1991 - Volume #15, Issue #3, Page #19[ Sample Stories From This Issue | List of All Stories In This Issue | Print this story | Read this issue]
Farmer-Investors Save Small Town Implement Dealership
When the original Allis-Chalmers dealership went under, farmers here in north-eastern South Dakota first thought they were going to have to do without. "The owner was up against the wall financially and it looked like he was going to have to lock it up," explains Rodney Westby, who farms 1,100 acres from his home place a half mile out of town.
"Then seven other Rosholt farmers and I put together an investment group and began negotiating with the attorneys. By the time the dust settled, we had formed a corporation and had bought the facilities." Westby is now the president of the farmer-owned corporation, called Rosholt Farm Power Inc., which bought the dealership's building, some of the inventory and tools.
The group looked into acquiring an implement franchise, but decided they could accomplish their-objective by offering the facilities to an existing dealer. After some scouting they found Gary Hoffman, owner of Hoffman Implement in Graceville, Minn., 37 miles southeast of Rosholt. He was willing to lease the facilities and operate it as a satellite to his main dealership.
"With inventory, a full dealership franchise could have amounted to over $250,000," Westby explains. "By leasing to an existing dealer to operate as a satellite we kept the doors open for less than half that." Though the satellite dealership in Rosholt handles Case-IH, it also offers a Couple of brands of short-line equipment, plus used equipment and mechanical work on machinery of all colors.
"Our corporation just had its third annual meeting," says Westby, "and all the investors are tickled pink with how it's turned out. We're getting a return on our money, as well as covering expenses like taxes, re-pairs, insurance and upkeep. It's definitely been worthwhile as a matter of convenience to farmers around Rosholt. But the main benefit is that we've kept it open to help keep our town alive. The dealership em-ploys a full-time manager, a partsman, two mechanics and a part-time bookkeeper."
The first lease between the dealer and in-vestment group was for two years, and included an option to buy. It's been renewed and business has picked up since the satellite dealership began operating. "A good volume of machinery has been sold out of here," says Westby, "and the parts business is growing every year. We feel it has been an unqualified success. Without getting involved, we would have had a building with the doors locked and growing to weeds."
Sometimes local businesses aren't appreciated until they shut the doors, notes Frank Beal, manager of the satellite dealership. Then it's too late to get them back. He suggests that other rural communities faced with losing an only dealership could try the same approach. "It's worked out real well. It took awhile at first to get the dealership up and running again. But we've made good progress; we plan to add another mechanic within the next month."
"The enthusiasm for saving the dealer-ship was tremendous," Westby adds. "We originally had 38 people interested in in-vesting. But on the advice of our lawyer we formed the private corporation and kept the number of investors to a minimum. If an only implement dealership or other business in town is having serious financial problems, the first step in helping is talking with the current owner. Work through him, his lawyers and creditors. If you can interest an existing dealership in setting up a satellite, the investment required can be manageable."
Rosholt has been singled out as an ex-ample of what small towns can do to survive hard times by the Heartland Center for Leadership Development, a nonprofit organization headquartered in Lincoln, Nebraska. The Center, partially sponsored by Pioneer Hi-Bred International, is devoted to
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