#300 - Looking Back 5 Years And 300 Episodes

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

Hello and welcome to this very special edition, the 300th edition of the Independent Dealer podcast. 300. 300. We've been at this for five years. This episode, of course, is brought to you by Buckeye Dealership Consulting and Luke Special. We flew together to be in Indianapolis to record this 300th episode and attend Buy Here, Pay here dealer for them. Yeah.

So we're in a different spot. Yes, it's fun. We've had some. Jeff, 300 episodes is a milestone for sure. And we're so glad that, that all of you tune in and listen to us and watch us on YouTube and all these things. It's so humbling to come to things like this and you introduce yourself and the people go, I know who you are. You know, I go, oh, okay. And it kind of. I'm still after 300 episodes in five years. I'm still astonished that people know who we are.

Yeah, yeah. And it's super humbling to feel like we've had any kind of an influence on dealers, businesses, their livelihood. I mean, it's incredibly humbling. So thank you guys for listening and being tuned in for 300 episodes. Hopefully we brought you some value. As a side note, just statistic wise, Luke, we've gotten to about 10,000 monthly downloads between iTunes, Spotify, YouTube. So we've gotten out of some dealers, which is really, really fun. It's really fun to be able to go to these conventions and speak and talk and educate and really, that's what it's all about. You know, it's like just educating dealers. We get better ourselves and hopefully we help people along the way.

Yeah, it's dealers helping dealers. Jeff came up with that, that attitude. And it's. And what's, what's funny is that the industry is kind of catching up to that. Industry education is catching up with that today, moderating a group during, during Buy here, Pay your forum and seeing the participation and other dealers helping dealers, man, I tell you, that was a great way for you to look at it. And it's really, it's caught on in the industry more and more times. We go to places, they're having breakout sessions where dealers are leading. And there's been so many dealers to step up after we started this. You know, you see other dealers that are wanting to, to get involved and do more things. It's really, it's. I'm not saying that we had anything to do with that. We may have, we may not. Have. But it's really good to see.

Yeah, yeah, absolutely. Look, and I think it'd be fun to look back. So tell me this. If we look back at where Luke Godwin was and Godwin Motors was five years ago, you know, we talked to you guys about the evolution of the podcast. Obviously, you know, we've got 300 episodes. We've got up to 10 downloads. But you've evolved as a dealer as well. And my dealership has evolved also. So tell me this, Luke. Over the last five years alone, what. What has changed? How has your dealership grown? Let's look at the metrics of both our dealerships and what growth we've seen, and then maybe we can talk about some of the good moves and bad moves that we've made at our own car lots.

Yeah, you know, we've grown a lot in. In those years. In those five years, we grew larger than we actually are now during COVID and we experienced the dive during COVID after, you know, after the peak of COVID and. And we rode that wave down, and then we leveled out and we started growing.

How many accounts did you have five years ago?

We had. When we started this, I had 658 accounts.

650. And how many do you have now?

Seven. 65 today.

Okay. Okay. So you've gone back up. You went down a little bit, and now you kind of.

Yeah, we. We made it up to 860 during COVID and we went back down, but now we're going back up.

So like 10, 20% growth. And what about your accounts or your dollar amount, your AR, is that grown by more than 20%?

Yeah, we went from 5.3 million to 8.5 million.

Oh, geez. So that's like almost 50% growth.

Almost 50% growth.

Isn't that wild? So I've got similar situations. Five years ago, I had about 400 accounts. Today I have 500 accounts. So that's what, a 25% growth in my account. But guess what? My AR or my dollar has gone from 2.3 million up to 5 million. So I've doubled the dollar amount for only a 25 increase in accounts, which speaks to ACV. ACV, more cars, more expensive, higher dollar loans. Just the natural creep of cost of cars over five years.

Yeah, you know, we look back in my. My average ACV right now is almost $14,000. A lot of money. The ACV back when we started, this was around 775 maybe, which was really high back then. Really high back then. And it's stupidly high now. Yeah, hopefully we'll see that come down a little bit.

Yeah, maybe the new normal. What about your physical, physical situation with your car lot, location, size, employees, what's changed in five years?

So we had about in, I don't have the figures exactly, so I was trying to count them up and I think we had 11 employees, not counting me, not counting family, and we're up to 19 now. Not counting family. We went from a five bay shop to an 11 bay shop. We've grown so much in our dealership. I've had to move out of the dealership into. Actually we have two employees now at different sites because we don't have enough room in our, in our dealership to house the people.

