Charles Waggett isn’t one to mince words. The owner of Vancouver’s British Italian Motorcycles has been in the powersport business over 40 years, and he’s not about to listen to financial pundits tell him that everything’s rosy.

“The idea that the recession is over is fundamentally stupid,” says Waggett. “I firmly believe that we are not out of the woods financially and we could be in for a second round. How is it that the official definition of recession is ‘two consecutive quarters or more of negative growth’ and yet when we have one quarter of positive growth, the recession is declared 'over'? Give your financial head a shake, people!”

It’s that outspoken nature that’s been the heart and soul of British Italian Motorcycles since Waggett purchased it in 1986. It’s been a tough year and a half, but Waggett remains passionate about the business. His love for bikes goes back to his parents’ garage in the late 60s, when high school friends would bring motorcycles and scooters over for Waggett’s makeshift repair shop. He moved to Vancouver in 1974, and a few years later, started work at a Honda dealership as a mechanic. He transitioned into sales at Suzuki, and not long after, purchased British Motorcycles – then a Norton importer for Western Canada since 1948.

His timing was great: classic Norton, Triumph, and BSA bikes were just beginning to come into their own, and Waggett’s skill in repair and restoration made him a perfect fit for the business. By 1995 he’d moved the business to Powell Street and sold parts, service, and used bikes for these classic lines; by 2002 he had become a dealer for both Motoguzzi and new Triumph bikes.

A risky move in 2005 brought Waggett to the business he runs today. He bought the building the business now resides in—pledging his house as collateral for a 100 per cent mortgage.

“I risked everything I have ever worked for,” says Waggett.

Fast forward to 2009, and it’s been a challenging year. Sales are down 20 per cent from the business’s peak year in 2007, though steady over 2008. Waggett has managed to hold the line thanks to a few smart moves.

“When the financial world was doing a belly flop into the abyss of recession in late 07 and early 08, I moved focus away from sales and into everything else,” explains Waggett. “I booked parts and accessories heavily and hired a new employee to sell the stuff. This way what I lost in sales volume was made up for in other areas.”

“I view sales as a bonus and the not the main reason for being,” he continues. “I do this because the cost of sales is by far my most expensive activity, but on a percentage basis is the worst return and most variable. It is necessary, however, because it drives the rest of the business.”

Waggett believes the seasonal nature of motorcycle sales means that the business is the first to be hit when the economy slows down, and the last to come out of a recession. The weakening US dollar has taken its toll too.

“It’s caused Canadian MSRPs to become substantially higher than US MSRPs,” says Waggett. “Customers go to the US to save money on their purchase – and then have the gall to expect me to take care of any warranty problems. One of my OEMs actually emails my customers telling them all of the great deals to be had south of the border.”

He believes that is decision to operate in European models has contributed to his long-term success. “The main thing is I don’t have five dealers within 20 minutes to compete with,” he explains. “Japanese OEMs tend to over-dealer an area. They do this so they can dictate to a dealer and so that no one dealer becomes so strong that the dealer can dictate to them.”

And he saw first-hand the downside of becoming too connected to one OEM. “In an effort to change the dealer landscape, the dealers were given a choice to invest heavily in buildings and inventory solely for their product, or lose their franchise,” says Waggett. “In the process many dealers, big and small, some of which had been selling the OEM’s product for over 20 years, were canned. Lifetimes of effort and investment were flushed down the crapper.”

Survival this past year, says Waggett, came down to studying all expenses closely. “What I have been doing all year is paying down debt, getting interest charges, banking charges and various fees and levies that seem to crop up like weeds in the spring, either reduced or eliminated,” he explains. He’s been examining other expenses too.

“Also I have eliminated most customer discounts. I don't know when it happened but it seems like motorcycle shop customers somehow feel they are entitled to a discount,” he says. “My answer, especially this year, was to ‘just say no.’ The reality has been that most of them bought the item in question anyway – I believe the main reason was because I had it in stock, but the other dealers stock very little and have to order everything.”

If you’re going to discount, says Waggett, apply it to the terms of payment the customer uses. “I have limited any discount given to 10 per cent on a debit card or cash and five per cent on a Visa. Visa purchases costs three per cent or more because you are taking the Visa for the goods and the taxes, but you don't get any mark up on the taxes.”

It’s a tough business, and harder than ever to break into. “Now the OEMs demand so much in a new dealer that I would suggest that you would need at least a million dollars in seed money to get you going and be very solid credit-wise so you would qualify for at least a million dollar line of credit for your floor plan,” he says. “Credit, these days, seems only available to those who don’t need it.”

The secrets to his success? It’s straightforward, he says. “There are no secrets – just watch your cash flow, reduce your expenses,” says Waggett. “And don't let OEMs tell you how to run your business.” CPT