By Dave Kanicki, Managing Editor

Dave's Tractor, Red Bluff, Calif.
Founded: 2001
Locations: 1
Lines: Mahindra, Branson, Gearmore, Worksaver, Pegasus and Koyker
Employees: 6 full-time, 3 part-time, 1-5 seasonal workers
4-Year Sales Figures: 2003: $1.8 million; 2004: $2.6 million; 2005: $3.5 million; 2006: $3.5 million

Dave Siemens sometimes describes his early success in starting up a new business selling small tractors to northern California rural lifestylers as a matter of good timing and dumb luck. But considering how far this dealership has come in its first six years in business, that would be a half-truth. Going from zero sales to selling hundreds of small tractors annually by 2005 can't be done with luck and timing alone.

There's no doubt that his timing was good, but dumb luck isn't what led his dealership to earning Rural Lifestyle Dealer's

When Dave's Tractor (Red Bluff, Calif.) debuted as a new tractor dealer in 2001, the rapid growth in compact tractors was just beginning to demonstrate its longer-term endurance. In that year, dealers retailed some 96,000 small tractors units under 40 hp double that sold just 6 years earlier. By 2004, total sales of compact units surpassed 140,000. By then, even the major equipment manufacturers began jumping on the bandwagon.

What makes the story of Dave's Tractor even more impressive was not just that Siemens started up a new tractor dealership from scratch. He also launched it with two tractors Mahindra and Branson that had little or no brand recognition in the U.S. at the time, and certainly not in northern California.

"Had I really thought about it before I did it, I don't know," recalls Siemens. "We were fortunate to start out in a time when there was a bit of a vacuum. People around here needed tractors and this allowed us to get rolling. It would be hard to repeat what we did nowadays."

Almost from day one, Dave's Tractor made it work going from $1.5 million in sales in 2003 to $3.5 million in 2005 and 2006 almost entirely from wholegoods sales. As new as the dealership is, parts and service has yet to contribute much to the dealer's bottom line.

Despite the solid performance, Siemens says he still has much to learn when it comes to selling tractors and operating a successful equipment dealership. But what he's learned so far about serving his rural lifestyle clientele can provide valuable lessons for other dealers who are also looking to capture a piece of this growing market for compact farm machinery.

Getting Off the Ground
It may be tempting to look at what Dave's Tractor has accomplished in 6 years as something of a rags to riches story, but Siemens looks at it more pragmatically. "They say you can't compete with the guy who is getting into or going out of business," he says. "When we started out, we would deliver free to anywhere in California. I was the guy who was pretty hard to compete with."

If there was any good fortune involved, it was that Siemens' saw the emerging market for compact tractors around his home in Red Bluff, some 200 miles north of the affluent Bay Area of San Francisco, at about the same he was tiring of corporate life. He had a successful 17-year career in the insurance business before he decided to become a tractor man.

He had quickly worked his way to a claim manager's position and his salary was based on a Bay Area pay scale, which is to say he was doing pretty well. Eventually, he'd had enough with the continual reorganizations of corporate America. One day, his wife, Carla, said, "If you don't like your job, why don't you just quit'"

Earlier, he had purchased his first gray market tractor to maintain the 3-acre property where he and Carla lived. 'I just wanted a tractor to mow the grass and put in some gravel. I only used it about 50 hours a year. It was pretty typical of why people buy those kinds of tractors."

Then he decided to sell it to make some money on it. He did it again a few more times over the next few years.

While still working at his insurance job, Siemens met someone who was selling a container of eight Yanmar tractors in Redding, Calif. "They were gray market tractors and he didn't know how to work on them or where to get parts." Siemens ended up buying seven of them and started selling them out of his barn.

"I used to fix up cars and I was a little bit mechanical. And my dad used to have a car dealership, so I had a little sales experience," Siemens explains.

After making a "little money" selling the tractors, Siemens gave his boss a 3-month notice and bought 20 more tractors, 20 loaders and box scrapers and began to set up his business. "The day I quit my job, I had an inventory ready to sell. I also said I would never hire an employee. I would do it myself."

On the weekends and evenings, he did "tractor work" for people. At the time, the operation consisted only of a house phone and a bedroom desk.

Six months later, with his business growing rapidly, Siemens hired his first employee and sales doubled. But as his sales grew, the lack of a significant quantity of good used tractors became apparent. This and the issues with gray market equipment led Dave's Tractor to take on Branson Tractors.

