#273 - Setting Goals From BHPH United 2023

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

Well, I'm here.

Everybody give applause. Thank you. That was. So we're going to talk about goal setting, and we have some of the oldest tenure. We're not old. I. I've actually been in business probably longer than all of us sitting up here. And I'm 29, so not really. But anyway, they're going to introduce themselves. They were going to talk about goals, saying how important it is in our business and goals. You can just set outlandous goals and never hit them. Right. But the key to setting goals is to know what you are capable of doing. Some of us set goals when we don't know what we're capable of is doing. It lets everybody down. You don't want to do that. So, without further ado, we are going to introduce ourselves. We'll start over here with Dan.

Okay. My name is Dan Francis. I'm working Andrews Auto Sales. We're in southern Indiana, small town called Evansville. It was established in 1972. My father in law, Dennis Andrews, started it. And in 2002, I had been in industry working and engineering sales. And he approached me and said, hey, I don't know how much longer I have in this business, but I don't do it very well. But it does pretty well for me. I have to show somebody. So he asked me if I wanted to give it a shot. So I gave it a shot in 2002, and here I am.

All right, Jennifer, it's your turn.

My name is Jennifer Barlow, and I'm with AMD Motors in Arab, Alabama. I've been in the business about 27 years. We are just a small town. We've got about 12,000 people in our town. Very small. Got in the business by accident. My dad brought a car home, told me to sell it. I didn't know any better. I sold it, brought me another one, sold it again. I said, well, hey, I think I'm gonna quit my job and be a car dealer. So here I am, 27 years later. I can tell you that I learned something new every day. I'm happy to be here. I see a lot of very knowledgeable people in this room. And this is some of the finest people that we'll ever be around. So thank you for having me.

Thank you.

Fixel.

Yeah. Hi, I'm John Fixel. I'm from Hokono Mountains in Pennsylvania, Northeast Pennsylvania. Got in the business 1995. Not on a bet, but believed that I could just buy and sell A car. I worked in this industry prior to that, but my wife lent me some money and. And the bet I made with her was if this business was ever successful, she would never work again. My wife hasn't worked since 1996. So this business is probably the most rewarding and tormenting business all at the same time. Okay. If you deal with the torment, the rewards are tremendous. Here we are. But, yeah, I'm really glad to be here. I see a lot of friendly faces out here. Thanks, Buckeye, for putting this on for us.

Sure. I'll tell you, the great thing about coming to a convention and something like this, especially this summit, is that we get to talk to each other and talk about our goals and our flaws and our failures and our achievements. And I own what my dealership's been able to do because of people sitting in this room because of the knowledge they've shared with me over the years and how to forecast how to set goals. So, quick question to start with. This is for everyone, and I want you to stand up because you've been sitting down too long. Who in here sets goals each year? Stand up. If you do, it should be all of you. But if it's not, that's fine, too.

No cheat.

So I want you all to stand. Keep standing up. Keep standing up. Those of you who do, those of you don't. This is gonna be really good. So all of you seen here, you set those goals by forecasting. If you don't forecast, I want you. If you.

Hold on.

If you forecast, keep staying up. If you don't, sit down. Okay. We've got some good goal setters here.

Yeah.

Yes.

Has it been harder? You. You can sit down now. I'm sorry, has it been harder to set goals in the last 30 months compared to previous years? Yes. 100%.

Right.

What are the biggest problems you have is setting goals in the last 30 months or 24 months? Don't say it once. Okay, so what is the number one thing we need to hit our goals a lot of times?

Capital.

Capital, for sure. Inventory and people. My biggest problem has been people. Anybody else have that problem? Yep, everybody. So what did Julia say early earlier? That there's 0.5 people for every job listed right now. So that kind of tells you what we're up against. And I'll be willing to bet when you take the technicians is probably point one person for every job opening.

Right.

So that creates problems. We're going to talk about goals. We all set goals, and we look at them on a quarter basis. Or year basis or whatever. So let's talk about Dan first. When you. Well, not when you set goals. What did you set your goals for this year?

