#207 - Budgeting for 2022 Rollercoaster

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hey, welcome to another episode of the Independent Dealer Podcast brought to you by Buckeye dealership consultant Jeff. What we got today?

Today we are going to talk about budgeting, budgeting, forecasting, and your gross profit margin goals for the year, your net profit goals for the year. Every year, right in the beginning, we try to talk to you guys about making sure you got a game plan. You don't know where you're going unless you got a roadmap to get there. So this is my wife.

This is why my wife always brings this crap up. I just like to budget my pants.

And go, yeah, Luke's got money, he's going to spend it as long as the account's in the black. So last year we did episode one 52. It was episode 152 last year and we did some sales forecasting and some budgeting. This one's going to be very similar, but we're going to talk more about gross profit margin goals, net profit goals, so you can follow along with us. We've got a spreadsheet that we're going to have on our website. You want to go to the independentdealer.com scroll down. You're going to see both of the spreadsheets, the one for last year and the one for this year. You can listen to both episodes and kind of combine them or use them separately to make your own forecasting goals. But this one will be on there. It's going to be set up, episode 207, expense forecasting, 2020. So we're going to do a screen share. We're going to walk through this with you guys. So if you're on the YouTube channel, you're going to see what we're talking about. If you're listening, we're going to just try to explain this in the most high level kind of explanations as possible so you guys can all kind of follow along and do this at home. Cool.

This is so important. And so it took us, we've been in business 36, almost 37 years, Jeff. I think it took us 25 years to figure out we need to do this. So dealerships out there that aren't doing it, you've been in business and you're making money. You know what, that's fine. But this is like a next level step, Jeff. And if, if young dealers can learn how to do this early on, you won't go through some of the heartache and a heartburn that, that we had over the years.

Yeah. And if you're in a 20 group, you're doing this monthly, you're reporting your numbers in the composite, but it's more historical. You know, you're talking about what you did and you're looking back. So this is going to be more future. You're going to say, hey, you know, let's use some assumptions off what I've done for the last, you know, two years, one year, 12 months, whatever it is. And then I'm going to look into the future of 2022. Where do I see this heading? Am I going to be growing my sales? Am I going to be taking a concerted effort to increase my gross profit or my net profit? And how am I going to get there? That's the biggest thing. We got to have a goal. And then we got to break it down into steps. Monthly, semi, monthly, however you want to do it in order to get to that goal. So we have these actual action plans. Hey, man, guys, my gross profit is horrible. Or hey, my overhead per car is ridiculous. My personal expense is ridiculous. Whatever it is that's out of whack, we got to know what it is so we can get there.

You know, it's interesting. You know, dealers are just one of a kind breed, I think, and it takes years to become businessmen, if you understand what I'm saying. Typically, car guys, the evolution is slow, maybe because we're just brain dead or something.

But we got a lot of exhaust fumes we've been bringing.

Oh, yeah. I mean, it must be standing in the night cell too long anyway. But I remember going to conventions early on when I, when I, you know, when I just kind of started this. And I would just say, yeah, I'm going to sell 45 cars a month next year. But I didn't have a plan to get there, Jeff. And so without a plan, we kept selling 18 cars a month. Right. And not until I understood. And Tracy Myers, we talk about a lot, is someone who really helped me understand that is that everything happens for a reason. And if you don't plan to get somewhere, don't have a plan to get there. You're not going to get there. And so that's what this is. It's a plan to control your expenses and to grow your sales, if that's what you want to do.

Yeah. So before we jump into the screen share and start talking about the numbers, just real quick, you guys listened last week. We still have our standing offer. If you leave us a review on itunes or Spotify at And then send us an email to infoindependentdealer.com we will jump on and try to help you out in your business. We'll do a Zoom meeting, 30 minutes. Talk about your business. You ask us any questions you have. We can look at financials. I mean, we are by no means experts, but we can look at things with a fresh set of eyes and maybe help you get to that next level, whatever it is. And if you want to go over this sheet with us, we'll go over the sheet and we'll talk about where you're at, where you're going, and how we think you should get there. So just use this as a resource, right? Leave us a review. Use this as a resource. We appreciate the couple people that have done it. And so we still got some openings. So jump on. Leave us a review.