"We sold quite a few Bransons and still do, but they were heavier and bigger than what many of our customers were looking for. At the time, they didn't have the smaller models to compete with the Kubotas," says Siemens. In 2003 we found out that Mahindra had contracted with Mitsubishi to build their 15 series, 18-32 hp). We looked at them and I called Mahindra and said I'd like to be a dealer. They said, 'you'll have to order five' and I said I'll take 20. They flew up from Texas and signed us up."

Selling the Brand
According to Siemens, the other dealers in the area were still targeting the big operators. "They kind of missed the curve on that one. So it gave me a chance to move a bunch of tractors when nobody else was competing." But it wasn't like he was selling the green or blue tractors that most people, even the rural lifestylers, would recognize.

To get its name out, the dealership began sponsoring local events like barrel racing for horse owners. "If they needed a tractor and an arena grader, we'd get a tractor out there and let them use it. If there was a go-kart race in town, we put our logo on a car. If there was a rodeo, we sent a tractor down there.

"People started saying, 'You're here to stay. You're part of the community.' It didn't cost much to let someone use a tractor for 10 hours."

While the dealership was quickly accepted in the community, Siemens says that he's still fighting the "Indian" image of the Mahindra tractors. "Nearly every customer asks, 'Where were these tractors built'' So we're still battling this even though Mahindra's now, by some ways of counting, the third largest tractor-maker in the world. It's the biggest minor brand in the U.S., but it's still not John Deere by a long shot. Answering that question is something we've learned to do."

How do they do it' "We just say, 'We'll be glad to tell you where they are built, but you also have to ask the other dealers whether it's John Deere, New Holland or Massey Ferguson where theirs are built.'"

Siemens says it's important to get the customer to understand that, for the most part, all these compact tractors are built overseas without sounding defensive.

"We're finally getting to the point, where we sell tractors built by Mitsubishi in Japan, and not Chinese tractors. There are 350 tractors on our lot right now (Dave's Tractor became a Mahindra distributor in 2005) and probably 320 were built in Japan. So we're starting to see the Mahindra and Branson lines get some respect."

Another question he heard a lot early on was, "How will I know you're still going to be here in a couple of years'"

"We've finally got enough presence for people to believe we're going to be here. This was a real challenge. With so many brands of small tractors out there, it is easy to bounce around, selling one brand this year and another next year. I speak to a lot of dealer prospects on behalf of Mahindra, and one thing I emphasize is, "If you take on a line, you need to keep it.'"

Branding the Dealership
Unlike the first few years when the dealership was getting on its feet and selling all the tractors they had without a lot of promotion, Siemens other area dealers are now more aggressive in selling small tractors.

"Today, we advertise more. We find we need to keep our name in front of people. We promote our brand, which is Dave's Tractor, by getting out to events. We continue to sponsor local events and not just buy a booth. Sponsoring horse-type events is particularly effective," says Siemens.

In its out-of-the-way location off the main drag, Siemens says the dealership must give customers a reason to find him. In addition to the events sponsorships, the dealership also places full-page color ads in the local Nickel Saver. "We run a big ad on the front or back page about every other week. We often see people with a copy folded up in their pocket when they come in. So it's worked pretty well."

Earlier this year, Dave's Tractor began to feel its first slowdown. As in most parts of the country, the housing market in northern California took a huge downturn. "We're experiencing our first downcycle," says Siemens. "It was inevitable."

He adds that, "It was tempting when sales started to slow down to stop advertising. I wanted to, but I was told, 'No. Don't do that. You have to keep the people coming in.' So, we've done that and we've also started running TV ads for the last few months. It's expensive, but the alternative is to sit back here and be lonely.

Customer Care is #1
Beyond everything else Dave's Tractor has done right in its first years, Siemens credits his early success to being able to empathize with customers. "When we started up the business, no one seemed to care to sell compacts to the average homeowner. We had a free pass for a couple of years. We didn't advertise and still sold as many as we could deliver," he says.

"In fact, we pulled some sales away from the local guys. We had two Kubota, a John Deere and New Holland dealership close up within 40 miles of us within a year. It wasn't us doing it, though we may have brought a little heat. It got even easier then," says Siemens.

Since then, though, the vacated sales areas in Tehama, Batte and Shasta counties, where Dave's Tractor does most of its business, have been picked up by "some really good dealerships," Siemens concedes. "This makes us work a little harder, but we've built a good rapport with those dealers. If you're on a friendly business relationship with other dealers, it makes life a little easier."

