#20 - George Mammarella - BHPH Master

Hello and welcome to this episode of the Independent Dealer Podcast. Today we have a real treat. An old friend of mine, George Mammarella, I would call him a buy here, pay here master. That is the phrase that went through my brain the entire time we talked.

Luke.

Boys and girls, this is something every buy here, pay here dealer needs to stop what you're doing, listen, and you got to take notes. You're in the car, pull over to the side of the road if you're on best, if you're in your office on this one, we're going to go over customer advocacy, making sure you get the customers the car they need. Talk about retirement exit strategy. One of my favorite things that came out of it was poor paper is not profitable. Listen to that one, guys, and control your debt, push referrals. He's going to tell us how to be profitable and do the right thing.

When it comes to buy here, pay here. Welcome to the Independent Dealer podcast, the podcast for auto dealers to learn and grow together. Here are your hosts, Luke Godwin and Jeff Watson.

All right, George, let's reboot this now with us today. George, of course, I've known him for about nine years. We were in a 20 group together. Just a wealth of knowledge, the things that he got done as a dealer and his attention to detail and just a world class A operator. George, share with us just real quick, how did you get in the industry? What kind of a dealership did you operate? And a little bit about how you got out and what you're up to now.

Well, actually I never planned to be in a car business. Wasn't in the plans at all. I had a restaurant, a little ice cream parlor on the side, also an apartment complex with a partner, he had a bar. And one day we were sitting around playing with some numbers and figured out that we each had three vehicles, three plates and registrations plus insurance. And we probably saved money actually getting a dealer's license. So we went and got a dealer's license. We bought a old muffler shop, $50,000 with 5,000 down and 500amonth land contract, and went to our first auction, a little two lane auction up in Mishawak, Indiana. And this was in 1989. And I was simply amazed because I'm walking in here and here's all these cars going, $100, $200, $300. So my arm had a nervous twitch and we were just buying left and right and ended up we bought about 14 cars, spent around 2,900 bucks and they were real jewels I mean they were Renault's alliances, they were citations, Chevettes, things like that. Well, the auction was about an hour and a half from my lot and you could find your way from the auction to the lot by the trail of broken down cars. So anyway, we sold cars, cash for a short period of time and just cheap cars. And at the restaurant my employees started wanting cars and they wanted to take payments out of the paycheck. So I started getting a little bit better cars and given to my employees because you don't want to, you know, give your employee a bad car and take money out of the check. And then other people started asking all of a sudden I said this is the way to do it. You know, buy here, pay here was not real big around then. There was no buy here, pay here dealers by us. That's basically how it got started started. I booted my partner out because he, he didn't want to start getting better cars. He just wanted to get make the most money for each car he could. We all know that if the car is not running they're not going to pay. So you can't get those cheap cars. So we started to grow and it went pretty good. Put in perspective is the demographics of our area. Our town is a county seat and it's got less than 4,000 people. The county has just over 20,000 people. And the 20 group used to always joke about me being on a sticks and nobody understood until we had to take a video of our stores as one of our homework times. We took video of our property and everybody saw that we were simply sitting in the middle cornfields. And even a article in the Dealer Business Journal when I was a 2012 Indiana Indiana auto deal of the year. The author talked about going by the place and 50 miles an hour on his little two lane highway. And all of a sudden out of this cornfield popped this lot and it disappeared again right away. So our demographics were not really there for a successful operation. So we had to look, think outside the box stuff like that. But the biggest break was in late 2005. I met Chuck Bonanno and I joined a 20 group. And that just really, really opened my eyes. I mean it was just, you know.

Just kind of winging it and just kind of invented it on your own.

Well, everything. They didn't have all the resources, every form I had to make up practically. They didn't have a regular dms. My payment method was that people would give me a $60 payment. I take a post it note, put the name and the amount and fold and stay in my pocket. And then I go home at night and I would put it on the ledger cards. This is a different generation. You got to think. You gotta remember that. So. But I embrace a 20 group completely. I mean, I had improving ideas. Etwenty group isn't all just about big earth shining ideas. It's taking your existing ideas and making them better by sharing with other people. And oh, this guy's got this little clause, and this one had that little clause and putting them together and making whatever your, your program is better. But the 20 group is great. And the thing about the 20 group is I learned as much from the failures in there as successes, because there was a couple epic failures in the 20 group. Early times. When I first looked at my first composite, there was this one company that I just wanted to be. They had 700 accounts of this, you know, great. That company, a few years later went under because they changed their model. They started doing a bunch of CAC. They thought it was great. I'm getting $2,000 cash profit up front. But they didn't look at their own composite to realize it was costing them 27, $2,800 per car to sell. And it was a downward spiral. Every meeting they would have less receivables because they were cannibalizing receivables to support the unprofitable retail end. And this company that was, was a fantastic company just disappeared. That's just one example. And I never would have thought that could happen. That made me very cautious. But that's, that's, that's basically, you know, how I got into the business.

