January 2015, Vol. 70, No. 1
Features
Lenny Sadler: Sound Business Decisions Still Relevant Today
EDITOR’S NOTE: This is the first installment of an occasional series focusing on what has become an essential marketing and support segment for underground construction contractors – effective, efficient, service-oriented dealerships.
In August 2014, Lenny Sadler began his 43rd year as owner of a Ditch Witch equipment dealership.
When he arrived in West Texas in 1972 to take charge of the small sales location in Amarillo, he was 24-years-old, the youngest owner of a dealership in the growing Ditch Witch distributor organization. Forty-two years later, Sadler is one of the oldest active owner/managers in terms of longevity of any dealership in the worldwide Ditch Witch dealer network.
From a small Quonset-type building on the West Texas plains with a modest inventory of parts and three trenchers to sell, Sadler’s company, still based in Amarillo, has prospered and grown, today owning and operating two additional Ditch Witch dealerships in Wichita, KS, and Grand Island, NE, with a branch in Gering, NE.
“Youngest to one of the oldest – from then till now – seems as if it happened overnight,” reflected Sadler. “It’s been a heck of a ride that’s been fun and satisfying and I’ve enjoyed every day. I can’t imagine doing anything else.”
Ditch Witch equipment (part of The Charles Machine Works organization) has been a large presence in Sadler’s life since he was a child.
“In the early 1950s, my dad [J.D. Sadler] was working as a bookkeeper for an oil company in Stillwater, OK,” Sadler said. “He learned of a job in nearby Perry, and in 1954 was hired as bookkeeper for the Charles Machine Shop. There about 10 people working there at the time.”
A few years before, the owner of the company, Ed Malzahn, had invented the world’s first compact trenching machine and they had begun selling the new product. However, the shop still depended on oil field and farm customers’ business.
“As a child, I remember my older brother, Mike, and I playing in boxes at the shop on Saturday mornings when dad had gone in to catch up with work,” recalls Sadler.
“But growing up, I really didn’t give much thought to the company my father worked for. His job there provided a good life. Dad stayed with the company becoming treasurer and was CFO and secretary-treasurer when he retired. We grew up doing what kids usually do, and through high school I always worked summers on farm jobs.
“It was hard work, but I liked working hard. I learned working hard was what you did and I grew up expecting to work to achieve what I wanted in life. I truly believe the values I learned in those years played an important part in the success of our business.”
Market growth, opportunities
Meanwhile, the market for Ditch Witch trenchers was growing and the decision was made that dealers were needed to sell and support the product.
In 1959, Sadler’s uncle, Russ Sadler, opened the first United States Ditch Witch dealership in Oklahoma City. While attending Central State College in nearby Edmond, OK, Lenny Sadler took a job with his uncle, working days at the dealership, going to school at night.
“In 1971,” Sadler said, “my uncle opened a branch in Tulsa, and he asked me to manage it. So we – wife, Linda, and son, Bret – moved to Tulsa and I was in the Ditch Witch business.”
Sadler found that managing the Tulsa branch might be not what he wanted to do on a long-term basis, and on one of his frequent trips to Perry to pick up parts, he was visiting with his father, Sales Manager Dwaine Goldsberry and Bill Haynes.
“Someone asked how things were going in Tulsa,” Sadler said. “I replied, ‘good,’ but that I wasn’t sure I wanted to stay there for a long period of time.”
Bill Haynes suggested Sadler take over the dealer location in Amarillo, which was not doing well.
“I didn’t have any money, had no credit,” said Sadler. “I had never been to Amarillo. But the idea was appealing. To make a long story short, the company’s bank in Perry loaned me $25,000 with my father as co-signer.
“I made a life-changing decision without really considering the pros and cons about what was the best thing to do. Throughout my life, I’ve continued to make major decisions quickly without over thinking what was best. For me, it’s always worked out well and my wife, Linda, has always been with me 100 percent every step along the way.”
Two weeks later, Sadler was in Amarillo. Driving from the wooded, green Tulsa area, he found himself looking at a small, Quonset-type building on the flat Texas plains. The company’s inventory was a small stock of parts and three trenchers, a used M4-22 walk-along model and two riders: a J20 and a V30, a four-wheel-drive model with brake steering like a skid-steer loader.
Leaving his wife and son Bret in Oklahoma, Sadler started sleeping on the floor of his one-room dealership. He went to the YMCA to shower and prepare for the day. Sadler’s daughter, Toni Len, was born a week later.
“I worked in the shop mornings to take care of the little business we had,” Sadler said. “In the afternoon, I made sales calls. My first day in business I sold the M4-22.”
Making the model successful
In time, he found a rental house and moved his family to Amarillo. Sadler was on his way and Ditch Witch of West Texas was growing.
“I paid back the $25,000 loan in 10 months,” Sadler said, “and was making enough to stock equipment and parts. The first year, sales were $80,000. I got into the rental business renting used equipment that always seemed to break down, so I quickly got out of that.”
In 1976, sales topped $1 million. “We had three employees,” said Sadler, “and constructed the building at the location where we are today. My younger brother, Tony, was in school at Oklahoma State and was undecided about his future. He came out to stay with us and decided to go to work in our business. Tony left to work at Ditch Witch in Perry for a couple of years, then came back and has been with us ever since as service manager.”
