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Pedal to the Metal, by George O'Brien |
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Jeb Balise is BusinessWest’s Top Entrepreneur for 2005
From the January 9, 2006 edition of BusinessWest
Jeb Balise started selling cars when he was 16, and he's never stopped, even though he has myriad other responsibilities as president of Balise Motor Sales, one of the largest dealer groups in New England. Balise says he's always loved the fast pace of his chosen profession - the action and the transactions, as he described it - and his success in growing this third-generation family business has earned him BusinessWest's 'Top Entrepreneur for 2005' award.
Jeb Balise knew at age 7 that he wanted to be a car dealer.
By then, he had already been 'working' for two years at the family business, Balise Chevrolet on Columbus Avenue in Springfield. His first job, he recalled for BusinessWest, was opening and closing the automatic overhead garage door during snow storms.
"My dad paid me a quarter for the effort, and I was really proud to be getting it," he remembered. "I was on cloud nine; I felt like I was part of the business."
Teen years spent handling a laundry list of duties at the dealership - from taking orders for parts to rust-proofing cars - gave Balise an added appreciation for this fast-paced profession, one that he has never lost.
"My number one love was the car business," he said, adding that this passion was also a huge distraction - in school and everywhere else. "I loved the energy, the action, and the transactions; I always knew I wanted to sell cars."
Today, Balise is still selling cars, although, as president of Balise Motor Sales, which has full or part ownership of 15 dealerships and last year logged roughly $450 million in sales, he has responsibilities far beyond matching a customer with the right-sized pick-up truck.
But that's exactly what he was doing one morning a few weeks ago.
"I got a call on my cell phone around 11 from my partner at Hampden Dodge," he recalled. "A customer was looking for a certain truck - one with an eight-foot box with an extended cab, and he didn't have one. I called my general manager at Balise Chevrolet, and he found the truck; the customer took delivery around 4 o'clock.
"I can't micro-manage everything," he continued. "But I want to be involved in enough things so I can continue to be on the leading edge; there are certain things we're doing today where if I remove myself too far from the operation, I might not be able to see new opportunities in terms of how we do business."
For his ability to see opportunities and capitalize on them, Balise has been chosen as BusinessWest's 'Top Entrepreneur for 2005.'
The award, which the magazine has presented for the past decade, goes to local business owners who best exemplify the basic tenets of entrepreneurship - business success, persistence, risk-taking, community involvement, and an ability to stay ahead of the curve.
Balise, 48, was chosen by a selection team for his body of work in the auto industry - essentially taking this third-generation family business to heights that could never have been imagined by his grandfather, Paul, who got it all started in 1916 with the Square Deal Garage in Hatfield, or by his father, Jim, who grew the family Chevy dealership and later took a huge risk himself on the then-fledgling carmaker Honda.
It was Jeb Balise who had the vision and drive to make Balise into what is known in the business as a mega-dealer, or dealer group, one of the largest in New England and within the top 70 nationwide.
Reaching this status has required a good bit of daring, some successful forecasting of the future in a business where there are no five-year plans because the industry moves too quickly, and the ability to see opportunity where others might see danger signs.
Such was the case last fall, when, after gas prices starting soaring, the bottom fell out of the used car market. While many dealers stayed away from the auctions fearing they couldn't sell what they bought, Balise instead hit the gas.
"We bought 600 used cars," he told BusinessWest. "The prices were so low, we felt we couldn't pass up such a fantastic opportunity."
As gas prices fell steadily through November and December, the market for used cars slowly improved, Balise continued, adding that most of those 600 used cars remain on Balise lots, eventually to be sold for much more than their auction price.
BusinessWest looks this issue at how Balise, by turning such apparent risks into business opportunities, has raced to the top of his profession, and how he and his team stay ahead of the curve - literally.
Previous 'Top Entrepreneurs':
2004: Craig Melin, President and CEO of Cooley Dickinson Hospital in Northampton
2003: Tony Dolphin, President of Springboard Technologies in Springfield
2002: Timm Tobin, then President of Tobin Systems Inc.