Sounds good. Let's roll.

Here we go. So with the screen share again, if you guys are on the YouTube channel, you'll be able to see this. Luke, you see it?

I got it, buddy. I got it.

Awesome. K. So guys, we're going to just kind of go through these and talk about these in kind of a very high level. I don't want to get bogged down into the numbers, but.

So in other words, you don't want me to talk.

Let's keep it as much general as we can so that all dealers can kind of appreciate this, whether they're following or whether they're listening. It's more so important to understand what goes into the number than what the actual number is. Because obviously all of our numbers are different, right? Yep. Hey, everybody, real quick. It is the middle of tax time. We are filing taxes. Everyone should have their W2s in their hands by now. Most everybody. This is your opportunity to be getting your money. Now don't wait for the tax man to distribute the cash to people. Hopefully you're all signed up with Tax Max. Hopefully you're running their first quarter program right now and you're getting hands on the money.

It's a. It's a great thing. Don't let you know, these people spend their money within 48 hours. They spend 98% of what they get in their hands. And so remember that the only way to get it quickly is to get it printed with a Tax Max check or one of those credit cards. Right, Jeff?

Yep. It's not too late. You can call the guys at Tax Max. They can have you up and running within the day to be filing tax returns. They'll overnight you the debit cards or the check stubs and you print the money out in your store. It's not often that we're printing checks. We get a deposit. Normally we're printing checks that someone else deposits. So your, your printer is going to be a little confused, but you will print it and you will deposit it yourself directly that day, especially if you're using the refund advance program, which you should be doing right now. So reach out to the guys at Tax Max and we will get back to the podcast. So to kick it off, we're going to break this thing down monthly. I've got a sales goal here, so we're just going to talk about what the very first number we want to know is. How many cars do we want to sell? Right. Because that's going to factor into a lot of things and most of it is our either gross profit per sale, our overhead per sale, our expense per sale. A lot of the benchmarks that we talk about are broken down by per sale. Right. Because that's essentially the size and the scale of your business, right?

Yep.

So you need to know how many cars you're selling now, how many cars you anticipate on selling and why you want to get there, you know, or why you want to go down or up or stay the same. And this is going to apply whether you're buy here, pay here, whether you're retail, subprime, whatever it is, Right?

Yep.

So we're going to start off with our sales number. I'm going to walk you guys just through January. It is what it is. I say 40, just so we can kind of hit in the middle of all dealers, big ones, little ones. Now our total sales price plus add on, this is going to be just our out the door sales price. Right. Basically our total sales volume. This I want you guys. This number could be broken into like five or six lines, right, Luke? I mean we typically, typically is doc.

Fees, aftermarket products, sales price of the car, any ancillary products. So yeah, this is a bunch of different things, but this is a total of everything.

Yeah. For the sake of argument now when you guys download this document from the website, feel free to make it your own. Added a bunch of lines here and say, hey, yeah, I'm going to break out my buy here, pay here sales. I'm going to break out my retail, I'm going to break out my ancillaries, I'm going to break out my doc fee. I've got some ridiculous $3,000 destination charge that I put on every car, whatever it is, you know, and that accounts for everybody. So if you're making a ton of money up front as a buy here, pay here, and you're tucking all the, you know, profit into your upfront margin and you're giving away a bunch of stuff for free, or whether you're more of like a V auto type model and you're making $500 upfront, but you're making another $2,000 on the back end. This, for the sake of argument, is going to wash all that out in one number. Next line, Luke, is going to be our cost of goods sold. Now, for the sake of argument, Luke, what should go into that?

The price of your car recon and the cost of your ancillary aftermarket products?

Yep. All the same stuff. So this is going to be anything it takes you to get it to the front line. So we want to see whether you use an outside shop and you're paying retail for all your repairs, whether your, you know, your transportation is being charged to the car, which it probably should be. Your detail, your mechanics, wages. My argument that that should all go into cost of goods sold.

Luke. Yeah, that's. Yeah. I mean, you know, we get split hairs there, but we don't need to because that's. That's the basis of it.

