#303 - How I Built This w/ Ben Wheat

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson. Hello and welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting. This is our most favorite time of the year, and not just because it's Christmas and we get gifts and a lot of time off, but because in the month of December, we do our How I Built this series.

Yeah, Jeff, it's so much fun. We, we get to meet other dealers that we don't always get to run into. We get to interview some, some of our friends that we've actually made really good connections with. And we also get to bring the stories to our audience that they don't get to hear. We get to hear a lot of these things, but there are lessons to be, to learn from there to, to do the things that these dealers are doing. And there's also some cautionary tales to not do the things dealers are doing. So, yeah, over the next four weeks, we're bringing it to you.

We are going to bring in Luke because so often you see these dealerships and you see dealers and you're like, wow, that guy is just successful. He's just got it made. He's got it figured out. He must have just been born that way. And we don't realize how much goes into it, how many hard knocks and how many near bankruptcies and how many just sometimes dumb luck goes into it. So I love hearing the stories behind, you know, the, the dealer, the name, things like that. So we're going to kick it off this week with our good friend Ben wheat. Luke, introduce Mr. Ben to the group.

Ben is someone we met a couple weeks ago when we were in Indy, and he owns Indie Wholesale Direct, one of the coolest facilities I've ever been in and one of the nicest guys we've ever met on the road. So, Ben, introduce yourself.

Hey, guys, thanks a lot for having me on again. My name is Ben Wheat and I am the owner, operator, president, what have you of an independent dealership in Carmel, Indiana, north side of Indianapolis. Indy Wholesale Direct.

It's, it's a phenomenal store. Ben, how many cars are. Are you selling and what is your, your mix? Subprime Prime. You're a retail dealer. What are you doing there?

So we've got, we've got a pretty eclectic, eclectic mix of inventory. We've got cars, you know, we try to keep most of the trade. So we've got stuff, you know, we've got $5,000 cars and we've got, you know, $200,000 cars. But typically, you know, our inventory falls in the range of, let's say, 10 to maybe $40,000. And we usually stock about 250 to 300 cars, typically online, maybe 200. There's usually about 50 in some stage of recon. And per month we like to sell, maybe we usually fall 120 to 150units retail.

And man, that is an operation. Yeah. How many wholesale on top of that? Because it sounded like we were up there, you were doing a lot of wholesaling as well.

Yeah. So it depends. It depends on the time of year, really. And, you know, this time of year, you know, we were talking before we went on about, you know, we are, you know, selling, you know, we're blowing out some old age stuff. You know, it's the end of the year, so we're kind of, you know, we're looking at our numbers and, you know, talking to our, to our accountants, things like that. And so we are, we are wholesaling quite a bit the last quarter, I would say, you know, especially this month. We may wholesale as many as 100 cars this month. A lot of times, you know, we'll find ourselves with. And I'm sure you guys have this as well. There'll be a. A car that's been on the back row for six months and you, you know, you just, you're never going to get around to fixing it. It made an engine, may need a transmission, so. So you just decide it's time. Let's just take it to the auction and say goodbye.

Yeah. Yeah. I think all of us end up, and us, the ones who don't do that, end up with a pile of junk like Jeff, and he just got a bunch of cash sitting on the back lot. But Ben, the one thing I found very unique about your facility, and don't get me wrong, it gets cold in Indy. So having an inside dealership is. It's something else. Can you describe your dealership to the. To the listeners?

Guys, it's tax time. That means you've got to get signed up with Tax Max right now. You can start running the fourth quarter program for Tax Max. Filing people's taxes in an advance, getting an estimate, and then getting that money sent directly to your dealership. Now with the fourth quarter program, so we've started it at my dealership where we've reached out to all of our, you know, priority customers or some of our best customers that might want to upgrade or trade in early. And we're giving that that as an option.

Yeah, it's Always good to have. It's an extra tool in the kit and that's kind of what we're talking about here. Whether it's a lender, whether it's a floor plan, company, whatever. You need those extra tools to get those extra deals done. Tax max is the way to go. They're there for us. They will help you. There's also a code in the, in the show notes. Check them out.

Yeah, it's VIP. Use the code VIP to get 40% off when you sign up for their VIP package. And the coolest thing they're doing right now is the click to file. So you actually don't have to do the taxes in your dealership. Your salesmen don't have to take the time to physically punch in the numbers. The customers can just click a banner on your website or you can text them over a link and they can file it from their phone. So while they sit at home, they can have all their taxes filed. They can do the whole thing. You show up the next morning and see that you've got a refund waiting to be credited to them and you can start selling them a car with that down payment. So it's a really, really cool program right now. Be sure to take them out.

