In Little League, coaches tell young players to “keep your eye on the ball.” The advice applies to both fielding and batting, but it is just as applicable to running a successful farm equipment dealership. That’s just what Don Van Houweling, owner of the 2016 Dealership of the Year, has done at Van Wall Equipment.

As Van Wall has grown as a company, Don has also grown as an owner and coach, says Bob Currie of Currie Management who runs the dealer peer group Van Wall is in. “He’s the poster child for an owner who goes through this transformation process. Most of the owners start off and stay in this owner-operator mode, with the emphasis on operator. They want to drive operational excellence and that’s their whole goal in life. In the beginning Don was doing that; driving operational excellence, and he was very good at it.

“Then as you do acquisitions and gain more footprint, we see some of these owners able to make the transformation from owner-operator to owner-executive. In that role they are no longer focused only on operational excellence but also on vision. They are asking questions like where are we going to be in 10 years? How are we going to get to the markets? They inspire their organization to the high goals through this vision. That’s the really good executive.

Van Wall Equipment,
Perry, Iowa

Founded: 1977

Employees: 500

Major Line: John Deere

Shortlines: Krause, Kuhn, Westendorf, Brent, Land Pride

Locations: 25 (total), 16 Ag (Perry, Madrid, Colfax, Nevada, Story City, Oskaloosa, Marshalltown, Grinnell, Toledo, Indianola, Knoxville, Albia, Carroll, Denison, Onawa and Sac CIty, Iowa), 2 Power Sports, 2 Material Handling, 3 Golf & Turf, 2 CCE, Van Wall Energy (Perry, Iowa) and AquaCheck USA (Perry, Iowa, serving North America and Mexico)

2015 Revenues: $240,966,000

2015 Market Share: 61.5% for Ag

2015 Parts & Service Absorption Growth: 105% for Ag and 78% for CCE-Consumer

Owner: Don Van Houweling

Management Team (pictured below l to r): Scott Meldrum (Integrated Solutions manager), Renae Pruess (supply management), Matt Van Houweling (business development manager), Don Van Houweling (owner), Chad Bruns (corporate parts manager), Chad Stoline (corporate service manager) and Mike Van Houweling (CFO).

“The extraordinary executives now are moving from owner-executive to owner-team developer to run with a professional management team that’s going to take the company into the future. And they work on their coaching skills. Don is a great coach. Running a 20-store company is a whole lot different than running one store and a satellite. He’s a perfect example of someone who has gone through the transformation while producing high results at the same time,” Currie says.

Becoming a Dealer

Prior to becoming a dealer, Don was working for John Deere at the Ankeny factory in production planning. In 1976 he was given the assignment to figure out how to reduce parts backorders at the factory. “They sent me on the road. For 14 months I was out visiting dealers. I came back and said to my boss, ‘I think I’d be a better dealer than I am a factory guy. How do I become a full-time dealer for John Deere ag as opposed to working at the factory?’”

From there, a John Deere territory manager put Don in touch with Barney Wall (the “Wall” in Van Wall). “Barney had two daughters who weren’t interested in the business and he was looking to retire. The territory rep suggested to Barney that I could take over his business over time, if Barney took me on as a junior partner and helped me get started.”

In 1978, the opportunity to grow presented itself. “Delbert Hawes, who was a John Deere dealer just 10 miles away in Perry had a heart attack,” Don Van Houweling says. “He called Barney and said, ‘I’m going to sell my business. Do you want to buy it?’ Barney came to me and said, ‘I’m not going to buy it, but I’ll fund it if you want to buy it.’ So, for $69,000 I bought his business. And I became one of the very few multiple store dealerships in the U.S. on that day, and the first in Iowa. I had 2 John Deere dealership, and that was very unique in 1978.” [Watch related video: "Breaking the Mold: First Multi-Store John Deere Dealer in Iowa"]

In the early years of the business, Don developed a close relationship with Charlie Gause, who was the manager of Deere’s Kansas City branch at the time. Gause encouraged Don to join a dealer peer group that the National Assn. of Equipment Dealers was forming. “Charlie was my mentor. He’s the one at Deere who gave me a chance; he’s the one who believed in me,” Don Van Houweling says. He took Gause up on the offer, and credits much of his success to the relationships he developed through dealer peer groups.

“Developing relationships with other visionary dealers like Tom [Rosztoczy], Jeff Bieber in Colorado (21st Century Equipment) and others really made a difference for me. I started to see a different picture of what this business could look like. We all started to see a different picture. We created our own future together. We gave each other courage. We gave each other drive,” he says.