So over the last couple of years, and I'm not a high volume dealer, I'm a one operation dealer. I don't know if this has been the case for some of you all out there, but we've actually lost our number of. Total number of accounts that we've had over the last couple years actually went down about 13% and that's kind of alarming to me. Obviously you always want to try to maintain a certain volume but it, we hadn't always lost those accounts for bad reasons. There was a period of time for, you know, 12, 18 months. We had an inordinate amount of payoffs. And you know, obviously you take the money, you know, and go on down the road with. But it does make your account balance go down. That seems to have backed off quite a bit. But we had trouble keeping up with that. We did okay, especially during the COVID times of keeping our charge offs at our target goal and being in 20 groups for the last dozen or so years for us is we've established that goal according to industry benchmarks of what we're able to do. And you know, you want to try to.

If you're.

Our philosophy is we're going to do it, we want to try to do it well. So our charge offs never really got as far as we could see that for out of hand. And our sales started dwindling some as well. We noticed that some of the new car stores were actively and aggressively going after our customers. That's how they're trading them out. And what I thought were pretty big balances. And in the 20 years that I had been doing this, I'd never seen those kind of payoffs before. So obviously when you get it you think, well, that's good. Yeah, it's good. They're taking our best customers.

It's nice to see that cash in the bank, isn't it?

It is, but it's not nice to see that customer go somewhere else. So we hadn't done a good job of reaching back out to those folks later. It hasn't been that long. So you know, in that time inventory prices have really gone up. And I really thought that, you know, paying that extra money and I thought, well, I'm just going to try to buy some value and try to stay in our old acv. And what we ended up doing is really straining our service department and having trouble getting cars out on the lot.

I don't know if you guys had.

That problem, but I knew I needed to do something about it. So 12, 18 months ago, I just bit the ball and said like Luke did, we're just going to have to pay the extra money to get the kind of cars that are more lot ready.

It's scary to do it.

You know, how much maybe so worry.

About how big the charge off is going to be after you pay that much for the car.

Right?

Potentially. So what's happening now with our portfolio since and even though our accounts have gone down by 13%, our actual account receivable numbers have gone, gone up by 11% because you're charging more once I.

Want to ask this question to the audience because I believe it's. I, I experienced the same thing. We, we shrunk by 16% in number of accounts, but our principal amount on the books have gone up. Has anybody else experienced a loss in accounts but a principal value going up? Raise your hand if you have. I think it's a phenomenal that phenomenon that's happened.

Yeah, we're not selling as many cars either because they're higher priced cars. And like we've heard several times so far and I've absolutely seen the cases, the cheapest cars on our lot, those are the first ones to go. But when they pass the service department and we get them ready and we think this is, this is worthy of going out on contract, you know, how cheap can you keep it? I think that's affected our sales potentially because if we had, you know, 50 cheap cars must be the first 50 ones to go pretty quickly. So our ACV is going up as a consequence. Our payments, our average payment has gone up as well, overall about 15%. And our customers, they can afford it though because they're making more now than ever before and we're seeing that.

And I think, I think you said in our call earlier that you wanted to sell 100 cars in the first quarter. Did you do that?

Actually, we did not. We missed it by a few.

But how many, how many do you think you missed?

About, I don't know, 10 or so.

Well, that's a pretty good goal. You weren't out of bounds, right? You said you wanted to make sure that you were tracking your leads and your ratios. Probably that's something that Nick talked about earlier. Did you, were you able to do that?

So one of the things that we recognized we needed to do moving forward was was get a better handle on the leads coming in. We're getting more Digital leads than ever before. So we subscribed to. We subscribed to Neo. I'll just say it. And man, what a powerful software package. I mean, it's by far the most powerful thing. I mean, some of the capabilities. I still don't understand everything that it can do, but I have to believe it's going to help us.

And so did you change one of your other things was a 2% charge off per month or less? Have you seen charge offs go up at all?

We really have.

And marketing changes. Have you done any marketing changes to produce more leads?

So most of our marketing dollars now are through Facebook, Google. I consider Google like a tax.

You gotta pay it.

And we do some digital OTT stuff on a smaller scale. But yeah, it's all digital now.

Jennifer, what were your first quarter or yearly goals that you set?

