Managing Multi-Regional Operations: Stewart Management Group Finds Success in Market Diversification Cont'd

The same is also true for advertising. In Birmingham, they stick strictly with TV. In Tampa, it’s newspapers. In Jacksonville, it takes a combination of both. It all depends on what is successful in the marketplace. That’s where they look to key people. But there’s still a lot of trial and error. “You listen to whatever advice you think is credible and make decisions, and if it doesn’t work, you change it,” said Stewart.

Growing a company like his would have been more difficult if not for his family. Stewart has two sons and a son-in-law in the business—all three trusted lieutenants. Gordon Jr. runs the Toyota and new Hyundai dealership in Birmingham, Ala., where he was recently joined by his brother Andrew as one of the new car managers. Stewart’s son-in-law Adam Logemann runs the mergers and acquisition arm, Trinity Ltd. “It certainly makes life easier,” said Stewart.

Stewart works with a lot of different manufacturers: Chevy, Toyota, Saab and several more. A good manager on the new car side of the business can usually handle just about any make and model vehicle. It’s the used car operations that require someone with a lot of local market lore and an understanding of what customers are looking for. “Used car managers have different talents than new car managers,” said Stewart. “New car formats are more standardized. It’s easier to move a new car manager to another state and not miss a beat.”

“Take a used car manager and move him to another state, he has a long learning curve ahead ...The used car manager is the key to any operation. You have to let him manage the inventory. You judge him by the numbers and give him the opportunity to prove he knows what he’s talking about. A good used car manager is worth his weight in gold. You make suggestions,” said Stewart. Ultimately, though, your success or failure in the used car business will rely on the manager in charge.

Two years ago, Stewart moved his management group away from the grounds of his Detroit dealership and into a separate office. In addition to keeping his eyes open to new opportunities for his own company, Stewart brokers dealerships for others as well. The off-site location is an essential part of keeping that part of his work confidential. It also gave him a central location to base one set of computer servers for each one of his dealerships. Several high-speed T1 lines keep the data flowing smoothly, and a central office allows one Internet technology manager to handle all the work, rather than hire someone in each dealership. “There are certainly some economies from the computer standpoint,” said Stewart. “We also have one corporate controller.”

There are some expenses, though, that can’t be shared. According to Stewart, “You don’t share advertising expenses as you would if they’re in the same market. That’s a disadvantage.”

Stewart’s current trip to visit a dealership will take a few hours, but it’s just another leg in a busy travel itinerary. He travels to stores regularly, and his comptroller is sure to routinely make the rounds as well. His managers also travel several times each year for regularly scheduled management summits—this is the traveling that provides the greatest benefit.

Referring to his management summits Stewart said, “The exchange of ideas is very valuable. When you get aggressive people, they want to share successes and talk about what they’re doing. It’s like a mini twenty group.” Members pick up ideas from each other almost by osmosis, and that directly translates into more sales. It seems that a side-by-side presentation of the numbers creates an unwritten competition among general managers. “They don’t want to be the last of anything. We have four Chevy dealerships and nobody wants to be the fourth-ranked performer; they also want to learn what the other guy is doing so they can beat them.”

Stewart is a strong proponent of twenty groups. They belong to a Nichols, Campbell and Morrow (NCM) twenty group. NCM prepares a monthly composite to rank dealers against each other. Whatever the brand, benchmarks are provided. Stewart’s stores shoot for benchmark performance in each of their stores.

“When the best in any organization competes for the top spot,” said Stewart, “an owner can’t help but benefit. When you have multiple locations around the country competing, you can increase the benefit geometrically.”