Taxmax.com yeah, so our dealership is on about five acres. So it's a pretty large, pretty large spot. And we have a warehouse that is almost 100,000 square feet. So we keep the majority of our inventory indoors and it makes it really nice in the wintertime. You know, your cars, you know, you're not scraping snow off of cars. Customers can shop, you know, in a, you know, climate controlled facility. You know it also and we, we touched on this when you were there. It really helps you with theft. You know, catalytic converter theft is a huge thing. So that helps us out there. We've got a pretty big service department that's on one end, details on one end. It enables me to have everything under one roo roof. Helps you keep tabs on everything, keeps the whole team together. You know, we don't have to have, you know, different spots for different things we can do. We've got our body shop, you know, all our recon, our repair facility, everything is under one roof.

It's a very neat setup. Were you always that way? Were you always in a building like this?

No. So, you know, 20 years ago when I first started, no, I mean I had a tiny little. I think we, I think the term's a trap lot, you know, one, one way in one Way out. It was actually an old gas station in Muncie, Indiana. But we had a facility on the other side of Carmel that was about, you know, maybe 5,000 square feet. We would keep maybe 30 cars inside. So I mean, it was a nice place, great location. But a couple years ago I was able to acquire this building and then it's been a great addition. It's really helped a lot.

Ben, give me a couple more scope of where you are now. And then what I want to do is rewind for dealers and talk about that trap lot that you started in. How many employees does it take to run the operation that you run?

So right now, I mean, it fluctuates between I would say, 30 to 35 employees. Typically we'll have, you know, salesmen. Unfortunately, they'll come, they'll go, you know, it depends. I mean, you know, we've got, you know, certain times we'll have, you know, you know, Texel leave, Texel text will come, text will go. But typically, you know, 30 to 35 employees is typically what we have.

And that's, I mean, because you're doing everything, I mean sales, some wholesale financing. F and I, you got the repair shop, you got the body shop, you're doing it all start to finish. Now are you buying all those cars or do you have people help you?

So, you know, again, we were talking about this before we went on, but we. I had a buyer. I actually had two buyers. It, it became, it became so much work to manage them that it's just easier for, for me to do that. And besides, obviously the trade ins, I'm responsible for obtaining all of the inventory.

Wow.

Almost exclusively.

That's a full time job.

It is a full time job.

And yet you still make it to the gym.

Still go to the gym. I've got a gym at my house though, so that makes it easier. So.

Well, we're going to get into that because I want to talk about how you're creating those efficiencies to kind of multiply your time because you do some really unique stuff. But first off, Ben, so how did you even get started? Like at what age? And when did you say, hey, I want to sell used cars to people? What was the, were you in the industry? Did you grow up with a dealer family or was it just something where you said, hey man, this looks like a lot of fun?

No. So both, both my parents practice law. So no one in my family, to my knowledge anyway, has had any, any affiliation whatsoever with, with the car business. And I, you know, I, I never really worked at a car dealership. I started out, I had a, My best friend, okay, in high school, and in college he worked at a dealership. American Chevrolet Cadillac in Muncie, Indiana. I went to Ball State and I was buying some trades off of their back row. And I was making, you know, you and I talked about this. I was making, you know, I started selling these in, at the time, Indiana Auto and rv. This was before, you know, all these websites. This is before cars.com, even, things like that. And I was selling maybe three, four cars a month and making really, really good money as a college kid. And after I graduated, I mean, I, I had my dealer's license when I was 21 years old, so I would, you know, excuse myself from a lecture and go talk to a customer about, about a car. And I, you know, for. After college, I made the decision to go to go to law school actually, for, for a year. And I was still, you know, doing this just like I was in college. But after a year I'd had enough and I said, you know, I just, this isn't what I enjoy. And then from that, from that point on, I was, you know, autumn automotive business full time all the time.

So did you, did you jump straight from hey, I'm, I'm in law school one day to hey, I, I'm going to get a piece of property and I'm going to do this?

Well, I had rented. So to, to have my dealer's license, I had rented a place, an old gas station on Madison street in Muncie, Indiana. 400 bucks a month is what I paid for the spot. And I maintained that spot while I was in grad school. And, you know, I, again, I was selling, you know, three, four, five cars a month and just gradually, you know, built that up. And, you know, just one day I, I just said, I can't do this anymore and had the conversation with my parents. It was a tough conversation, you know, because, you know, they didn't really know. You know, there's a stigma, you know, that goes along with the car business. And, you know, everybody, you know, it's, it's, it's seen as just kind of a. I don't know what word to use, but it's not, it's not maybe the most glamorous, glamorous profession to, to pursue.

Well, I mean, that depends 100%. Were your parents personal injury attorneys or were they corporate?

No, no, no, no. Yeah, they, I grew up in a small town. My dad actually is a, is a circuit Court judge in Steuben County, Indiana. He's the one.

Geez. He probably wanted to disown you.

Yeah. In the state. No, he's been a judge since I was in the fourth grade. He's on his second year, so.

My goodness. So you have. Did you have to change your last name or do you still. No, I did not.

