MTD Exclusive: Jensen Tire President Explains Why 'Cash is King'
"Cautiously optimistic" describes how many independent tire dealers feel as they move through the second half of what has been an incredibly tumultuous year. This week, MTD will share what executives from several independent tire dealerships that appear on the 2020 MTD 100 think the rest of 2020 will bring and how they are positioning their businesses for continued success.
After a few tough months, car count has picked up at Omaha, Neb.-based Jensen Tire & Auto. With 21 retail locations, the company is ranked number 54 on this year's MTD 100.
"We had a pretty good start to June," says President Matt Jensen. With the relaxation of stay-at-home orders, "I think people are feeling that they need to get out of the house. The weather has helped, too. It's been warm here."
Jensen Tire's store count remained flat in 2019. But the dealership plans to add another location next year. "We've been looking at land for quite some time," says Jensen. "Land prices have levelled off. You're not paying premium prices like you have over the last five or six years. We're highly involved with a property right now.
"But it's like anything else," he cautions. If COVID-19 infections continue to increase, "things could change real quick. You don't want to spend too much if you expect problems down the road. Cash is king."
Jensen has taken a number of steps to preserve working capital at his company. "Inventory is a big thing. We normally stock close to 40,000 tires. We don't do that anymore. We're drawing inventories down and we're turning rubber into cash."
Suppliers understand that strategy, he says. "Their business also is down. I can't imagine any (tire dealer) being up with a manufacturer. Every supplier has its quarterly objectives and most have decreased those by about 40%. Everyone we deal with has changed the targets they need to hit.
"Our big thing right now is keeping people motivated. We're getting them geared up. But we're only buying equipment as we need it. We're repairing (items) as much as possible. We're not overdoing things. We're very, very cautious."