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NAEDA

September 2010

The Dealers' Management and Merchandising Magazine

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BYBARB BAYLOR ANDERSON

Dealer

Four generations of business success

J Koenig Equi pmen t's Tipp City, Ohio location.

Koenig Equipment, Inc. Locations: Anna, Botkins, Germantown, Greenville,

Oxford, Tipp City, and Urbana, Ohio; and Gas City, Huntington, Logansport, and Rossville, Ind. Employees: 180 plus 3 summer interns Major lines: John Deere, Case IH Customer base: Commercial agriculture, rural lifestyle, commercial and government landscape contractors, and residential lawn and garden Associations: Ohio-Michigan Equipment Dealers Association, Mid-America Equipment Retailers Association

Keys To Success • Have a plan for maintaining economies of scale, while addressing customer needs. • Hire good people who will deliver top customer service. Attract them through your benefits package. Consider placing them on salary rather than commission. • Use your Web site to attract customers. Keep it dynamic and fresh. Add an "opportunity box:' • Hire seasoned professionals for technical areas, rather than generalists. • Family businesses do not generally have a member for every key business area. Operate like you can't fill every position with a family member and hire accordingly.

OHN C. Koenig may never have imagined in 1904 where his hardware and farm equipment dealership might be today. But more than a century later, Ohio-based Koenig Equipment has 11 locations across two states and handles more than just local friend s and neighbors. "My grandpa was committed to the long-term . He handled only quality products, offered them at a fair price, maintained convenient hours, and supported his merchandise with good p arts availability and responsive repair and maintena nce. He always greeted his customers as friend s and made sure transactions were of mutual advantage:' says Ray Koenig, one of the current third generation shareholders. "Not much has changed with th at philosophy." Ray says the sa me goals carried over into second generation participation in what was then called Botkins Hardware Co mpany. John C's sons, John, Bill and Emerson, brought speCialization and teamwork to the business. And as Botkins grew into Koenig Equipment, Inc., Emerson's children , Ray, Ken, JoAnn, Jack, and Greg, enriched the family business legacy with unprecedented sales growth and geograp hic expansion. "My dad and tvvo uncles became involved in 1945 and ran the business until 1974. Then the third generation , my generation, entered the picture and we incorporated the business:' says Ray. "We made our first acquisition in 1979 and have continued to do that until now. Along the way we've tried to maintain the advantage of economies of scale a nd also be responsive to customers, their parts and support needs:' Koenig serves four cu stomer groups - commercia l agriculture, which is prim arily corn, soybean and wheat growers and some livestock produce rs; the rura l lifestyle market; government and commercial grounds mai nte­ nance accounts; and residential lawn and garden. The dea lership carries Joh n Deere and Case IH equipment lines and a few short li.nes.

Sustained family legacy Today, nine Koenig family members work full-time in the bus iness - five from the third generation and four from the fourth. Of the 26 shareholders, all are employees and eight are Koenings. "We started a trans ition phase in 2004. By 2017, we will have moved into fourth generation leadership with primar il y cousins, rather th an siblings:' Ray explains. "We intend to maintain the family operation for the foreseeable future." The board ofdirectors has seve n members. Two are Koenigs. Ray says the dealers hip also has a family council- a super majority of sha reholders - that works with the board . Decisions are made by conse nsus and conveyed to the boa rd through a family representative who sits on the board . That current family member is Ray's nephew, Aaron. "Most closely held famil y companies are not likely to have a family member that is an expert in every key area where you need one. If so, they are very lucky:' he says. "You have to operate like you won't be able to fill every position with a family member and hire accordingly." Continued on page 16

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Continued from page 14

KllPlllg l-quipl! If'1 I hirf'~ IllP hE";1 el1lpiOVep5, '>l1ch as Ilefl to rig/H.I. Ml kp MlIrr y (Uri ana). h Iping.-1 IISlUllIPf will d pl.trltPI pl lfchasp. Jin1 1\1\1 55 (Annal. lightening J combine hyd rau lic hose·; and Jorcla n Wolf (Hunt ington). get ting a reading .:I I ,1n f'lect ri ral l p.s l SI<l lld.

