ATTENDANCE increased 24% over last year at the 14th annual National Trailer Dealers Association Convention, held Sept. 25-27 at Marriott's Camelback Inn Resort, Golf Club & Spa in Scottsdale, Arizona.
The program featured a keynote presentation on value-added selling, a general session on business valuation and the sale-of-business process, as well as round table discussions on security, sales and marketing, finance and shop/back office management.
Attendees also had opportunities to connect with their peers to share new ideas, including a western-style opening reception, optional tours of Phoenix, Scottsdale, and El Pedregal, the annual golf tournament, and an awards dinner.
Outgoing president Kelly Stephens, president of Florida Utility Trailers Inc, Apopka, Florida, presented his State of the Association address to attendees of the Awards Dinner that reflected a strong association that is ready to face the challenges ahead.
“The NTDA's success in the past year continues to reflect the dedication and contribution of its people — the board, staff, and most importantly, you, our members,” Stephens said. “Even though the economy has caused our industry to struggle over the last couple of years, the association has been successful in maintaining a consistent member base. The association's goal is to grow the membership as it strives to develop new programs and services.”
Stephens turned over the presidential gavel to Jennifer Blount, president of Carpet Trailer Sales Inc, Dalton, Georgia, during the awards ceremony. Blount presented Stephens with a plaque honoring his service to the association.
Stephens' term with the board expired at the close of the 14th annual convention. He was elected to the board in 1998 and on the board chaired the 2001-2002 Member Services Committee and served as second vice-president before being elected president in 2002.
Blount has been working in the trailer industry practically all of her life. Her mother and father opened Dalton Trailer Service in 1968. As a child she always enjoyed being with her mom and dad. They took the time to teach her the business and put responsibility on her at an early age.
Blount began working at Dalton Trailer Service in high school. She worked with Ideal Leasing Services in 1980 and formed Carpet Trailer Sales in 1987. Container Storage Rental and Sales was started in 1995. All four businesses are still operational today. Blount currently serves as president of Carpet Trailer Sales, a charter member of the NTDA.
Giving back to the industry has been a significant part of Blount's career. This is her second time serving as president of the association. Her first presidency was served from 1993-1994.
Blount said that her company has maintained its membership in the NTDA to become educated about changes in the industry, to learn about issues affecting her business, and to cultivate new relationships with members that have helped her business prosper and grow.
“Many changes have happened in the industry,” she said. “As a whole we are more productive, education has been increased, and technology has opened many new doors for us. Dealer-manufacturer-supplier relationships have improved to a point where we are all working toward one common goal of taking care of the customer. We also are a more safety-conscious industry. Use of the Internet has put the world at our fingertips.”
As NTDA president, Blount says her goal is to create a stronger association and to forge even closer relationships between dealers, manufacturers, suppliers, and customers. According to Blount, the economy has heavily impacted trailer dealers, but has made many dealers become better business people. Blount said she also is concerned with legislative issues that have the potential to impact the profitability and good relations of vendors and customers.
“We have had to make changes in our operations to carry us forward. Now that the economy is improving, we should be well-positioned to move into the future,” said Blount.
One of the things that remain consistent over time in the trailer industry is the people, according to Blount. She notes that the NTDA staff is a valuable resource for businesses to help them when problems arise.
When Blount is not busy managing her businesses and industry concerns, she enjoys traveling, fly fishing, and spending time in Wyoming.
Whatever your customer's problem is, you have a solution for it. Chuck Reaves, founder and president of Twenty-One Associates in Atlanta, Georgia, encouraged attendees of the convention to “get out of the trailer business and get into the problem-solving business.”
What can we do to differentiate our products? According to Reaves, it takes a willingness to change and the ability to not take your customers' perspectives for granted to be successful. There are two ways to sell: value-added selling and commodity selling.
Commodity selling is built on the premise that all products and services are equal and that the buying decision will be based on price. Value-added selling is built on the premise that every product and every service can be differentiated in the customer's mind to the point where the customer will pay whatever the salesperson is asking for the product or the service.