So you kind of fell into it by chance, joined a 20 group, and you weren't in a, you weren't in a real, you know, easy market. So talk maybe a little bit about that. I mean, when you, some of these dealers, you think, well, you know, I'm in a small town and it's hard for me and I don't have a big customer base and blah, blah, blah. But, I mean, you did it right in a very small county. What did you end up growing your receivables to? Or what were your kind of average sales numbers?

Well, toward the end, stuff like that, I was averaging 350 or so new deals a year, you know, 30amonth on average. I had some months. I had one good tax month in February for like 65 sales. But toward the end, when I started selling off the accounts, I had 650 accounts, active accounts, only about 50% of my business. Was actually in my county. All the rest was in the collar counties. And you got to remember back then, Biheepejia was a neighborhood business. You didn't, you know, you like to sell to somebody in your town, in your neighborhood. People didn't buy your pay. Dealers didn't sell cars to people two and three hours away. Back in the day, you were physically making payments.

There wasn't ACH and credit card and.

Yeah, you know, you can do that. But back then, anybody came in and paid 9% was cash. It was a totally different, different animal.

So, George, it's funny, you and your business and our business are very similar in numbers. And, you know, Jeff's. Jeff's young and he doesn't rem. The times where you took payments and wrote it on the ledger card and you had to flip through the book to find out what the payments were going to be and all this and that. I've always admired people in the small communities like you're in that have gotten that big automatically. You think that, well, I'm in a big city, I should sell more cars than someone in the small town. But even in South Carolina, there's a lot of rural areas, and I've seen dealers like you and those small demographics just grow up and get real big. That speaks, I think, a lot to how you're treating the customer. You want to walk us through that a little bit?

Well, customer retention is definitely the keystone of our business. If you're in a large city or a large population area, you've got an unending supply of customers walking by. When you're in a small town, you're limited. And the other thing is that somebody who loves you is going to tell a few people. Somebody who hates you will tell everybody. So you have to really treat your customers well. We treat them like, oh, that was our most important asset. A lot of dealers don't look at it that way. I mean, they just looking at. To just put iron on the street. We had a lot of programs. We had on time payment programs. Every time you made your payment on time, you got a ticket and a drawing. Each month I pulled for $300 gas cards or just $100 gift cards. Sometimes we switch it up and make $650. And whether you called it in, whether it's recurring payment, because toward the end, almost all of our payments were recurring. But at that time, everybody would come in, but we'd have all kind of other drawings, TVs and stuff like that. We'd randomly take every few months, go out and get a bunch of car wash cards and $10 McDonald's cards. We sent them out to 60 or 70 customers. Mostly the ones who mailed in and stuff like that we didn't see all the time because those customers we'd give stuff to. We had things like Saturdays we did our oil changes. We had free oil changes. So we have our two base set up just for oil changes. Saturday we put out donuts and coffee and stuff. And the place was full of people on Saturday coming in to get their oil changes.

Wow. Did that convert to a lot of sales doing that?

Well, that, that actually did. And the biggest thing that did was our low balance customers. Low balance customers. I would actually send out an invitation to come in for an oil change, free roll change or for like a service, a winter rise. And while they're there, they said, oh, look around the lot. You want to go get some lunch somewhere? You want to, you know, go in town, take this truck, take this car. And we would be able to talk them into trading back their car. And at the same time, while the car was in the garage, we'd be able to look at it and say, hey, is this car a retail car? Is this an auction car or is this a parts car? Yeah, so that we'd have a really good car. That the guy was a low balance customer. I would do anything to trade him out of that car, put him in one of nicer vehicles. I know he was worth the. Worth it. And then take his car and put it at a more at risk customer to try them out rather than have to go and buy new inventory. So we would use these customer retention programs as ways to get them in and push them off onto newer and better vehicles. That worked very well for us.

