#251 - How I Built This w/ iGo Motors

Hello and welcome to the Independent Dealer Podcast, brought to you by Buckeye Dealership Consulting. This week we have another great installment of our How I Built this series, which is Luke again. It continues to be one of our favorite, best episodes. Best series we do.

I think that's always the case, Jeff. Whenever dealers or other entrepreneurs can listen to how dealers built this or how any business owner built this, it's really. It's refreshing. Some of the same people are having the same problems we have. Some of the people use the same products we do, and sometimes it's better to hear where somebody's made a mistake so we don't go and make that same mistake.

Right. Do the same thing. Yeah. And this week, so we have two of the owners from Igo Motors. Igo Motors is located in Kentucky. We were able to get Michael Meyer, the president, and Elizabeth Taylor, the cfo. So, really interesting story. You guys are going to hear on how they kind of developed this car dealership just, I mean, on the back of a napkin, from the ground up.

On the back of a napkin. They are now 2013, February 2013. They sold their first car, Jeff. So almost 10 years, and they're selling now 160 cars a month. All by locations, all by here, pay here. Four locations, five owners, which kind of blows my mind. I couldn't even imagine having to talk to five different people to make a decision. 80 employees, Jeff. Wow. That's a lot of folks working there. And a central, you know, recom facility and headquarters. Man, I tell you, that's. That's what my dream is. One day when I want to get big. I don't probably really want to get big, but anyway.

But if you did, that's a great model.

I think it's the way to do it. It's the way to do it. And I tell you, there's a lot of. A lot of good information in here. And Jeff, you know what's neat is they talk about their use of GPSs and reinsurance and these and going to conventions and things like that. You know, so many of our sponsors, that's what they're about, right? And it was just. It was great to hear them talk about those things.

Yeah, yeah. These guys are using those products that we tell you to use every single time you listen to the podcast, right. We say, get your reinsurance set up with Buckeye. Call the guys there, get your reinsurance going. It's a great way to take care of your customers. We say call Pastime.

Right.

Another great sponsor of the podcast. Give them A holler and get your GPS situation figured out because you need to protect your assets. And you know what else did they talk about this right?

It was so funny. And the other thing they talked about, they opened in February of 2013 in the Middle of tax season. And Jeff, they didn't even know what tax season was. Is that crazy? Right?

Yep. Yeah, they just happen to time it just right. And of course, you guys know Tax Max, another great sponsor of the podcast. Now is the time to get your tax program set up, fourth quarter programs running, and then obviously your first quarter program coming up where you can start filing the taxes right in your dealership. Get the money straight to yourself. So that is the pitch for our sponsors. Guys, we're not going to interrupt this podcast to give any more ads. We're going to get right into it.

You are listening to the independent Dealer podcast with hosts Luke Godwin and Jeff Watson.

So that, that's actually kind of a funny story because my background has nothing to do with automotive at all, but I was in business. So we were, we were building houses. They had a construction company here local, and we were doing general contracting and building custom homes. And so we had a lot of the guys that we hired were using buy here pay here services. And there was this one particular buy here pay here in, in our town that just had a bad reputation. And me being a business guy and, you know, I kind of hear reading between the lines, I could tell, you know, even though people really had a lot bad to say about him, he wasn't doing anything legal. He just wasn't taking care of his customers. You know, he would, he probably didn't even know the car was going to break, but he just kind of said whatever when it broke, like, that's not, you know, you bought it as is. And so one of, one of my best employees, even against my recommendation use, you know, use. This guy got a, got a car and it just, it started breaking right away, which we, we all know that happens. But it was the way that it went down that really got to me. So he, he had to put a transmission in about three weeks in which he paid for out of his own pocket, my employee. And then after that, the, the engine started, started messing up and it wasn't like it was long enough where, where neglect could have been the cause. It just was a kind of a dud car. And the guy's like, I can't do anything for you. And Josh, my guy was like, I, I can't. I already, I already spent 1500 on the transmission. I can't afford the engine and the payment. So he actually brought, brought the car back to him and dropped it off. But he, he told him, he's like, listen, just put it on my payments. Do something. I don't, I'll keep the car. I just, I literally can't afford the engine. And you know how our customers are.

Oh, yeah, yeah.

And that. So you go ahead.

I was just. Jeff, we've had several people who started out of being builders, right? There's been, well, the Watkins, he was a, he was a contractor and, and I think there was a guy down in Louisiana we had on one time that was a contractor. That's just funny that, that it seems like when people make a lot of money, then they start being, going the other way, developing and stuff like that. But I guess, Michael, you, you said that y' all got in in 2012. I mean, was the housing market going to crap? I guess, and you had to figure out something else to do.