Yep. So that's going to get. You use your rough, rough gross margin and what's. Well, let's add in our. I got two more lines here for my wholesale gain and loss and then my other income. So we're going to have some wholesales. I don't know. I seem to lose on all mine. Luke, I don't know if you win on wholesales.

I have been lately.

Okay, so that could be a wash at the end of the month. And then your other income is going to be anything else. Right. I mean, maybe you rent out a space to somebody. Maybe you have a service shop. Right. Luke makes a ton of money in service. I do not. I lease a small portion of my car lot to a billboard. I get paid monthly to have a billboard on my car lot. You know what I'm saying? That's part of my operations, in my opinion. I'm going to put that on there.

Yeah. And, you know, go ahead. So. So that gives us the gross profit, total revenue. And so we talk a lot of times in car business about gross. Well, this is. This is gross, right? You know, you talk to other businesses and everybody is talking different, you know, different, I guess, nomenclature when it comes to this. But this is the gross we made on the Cars.

Yeah.

And this is a real number. So, you know, if you. If you don't look at this, if you divide those numbers, that gives you a $5,000 gross profit, which is really freaking good. Jeff. Per car sold.

Yeah. Yeah. Based on my numbers, that's probably a little healthy, but the benchmark goal is 40% gross profit. Based on that.

Yeah, that seems reasonable.

Yeah, that's what you should be shooting for. So, all in cost of goods sold, based on your sales price, all your ancillaries, everything washes out. 40% is a healthy gross profit margin for our industry. I bet a lot of people are not there, and there's probably some other folks that are over that. You know, I think if you're a heavy buy here, pay here, you could probably be over that. If you account for some of your expenses differently, you can manipulate that number to get there. But all in. You want to be somewhere in that 40% ballpark.

Yeah, I think so. I think that's because you're going to end up with about 23 net. So that seems about right.

Yeah. And we'll get to that number. So next, this spreadsheet has us lay out all of our direct expenses. So now we all know we've got direct expenses, which are expenses that are what we call variable. Right. They are based off how many cars we sell. Those are going to include the things like your salesman's compensation, your advertising, your recon that you might not have included in cost of goods sold, any warranty or goodwill. Those types of expenses that are going to be variable based on your volume.

Yeah, and that's, you know, that is a big expense. People don't think about it a lot of times, but the more cars you sell, the more commission you're going to have. The more delivery expense you're calling here, miscellaneous recon, it's going to be there. And the more goodwill you're going to have so that that number goes up proportionally to the amount of cars you sell.

Yep. So benchmark for that is around $1000 a car per sale. I think it's like 1100 bucks or something, depending on, you know, which group you're looking at or time of day. So you want to be somewhere in that thousand dollars on your variable expenses. Next, you're going to have other kind of personnel expenses. Now, typically, these wouldn't. They're definitely not going to include your salesman's commission. Those should be separate. But you're going to talk about all your staff, you know, your title clerk, your lot tech, your you know, maybe management fees, your F and I guy, some of those things that are maybe going to be more of a fixed type personnel expense.

Yeah, well, these expenses, these wage expenses don't make you any more money. You got to remember that they in the buy here, pay here world, they may help you keep the money that you think you've made, but you really need to think of this as something you want to try to try to keep down as low as humanly possible. Because they don't help the plane fly, they just kind of weigh it down a little bit.

I like it. Yeah, that's definitely a good way to look at it, is what are these necessary operation type people I need, you know, and my benefits, my health insurance, my, you know, 401k, any of these things I'm doing to kind of keep. Keep the wings on, as Luke said, you know, kind of keep the plane. Plane going.

But Jeff doesn't pay payroll taxes, so he's going to go to prison and it really doesn't matter.

Yeah, I got a big fat zero in there and two reasons for that. I actually use employee leasing, so I don't know what my payroll taxes are. It's all in one big lump sum that I paid at my payroll company. And I don't give anyone benefits. Actually, I should put a dollar in there because we do provide soda pop to people. So.

Soda pop, where are you from anyway?

So. So look at those personnel expenses. It's very easy to look and say, what's my payroll? What are my benefits? What am I giving people? That also is about in the thousand dollar area, you know, give or take. That's kind of the benchmark. About $1,000 per car. Sold. Now we talk about fixed expense. Luke, what are our fixed expenses at our dealership and how do we define those?