Yeah, yeah. So you've grown quite a bit. Similar for me obviously, you know, going from, you know, selling maybe 25amonth to now I sell maybe more consistently 40amonth or so. I added a second location as you know, you know, I bought a second location. We can talk about that later as good or bad. And then from employees, I think we averaged maybe about 10 back in the day to now we're maybe more in the 15 area as far as employees go. So we've definitely added more overhead, you know, more sales. And I say all that, not to say that growth is necessarily crucial. You know, I think a lot of dealers over the five years may have stayed where they were and they may have just churned and had a great lifestyle and you know, they made it.

Fine, learn how to make more money with less. Right?

Yeah. With their existing footprint. So it's not to say that you have to grow, but sometimes it is important.

I think it's, I think it's important. I think it's important to find the right spot for yourself.

Right.

And if that means growing to get to that right spot or reducing to get to that right spot, you know, it's all, at the end of the day, it's all about net, right?

Yeah, it is about net. It's also about lifestyle. And that's what we talked about with some dealers earlier today. I said, hey, you almost have to back into it from what's your overhead based on the lifestyle you want to live. And that will tell you how many cars you have to sell and how much you need in your portfolio in order to support that lifestyle. Right. There's no reason to grow, just to grow. There's no reason to go out and borrow just because I want to say I'm a 20 million dollar portfolio guy or to say I sell 100 cars a month. Does that really improve your lifestyle, you know, or your long term goals? So sometimes, I don't know, work into it backwards.

Yeah, I mean, we always talk about working into it backwards. Right. Working into how many, how much money do you need to spend in advertising to, to get to where you need to be by, you know, that's, that's the way we look at it.

Yeah.

And, and, and working into a backwards day from the lifestyle perspective, I've never even thought about.

Yeah, well, I know for me, you know, we talk about metrics. I have, I'm very heavy on personnel expense. I was heavy then. I'm still heavy because I'm not in the dealership a lot. So my top guys get paid pretty darn well to take care of the things I don't want to take care of because I'm just not there. And of course they're way better at dealing with it. Good time to plug one of our sponsors. One thing that has changed over the five years, Luke, when we started this.

Thing, we didn't have sponsors.

We didn't have sponsors. And now we have some sponsors. And you guys know our sponsors have help us pay for Facebook ads, Instagram ads, and Luke's alcohol bill. I don't know, where do we put this money?

You know, we use it to bring this great production value that we, that.

We have here as we're tucked in a small closet inside a hotel. But of course, the guys at primaland, as you guys know, are sponsors. It's the place to go to get money. Flooring lines, purchase real estate. And we know that debt is more expensive right now. Right, Luke? I would probably say if we talk about some of the things over the last five years that good and bad decisions that we've made in our dealerships, I would go out on not a limb, but I would definitely throw out the fact that I didn't take advantage. I took advantage of the low interest rates to a degree. Right. So I want to point out that I bought a second location and locked in an SBA loan. Right. Which is a locked in rate. And I did not go out and re secure a line of credit with a locked in rate. I probably could have or should have.

It's so funny, when we were, we were building a list of good moves and bad moves before we started this episode and we were just doing on our own. And you have bad moves not locking in low debt and my bad move, not taking advantage of low interest rates when they were there. And that's you know, I mean, hindsight's 20 20. No, but you know, nobody thinks about it. I didn't even think I was going to need any extra cash. And then all of a sudden I need extra cash and it's costing me way more than it would have cost me if I could have leveraged leverage, something that I had when interest rates were worth 3%.

Right. Yeah. And when I say lock in long term, I think the only way we can lock in long term is, you know, through like cash out refis on your property. Right. Because that's a, that's a 30 year, 25 year fixed commercial loan at an interest rate. If I had gone out and got a line of credit and from a lender and I had penciled it at prime plus one or prime plus two back in the day, it would be doable. Now prime plus one or two would be much, much more stressful. So that's also a lesson learned that when you're modeling these things out, you got a map model for today's rate and the potential of tomorrow's rate, which could be worse.

Yeah. We've lived in a, an area of low interest rates for so long that we forgot that interest rates actually rise. And that's something we all need to look for for the next five years. When can we, when can we make those moves that are going to really help us moving forward? When are there opportunities in the market that, that makes sense? We try to point those out when we see them and sometimes we, we have blind spots as well, so we don't see those. Yeah, those things and we. I missed this boat. I didn't. When I bought a new house, I didn't take out a, a loan when it was 2% like a, like a dummy. Right.

