Cover Story~Al Serra & Joe Serra
Interview by Michael Roscoe
Al Serra is known throughout the country as one of the biggest and best dealers there has ever been. Recently, Al sold his dealership interests to his son, Joe. I interviewed Al and Joe to get a perspective on a classic case of "turning over the keys."
Al, how did you get started in the car business?
By accident. I was trying to find a job after I got home from the Korean campaign back in '53. There really weren't many jobs available but my father-in-law said, "Al, why don't you try selling cars?" I didn't know, first of all, if anyone would hire me, but to make a long story short, I did get a job selling cars at Fernwood Chevrolet in Ferndale, Michigan, right on Woodward Avenue. The reason I went there was because the dealer in my hometown of Pontiac wouldn't hire me because I didn't have experience. I started in November, and in December, the dealer in Pontiac called me and said that they had an opening, and since now I had experience, they would hire me. Well, I knew that, being in my hometown I would do better than in a city that I really knew nothing about. I stayed there for about 13 years. I went from salesman to assistant sales manager, sales manager, general sales manager until I started looking for my own deal, which was in December of '66.
What made you think you could acquire and run your own store?
I had come to the point where I felt I was ready. I remember Sloan Kettering, former chairman of General Motors being interviewed about his career, and they asked him, "What advice would you have for someone getting started now?" His advice was that he would buy a GM franchise. The desire was there to do it, and that advice committed me to looking for a store of my own. I finally found one in December of '65.
Tell me about it.
The manufacturer happened to be Ford Motor Division under their Dealer Development Program. Their required downpayment at the time was 20%, so my brother-in-law, Jack Cauley, who had worked for a manufacturer, had worked for GM and had some retail experience, came in as my partner. He put up 10%, I put up 10%. We went in as partners in a Ford store in Flint, Michigan, which is really a strong GM town.
We worked our butts off, to be perfectly frank, just trying to keep our heads above water. But we managed to get through that. I ran the sales end of it, Jack ran the rest of it. He acted more as a dealer and I acted more as the General Sales Manager. In fact, I worked the used car department most of my time, because that's where we had to make our money. Both Jack and I had large families; Jack had eight kids at the time and I was trying to catch him, finally did and passed himI ended up with ten. Both having large families, we knew that we would have to part ways someday, and I kept trying to contact the Chevy dealer in Grand Blanc, Michigan about selling me his store. He finally agreed to do it at a time when he was getting some factory pressure to build a new facility and he didn't want to. So I caught him at the right time and I bought the store in Grand Blanc.
What happened next?
We had to build a new facility and so forth, but we got that done and we put together a good organization and had real good success. And then I guess what the next question is, is how did I get into other stores?
Right.
Actually, I really had no intention of expanding or getting into other stores, but I had put together a good organization. I had hired young people that I worked with, trained and got them to see procedures and doing things the way I thought they should be done. They became very good managers. One of them approached me-in fact it was my nephew, Tony-he approached me about how he'd like to get into business for himself and asked if I would help him. Well, I told him I would, so we got Tony started in the business, and it wasn't too long after that that one of my other managers came to me and asked me the same thing. I thought, well, I did it for Tony, I should do it for him as well.
Now, when you say you "did it for them," that means?
I put up the money for them to get a store. So we purchased another store, put them in it, worked out a deal where they could buy in or buy out, either one, and that's how it all started. The only request I ever made of any of them was, you can't go until you've got somebody that can fill your spot. And they did. They did a good job of doing the same thing that I did with them-bringing somebody in, training them and saying, hey, this guy is ready, I can go, and when I saw he was ready then that's when we did it. And I still managed to keep our own store going-and going strong.
In all cases, we tried to let someone buy in up to 20%. However, I've had quite a few of them that I would then say, "I think it's time you bought me out," and I would do that when I thought the individual was getting to an age where he's got to think about himself, usually because he had children who were old enough to get in the business. When I saw that happening I would say, "You really need to buy me out and start something for your kids."
Al, it's my experience that the dealers who were at the top of the game at one point really knew how to sell a car. What is your personal sales philosophy?