Our local area doesn't really go up or down with the bubble so much. We're, you know, we're building custom homes for, mostly for people moving in from out of state, so everything is still cheap to them. So when you hear about the, you know, the housing market crash, you know, when, you know, it's crashing in Nashville and, you know, Atlanta and L. A, people are still moving here in a little rural town of Columbia, Kentucky. So we never actually saw a bubble, nor did we see a bust. We just.

At that time, you saw an opportunity through your employee kind of being mishandled by another buy here, pay here. And you said, hey, here is an underservice or ill pay handled business opportunity. What was the next step? Why did you even think, hey, I want to take all this good money I have building custom homes, and I want to throw it after this crazy, crazy idea of carrying.

Yeah, so I, I, I had a, I had a buddy that, that also had, had worked for me, but we grew up with him, and his brother was doing buy here, pay here down in Nashville. And so he would always talk about how that, you know, how that, how that was going. So I had heard buy here, pay here knew a little bit about it. And so what I did was I went and checked, like, how much this car cost this guy locally. And it, you know, back, back then, he actually paid about what he got as a down payment. We all know that that's, that's old school. But they were, you know, back in 2012, this guy bought this Dodge car for 1500 bucks? Ish. I don't know. But that's about what the going rate should have been at the auction. That's what Josh gave us, the down payment. 1500 bucks. So I was like, this guy didn't have anything in the car, and he's got a loan, you know, gonna get five grand out of this car. You know, why wouldn't he keep that customer? That was my question. I'm. Now I'm looking at it not only from taking care of the customer. I'm looking at it from a financial standpoint, saying, why would this guy let Josh drop the car off at the lot when he could have kept him in this car by fixing the engine? I'm sure he could have got it fixed cheap. That's what I'm thinking. I don't know. You know, at the time, I'm just thinking, what. What is.

What is.

What is the deal here? So I. I started rolling the. The numbers around in my head, and the numbers in my head started making sense. So I. I started putting them on paper, running some projections, and. And I knew nothing. I didn't have anybody to tell me the numbers. I'm just guessing at everything. I'm like, okay, we can buy cars for $1,000, and we get $1,000 down, and then you got. You know, you're selling them for this much. And so I can afford to put a lot of engines in, and I think if I take care of my customers, I can take all the customers from this local area. And so the. The numbers that I put on paper didn't pan out. We couldn't find cars for a thousand dollars. But we. We made adjustments as we went. The. The fact of the matter was there was money to be made, and you could do it while taking care of the customers.

So you had that idea. You. You saw that there was the opportunity. I want to know logistically, I mean, did you. Did you drop the construction thing and go out and start buying cars yourself and putting them on the lot or selling them? Did you bring in partners? And was your idea to scale to the point you are now, or did it start out like, oh, this will be a fun little hobby?

Yeah. So, no, the idea was definitely not to scale, and the idea was not to quit construction. I just figured buy your pay here was easy. I wouldn't even need to work. Like, I just keep on building houses, right?

Yeah. Sell them to your employees and carry the notes for you.

Just get, like, three employees and put cars out on payments, and they just.

Take care of It, Yeah, of course they do.

Yeah. It's good to go. So, and so my projections. Now here's, here's the, what we were looking at. So I'm looking at like if we can sell five cars a month. Now I've got, so my brother in law who was working on the road, who married my sister. They, they, they had their first child. And you know, I thought, well, you know, they probably want to come off the road. And he knows about cars. He grew up with cars. So. And, and Sarah, my sister, she's great with accounting and you know, the office management part. She, I'm like, this is a good pair. So I made the call then I'm like, hey y', all, y' all should come run this buy here, pay your thing for me. You could, you can make as much money as you're making on the road. And, and then I just thought, well, I'm just gonna keep doing construction. So he had this little shop, a little two car garage by his house. And so we set up shop there and we said, well, we can sell five cars a month. You know, we can, he can get paid, I can get paid a little bit. You know, it's like a side gig for me and we'll be good to go. So we, we figured if we sell 10 cars a month, we were, we were, we were really doing something. This is a, this is a job for them and a side gig for me.

It was so funny is that this is. Yeah, I've just seen this start this way so many times. And, and what you find out quickly in the buy here, pay here space. There's a number that you have to sell to make it make sense. And selling five or ten doesn't necessarily make sense.

Right, right, right.

And that's. How would it take you to figure that out?

I'm not getting paid because, you know, I'm just, I'm just, you know, getting, it's just a business for me. And you know, they'll, if it'll grow into a little, a little something on the side, I'm, I'm happy. So I'm, I'm just over here doing the construction thing. And then as long as I can, you know, as long as I can afford to pay, you know, Carrie and Sarah, my, my brother in law, my sister, what I agreed to pay them, I was good to go. So I did need a little bit of money. I had a little bit of money, I need a little bit more money to get this thing going. And so I went to my, my brother And I said, hey, you wanna. You wanna piece this thing? Like, I'll give, you know, I'll. I'll give you some equity in this little. Little thing that we're doing. And you. You put in some money. And so that's. My first partner was my brother, and he was on the road as well. He was working for the same company that Carrie was working for on the road. But he. He had saved a little money. So he. Between his money and my money, we're like, yeah, we can. We can sell like 10 cars a month for a while. And so we opened. We sold our first car in. In February of 2013. So we. We literally opened in tax time. And we didn't really even know what that meant, but that was a good thing. The only problem was we sold 40 cars that month and.