Yeah, that's. Everybody just let's stop. Everybody stop. Write that down. Whoever's out there listening, write down what.

He just talked about.

He talked about low balance customer and about getting them in for free oil changes and swapping them. Because that is. That's probably one of the best things that's ever been said on here.

Yeah, so much money.

That applies to the retail guys too. I mean, you don't have to just look at low balance. You can look at term. You know, if you know that you set that guy up at a 36 month loan through credit acceptance, you need to be remarketing that guy at, you know, month 18 or month 20 or whatever it is. Either way, you know, get them in.

Well, one of the secrets of growing accounts is you have to have both long and short term, if all of your accounts are short term, you're hardly going to grow. You're going to be spending too much time replenishing the accounts that are paying off each. But so you have to get the long term. But the long term comes a lot of risk. So that's why, you know, we prefer to do the long term with customers that, that, that we already had a track record with. You know, so back then when I was into it, 18 months was like a long term, you know, 12 months. 18 months. But I would do a good customer. I put them out on a three year. Yep. You know, and toward them. When I got, when I was getting out of the business, I had 48 month terms, not a lot of them, but on the nicer trucks and stuff like that.

And that's, that's what we've evolved from that from, you know, from the 18 to 24 months. Now we're averaging 44 months and you can see your portfolio grow for sure at that point.

Yeah, it's just a matter of like say you got to get the, I mean so many people think it's not rocket science, it's X amount of accounts bringing X amount of dollars per month, period. It's a cash flow business. You know, you could sell tomatoes, you could sell cars. It's the same thing.

I would prefer if I could sell tomatoes. So George, now I know you had some circumstances come up and you decided to exit the industry completely. There was no real, you know, you didn't have someone to pass it off to or the succession plan didn't work for you. But maybe sum up for us real quick. I mean, how did you exit? What did that look like? I think sometimes the buy here, pay here dealers, we just keep grinding and grinding and grinding and we never think, well, where am I going with this? Like what's my end game? How am I getting out? Or how am I getting free someday?

Well, the exit strategies are very important and very difficult. First of all, almost all dealers think their accounts in a business are worth more than they are. What a lot of people don't realize is that your customer base, your accounts, once you stop selling, once you're pulling out of the business, once you say that, hey, you're not able to come in here and get free or discounted repair work done. You're not going to come in here and, and swap and trade up things like that, your accounts start dropping like flies because that's what keeps people coming to you. So my situation was we had been discussing ways to get out of the business. And I actually did a trial selling of some accounts just to see how it worked. And it was basically a nightmare. I got very good money for it. It was like 84% upfront advance. But the customers, every one of them was unhappy because they didn't want to go to another company, stuff like that. Right after we did this trial my wife comes down with cancer. And it was bad that, you know, she was not given a good outcome for this which fortunately she is remissioned now and everything's going fine. But at the time we had to get out of the business and had to deal with her situation. So I immediately started marketing my accounts. I closed the business down to like roughly eight months, did four more rounds of sales and each round went down because the. And I have several different companies I marketed it out to. They look at the risk involved. And nowadays there's so much litigation, stuff like that. So first of all, if you do anything with your accounts as far as passing a payment or refinance or something like that, those nobody wants to buy because you know, because of compliance. So you know, the first round was like 84%. The next round was like 80%. Then it got to like 77%. Then it got to 75% because as they bought deeper and further into the accounts they were getting more long term accounts which had more risk to it versus short term and such. But anyway, so basically what I did, I just put them out, put them out there. And I spent eight months doing everything I could to help these cut these customers transition over. But we still had a lot of custom. When I closed the business down, I still had about a hundred accounts that they would not take and the customers couldn't pay off. So then I Simply actually about 130 accounts. I put my rented a little office at a body shop that did a lot of business with me and had my collector work part time. They just collected these accounts and they collected for about another year and that was it. And finished them up, gave them all big discounts. You know, if I would have sold those accounts for a 30% discount, I was giving the customer 30 to 40% discount to pay off, just to clean them up. But we ended up exiting and got out. The only thing I would tell people, if you're ever thinking about exiting at some point in time and selling accounts, you need to start a few years ahead of time making sure everything is super clean. Every I is dotted, every T is crossed, no combining vehicles on contracts, no passing payments, no refinancing no, because all that stuff they don't want to touch.

Well, they, not even. You're talking about passing payments. You're even talking about like payment deferrals. They, they won't even touch those.