I was never what you would consider a top producer, by any means. I was a good producerthe competitive nature in me, I certainly wanted to be up at the top. But I can recall, wherever I worked there was always at least one individual who was truly better at selling cars than I was. They just did a better job and I worked hard trying to catch them. Was I a successful salesman? Obviously, yes, I was. When you get to be a dealer, you must have administrative ability. If you truly understand the business and understand what needs to be done and what shouldn't be done, then your job is to find people. I had a lot of the sales and management ability, I could certainly do a good sales training class or certainly could help the sales manager if he had a problem. But that's only a small part of the business. The other part of it is to really get to understand parts, service, accounting and try to make the whole thing into one. I really had to work hard at that and I did because I knew it was important. Today I know as much as anybody about what needs to happen in service, what needs to happen in parts, what role the accounting department can play and the importance of that department in the overall well-being of the dealership. The importance of used and, of course, the importance of new and the importance of salespeople. Someone asked me the question the other day, "If you had to pick a dealer, what background would you like them to have?" And I said, the accounting background, because with an accounting background you really have insight into everything.
You're able to manage.
That's right. What I failed to add when asked that question was, providing he has good people skills. Just knowing all about accounting with poor people skills is never going to cut it.
You'll be able to see where the problems are, you just won't be able to get them corrected.
That's right. Being a service manager and trying to run a dealership won't work, no matter how much you learn about the other departments without good people skills. A good sales manager has to learn how to develop people skills to get his team going; a good salesman has to learn how to develop people skills in order to sell cars. But I've seen those that when they go to managing people, their people skills are terrible, therefore, they never are successful.
Looking back, what are some of the reasons why you were able to grow your business to its current level?
People. It just flat comes down to our ability to hire, train and produce good people, because once you've got the person that you can expand with, and you've got the money, you just go ahead and do it. But if you've got the money and you don't have the people, you're faced with failure. Buying the deal doesn't mean it's going to work. You've got to have somebody in there who can really make it work. To think that I could make it work remote controlwell, it just doesn't happen.
Al, what were some of the biggest challenges along the way?
I think the biggest challenge along the way is really having a feel for where the business is going and trying to stay ahead of it and not sitting back and saying the business shouldn't change. I hear that often. The truth of the matter is business is always going to change and the consumer is going to demand and look for different things today than he looked for years ago. I do have to become more knowledgeable about the Internet. I do have to be more knowledgeable about things that are happening that you'd rather not see happen. We complain sometimes about what the manufacturers are doing. I think a lot of what the manufacturers are doing, we should look at and say we need to do that too. I don't mean that the manufacturers need to get into the retail business, because I really don't think that's their strong suit. Understanding we're in the retail business, they're in the manufacturing and wholesale business, and if we can keep that apart, then we've got to look at it. A big challenge today is really understanding where the manufacturers are going. If they're truly trying to find out how we should do business better, then I say we ought to do it. If they're trying to find out how they can do business without us, I honestly think that isn't going to work. But again, the biggest challenge is staying ahead of the game and changing with the times.
Al, one of the changes has been the introduction of and the aggressiveness of the consolidators, AutoNation, Sonic, Planet and such. Was there any point at which you considered that path?
No. The only way I would have considered AutoNation would have been truly if I had nobody else to sell the business to or turn the business over to. If that were the case, I might have gone to AutoNation.
One last question...what are you going to do with yourself every day?
(laughter)
Are you going to be able to stay away from the stores?
Well, I'm kind of new at this right now. I'm at that point where I've got to find something to get me up in the morning and get me going. If Joe's got a question he wants to ask me, I'm sure he knows I'm available.
Joe, let's start with you the same way I started with your father-how did you get in the car business?