And you had no more tax.

Yeah, now we're definitely broke. All of our money has been spent. Yeah, my money, his money, all of our money is now out on the road. And we're like, you know, we either have to stop or we have to find some money. So.

This is the story of every buy here, pay here, store. I mean, honestly, we were doing great. We had all this cash, and then we had tax time, and then all of our inventory went away. All of our cash went away. And then April 15th, and then we were really screwed.

I mean, we're just playing broke. Tax guy said, yeah, you made a lot of money. We're just like, no, where is it?

No, we didn't.

It's all gone. You're very broke.

Oh, my gosh. So. So you sold 40 and I guess in February or in March. February together.

That's one month. First month in February.

And how many cars did you have?

Well, we sold them all. We. That's all we did. We went to the auction, we started buying cars, and then they started selling faster than we could buy them. So we. Then I had to jump in, and me and Carrie were both buying, even though it was supposed to. I wasn't supposed to be working. I'm still. Now I'm buying cars. He's buying cars. He's trying to fix them. He's working at night. He's swapping engines on the floor. No lifts. We quickly had to hire him a helper, which we weren't planning on doing. We wouldn't, you know, it was just supposed to be him and him and Sarah running this thing there. And so we ended up getting that 40 gone. But we had no car. We have no cars left, no money left. That Was that, was it?

Yeah, I've been there. I've seen this exact thing play out. So February goes, you buy some more cars, you get those ready, business slows.

Down a little bit.

Maybe it doesn't, Maybe it picks up. When did you leave the construction business?

It was, it was a little while in. So what, so what happened after we, after we ran out of money that first month? That actually Elizabeth's dad, another one, another one of the partners, Alan Lindsay, he was, he was one of the guys that I was running all these numbers by early, even as I was going through it kind of as a, as a check. Like, hey, he wasn't necessarily, he wasn't, I wasn't prospecting him as a partner, but he was just a great business guy in the area. We, we knew him, we hung out with him. And so I'm running all these numbers by him and he's like, yeah, I would never get in the car business like that, not me. And, but he was, he was helping with the numbers and running and building spreadsheets for me and, and you know, he started getting a little bit more and more interested, especially in, in the, the, in what we were doing. Not in, not necessarily in the car business, but helping people get transportation. He started getting interested in that aspect of it. And so he, he floated the idea of, of coming on board with some cash as an equity partner fairly early on. And I was, I was really not interested in partners that it really has, it wasn't how I roll in the construction business. I kind of like to call the shots, make the decisions and not have to, you know, worry about other people. But it, it ended up where it did start to make sense and he was persuasive and he had, and he had, and he had some money. He actually loaned me money before he became a partner. I mean that's how we were able to get to the second month. And he knew it wasn't a short term loan. He knew what was going down. He was loaning me money on it at a, at a decent interest rate and it was going to stay in for a long time. I, you know, then family members started, you know, pitching in. They like the interest rates we're given. We were doing, we were doing 20 early, you know, whoa. To investors. What's that?

20, 20% return.

So friends and family are, you know, they got, we're trying to just stay in business.

Yeah, you know, non secured, I imagine.

Oh yeah, totally non secure.

They just got a handshake and that's.

A, that's a big. That's a big number to return because you're probably only making about 28%, you know.

Oh, it's.

It was.

Yeah, it's a big number to return. Of course, we, we ran more projections and we, you know, and take into consideration the interest rates and, you know, it still looked like, you know, the money was there. So I didn't mind spreading it around a little bit. Not on a partner. Not. Not necessarily as partners, but as high interest rate. I said, if you want to partner with me in these funds, I'll give you a good return. And that's kind of how I did it early, but it wasn't too long before. Before we. Well, first off, Carrie, who. Who started as an employee, he wanted a piece of it. So he, he came in as a partner. So now I got me and David, who. David is you.

Your brother. Your brother in law.

Yep. And so now they're both. Now they're both partners. Of course, David, he's out on the road working. And then, then Sarah and Elizabeth are good friends and Sarah starts needing help in the office and the books were just playing mess. Have you ever seen a startup buy here, pay here?

Yeah.

That is just a construction guy try to, try to do, you know, buy here, pay here books.

Yeah.

Yeah. So you love your sister. She needs some help.

Well, she's good, but she's good with numbers. But she has no idea about accounting.

Yeah, yeah, yeah. Nobody does. So it's a complete mystery.

So.

So that's. So this is what, two, three, four, five years into it? We're talking about like 20.

