Regina, Saskatchewan
Category: Greater than $50 Million in Sales

From l to r, Tim Young, Lloyd Young, Bill Young and Kirby Engele.

Founded: 1988
Major Line: Case IH
Shortlines: Bourgault, Kubota, Apache, Seed Hawk, Riteway, Degelman, Farm Aid, MacDon, Loftness.
Locations: 5. Regina, Moose Jaw (acquired 2000), Assiniboia (2003), Windthorst (2005) and Weyburn (2006). Also acquired Ag Depot (2001), the parts distributorship for Apache and Willmar sprayers in Western Canada, handled out of Regina dealership;
Employees: 132
2008 Sales: $97.7 million ($73.7 in wholegoods, $17.1 million in parts and $6.7 in service)
2008 Return on Assets: 27%
2008 Parts/Service Absorption Rate: 93.74% (North American average: 61%)
Key Staff: Tim Young, general manager; Kirby Engele, operations manager
Owners: Lloyd Young and son, Tim; Bill Young and son, Ron

Trying to boil down the elements of success for Regina, Saskatchewan-based Young's Equipment — a multi-store dealership that enjoyed 77% revenue growth last year while only adding 6 employees — is a arduous task. There are certainly a lot of things that the dealership is doing right, and always, it seems, with a purpose.

In fact, Tim Young, general manager, would rather talk about matters other than financial success. Things like the tremendous effort by staff — 132 at five locations, each of which Tim can call by name. About the reinvesting in the things the customers see value in — like inventory and employee training. And a business horizon measured in decades, not quarters or even months, that ensures things are "done right" and in the best interest of customers and staff.

"Our record sales with limited staff additions was the result of a tremendous effort by the employees," says Tim, noting that being able to exclusively focus on the business and not integrating other stores provides a focus that most growing dealers don't always have.

Yes, there's a lot that could be said about a dealership enjoying this kind of success in a highly demanding market of expanding cereal grains and specialty crop farmers. And there's a lot to say about its leader, who enrolled in an MBA program at age 43 to prepare for the multi-store journey he knew was on the way.

But most of what you need to know about Young's Equipment is revealed in the following example…

To celebrate its 20th anniversary last fall, Young's Equipment flew 187 employees and guests from southern Saskatchewan to Las Vegas for an all-expense paid, 4-night stay at Treasure Island. "We had a huge birthday party the night people arrived," says Kirby Engele, operations manager, noting that it was no small expense. "It was Tim's way of saying thanks to everyone, and he means it."

In 2008, Young's sales increased 77% (with only 6 additional staffers) and sales per employee by 58% compared to 2007.

What's unusual is that, for Young's Equipment, this is somewhat "business as usual." Young's also puts up all employees and their families at a Minot, N.D., hotel and pool for the annual Christmas party, where Tim hands out video-game money to kids and thanks them for being understanding when a parent misses a ballgame or other event due to taking care of their customers. There are numerous other recognitions and rewards for the Young's Equipment family — all year long.

The numbers on sales growth speak for themselves, but supporting them is a can-do spirit, a drive for customer satisfaction, and family-like culture that permeates every inch of the dealership. And while interviews with staff and others in the industry point to a leader whose heart is as big as a combine, the company's financial success is no accident.

"You can manage the business in a penny-pinching fashion," says Tim, "or you can spend money, have fun along the way and make sure your customers and employees are happy. That's the route we've taken in developing a long-term sustainable business."

Managing for the Long Term
The only horizon at Young that matters is the long one. Building a sustainable business was something he learned from his father, Lloyd, now 79.

"We really don't worry about short-term results," says Tim, whose maxims include "act now, but think long-term" and "outwork and outinvest the competition." "We could probably maximize our profits 3-fold, but we prefer to maximize customer satisfaction first."

An example is the dollars the dealership purposely makes in inventory — both parts and wholegoods — and things like trucks and trailers. "If we were managing for the bottom line, we wouldn't see that sixth semi out there," he says, pointing to the back lot. "But if a unit goes down, you need to get another unit out right away."

A Challenging Beginning
Lloyd and Tim had both had been in and out of the dealer business when opportunity came knocking in 1988. Tim was running a Case IH company store in Yorkton, Saskatchewan, when things fell apart that year with Case IH's franchise in Regina.