My yearly goals is I was going to increase my sales. I needed. I'm working on building my accounts back up. We're kind of a hybrid model at our place. We do. We were doing 50, 50 buy here, pay here and then we were doing retail as well through the local credit union, cash, things like that. Back last October, I decided that I was going to focus more on the buy here, pay here. So we've been growing accounts trying to get that taken care of. And we actually, we had 125 is what I wanted to do. The first quarter we ended up with 132. So we hit our goal for that. We've got a little bit bigger goals for this next quarter. We're going to try and do 140. We haven't started off real well, but we're getting there.

How many people in here would like to sell more cars in the second quarter than the first first quarter? That's unheard of in our business, I think.

Dream big.

Dream big. I like it. You know, you said one thing that you want to reduce your overhead.

Yes.

We would all love it. Does anybody here not want to reduce their overhead? No, everybody wants to reduce their. You talk about how you go about 3%. There's no way I can do that. I'm not even gonna try.

First quarter I ended up a five and a half percent reduction. Wow. But when I say that I went through every single fire.

Everybody.

Nope, nope. I still got them. Actually hired two more, but I actually went through every single bill that I have. I've renegotiated contracts. I said, do I need this? If I don't need it, then I'm chunking it. If it's not adding Value. If it's not bringing productivity, then I'll chunk. And we're, we're well on our way. I just hope that we can sustain. We'll see what the second quarter brings.

I bet everybody in this room would hire you to come to their dealership.

To try to fix that, help with that.

All right, John, what were your goals?

Well, my, my single point biker pay has made a living that's about between 47 and 50 cars a month for ever. We've done very well at that selling the aftermarket products, our own captives and things like that with the warranty, the CPI debt. But over the last encode we've been struggling to get to 40 and sometimes we've been in the low 30s. So during this time I, I had another like a subprime and now it's a prime lot and I've taken advantage of some of my buy here pay. Your customer wanted to go elsewhere that are getting hunted daily by these headhunter Esau dealers and Kia dealers to. To get my customer. And I've taken advantage of flipping some of those customers into subprime and prime deals. Different market but a of lot allowed me to keep the customer and stay in contact with that customer. So we actually probably with capturing someone's buyer pay we couldn't do instead of turning lower to our prime lock or subprime lot has allowed us to exceed our goals and a lot of cash through the door with those loan to loan values that those banks were just handing out last year.

So you told me you wanted to do 47 average a month. That's your buyer page door.

Yeah, we have not done that. We probably average about 35 to 36 this every month this year. But we've probably been in the low 40s of customers we couldn't do there that wanted out of their cars for whatever reason they wanted out of their car, whether mechanical or mechanical I guess. But it seemed like they wanted out and we were able to produce a car on the biker pay a lot. But we also let us keep that trade and I could put it and we did it at 100 payoff. That was part of the conversion I did so I could finance. So if I was getting 100 of that loan, I would give up the interest, keep that loan.

So one of your goals for the year was to get back to 1200 accounts. Are you, are you in that market?

No, we are. We're 10 from that. Yeah. Where we just fell below 1100 from 1217 or something like that.

I think one of the Main goals for a lot of buyer payer stores this year if you've been in business and you have a seasoned portfolio. Everybody lost accounts during COVID I think is a. Is a fair assessment now there's, there's anomalies out there, buyer payer stores that have started up that have really grown quickly. But I think in general most of us have lost some accounts. One of the main goals we see is that we need to get back there. Can we get back there with inventory prices is a question.

What do you think John? Well, I think I don't spoke here before they said about like the new car dealers really have to go to sell cars again I think we have to do the same thing because we can give all the reasons why we can't do this or we can't do that. And I listen to apartheid different podcasts all going to loop.

There's no others.

Yeah I know that. Well unless there one. Okay. But there's a guy on there, he's Hispanic guy from Texas. Largest Chevy dealer I think in Texas or something but he says we're Americans, we're not Americans. So instead of our telling our customer we can't we got to just sitting down tell what we can't do, try to get that deal and love that customer. You know just who we got to love our wife and our customer is that's helps us love our wives.