2001: Dan Kelley, then President of Equal Access Partners
2000: Jim Ross, Doug Brown, and Richard DiGeronimo, then principals at Concourse Communications
1999: Andrew Scibelli, president of Springfield Technical Community College
1998: Eric Suher, President of E.S. Sports in Holyoke
1997: Peter Rosskothen and Larry Perreault, co-owners of the Log Cabin Banquet and Meeting House
1996: David Epstein, President and Co-founder of JavaNet and the Javanet Cafe in Northampton
Getting up to Speed
Balise still vividly recalls the first time he sold a car.
He was 16, and had managed to graduate from the parts department at the family dealership to the showroom during summers and school vacations.
"I'll never forget how nervous I was," he told BusinessWest. "It was an older couple - I remember telling them I'd never sold a car before. They could see how nervous I was, and they actually made me feel more comfortable and get through it."
What Balise also remembers is that he sold two cars that day, a quick start that offered only a glimpse of future success. "Once I started selling," he said, "I never stopped."
Indeed, he didn't. Not through the rest of his high school years, or after his 'three-week college career,' as he put it, or after his family sent him away from Springfield to essentially learn the business from a rising star in the industry, Dan Quirk, who was growing his Chevy dealership in Braintree.
"I was a real pain in the neck for both of my parents," said Balise, recalling that, even at an early age, he wasn't shy about telling his father how to run the dealership - and run it better. "Ultimately, my father decided he wanted some space."
Balise soon returned from Braintree, and, over the next several years, partnered with his father in an ambitious expansion program that, as of this writing, left the company with 15 dealerships across Western Mass. and Cape Cod, two collision centers, and a Balise Dealer Services facility in West Springfield. Opened in December, BDS, as it's called, is enabling the company to become increasingly efficient through centralized operations and economies of scale (more on that later).
Assembling all these pieces and making them run efficiently and profitably has been achieved through a combination of vision, good timing, and a certain bit of luck, Balise told BusinessWest, adding quickly that the gift of vision - in a business sense - was passed down by his father and grandfather.
The latter was a farmer in Hatfield who eventually bought some welding equipment and started a small business fixing farm vehicles. As the automobile slowly became more prevalent, Paul Balise expanded the venture to service those vehicles as well. In 1927, Balise decided to expand again - into sales of cars, and opened one of the first Chevrolet dealerships in the region, in a tiny building on a dirt lot on Front Street in Chicopee. That business moved to Columbus Avenue in Springfield, when, shortly after the stock market collapse in 1929, another of the region's early dealerships, Williams Dodge, failed, and the bank holding the note asked Balise if he wanted to buy the building.
"He couldn't afford to do that, but he leased it for $600 a month, which was a lot of money in those days," said Balise, adding that his grandfather somehow gutted out the Great Depression when most car dealers went out of business.
The property on East Columbus Avenue was home to the Chevy dealership for more than 60 years. It was there that Jim Balise joined his father soon after graduating from college following World War II, and where the second-generation owner introduced the region to the Honda line of automobiles.
And it was there that Jeb Balise acquired his passion for cars and selling them.
As he said, he started working in the dealership about the same time he began kindergarten. His parents limited his work at the shop over years, however, hoping that he would focus his energies on school instead.
He didn't. "I wasn't a trouble maker by any means, but I was a pain in the neck when it came to school," Balise explained. "I was always getting detention or something. I played some hockey and did some other things, but my focus was always on cars." This fact wasn't lost on his eighth-grade guidance counselor.
"He called my mother, and said, 'for God's sake, put this kid to work and let him use up some energy - it will be good for him.'"
Thus, he started working summers and vacations in the parts department, and later moved on to reconditioning used cars. Whenever he got the chance, he would visit the showroom and soak up knowledge from long-time salesman Bob Glaser, who took him under his wing.