As such, Ray no tes th e dealership has two other catego ries of peopl e invoJved with the co mpany: employees who have bee n with th e origin,ll dealership or olle of the acquired dealerships for 20 or 30 years, and empl oyees who have been hired more recently because of th eir seasoned manufacturing ex pe ri e nce wit h co nte mp o rar y eq uipm ent. About 180 people and three summer intern s wo rk for Koenig ,KrosS parts of 40 counti es. Locati o ns include Anna, Botkins, Germantown, G reenville, Oxford, Tipp City, and Urbana, Ohio; and Gas City, Huntington, Logan sport, and Ross ville, Ind. "Many of onr long- time employees have been wi th us for so long, they act like they own the business ... and in some cases they do;' quips Ray. "Severa l are shareholders, and because they have a stake in it, they take pride in helping build our success:'

Good people bring success Having top-notch emp loyees is one reaso n Koenig has grow n so successfull y. '''llle best way to deli ve r top custo mer se rvice is to have the best employees. We h8ve dttracted top people through our sa lary stru cture and gain sha ring. We keep th em by providing meaningful work;' says Ray. "Our emp loyees are allowed to make decisions and are held responsible for their work. We have <l lea rning ce nter in our admini str<1tive area that has a library ,1Ild meeting rooms for employee and customer lea rning an ci personal developlllept:' As a dealer, Koenig Equipment has a un ique app roach to employee compensation. Department managers at each location, adminislt-ative stafl and sales peo ple all a re sa laried emplo yees. "We put them on sa lary so the)' ca n build long-te rm relatio nships with customers rather th an worry about com mission;' says R<lY. "We want our people to make good purchase recommenda ti ons based on what we sell and the needs of the customer. Our s8laries are perfo nlld nce b,lsed, so they have to produce. But it is not measured month to mon th ." 111e thi rd ca tegory of employees, seasonal prod uct specialist profess ionals, has become more integf<ll to Koenig as the eqllipment industry ha s become more complex. "With all of the new technology like G PS, you c<ln't be d genera li st in parts and service. Yo u need spec iali sts for particul ar areas;' he says. "Fortunately, we do not have a tough time filling techni ca l positions. 16

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"The best way to deliver top customer service is to have the best employees:' Ray Koenig, Koenig Equipment. Inc.

Da yto n is in ou r trade ,1rea. Si nce it is a manufa cturing town, we can usually find spec iali sts. liVe ,1Iso are hiring more bacca laureate degreed people, which is a major change in the last decade."

Customers focus for future Ultimately, Koenig defi nes complete success by the number of very satisfied custoillcrs that are repeat bu yers and that refer fl-iends and neighbors to the dedlership. "We see a lot of legacy within the agricultural industry. And as a fourth generation dedler, it is gratifying to see fourth and f1fth generation customers cOllle into our sto res," says R'ly. "We hope we are a small part of their success just as the y are part of ours." Rather than a s uggest io n box, tile Koenig Web s ite, WWW. koenigequ ipment.com , features an "oppo rtunit y box;' where vis itors Cdn provid e feedback o r suggestions. "You have to give customers ,1 reason to visit your site often ;' says Ray. "My nep hew is enhancing the site to 111dke it even more useful and d)IJlarnic. \Aie st rive to keep it ft'esh with pictures and infortlldtion ,lb out used equipment." Ray adds the site will be ,1 good Wily to reach new custom ers. "Many dealers m8Y remember those nostalgic days where you worked in one township and knew everyone. 11),11 is the business my dad and uncles ran," he says "Our cha ll enge and opportunity now is to ma intain a sa les structure that covers economies of sca le, custom er di versit y and varied wedt he r p8Herns across our region. 111at is the on ly WJy to provide custo mers wit h products, pdrts dncl suppo rt for the futu re ." Ray continues, "l1)e U.s. ,1g ricu ltural industry is unlimited in its potential for developing 8nd delivering varied and sustainable products: food, fiber, biomateri als, and bioenergy. We are proud to be a sillail par t of that picture. We Me prepared to capit<llize on th,lt bright outlook by adding more branches as oppo rtunities arise." • BARB BAYLOR ANDERSON i In·,, II .) wi k !.lrIIJ(-> (,f HJrlt:uhuf II h'lJt'

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