Cultivating a successful precision farming department in a farm equipment dealership is a challenge that is as difficult as it is rewarding. Spinning the precision department off into a standalone business takes that challenge to the next level. Five years ago, Jim Straeter, owner of New Holland Rochester in Indiana, did just that. In a panel at the Precision Farming Dealer Summit, Straeter, along with his Precision Ag Manager, Lanty “Spud” Armstrong, shared their journey toward making precision a profitable standalone business.

Straeter, originally a store manager before he purchased New Holland Rochester through the manufacturer’s dealer development plan in 1987, has always believed in taking “calculated” chances. Growing the single store to 7 locations throughout Indiana with sales near $70 million, is a testament to that philosophy. In 2011, Straeter recognized another chance worth taking.

“As times are getting tougher, it’s more important for farmers to get every benefit out of every square inch of their fields and that’s where precision comes in,” says Straeter. “So we made an investment in building an independent business we called Ag Technologies 150 feet away from our main store in Rochester.”

Ag Technologies was established as an equipment partner to deliver precision farming products previously sold through the dealership’s stores. Branching the precision farming arm of the business off resulted in a significant upfront investment, which included a new building, inventory and staff.

Straeter cites pragmatic concerns like work space and level of service as big drivers behind the move, but he also says he wanted to make a statement to customers — and the competition — that precision farming was so vital it required a separate, specialized group of people dedicated to selling and servicing technology.

“The decision that I made was that we were going to show ourselves and our customers that we were dead serious about the precision farming business and the potential it had going forward,” says Straeter. “We wanted to give it that kind of recognition way back in 2010, and our customers responded to what they saw happening. We made that commitment to build the building in spite of what everybody knew was an uncertainty about what was going to happen going forward.”

One of the first steps of launching Ag Technologies was to tap Armstrong for the position of manager. Straeter had hired Armstrong straight out of Purdue University in 2004, and after spending nearly 7 years supporting precision equipment in the Rochester location, he had become their most experienced precision specialist. When the idea was broached, Armstrong saw immediate benefits in moving to a standalone business model.

“As far as auto-steer and GPS, we’d already had a lot of experience with these components,” he says. “But when I started looking at rate controllers, boom height, Ag Leader’s OptRx and Trimble’s GreenSeeker, it made me think we needed to start specializing. We went with an idea that Ag Technologies would be more of an advanced precision
farming department.”

In the first year of operating independently, the new 6-employee store tripled precision sales and the change, although costly, has opened the door for many opportunities. Following are 7 of the biggest benefits that Armstrong and Straeter cite for establishing a standalone business.

1. Opportunity for Specialization

While each location in the dealership network still handles precision equipment in a limited capacity, it’s been convenient for customers and staff alike to have the businesses segregated. Armstrong feels that he now has the opportunity to pursue sales of more advanced precision equipment.

“In the past I had to keep pushing myself, but I realized that I didn’t need to be the guy installing EZ-Steers and lightbars,” says Armstrong. “We can take an advanced technician from each location and train him in level one precision farming to handle those things while we take care of more advanced things.”

In this respect, the move was doubly efficient because it helped free up Armstrong to build a team dedicated to pursuing more advanced precision equipment, and also helped to ensure that each of the dealership’s locations were on a path to be more self-sustaining as far as rudimentary precision service and installation was concerned.

2. Building a Reputation for Precision Farming

Both Armstrong and Straeter agree that one of the biggest benefits of building a standalone precision business has been the dealership image it has cultivated with their customers.

“When people walk in the door at Ag Technologies, they don’t see grease guns and flashlights, they see precision farming equipment and sprayer parts,” says Armstrong. “Customers see the inventory and the staff and they know they’re getting what they’re paying for. They’re getting a dedicated precision group and most of the specialists have advanced level 2 training. We stand out as an independent precision ag dealership to our customers now.”

3. Adding Workspace

While adding space to any business can open new doors, this addition helped pave the way toward more training and higher precision farming-related utilization of shop space.

“Now, we don’t have to worry about having the space to bring in a corn planter to put clutches on or a sprayer to do boom height,” says Armstrong. “It’s been a nice feature for training. We don’t have to say, ‘I’ve got 50 or 60 guys coming in, I need a corner of the shop.’ And we don’t have to rent another facility either.”

4. Streamlining Inter-Dealership Support

Separating precision farming from the other locations makes supporting the other arms of the business a bit more straightforward than it was in the past. Although some of the more remote locations in the dealer group have their own precision specialists and level 1 technicians, all stores are still able to make use of the services Ag Technologies provides when they’re in a bind.

“The specialists and level 1 technicians at other stores can handle the easy stuff like auto-steer and EZ-Steer, but when they get lost with something more complicated they can give us a call,” says Armstrong. “We bill them for any work we do, just as if they were a customer which has been an easy way to differentiate those fees between their store and ours.”

5. Storing Auxiliary Equipment

Ag Technologies serves as a repository for all of the dealership’s service units. With all of the backup precision equipment centrally located, it can be monitored and distributed efficiently.

“It keeps us from having service units sitting around at a whole bunch of different stores,” says Armstrong. “Each store stocks some basic lightbars and unlocked displays, but if a customer has some hardware go out on them, we are only an hour and a half away.”

6. Inventory & Serial Tracking

Armstrong says now that the majority of precision farming equipment rolls through Ag Technologies, keeping track of serial numbers for warranty purposes is easier and more thorough.

“With all the precision hardware going to one place, we can keep track of serial numbers going in and out,” says Armstrong. “In the past, I think sometimes guys might not have been getting all of them, but we really should have them documented and it’s easier this way.”

Making a tighter sales volume record specific to precision equipment is easier in much the same way. This has helped them gauge the effect of different initiatives, follow trends and better predict inventory requirements.

“With our business system, when I worked at the New Holland Rochester location, everything was mixed together in the sales record,” says Armstrong. “It was hard to separate out the precision farming sales vs. tractor and combine sales. We still sell wholegoods, but with the way the system works now, it’s easier to differentiate everything. I can pull a financial record any day of the week and give hard sales numbers.”

7. Staying Vigilant About Obsolescence

Precision hardware is a bit more susceptible to obsolescence than the bigger ticket items at a dealership, and sometimes displays or lightbars might fly under the radar and have to be written off as a loss later. Focusing on just precision, Armstrong has been able to reduce the incidence of this.

“We are able to keep track of inventory that’s in the process of becoming obsolete much better,” he says. “If an item is at just one store, it won’t sit on a shelf for 9 months and be forgotten about. We keep track of that much closer and try to keep that stuff moving.”

8. Streamlining Phone Support