No, no, we're talking about like one year into it.

Oh, this all changes in one year. So 12 months, you guys go from zero to 60.

Yeah, things are moving crazy fast. We never stop selling 30, 40amonth. So. So we're trying to come up with cash. We're paying 20%. We're. We're trying to staff this place.

So just a huge demand in your area for what you're doing.

Yeah, huge demand. We're in the middle of absolute nowhere.

Wow.

Selling to 12 counties. People are driving from everywhere. Like they're. We put them on Facebook and they just sell them the same day. Like we never had more than five cars in inventory. We're selling 30, 40 cars a month.

I got a question was that because. Because I've seen this happen with startup buy your payers. And what happens is it brings. Sometimes it brings people out of the woodwork who are just bad customers. Were you. Did you start to See that early on or were you actually, was it just a, a case where there was a hole in, in supply of your, of your product in that area or were it, was it people who had.

Already looks asking where were you ignorant in the beginning and did a bunch of crappy loans to people that shouldn't.

Have had which, which plenty do. But I think, you know, what I've seen is in the beginning that happens at a more rapid pace. And I hear pay here. I mean, did you see that or.

No, I think there was a hole in the market. But also we would, we would literally loan to anybody that had a down payment.

Okay. Okay. Yeah. Kind of loose underwriting. Hey, you're here, you're a good guy, you're local, let's get you, yeah, you're good to go.

And we didn't have a lot of trouble with. We started gpss immediately. That was, that was one of the things that Alan actually pushed to make sure to get GPS on all those vehicles so we could recover the assets. We did. Obviously we, I mean like everybody else, starting out by your payer. We reput our own stuff. I've had to now I've had guns pulled on me, knives pulled on me. You know, it's just. You just out there repoing your own cars. Yeah, we've chased cars down all night long and then got, then got pulled over by the cops thinking we were the bad guys. You know, we've done it all.

So at what point, so at what point in the journey did you come in full time? Was it a year? In two year, three years where you said, okay, this is now making more sense for me as a career than the construction thing.

I'm all about three years. Yeah, about three years, Ken. Yeah. Although I was before I came in full time, it was, it was taking a lot of, a lot more time than I thought it was going to take. So I was basically running two full time jobs.

Yeah.

But before I decided the construction thing needed to go because this was the real deal, it was probably three years in.

I imagine you weren't married, didn't have any kids at the time.

Oh no, I was married with kids.

Man, there you go. Three full time jobs. So.

That's right.

At one point you brought in more owners. And I want to talk about that because you have such a unique ownership structure in having, you know, a private company. But five, is that what you said? Kind of five owners. You, your brother, your brother in law, Elizabeth and Elizabeth's dad. Is that the structure? Okay, how did that develop and maybe Elizabeth, maybe you can speak to that. I want to hear from you. At what point did you come in? What was going on? And why? Did you ever think that you wanted to kind of hook yourself to this, you know, buy here, pay here car lot thing?

I'm not sure I thought that. I really don't think I did.

You got guilted into it or is this.

No, no. It actually turned out to be a lot more than I realized. Like he said, his sister and I were really good friends and when she started needing help in the office, I had just gotten married and come off the road. My family was a full time touring band and so my dad did a lot of business on the side, but I just didn't have anything do and I was bored to death. So why you're.

You're Departed. You're the Partridge Family.

Yeah, kind of like that. Kind of like that down that road a little bit. We, we were. We were gospel, so we sang all over the country, mostly in churches, but quite a few festivals to it. It was just my whole life growing up. So coming off that, not having anything to do, I. I was like, yeah, I'll take some books, I'll try to mess with some. I mean, I didn't quite realize how bad it was. I. I don't say, I say that lightly, but it was, it was pretty bad. I'm used to my dad. He's extremely detailed and like he has things structured just very specifically. And so I kind of came into it with this, this, like, I didn't really understand quite how bad it was.

Yeah. She's like, why does Quickbook say negative 200,000? I'm like, I don't worry about that. We just use print book for the P and L. We got that. We got the real money over here on the back of the checkbook.

Hand ledgers 22, $50,000 go. And he's like, that was two whole years ago. I'm like, you all this is crazy. Like ought to say what's real. It took a while to get that straightened out. And then I just worked. It was. It turned out to be a lot of fun. It was a tiny operation, good friends. And then Sarah kept having kids. They'd be in the all. It was just a good time. Like, I just loved it. I still to this day, I don't know very much about cars, but I do love the business. And so we kept working, kept selling. I was, I was doing everything from taking payments to repos, to dealing with the repo customers. To banking, to bookkeeping. And it was just. It was just flat a good time. And I have no idea to this day why, because if you told anybody that they would die of boredom. But then you're in and it's really fun.

So are you. Are you a trained accountant or CPA or anything?

No, she is now. She's been trained in the buy here, pay here business. Okay.

