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Keep on Rolling
Just because General Motors is facing an abyss doesn't mean its dealers are,
too. Charles Winton and business partner Patrick Denson opened a new Chevrolet
dealership in October 2007 and are focusing on used-car sales and maintenance.
ENTREPRENEURS by Jean Gruss | Editor/Lee-Collier
As an accountant for automobile dealerships for many years, Charles Winton always had advice for dealers.
Now that he is one of them, Winton has his work cut out for him. He opened a Chevrolet dealership in Estero in October 2007, two months before the country officially entered a recession that is now threatening Detroit's automakers.
Winton says he doesn't lose much sleep over the wrangling in Congress over what to do about the Detroit automakers, though his business partner Like any good entrepreneur, Winton worries only about the things he can control.
It's no secret that new-car sales have been dismal. But unlike the automakers, dealerships have other sources of revenue, such as the service department and used-car sales. "Our challenge is to make sure we focus on the other aspects of our business," Winton says.
Although Winton won't divulge financial information about his dealership for competitive reasons, he says it was well capitalized from the start. The company also didn't spend too much on overhead, as Winton and Denson saw the signs of economic decline before they opened Estero Bay Chevrolet in late 2007.
Despite the fact that Lee County government red tape prevented him from opening the dealership during the boom years, Winton says Estero's demographics show people have higher incomes and have better credit than many other areas of the country.
What's more, he says the area isn't saturated with GM dealers the way they are in other parts of the country. "From the first time I came down here, I saw the potential of this market," Winton says. "I still see the potential."
From accountant to dealer
Raised in Memphis, Tenn., Winton became an accountant, working for a firm that specialized in helping automobile dealerships. The firm had 300 clients in 30 states.
Winton became intimately familiar with the financial workings of dealerships. "My greater passion was working with dealers, rather than preparing tax returns," Winton says. Still, he says, "I was always second-guessing the people I was working for."
After 10 years of advising car dealers, Winton wanted to be one of them. But friends in the business advised him to get experience in the showroom, so Winton started selling Lexus cars in Dallas early in 1995. "I knew the business from the top down, not the bottom up."
Selling cars wasn't as easy he thought. "I want to use the word 'frightening'," Winton chuckles. "It's not easy," he says.
The biggest challenge was learning how customers think. "I thought I had a grasp on that, but I really didn't," Winton says. Fact is, most customers anticipate a bad experience when they walk into a car dealership.
Winton's career in sales lasted six months. In June 1995, he moved to Amarillo, Texas, where he became the chief financial officer of a four-store chain called Cross Continent Auto Retailers. A year later, Winton helped engineer the $50 million initial public offering of the company, the first auto dealer to go public. Wayne Huizenga's Republic Industries later bought the company for $145 million in stock.
After the sale of Cross Continent, Winton met his partner Denson while both men were working in Phoenix. Denson was managing three of the Saturn dealerships for which Winton was the chief financial officer. The pair decided to start their own dealership.
County red tape
In 2003, GM granted Winton and Denson the right to open a dealership in Estero, an area in Lee County halfway between Naples and Fort Myers. "Estero was the perfect spot for the store," Winton says. Unlike areas of the Midwest and Northeast, Florida doesn't have as many dealers. "It was fast-growing and in between Chevy stores in Naples and Fort Myers."
But Lee County's cumbersome restrictions on growth meant the dealership couldn't be built without an exemption from land-use regulations, despite the fact that the 20-acre site lay at the intersection of Corkscrew Road and Interstate 75.
That turned out to be a bigger challenge than Winton expected. Instead of the 18 months he projected to open the dealership, the process took four long years in which the pair sat out the economic boom. Winton was undeterred, persuading nearby residents to give their blessing to the dealership.
"What kept me focused and still enthusiastic was that Estero is a great market," he says, looking back. Besides the positive income demographics, Winton saw the growth of nearby Florida Gulf Coast University, which now has 10,000 students, and two malls with about 3 million square feet as catalysts for his business.
Still, Winton and Denson lost the momentum that the boom would have given them. "What we lost, more than anything, was '05 and '06," he says. "Pat and I would have loved to have started out in those years."
Signs of the downturn
By the time they had worked through the county's red tape and opened the dealership in the fall of 2007, there was widespread evidence that the real estate boom had ended and the regional economy was declining.
"When we capitalized our store, we knew it was a startup and we were prepared for it," Winton says. GMAC provided the working capital, but much of the investment came from the two men. "We're two entrepreneurs who put their personal savings in the company," he says.
Knowing the slowdown was at hand, the two entrepreneurs were careful with overhead. They didn't hire too many people and didn't take on too much new-car inventory. "People and advertising are the two biggest things we can control," Winton says. "We're not going to take 200 cars from GM," he adds.
With slow new-car sales, they sharpened the dealership's other businesses, such as used-car sales and service. "You can't force the market that's not there," Denson says. "You've got to let things settle down."
Instead, they've increased their used-car inventory by 150% and pushed special promotions for maintenance. They shifted a substantial chunk of their advertising budget to the Internet, where many people begin their search for a car.
Still, the economic uncertainty makes planning for the future difficult. "We're just taking it a month at a time because the market keeps changing," Winton says.
In this environment, Winton says businesses need to be nimble and quick to respond to the market. "Don't do anything you can't change in 30 days," he says. "As an entrepreneur, your job is to be able to adjust your business plan as the environment dictates."
Winton is careful about discussing the government's efforts to help the American carmakers. What's been lost in the debate, he says, is that GM is coming out with some great new cars, such as the Chevy Volt hybrid and redesigned Camaro.
While other GM brands may suffer, Winton says he's not worried about the fallout for his store. "Whatever happens to GM, Chevrolet will survive," Winton says.
REVIEW SUMMARY
Company. Estero Bay Chevrolet
Industry. Autos
Key. In this environment, it's important to be able to change your business plan quickly as the market changes.
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