You know, the biggest one up front I always think about is rent. I know it's a little bit further down there, but that's a huge fixed expense. The utilities are fixed, your insurance are fixed. Office supplies, interest if you're, if you're using a line of credit or whatever, travel and entertainment, professional training, Jeff. And that's something we really talk about a lot and it's something that has to be budgeted, right?

Yeah, yeah, good point, Luke. And while you mentioned that, obviously we need to plug one of our great sponsors, Buy Here, Pay Here United. So when we talk about training and we talk about training expenses, this is one that's going to be worth it to you. Book it now. Buy her. Pay Here United. Coming up in Las Vegas. Get on and get signed up.

Actually, they just, they just released the agenda this morning in the email. If you hadn't seen that, go check it out. April 10th through the 12th at the Bellagio in Las Vegas. They got a great rate. Won't cost you much to stay overnight. It's 499 for first attendee and 199 for each additional. I've seen the agenda, Jeff. It is great. It's going to be dealer led and it's something that will be there and we hope to see everyone here, there as well.

Yep, yep, yep. So great friend and sponsor of the podcast. So make sure you're budgeting for that education and training expenses. That's something that you should have continually. And whether that's, you know, going to 20 group, whether that's going to the conventions and whether that's, you know, consulting with people. It, it pays huge dividends, right? It does, it does other expenses. Now, some of these could be arguable that they're variable, right. You'd say, oh, they're gonna be sell more cars, then I have more office expense. And if I sell more cars, then I have more this, that or the other. Or my, my software provider charges me more once I hit a new tier.

They're marginally, you know, marginally.

Marginally variable.

Variable. So I know that's a crazy way to think about it, but then, you know, it's an expense you're going to have each month where you sell cars or not. Right. And so you just got to plan for it. And these are ones that will put you out of business. Just remember that. Because if you, if you assign too many things and you're not making, you're not selling up cars to pay them, you're. You're going to go out of business.

Yep. You could look at it like, hey, any of these things have a contract? Am I signing a contract on any of these? They are definitely fixed because you will be paying it for 12 or 18 months or 20 or whatever it is, regardless of whether you sell two cars or 200. Right?

Yeah. And you know, floor plan expenses, Jeff, you know, they can eat you up because of your sales flow. Then they're there and they go up, but it's still a fixed expense. So you got to keep these things in mind. You don't want to, you don't want these fixed expenses to creep up too high because that's when you really get in trouble.

And this makes me think, I think this should be a solo A standout podcast episode and definitely a 20 group exercise that I would like to see us go through is pull up your credit card statement, pull up your bank statement, and highlight every single recurring charge that you have on there, put it into a spreadsheet, and then sit down with your people, your manager, your controller, your wife, your receptionist, and say, what are we using? And are we using it? And do we need to continue to use it? And then dig in deeper and say, yes, I am using this software provider, but am I using all the features that it has? Am I paying for features I'm not getting, or am I not using the features that I'm paying for that I didn't know I was. I mean, I'm just thinking now I've got multiple booking tools. You know, I've got like three different ways to log in and appraise a car, and it's ridiculous. So I need to look at each one of those, and I guarantee you I've got, you know, a thousand more dollars. I could shave off my monthly budget.

And I guarantee you people out there have things that they don't even know they have and they're not using them. You know what I mean by that?

Yeah, absolutely. You're some shop manager at some point signed you up for Mitchell or all that, or some random site because they needed some schematic and they didn't know that it was recurring and you didn't pay attention. That was recurring. And you think they're every single week and the new guy doesn't even know he has a login to it.

Absolutely.

A hundred percent. That's going on right now in the majority of dealerships. So that's a whole separate exercise for another day. But it's something interesting that you could track and say, whoa, whoa, whoa, whoa, whoa. My fixed expense is way out of whack. Here's my goal to get it into line. I'm going to look at each one of these line items. My software, my auditing, my dues and publications, you know, my travel, my entertainment. I'm going out to eat. I'm buying food for the whole lot every single Friday. How did that get out of hand? You know, when did this become like steak and eggs? Everything go.

I just. I just had that discussion this morning.