"He would take me to the diner, buy me a donut and explain the business to me," said Balise. "I really loved the action; I was fascinated because there were so many pieces to the business.
"It wasn't just selling new cars," he continued. "It was used cars, service, the body shop. It was overwhelming and exciting; there was always something new."
A Real Coupe
What Balise remembers most about Glaser was his listening ability. "He could relate to anyone, regardless of their age. He was a good salesman, but he was also a great person."
Balise went about emulating that style as he ventured into sales at the family's dealership, and, later, when he would continue his education (in the auto business - he tried college but decided it wasn't for him) at Quirk, at his family's behest.
At the time, Dan Quirk was the youngest and one of the most successful Chevrolet dealers in the region. From him, Balise took lessons in customer service and growing sales volume. Actually, the two shared similar views on sales and how to improve them; Quirk merely helped the younger Balise refine his ideas and, in the process, make them more saleable to his father.
"To my dad's credit, he was a huge proponent of change when I returned as general sales manager, and I had a blast working for him," Balise recalled. "Where a lot of fathers may take the approach of trying to slow their kids down, he didn't."
"He held me accountable in certain ways, to be sure," Balise continued. "But he encouraged me, gave me the tools I needed, and didn't stand in my way when it came to the changes I wanted to make."
Those changes included some adjustments in compensation policies to encourage volume sales, increasing the size of the sales force, and doubling the advertising budget, from roughly $30,000 a month to nearly $60,000.
"My father did a good job of remaining calm, but I was scaring the hell out of him," said Balise, referring specifically to the soaring ad budget. "The first 90 days (the dead of winter) were a little rough, but after that, we knew we were on our way."
The biggest change, as it turned out, was a pattern of growth through acquisition, and it developed as a form of compromise between the two. Jeb Balise wanted the family to acquire another dealership, one that he would manage. His father, meanwhile, wanted him to stay on Columbus Avenue and run what the elder Balise called the family's golden goose, one that by this time was selling 3,000 cars a year, more than double previous levels.
The compromise, as it worked out, was that Jeb would stay with Balise Chevrolet, and the two would partner to acquire and manage other dealerships.
The process started by making Honda a stand-alone dealership on Riverdale Street in 1985. Over the next several years, the company added or acquired dealerships for BMW, Hyundai, Volkswagen, Mitsubishi, Chrysler, Ford, and others. Some have been sold, most retained, some kept and moved to different locations.
At present - and Balise said he is always looking at acquisition opportunities, so things change quickly - the Balise stable includes three Ford facilities, in Westfield, Wilbraham, and Hyannis; three Saturn dealerships, in Enfield, Conn., Hadley, and Springfield; two Nissan stores in Hyannis and West Springfield; a Honda facility in West Springfield; a Mazda dealership on Riverdale Street, a Mitsubishi Fuso truck dealership that shares space with Balise Ford in Westfield; and a soon-to-be relocated Toyota dealership in West Springfield.
It might take him a second or two to recall the precise dates, but Balise can recount each acquisition or addition, how and why the deal came about, and from whom a dealership was acquired. He says that's part of an evolution in his career - from transactions involving cars on a lot, to buying and selling the lots and showrooms themselves.
Cornering the Market
The Balise dealer group now sells about 14,000 cars a year. Increasing that number on an annual basis is essentially Jeb Balise's job description.
And, while practically apologizing for using well-worn CEO-speak, he said that carrying out that assignment comes down to hiring the right people and giving them the tools they need to succeed.
"It sounds like a cliche, but it's true; you need great teams of people," he said, adding that each dealership is, in essence, its own business with its own CEO, the general manager. Balise is involved with the hiring of those GMs - as well as some other key personnel - but then lets those individuals make decisions as if they were the dealers.
Beyond astute hiring, however, managing a successful dealer group is a function of putting the right dealerships on the right pieces of real estate, said Balise, and this is often a difficult combination to achieve.
