#255 - Planning Your 2023 w/ Justin Osburn

Foreign.

You are listening to the Independent Dealer podcast brought to you by Buckeye Dealership Consulting. This week, Luke, we are starting 2023 out, right? We have brought in Justin Osborne. He is going to enlighten us and help us get our ducks in a row to start out 2023.

Yeah, we kind of ended 2022 with, hey, this is how you plan. This is how you prep. Well, you, you know, Justin is an actual guy who goes out, he's in the field, he consults with people, gets people working the right way. Well, he's going to share some of his insight today on what we can do to be great in 2023.

Yeah. Awesome. Justin, welcome to the podcast. Introduce yourself to the community. For those that don't know you.

Hey, everybody, I'm Justin Osborne. I'm the CEO and founder of Automotive Reinsurance Concepts, or ARC and Smart Groups.

Yeah. So Justin's got his hands in everything. If you go to his website, you can see he's doing consulting, he's doing reinsurance, and F and I training. He's got 20 groups that are called smart groups that he's taken off with in the retail space. So just a real man of all trades and really the guy that goes into dealerships and helps them see where to chart their course. Right, Justin, tell us about that. What have you been doing lately with some of these dealers to get them set for 2023?

Well, thank you. Yeah, I mean, so a lot, you know, I do a lot of consulting, and a lot of my consulting work is in larger independent retail stores. But, you know, here at ark, we bleed independent dealer. We're constantly and passionate about trying to figure out ways to provide training and value to the smaller dealer that has limited access to resource. You know, there just seems like there's such a vacuum and you guys do a great job. Programs like this to try to bring education and best practices to the smaller dealer that's getting started or trying to break that ceiling level of moving to 20 to 30 to 40 cars so they can start to build an infrastructure and a team and move forward. And I spent a lot of time in November and December with a lot of dealer groups in the country, independents. And we did spend a lot of time focusing on how to really maximize 2023. I mean, how do we make 2023 the best year ever? How do we grow. Grow in volume, grow in gross. And growing a business, a dealership, you know, there's a lot, you know, I mean, you guys know better than anybody. There's a lot of Levers that need to be pushed forward. At the same time, you know, you've got to. You've got. You're juggling so many balls and you're wearing so many hats that when you make progress in one area, it can be easy to not bring another area alongside so that you actually can grow and develop your business. And some of the key things that we focus on leadership teams when we're working on annual planning and like, like what is the plan for 2023? Did you show up to work today? And you don't actually have a clear focus of what this year looks like or what next year looks like. So we always start with the end in mind. You know, what does your business look like five or 10 years from now? And today's in 2023, five years from now, you guys will probably agree. I mean, that's like a lifetime. I mean, so much changes, technology's changing. You know, we got words in the ether now like disruptors, you know, whatever that means and how's it gonna disrupt? Nobody wants to be left behind. And so we're constantly looking at new technology, new products and services to try to figure out how to keep our business as a differentiator from the dealer down the road. And try. It's really a difficult exercise. You know, I work with dealers and leadership teams all the time and we say, what does your business look like five years from now? What do you come into work every day for? What are you trying to provide for your family personally? What are you trying to provide for your team? What staple or legacy are you trying to build? What's your succession plan? And when dealers sit back and they think about that, a lot of times it's more challenging than you would think, you know, to kind of come up and say, well, what does my business look like five years from now?

All right guys, you real quick to interrupt the podcast. It is officially the first quarter of 2023, which means hopefully you are signed up on the Tax Max program. Hopefully you are pre filing people's tax returns in your dealership and getting your hands on that money. Now you can apply for a refund advance, right, when you file their taxes, right? So in my dealership, we've done a handful of fourth quarter programs where we deferred their down. Those people are going to come back to us this month as well as everybody else when they have their W2s in hand. We are going to file their taxes in our office, apply for the refund advance, get sent money today, as well as the cash that they have in their pocket as a down payment. And then we're going to also get a deferred down payment come tax time.

So if you love taking, you just love taking people's tax money.

Well, to be honest with you, it's one of the few ways we can put a lot of deals together right now. And I know everyone sees that cars cost more, our F and I products. Like we talked about with Justin, we're trying to make sure we have F and I products on the back end to help us with our grosses. So yeah, I need more.

If you don't take it, someone will and really quickly. So make sure you're involve a tax facts and get some of these tax deals done.