Yeah, I had, I had some, I really fought with them about. And they ended up having customers sign affidavits and stuff like that because when they put in, you know, I did defer a few payments people, but when they would put in the contracts in the computers, right. They would start from the beginning. So if you defer three payments, it would show them three payments past due. Ah, calling these customs that repo the car because of three payments past due. And I was spending so much time intervening and stuff like that was crazy. But the first round there was hardly any compliance. They, they liked and they took them. But as the rounds got more because of what was going on in the industry and losses out there, the compliance became, I mean they would check, they would go through, pick out the accounts pass and okay, these were going to buy. They don't want their compliance office. And compliance would go through with a fine tooth comb, everything. And they got so strict just over the difference of about a year. The strictness was crazy. How they changed that was because of big lawsuits that had popped up.

It does seem like if you're going to sell out the best, you know, you really do have to time it with the economy.

Right.

Because good times and there's bad times and you don't want to be, you know, I think about yourself and some of our other friends and in that group that had sold their accounts and you know, you guys had timed it on the upswing and if you tried to do that now or in a bad economy, you'd be getting much less than 70, 80 cents on the dollar.

Oh yeah, it's. Yeah, it's gone up and down a lot. And I was lucky that I sold mine at a good time. And my accounts, with the exception of the ones that I had done some passing payments with strong accounts. And again, they also look at if you've got a Ford Taurus out there that the customer owes you $8,000 on and it's a thousand dollar hooptie at the auction that goes into Formula 2 as far as what kind of percentage they're going to give you. So it's not just dollars and accounts, it's your collateral. If you've got your customers totally upside down and stuff, they're not going to pay you for that.

That's right.

So George, from my Standpoint in interacting with you. I mean, you're such a wealth of knowledge. And I know the industry's changed quite a bit since you've been in it. So with the exception of some of those new technologies and this, that and the other kind of nonsense that's going on these days, what. Give us a couple tips. I really like to say, man, George has been there. He's been through it. Like, what would he do if he were starting a dealership today or maybe he was still in the business? What would you tell us? Get started. Do this sooner, do this now, and not 30 years, 40 years into your business.

Well, the tips, I guess you might say probably a little different than what you would expect. I'd say, first of all, be an advocate for your customer.

Okay?

Be an advocate for your customer. You know, they're your biggest asset. There's certain things I see dealers doing that I think are crazy. One, old age units. How many customers do you see have a unit sitting on the lot as old age? So they give a $200 spiff to the salesman to get rid of that unit. If that unit's sitting there, there's a reason. Take it out, drive it for the week, and drive it home. You're gonna find it's a pos. But yet you wanna push that onto a customer who you want to stay loyal and be a good customer. So things like that. Doing situations where tax time customers come with big down payments, so you put them in a car that's not right for them, the payments are gonna be more than they can handle. Stuff like that. You know, be an advocate. Put your customer in the right car. Little things like green. My customers had to drive a long way to work, and I'd have customers come and they want that nice big Dodge ramp pickup truck. They didn't realize that's going to cost them a hundred bucks or more. We can gas, and there was no way they could afford to pay that gas plus their payment. So even though they had the money, they wanted that car, you would make sure that the talking to them, that would work. Part of our application process was we actually had a budget. We would go through with a customer line for line. And I can't tell you how many times I have a customer sitting there and I explain, hey, you've got $1,500 coming in, but you've got 17 going out and you want to add a car payment and, oh, I think I can make it. Well, no, you can't make it. But a lot of dealers will Put them in a vehicle. So you have to be an advocate for your customer. You know, some of the do's, for example, get them a car, Try to get in a car that they like. My area big cars were the quad cab 4x4 trucks, third row seat SUVs. I mean, these people, a guy in his truck, I mean, he gave his truck more attention than he gave his wife. So if you're able to put them into that kind of vehicle, you know, your gross might not be as good and you might have a little bit longer term. But that guy's going to take care of that vehicle. He's going to pay for that vehicle if he absolutely can, and he's going to maintain it. He's going to do the oil changes, he's going to do the service. So you try to put him in a vehicle that they really want. The worst customer is a guy that comes in, says, I need something. The cheapest job in the life, get me back and forth to work. Because no matter what as he's driving that, he's not going to like that car. He's not going to maintain it. It's going to come back to you. He's not going to brag to his neighbors and friends about it. So even with every time we sold somebody a quad cab 4x4, we would blast that thing over Facebook, blast it everywhere. He'd blast out and then we'd get all these calls, oh, do you have more of those trucks on there? Because my customer that time typically couldn't afford that kind of vehicle.