We're not worried about kids, kids as well Kids.

Well I guess you cannot like your kids some days but. But yeah so. But we gotta, I think we gotta get back. We got VIN Solutions as our CRM now which really is a overpowering tool and you may not see the value in what that costs but we share between three rooftops and the amount of follow up we're able to do and keep some of that base and that contact. 3 months, 6 months, 12 months. It's their daily tasks and that has really been a struggle for us the last year to call for those referrals, call those people back, the good paying customers on top of it that we're losing.

So that's the best way to produce more accounts is to sell more cars.

Right.

Selling more cars fixes a lot of things.

How do you go about.

Jennifer, I'm gonna start with you. How do you go about setting your goals? What time of the year do you do it? You just throw a number against the wall. How do you do it?

I generally start in November trying to set my goals. I go back and I just run a. Just a yearly log. I look and see where I'm at, what I've done for that year. And I say, okay, what is it gonna take next year for me to grow or what's it gonna take for me to come out of whatever I've done? And then in November, I sit down and I try to figure out what we've got to do, where we're going to be. December, we're trying to figure out how we're going to get there by the end of December. I've got to have a plan in place.

So you have a drop dead deadline. I've got to do it. No choice.

No choice.

How many of y' all out there have deadlines for your goals setting for the year to come? A lot of people, very important. That's kind of like a goal in a goal, right? Dan, what do you do?

So it tends, for me at least, I can see my business most objectively whenever I'm attending 20 group meetings.

Bingo.

Yeah. You talk to your other people that are in your 20 group, you see where your numbers are at. You're not getting calls from, you know, pissed off customers and getting distracted or whatever. And we set goals and, and I've really been fortunate to have some really good moderators that have helped over the years. You know, our first moderator is Chuck, I saw him earlier, it's great to see him again. And you know, Dave Brotherton and Ben Goodman, they've all been wonderful and they really kind of help you understand kind of the numbers as a whole and point out, do a nice job and fellow members do as well, areas of your business that they think will really help, help you stay on track. So usually the last meeting of the year, we look to set our goals.

The last year, the last meeting of the year at 20 group is a great time to, to look at forecast building and set those goals. Is that what you do as well, John?

Yeah, yeah. Like I said, I'm not hard set at the end of a year to create it because I'm never right. So after all these years, I get tired of being wrong. So like I said, that 20 group, that first quarter is always the bounce quarter for typically in our business the second quarter. But that 20 group meeting in April, June and September, whenever yours would be, is just a tremendous value. That really took somebody who didn't know that you needed to buy unemployment insurance to where we are now, 28 years later. If I had to rename my business be 20 Groove Motors because that's everything that you came in, you say, yep, yep. Every process I have came from 20 groups.

Let's talk about major obstacles that. That we typically have uncovered years and what they look like now. So if you look back on the years where you maybe didn't miss your goals or it was harder than you thought, what are some of the options.

That'S in your way?

I'll start with you, John.

Well, most of us employees, you know, we had some folks that were really nervous about the virus, and I don't really want to come down either way. We didn't subscribe to all of that. We worked straight through it, but we had to make some adjustments, some accommodations for people who were. Whether it was in an office by.

Themselves or some at home.

Work and things, collections at home, and even my it stayed home for a while. So we become more accommodating and we've become more astute to time off for employees since COVID hit. It seems that's what drives. So people, instead of, you know, mandating days off or amounts of time, you take your vacation. I don't care if they take an afternoon now, if that's really what it takes, because they're going to get that freedom. So somewhere else, other places, they have other options. And it is hard enough to get our people we like. And what's the difference if they take every Monday for 12 weeks or 10 weeks instead of two weeks off at a time? Yeah, yeah, there's no difference.

So staff is one of the things.

Staffing, Staffing was other than the normal woes of inventory. Sure.

And Jennifer, my staffing as well, we're still having a tremendous time getting things out of our shop. Time to line has really been tough for us. You know, I could sell probably twice as many cars if I could get the cars from my back to my front. So we're really focusing in on that the second quarter, trying to get all that taken care of. Just tying up some loose ends, things like that.