Yeah, slide all that tax time forward, guys. Don't wait until April 30th to run out there and try to sell a bunch of cars. Do it now.

I just want to stop you right there because you're so right. You know, I laugh that car dealers, we are a month to month business. Right? How many did you sell last month? How many did you buy last month? How many went through recon last month? This, that and other. How can a dealer look five or ten years out, Justin? I mean how do you tell someone we gotta look here, not next month. How do you get that mindset?

Well, I think that when you don't have some guidance, a lot of business owners will sit down and say, okay, well that must mean what does my revenue look like, what does my building look like? But if you look at some big companies that have set long term targets, Nike's 10 year target was Crush Adidas. I mean that was their 10 year target. Koch's 10 year target was to put a Koch within arm's reach of everybody on the planet. That was their 10 year target. And so these are targets and you got to think about this, these are targets that everybody on the team, no matter how large or small the team is that's working on your vision, can get behind and that it's easy to comprehend and we're rowing in the same direction. So. So these long term goals are really critical because in order to build a roadmap for today, we have to know where we're going. And this is a common analogy, but you can understand that if the three of us were going to jump in a vehicle and say let's go on the greatest trip ever and we've got all of our gear packed and we're going for a week and we get in the car and then I look At Luke. And I say, where are we going? And he says, I don't know, where are we going? Well, nobody thought about the location.

We might have a podcast.

Yeah, I mean we might have a great time. We're going to have a good time over the week. But like we're not. We don't have a target, we don't have somewhere to go. And so trying to figure out, okay, where are we going to go? And this takes practice. You know, it's kind of like books. Sometimes you read books and you'll pick it back up two or three years later and you reread it and it's a completely different book because you've had so many new experiences. So these things can be fluid, they can be living and breathing things that evolve over time. But I can't make the point, I can't stress the point enough that it's all about starting with the end in mind so that we can build the quickest line from point A to point B. So what is your five year target? Well, what we do from there is once we spent some time trying to develop that, then we say, okay, well let's break that down ultimately down through a series of steps down to. And what's the most important for planning is the one year plan. What are we trying to accomplish this year? What's our revenue targets this year? What does our staff look like this year? What is our one year plan of things that we need to do to move to that long term goal? That one year plan is written and it's not in an essay form. My company, for example, has six bullet points on the one year plan. We want to accomplish these six things this year. And this is what we work with dealers on as well. What are the four or five or sometimes less is a lot more. What are the four or five things that we want to accomplish this year in our one year plan? What are the goalposts? What means we won? And so once we. And that's kind of step one is having a very clear one year plan is if we do this this year, we win. And then from there you break that down into scorecards. And scorecards are activities that it's going to require for us to hit that one year target. So if I have five things I need to hit this year, I want to more cars. I want to sell X amount of cars by December 31st. I want to get to an average of selling this kind of volume or a gross profit of this kind of volume. You know, those things are listed out as One year plan. And then we start looking at what activities do we have to do to be able to hit those targets. And these would be activities that could involve how many, you know, leads we need, how many BDC calls we've got to make, how many appointments do we need to come through the front door. And that's a scorecard. So once we built a scorecard and say, hey, if we do these six things, we're going to get those, we're going to hit those six targets. And so once we've identified the activities that are required to hit that one year plan, now we've got to assign it to somebody who on the team is responsible for this. And when you look at growing dealers, you know, smaller independents that are a one man band, I mean they are literally doing quickbooks on Sunday night, you know, because they don't have time during the day. And when you, when you're wearing all these hats and you add a person, you finally invest in adding this person, you add another person, maybe one or two or three people on your team. One of the most difficult things I found for the growing dealer to do that's smaller is to figure out now that they don't have to do everything. And it's such a burden too. It's so difficult to transfer the responsibility. It's easy to transfer tasks. It's easy to say, hey, I need you to go do that, I need you to go move the lot. But it's really difficult to transfer responsibility and say, listen, you're going to own this thing. This is your activity, this is your scorecard. And so once you have a scorecard card and you put names beside it, who is going to be responsible for that, Then we have to have accountability. And the best way to have accountability is to have a weekly meeting and where we're monitoring those scorecards in a positive, optimistic, productive environment. And we're monitoring if we're on track or if we're off track. And this way we can continue to move towards hitting those activity goals that will ultimately hit that one year plan.