Even with more competition, Dave's Tractor continues making inroads because it sticks to doing what it does best. That's understanding what his tractor customers need and want, how they live and work, and having the patience to work through a sales process that creates customers for life. "It's been natural for us," says Siemens, "because we were tractor customers before we became dealers."

Siemens' home is situated on 10 acres of land, which includes a pistachio orchard that is no longer productive, but still requires regular maintenance. They also have horses. Rob McFarlen, general manager of Dave's Tractor, likewise, owns a few acres of walnuts.

"Probably the most important thing is we really understand our customer the weekend warrior, the horse rancher, the landscaper. We understand the lifestyle. Rob and I do most of the sales. We use our small tractors on the weekends. We didn't come from an ag background where we wonder why people would need a tractor less than 100 horse."

For Siemens, making friends with his customers is imperative. "By the time we deliver a tractor, we know our customers very well. Then if they have a problem, we get a 'friendly' call. If we see any sort of issue we try to jump on it immediately. Of the nearly 1,000 tractors that we've retailed, there are only two customers I wish I hadn't sold to."

Carla adds, "I've seen Dave and Rob spend a good 2 hours with a customer and you can see the relationship develop. They'll take as much time as is needed. 'What are you going to do with the tractor'' 'How can we help'' This is part of the business that we really enjoy."  

Lessons Learned Along the Way
While Dave's Tractor's history of selling tractors is a short one compared with many ag equipment dealers, its specialty of catering to rural lifestyle customers along with its "fresh eyes" perspective may be eye opening for a many traditional ag equipment stores.

Here are some of Dave Siemens' views on what he's learned along the way in developing a successful business serving the needs of the rural lifestyle equipment buyer.

- Financing - "This is an area where things have changed a lot. The first 2 or 3 years we didn't finance tractors at all. One day a customer said he wanted to finance his purchase through Agricredit. So, I signed on with them even before Branson had a contract with them. Now we finance nearly half of what we sell."

- Store Appearance - "One thing that Carla does to help our sales is she keeps our facilities clean and makes sure we have landscaping out front. She's also put in a little area in the store where people can sit down and relax. We've tried to make it comfortable without making it fancy. The ladies really like it. The guys don't notice."

- Know Your Competition - "We study our competitors' products extensively. We know where we excel. We're able to impress most customers with our knowledge without having to talk down the other brands, which typically doesn't work."

- Work with Your Suppliers - "We've built and maintained a good relationship with our suppliers. We're not complainers and we pay our bills on time. We tend to get excellent service out of them."

- Listen Carefully - "If a customer comes in and says, 'Give me a price on a 2615 with a box scraper,' we give them a price with few questions asked. Typically these customers don't know exactly what they need, so we'll spend quite a bit of time learning what their needs are.

- Again, Listen Carefully - "After understanding the applications for a tractor, we try to discern the customer's financial situation. For example, when they say, 'I want a small tractor,' are they really saying 'I want a cheap tractor'' Or maybe the customer doesn't have the cash, even though he said he did.

"I've been known to shoot myself in the foot on occasion because someone will say; 'I'm a cash buyer' and I'll say, 'That's good because that'll save you some money.' Then I realize he really isn't a cash buyer. He's just trying to impress me. By then I've just agreed with him that financing isn't good, when he really needs to finance."

- Watch for Egos - "Sometimes the husband tries to impress his wife that he knows something about tractors, when he doesn't. There's the delicate thing of teaching the guy at the same time without making him look silly. Egos can get in the way some times."

- Critique Your Sales Approach - "Rob and I critique each other after almost every sale or lost sale. The customer walks out and we'll ask each other, 'Why did he leave'' This has become very helpful. Sometimes Rob will say, 'Hey, did you forget about that other model' That would have fit.'"

- The Web is Huge - "You need the proper web presence or forget it. These guys are tech-savvy people. We have a lot of e-mail conversations with people because a lot of them want to talk to you from the security of their homes. We always respond. You need to make sure your salespeople are good with this."

- Employees are Important - "I should have delegated more of my work earlier. I had this feeling I was the only one who could do my job. Sometimes I worked myself too hard when I have other people here who could do parts of my job better. We've been profitable, but I'm ready to give up some of the profit to have a little more flexibility with my time.

"I'm learning that, even though I think I need to do everything to do it right, other people can do it just as well. I told my father early on that I didn't want to have any employees. He said, 'Bad employees are a problem, but good employees aren't. You don't have to have employee problems.' So far, we haven't had that issue."