Commodity selling is easier and can result in higher turns for the selling organization. It requires a less sophisticated and experienced salesperson so the cost of sales can remain relatively low.
“After all, how hard is it to sell when you have the lowest price in the market?” he said. “The buyer who believes that ‘a broom is a broom’ and ‘tape is tape’ will be a commodity buyer, and they will buy on price. They believe the product is a commodity and they buy accordingly. Unfortunately, there are salespeople who will agree with the buyer and sell their products and services as a commodity.”
There are some serious downsides to selling on price, according to Reaves. First, margins will be poor to nonexistent. Too many companies that sell on price find out, often too late, that their margins were too small to sustain their businesses.
“The other problem is, whatever you use to close a sale will be used to take it away from you,” he said. “If you close it on price, you will lose it on price, and someone always has a better price.”
More and more companies — large, medium, and small — are turning to value-added selling to keep their companies financially healthy. Interestingly, as they sell at higher prices, they are actually finding that their volumes increase.
“The myth is that if we raise our prices our volumes will decline,” he said. “That is true if we arbitrarily raise our prices and make no attempt to show the customer our value. However, if we can demonstrate, maybe even quantify, the true value of our product or service and do it in such a way that the customer perceives the value to be there, then the customer will buy at a higher price.”
Reaves told attendees those organizations that have raised their prices have learned to sell around the price objection. Salespeople learn quickly that they can use this newfound knowledge to sell all of their lines to all of their customers using the value-added approach rather than the price approach.
“Once you have found the differences in your products, quantify the value of those differences in terms that are relevant to the customer,” said Reaves.
Reaves offered attendees what he refers to as his “PLUSH Selling System”:
Positioning: Ask yourself, who does the customer think you are? Position yourself with the right person the right way. Where are you positioned in the client's organization? Did your position with that customer go up or down on your last sales call? According to Reaves, when you are positioned with the purchasing agent, you had better have the absolute best price or your chances for success are limited. If you do not have the lowest price, you should consider being positioned with someone else in the company. Ask questions such as, who else in the customer's organization will be directly affected by my product or service? Then position yourself with those people.
That may sound difficult, but if you target the right individual or department you will typically find a way to meet with them. Begin with the question, “Why is it in that person's best interest to talk with me?” You already know why you want to talk with them; you need to find a reason why they would want to talk to you. Once you answer that question, your mind will figure out a way to get in to see them.
Listen: What do your customers really want? Listening is a function of asking. Asking questions will bring you the information you need, but doing your spiel only sends information to the other side of the desk.
“Here is the problem with trying to learn the customer's true buying criteria: most customers don't know what they want,” said Reaves.
Unique: What really sets you apart from the competition?
Reaves recommends doing a scorecard with the customer. Most importantly, Reaves says, “Solve the customer's problem, not yours.”
Solution: You may be responding to the most detailed request for quote that you have ever received. The customer may have been very specific in his requirements. Still, the customer may not know what he wants. Customers ask for quotes based on their understanding of your products and services. In other words, they are asking for the best of what they currently know about your products or services. Could they be missing something?
Spend your time learning more and more about what you sell. Study the features and benefits. Learn new applications based on how your other customers are using your products and services so that you know the capabilities of what you sell better than any customer.
“Why settle for what the customer thinks they know about how your product or service could help them?” said Reaves.
Helping: The single most important function of sales is to teach. It is in your best interest and the customer's that you educate them about your capabilities. When the customer knows what you can do for them and they can understand the value, price becomes less and less important in making their decision.
Proper business valuation
If you want sell your business, you first need a package to put out on the market. That's where the process of business valuation becomes especially important. Business valuation is intended to substantiate the intangible part of your business (the difference between book value versus the ancillary value of your business).
Convention attendees were given detailed information on the sale-of-business process and business valuation by Allen Oppenheimer, founder and president of AM Oppenheimer, La Jolla, California. He is a Certified Public Accountant, licensed business broker, and registered securities principal.