Today, Van Wall Equipment operates 16 ag stores, along with 2 power sports stores (Polaris, Honda, Yamaha, Victory and BMW motorcycles), 2 material handling locations (Doosan), 3 stores focused on John Deere golf & turf and 2 Commercial & Consumer Equipment (CCE) stores. In addition to the equipment side of the business, Van Wall is also involved in selling crop insurance through Farmers Mutual Hail and solar energy solutions and wind turbines through Van Wall Energy.

Van Wall Equipment’s focus on service first and the aftermarket has helped cushion its revenues from the downturn in the ag economy.

The Integrated Solutions department has created a specialized golf and turf sprayer primarily out of ag components that they adapted for Iowa State University’s grounds keeping crew. The project was so successful that they now have a contract to build the units for John Deere and will be the exclusive supplier of the product for the next 3 years.

Always Service First

Since the beginning, Don Van Houweling says Van Wall Equipment has been a service-based dealership. That focus on service is what got the dealership through the tough times in the 1980s, when many dealerships were going out of business.

“In 1979, I made the decision to build a new store in Perry, Iowa, on the highway. And so we built a store that back then was pretty large — 40,000 square feet. And we had just enclosed it all and I thought it was probably time for my wife, Terry to come out and see what we were doing,” Don says. “And I took her out there and she came into the building with me and she said, ‘Don Van Houweling, what have you done?’ Because I’m first generation dealer and she knew we were borrowing the money to do it. And I said, ‘Well, my vision is that if we don’t have room to service the customer, we can’t grow the business.’ And so it was mostly shop space.”

The investment in an expansive new store may have seemed crazy at the time, but it ended up being precisely the right move. “Well, as it turned out, seven John Deere dealerships within 20 miles of that location went out of business over the next 2 years. So we hired their technicians and we started taking care of all that service work. And that’s how it started,” he says.”

Van Wall continues to invest in the service shop at all its locations. Nearly all of the dealership’s stores have open-front sheds behind the shop to store customer equipment. He describes them as one of the keys to Van Wall’s success. “We can build them for a very reasonable cost and design them so that planters and/or combines easily fit in them,” he says. “We’re going to invest $1.5 million in open fronts in 2016 to make sure that we can hit 100% absorption at our ag stores. Other than people, that’s our number one investment.”

The sheds are very important for Van Wall’s preventive maintenance programs, says Chad Stoline, corporate service manager. He says the majority of Van Wall’s service revenue comes from preventive maintenance service specials. The sheds allow Van Wall to stage equipment under roof without taking up space in the shop, which is appealing to customers. The program also includes detailing the equipment once the service is done, which Stoline says is enough to get some customers signed up.

“The preventative maintenance strategy is important to balancing our month-to-month workload,” Stoline says.

The programs also help Stoline ensure he has 100% time accountability for his service techs. “It’s hard to get full application of time if techs don’t have a job to work on,” he says.

That service-first backbone has been crucial to Van Wall’s success during the current downturn in the ag economy. “One of the things that I had learned over all my years of doing this was that as wholegoods volume goes down, parts volume usually goes down right with it. They’re in a linear graph. So if wholegoods goes down 20%, parts goes down 20%,” Don says. “Because of our service backbone, we have not seen that this year. So if you don’t lose your aftermarket margins and you’ve got 100% absorption, you can make it work. So if you keep your volume up on aftermarket and have 100% absorption built into your business model, you can sustain significant wholegoods volume reductions.”

Measuring the Business

Parts and service absorption rate is one of the top metrics Van Wall’s management team uses to measure how the business is performing. In 2015, the dealership’s ag stores achieved 105% absorption.

“One of the things you have to look at and evaluate when you talk about aftermarket absorption is that your absorption opportunity is much higher with pure ag than with a diversified base with consumer products,” Don says. “So the consumer products model is around 80% absorption. The ag model now is 110%. We actually challenged ourselves at our last 20 Group meeting to get to 120%. So I think what we’re finding is 110 is the new benchmark.”

Reaching 100% absorption at Van Wall’s newest acquired locations will be a challenge, Don says, but for the stores that have been operating under the Van Wall model for a number of years the goal of achieving 100% absorption is consistently achievable. “To take these new stores on and create a new culture and a new accountability, as well as a new desire to sell service hours and a new commission structure, that’s a 2-3 year process. When you’re growing fast, it’s also going to be more difficult to get your absorption up there, particularly when you’re moving into stores where there was limited accountability previously. It’s an interesting dynamic,” he says.