George, let me ask you a question on that real quick, because I sell a lot of trucks and a lot of stuff that other buy here, pay here, don't do. And I totally agree with you. Walk us through the fine line because, you know, somebody might say what you said is a little contradictory, but I know you've been in the business and I think I know where your answer.

Is going to go.

But there is a fine line between the cars people like and the right car for that customer. Can you, can you go over that and kind of distinguish how we know what. What is what there?

Well, you get, the first of you have the right car for the customer would be a car that's going to fit his needs. Like I said, if that customer is driving, you know, an hour and a half to work each way, you don't want to give him a Dodge Ram that's going to cost them more in gas in his car payment. Right. You also wanted them something they can maintain. There Was a whole list of cars we would not sell because we would do the warranty. We want to make sure this cars are maintained. And certain cars we all know are prone to issues. So we wouldn't want to get the customer involved with that. And we had, we'd have things as crazy as I can. One time a guy came in, he bought a, this was, this was a long time ago. Bought a Fiero, little two seater Fiero before everybody found out what that those were, you know, flying bombs. But anyway comes back in because with his wife, she doesn't matter, they had her. He didn't tell us he had two kids. So I mean, you know, so you know, you have to talk to your customer, find out what their needs are. And you can't always make it perfect. You know, sometimes people driving down the street, they never slam on their brakes and pull into your lot to look at that 05 Taurus. You know, they're going to come and look at the truck, SUV. But sometimes the 05 Taurus is what that customer needs. Agreed?

Yeah.

So it has to do with interviewing and getting to know your customer, not just trying to push them into something. Also always give them a choice. I hate it when you go to a car lot. Here's what I can give you. This one here, no, here's four I can give you, here's five I can give you. Which is going to work best for you. So another thing we would do a lot of times not to push them in the deal that day, you know, you know, maybe get a deposit, go home and think about it, make sure, hey, take the car home, you know, if it's somebody, you know, live close by, make sure it was a deal. You don't want the people to regret buying that vehicle afterwards.

I agree. Did you ever have any three day return policy or anything like that?

Yes, we did. And that was just practicality. And actually would even go more than a three day. If a customer came back, was unhappy with the car five days a week, two weeks, three weeks later, they were very unhappy with that car. First of all, if it was a mechanical issue, I would, you know, fix or trade them out of it. But secondly, if it was just something did not like the car, your chances of collecting for that person over the next two to three years, almost nil. So you might as well, you know, either take them out of the deal and if the customer was just somebody who was too hard to deal with, send them down the street or put them in something else. It was totally crazy to try to keep them in that car that they were going to be unhappy with.

You know what I'm really, what I'm getting from this, George, is you functioned. I mean, you were in the community, it was a small community. And I know you were involved with a lot of other groups and activities and events outside of just your dealership. So George's reputation mattered. It mattered. If George put you in a car that wasn't right or that you had any kind of buyer's remorse, you were going to step in because what you wanted was a, you wanted a customer for life and a friend. And secondary was you making a couple of bucks on selling a car. And I think that's something that, I mean, all of us need to have that mentality at our dealership. We all need to have a small town, you know, your reputation matters type mentality. Regardless of whether you're in downtown Dallas and there's another customer every two seconds coming along, or you're in the rural, rural area where you only have 20,000 potential people to sell to.

