Where the rubber meets the road

Where the rubber meets the road

COMPANIES by Jean Gruss | Editor/Lee-Collier

Rick and Rosie Johnson built a chain of seven auto-and-tire stores and aim for a dozen more in Southwest Florida. They offer valuable lessons in growing a service business.

Rick and Rosie Johnson put it all on the line 10 years ago.

In 1997, the husband and wife had two children in school, a mortgage on their Naples home and just $6,000 in the bank when they both quit their jobs and started an auto repair and tire business called Rick Johnson Auto & Tire.

"Rosie, what's the worst that can happen?" Rick remembers asking Rosie.

Today, the Johnsons own seven auto repair stores and they aim to build a dozen more in the next 10 years across Southwest Florida. Their story is a classic tale of back-against-the-wall entrepreneurial guts. They invested all their savings, put a second mortgage on their house and plunged into renovating an old tire store that became an instant success when it opened.

But that initial success was hardly assured, as all but one bank turned them down for a loan. "I just went forward and didn't think about it," says Rick Johnson.

Born with cars

Rick Johnson's father, Henry Johnson, owned 18 auto-and-tire stores in Virginia and North Carolina, so the young Johnson grew up working in his father's shops. "I know how to build an entire car," Rick Johnson says.

In 1986, Henry Johnson sold his business and moved to Naples where he had bought land in the Golden Gate area in 1965. He opened two Henry Johnson Tire stores in Naples and recruited his son Rick to help him run them.

But Rick Johnson had ambitions of his own to grow the business and his father agreed to sell him the business. When the deal fell through, Rick Johnson quit to start his own company.

"I was a little bit scared," he acknowledges. In 1997, the Johnsons had one child in high school, another child in middle school and Rick had no car of his own because he had always driven his father's company truck.

The day he quit, Rick Johnson bought himself a 1500 Dodge Ram truck and started hunting for locations to build an auto and tire shop (he still owns it and the odometer reads 150,000). With just $6,000 in cash on hand, Johnson was worried he'd never have the resources to build a new store. "The doors slammed hard," he says.

Then, he discovered that a Tire Kingdom store had moved out of a leased building on Green Boulevard east of Interstate 75 in Naples. Miraculously, the owners of Tire Kingdom had not made a deal with the landlord to prevent him from renting the building to a competitor when they moved down the street to a new location.

The Johnsons determined that they needed $60,000 to renovate the store and buy equipment. All but one bank turned the couple down for a second mortgage on their home in the Livingston Woods area of Naples. "If we didn't get the loan, we knew we had to get a job," Rick Johnson says. After he secured the loan, Johnson negotiated with tire and other suppliers for 90 days' credit.

Within a month after he had quit his job and enlisted his wife Rosie in the new venture, Rick Johnson had found a store and secured enough money to open it. But he knew they had to open the store in time for Thanksgiving to be successful.

That's because Naples' population was even more seasonal than it is today and the winter residents typically returned to Southwest Florida after Thanksgiving. The Tire Kingdom store had been there for 14 years and Johnson wanted to capture their business when they returned.

Rick, Rosie and the Johnson children all pitched in to renovate the old Tire Kingdom store. "We were running out of money," Rick Johnson recalls. "We were working day and night."

With little cash on hand for marketing, Johnson bought eight one-inch advertisements in the Naples Daily News for $88. He says he got the cheapest "Golden Gate rate" of $11 per inch and ran one-inch ads for a week that said simply: "Where is Rick Johnson?" On the last day, the ad told readers where to find the new Rick Johnson Auto and Tire store.

After 38 days of backbreaking work, the first store opened Nov. 4, 1997 and was an instant success. That was a good thing because Johnson had hired two employees and he wasn't sure whether he was going to be able to pay them. "We had no cash flow," he says.

Fortunately for Johnson, many customers didn't even realize that Tire Kingdom had moved down the street. "It was divine intervention," says Johnson, a religiously devout man.

Six months later, Henry Johnson agreed to sell his son the two auto-and-tire stores he built in Naples. Rick Johnson won't say how much he paid, but says the elder Johnson still holds the loan.