Jeff, by the way, about buying food for everybody.

Yeah.

Is this with your family or with your work?

No, with my work.

Okay.

How much I spend with it?

You're going to keep buying food for your family? That's good.

I'm going to keep buying that's excellent.

Okay, so that's going to bring us down to our total expenses. We're going to add all three of those line items. Right. Our direct expense, our personnel expense, by the way, fixed expenses, also runs about $1,000 per car. Sold. Right. That's benchmark. So it's super easy to remember, guys, $1,000 for your direct expense, your variable, $1,000 for your personnel, and $1,000 for your fixed. That's pretty much benchmark. Purse car. Sold. What does that mean?

So if I'm making $2,500 a car, I'm going out of business.

I am going out of business. Right. If you are a small, average size dealership, if you are benchmark, if you are average, you have got to GROSS at least $3,000 a car. And that's a very easy thing for dealers to translate. Right. Super easy for me to know that, to look at all these numbers and know where I'm going and what I'm coming from. But just to know, man, $3,000 only covers my nut for the month. That's a daunting task.

Yeah. And, you know, it's something that you could. I see dealers run into this problem, Jeff. They buy a car and they sell the car and they make $1,000 and they think they've done something. You know, if your volume's high enough, you have, but if your volume is not and you're having to sell that car to pay off a floor plan to do this and you think you've done something you really hadn't. So you need to know these things right off top of your head. You need to know what you're doing and how much everything's costing to do.

So we bring that down to our bottom dollar. And now I threw on a couple extra lines down here. You're going to have your net income, but I've also added in a finance charge earned. So if you are buy here, pay here, or if you're getting, you know, any other kind of income, we're going to throw that in there. If you've got it, you can account for it. Kind of helps you from. I mean, this isn't really a budget on cash flows so much as is a budget on expenses and gross margins.

Yeah. One thing we do need to say, though, buy here, pay your dealership is a little different. So you could essentially break even on the sell the car and expenses. And if you're making money in interest charges, then this, then you're making money. So you just need to make sure that you know what business you're in. If you don't have any other extra income, then you have a problem. And that's where people, people fall in trouble.

And I would say also vice versa for that. If you're a buy here, pay here customer, you could be making a ton of money up front in your gross margin. But after your repo losses, you're not making anything happens.

Happens all the time. You can sell your way out of.

Business all the time and you think you've got these huge gross margins, but you're not collecting it because maybe you're put make your burdening the customer with a ridiculous payment or whatever the reason is. And some people do really well with a high margin, high repo rate, and they still make money at the end of the day. So that's why I'm saying let's factor those in from our finance charges earned. But also we need to factor out our bad debt, which would be as a buy here, pay here dealer, your repo loss. As a subprime lender or a retail lender, you've got lender fees. So if you're sending everything to CAC or labelle or Westlake or any of these other guys that are getting you hitting you with some big discount fees, you need to account for that too, because again, you thought you made $5,000 on this car. They hit you with a $3,000 lender fee. They're only cutting you a check. That's barely keeping the lights on at the end of the day. Right?

Yeah. I mean, it's. There's so many things that go into this, Jeff.

Yeah. And you could, you could be like, well, I've got a reserve pool, and once I get to my pool, they're going to start paying me out.

Never count on that money.

Yeah. A, I hope you make it there. B, there might be no money once you get there.

So there's so many dealers out there in that situation. And I think the best thing to do is make sure that if you, you are a CAC dealer or Westlake or whoever has those reserve pools, that that is not money you count on because there's so many stories of, of dealers never seeing that money and you need to make it here. And if that other money is just gravy is what I'm trying to get to.

Yeah, yeah, that's a smart, smart opinion. And the other thing we talk about too is, you know, this would probably back up more to the income and the cost of goods sold side is, you know, to plug our Guys, Buckeye, hopefully you are taking some of that expense and putting it in your own pocket, Right. You're getting discount from the lender and they're keeping that in their pocket. That's a discount. Now, if you're reserving expenses for yourself and you're putting it in your reinsurance company with Buckeye, that's a hard expense and that's coming off your P and L and these, you know, projections, but it's staying in your pocket. So when the day comes where you have a reserve, you can lend that back to yourself.