I think it all comes around. The dealers who like to take the shortcuts, like to get the huge grosses, it comes back and haunts them. They don't collect on those grosses a lot of times and stuff. Give you a good example, those of you who are in the business 20, you know, 8, 2009, when everything came crashing down, that was a terrible time. Our industry in our area was basically steel mills, mobile homes and modulars and auto and all fields industries got hammered. The county, two counties from us was the highest unemployment county in the country and had two visits by the president during that period of time. Well, we had customers dropping like flies. It was a very scary time. The first three quarters of 2008 were the best quarter they ever had as far as selling. The last quarter, everything started nose diving. In 2009, we had so many people losing their jobs or going from a $2,500 a week job to a $1,300 a week job. These are people we knew, we dealt with. We had virtually no chased vehicles. We had a lot of drop offs and a lot of money gave back to the people. We would refinance them, we'd cut the payments in half. If they had two vehicles from us, one for the husband, one for the wife, we combine them to one smaller note. There was some medium to low balance accounts that we looked at and said, look, just give me 100 bucks a month because what did I want? I didn't need all these vehicles back on the lot. The auctions had nosedive in value, so I wasn't going to get anything at the auction for them. So instead we work with the people. You know, what happened after that when got back into a couple years later and when subprime started coming back, we started getting a lot of those customers back. And even if we didn't get them back, they were referring people into us. We kept that customer, you know, and we lost a little money during that period of time. But like I said, it wouldn't have done us any good to yank all those vehicles in. Instead, let's work with the customers that we already had because the customer was more important than the account, individual account, and that ended up working out for us. But it was a scary time going then for, you know, if you weren't. Weren't there, how fast things went south.

Mm, I agree with that. It was, it was a scary time. And, you know, we ended up getting a lot of good customers out of that time. And we grew our business during that time because we were in a little more stable economy than a lot of other places. Like, like what you're dealing with there in Indiana. And exactly what you're talking about is, you know, you have to work with that customer. Even when the economy goes south, you can't really, you can't expect your customers to do more than what they can do. And you working with them, I'm sure that generated a lot of, a lot of goodwill and let you grow after that economy changed.

Yeah, that's true. Very true. Luke. Another point, I guess the second point would be sort of selfish, I guess, but this is a reality of life is you pay yourself first in business. You're not, you're not a charity. You're there for a reason. You pay yourself first. That means by having regular paychecks, setting up a 401k or simple IRA or other retirement plan as soon as you can fund it, getting either an offshore warranty company, cpi, debt cancellation, something like that, to start funneling money into, to preserving it. You know, it's hard for a lot of dealers to wrap their head around putting money aside and something that's going to get a 5 to 12% return when they can put that money in inventory and get in. Once all the charge offs are done, expenses are done, maybe 25 to 35% return, it's hard for them to put their head around that. But you have to pay yourself first and put some money aside separately and it's as a safe haven because you never know what's going to happen with business, with the economy and stuff like that and a lot of these situations, you know, it's a lot better than what you would think, say a offshore warranty company. You're not like when I had mine, I was saving 30, $40,000 a year in taxes. Plus when I cashed out at the end I had over $600,000 I was able to take out totally tax free because the deductions I got for selling my accounts at a discount. So it not only saved me money and saved me taxes, but also got every penny back.

Man, you and I, you and I are like identical almost in our thought process.

Yeah, you know, a lot of people, I can't afford to do it right now, but you start small, start 300 per cap per unit or 200 per unit, you know, and then move your way up. But, but like I said, so many people, they just want to bury the money in inventory.

Yeah.

And I guess go ahead.

No, it's like you were saying, you pay yourself first and you're forcing yourself to save in a way, you know, and whether that's by putting in a reinsurance company or putting it, you know, towards the mortgage on your lot or putting it towards maybe some other, you know, car related or non car related investment, but you're going to learn to operate on the remaining cash flow.