Taking the Extra Step
Siemens believes that what sets Dave's apart from other is his obsessive focus on customer satisfaction. "I know everybody says this, but it's very important to me that we have no unhappy customers."

As an example, Siemens talks about a Saturday morning call from a new customer. "He had the tractor only 4 days and, all of sudden, the bucket wouldn't dump. He bought it to clear land to build a workshop. So, it was very important that it get done.

"He's an hour and a half away. I told him that he probably knocked a quick-connect loose. He insisted that this wasn't the case and was convinced that the bucket was broken.

"So, I called one of my mechanics and sent him up there on a Saturday. He drove all the way up, connected the quick-connect and drove home.

"The customer called the following Monday, saying, 'You guys are the best. I'm telling my friends how wonderful you are.' I think as a token of his appreciation he also sent someone to buy a grill guard and some other things."

Siemens says that it would have been easy not to have reacted that quickly. "We don't get paid under warranty for things like this and I didn't charge him, but now I've got a customer for life. It cost me $100 dollars for my guy's time."

Not Everything Works
As he's gone through his "dealer" learning curve, Siemens says he's tried a number of things to grow the business. Some have worked out well, while others haven't.

Convinced that his customers would only want the highest quality equipment, Siemens began by only carrying the best. "We said we're only going to sell top-quality, top-of-the-line implements. If customers want to buy a cheap implement, they can buy it elsewhere."

But as the price on top-of-the-line mowers, blades and scrapers escalated, he was having difficulty competing.

What the Judges Say About Dave's Tractor
Here's what an independent panel of judges had to say about Dave's Tractor, recognized as the first-ever Rural Lifestyle Dealer of the Year: - "Very solid growth record - doubling in 3 years." - "New facility already paid for." - "Great start-up story: family working hard, doing things right and seeing success."

This summer, the dealership added an economy line of implements. "It's something I resisted for a while, but we've added the Pegasus line and it's given us an inexpensive line of implements to compete against Tractor Supply and that sort of a retailer.

"It makes sense to use a high-quality implement on a high-horsepower, high-use type tractor," says Siemens. "But on a 25-hp tractor that's going to grade a driveway only twice a month, we found we had a hard-time selling that quality against price. We still offer the more expensive brands, but we have an option now, and when you have an option, you can sell both. Customers like choice."

Another mistake Siemens won't make again is buying a few low-cost Chinese-made tractors. "I saw dealers selling so many of them, I thought maybe I was missing something. This was a mistake. I got them here and realized they were of poor quality."

What's happened, he says, is customers look at them and end up buying another tractor. He's decided to keep them on the lot so people can look and compare. His biggest mistake "I should have only bought one."

Still Debt Free
Besides receiving 2007 Rural Lifestyle Dealer award and Farm Equipment's 2006 Best-in-Class Dealer of the Year award, Dave's Tractor has also earned outstanding dealer awards from both Mahindra and Branson Tractors. But what the dealer is most proud of after six years of growth is that he remains debt free.

Since opening the store, Siemens purchased an additional 7.5 acres of land and built and paid for a new 6,000 square-foot facility with offices and full service shop.

"Coming into this, we set money aside and made sure we had zero debt. Now, we're getting calls from people who bought a couple of years ago who are saying, 'Things are getting kind of slow and I'm selling my tractor and trailer,' and we're able to buy some good used tractors.

"We take trades whenever we can, which sets us apart from some dealers because they're so cash strapped they can't do it. We encourage trade-ins and set some capital aside so that we don't lose a good deal."

"We're debt free and it feels good. This past June and July were terribly slow. We almost got completely caught up for the first time ever in getting our trade-ins ready for resale. I was getting concerned. Then in August things took off. It just seems to be very important not to be in the hole."

Still Learning
Siemens still has much to learn to maintain his early success. "In every issue of Farm Equipment, I read comments about keeping inventory turning and about making money in service and parts. We've really focused on turning our inventory, and for the first time, we're seeing service and parts as a profit center as we have a tractors out there that are getting to be a few years old," he says.

Despite the recent slowdown, Siemens still sees plenty of opportunity down the road. "I hear some guys grumble because farms are being bought up around here and broken down into smaller parcels. When you break a 640-acre section into 5-acre plots, what I see is 128 potential customers. If I only get 20% of those, it's still a lot of tractors. Not that I like to see a big farm broken up into 5 acre lots, but somebody's got to win."