Just paid cash for it.

Just pay cash for it. When I could have friggin.

I could have gotten free money.

Gotten free money.

Right.

And I could use that to invest in my dealership. I could use it to invest in, in the market. I could have done anything with that money to make more than that 2% it would have cost me.

Right? Yeah.

So it was just dumb.

And it was also available. And that's the difference. Back in the day, yes, it was a little bit easier to get a loan than it is today. So what we say that in and what you can take from this is where are those opportunities that you see it? My advice would be trust your gut and, and maybe go all in or maybe just go a little more in than you, than you think you, you Know, I think we all kind of hedge and we're all a little too scared to really jump in when we see something or make some sort of a large policy change or, or a business model change based on, you know, this, this trend that we see happening. But maybe have a little more faith in yourself.

You and I were talking about this yesterday, and one of my good moves, I thought, was doing this because it's opened the doors and network with other dealers and the. And we were talking about risk yesterday in the car coming back. We went to see a dealer that's up here. And the dealer, it's huge. I mean, he's. He's a good business guy, and hopefully we'll have him on soon for how I built this. And, and his appetite for risk is different than you, than ours. But we've got to learn that when we see a break in the market, we gotta go for it. And that's, That's a bad move that we didn't make is we've gotta be all in sometimes because our gut's usually right. We've been doing this a while.

Yeah. It's definitely what we call the go big or go home mentality that you see in a lot of dealers out there. And we've had quite a few on the podcast, and they're inspirational. Right. I mean, they all look at it and you say, wow, that guy really is putting his neck on the line. Go big or go home.

Yeah. And like. And sometimes you go bust.

Yeah.

But these guys who've been bust, they come right back and you're just like. I mean, it's.

We.

We talked about doing a case study on this and trying to figure out what that. What that thing is. Right.

What that gene is. So what. What else did you. What else would say, you say is a good or a bad decision you made over the last five years?

Covid was tough. And I think one of the things that I had a blind spot on in during COVID was not seeing the adjustment in cost of labor.

Right.

And not keeping the staff I had by paying them just a little bit more money. It really hurt me. It hurt me in. When we talk about how I got to 800 and something accounts and it dropped off. And basically that was because I did not make the moves to keep staff. Paid them a little bit more money to keep really good staff. And it's taken me this long to get back to.

To doing it. And you cut all your advertising and.

I cut all my advertising at one point.

You guys can go Back to episode something 200.

Yeah. And you know, and sometimes you just. I don't know. I, I didn't have the inventory. I made some bad mistakes during COVID I've made some good. I made some good decisions at the beginning of COVID Buying a lot of cars, sell them quickly. I was doing it right. And then I don't know if I got burnout or, or what. And I got frustrated and then it. Then I let it kind of drive me down and I, you know, that's one of the bad things I, I had.

How about you? I'd say a good move I did a couple years ago was just decided that I needed to control my destiny on my own. Right. I think we all start this and a lot of you guys have partners, business partners, whether it's a buddy or a dad or some. Someone your spouse or ex spouse, I don't know that you started this business with and you got in. And there definitely comes a point where maybe you have got different priorities or different visions for the future, different levels of dedication. So me having that tough conversation and pulling the band aid off and saying to my business partner, hey, we need to split ways. Let's just cut this baby down the middle and take the left or the right, whichever side you want. I'm cool with the other one. And so, you know, I did that with my business partner and I, I shed all, you know, he took all the real estate that we had, you know, some investment properties, a student housing and property management company, and some of the diversification that we'd done over 15 years in order to be in the car industry, but also be in real estate, which I felt was a good, you know, balance. And now I'm just a car dealer, you know, quote unquote, just a car dealer. All my eggs are in one basket. And that's. It's nerve wracking. It's scary. But being in control of your own destiny and knowing that, you know, when you make decisions, I don't need approval. I don't need to get consensus from a partner. I don't if I want to shut it down or switch to leasing or go, you know, total retail or up my ACV or lower it or close a shop or open a repair shop or buy another piece of property, it's me. Yeah, I make that decision. And that freedom is, has been great.

Yeah. I remember when you were going through this and it's hard. Anybody having a partner is hard. Getting out of a partnership might be harder. And I mean, there was a time where you didn't know if you were going to be in the car business anymore or were you going to be in the real estate business? And I said to you, because you were getting some pushback, I said, well, Jeff, just say, tell your partner, well, I'll just take the other side. If you don't think this is fair, I'll take that side. Yeah. And I think that's what pushed it over the edge, right?