Yeah, I agree with the staff. And the first presentation we had here at this summit was, you know, it really hit home. We had to, you know, really try to, you know, figure out who's going to help us keep our business heading in the right direction. Who do you want out there representing your business and are they doing a good job? Are they saying the right thing? So we've become, like John said, we've become more accommodating now with people that we, you know, feel are performers standpoint of being flexible on schedules. You know, we've got a single mom that works for us, does a great job, just, you Know, she needs a lot of flexibility. And years past, I don't know that I could have stomach. Stomach that. But you know, you have to if you want to keep them. But at the same time, you know, we're all business owners, so we want to be able to feel like we're maintaining, you know, some control over your business. So it's a balance.

So I think we're finally, let's say. I don't want to jinx it, but we're probably done with COVID So.

Yes.

The first four months of this year, have you seen any other challenges that you didn't anticipate for this year? And whoever wants to go.

You know, I was, I was really. Was really.

Looking forward the, the added.

The Radent priest heist. And I'm not an economist, don't ever pretend to be one. But the rate increase hikes, I was hoping the impact on that for, for our business, since we are fairly established, would be some of these subprime lenders would start pulling back more than what we've seen. And I haven't seen as much as that as I'd like. So I was looking forward to this season and you know, they, they talk about. And unfortunately I missed the, the economic presentation before us. I was really hoping that, you know, it seems like our business does. Has an inverse relationship to how well the economy is perceived to be doing. You know, if the economy is not doing as well, it seems like our business really tends to pick up when interest rates are high or whatever. You know, say there is a recession out there. You know, a lot of these financial companies I've seen in the past, and it's like a cycle. It gives us an opportunity to, to serve a bigger portion of the public. And I haven't seen that yet.

It's coming. We had another bank fail this morning that's going to probably really start to. To back it up a little bit more. You know, who knows? So recon goals are always. They're kind of the, the perfect puzzle piece to fix most things. All of us can sell cars. We have them ready.

Right?

Right.

So how do you go about setting your monthly recon goals? Is it direct correlation to how many cars you sell or do you just say this is how many cars my shop can get ready? John, I'll start with you.

Well, we have a consolidated service center, but we set our mark at 125 cars a month, which is five cars a day. That shop is the bane of my existence some months. And every time I think I've Seen something, I see something else. But we steady do that 20. But that 20 is hard. And I brought in like the best guys in our industry for that. Dave Brotherton was up, Ben Goodman was up. And they've given us some good guidance on that. And, and it's really helped me get some traction. You know, when you think you know everything, you don't kind of thing. But it's really given us some direction for that. But it is difficult. The parts, for me, it's the parts I got the guys. It's getting the right part. Not necessarily always at the right price, but never too much. So there's a balance of that buying the part and the time it takes to get. I'll suffer money for time every time, so. But that's been been the hardest part trying to get those. The RO has grown from 1300 to 1800 on buy here, pay here and then for.

For our way we recon it and.

Then on our prime it's probably 1500-2000 dollars on our prime cars. So there are more ports getting thrown at these cars that you see to be 1300 and 900 because we could buy them better. So it's almost doubled in some cases.

Let's just hit your buying goal real quick. How do you set that? If you've got to have 120 cars, is your goal every month 120 or do you base that on times of years?

No, we, we steady sell that 120 mostly. I was an old wholesaler from years back, so. But we, we can stay around that 120. If I can have 120 all year round and some, maybe not all in buying but between the three, like you said, sometimes our, our industries are inverse of the other side. So if prime is doing real good, biker payment may not vice versa. And it seems because of the, the low numbers, we sell 40 to 50, 20 to 30 and then 30W, we're not really chasing this big number.

Gotcha. Deborah, what are your recon goals?

My recon goal is if we could just. I only have two mechanics and a glorified oil changer. And so if we could just get 50 cars a month through our shop, that would be terrific. Right now we're sitting usually 35 to 40, so we still got a little bit of work to do. I don't know that they can do much more.

That's a. For two techs and an old jack. That's a lot.