Justin, let me dig in here. Sorry. So you covered a whole lot of stuff. So I want to go back and kind of dig into some of those things real quick so that the audience could kind of flush those out in their dealership. When you're talking about setting the larger goal of a five or ten year goal, and I have a lot of questions for you along these lines, but is that something like you communicate that to your staff and you put that out there, you get in with your key staff and say, okay, where do we see our dealership in five to 10 years? How Frank and honest does that conversation have to be? Because you know, on my side, when I think about sitting down with my key guys and saying, hey, this is where I want this dealership to be in five to 10 years, it's kind of like, hey guys, I need you to get my nest egg, my retirement to this point in 10 years, it just seems a little like a little awkward. Is that not a problem? I mean is that just candidness? Am I just being.

No, it's a great question. And I think this is why I said many dealers when they're looking at a long term goal, if they don't have some guidance, they feel like it needs to be revenue tied. Let's do 20 million a year in five years from now. Well, that is not a great long term goal because we're trying to set a goal and like I mentioned some examples of like Coke and Adidas, these are types of long term goals that support the vision. We're the leaders, we're the owners. So it's our responsibility, responsibility to say we're going that way team, this is the way we're going to go. And then everybody on the team has a responsibility or they wouldn't be on staff to help us get there. And so these goals that you set, I don't, I think you're right in the point that you want to be careful not to set goals that are like self serving but are really altruistic for whatever the culture of your business is and whatever everybody on the team can support. You know, Nike's crush Adidas. You can imagine everybody from the C level executive to the CEO down to the person that's building the laces can get behind, hey, we got to do a great job. Our mission is to be and crush Adidas. Coke is another good example. Now you might have a list of where you want to be that's more private, of I want to sell in six years, I want to have a successor come in in six years. But that's not really what we're talking about. We're talking about casting a vision because as John Maxwell says, leadership is about influence and it's our responsibility to influence our team and provide great leadership to drive towards a point and we have to come up with a long term goal that caters and catalyzes the entire group. Does that make sense, Jeff? Yeah.

Well, help me understand the difference between then of a long term vision and I get that, like, if I have a long term vision or a mission which is, you know, be the best dealership in a 50 mile radius or have the best Google or we're going to crush these guys or whatever that is. But if I have a goal that needs to be like specific and measurable, right. So I need to say what crushing the competition looks like is we are selling X amount of cars a month with X amount of gross, or my portfolio is this size in 10 years and then I can break those into yearly and monthly and quarterly activities, right? I mean, absolutely. Like you got to put a dollar amount or a quantity on it eventually in order to break it down into smaller.

You're 100% right. We may not be, you know, for the entire team. We may not be getting into the details of, you know, gross profit objectives, volume objectives, reinsurance, you know, growth and even like, for example, investment opportunities inside of reinsurance. I mean, we certainly aren't casting that vision to the team. We're casting a vis. That is the title, the header of those metrics that you're talking about with your leadership team, your inner circle. You're going to have some metrics that are supporting that long term goal so that you can back into and reverse engineer the activities in the one year or three years so that you can like what you're saying, your leadership team needs to be familiar with those numbers. But as far as like an overarching long term goal, I mean you need to encapsulate it in something that everybody can get behind. But you certainly got to have the metrics underneath it. But that's more for the smaller leadership team to discuss.

Let me ask you about the metrics and the math and Luke I think has some opinions about this as well. If I say, hey guys, we want to sell 500 cars this year, that means we got to do X amount a month. That means we need to do X amount of appointments because we know our closing ratio or we know our optimal closing ratio. That means we have to have X amount of phone calls, X amount of applications. You know what I'm saying? Like, is that math? The math. I think a lot of dealers maybe lose that. And I know I do where I'm like, wait, if I'm going to sell 50 cars a month, that means I need to be setting, you know, 150 appointments. That means I need to be making X amount of phone calls. Like the math is the math. So what do I need to do to get there? I need X amount of leads. Okay, how do I Get X amount of leads. Well, I need to spend X amount of dollars. Do we lose that? Because it seems like it's, it's so.

Funny you say that. I was, I was speaking at Ohio's convention and there's a cool, there's a highlight clip of my talk and I was walking through these metrics and then I had a point where I said, you won't do that. It's math. You can't do that. And so, you know, I talk a lot about how, you know, waking up today and say, hey, let's sell. We've been selling 25 cars, let's sell 50 next month because we added a salesperson. I mean, that's not the math.