Yeah. And that's, you know, the greatest thing about reinsurance. We talk about this so many times, and Buckeye Dealership consultant can help you with this, is that it will lighten your load on your taxes because you get that direct expense, it allows you to put money away for the future. And if you do it properly, you know, maybe, maybe you can break even but still have a bunch of money for the rest of it for the rest of your life. So do it the right way. Get a reinsurance company and don't give this ancillary money away to other companies.

So that leads us down to our very bottom line. Net operating income, you call it by a bunch of different things, depending on how you did your calculation, your ebitda, the money you have left at the end of the day to pay yourself, to reinvest in your business, to pay down your line of credit, to pay off your debt, to expand, to do all those other things with and healthy net operating income for a dealership benchmark is in that 20% area, Luke?

Yeah, I think so. Our benchmark is 23.4, I think, and I hit pretty much, pretty much at that number for the end of the year, 26 maybe. At times it kind of fluctuates. But, Jeff, I got a question for you on this, because this is something that I see problems a lot when we talk about personnel expense. Are you putting your salary and my salary into that?

So that.

Because it needs to be there. And I'm going to argue this point.

We would argue this point and say you, if you're paying yourself, you have to be paying yourself a reasonable salary. So that's, that's concrete. That is 100% there. You cannot be running and operating a business and not paying yourself a reasonable W2 salary. Right?

A hundred percent.

And that could be 50 to 60 grand, let's say. Right? Well, what?

Well, let's do this. And this is the easiest way to, to think about it. If you had to go Hire yourself. What would it cost?

Okay, at least, that is an hour.

At least $15 hour. But that is your benchmark. Okay, we just talk about benchmarks. You've got. Let's just say I have no salary built into this projection myself for myself. Okay. And I think everybody out there is probably should be paying themselves close to ten grand a month or so. Right. Depending on how big your operation is. If it's a smaller operation, you're probably not doing that. But if you're a mid sized dealer and you're doing all the work, you're buying all the cars, you're doing recon, you're selling some cars, that's a big number. Right. So if you don't figure that in there, that 15% net profit that you think you have is not 15% net profit. Yeah, it's much lower than that. And so you think you're making money, but what you've done is created yourself a job. Yeah.

That leads us into a lot of different things we talk about, Luke. You know, the quote is, run it like you're gonna sell it. So budget it like you're gonna sell it. And that would give you a more accurate EBITDA number to say, okay, as a functioning business, yes, I've accounted to replace myself at 100,000 a year in order to give someone as competent to me to take over all the tasks that I'm handling that should be budgeted into a functioning car lot. If you're saying, hey, for tax purposes, I'm going to pay myself the minimal amount acceptable W2, and I'm going to take the rest as a draw, that's completely fine. That's up to you. But make sure for budgeting purposes, you're putting it all in here so that we can really look at apples to apples as far as this investment. That's investment. And what your actual net income is.

And Jeff, you know, just off the top of my head, if I wanted to budget this out for a whole year, what's the best way to go about doing it?

Meaning what?

I mean, if I wanted to forecast the rest of this year, what my actual expenses can do, I average that out over the last three months. I mean, how do I decide what's the best way to go forward, in my opinion?

Yeah, I mean, the fixed expenses. I know are there, my variable expenses, I would build out probably a little more sophistication into this spreadsheet and base it off my number of sales. Right. Am I growing? To me, that's where it all starts. I Would go back and say, what is my growth goal for the year or not a growth goal for the year? And then I would start off maintain. Yeah, I would start off that number of. Okay. It all starts with the sale, which we know starts with the buy and the recon. So I've got some constraints there, but that's where I would start it. And then I'd budget down from there and say, these are going to be variable and they're going to go up. If I try to increase sales, I'm going to have to add an employee, which, to Luke's point earlier, you're not going to increase sales and then add an employee expense. That employee expense is going to come a month or two before your sales actually catch up with it. So keep that in mind that you're going to be paying someone or a manager once you get to a certain level that either isn't producing or isn't producing yet.

Yeah. One thing I ran into this past year, Jeff, is that all of our expenses went up, and they went up a lot. Did you experience that? Anybody else out there experience that?