Rezoning in Bonita

With three successful auto and tire stores, the Johnsons could use some of the profits to open new stores. The key was finding the right locations.

In 1999, Rick Johnson recognized that Bonita Springs was the next fast-growing area in Southwest Florida. The rapidly growing city lies between Fort Myers and Naples.

Rick Johnson found a one-acre parcel in Bonita Springs on Bonita Beach Road and he paid $140,000 for it in 1999. But it took a year and $40,000 in legal fees to rezone the property. "Every dollar we made on the three stores had to go into that fourth store," Johnson says.

Looking back, Johnson says it taught him to be extra cautious buying land that's not properly zoned. Still, he didn't regret it because the store performed well after it finally opened in February 2001. "I knew in my heart it would be a success," he says. Plus, the property is now worth $1.5 million.

Johnson continued to buy land in 2001 and 2002 for future stores, including the fifth store in South Fort Myers and the sixth store in Naples on Pine Ridge Road, where he paid $660,000 for a one-acre tract near I-75. "I said, 'Are you crazy?'" Rosie remembers asking her husband when he paid what was then considered an extravagant price for land. "I was hyperventilating," she says laughing.

"If we don't buy it now, we won't be on Pine Ridge Road and I-75," Rick told Rosie.

By then, bankers started knocking on their doors to see if they could finance future stores. The seventh store opened in Estero off Corkscrew Road near I-75, a fast-growing residential area where there's little competition.

Rick Johnson, 52, says having seven stores makes it easier to hire mechanics and if any single store performs poorly it won't have such a dramatic impact on the company. Each store generates about $1 million in annual revenues.

To diversify and boost income, Johnson is now buying larger parcels of land for future auto-and-tire stores and where he also plans to build shops and offices for lease. For example, he purchased 3.2 acres on Bayshore Road in North Fort Myers where he plans to build and lease space for shops and offices for rents between $18 to $23 per square foot. "It'll be another income stream," he says.

Future locations that appear promising include Colonial Boulevard in Fort Myers, Lehigh Acres, Cape Coral, Fort Myers Beach and Immokalee Road in Collier County.

REVIEW SUMMARY

Company. Rick Johnson Auto & Tire

Business. Auto repair shops

Key. Know a business intimately before you venture on your own.

CEO INSIGHT

KICKING THE TIRES

Rick Johnson has built a chain of seven auto-and-tire stores and plans a total of 19 across Southwest Florida. Budding entrepreneurs may want to consider his advice:

• Work for the competition and gain intimate knowledge of every part of the business before you venture on your own.

• Learn to make money for your current boss before you start your own business.

• Learn accounting. Making sales is just 25% of an owner's job. The rest is knowing and understanding the financial side of the business.

• Be willing and able to do every job in the business well. This will give you an advantage over the competition.

• Learn what it costs to build the business and how much money it will take to run it.

• Ask questions of others who have been successful and learn from them.

• Don't be afraid to ask for help, even if it's from the competition. Be humble.

Starbucks while you watch

Rick Johnson's strategy to beat the competition is to pamper customers and treat employees better.

The waiting room at a Rick Johnson Auto and Tire doesn't have your typical plastic chairs and bitter coffee. Instead, it features leather sofas, Starbucks coffee, a large flat-screen television screen, up-to-date magazines and spa-like restrooms.

Customers also can watch the mechanics working on their cars. The waiting room has a large glass window that gives customers a view of the work area.

Meanwhile, Rick Johnson has made an effort to attract mechanics with families because they tend to be more loyal. For starters, he pays them 10% more than the typical car-shop wage and they work 20 fewer hours. The stores are closed on Sundays and they close at 6 p.m. during the week and 5 p.m. on Saturdays, earlier than rivals.

What's more, Rick Johnson awards bonuses and Christmas gifts at the end of the year, matches 401(k) contributions, offers medical benefits and vacation pay.

Who says you can't be a mechanic and have a life?

-Jean Gruss