Well, yeah, it was. I mean, I had divided it in a way where I knew that I'd be happy with either. Yeah. This is a fair. Two fair buckets. Which one do you want? And that works for us. I don't know if that works in every situation based on your guys's situations, but what. What I'd found and my overall lesson that I'd leave with you guys on that is in the beginning, it makes a lot of sense, hey, I'm going to buy a car. One day you're going to buy a car, the next day, I'm going to sell a car, you're going to sell a car, and we'll just split everything down the middle.

Yeah.

No, no, no, no. Spell it all out. From day one, every possible scenario you can think about needs a plan. What's our buy sell? What are your responsibilities? What are mine? What's my job description? What's my comp plan? What's your compensation plan? It's not 5050. It's not down the middle. It's not, I give some effort, you give some effort. And that works out great in the beginning. But priorities change. People have families, people want vacations, people get sick, things happen. So spell out every possible scenario you can. And if you haven't done that, sit down now with your business partner and spell that out so that you guys know, hey, you work, you get paid this. I work, I get paid that. And our comp plans are fair for each other based on our performance or activity, but they don't have to be the same.

No, yeah, Best. The best thing to do is if you can do it on your own.

Do it on your own.

And if you can't, then spell it out.

Right? Yeah, yeah, absolutely. What else? Anything else you feel like you. You did well, did bad. Yeah.

You know, it's continually figuring out ways to use my reinsurance company and my reinsurance money. It's a good move. We've always talked about this, but there's a lot of different moves you can make once you have that company. And so we've done new products, products that Help our customers, products that make our cars better, products that make us more money. Right. So I really kind of doubled down on that, got into the CPI portion, just figuring all that out. It's a good business move. And you know, of course we Buckeye, everybody go see, share our folks in Buckeye. But that's been one really good thing that, that I've done during this past five years, that maybe I didn't use my reinsurance as well as I could have the previous five or six years.

Yeah, I definitely think that had I, everyone says that had you started your reinsurance company years ago, had you started your CPI program years ago, you'd be this much further ahead now. So for sure, the best time to do it is now get started and start building it. Because, yeah, I look at the, I mean, I've only been at my CPI program for a year and I'm not even fully committed to it. And it's, it's grown into a great little income source every single month, you know. Yeah, that CPI adds up really, really fast. I would say one of my bad moves is, is not making those. Dragging my feet on decisions, I think. You know, like, I like to analyze every single angle of a product or a vendor. I hate just jumping into, like the new fancy widget. You know, you go to these conventions and you see, oh, this is the new service that's going to save you time and sell you more cars. So I'll vet them for a very, very long, long, long time. Right. Or if I feel like I'm unhappy with a vendor or something, I'm like, oh, but it's so much headache to change. I don't want to stitch my payment processor. I don't want to switch my reinsurance company. It's just such a hassle to teach new processes and have new logins. I think that's one thing that's bad for me is not just knowing when to just rip that band aid off and say, I know I don't like where I'm at. I know I don't like the service. I've got to make a jump and just, and, and keep doing that and always just kind of leveling up and knowing that you're not just stuck with where you're at. You're not stuck with your GPS provider, you're not stuck with your reinsurance company, you're not stuck with your, you know, even the options you're buying from, you're not stuck with them. Always be looking to upgrade and get something better.

Yeah, that's Doing this podcast has opened up a lot of doors for us, and you learn so much more by talking to so many dealers and the vendors. We get to talk to vendors. We, you know, vendors come and talk to us all the time about different things. And it's. It's been a lot of fun. A lot of fun.

Yeah. And you see the guys, like, even. Even so Tax Max, our other sponsor this week, they've come out with new programs, right? So like their VIP program and their file and drive program that he talked about a couple weeks ago. You look at these vendors, and they. They're forced to reiterate, right? They're forced to reinvent themselves to keep us dealers interested and to keep customers interested. So they're continually reinventing these things. So why would we not do that inside our dealership? You know, are we looking at our processes? Are we reinventing our pay plans? Are we restacking our dealerships in the way that we handle, you know, reconditioning and sales and even, you know, from our logo and marketing advertising standpoint, like, why not reinvent and reinvigorate yourself instead of just kind of being stuck in that rut of continually just doing the same thing over and over and over like that? That can be. It can get very unexciting. Does it get you excited to go to work in the morning when you're just kind of running along and just trudging along in the same way?