He adds that each location has a different target rate, and that target varies based on the circumstances at each individual location. “We look at it and say, ‘Are they doing as well as they can or not?’ But there’s no question that a mature set of stores that are ag stores should be able to get to 110% now.”

Looking Beyond the Numbers

The corporate management team gets together on a monthly basis to review each location’s performance. Each location — and each department within each store — is given a monthly budget. Each month the management looks at how they did compared to the budget and compared the prior year. But as the dealership has grown, management has discovered that they need to look at more than just the numbers.

“We were doing that primarily on a financial basis. What were sales, what were costs, what were the expenses, what was gross margin, how did that look? And as we started adding more locations, we quickly started to figure out people were getting to a number in different ways. And in a lot of ways, probably not the way we wanted them to get the number. But we were really just measuring the number,” explains Don’s son Matt Van Houweling, business development manager.

To get a better handle on the “how” of the results, Van Wall adapted a scorecard system that Stotz Equipment (Farm Equipment’s 2013 Dealership of the Year), which is in their 20 Group, had developed. “We used it and sort of massaged it for our organization to start measuring the process that gets to the number just as much as the number itself because of the ups and downs,” he says. “In some cases, it might be difficult in a certain location, a certain month, to make the budget number. But if you were really good with your processes, then you’re still doing what we asked you to do.”

Van Wall implemented the scorecard in the aftermarket to measure the process more so than the financial results. “We were already doing a great job of asking about financial performance. But we hadn’t done a good job of saying, ‘How are you running the department?’” Matt says.

For the parts department, the scorecard measures how a location is utilizing and updating the purchase order system, managing zero sales, transfers, shipping and handling and outstanding parts warranty, among other areas. Some areas the service department’s scorecard covers include how accurately outside labor and materials is billed, filing warranty work, managing work in progress and work order accuracy and detail.

Van Wall’s Neveda, Iowa, location’s design is the vision of owner Don Van Houweling. He drew inspiration from Chicago’s O’Hare International Airport’s terminal and the shape of a barn’s hay mow.

Each item on the scorecard is assigned point values. “It’s not completely black and white because we’ve got different locations that have different people and different volumes, but for the most part there are those core processes that we do and we measure every quarter. We actually do a physical audit and do the scorecard. These guys [Stoline and Bruns] then go around and review the scorecard results with the management team,” Matt says.

In terms of the financial goal for the parts department, Van Wall aims to achieve $850,000 per parts person per year in parts sales.

Van Wall’s 165 Hour Club is one of the ways the dealership group keeps its aftermarket absorption in check. “If you can get most of your technicians selling 165 hours a month, you can get to 110% absorption. It’s overhead, expense control and labor application. Labor application also has to be somewhere around 95% or above,” Stoline explains.

When it comes to gross margin for the service department, the dealership group’s goal is for each store’s service department to be above 60% and to be at 65% as a company. The departments that are leading the way for the dealership are at 67% or 68% gross margin. “Last month we had something like seven departments that were below 60%. That’s not going to work for us. We’ve got to fix that,” Don says.

Van Wall has an open book policy with all of its numbers. “All of the managers know their profitability and key financial measure. They are each responsible for their department’s expenses,” says Don’s son Mike Van Houweling, chief financial officer. “When you share all that, you can then give them a goal. So now have something that they’re working toward. We have a financial goal which then is broken down at the shop rate, which is then broken down to an hourly goal for the month, which is then an hourly goal for each technician, which ties into the storage sheds and our 100% accountability for time. This is all because we’re trying to beat our goals. We have labor to sell.”

Stoline adds, “Our belief is people want to know when they’re successful. And it’s hard for them to know when they’re successful if we’re not measuring what they do.”

The leadership team also pays attention to Van Wall’s market share, which in 2016 was one of the highest in their region at 61.5%. Mike says, from a brand perspective, the market share leaders, in central Iowa have typically been green and red, and we have good red competition,” he says.

Don adds: “If an organization’s got 60% market share, then it’s 150% more than anybody else, and if they don’t mess up, the competition is challenged. And that’s where we are. If we don’t mess up, I think we’ve got a excellent opportunity as a John Deere organization.”