Through the years the Ditch Witch product line changed with more models, bigger more powerful models, multi-task machines with attachments that let one machine do several underground construction jobs.
“When we got started, we sold trenchers – vibratory plows were in much demand here,” said Sadler. “A primary customer base was rural telephone companies and they remain an important part of our business today.”
Horizontal directional drilling (HDD) came along in the early ’90s and many dealers across the country found HDD the primary driver of their business with the telecommunications boom bringing rapidly-increasing demand for directional drills.
“The telecom boom never really came to West Texas,” said Sadler, “and we didn’t experience much demand for HDD equipment. We have flat, wide-open spaces here with no large urban centers, so the benefits of directional drilling didn’t apply at that time. Most underground utilities continued to be trenched or plowed in. Our customer base had broadened to include electricians, plumbers and some landscapers, but rural telecom still was our mainstay.”
Sadler observed other dealers experiencing tremendous growth in HDD demand, but it was passing Ditch Witch of West Texas by. However, that also meant the dealership didn’t experience a huge drop in business when the telecom bust came in 2000.
“It really didn’t affect us,” said Sadler. “We never experienced the boom, but were spared the bust that affected so many in our industry. And during the 2008 recession and difficult times that followed, our business remained stable.”
HDD arrives
A need for directional drills finally arrived for Sadler’s dealership when regulations were enacted to prohibit cutting across farm-to-market roads, and rural telecoms began boring road crossing and then water crossings and other applications.
About 2005, an unexpected factor began to affect HDD demand. Trenching across farmland displaces topsoil and fertile topsoil is necessary for crop growth, Sadler explained.
“Farmers began to demand that to cross their land the top soil must be preserved, because it takes many years for new topsoil to develop,” he continued. “That means either double cutting – digging one shallow trench through topsoil and saving it to put back in place; then digging deeper trench to put in pipe; filling the deep trench and replacing top soil. Directional drilling eliminates double cutting, saving time and labor costs.”
Ditch Witch of West Texas continued to experience steady growth through the first decade of the 2000s, but Sadler credits a shift in the company’s business model with significantly altering the company’s path.
“My youngest son, Jake, joined the company in 2001 after graduating from Texas Tech University with a degree in business and finance,” Sadler said. “He soon suggested we should get in the equipment leasing business. I knew nothing about leasing, but I said to develop a plan.
“We found many potential customers couldn’t justify buying equipment – especially larger machines – but they could afford lease payments. They would lease a machine they needed for a project for 30 days which often turned into 60 or 90 days. When that job was finished, they had another one ready to go and needed the machine. Often the lease was extended to the point they felt they had too much in the machine to turn it back, so they bought it.” The leasing operation has succeeded beyond expectations.
Expansion
“In 2012, Jake and I purchased the dealerships in Wichita, KS, and Grand Island, NE,” said Sadler. “The Wichita location required a lot of work: among many issues, there was a NDS business system that wasn’t being utilized to its potential, and no accounting or cost accounting systems in place. Jake moved to Wichita, put a new business system in place that was compatible with the factory for ordering equipment and parts. In April 2014, we went live with a PFW business system with all locations using it. It was a tremendous and time-consuming process.”
A new facility also was constructed in Park City, KS, with the grand opening ceremonies this past June.
“Everything is state-of-the-art,” Sadler said, “and we’re told it is a flagship facility, an excellent model for building a new dealership.”
The Nebraska operation didn’t require as much attention. “An excellent manager was in place,” said Sadler, “so we put in new business systems, hired new people and all is going well. The branch in Gering is running smoothly. Plans are to build a new facility in Grand Island, and we have the location in a business park and plan to build in 2015.”
Recently Sadler spoke to a group of business seniors at Amarillo College. As owner of a successful local business, the students listened to Sadler’s account of how his equipment dealership was started and how it prospered. He told them about the snap decision to come to Amarillo with no money, no credit, only a $25,000 loan cosigned by his father. He told them about sleeping on the floor as he got the one-man business up and running.
“They couldn’t believe a business could be started that way,” said Sadler. “One student asked, ‘You didn’t get the demographics, run data on Excel?’ No, I said, there wasn’t an Excel then, but I didn’t gather any information about the market – I just told myself I was in, and I’ll make it work.”
Near the end of his presentation, one student commented: “There’s really nothing relevant in what you’ve said that could be used to launch a business today.”
“I agreed that what I had done wouldn’t work today,” Sadler said. “Nothing wrong with gathering facts, studying the market and analyzing data. And certainly today a substantial amount of money is necessary to establish an equipment dealership.
“My response regarding relevance was that going forward in life, there are opportunities and you must be able to recognize and accept them. “Over thinking can result in missed opportunities. The real keys to operating a successful business are the same today as they were when I got started and throughout the growth and evolution of my company. They are a passion for what you are doing, honesty and integrity, hard work, making sound business decisions and always addressing your customers’ needs. These essentials haven’t changed, and they are not going to change.”
FOR MORE INFORMATION:
Ditch Witch Undercon, (866) 445-8807, www.dwundercon.com
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