And if you're having a program like that, use it. I know a lot of dealers who do have an offshore warranty company, they never put anything through it. Now our claims ratio is like 40% because we put our oil changes through it changes. We did everything and we, we basically, you know, you know, warranted everything on the vehicle just about. And a lot of the customers, a lot of the other buy dealers out of 20 group would say that we went too far with that. But again I was looking at the end results, you know, getting the satisfied customer even they moved on to cars better than we had. They would send the neighbors in, the kids in. Our biggest thing was co workers and stuff like that. But the other thing would be on somebody new. Getting into business is don't become intoxicated with sales and growth. So many people come in and boy, I gotta grow, I gotta grow. I gotta get my second store and third store and I've gotta, I've gotta get 300 and 500, 600 accounts, you know, don't become intoxicated because Buy here, pay here is one of the few businesses out there that you can actually sell yourself broke. A lot of people don't realize that. And it happens all the time, all the time. You know, grosses are really overrated. What you pocket after tax is not, is what's important. And poor paper is not always profitable. There's odd examples. How about that, Our rent to own dealer that was trying to come in our group one time, he thought his receivables were so, so popular. We were sitting on talking, he had people owing him nine and ten thousand dollars on thousand dollar hoopis. That was the bulk of his accounts. And you know, we tried to explain him, you will never ever collect that money, you know, but he didn't, didn't understand that, you know, control your debt. You know, just because you're offered, when the times are going good, people are just throwing money at you. So just because you're offered a one or two million dollar credit line, you don't have to take it, you don't have to use it. Debt ratio is something that is very important. I remember back and I think it was 2006 or 2007 at the Lidum convention in Vegas. They had a topic called ask the experts where they have a panel of top buy here, pay here dealers up there and you ask them questions and I asked if they had debt, what the debt ratio was and I was floored because they ranged from 35% to one deal had actually 80%. And then the collapse came, you know. And then in 2010 I was at another conference, lead them conference and I asked the same question and the panel at that time the answers came back 10 to 40%. So they learned a lesson because when the market went down, your receivables were worth maybe 50, 60 cents on the dollar if you were lucky at that time. But if you owe 70 cents on the dollar, you're bankrupt. And they didn't realize that. And so a lot of big companies, big companies, Ray Lyle, anybody who knows about one of the biggest buy dealers in the country, it imploded. You know, they didn't realize that. And so the fact that just because you are offered credit doesn't mean you have to take it. Try to grow as organically as you can. Sometimes credit is good. We had credit line we would use simply to buy extra inventory for tax time. I would always try to get that paid off within so many months after tax time. But you know, some of these floor plans and stuff where you're, you put yourself at risk, you can grow fast when things are good, when things are bad, it can come around and bite you.

I'll tell you the wealth of Knowledge you have is so important for people who are currently in the business and people who want to get in the business. Man, I tell you, this is awesome. Jeff, Jeff, you were lucky to have George in your group for so long.

Yeah, George was always a sage of wisdom, and it was one of the guys you always tried to position yourself next to during the dinners and the lunches because you would want to, you know, try to pry as much information out of him and get educated. And as he says these things, I specifically remember conversations and settings where he.

Said, jeff, get out of debt.

Get your debt. You know, your leverage ratio down. Don't do this. You don't worry about this.

And look at this.

And, man, it's just. It's invaluable for us to be able to look at people who have been where we are going and learn from them. You know, you don't want to have to learn these lessons. And that's one thing that George mentioned before. The technology that we have, from the Facebook groups to the conventions to the 20 groups to this podcast, I mean, so much more than what everyone had 10, 20 years ago. You didn't have this kind of communication and information sharing. You were learning it on your own. You know, you were. You were taking the lumps because you did what you didn't know.

The tools you have out there now are fantastic. I mean, it's a real game changer. I wish we had that back when I got started and getting involved in some of these training programs in the 20 groups and the tools you can. Somebody new coming into market can learn in a couple years what would take somebody else like myself maybe eight, ten years to accumulate. So, I mean, the curve has increased so dramatically. And the 20 groups, I mean, I love the 20 groups. The composite time, it always used to kill me. The deal is in that every 20 group has few of these dealers in it that would fudge their composites. They didn't want to look bad in front of people. You know, we're not doing it at all. Be brutally honest in your composite. It makes you embarrassed, makes you want to. Want to do better. And our 20 group was very good. We really had a good group. And we would really, you know, go after people if they were trying to make excuses. And we also mentoring on our group, we had several different deals. I mentioned stuff like that. But, you know, we would call people on something if they said that I couldn't do it because of this reason we call them on it. We had a very good group. And I watched Jeff's a perfect example how his operation changed and grew in a few years. We were in a group together. It was a remarkable metamorphosis.

Well, George, I appreciate that. I really appreciate your time today. Thank you so much for joining us. I mean, we could do this for hours and hours and hours because there's so many topics that you have expertise on. But thank you for your time. Any parting words of wisdom for us?

No, not really. Just, again, take care of your customers, treat them well, and again, push referral programs. My biggest thing I did was referrals. We had so many referral programs. Push referral programs. And mine. Your database, every one of you has hundreds, if not thousands of old customers are paid off. Customers that you can go back to, whether it be with newsletters and special offers, stuff like that. That's a huge resource, too, is our database. People lose track of what a great resource that is. Even if they don't buy from you again, they know somebody who will buy. You give them a card, say, hey, you bring in a customer, we're gonna give them 250 bucks off the car and give you a $250 spiff. You know, things like that. So think outside the box. Awesome.

George, thanks so much for your time.

Good to see you again, Luke. Nice meeting you.

Yeah, nice meeting you, George.

Thank you, Sam.