That's not the math.

It's new math now. So certainly there's different math between a buy here, pay here. In a retail independent store. There are different metrics that are critical to hitting certain targets because you know, the businesses operate differently as far as the, the financial statements and the growth, you know, for the retail side. And that's where I usually lean into on the retail side, volume. And I'll give you a real specific example. Volume is usually actually volume is always predicated on four fundamental things. And those things are your inventory, your inventory count and make it. And we can unpack all these four things. But in a nutshell, your, your inventory, your lead count, the number of salespeople you have and something, those are three objective, measurable things. And the fourth one is more subjective and it's your process. And if you were to look at those four things, there's very little else that would, barring Covid, that might affect your volume. So if you want to double in sales, and that's why I even mentioned in the beginning, it's pushing these levers forward. If you wanted to double your volume on a retail lot and you went out and just doubled your inventory, you're not setting yourself up to win because you need the lead count. You have to have the leads to come in. Now inventory increase will drive lead count up by itself. Just by having more cars, you're going to get more leads with the same advertising dollar. But you need an increase in leads. In fact, you need eight to 10 times your inventory to turn it 45 days supply. But you need leads, you need inventory, and you need enough salespeople. For the small dealer. When we're talking about this math of volume, for example, the small dealer sometimes really gets struggles. And I get it because it's an investment on when to hire another salesperson. To help support that growth because it's an investment typically. We talked a little bit about training. That's scary turnover. Is this person going to work? How much time am I going to waste when I'm trying to wear seven hats trying to train? This person may not show up tomorrow. So, I mean, all those things are frustrations, but if you don't move those levers in tandem and if you don't understand how they work together, then the map.

All right, one more break in, guys. This is a new one. Luke, we are going to talk to you about primaland.

Yes.

Good folks. So people who really love our space buy here, pay here, and facilitating deals for dealers that are trying to buy out, trying to get some money to help with their line of credit. All these things that PrimaLin does. Jeff, we've had them on several times to discuss and they really, really help dealers get people, keep people's books clean so they can borrow money. Because it's so hard to be in our business without a lender behind you. And primalim is one of the places to go to.

Yeah. And I want to discuss for the viewers. You guys know that every sponsor of the podcast in the past has been someone that we personally use. We vouch for their product. Luke and I use both of them. Well, we both use the majority of these products, you know, in the past, Primal, and neither of us use right now. So in full disclosure, neither of us are customers of Primal and. But we have a lot of vendors ask us to be advertisers. Right. A lot of inbound stuff. People want to be on here, and we turn down a lot. The reason we said yes to Primal and this time was they are key. They are perfectly positioned for the transition we're going to see in the buy here, pay here and retail space. Right. There's going to be a lot of dealers that want to get out, a lot of dealers that want to get in, and a lot of dealers that want to grow. So even someone like Luke, he's cash flush, right. He doesn't need to go out and get a line of credit on his receivables to grow. Guys like me, I can only do so many cars a month. I'm constrained by my cash flow. Right. So if I want to go from being a 30 car store to a 50 car store, I can't just do it like we were talking about with Justin. Yeah. I can't just turn that spigot on one month and be like, okay, I'm going to do 50 cars. I've got to start prepping and have a lender, whether it's a local bank or whether it's a company like Primal End, which I'm going to talk to about being ready to say, hey guys, to fund these extra deals every month, I need to have someone like you give me a line of credit.

You got to have all the levers and then buy here, pay here. One of the levers is extra cash. If you don't have cash, you will not be in business. And Primal.

And you've got to prep for it before you need it. That's the other thing. You can't just be like, oh man, I need cash by Friday.

No, no.

This is a month, month long process of making your financials are good, making sure you're finding the right lender at the right rate. So anyways, that's our very, very long intro and explanation of why you're going to hear some more from Primal End over this quarter.

Let's talk about, let's talk about that moving them in tandem. Because for so long I've had issues moving them together. And I don't think Covid's helped anybody move that staff thing in tandem. Right. Or the inventory button in tandem. Because what has happened at times during this last two years is that we could push the inventory button, but we couldn't push the labor button. And then when we could push the labor button, we couldn't push the inventory button. How in a normal time do we make sure we're pushing them together or do you have to push the inventory button and then push the sales staff button? They don't have to be perfectly in tandem, but what comes first, the chicken.