There are many reasons owners opt to sell their businesses, from boredom and burnout to estate planning to industry consolidation to health reasons. If you have determined that selling your business is the direction you want to go versus an employee stock ownership plan or business transfer to a family member, then it is important to gather all of the relevant data necessary to present your company in a way that will deliver maximum value to you. During the sales process, you may consider targeting investment bankers (e.g., brokers), business intermediaries (professional sales representatives), or a local businessperson who presents an opportunity.
The sale-of-business process is an in-depth one with many critical areas for consideration. For instance, increasing sales doesn't necessarily mean you're increasing the value of your business. You must closely look at other components. Reviewing the adjusted balance sheet equity, goodwill, and return on investment (on a pre-tax, pre-interest basis) are all key to the business valuation process.
Off-balance sheet assets or quantifiable assets that are not capitalized on the balance sheet, such as your customer base, are of significant value to a potential buyer. Research and development, propriety computer software developed for your company, patents, and brand name recognition are also important assets to note when selling a business or forming an exit strategy.
Another key component of a sale-of-business package is goodwill, which is the future potential of the organization. According to Oppenheimer, the buyer wants to see that your company has a lot of structure (i.e., president, vice-president, general manager, controller, and sales manager). It is also important to define the responsibilities of those key personnel. The buyer may be interested in asking you as the seller to stay on with the company under an employment agreement to help transition the business and to ensure viability of the organization.
The marketing/market research conducted before a sale is especially important, according to Oppenheimer, because it substantiates the goodwill value of the business.
“Value of the business is based on future potential. This value could be worth millions, depending on the compatibility of the buyer's goals and the future outlook of your business,” said Oppenheimer.
Research publicly available databases to determine historical growth, outline your industry niche, and evaluate industry trends when putting together a package for a potential buyer. Research firms often charge fees to use their databases to obtain this information; however, Oppenheimer says providing objective industry data to a potential buyer is a must. Information on the geographic market your company reaches (e.g., regional or national) as well as market penetration are key data points in pulling together a sales package. Objective information on your competitors and their market position should also be included in the market research portion of a sales package.
A buyer will be most interested in your company's existing marketing methods as well as any suggested marketing enhancements. According to Oppenheimer, a key selling point is your ability to show the buyer they can grow the business and how you recommend growing it.
The financial part of your business is key to any potential buyer. You will want to present at least three years of financial data that reflects true operation profitability or loss history. To obtain a true profitability statement, discretionary items on the books such as the owner's salary, travel expenses involving family members, automobiles, fuel expenses, automotive repairs; life insurance policies, and nonrecurring expenses such as building ownership/repairs, employee litigation (such as a discrimination suit), and contracts (e.g., legal fees) must all be factored off of the bottom line. A buyer will also want to see any accumulated interest or debt. A proforma of future income statements will also be expected from a potential buyer.
Inventory can be a tricky part of a business sale. Machinery and equipment will likely be evaluated based on their replacement values with consideration for depreciation. According to Oppenheimer, adding equipment before a sale is not likely to be in your company's best interest as it may not add a dollar-for-dollar value to the sale. Also, as the current owner, you would be required to pay off debt on any equipment purchases before the sale of business occurs. This is true for debt on automobiles owned through the company that would be paid off through proceeds of the sale.
Real estate is an especially important area to have professionally evaluated when considering the sale of a business. Real estate has a value separate from that of the business. The buyer may want to move the business to a different location, in which case the real estate could be sold or leased to another buyer.
After all of the company, market, and industry data have been compiled, the next step in the sale-of-business process is to target potential buyers with a letter of introduction.
Based on positive responses, a formal package detailing your proposed sale (including financials, market research, and other data) is distributed to interested parties. The negotiation process then takes place until the point of which an offer is made to you, the business owner. Once you accept an offer, a letter of intent to buy a business is drafted.
The letter of intent is usually not a binding agreement. Attorneys are then brought in to draft a purchase agreement that is usually based on the letter of intent. The purchasing agreement is a detailed and binding document that includes warranties, representatives, price, and deal structure. It is important that the document works for the buyer and seller. Once a purchase agreement is signed, due diligence and the eventual close of the sale takes place.