The store there fell into receivership as the two owners were sent to jail on fraud convictions. While Regina offered the market potential, the situation couldn't have been much worse. "The consensus on the street was that whoever took the business on would have a Herculean task in rebuilding it due to the fraud and trust issues," recalls Tim. "Further, the fall of 1988 was a very difficult end to a drought year, with farmers having little or no crops at all and very short on cash."

Feeling they had a strong name in the region, the Youngs knew the area had promise — even with what they knew would be a painful turnaround process.

No other parties wanted to clean up the mess, and the Youngs — consisting of Lloyd, Tim, Bill (Lloyd's brother), and his son, Ron — were the only ownership group that came forward. "A lot of people shook their heads when they saw that we were getting into it," recalls Lloyd.

The Youngs purchased the assets of the former company out of receivership in November 1988. "Our 9 employees were considered the biggest optimists in the province," says Tim.

"After a few years — including a combine glut where Bill and I went to Australia hoping to find a way to sell used combines down there — our farmers got some decent crops, prices increased and we were able to get our footing," says Lloyd.

Rising from the Ashes
Three weeks before its acquisition of the Moose Jaw dealership was to be consummated in May 2000, (See "All in the Master Plan" sidebar below), tragedy struck in Regina. A circuit on an electric harness between a 1-ton truck and gooseneck trailer ignited a fire that was a total loss. "The truck had 25,000 tons of silage bags that immediately caught fire," recalls Tim. "There was an explosion, but it was a slow fire and everyone got out OK."

On that day, 25 pieces of equipment were in the shop and nearly $2 million (in dealer costs) of parts inventory were destroyed.

Half the staff was in the parking lot when the fire finally blew through the front doors, says Tim. "Our lead tech came up to me and said, 'That hurts.' Then he looked me in the eye and said, 'I know we can handle this. And I want to be the first guy through the doors of the new building.'"

In what would become typical Young Equipment fashion, the shop foreman knew who was scheduled for service calls the next day and took his own truck and tools from home and went to work fixing the farmers' equipment.

It was that type of attitude from the employees, and what they learned they could accomplish, that made this tragedy a turning point for the company, says Young.

Federated Insurance's agent stood with the staff as the dealership burned and reassured Tim that they'd be there to help them get back on their feet again. Cashing in his chips after 12 years of building a loyal customer base was never an option. "That night of the fire, I was working on the Moose Jaw acquisition plan to send to Case IH. And while the owners of the dealership in Moose Jaw expected us to back out on our gentleman's agreement, we didn't. Our word is just as strong as any contract."

Tim found an empty dealership nearby and was back with a roof over his head in a couple of weeks. They immediately went to work designing a new 67,000 square-foot building (nearly 2 times bigger than the old one) that they'd move into in February 2001. (See "Rebuilding a Dealership: 'Better Than Before'' sidebar below).

"If not for the fire," says Tim, "there wouldn't have been any reason to build a new facility and we wouldn't have won the Ag Depot sprayer parts business (acquired in July 2001) without it. Because we rebuilt for future growth, we had the capacity for the parts and the additional techs that we needed."

To recap, there was a fire, an acquisition, a new dealership and another acquisition — which required 12 new staff, new vehicles, wholegoods and $2 million in parts inventory — all in a span of 13 months.

"The fire pressed all of us to execute at a higher level," says Tim. "We discovered that we could handle more than some thought was possible. Instead of wondering 'I don't know if we can,' people started thinking along the lines of 'We can do this and here's how.' If you're allowed to think you can only do so much, you never find out what you're truly capable of. It's amazing what you can accomplish when you're being tested."

After the dealership lost service techs to Canada's oil industry, a solution was found by recruiting and hiring two foreign techs per year. Techs currently hail from Australia, Germany, Netherlands and the Ukraine.

Reinvesting in Human Assets
Young's Equipment actions show the value its places on employees. While recognition is a big part of keeping people motivated and pulling in the same direction, so is training. The company routinely invests $150,000-$200,000 in training and last year provided 2,200 hours of training for staff. "We believe in taking every opportunity we can to get better," says Bill.

Tim believes that training is symbolic of the relationship between a company and the staff. "We want people to have the tools to succeed and training makes a strong statement that we value them as employees; that they're viewed as a long-term part of the team."