Or the egg Here, typically the first thing that comes with is a solid understanding of the game plan. So. And what I find is. Excuse me, what I find is a lot of dealers think they understand how they need to move together, but they don't quite get it. And so they'll push a button or two and then what happens is they don't 10 work doesn't work, which leads to frustration. And usually inventory comes first. If you have a clear understanding of growing volume. It's a plan and something, unfortunately. And God, I love car dealers. I mean, it's my spend every day away from my family working with car dealers. But they're not the best at analyzing historical data. And the challenge, in fact, if you were to walk into most independent retail stores and ask what their lead count was last month, not only would they not know, and I get not knowing, you look at A lot of numbers, but you've got to ask somebody or you've got to go figure out your login to figure out how to get in. Now I got to call the third party that's supplying my lead count because I don't know how to get it. I mean, I see it all the time, and that's frustrating because that's a critical number. But if all things are aligned, like, if there's good understanding and this data is available and you know what to look for to make it shorter, you know, you would increase your lead count first. Sorry, increase your inventory first.

Okay.

And after that, you would be. Obviously, you would be interviewing salespeople to prepare, and then you would know your numbers of where your lead counts need to be as you start to manipulate the marketing with the expectation of increased inventory. And then you're interviewing. I believe that independent retail dealers ought to have an indeed app for a sales professional that never comes down. You never know when you're gonna be working at your desk, and someone walks through the door and throws a resume on your desk, and they're a rock star because you just always. Why would we wait till somebody quits to throwing up an ad if it's mission critical? Most independent dealers, car sales professionals, sell on an average of 18 cars per month in the independent space. So if the number's 18, think about this. You push the inventory throttle forward. You go out and you buy another 40% inventory, expecting to grow. And you normally are selling about 30 cars a month. Well, 30 cars a month is usually the dealer scrambling to sell 12 cars while the one salesperson. They have, one salesperson on staff, is selling 18. So that gives you your 30 car sales. And in fact, I tell people you ought to pat yourself on the back because the fact that you can do the accounting and grow your business and wear all these other hats and run down the road to run a car down to the local service department and juggle, hitchhike back. You know, I mean, the fact that you can wear all those hats and sell 12 cars to get to 30 is a lot of work. But when do we hire number two, and what will that yield us? I mean, 18 times two ought to put us at 36 vehicles. Plus you're selling instead of 12. Now, maybe you're selling four or five because you're getting busier. So, you know, do. And it's all. It is all math. I mean, we could break the math down, but, I mean, you can calculate how much inventory will produce, should set the expectation of how Many leads you need and then how many salespeople you need to have to support that. You can calculate all that in advance and it's not, it's not rocket science.

So where does the lever for advertising come in and that's producing lead count? Is that, is that as soon as you have the inventory or is that as soon as you hire somebody?

Well, it's, it's all about having a plan that, that you, you understand that I'm going to push these three or four things forward. I understand the order, I'm going to do it and then I'm going to start increasing my inventory. And I'm also. But, but there's things to do, Luke. There's, there's historical data and research on how many leads you're getting. What have I been running on lead count? Have there been ebbs and flows on my lead count? Has it been very consistent? And if there's been ebbs and flows, is that market driven? Have I changed my inventory? Have I changed my advertising sources? So you know, in advertising, I hate to change more than one thing at a time over a 30 or 60 day period because you change two things and all of a sudden it's a big question mark. Well, I canceled Cars.com and I added this new Facebook advertising agency. Which one affected our lead? Cause we just saw a dip in leads. Was it that or was it this? So if we sometimes, if we can do these things one at a time and measure the response and be a little bit more patient, we can see what's working. What's not to your point about lead count in advertising? Another Achilles heel or blind spot for a lot of dealers is getting an ROI analytic on what's returning. And this has been very tricky in the car business in the past. Thank goodness it's 2023 and these systems are getting better from third parties. But it's not just how many leads did get, but what gross profit did I generate from those leads and what was my aged inventory from those leads. So for example, you know, if we look at turn time for retail dealers, you know, you hold a car for 75 days and you sold a whole bunch of cars from advertising on 75 days old, you didn't make any money. Right? So I'm looking for, I'm looking to put my money and measure my ROI on things that are not just generating sales, but are generating gross profit and that are also generating quick, quicker sales. You know, if you sell something very quickly from an advertising source and make money, gee, let's double down on that and see if we can't exploit that or come up with a new idea to do something similar and then maybe cut off, you know, the bottom advertising. That's not working as much. But I don't usually see a lot of dealers that have an ROI analytic.

