Boyland would take the plunge into majority ownership, and over the years go on to become one of the country’s more successful African American athlete–entrepreneurs. He succeeded by focusing on the bottom line. “Don’t get into business as a hobby,” he says. “If you own a business, make it about profit. If your business is your hobby, don’t expect to make any money.”
Playing Through the Pain
So when the global financial downturn devastated the automotive industry in 2008, Boyland and his management team came up with a game plan for the business. “Our operations became streamlined and our net profit as a percent of sales increased, although our total sales decreased,” says Boyland. “We experienced a slight drop in net profits for that first 12 months. Then after all the cuts started to realize and all the economies of scale and operation—fat cut out that we probably didn’t need in the first place—started to take place, our net profit as a percent of sales skyrocketed.”
Management made adjustments to maintain revenues even if there was a 20% drop in sales, so the team looked at what assets were needed—and which weren’t—to effectively function at that lower level.
They made the following moves:
• Instead of carrying a 90-day supply of new cars, they carried a 60-day supply; they went from a 60-day supply of used cars to less than a 40-day supply.
• The number of company dealerships was reduced from 11 to nine. Underperforming locations in California and Ohio were sold.
• Employee count was reduced by about 12%, which in turn reduced payroll, taxes, insurance, and the costs of other benefits.
“We stopped paying for cell phones. The people that had health coverage from their spouses, we pay them to not take the insurance we provide.” As a result, personnel expenses were reduced 13%.
• Boyland decreased or eliminated his own compensation, depending on the location.
• Boyland, who owns the property at seven of his nine locations, reduced the rent to equal 10% of the total monthly gross profit.
• Management renegotiated with vendors, requesting a reduction in costs. “We had a substantial success with ADP and all our national vendors and local vendors as well.”
All told, expenses were cut 22%. “We were pretty lean going into it so we weren’t so fat that we really had to make a lot of adjustments,” says Kaiser. “Dorian’s dealership businesses are lean. The management is pretty well trained in making sure that we’re not spending silly money on things that aren’t doing anything for us.”
Boyland plans to continue running lean and awaiting the next opportunity. “Credit is going to be available, and our cash position will be good. So I’ll have people ready to move into those slots,” he says, “so whenever a call comes [to acquire a new dealership], I’ll be prepared for it.”