Customers are interested in his approach to training, too. "They're fine with us making money as long as they see their dollars being reinvested — just like they do on their own farms," says Tim. "Customers benefit from our training on a demo, when their equipment is being set up properly, when a product specialists solves an issue, or when a tech quickly diagnoses and fixes their machinery. Customers know training is a priority here and it's part of the intrinsic value we offer."

To date, 13 salespeople and managers have been enrolled in International Ag University. Young's also supports any apprentice technician who wishes to achieve journeyman status.

In addition to training, or perhaps because of it, Tim is protective of his human assets. "We don't cut back on people if economy slows down. I want a consistent approach with long-term people. If I want them to stay with me, then I need to stay with them, even when the financials might dictate paring things back. The only way to make this approach practical is to work at a high level and give people a feeling of security.

"We've never had to lay anyone off here due to a lack of work. The only person that worries about that is me. They know we'll commit to them, and we've seen tremendous loyalty and commitment."

Reinvesting in Inventory
Another place where Young's Equipment bucks industry norms is its inventory levels. "Consultants advise against tying up dollars in inventory and instead ordering on an as-needed basis," says Tim. "But for Young's customer base, the downtime waiting for a part can mean dollars lost or a disaster." Young's currently maintains a $7.5 million parts inventory alone ($1 million in all-makes of sprayer parts) to meet customer needs quickly.

It's the same story on wholegoods, with $15 million in inventory on the lot at any given time. The objective is to keep a rental or loaner available during crunch time. "When a sprayer, combine or high-horsepower tractor goes down, customers know that we've always ordered a couple of extra units," says Engele. "When something major happens, it's not unusual for us to have a unit out there on the farm in 90 minutes."

Recently, a John Deere customer wanted to buy a Case IH self-propelled sprayer Young's was holding as a replacement unit. "He made us an offer to pay cash with no trade-in, but we told him we couldn't sell it as we needed it for a breakdown situation," Engele says.

"He was upset at first, but ultimately said, 'If you're that committed to supporting your customer, I'll wait until you can get me one.' We sold him an even larger sprayer. He saw we were 'walking the talk' on customer support."

But it's the parts inventory that separates Young's from other dealerships. A competitor cut way back on parts to satisfy its major's focus on inventory turns and now has fewer available parts. "The first thing the customer notices is when the parts department goes south," says Engele.

And while the dealership could perhaps rely on the CNH Parts Depot (that's just 5 miles away) for inventory, Engele says that's never been the case. "It'd still take 3-4 hours to get the order processed and the parts over here. Our customers like to know that the parts are onsite and they we won't need to wait for the Parts Depot to find them and get them over here."

Meanwhile, Young's increased its inventory by $1 million over the last year. "We're doing it with a purpose," says Engele. "Our turns are only 2, so it's a high cost of sales. But it's clean inventory; we just have a lot of it." The company is on track for $18 million in parts sales at a 32% gross margin.

The company manages its inventory through a parts van that leaves Regina 7 days a week and drops and picks up parts at every store. In addition, they have arrangements to drop parts at six gas stations in towns along the route where customers can pick up parts. Over the course of the year, $2 million in parts are transferred between stores.

True 24-7 Service
Young's was among the first dealerships in Western Canada to go to 7 days-a-week dealership hours — with full services. This means that the sales, parts and service departments are staffed 7 days a week, as well as the parts delivery service. It's another case of the firm "walking the talk."

"We're working when our farm customers are working," says Lloyd. That makes a difference, says Bill, when farmers see other dealerships turn into a ghost town at 5 p.m. Friday, whether the customer has been taken care of or not.

The company's 24-hour repair service during seeding, spraying and harvesting is promoted as well. "The demands during growing season are daunting and farmers spray at night and can't afford downtime," says Tim. "Our techs will go to the dealership at all hours to get parts, replicate one if the desired part is unavailable, or hop in a service truck and work until the job's done. We convert customers who bought on price elsewhere, but realize they want our world-class growing-season service."

One service tech worked 33 days straight during harvest keeping the farmers going. In Regina, there are 7 full-time techs on the road full-time working from 10 service trucks. "They come in to pick up parts and that's about all we see of them," says Engele.