It's hard too, because all leads are not created equal too. So there's so much nuance to those leads where it's like, oh, we generated through this avenue. And it's like, yeah, how many of them bought?

So you saw one car?

Yeah. And then everyone's like, oh, I sold 50 cars last month. Okay, how much did you make? You know, he's a 200 car dealer and he's making 200 bucks a copy.

Like, well, let's, let's talk, let's talk about that real quick because I think that the environment we've been in in the last two years has really inflated gross profit or what people think gross profit is going to be moving forward. Justin, I know you're big into F and I and you do a lot of training on that. What does the future look like and what are your dealers currently seeing when it comes to gross profit? How much does it come down over the last 90 days and do we expect it to continue to come down? Where do we think that is? Have you seen it?

I've seen it for sure. Everybody's complaining about it. It's come down drastically. Some are down to 25, 30, 35% of what they are running in Covid on front end. Certainly there's an effort on the back end as a hurry up and scramble to try to figure out what this decrease in front end gross is doing. It's happening right now. Everybody's affected. If you're watching this, you're an independent dealer and your front end gross is down. You're not alone. And the challenge that when you talk about F and I, the real world challenge that the smaller independent retail dealer has is, is their inability to get more lenders because they're small. You know, you've been in business two years and you're selling 40 cars a month, you're going to have a hard time getting capital and ally. And if you don't have those allies, you don't have those lenders, those national banks that can give you lots of room on the back end to sell F and I product and hold rate, then, I mean, you're at a disadvantage to begin with. And this is why you see so many independents that start, you know, on a CAC program or A Westlake program, because these lenders are catering and signing them up and catering to what they can do. Now the problem with that is the dealers have to sacrifice more front end on lender discounts in order. So not only do you have falling gross profits, but then now you got to fight this discount fee from the lender from cac. And I'm not being disparaging from CAC and Westlake, thank God for them because they've given so many independent retail dealers even a place to start. So, you know, you got to look for local credit unions. This is the real grit of the job. It's the discipline to pound these banks and find banks that will give you an open up opportunity for you to sell F and I know a lot of dealers that would love to sell more f and I, but if they don't have the discipline, the network to network into a rep or the ability to get some lenders that'll give them some room on the back, I mean, it's difficult to swing the bat if you're never up at the plate. And a lot of these dealers just haven't figured out that. And some of them can't, unfortunately yet until they've been in business a little longer or they've got more inventory or more of the right inventory mix. But acquiring lenders for F and I is step one and it takes a lot of discipline, a lot of work. I literally know dealers that were selling 40, 50 cars a month. And I'm thinking of one specifically that called Capital One every single day for like three months until they finally signed him. And it changed. It was a game changer.

Hey everybody, last break in, we promised, but it's all about reinsurance. Jeff Buckeye Dealership Consulting, DPG. We talked about groups, 20 groups. DPG is where I get my 20 group access service wise and dealership wise. But these guys focus on reinsurance. Reinsurance should be part of your 10 year strategic plan that we talked about, right, Jeff?

Yeah. I mean, building up your reinsurance company is just so smart. We all know guys, right now we're looking at getting our taxes put together and we're looking at that tax burden that we're going to have to be ready to cough up if you have not prepaid your taxes all year in 2022, like some dealers may not be as good at doing, but then they get this big fat surprise tax burden. Reinsurance is the way to reduce that burden. And DPG has their great supergroup coming up at the end of January. So if you're listening to this on the 5th of January. It's not too late. You can still jump on their website, search them up. Buckeye Dealership Consulting. Get signed up for the supergroup down there in Orlando. It's open to everyone, client or not.

I'll see you there.