Yeah.

The school of hard knocks that I go.

Yeah, it really is.

And my dad helped a lot. I like to say. I reeled him in because he wasn't a partner when I came on as the bookkeeper. And I would go to him and be like, what are they doing? What is this? And he would help me kind of fix big, bigger problems and structure stuff in the bookkeeping a little better. And so by the time. When did he come on? 2016?

No, it was earlier. It was 14.

Okay. So a couple years in. Yeah, he did. And at some point along the line, I think Michael was like, well, I don't want to lose the bookkeeper. So they brought me on as a partner.

I could, I could, I could see the potential. It was a little bit. There was a little bit more than bookkeeper there.

And where else was I gonna go? I. I was having the time of my life. So they brought me on as a partner. And then that was the five. It kind of sealed the deal. And we've been doing it ever since. It gets wild sometimes. I'm not gonna lie. You get that many people in a room, especially family, everyone laughs at us. They're like, how do you do this? We don't know. It really works.

I. I couldn't. I could not do that.

And I think a brother, A brother in law, neighbor, daughter. Yeah, that would be quite the party.

So.

So we're probably at what, 2015 or 16 still? One location is at the case at that point. Yeah, 2014. So how does the discussion begin to. To expand? You've got the band together, Elizabeth's band here, and we've got five people who are four of them working in the dealership. One of them maybe not. How do you get everybody on board to start the expansion? And what was your first piece in that expansion? Did you map it all out or did you just go, hey, we're going here first?

Yeah, we don't. We. Especially back then, we just kind of roll with whatever we think.

There was a map with demographics, like, like whiteboard looking thing that said where we should go. It hung on the wall forever. So there was sort of a plan.

Our first, our first location. That was our second, our second location. The first additional location that we had. We actually didn't even open it as the same business. We were really trying to, to do some testing in our original business, which was called Integrity Auto Sales, was doing so well. We, we were doing zero percent interest because I thought, well, that's just dumb to not tell the customer exactly how much the payment is, like how much they're going to pay. If you're going to sell them a car for $8,000, they pay $8,000. So we, we found out real quick that Uncle Sam likes to rape you when you do that because you don't get to collect the interest as you go. And they want the profit all up front. And of course we got to have enough money to, to pay the bills. So we're, you know, it's all, it's in the markup versus in the interest. So it's not really, you know. Anyway, we, we did, we, we found out pretty quick that you should just, if you're gonna just get this amount of money, mark the car down and put the interest on it. And so, but we were doing so well. We were actually a little scared of changing that because it was kind of our thing. So we opened business in the next town over and we charged the interest. We went with a little bit higher end acv. It wasn't even the same name. And we gave away free oil changes and did, did some other stuff. But to do that we needed somebody to run it. So that's when we called David, who's a salad partner. We said, hey, now you should quit. Come, come, come run this other lot. So there you. And we learned a lot. And we mixed the two models, but at the end of the day, they were too close together. And basically what was happening was the customers would just go to both lots and find out what inventory they wanted and go that route. And they didn't care one bit that the inventory was 15% interest, the one lot, zero percentage interest at the other. They didn't care one bit what the price was. They didn't care about any of it except for what car they wanted, how much money they had down and if they could afford the paints. So we learned pretty quick that interest was not going to be a problem in the, you know, in the, in the, in the customer's perspective. They did kind of like the oil changes and the, as far as the inventory goes, you could just put the same inventory, like put the, put the high end and the low end inventory. On the same lot, and they'll just go and choose in one lot. So we were really losing a lot of money in overhead, and it wasn't getting us any extra sales. So we ended up shutting that location down and mixing the two models and going back to our origin location. Hmm.

That's so many people. So many people do that. They open. They open two lots and sell the same amount of cars. Jeff Watson. And it's, it's just doubles your overhead, and it, it takes. It takes people a while to. To figure that out. I'm glad y' all figured out sooner than later.

Yeah. And it wasn't that we weren't planning on expanding, but you. You gotta. You. You gotta do it at the right time, and you gotta pay attention to your location.

So I want to know also, as we go down this road of you guys expanding to more locations, when did the like. Because it sounds like prior to this, it was almost like the Wild West. Like, you know, Michael was repoing, Elizabeth was repoing, and everyone was kind of doing everything. When did you guys really start to put in, like, structures, policy procedures, get a dms? Did that all kind of come about at the same time? Or is that something that recently developed the dms?

We kind of lucked out on the DMS because I didn't know anything about dmss, but I did research. I knew we. I knew we needed to be able to. To do this on a software, not on a hand ledger. So before we ever sold our first deal, we actually selected a dms, and from the beginning, we. We were using a dms and it. And we're still using that same DMS to this day, which is a little crazy because I don't know how we picked that one the first time and didn't have to switch, like, three times. We are. Yeah, so we are. We are going to be switching, but the same DMS we started with, we're using to this day. So we, we did have that. That advantage.