Yeah, it's. You know, probably everybody listen to this is half functioning, right? Like, I mean, like, we entrepreneurs, we're trying to do something, you know? One of the other bad moves I didn't do is when a building that I'd been wanting for a while came up for sale. I asked 20 people whether I should buy this place instead of just buying it, and everybody talked me out of it. I could kick myself, Jeff. It was right there next to my dealership. It would have been so much better than what I. What I currently have, and I didn't do it.

Yeah, I want to tell me. Yeah, go with that gut instinct, right?

It's got to go sometimes. Just got to go.

You got to go, what?

Next five years.

Next five years, what's it gonna look like? Speaking of gotta go, I don't know. I'll be honest with you. I don't know. I've been debating on borrowing and trying to grow again or just optimizing the footprint I'm in and selling the same amount of cars and keeping my portfolio the same, but just trying to up the Quality, Okay. Right. Sell the same amount of cars, but just try to get a higher quality customer, a higher quality car, because I know they're going to be pushed into the buy here, pay here market instead of trying to get to that next level and still bringing in a lot of lower qualified customers. Just raising my bar and using this downturn in the economy as an opportunity to clean up my portfolio and not enlarge it.

Yeah, you know, I'm. I plan on growing.

Okay.

And I don't, I don't know when that growth is gonna, is gonna be enough. You know, I used to say, oh, when I get to a thousand accounts, I'm gonna be happy. Well, I haven't been there yet, but I, I see a way to get there now, and I think we can do it within the next 24 months. You know, I might get there and realize that actually having 800 accounts instead of having a thousand accounts, sometimes that happens. Y' all just, just let you know that sometimes you make more money with less accounts. But I see growth in the future. I see a multiple location set up in the future, but it's not something.

I got to do now.

I got, I got to get better at what I do at my current location. I've got to train employees better. You know, I've got to do all these things so that I can grow and, and I can step away a little bit more. I would love to be able to go on the road and see other dealers a lot more than what we currently do. So I see growth. Hopefully it's good, steady growth, and then we'll. We'll see where we land.

I think looking back on this right now, I would, I will tell, I will predict that I have not bought into fixed operations the way I tell myself I should. And I think that I should, and I think every other dealer should. Yeah, because I believe, and I think the consensus is the writing's on the wall. Cars are not getting cheaper, they're not getting more affordable, and they're not getting easier to fix. So recon is going to be just so much more crucial moving forward than it already is. It's pretty important now, but I think it will get more and more and more as these later model cars, we start having to live with higher miles to make them more affordable. We start having to put in more engines, more transmissions, rebuilding engines instead of replacing them because they're not even existent on the used car market anymore, or it's not affordable. So having a more robust repair shop, I think I know that it's crucial. I just can't crack the code and I don't think I'll steer into it as much as I should.

Well you have time. You can do it now. You steer into it. And recon is so important. You can only sell as many cars you get ready.

Right.

And so if you can only, if you can only, only get ready. 30 cars a month, that's all you can sell.

Yeah.

So you got to lean into it and then you got to have a way to repair them when they come back because they all break. One thing I tell every customer, I can guarantee you one thing your car.

Is going to break.

I mean that's, that's it. Right. So there's definitely opportunity in pick stops. You know, it might even be opening its own fix up somewhere. You know, it's on standalone building. I think you're right there to look at that. You know, if you don't have service, I encourage people out there listening, get it, get open up a service for you need it to do it.

Right. I think I definitely. Yeah. I think the, the most keen operators we know of are investing heavily in that. They see the writing on the wall as well. Yeah.

Any what's podcast like in five years.

You know, hopefully we keep growing. Guys, thank you for listening. It helps when you guys leave reviews. Tell your friends, subscribe to YouTube. Subscribe to the YouTube and give us feedback. Let us know what you guys want to hear more of, less of. And we'll keep delivering it.

Yeah. And always come say hello to us if we're at. We. We talk to a lot of people and, and we try to remember names and faces and you know, sometimes we do a good job. Sometimes we don't. You catch me after seven or so, I may have had a drink or two and, and not remember you the next day. Not just kidding, but say hello to us. Tell us what you want to see in here because that's how we do this. And we're doing it for, for y'. All. We're not really doing it for us. We don't, you know, we, we get to have fun and I like that.

Yeah. Yeah.

So been a good ride.

Awesome.

We'll see you in another 300 episodes.

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