Because I'm sure expense went up drastically.

Personnel expense went up drastically. Recon, I mean, for the most part has gone up because parts have gone up. You know, all these things that we didn't anticipate in 2021 happening, they happened. And if I didn't know where we were and I didn't look at this monthly, you know, because our sales. Our sales are flat or if not lower than 2020. So I've got to keep my finger on this. Even though we've been in business as long as we have, there's something I still have to look at monthly and if not weekly.

Yeah. And I think you also. It's hard to. When we talk about predictions. Yeah. None of us have a crystal ball. We don't know if we're going to have a recession and sales are going to slump and we're going to have a ton of, you know, bad debt show up on our books. We can't really see that crystal ball. So, yes, we're taking the best guess, but the key is to know that you've got a buffer. And that's the point of this budgeting. If you put together an accurate budget and you look at, hey, based off what I did for the last 12 months, man, I am slim. And I could not take a hiccup in my sales or I could not take a hiccup in my bad debt expense, and I can't even afford my Landlord to raise rent on me by 10%, you know what I'm saying? Because all in my net income, I just covered my tax burden. I'm broke again. So this is good. So you can see. You can see where your buffer is and where your Runway is, and you have the ability to weather the storm.

Yeah. I mean, it's been a. A weird couple years we've had here. And if you're not prepared, and if you're not prepared going forward, I don't know what to tell you because this expenses I don't think are going down, and cars unfortunately, going to probably remain high. So we've got to make sure we. We buy the cars properly, we recon them properly, and we sell them quickly. That's the only way all this works, right?

Yeah, absolutely. So this has been a real rough kind of shot in the dark, you know, hopefully you guys have followed along through this, whether you're listening or watching on YouTube. Obviously, we are not accountants. We are not attorneys. We are not professionals. We only pretend to be. Reach out to some folks. We've had people on the podcast before, great professionals in the industry that will sit down and they'll do a forecast with you, they'll do a cash projection, they'll do a business model and plan this out for you. It won't cost you much, because think about it. I mean, if you're off by $1,000 a car or $500 a car and your overhead was 3,000 when you really thought it was 2,000, you're losing money on every single sale because you didn't spend 1,000 or $2,000 to hire a professional to help you out with that.

And if you're borrowing money to lose $1,000 a car, then you're in trouble. Also, if, you know, if you got plenty of cash, really doesn't matter, I guess.

But yeah, if you're eating up your line of credit. So reach out to the guys like cla Sanchez and Butler or Amanda Sanchez is great. Obviously. We had Chad Martin and his group, the fractional CFO guys on. That's just kind of a couple off the top of our head. If you want to go back and listen to their episodes.

Yeah. And I mean, and Buckeye with their consulting side, they can help you Niada.

NIDA people there, your state and national association. Yeah.

This is just something you can't let slide. And we preach it. And we preach it. You've got to be ready at every angle because this is not a hobby. This is not just buying and selling cars. This is your livelihood, right?

Yep, Absolutely. Luke, this has been great, man. Everybody, hopefully you enjoyed the episode again. Go to our website, download the exception excel sheet, and you can walk through this with yourself. Build it out the way you want it. Combine them this year, last year, just. Just put something together and keep it going. Revisit it monthly. Luke, we're going to be bringing some content from Buckeye Dealership Consulting deal.

Yeah, performance groups.

Yeah, we're going to be in performance groups.

Starting tomorrow. We are going to be in Phoenix at the Wild Horse Pass, and I think we're going to bring you some stuff live. Right, Jeff? So not live, but semi. Semi podcast. Semi timely Friday morning and Saturday morning when you think.

Yep, yeah, that's our game plan, hopefully.

Watch for the drop. Watch for the drop.

A lot of good stuff on our Facebook and through podcast.

And I'm sure we're going to see a bunch of people out there that we don't currently know. Okay? So you may listen to us and, you know, want to say hello. Please say hello. Please talk to us. Let's get to know you. Let's network like we normally do. But we don't know who y' all are because we can't see y'. All. Y' all can hear us. We can't see y'.

All.

So please walk up, say hello, buy me a drink, whatever. Guys and girls, thank you all and we look forward to seeing you all soon.

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