A Noble Endeavor
Call it careful planning or fortuitous timing, but in either case brothers Mike and Patrick Noble launched their dealership in April 2006 during the recent height of the RV market.
Nationally that year, wholesale RV shipments reached a 30-year high of 390,500 units, and the Noble brothers found their own sales for the year greatly exceeded their initial projections.
“The goal was to sell 106 RVs in 2006; we hit 187,” Mike says.
Brothers Mike (left) and Patrick Noble founded Noble RV in Owatonna, Minn., in 2006. Despite the fact that neither brother had direct experience operating an RV dealership previously, they have survived and even thrived in challenging economic conditions.
Notably, neither brother had any direct experience running an RV dealership when they started their business in the small community of Owatonna, Minn., located along Interstate 35 about 65 miles south of Minneapolis-St. Paul. That doesn’t mean they didn’t have strong business backgrounds and hadn’t done their homework, however.
Patrick had spent his previous career in the automobile industry, primarily on the financing side of the business, while Mike had a varied and successful career doing everything from developing energy-efficient lighting to the disposal of hazardous waste.
When Patrick approached his brother in 2004 about the idea of opening an RV dealership, Mike devoted himself to learning everything he could about the industry, even forming a shell company so he could attend the National RV Trade Show in Louisville, Ky., that year.
Mike’s extensive research led him to one definite conclusion: “I told Patrick, ‘I think there is an opportunity for us to do business in this industry,’” he says. In fact, he believed in the business so much that he agreed to stake the venture with his life’s savings.
“I knew Patrick was a good operator and that he could make it happen,” Mike explains. “It was his car experience that enabled us to achieve success.”
First Steps to a Successful Venture
Before the brothers opened their dealership, Noble RV, Patrick went to back to school for a formal, week-long training session that covered the basics of running an RV dealership – everything from how to manage to handling service and parts. He learned how to use budgeting software to put a business plan together.
Mike also did his own homework.
“I went to every RV dealer in a 60-mile radius and did an inventory,” he says. “I put together a spreadsheet of every make and model that every RV dealership merchandised. I created a pie chart.”
What leapt out at him was that more travel trailers were on those lots than anything else. It was easy to surmise that they were the No. 1-selling RV product.
Armed with what they had learned, the brothers acquired a building with a 3,000-square-foot retail showroom on a 5-acre piece property in Owatonna on which they retailed about 70 towable units, focusing on travel trailers and fifth wheels.
After such a successful first year, the brothers in 2007 took the plunge and expanded their dealership: they leased an additional 3 acres of parking space that belonged to a museum located opposite of the dealership and used the space to merchandise an additional 40 RVs, including some motorhomes. They were now merchandising about 100 RVs on their asphalt lots and were achieving all their goals.
Sales assistant Lisa Fink talks with customers DuWayne and Lois Prange about the features they would like in a new RV. Noble RV merchandises about 225 units.
Noble RV has a spacious, modern-looking front office and parts department
To make sure they stayed abreast of the latest industry developments, they joined the National RV Dealers Association and the Minnesota Automobile Dealers Association, and they read a variety of trade publications related to their business.
2008 Brings Tough Times
But just as the business started hitting its stride the country entered the Great Recession, which devastated many businesses, including an estimated 200 RV dealerships across the country that closed their doors over a roughly 18-month period. At the time, Noble RV would seem to have been particularly vulnerable to market forces given that the business was relatively new to the industry.
But instead of sitting back and worrying, the brothers rolled up their sleeves and got to work. They did obvious things at first, such as dropping pricey motorhomes in a region of the country where towable RVs were the in-demand vehicles. Plus, they quickly came to recognize were playing on an uneven playing field in the motorized category.
“Manufacturers got desperate and gave huge discounts to the large national dealerships, leaving us at about a $15,000 disadvantage for each motorhome,” Mike explains.
As the recession worsened, Noble RV had to continue moving product off the lot if it didn’t want to end up another casualty of the rough economy. To meet the challenge, Patrick started to better utilize his sales management experience, honed in the automobile business.
“Patrick went back on the floor as a sales manager. We had made a mistake on a hire and weren’t selling enough,” Mike says. “Patrick got the ship steering and moved the old inventory out, including the rest of those old motorhomes. I had some more cash I infused back into the company.”
At the same time, the credit crunch was dinging a lot of dealers, and Noble RV was no exception. “The banks pulled the rug out from under us,” Mike says.
Business and Finance Manager Dustin Taylor talks with customer Vince Bakken about the details of Bakken’s purchase. As financing from national banks dried up, Noble RV turned to local banks and credit unions to get customers financed.