What are you on?

Gotta be way raised.

Auto manager.

Exactly. Yeah.

They never heard of it.

So Alan, who's the. He's the software guy, the IT guy, he's basically made this DMS work for us, even though it wasn't necessarily designed for it. It's a desktop version of a dms.

Oh, God.

That we're using at four locations via cloud server. Oh, my God. Yeah. And so what?

And, and so the DMS came along pretty early, and you guys have stuck with it and made it work. When did you guys start to have to put in structure. Because I, I think scaling to the size you are now, I mean, that's some growing pains, right? That's like, okay, I'm no longer the one doing the repost, but now I gotta teach these people in different locations to do everything consistent. How do you guys coordinate that right now? Or what about growing pain?

The reason that we had to put structure in is because we were looking to. To grow. And we. We started. I don't even know where are we where we heard that we should be going to the, the buy here pay your conference, which was, you know, back when Ken Shilston and Ingram was was running the buy here pay here before NIDA bought them out. And who. Where did we decide we needed to go go to that thing? I don't know where we. Where we heard that we got. We need to go to this conference. So we did that. And I think we were mainly looking for. For funding. So we, we started a conversation with quite a few of the funding guys, but ended up with really getting interested in Promand. And we never, we never pulled the trigger with Prama Land. But what we did, what they did help us with was what we needed to be doing to be able to get money like that. So when we started needing money, we. We had to. We had to come bring the structure together, make sure that the accounting was. Was in. In order. Make sure that the accounts were in order, that we had proper contracts that we're doing things, you know, Right. So we. That's kind of where it started was at the conferences where we, we started to learn, okay, we gotta do this and we gotta do that. And if you're gonna, if you're gonna expand and you're gonna get. And you're gonna get this funding, you gotta be doing things a certain way. And so that's where it started was. Was at our first conference and we. That was in 2016 when we went to that first conference and we met Tim Byrd with dealer re back before every other booth was, was. Was reinsurance. And he was one of them.

It's so, it's so true, you know, like when you, when you kind of build it, when you build a business, you know, and myself too, I'm similar to you guys. I kind of built the plane as I was flying, right? Like, I was like, oh, let's just, let's get into this. And it like that's kind of where you guys did it, like, oh, this is a great opportunity. Let's jump in. And then you learn a bunch of these things and you kind of build the ship as you go. But you learn that to be attractive, if you have those ambitions where you want to get funding or be attractive to banks, you have to have all this structure in place. You know, they don't want to step into a guy that's keeping track of his payments on Excel spreadsheets and doesn't know his financial statements. Luke, I think we talked about that. Like, build it as if you're going to sell it. You may never sell it, you may not ever want to sell it, but you have to build your business as if someday you were going to sell it.

Joe, Joe McCloskey said that to us. Build it as if you're going to sell it. And we're talking about someone who sells two to 300 cars a month, several locations, probably one of the brightest dealer, independent dealers, if not dealers in the country told us that. And, and it's so funny that Primaland you don't talk about just some good people. They're not sponsors of podcast, they're just good people who, who help dealers get their act together so they can get funding, whether from them or from someone else. I. Our business is 37 years old. Okay. And it was run, it was run like crazy. Just craziness for the first 20 years of it. Okay. But going to the first conferences and being involved in that is so important. And I'm glad you all brought that up because if you aren't at conferences and you aren't attending expos and things like this, you just don't know what other people are doing, right? Jeff, I tell you, that's awesome that y' all got there something, something y' all talked about beforehand. And I, I firmly believe this is key to having the amount of locations y' all have, and that's having a centralized recon facility with kind of like your corporate office in that position. Can you talk about how y' all came about going to that and, and having like the, the center cap with the spokes around it and, and how vital is that to what y' all do today?

Yeah, so in our, in our first location, we started with a two car, a two car garage. It didn't have enough ceiling height for a lift. And we, we framed up an office in the corner of it that was exactly the size that was needed for the motor vehicle commission to give us a license and quickly started adding on to that location. And so it's kind of on a hill. So every time you add on, it's like a different level and Everything in.

Kentucky on a hill.

