The Game Plan

Dorian S. Boyland, CEO of Boyland Auto Group (No. 4 on the BE Auto Dealers list with $315 million in revenues) can say something few people in the automotive industry can say: His company just had its best year ever. Not only are revenues at the Orlando-based chain of dealerships expected to exceed $400 million for 2011, but net profits are expected to exceed $10 million–and the professional baseball player turned automotive mogul couldn’t be happier.

Over the last few years, Boyland (who was Black Enterprise‘s Automotive Dealer of the Year in 2003) and his management team made some painful decisions to stay in the black. With nine dealerships in five states, Boyland Auto Group had overhead costs that were tremendous. With the economy at its worst in 2008, management assumed a proactive stance. “We needed to make the same amount of money even if there was a 20% decrease in revenues,” says Boyland. So adjustments were made in headcount, benefits, assets–including new and used cars, and salaries. Boyland also sold his two least profitable locations.

Those painful moves are now paying exceptional dividends. Though the health of the economy remains uncertain, new vehicle sales for Boyland Auto Group, which sells Dodge, Ford, Nissan, Mercedes-Benz, Honda, and Hyundai, are on the rise; revenues for 2011 rose some 28% from 2010 to more than $400 million, and net profits rose more than 30% over 2010. In an environment where many African American auto dealers faced bankruptcies or were forced to close by manufacturers responding to reduced demand, Boyland Auto Group is prospering–sending a message that while black dealerships may still be reeling, they’re not down for the count.

From Starting Lineup to Bottom Line
Boyland, a nearly 30-year veteran of the automotive business, began his professional career in a much different arena. A second-round draft pick in 1976 for the Pittsburgh Pirates, the 6-foot-4-inch first baseman and graduate of the University of Wisconsin was part of the team that won the 1979 World Series. Boyland retired from professional baseball in 1983 and decided to put to work his bachelor’s degree in business administration and computer science. While contemplating a job offer–systems analyst with chipmaker Intel Corp.–Boyland received a call from Ron Tonkin, owner of one of the largest auto dealer groups in the U.S. and a past president of the National Automobile Dealers Association. He offered Boyland a sales position at a dealership in Portland, Oregon.

Boyland loved the business and within two months was promoted to assistant manager. He relished the competitive environment and faced new customers the way he had faced new pitchers. In 1985, Boyland and Tonkin went into business together and acquired a pre-existing Dodge dealership (of which Boyland owned 30%). “Dorian is a very driven, successful guy with vision,” says Dan Kaiser, who also sold cars with Boyland in the early ’80s and is now a partner in four of his dealerships. “He’s got the moxie and savvy to put deals together. I was kind of the operator guy. Dorian could put all the deals together and I would help him operate the deals.”

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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.”