Customer Service & Solutions

Van Wall has applied a concept they call Solutions 360 to how they run their business, meaning they will find a solution to any problem a customer throws their way. “It is a solutions culture where, whatever problem that grower is facing right there, we have a solution. Whether it is a value added service or a wholegoods opportunity, we have a solution there. We don’t want to say, ‘Well, we can’t do that.’ We’ll find a way,” says Scott Meldrum, Integrated Solutions manager.

Don says Solutions 360 will allow them to leverage their market share. Overall, Matt says the dealership’s goal is to achieve 10% growth year-over-year, every year.

Equal Opportunity for Success

Employees at Van Wall Equipment are typically paid a salary rather than an hourly wage, and everyone has the opportunity to earn performance-based bonuses. “My concept is whether you’re a technician, a parts person, a salesperson or a manager, you’re all valuable in the job that you do and should be treated equally,” explains Don. “And everybody in our system has the opportunity to earn additional income based on performance.

For example, Stoline says if a technician had a flat rate of 5 hours and he does the work in 6 hours, the old system of hourly pay provided no incentive. “In our system, he gets credit for the 5 hours if he does it in 6, but if he does it in 4 hours he also gets credit for the 5 hours. He’s got skin in the game now,” he says.

The switch to a salary-based pay structure has created a very strong incentivized “pay for performance” culture, says Don. “It’s not unusual for a technicians to make $2,500 commission in a month. So we have a very strong system to perform the work,” he says.

Mike adds: “It creates a level playing field for everybody to have this confidence of their salary and the flexibility that goes with being a salaried employee. And then on top of that, it gives us the ability to reward those that are really performing, which is different than putting in time. That helps us reward high performers and retain them. And then theoretically, it helps the business be more successful financially too, when we do that.”

Cultivating Leaders

Today, Van Wall is guided by a 7-person leadership team. This team approach to guiding the company is new for the dealership group. Up until a few years ago, Don was overseeing the whole company, but as the company grew he realized he couldn’t do everything. Now in addition to himself, the leadership team is comprised of his sons Mike Van Houweling (CFO), Matt Van Houweling (business development manager), Chad Bruns (corporate parts manager), Stoline (corporate service manager), Meldrum (Integrated Solutions manager) and Renae Pruess (supply management).

In talking about his management philosophy, Don says he believes in servant leadership. “It’s important for them [the management team] to know that my job is to serve them. And their job is to serve their people and their customers. It’s all about humility,” he says.

Beyond the corporate management team, Mike says the dealership has a traditional location manager structure. Each store has a location manager, who also serves as the sales manager for that store and reports to Don. Then the department managers at each store report to their location manager. “But they also have a dotted line to our corporate parts and service managers, who we consider parts and service coaches,” he says.

As the dealership group has grown and added a level of corporate management, they’ve worked to still keep a local feel to each location. “While a lot of growing organizations have gone to regional managers or something like that, we kept with the location manager with the notion that we want to keep that local feel, empowerment and decision making and hands-on teamwork with a clear leader at each location,” explains Mike.

Approaching management with a coaching mentality is something near and dear to Don, and it’s what comes naturally to him. “My feeling is that because I love to coach, I have been able to lead. I just think that’s God-given, just who I am. We are who we are. But I love to coach,” he says.

He coached his sons in baseball for a number of years and took them to the state tournament on two occasions. Don’s description of how he coached mirrors how he leads Van Wall today. “There was nothing more exciting for me than to be on first base when the kid made a hit and got on first base. That was exciting for me,” he says. “Watch the first base coach of the Kansas City Royals, Rusty Kuntz — he is the culture of that team. When you get on first base, you know he’s going to be there with a smile.”

Don firmly believes that athletics, particularly at the high school level, teaches valuable life lessons that fit the dealership well. Kids learn to be winners, have confidence and to have courage. “All of these people in this room [the management team] came from small town athletics where if you went out, you got to play. And boy, that’s a big deal. They become winners.”

He adds that the “secret sauce” to Van Wall’s success is the young management team. “I’m so proud of all of them,” he says.

When asked how they thought their 20 Group would describe Van Wall, the management team agreed their peers view them as innovators.

“We might not always win and we might not always be successful, but we’re known for pushing the envelope faster than average,” says Matt.

Don summed up how Van Wall Equipment approaches business today and why it will continue to succeed in the future best.

“One of my friends says, ‘Don, you’re running when everybody else is walking.’ And that’s exactly what I’m doing right now. I see this economy as an opportunity. I think we can come out of this thing so much stronger than we went in. And I think we will.”

July/August 2016 Issue Contents