Yes. And so we had like, we had like 42 additions and each one of them was like a different level. So you really couldn't, you couldn't roll a cart through there, you know. But, but we ended up with this. We ended up with eight lifts and we were still subbing out the, the major work. We were still subbing out. You know, we didn't do any body work, we didn't do transmission work, did a little engine work. We subbed all those out. But that was, that was our headquarters. We turned the original two car garage, which is 1200 square feet, into our, our corporate office. But we were still selling out of that location as well. So the front portion of that location, we walled it off and we put one way, one way glass. And we had our sales staff up there. And then we were in the back, you know, running operations for both of our locations. At the time, Bowling Green, we had opened the second location 90 miles from us or 70 something miles maybe from us. And so because we didn't want to make the same mistake, we wanted to go further out into a bigger city and not sell the same customers. So we, we put a location out into an actual, a larger area. And we were running those locations from, from Russell Springs. But we were, we were having a lot of trouble with the sales being on site of the recon facility because the customers would come in and they'd have these issues and the salesmen want to run them back to the recon guys. And we were having major inefficiencies trying to. And then, you know, you got your cars coming in, you got your cars going out, trying to stage cars around your, your lot for sale. Everybody wants to know, is that for sale? Is that for sale? And it just, it just became a, a very, a difficult thing when we were moving that many cars through. Plus we only had an acre and a half usable there. We were, I mean, we were just packed in there.

Let me tell you how bad it was. I would pull up to work and I drive a little Ford Focus and I would just park it in the middle of the drive because I didn't know where to park. And I figured some mechanic would get in my car and move it to where that they needed it so they could get their work done and I could get to my desk. That's how bad it was.

I believe it.

That's.

Yeah, yeah.

Acre and a half. I couldn't, I couldn't imagine only have an acre and a half. I could make it work.

I think that that model is so smart though. You know, we talk about it all the time is you have a centralized recon facility that's separate from your dealership so that you're like, you said, your customers aren't like, oh, I mean, I can see an open bay right there. Why don't you just roll that in there? Or hey, what's that car doing? Can that one. And we battle that all the time at our place. You know, we have a wall between the front and the back. And we say to salesmen, don't look behind the wall. Like if it's behind the wall, don't worry about it. Sell what's in front of the wall. But having kind of that central recon facility, it seems like you'd be able to be, I mean a. Economy is a scale are really nice to have everything kind of right there. But what about the distribution? I mean, getting things. Do you guys move cars between the locations? Do you have like a semi hauler that you ship these cars out to your sales lots? How do you handle logistics?

Yeah, so what we did was we, we ended up moving the, the sales portion of that original location down the road about 10 miles into, into town. And then we had just the recon center there, but we were still subbing everything out. And we, we, we have a, we had a three car. We have three car wedge. That's what we used. And that's how we rolled everything in and out. And then our repo trailer was just like a, an actual trailer behind the truck that was like a tilt trailer with a winch.

Oh yeah.

And so, and but we, we drove a lot off with keys. So that's, that's basically our fleet was a, was a three car wedge and a, and a, and a winch trailer. And so we would, we would move those, we move those cars out three at a time, you know, to the, either, to either the locations. And then we moved, we moved down the road about six miles to a 30 acre facility with, with multiple buildings, a nice office. Of course. We built most of it, remodeled most of it. It was a, it was an old sawmill. And then that's when we moved all of our subs in house. Took. We, you know, we basically bought all their shops out, moved them in house. So we were able to do that. Our junkyard we had, we had. All of our junk cars were parked three miles from our other location because you couldn't park them on an acre and a half. So the junkyard guys that were running, you know, trying to Pull parts off of our junk cars are running back and forth all day long on the road. That's just a hazard. It takes time. And now we have our. Everything's on in on site now. Junkyard's on site, all of our subs are on site. And we, we upgraded our, our hauling fleet to a semi with the, with a 6, 7 car hauler, but quickly realized that it's much cheaper to hire that.

Yeah.

Because by the time you pay for your CDL drivers and your insurance on the truck and unless you're willing to somehow, you know, hire somebody to, to dispatch hauling other people's cars, you're gonna deadhead all the way to the auction and you know, and then, and then pick up the load of cars, run back. And it was costing us almost twice as much as what we could have hired it done for. So now we're back down to the same. Now we have a rollback truck versus the, the, the winch trailer and back to a three car winch. So we haul our own cars from the, from the recon facility out to the, to the sales lots. We any cars that have been repossessed that are there need and recon, we'll load those on the same hauler and run them back. So we're running, we're. We're not deadheading near as much and we're in the three car way just fine. Everything coming from auctions now are, are.

Hired in, you're hired out. So what's the typical distance from your recon center out to these four sales locations use?

70 miles, fairly close. We've got the closest one's about 15 miles roughly. And then we've got one that's 20 miles, one that's 40 miles. And then our longest in. Over in bowling green about 75 miles. Ish. Okay.

I mean so that's not, that's a.

So before, before we, before we wrap this up, Jeff, I want to ask a question of both because neither one of y'.

All.

I grew up in the car business. So, you know, it's. I, I'm learning new things about the car business every day. Elizabeth, I'm gonna start with you here. What is the one thing that has surprised you most about this journey you've had in the car business?

Oh, I would say the people. It's, it's not just the customers. It's the employees. The people just surprise me because things are actually simpler than they seem. So I think that learning. I think what I, what I'm surprised to discover is I Don't have to know a whole lot about anything I'm doing. I just have to be able to deal with people. So I, I mean, for me, it's just really shocking.