While 24/7 service sounds overwhelming, Brent Bazin, service manager, says that their operation feels less pressure than most dealers. "First, we schedule and staff the weekends, so we don't have to search out people when a service issue arises. Second, we've built winter service up to where we haven't even promoted it for the last 2 years. So we've eliminated routine problems early so that we can look after the big in-season service issues as they occur — without all that extra pressure."

While other dealerships advertise an on-call service technician, Bazin says that Young's is still the only place where a farmer knows he can get in the truck, drive up and get his parts on the spot.

Operating the Business
As the company has grown, Regina remains the headquarters branch and handles all administrative functions for the five stores. Engele issues scorecards to monitor and compare each operation's performance on 22 key metrics. The metrics that are most closely watched by Tim are inventory turns ("the number one place a company can burn its cash") and absorption rates ("the real measure of the efficiency of parts and service"). Tim credits consultant Jim Weber for helping the management team plan and measure the key factors of the business.

"We consistently track the numbers, key indicators, benchmarks and forecasts by store and department, namely inventory levels, turns, margins, expenses, profitability," Engele says. "When numbers don't look good, we act quickly and get to the root of the problem — before it gets out of hand. By focusing our energies on our goals and benchmarks, everything else falls into place."

Technology is part of the company's ability to manage a growing operation, too. While the branch managers meet face-to-face in Regina each quarter, Tim and Engele host weekly www.gotomeeting.com web-based conferences to go over the reports and discuss key issues.

The Iron Solutions QuotePro system ensures that the salesman's goals are aligned with the dealerships and allows the transfer of information on used equipment between the stores. Also, the company recently upgraded its DIS computer management system, which increased processing speeds by a factor of 10, says Engele.

Regina is also the home of a Livestock Equipment division, run by Lloyd, Bill and a service manager. It's an entirely separate sales and service department (including its own shop) within the dealership, keeping full attention on the equipment needs of livestock producers. The business also evolved to take on grain bagging systems (Richiger, Loftness and Renn Mill Center) with great success (80 baggers and extractors sold last year alone). "It's a great product with all the growth in more grain production. We've got customers who can keep their combine going nonstop with just one grain cart and bagger," says Bill.

"We're the only dealer I know of that has its own dedicated service department for livestock and grain bagging systems. There's never any question on where to send the service guy first — a $300,000 combine or $40,000 bagger. Our department specializes here."

Next Generation Plans
In 1999, when his son, Sean, was in eighth grade, the father and son outlined a career path for him, which is still on target today. Currently working outside of the family business (also part of the plan), he and Tim expect him to be on the payroll within the next 18 months.

"I don't see us growing much for the next couple of years," says Tim. "We want a new building in Weyburn next year. After Sean is on staff for a year or so, then I can see us adding more locations. We could be at 10 stores in another 5 years."

Demos Bring Objectivity to Results
Young's Equipment's training investment is most evident to the customer in the depth of knowledge shown in the equipment demos. "Demos will continue to be a cornerstone of our business plan and we're progressing to the next generation of combine demonstrations," says Tim Young, general manager. Despite the expense involved in demos, Young sees it as another way to differentiate the dealership from the pack.

In an effort to provide true apples-to-apples evaluations, the company purchased a 1,200-bushel Bourgault grain cart and scale, says Kirby Engele, operations manager, who says the demo season is his favorite time of the year. "As we demo our unit with the same class of combine and header as the customer's, all product harvested from both combines is weighed and documented."

After scheduling the demo to accommodate the grower, Young's semi and trailer pulls onto the farm with the combine, a new 4WD tractor and grain cart. "We bring along enough staff to operate the tractor and grain cart, and with the customer's consent, we'll also operate his combine while he runs the demo unit," says Engele.

Starting with an equipment "walkaround" with the customer, one of Young's combine specialists rides with him until he's comfortable, and then leaves him alone. According to Engele, the typical demo lasts 8-12 hours.

With product specialists on hand for tractors, combines and drills, the specialists focus on demos and customer clinics. With the grower often more astute on the technology than a salesman, Tim says the product specialists can better stay on top of the technology, which allows the salesman to evolve more as a relationship manager and negotiator. "It makes salesmens' lives easier, as they have that technical resource and don't have to do it all themselves."