Well, as you know I grew up having a father that was in the business. But I can tell you, Mike, I honestly felt that I probably would not enter the automobile business. Like a lot of sons of dealers, I did work at the dealership during summers. I was very fortunate in that a lot of the jobs were in the accounting office. My father would have me work at different seats in the accounting office, whether it was billing deals or costing out deals or helping out with inventory, whatever it might be. Then on to the cashier lane, doing the cashier booth, which looking back was one of my most fun jobsmost difficult, but most fun. I knew that I probably wasn't going to enter this business and I really wasn't sure why until after I went to college and was looking for a job. I remember, I was driving with my father in town and he asked me what I was going to do after school. My majors were in accounting and computers and I was looking at selling computer systems and a couple other things. I didn't want to enter a Big 8 firm, I already knew that, but I had decided to steer away from the automotive field. He finally tried to pin me down on why automotive didn't interest me, and there were a couple of reasons, but really the main reason was I felt I wanted to make my own mark in some profession. I always felt that if I entered the automotive industry, I would always be Al Serra's son, no matter what I did, good, bad or indifferent. I always thought I'd be looked at differently. That's why I felt the need to go somewhere else. My father understood but said, "If you're going to look for others to pat you on the back and say you're doing a good job, you may be kidding yourself. You'll know deep down inside whether or not you have earned somebody's respect." It's an internal thing versus an external thing. And that made sense to me. I can always tell you I'm Al Serra's son. That's just something that I have to accept. When you have someone of his talent and his success as your father, you're going to be his son and there's going to be people out there that will not spend the time to know you or understand you. That's just the way it is. But thank God I had a chance to drive down a road with him one day and have him knock me in the head a little bit.
So you decided to follow in your father's footsteps. How did that start?
I entered the business in '82. I started Al's little one-person management company. He was just about to buy his second store and we got to talking and I said I didn't want to replace any of his current employees because I had a lot to learn about the business. So I started in the management company. Then in 1984, Dad and the General Manager of the Chevrolet store came to me and said we probably have to switch spots. They should move into the daily role and capacity of running the management company, and I should head up the Chevrolet dealerships. So we swapped places. They went to the management company per se, which was now a four-person operation. I went into the dealership and have been running the dealerships ever since. That's what I know. That's all I do.
Joe, what are some of the similarities between you and your father?
I'm going to start by saying as similar as we are, I have tried to be myself versus trying to be him. I see a lot of sons living-up to be like fathers, I see a lot of people who try to emulate somebody, try to be somebody they're not, and that can be difficult. We're extremely alike but yet I think he has his own style and personality and I have my own. And because of that, it's easier for me to be me and it's easier for him to be him. I think the biggest likeness is we have tremendous work ethics. Not to say we're workaholics, because we're not, but we're very fortunate in that we love what we do.
On the other side of the coin, what are some of the biggest differences between you and your father?
Biggest difference is our styles. He's very forceful, demanding, can get on you really good. I'm probably not as good of a chewer because it's not my style. Another difference is more of just where the world has gone to technology. I utilize tools that weren't available to him, and thus he likes the old way of doing some things.
What would have been the most difficult thing for you to do that he accomplished?
Well, I'm going to put myself in his shoes back then at that time, all variables the same. What would I have done different, what would have been difficult for me to do? You know what though, that's a good one. If it would have been me, I don't know if I would have even entered the car business. Probably the biggest difference would have been, he's more sales-oriented, which I think back then was critical, that is really what made him a success. I'm more
Analytical?
Yes. I love the numbers side of it.
Your father is pretty focused on the analytical side as well.
He understands the numbers really well from a standpoint of knowing when to ask "why"-"why is this, why is that." He's good at that. Getting back to your question, could I have done what he did? I would like to think that I could have accomplished some of the same things, but I don't know if I would have.
How has the company changed since you bought your father out?
Overnight the company changed hands, but if you look at it from the outside, it hasn't changed. Same buildings, same names, same franchises. Quite frankly, same management in place that was here before I acquired the company. Same partners. I've got tremendous partners out there in our stores. I mean they are the best partners you've ever seen. So everything works the same at the top. But the company is changing in that it's now taking on some debt that it didn't have before. Just because of that, there's some things that will have to change, some decisions that are going to have to be made because there's now another factor that's going to be entered into the equation. We might make a different decision as to help reduce the debt or reverse the debt. So that alone will force me to do things that Al did not have to do, but that's not bad. I look at that as a positive. Al always ran a tight ship, but we're going to tighten it up a little more. So that's the one thing that will be different, without a doubt, you will see some different decisions made. The other thing is, obviously we all want to surround ourselves with people that share the same values. As time goes on we'll get the team to be more in line with my vision and my goals and aspirations.