People are. Yeah, it's a people business for sure. And Michael, I mean, you were building custom homes and now you're building cars to, to build a, you know, a, a portfolio of cars. What is it that surprised you about this business compared to what you were doing?

Well, really, what I wasn't. The thing that I wasn't expecting was how much capital it takes. That surprised me because, you know, we, we got in and not, you know, thinking we were gonna, we were gonna get our down payment. Get our down payment, was gonna pay for the car. So buy here, pay here is a very capital intensive business. And you, you have, you've got to turn a profit, get some equity in the business or you're just not going to make it. So, you know, anybody that thinks they can, they're going to be able to pull their equity out. And you know, you, you got a, you get a P and L that, you know, says you make, you know, so much money and then the government wants to tax you on that money. Well, you can't take that money out. You can take, you can take some of it out as a, you know, whatever. You know, if you can't pay yourself a salary, then you're doing something wrong, obviously, and it should be a decent salary, you know, compared to the, to what the business that you're doing. But it's, it's capital intensive. And if you don't make a profit, you're, you're not going to get anybody loan you any money because, I mean, they're just, they're just not gonna put their money up if you don't have your own equity in the business.

So a lot easier to loan money on real, real estate in it.

Yeah, we were, we, we went to, and I had, I had good relationships with a lot of banks, you know, doing, doing the, the construction. And I went to every one of those banks and every one of them just laughed.

Yeah, you're like, we had like a loan backed on subprime auto loans.

They're like, yeah, yeah, we could probably do a floor plan. Like, I know I don't need a floor plan.

Yeah, I don't.

I, I'm not, I'm not going to pay you when I sell the car.

Yep.

It's not a floor plan. I'm like, yeah, that, we don't do that.

Yeah, yeah, yeah, we're not crazy. We're not in the business anyway.

I think that what surprised me was you. You know, when I got in the business I thought well you don't have to make. You don't have to make much money per car like but really you got to put that profit on the books whether it's, whether it's real or whether it's fake. You got to put the profit on the books, put the AR on the books and get some equity in the business. So you're. So you're in a position to be able to retain some capital.

Who did you guys. But just as a side note, who did you end up going with? You. Did you say no Primal in but.

With one of the local banks.

Oh really? You did find a local bank to step in.

We finally pulled it off. We. We got an accountant who, who was president of one of the local banks and he sees the, he sees the number and he, we went to his, his bank which he still has a lot of stake in and they turned us down. And he was, he was fairly upset about that because he considered it a good loan. And he. His biggest rival in business when he was banking, when he was the president of the that bank was a lot more aggressive and a lot more of a risk taker. And so he actually referred us to his biggest rival and they came up with a plan which is very unique. To be able to collateralize our assets even without being set up like a primal end or something. And we've grown with them for the, for, for this this whole time. We're about to their cap now so we'll be on but they, they've got us to where we are now.

That's. That's a great story because that's, that doesn't happen every day.

Yeah. But also a great lesson. You always want to shopping those banks against each other is always smart no matter what you're doing. You know, I think we, we think as buy here payer dealers we're so excited just to get one bank to say yes or think we could even get in one to get a line or a real estate or anything. But like you always gotta you know, play them against each other as much as you can.

For sure.

Any. Any other parting words you guys, for the audience listening? Takeaways, things you wish you'd done earlier, things you wish you hadn't done.

One probably one of the best things that we did. And I know a lot of, a lot of a lot of buy here pay heres are doing it now. Most of Them probably are, but the reinsurance, probably one of the best things that we did and what we booked, not just, not just for the, you know, for putting money away, you know, tax deferred for yourself, but actually charging the customer extra for the services and then taking care of the customer. So what we do is we charge customers for, for those, those, those side items that, that we're reinsuring. Whether it's the, you know, the CPI or DCC or your service contract, whatever you're going to, whatever route you're going to take, you know, the customer will pay for that because they, they can do that in lieu of, you know, your full coverage insurance or in lieu of paying for their own engine or, you know, there's some, there's some value there and you can take that money and turn around and use that same money to take care of your customers. So we don't, we're not real strict when a customer comes in and they're broke down on what is, you know, actually covered and what's not covered. Now we do charge differently. We might put it on their payments if it's not covered and then charge the, the service contract what that can be charged. But the, really the, the big thing is get, get some reinsurance, charge extra for it, and then we use all of that money to take care of our customers. Not, not the, not the, necessarily the, the portion that we get to keep in our reinsurance company. But any, any markup on those products all goes back to the customer, along with paying the customer's claims out of that money.

That's a. Yeah, that's sage advice right there. Taking care of the customers, keeping these customers on the road was actually what's got you into the business is the only way to stay in the business, that's for sure.

Guys, thank you so much for your time. This has been fun. It's such a fun story.

Thank you for having us.

Yeah, thanks for having us on.

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