Here again, Patrick stepped up to the plate, his automotive finance background proving a useful asset. One winning strategy: Noble RV had cultivated relationships with local banks and credit unions, which paid dividends when larger lenders exited the market.
“When we started in 2006 we already had relationships with lenders,” Patrick says. “The contacts with banks came in handy.”
Fortunately, Noble RV had its financial house in order, which gave lenders added assurances that the banks and credit unions could do business with the dealership.
“We had clean financials, and they sign on with you a lot faster based on relationships. That is where we explored when thing tightened up,” Patrick says. “We also made phone calls to more regionals and credit unions. We went out and looked for other lenders looking to get into new businesses – and we got some of them into the RV business.”
With Patrick’s relationships and sales management ability, Noble RV made it through the most difficult period and into 2010, when things began easing up a bit. Mike’s confidence in his brother from the beginning had paid off.
Dealership Growing Again
In October 2010, Noble RV looked to grow its business again, this time leasing an additional building down the road from the dealership where it could merchandise about 25 RVs during the cold winter months.
“We are on three different properties: the original dealership space; the parking lot of the church; and a building next to the dealership,” Patrick says.
As it seeks to build on its success, Noble RV has been marketing itself forcefully year-round on the Internet.
Parts Manager Chris Helgeson talks with customer Curt Spatneka about the details of some parts.
Technician Randy Draper works to replace the roof on a motorhome. Noble RV has six indoor and six outdoor service bays where it is able to do nearly any type of repairs, excluding transmission and engine work.
Technician Doug Bjorge installs a fifth wheel hitch in the back of a pickup truck. Noble RV stopped selling new motorhomes in 2008 in order to focus on towables
“Right now the Internet is the most important place to market yourself,” Mike explains. “People comparison shop. New owners go to the lowest-priced RV dealer – and some are willing to travel thousands of miles to do that.”
The brothers also use TV and radio advertising sporadically to promote special events every year, like their anniversary each April.
Still, the brothers recognize that word-of-mouth is perhaps the most valuable advertising tool, and they strive to offer customers the best service possible.
“We go the extra mile for people,” Patrick says. “Our relationship with a customer starts when they drive out of our lot.”
To Noble RV, running a top-notch dealership means having a nice-looking facility, stocking quality RVs, having a sufficiently stocked parts showroom, operating several service bays, and having a talented sales and service staff.
The dealership offers a large selection of towables from Thor and new subsidiary Heartland RV.
“They (Thor) have been around a long time and have a great reputation,” Mike says of the dealership’s reason for carrying the manufacturer. “We knew they’d be there when it came time to do warranty work. They are national, which is good for our customers who have trouble on road.”
For similar reasons, Noble RV carries several travel trailers and fifth wheels from Forest River, along with some less expensive aluminum campers from Livin’ Lite.
Noble RV tries to have something for every customer, from lightweight campers retailing for $5,000 to high-end fifth wheels selling for more than $80,000, although most of what Noble RV sells averages about $24,000, what Mike calls the dealership’s “sweet spot” in the towables market.
“We want to appeal to the majority,” Patrick says of the dealership’s inventory selection. “The majority of our focus is on towable business. A lot of people already own a tow vehicle (here) in the Midwest.”
The dealership merchandises up to 225 RVs during the season, and the company’s goal is to turn that inventory three times a year.
Creating an Inviting Environment
As for Noble RV’s facility, the dealership has a modern and inviting look. Its’ 3,000-square-foot retail show floor offers all of the basic necessities and then some, to the tune of $150,000 in parts and accessories.
“We stock as much as we can,” Patrick says. “You can never stock everything, but we try to stock all the standard parts. If you break down on the road, I want to try to have as many standard parts as I can to get you back up and running as soon as possible.”
To service RVs, Noble RV has a dozen 50-foot service bays: six indoor and six outdoor. With these bays, trailers can be pulled in and there is enough space to pull out the slides to work on them. There are indoor heated floors and, of course, the necessary dump stations.
And to work on customers’ motorhomes and towables, the dealership employs six technicians, paid on an hourly basis. The technicians do not work on engines or transmissions, but are able to do most other repairs. The dealership is in the process of getting its employees – technicians, as well as parts and warranty specialists – certified.
The end goal is to be able to give customers the whole package in one location, according to Patrick.
“We built a very nice facility for parts and service,” he says. “We are a one-stop shop: we can do everything here – from sales to credit financing, to reselling units, parts, accessories and service.”