"It's easy to find a dealership, and it's easy sometimes to find real estate, but it's often hard to get the right combination," he explained. "Sometimes, you have to buy the real estate in anticipation of a franchise, or vice-versa; you buy a franchise in a bad location because you recognize that there will be opportunities to get the right location."
This is the current assignment in Hyannis, for example, where Balise and some partners have acquired a Nissan dealership with a good track record and strong potential, but are still searching for the right location on which to maximize its potential.
In Western Mass., Balise feels he has a good mix of dealerships - domestics and Japanese imports that in many ways compete against one another as much as they do other dealerships - and good locations, including Columbus Avenue, Riverdale Street, and Route 20.
Creating the right combination of makes is challenging, he said, noting that it is sometimes hard to gauge how a carmaker will fare years or decades down the road. Hyundai staged a strong comeback that some people foresaw and others didn't, he said (he sold his Hyundai dealership in an effort to create opportunities with Toyota, a decision he certainly doesn't regret), while other makers are now struggling. Choosing the right franchises and locations is often a matter of taking calculated risks, he explained.
"What's happening now is what was predicted by some pretty smart people 10 years ago - that Toyota that would become the number-one manufacturer," he said. "So we try to align ourselves with the import franchises, particularly Honda, Nissan, and Toyota."
"But, at the same time," he continued, "depending on the demographics and what the price is for a dealership, there are great opportunities for certain domestic franchises in the right locations."
Balise recently became a partner in the purchase of Hampden Dodge on State Street in Springfield, a dealership
that could fit into that category, he said, adding that one challenge for all dealer groups is to create a degree of stability and progress at one dealership before moving on to that next acquisition.
"That's a store that will require some time and effort on all our parts to get it turned around," he said of the Dodge dealership. "But it's important that we do that, for us and for the manufacturer, before we go out and look for another dealership.
"While we don't have a five-year plan, like a manufacturer, for example," he continued, "we focus on achieving the highest standards for every opportunity. While we've had a lot of growth, sometimes we actually slow ourselves down so we can get what we have on our plate up to speed before we do another acquisition."
Today, one of the challenges facing Balise is to match car makes and suitable locations with modern, state-of-the-art facilities. This process has begun with Toyota and a new, 47,000-square-foot facility now taking shape on the site of the former Riverdale Lanes bowling alley in West Springfield.
Construction began late last summer on what will be a customer-focused dealership, one with an indoor drop-off area for service customers, a drive-through facility for oil changes, and a specially designed area for picking up new cars. There is only one other such facility currently operating in the country, in Avondale, Ariz., and Balise visited it several times while finalizing plans for his new dealership.
Other new dealerships are on the drawing board, he said, listing Honda and Lexus as the next car makes in line for new facilities, in which order he's not sure. But the new facilities are just one part of the company's commitment to stay ahead of the curve.
Another is the dealer services center, a facility created to enable the company to operate more efficiently and cost-effectively.
"It allows us to do more with our resources," said Balise, adding that the center will utilize communications technology to improve service and reduce the cost of doing business.
"One example is our phone system, which we're still rolling out," he said, noting that soon, calls to all dealerships and other components of the business, such as collision centers, will go to one central reception area at the BDS. "When you have a group of people answering phones, that's more efficient than having a single dealership with one phone operator who could be tied up with one call and have two more waiting."
Similar improvements in efficiency are expected in everything from mail service to supply ordering, said Balise, who told BusinessWest that economies of scale will be needed if the company is to make the kinds of investments - such as the new Toyota dealership - needed to continue moving the company forward.
The Finish Line
Balise told BusinessWest that there are now a few accredited schools in this country where people can go to learn about the auto industry and how to succeed within it. But for the most part, this is still a learn-by-doing business.
That's what Balise has been doing since he earned his first quarter opening and closing the garage door at Balise Chevrolet in 1963.
And that learning process continues, he said, adding that this is a big part of being entrepreneurial.
"You never stop learning and you never stop looking for ways to do things better," said Balise. "That's how you stay on top in any business."
George O'Brien can be reached at obrien@businesswest.com
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