I'm going to. Luke will be there. I'm still on the fence. I may or may not be there. I got to convince the Mrs. That I can be away some more, but it's good. So if you can get away, if you're near Orlando, if you can get there, be there, meet Luke, get some good education. Sorry. It's exactly what you said a couple minutes ago. When you're like, these dealers are out there selling 15 cars on their own and maybe they hire one salesman to come in, but they're still selling four or five on their own. It's no, you got to stop selling any cars. And maybe your best effort is focused on going out and finding those lenders and making those contacts. Like you said, it's hard work. It's pounding the trenches, it's calling them every single day. But if you can add those ones, maybe two lenders, it could be a complete game changer for you.

It's a 25 car a month difference.

Yeah, it's the delegate and elevate. Right.

Well, and it's also maximizing your gross profit on the deals that you're currently getting, you know, if you can figure out a way. And credit unions can be where you can strike gold because, you know, there's a lot of credit unions, a lot of local and regional credit unions that if you work with them, you walk in and see them, you sit down with them, you call them, you talk to them, you bring them donuts or whatever. You know, some of these credit unions will sign an independent dealer, especially locally. And these credit unions are dealer friendly. I mean, they allow you to bump rate, they'll pay a flat fee, they don't do lender discounts and they give you lots of room on the back end. So the credit union, if you're really struggling with a national bank, a credit union could be the quickest way from A to B.

Well, they might be the most accessible right now too.

You know, the ones that are still.

Lending at decent rates.

So most accessible. And also it could build you to those other places because you go from selling 40amonth to selling 60amonth and then all of a sudden Capital One and Ally and all those Santander and all those may want to talk to you.

Then.

You know, last little bit we got here, Justin, if, if someone stuck to this farm, they listen to us enough, they know it's important to train. What do you recommend for a dealer this year? How can you just start a simple training program?

It's tough. And the short answer is to have something that's. If you've ever read Stephen Covey's book, the 7 Habits of Highly Effective People, he talks about the time quadrant, the quadrants of time, the window of time. We have urgent, important things, we have non urgent, important things. Then we have non urgent, non important things. And then, you know, and that box of not urgent but very important is the one that usually gets neglected. We handle, we put fires out. You know, I say this all the time. A dealer wakes up every morning, takes a shower, gets a cup of coffee, drives to work, and on his 20 minute drive, he's thinking of the three things he needs to get done today, he or she. And by the time he finishes that cup of coffee at the lot, 12 fires have erupted from every direction that he never anticipated. And he drives home 16 hours later and thinks, gee, I didn't get to one of those things I was supposed to do today. And that's the chaos that we love and that we live in, right? But what happens, you hire and you see if this is practical experience for yourself, but you hire somebody with good intention and you say, here's your new hire paperwork, I'll be back in a minute. You come back three weeks later, you're surprised Johnny's still there, and you say, gee, you haven't figured out how to do this yet. You've only sold one car. And it's not because you don't want him to win. It's not because you're a bad person, it's because you're just busy. So unfortunately, if you're not going to outsource training and you're going to try to do it in house, the best thing you can do is take your weakest area that you need to improve and dedicate just an hour to outlining what are the things that we need to get better at. What are some things I need to work with my team at? And then I would recommend spending 30 minutes to an hour at a minimum, weekly training your team as corporately so that they're all improving and driving to the same mission. But training is dramatically, dramatically and exponentially better when it's wealth, when it's thought out, at least designed and on purpose and thought through. That's why I'm so. I Don't understand these franchise sales meetings, which I've led and been in thousands of them, but you get in on the morning, in the morning at 8:30 and it's a raw session, rah, rah, rah. And most of the time there's no plan, there's, there's no curriculum, there's no training, there's no, this is how we do it. It's just like, what are you going to do for me today? And so I would say, Luke, that the best thing you could do is just sharpen a pencil, get a cup of coffee and you know what your business needs, start thinking about what you need to shore up and how are you going to communicate this? The last thing I'll say on this point is something else Covey said in his book is you're successful and you're an entrepreneur because you know how to lay a golden egg. The task now becomes can you teach other people to lay golden eggs? And if you can do that, you're going to elevate them and yourself and your business and you're going to scale. But if you ignore it, then you're going to find yourself frustrated with your team and you're going to work your butt off. So having a plan is, I know it sounds kind of cliche, but it really is the starting place to developing something meaningful to your team.

And just a shameless plug for our newsletter. One of the first weekly tactical tips we did actually talks about time management and Eisenhower Matrix, which is what Stephen, what you, what you referenced on Stephen Covey. So go back if you haven't watched our YouTube channel, subscribe, like do all that good stuff, but search Eisenhower Matrix on there and it should come up with time management. And go ahead.

