Xtreme Performance in CO??

NOt sure of all the specific details......but from what I remember...


Donovans wife had some serious health issues. Running the business's took so much time and effort of the Faceys, that they decided to sell and focus on getting Mindy better.

The had some buyers lined up....but its one thing to sell a shop and another thing to obtain the rights to sell certain products ie polaris and skidoo.

The new owners were not going to get the rights to sell some of Xtreme's existing product line...so I think the deal fell apart.

But the good news is they are back and I think Mindy is much better now!




At least thats how I remember it going down?

I am sure Donovan could answer any questions you had.

Dfacey on here

That's it in a nutshell. There were a couple other things that attributed to the departure.

Mindy has improved, she was looking and acting great when I was out at the house last Fall.

Bigman - No, no, no - please don't wish that on me! :face-icon-small-hapTwo stores, 50 employees, floorplan companies, banks, five products lines and all the politics that go along with that. It was certainly not the escape strategy we wanted but getting out has been nice. I know the perception from the outside is that dealerships must be profitable in order to have all the units, parts, accessories, buildings, trucks, etc. that make up the business. The reality, though, is that most dealerships are not profitable (less than 3% net) and the risk is very high. For most stores, a vast majority of the inventory is not owned by the dealership but carried on a floorplan line. The inventory will have a certain amount of time that it doesn't cost the store interest but after that, it all accrues interest. The older it gets, the more interest it costs. That interest can kill a store so most of the manufacturers tie some interest abatement to the next order. So if you overordered this year and can't afford to pay the interest, the manufacturer will help you by suggesting you over order again next year. Being scared of the death spiral that puts you in, you lower prices and try to sell all the inventory before the interest comes due again. In the process, you kill your margin and don't generate any gross profit. Of course, if you have employees, they don't like to sell stuff for free so you still have bills to pay in spite of not generating much profit. Generally that strategy works for the manufacturer, though, as they've managed to lower the actual retail price to the customer. Given usual price elasticity of demand, that means they've sold more units. Even if they don't manage to jam up all the dealers in a given area, usually they can get one guy nervous and dumping product. Unless he runs out of product, that usually has the effect of getting everybody selling for somewhat less just to stay competitive. Now, it's certainly not my position that all dealers are doing a great job or the manufacturers are evil incarnate. However, I can say that for most stores, the perception of their customers, employees, and suppliers is that they are more profitable than they really are. For a lot of guys I talk to, especially in this climate, they consider not losing money or sales declining any further is a win. Combine that with generally having to personally guarantee all floorplan lines and bank loans and you have the dealer principal with everything they own on the line hoping to break even or maybe make 1-2% net of gross sales. Think about that...if the store does $5M in sales, a good bottom line would be $50k-$100k. That's not a inconsequential amount, but when you think about a lot of people making that kind of money at a " normal job" without playing all in poker all the time, you start to see where the worry and stress comes from. The other stressor is that the profitability in most of these stores is very knife edged. Not much has to change in a $5M store to go from making $100k to losing $100k. When the powersports business has seen steady 40% losses year over year since the recession started, you can imagine what that does to the numbers. At the height of our stores when business was going okay, we had to make $250k/month in gross profit to break even. About half of that was to pay the employees, $30k in rent, $25k in interest, and then all the usual misc expenses. Even after we cut a bunch of expenses, almost to the point that the stores didn't function terribly well, it was still over $200k/month in expenses.

Given all of that, I'm really enjoying this much smaller and much simpler business model. I'm enjoying talking to the customers myself, I'm enjoying working on the units, and I'm enjoying not having the stress of having a business that needs to generate $12k/day in profit just to not lose money! I'm also enjoying taking Mindy, the kids, and the dogs along and camping in the fifth wheel when we go snowmobiling. I'm well aware that as our stores got bigger, Xtreme didn't do everything right for every customer all the time, in spite of that being our intent. Even given that, we have received and really appreciated all the kind words and well wishes from people who saw us at the snow show, have since called or stopped by, and posted here.

Thanks!
Donavon