What are your plans for Serra Investments?
I'm going to be very cautious in answering this because I don't want it to look like what was in place before wasn't good, do you follow me?
Yes.
I wouldn't have purchased the company from Al and the other shareholders if I didn't think there was some potential that maybe we're not tapping. I did see some areas. I bought a company I knew. You can't get much better than that. It was a company I knew, it was a company I understood, something I had a chance to sit in and watch for years. The first thing I'm going to do is have a plan. I do and I've gone out to all the partners and shared it with them, and it starts with making sure that they understand we're truly partners. It's a different mindset. I think before with some of Al's investors in the other stores, they might have been more of an employee and Al was the investor, only because he is who he is. They respected him, he's the one who got them started. They used to work for him at one time, so in effect, he's always their boss. I want the opposite. I want to be true partners with them. I want them to look at Serra Investments as an investment company and it's going to start with making sure that our relationship is a partnership relationship. I won't do anything in the store that the two of us don't agree upon. By the same token, I'm not going to remove myself from a store. I don't want to come down and sit at a management company office day in and day out, I want to continue to operate a store, continue to be a day-to-day retailer. I do understand that I now have additional obligations and responsibilities that will pull at my time and force me to spend less time than I would like inside each dealership operation. But I don't want to lose touch of what the dealer does day in and day out. That's critical to me and quite frankly, selfishly, I love that part of it.
What about on the technology side? How are you going to take advantage of technology that's available out there?
Couple of thingsfrom a managing the group standpoint we want to manage it in-house, internally with a management company. I'm still going to have a management company, but it's going to be of a different nature. It's going to house corporate's needs, like legal, accounting, tax auditing functions, things like that. Those are things I need from a corporate standpoint because we are one big company and we need that. But other things, I'm willing to partnership up with different companies out there and I'm going to form a partnership, an alliance with them, to where they're specialists in certain things-they might be specialists in training, they might be specialists in service op, they may be specialists in parts, they may be specialists in analyzing statements. I'm gonna pull them off the shelf and utilize them in our stores. I just signed up with Dealer Service Corp. They will help me make my fixed ops managers' jobs easier by providing my people with an easier tool to use. A new tool with graphs and charts that tear it apart and enable managers to see problem areas at a glance. The service department, well, that's not my forte, right? So I need it simple, I need it easy, I need the little colors saying hey, great job but here's an opportunity area. So we're going to utilize technology like that. I don't want to name a bunch of companies and sound like an ad for them, but I'm going to pick out the best ones and through technology they can sit in their offices and tear my stores apart.
What about the Internet? What are you doing there?
I would say most all of our stores have a Web site. Depending on the size, they have somebody dedicated to handling any and all incoming communications. We have signed up with several of the agencies that supply leads.
Does each store autonomously pick their lead generators?
Right now, yes. You're bringing up an interesting topic and that is on my hit list of things I need to now accomplish, consolidating all stores.
What do you see as the biggest challenges for dealers in the near term?
People. That is all I am focused on right now. I will do everything and anything to recruit, to retain and hire the best people out there. If there's somebody out there who likes this business, has a passion for this business, I want to meet him/her, I want to talk to him/her, I want to encourage him/her to join my team. And I will show them opportunities, because I think I have a great story to tell. We're not a public company and we're not going to be a public company. We're private and we're private with an opportunity for somebody to invest with me and our other partners and grow with us. Those opportunities are not as available as they were when my father started. I'm working very hard and I go around to our different stores just trying to find out who we have currently in the organization, who have the passion and talent for the business, who want to grow, who have the desire.
Joe, are there any final thoughts you would like to share?
I was given a great opportunity by my father and the other shareholders. Unfortunately, or fortunately I guess, dependsI had to pay what the current market value was. But, I think the transaction was one that was good for both the sellers and the buyer, and for that, I am extremely grateful and thankful to all the past shareholders. The ball is in my court, I have an obligation to all the employees of the Serra organization to make sure it's as successful as it has been in the past. I want them to understand that I'm committed to do that, I will make sure that it happens.