What the Judges Say About Young's Equipment…
"Stands out above all other nominees…Generates nearly $100 million in total sales, but most impressive is that their total revenue growth improved by $56 million over the last 2 years … After earning 'Best in Class' status last year, this dealership improved to vault itself into the number-one position … Highest dollars generated per employee in the category at $740,347, with highest return on assets at 27%."

All in the Master Plan
There aren't too many multi-store dealerships that can say their acquisition path was part of a master plan, but the Youngs can.

"The first 4-5 years were difficult," says Tim Young, "but then we found success. That was the only goal back in 1988." In 1995, after 7 years as a single-store location, Tim admits he was feeling restless. "I knew we should start moving toward a multiple-site model."

Also, it was clear that his fifth-grade son, Sean, was keenly interested in the business. Building a company that he'd want to be part of one day also reinforced a desire to grow, he says.

But before going down that path, Young's self-reflection led him to a desire to hone up on his own management skills, and he enrolled in a 2-year executive MBA program at Queen's Univ. in 1997.

His thesis focused on a strategic plan for the business. He wrote a 70-page plan that outlined the reasons for growing, and specific action plans that would include acquiring Moose Jaw in 2000 and then Assiniboia and Weyburn, which were owned by the same dealer-principal. Today, 10 years after he earned the degree, he has one additional dealership, Windthorst, which had not been part of the original plan but was added in 2005 as the owner felt the time was right to sell to a larger ownership group.

"We found a good spot in the economy and the marketplace," says Lloyd. "While I don't know that we could've forecast the success, it was all part of the plan. The key was good staff and good leadership from Tim, and getting everyone on the same page."

Rebuilding a Dealership: 'Better Than Before'
After the fire at its sole location in May of 2000, the dealership took the opportunity to build something bigger — by 28,000 square feet — and better than its previous site. Tim Young toured dealerships, talked with others in the business, polled employees and drafted an open, welcoming design for the new 67,000 square foot dealership that opened in February 2001.

Some of the features of included:

• 30-foot ceilings — with lots of windows and natural light — in the new 2,250-square-foot showroom
• Six individual parts counter workstations in a "stair-step" design
• Three separate counters for customer parts, technician parts and service
• In-floor heat, a 30-foot door and drive-through wash bay in the shop
• Mezzanine in the parts department to put excess parts storage on a second level via forklift
• Expansive training room/lunchroom that can seat 125 (also includes a pool table and foosball table). The training room is also offered to outside groups, such as chemical companies, local government meetings and for Case IH to use as a training locations for other dealerships
• Sales offices around the perimeter of the showroom with the general manager's office positioned with a clear view of the store entrance, showroom, parts counter and service counter. Even if Tim or Kirby Engele are on the phone, they can always greet a customer with a wave. "Never leave that office dark and empty," they learned.

What Others are Saying …

"Of the nearly 30 dealer-principals I work directly with, Tim Young is on the short list of the best managers. He's a true visionary, excellent at looking well into the future and not getting mired by the crossing of t's and dotting of i's. He's the best I've seen in developing a culture of espirit de corps and customer satisfaction. He surrounds himself with good people and gives them responsibility and authority."
Dr. Jim Weber, Consultant

"Young's is known for their professionalism. Tim Young is very hard working and opened minded — a well-respected employer. They expanded its dealer facilities to be state of the art, aren't scared of what future technologies may bring, and are the first to take the lead. They embrace new advances and hire the right people to perform these tasks. From the moment you enter the dealership, you notice how the entire staff is extremely customer-focused and eager to help."
Leah Wood, Case IH Territory Manager

"Young's is a first-class organization. Tim and the company are extremely well respected — by farmers, the community and other dealers. They've earned a number of accolades in the community, serve on many charitable groups' boards and are philanthropists. They invest in their own people and treat them better than they could hope to be treated anywhere else. Employees view their work at Young's Equipment as a career, not a job."
John Schmeiser, Executive Director, Canada West Equipment Dealers Assn.

Farm Equipment's WebTV
Visit www.farm-equipment.com to view four personal video interviews with Tim Young, including "Profiting from a 7-Day/Week Schedule," "Recruiting Foreign Technicians," "GPS: Leading the Customers" and "Opportunity After Disaster." The 2009 Dealer of the Year video series is sponsored by IRON Solutions.

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