August 8, 2011 – Young entrepreneur takes on Harley dealerships
August 15, 2011
Filed under Features
By the time Adam Smith was in his early 30s, he had owned three Harley-Davidson dealerships and sold two of them. His success continues today, as he is now the owner of his fourth dealership — the first in which he was employed.
To say Smith has seen some success is an understatement. Smith opened his first dealership around the age many began working in their first. And he has become a seasoned owner long before others are able to buy their own store.
But Smith, now 37, is humble about his success, attributing it more to his treatment of his dedicated staff than to his own business knowledge.
Born into the business
Smith has never been a stranger to the motorcycle business. His father, Don Smith, and his uncle opened a repair and parts shop in 1968. By the early 1970s, their business had transformed into a dealership carrying Honda and Yamaha.
“Between then and through the ’70s and ’80s, they probably sold every brand but Harley,” Adam Smith said.
That changed, however, in 1988, when Don Smith was given a Harley franchise and opened Texas Harley-Davidson in Bedford, Texas.
Don Smith was anxious to get his son into motorcycling at a young age, modifying a small motorcycle, so Adam could ride it when he was just a toddler.
“I always loved motorcycles. I learned how to ride a motorcycle before I learned how to ride a bicycle,” Adam Smith recalled.
Despite being born to a motorcycle dealer and becoming an enthusiast himself, Smith was not always drawn to take on the Harley business.
“The first business I thought I was going to get into was the bicycle business, because I rode a lot,” he said.
As a teen, Smith worked at a bicycle shop, and he was a successful salesman, selling four to five bikes a day. But after talking to his father, he realized the bicycle business wasn’t as lucrative as the family motorcycle business. Adam Smith was selling four to five $500 bicycles per day, while his father was selling four to five $20,000 motorcycles per day.
“My 15-year-old brain at least figured out $20,000 was more than $500,” Smith said. He began working at his father’s dealership in 1991 and quickly grew to love the business.
A young entrepreneur
Though the Harley sales were initially Smith’s second choice of career, he discovered he was good at selling motorcycles and liked the relationships built at the dealership. But he was soon ready to move out from under his father’s wing.
On March 6, 1997, Smith opened his first dealership — Longhorn Harley-Davidson in Grand Prairie, Texas — around the ripe age of 23.
“It actually was a new point that Harley was wanting to open in South Tarrant County,” Smith explained. “I had made some friends at the company, and I said I was the right guy, and they plugged me in.”
Looking back, he can laugh at the fact that the motor company was probably taking quite a risk allowing such a young man open a new franchise. Smith says he was probably the youngest Harley dealer ever, but he didn’t struggle.
In fact, he was so successful that he bought a second dealership in Waco, Texas, in the early 2000s, making him the youngest multi-Harley-Davidson dealer in the country.
By 2004, the dealership business was succeeding so much that Smith bought his third store, Texoma Harley-Davidson in Sherman, Texas.
“It was one of the last Harley dealerships out there that was in the original location — 3,500 square feet, six employees,” Smith explained.
Though business seemed to be going well, Smith was growing increasingly frustrated with Harley. He and other dealers thought the OEM was operating at production levels that were taking the product “dangerously close to becoming a commodity and not a treasured purchase,” he said. “They were chasing a stock price, in my opinion.”
He also thought Harley was ignoring its dealer base, and he wanted to take a step back from the company, so he sold his original two dealerships — in Grand Prairie and Waco — in 2005, only a couple years before the market crash that led to the recession
“I just thought Harley was heading in the wrong direction. I thought I’d better sell these [dealerships] while I can,” he explained.
Despite this, he held onto Texoma Harley-Davidson, eventually building a new store and increasing the staff from six to nearly 30.
“I had very little money in it, so even if things went really, really wrong, I wasn’t carrying any debt, and I could weather a storm,” he said. “You always want to have plan B, and that was my plan B.”
Smith’s backup plan worked, and Texoma Harley-Davidson was his only dealership for quite a while. But he added another this past January when he purchased Texas Harley-Davidson from his father. Smith in part bought the dealership because values are down, so he got a deal, but there were personal reasons behind the purchase as well.
“My dad’s older now, and his enthusiasm for the business had waned. The business had suffered,” Smith reported.
His father still loves Harleys, but had been spending more time on other activities, leaving the business without the push it needed to succeed. In the past several months, Smith has transformed the dealership, renaming it Adam Smith’s Harley-Davidson. He also remodeled the store, changed the atmosphere and increased staff by 30 percent.
Key to success
Smith says the secret to his success isn’t too complex.
“I give a crap about my staff,” he said. “I give a crap about their lives and their situations because if I do that, they’re going to give a crap about our customer base.”
In relationship-based retail, such as motorcycle sales, Smith believes it’s important that his customers feel welcome and get to know the staff.
“If I want our customer base to feel that relationship, they have to feel like my staff isn’t part of a machine,” he said.
The only factor that really sets his dealerships apart from any other Harley store is how customers are treated, other than that, almost every other dealer carries the same bikes and the same parts, accessories and MotorClothes.
“It’s really the people who greet them when they walk in the store, and that’s the one thing I can have a direct impact on,” Smith said.
He hasn’t found a practical way to measure the results of his treatment of his staff and how their attitudes affect sales, but he still believes he’s on the right track. Many of his employees have been with him for more than10 years, working at his various dealerships.
“I just know it’s worked up to this point. It’s the only way I know how to do it, and that’s how I’ve always done it,” he said. “It’s just the way I am.”
Another important factor in his businesses is that Smith learned that after hiring more than about 14 employees, a dealer can no longer micromanage every department. A successful dealer has to be able to look at a dealership in a broad sense and into the future, while at the same time understand the employee’s positions.
“One of the tricks is first you have to be self-aware and realize that this is where I’m not very good, and I have to hire someone who knows how to do this,” he explained. “You have to hire people smarter than you to run the departments.”
Once he has the right staff in place, he believes little marketing, other than some direct mail and email blasts to existing customers, is really needed.
“If we do our job, then the customer base is going to do the marketing for us,” Smith said. “If you just treat folks the way you want to be treated as a customer, they’re going to come, and they’re going to come back.”
While Smith has owned four dealerships, he hasn’t rushed to become the market leader in each area.
“I realize this is a marathon,” he said. “I’m not going to be in the business for six months or five years. When you start at the age of 16 years old, and you’re going to work until age 60, that’s a lot of years, so pace yourself. You don’t have to be No. 1 right away. Being No. 1 can be perpetually dangerous because you think you’re smart.”
Though Smith credits his staff for bringing the customers back to the store, there’s no doubt he has the dealership business figured out. Not many 37-year-olds can say they have owned four dealerships and have two running strong.
Luckily for Smith, he learned early that bicycles were not his calling, and he needed to be in a business where the wheels turned a little faster. He’s found not only that the Harley business is something he’s good at, but it’s something he enjoys as well.
“I just like the action,” he said. “There’s so many different things that go on everyday, every week, every month. There’s always something to keep your interest. We’re not canning goods; we’re not building the same widget over and over again. It’s different every day.”