Once a letter of intent is signed, word will get out about the sale of your business. Oppenheimer cautions that it is important to be coached on how to approach the employees, media, and industry with this information.
Another important part of the NTDA's educational programming was the opportunity for dealer attendees to learn about the latest Allied members' product offerings. The following Allied members provided five-minute updates on their companies on Sept. 26:
Susan Erickson, Manager, TruckPaper, Lincoln, Nebraska: Buying Guides and Web Solutions for the Truck and Trailer Industry.
Peter Del Valle, National Sales Manager, Fastline Publications, Buckner, New York: Buying Guides for the Trucking Industry.
Frank Halbert, Area Manager, Karmak, Inc, Carlinville, Illinois: The New Sales Management Program From Karmak's ProfitMaster.
Phil Bortz, Sales-Mobile Products, KEITH Manufacturing Co, Madras, Oregon: KEITH WALKING FLOOR Material Handling Systems.
Bob Sibley, Director of Trailer Products, Meritor WABCO, Troy, Michigan: Roll Stability System for Trailers
Lenny Miller, National Sales Manager, Mac Trailer Mfg, Inc, Alliance, Ohio: Mac Trailer's New Aluminum Horizontal Smooth Side Dump and Waste Trailer as well as its Y2 Round Aluminum Dump Trailer.
Lyn Simon, President, onewaytrailers.com, Salt Lake City, Utah: Internet-based Trailer Delivery.
Scott Leffert, Sales Manager, Powersource Transport Inc, Griffith, Indiana: Movement of Trailer Equipment from Dealer to Customer; 48-state Service, Guaranteed.
Terry Stone, Manager of Marketing and Transportation Products, Ainsworth Lumber Co. Ltd, Vancouver, BC, Canada: Transdeck Trailer Flooring
Robert Ward, Account Manager, Till-Fab Ltd, Norwich, ON, Canada: The Roll-Tite Tarping System.
Jim Ladner, Transportation Sales Manager, Landoll Corp, Marysville, Kansas: New Model, All-New Trailer.
Baine Adams, Vice President of North American Sales, Hendrickson International, Woodridge, Illinois: Hendrickson's Sliding Tandem for Platform Trailers.
Varun Rao, Marketing Manager Worldwide Trailer Products, ArvinMeritor, Inc, Troy, Michigan: ArvinMeritor's Complete Line of Trailer Systems.
John Carr, North American Sales Manager Commercial OE Sales, Bridgestone/Firestone North American Tire LLC, Nashville, Tennessee: Addition of R260F to Product Offering.
Michael Johnson, Trailer Sales Specialist, Tuthill Transport Technologies, Mt Vernon, Missouri: Slider Pin Release Systems and Air Ride Suspensions.
Justina Faulkner, Associate Publisher, American Trucker, Indianapolis, Indiana: Trade Magazine Marketing and Direct Mail Opportunities.
Chad Barczak, Internet Director, My Little Salesman Catalogs, Eugene, Oregon: Internet Marketing Opportunities.
Tom DeWeerd, National Market Manager-Trailer Products, JOST International: Component Updates for the Trailer Industry.
Dale Lane, Director of Sales, Airgo Systems, Edmond, Oklahoma: Airgo Systems Automatic Tire Inflation Next Level System.
Ernie Gilbertson, Vice President, Wallwork Financial Corp, Fargo, North Dakota: Wallwork Financial Corp.'s Service Offerings.
Trey Gary, Sales Manager, Pitts Trailers, Pittsview, Alabama: Overview of Pitts Trailers' Products and Services.
NTDA scholarship program
Stephens announced the winner of the NTDA Scholarship Program during the Awards Dinner. Stephanie S. Black, daughter of Roger L Black, MIS Manager at Tuthill Transport Technologies, Mt Vernon, Missouri, was awarded the 2003 NTDA scholarship. Stephanie is currently in her second year at Florida College, where she maintains a 4.0 grade point average while pursuing a degree in elementary education.
Next year's convention
The 15th annual NTDA Convention is scheduled for Sept. 16-18, 2004, at The Westin Resort on Hilton Head Island, South Carolina.