I want to ask Justin one question before we let him go. Justin, and give us as kind of your parting words of wisdom. Where do you see 2023 going? Where are the areas of opportunity and where are the areas of caution that you would leave all the dealers with right now?

One of the things that I'm seeing that seems to be right on the edge on the horizon that's new is inventory acquisition. Large dealerships that have resources are right now, while you're running around trying to figure things out, right now, they're war gaming how to build new BDCs that are outbound, calling off customer sourcing inventory. They are aggressively attacking Facebook, Autotrader and cars and Craigslist. Actually, I thought that was dead, but that's still a thing. So they're aggressively attacking these fronts they're communicating. I mean massively. And you take this idea of a BDC which many independents probably watching this, maybe you have one BDC rep or maybe you have a bunch. But 80% of the independent retail dealers don't even have a BDC yet. They're still trying to scale to that. But you've got these teams out there that are re equipping and redesigning BDC teams to outbound call, message text and use social media to scour Facebook marketplace, Craigslist to get away from auctions, to get away from auction fees, to get away from transportation costs. And inventory acquisition through Covid obviously left a real bad taste in people's mouth with the supply and demand. So this is new. I mean this whole idea of aggressively building an apartment that's attacking inventory acquisition. That's not like what we've seen before. You know, we transition from I gotta touch it, see it, go to the auctions we three times a week to now. Then we graduated everybody to you really can buy a car online now. You've got teams of people that have never been in the car business that are aggressively calling, you know, these customers or these, these individuals on the street that have vehicles for sale and they've got what those customers want. That's the ability to write a check right now. And so get sourcing inventory off the street is what I see as the biggest thing that's come from COVID and what's going to be exploited in 2023, front end gross profits are going to continue to drop and normalize. I don't know if we're at the bottom yet, but it's been trending down aggressively for 90 days. F and I is continuing to be a bigger focus. Preloads right now are a big focus for a lot of independent dealers. They're figuring out how to legally compliantly preload as much as they can on vehicles. That's ethical, that's moral, that's legal. So that they can make up some of those front end missed opportunities on the back end.

Well, that's. Yes, I tend to agree with everything looking forward, Justin, you know you have a way for folks to, for smaller independents to start getting that, getting that training there. If you will just tell people how to reach out to you and what you got going on there.

Sure. Well, I'm Justin Osborne. You can reach out to me on my email. It's justinrcdealers.com that's ARC dealers with an S dot com. You know, we're pretty excited that we. I'll just quickly mention two resources that we've just released press releases on at the beginning of 2023. One is IDU, the Independent Dealer University. Speaking of training, the IDU platform is an online virtual training program for every seat in the dealership. Whether you're a salesperson or an F and I manager or an accounting person or fixed ops or a dealer or manager. We have training on this platform for everybody. It's extremely affordable. We built this for the smaller independent dealer. The other thing that we just released, which is a great tool and I know there are other platforms out there that are good as well, is a 20 group. If you're not in a 20 group, I know you guys have been proponents of 20 groups, whether you're in ours or somebody else's, I highly recommend you check out a 20 group because this is an opportunity for you to have 19 other board members, if you will, that can give you best practices. You know, one person in that room that is trying something new that you can go home and deploy. It certainly makes the investment worth it. And I'll just end with, we just struck a strategic partnership with seven state associations and with this we're releasing Smart Groups Light. This is a 20 groups reimagined. It's a new 20 group program that's been designed as an intrastate 20 group that dealers can drive into and drive home to. There are little to no pro rates. They are very affordable and they're local so you don't have to fly across the country. And these 20 groups, the smart Group Light program was built for the independent dealer that can't hang a shingle for three days on the front door saying be back on Wednesday. You don't have the staff to go or the money to go to fly to Florida to go to a resort. So Smart Groups Light is another resource that's affordable and there's others out there. I highly recommend you also check out those those 20 groups to grow.

True, we are big proponents of peer to peer learning, that's for sure.

For sure.

Well, Justin, we appreciate your time and hopefully, hopefully Dealers got something out of this because I know I did.

Well, thanks for having me. It was great to see you guys.

Dealers helping dealers.

Please leave us a review.

Review and subscribe the Independent Dealer podcast.