Yes. And it's very hard for us to find mechanics in our area. You all know that so we just kind of do the best that we can do is as far as my buying goes, I try to focus on previous sales. What we had, usually it's 30 to 40amonth. Sometimes I hit that number, sometimes I don't.

So do you look back at what you saw the previous month and then try to replace it?

I do.

Okay, Dan.

So I try to keep a certain number of cars in the lot. About this time last year, at the end of tax season, it looked like we were going out of business and it raised a red flag. And I looked at what was getting ready to come through and what work was still left on them and knew I had a problem. I knew I had to get away from. That was the final nail in the coffin that we had to get away from the lower ACV and start working on trying to get more cars that were ready to go. Not necessarily looking for the value buys that strain the service department on top of the service contract work that we have running through as well.

So it balance good historical data. When y' all look at your historical data, do you compile your old historical data? How do you go back to your composites and look and look at those?

I think composites for us are the best way because those are the ones I look at every month.

Do you look at other people in your group the same size, their numbers as well?

Hell yeah. That's how we rate ourselves. That's how I can see if I'm on tempo, above tempo. I like being left. I was right for a long time, you know, but so I, I like that there's healthy competition in, in that with your friends. That.

Yeah.

So that's us. I rely on that more than my DMS and Jennifer.

I use my composite and then I also look at my historical data too. I'll go back from last year, two years ago, even three years ago, just to see where I'm at. I need to be going.

I don't like to look at my composite to, to. To goal set. I don't know why that is. I just have a lot of historical data.

How about you? Yeah, composites.

Maybe I need to start looking at.

It's worth it for a while, dude.

So we have about three minutes questions from the audience. Way back in the back.

To start with, I actually have a.

Question for all three of you.

I guess three meetings are better than one. And when you guys advertise for your.

Businesses, do you market your buyer payer.

Options, your pricing or the overall business and who you are?

So are we already Advertising, are we branding? Are we advertising prices which probably nobody in the room does or inventory or mix and everything when it comes to your buy here, pay here, store, what, what do you see? What works?

I'm more branding on you know we can get you approved. We have a quick 90 second, I think we advertise like a 90 second quick, quick approval. We have the cars out there and does say call for pricing.

It's hard to find that.

Website that will let you do that. But pricing doesn't keep us competitive. That is a argument on the other side of that. I'm on the side of not doing it. It's worked for me for a lot of years and we're a brand in our own town now after such a long time. So that may be a little struggle for someone who's new.

Yeah, I think so too. I assume most of you are branding advertising more than anything else, right?

Yes.

Certainly don't, you know, point out price is our main selling point. But a couple of years ago Luke, I actually started advertising price on our website which a lot of buying your behaviors haven't done but some of the really big successful ones, they actually do do it.

Yeah, we price ours.

Yeah, I mean they're going to know at some point anyways and there's ways to help with that whether you give a warranty versus a service contract and back out cost and sell service contracts.

But I think, yeah, I mean I think advertising is like pushing advertising. That's probably not the right way to go. Next question, what's your average purchase price.

Average miles, loan term and sell price? Dan.

Sir.

Okay, so our actually wrote some notes down on here. Our actual purchase price, our ACV cost went up you know, 30 some percent. We're you know, close to eight grand now and then recon on top of there. You know we use industry standards on your typical markup so you can you know, visit our website. We got a pretty big array of prices on there. We like to keep a range and our average payments have actually gone up about 15, 20% as well because the ACVs have gone up.

Jennifer.

My average ACV is about $8,800. My average miles is probably 1:35 to 1:45. My average payment is about 120 to $130.

John. $8,500 plus the recon. But I really look at my return on investment. I try to keep that under 24 months. So some of that will dictate if I need to. My payments have gone up from that 90, $100 to 110, 115, 125. So I try to keep that ROI under 24 months just based on my portfolio. I know we flip our portfolio every 30 months, so I know that's my turnover rate for my portfolio. And that's how I met. That's typically how I manage that. So I'll find somebody who can pay 125, not a hundred dollars. We do turn people away way on if they can't afford that.

Well, we got us out with one minute to go. Good job, everybody. Thank you all for being here.

Dealers helping dealers. Please leave us a review and subscribe the Independent Dealer Podcast.