 15 percent annually.

In addition to his Suzuki, Kawasaki, and BRP motorcycle lines, Custom Cycle and Marine has recently re-acquired BMW after a ten-year hiatus and has added Triumph after giving up his long time association with Honda as that company continues to shift to the ‘Powerhouse’ model where Honda power product sales are integrated with the company’s car dealerships.

Despite saying he’s an optimist, when pressed, Dobson believes 2009 could very well be a down year for the powersport sector, but he’s hoping that adding the BMW and Triumph brands will keep his sales numbers up.  He believes BMW buyers are a “different breed” and less affected by a slowing economy.  “[A BMW] is not the first bike for 90 percent of BMW buyers; it’s not a whim purchase like Japanese bikes,” he says.

With the potential for an uncertain year ahead, Dobson is in no hurry to make changes in managing his enterprise or in marketing.  He says years of sound, rigorous, business management practices have positioned him well for a possible downturn in the business.  “I’m a numbers guy,” he reveals.  “I know all the ratios – if I sell so many units, I know I need so many techs,” adding, “I’ve got the business model – I’ve got confidence in that – and I have confidence in myself to carry [the business] for three to four [unprofitable] years.”  Dobson attributes his dealership’s rock-solid business model to learnings he gleaned from joining a powersport “Twenty Group” – a business management service that organizes non-competing peers to share best business practices, solve problems, and find ways to increase profitability for group members.

Recalling one of his first Twenty Group experiences, Dobson was asked to share his budget with his group.  “[The members of my group] cut my budget to ribbons.  They asked why I had budgeted an [X percent] margin on parts; they said it was too low.  They said the trade account discount was too much.  Then they asked if trade accounts ordered by part number; they didn’t – my parts staff had to look up the part numbers.  They asked how trade buyers paid – with cash or credit card; it was often with a credit card.  Then they asked how long we gave them to pay; it was up to ninety days – it was too long.”  It was quickly apparent to Dobson’s Twenty Group peers that he was losing profit on the sale of parts to trade accounts because he was discounting the price too much, burning up valuable staff time looking for parts numbers, losing profit on credit card purchases, and allowing too much time for account payments.

“My Twenty Group said, ‘Here’s what you’re going to do when you get back to your dealership.  You’re going to contact all your trade accounts and tell them their discount is now reduced.  You are going to sell them the microfiche and they will have to order by part number.  There will be no returns if they order the wrong part; they’re stuck with it.  And they have to pay within thirty days.”  Dobson chuckles as he recalls his general manager’s reaction when told he was going to implement that advice.  “My GM said we are going to lose every single one our trade accounts.  And you know what?  We did – and we added $35,000 dollars more to our bottom line that year.”  (Interestingly, other industries have adopted a similar approach to increase the efficiency and profitability of selling parts.  Finning, the world’s largest dealer of Caterpillar equipment, gave computers free to its parts buyers and offers additive discounts based on ordering online; ordering by part number; using Finning as sole parts supplier, and paying within a specified time.)

Dobson pays close attention to the details to make his dealership a successful.  He cites the sage advice voiced by successful businessmen such as one friend who is a car dealership owner (“I’ve never seen a car dealership go broke by having too much inventory”) and American multi-billionaire investor Warren Buffet (“You can only go bankrupt with borrowed money.”)

While he may have some concerns about the upcoming year, Dobson is taking a longer view about growing Custom Cycle and Marine.  The current facility has housed the business for ten years and renovations are under way to fit it with BMW’s upscale retail image.  Eventually, Dobson’s intention is to turn the current location into the ‘European store’ selling and servicing BMW and Triumph motorcycles; the other motorcycle and powersport products will be sold and serviced at a second location.

And while Rick Dobson says he has no current plans to make major changes at  and Marine with the prospect of a flat or down year in 2009, he says, “The best advice I can give to any powersport dealer is to join a Twenty Group.”

CPT