No. You know. You know, my mom and dad have always been so supportive of everything I ever wanted to do. Aviation, for example, like we talked about. I mean, whatever. Whatever idea I had, they were behind me, behind me 100%.

So no chip on your shoulder when you said, hey, I'm going to. I'm bailing on law school. I'm going to go do this year's car thing. Did you say, okay, Ben, now I got to do this used car thing and prove to them that I can make a living flipping, you know, Chryslers just as I could, sitting behind a desk nine to five.

So. Do you know what my dad said? I'll never forget this. I was at. I was at an auction in Indianapolis. And, you know, this is the day after we had had this conversation. He called me and he asked me, you know, what can I do? If that's what you want to do, your mother and I talk. And he asked me, you know, instead of fighting me on it, he asked me what he could do to, you know, to make sure I succeeded.

Do you have them on retainer?

I don't.

Do they review your legal documents?

Oh, no, no, no, no, no, no. Definitely, definitely never involve my mom and dad in any of that sort of stuff.

So, Ben, you. You tell your parents this. You leave. You leave law school, and you're just all the way in the fire, right?

You. You committed 100.

At that point, you're committed, and you have this lot. At that point, did you start stocking up? I mean, because, you know, all of us know you can't make. You can't really make a living selling three to five cars a month. You can when you're in college, but you got it. You got to step it up now, right?

Correct. Correct. So I started this. So basically, my seed money, originally, I sold the car. I had a. Which I wish I still had. I had a 1997 BMW M3. And I sold my car, and whatever money I had, you know, you know, I maybe had five grand in my bank account. So, I mean, I. I had, let's say, 30,000 bucks to work with, and then my dad loaned me $30,000 as well. So, you know, I had 60,000 bucks, which at the time meant, let's say, you know, four to five cars. And then I did not have a floor plan for over two years of any type. So that's what I had for, for, for two years. So let's say from the time I was 22 to the time I was 24, and I built that up, you know, I maybe increase that fivefold in two years. So, I mean, not bad. Not bad.

Yeah. I mean, that's a lot of money. And what year was this, Ben?

This would have been 2004. 2005. Okay, so something, something with that, though, that I think a lot of people get into trouble is that taught me how to be efficient and taught me, you know, the value of every dollar counts. Whereas I think a lot of people, if they go out and get a half million dollar floor plan line with AFC or next year, I think, you know, the kiss of death is taking on debt like that without any capital of your own. And I think that a lot of dealers have failed because of, because of just that.

I think one of the worst thing a new dealer could do is, is get a floor plan right out the gate. It's, it's the recipe for disaster. I've seen so many people go and the first thing they do is buy a car that they want to drive. Right.

You read my mind.

And put it on the floor plan. The next thing you know, that car is being repossessed. But you know, fast forward past that. That's awesome that you were able to, to take $60,000 and essentially turned into $300,000 in inventory in just several years. How long was it before you hit like the, the 20 number?

So I would say the 20 number by the end of that two years. I would say it'd be, it'd be a, it'd be safe to say that I was, I was there at the end of that two years. Now with that being said, you know, that would be probably wholesale and retail because I would, you know, I was doing both, you know, and I was also, you know, I was buying cars off the street. I was buying cars at the auction. It just, you know, it really, when you don't have a lot, it really, really teaches you how to be efficient.

Yeah, for sure.

Yes.

Yeah.

You've got to hustle a lot. And, and, and to your guys's point earlier, when you talk about that, when it's your own money in the game, you're definitely, you're, you're scraping pennies, you're answering those late night Text messages and emails to find that deal and to chase down that, that one car that's a private party sale that's, that's worth bringing on the lot. And you definitely lose that a little bit as you scale. At what point, Ben, did you, when did you start bringing on people? Like, were you doing 20 cars on your own, buying and selling? Like, when did you start to add employees?

I had a car trailer. So I would literally, I mean, I was a one man show now, you know, I, I would have, you know, a buddy would help me move a car. I mean, I'm not going to say that nobody ever helped me, but I definitely wasn't, you know, paying anybody any type of wage for that two years. I mean, it was me, you know, and then I'd always have a vehicle for sale that I could pull my trailer with. So there was that and I was moving all this stuff myself. And you know, I'd be moving cars back and forth all night. And at the end of that two years though, I hired a, I guess you would call him a lot boy or, or a helper or, you know, whatever. And I'll never forget he, he worked for, for $10 an hour, if that tells you. And he was a great employee for 10 bucks an hour if that tells you how far back that is. And from there it was pretty much off to the races. And about that time is when I did get a floor plan that's, you.

Know, the jump from five cars a month to, to 100 cars a month. That's a, that's huge. Along the way, you would have had to, to get your processes dialed in. At what point did you figure out that what you were doing by yourself was broke? Like, broken. Like, was it 20 cars a month? Was it 40 cars a month? Was it 60 cars a month? When do you, when did you realize that I've got to write this down. I've got to get people on board to help me get to that next level.

So it just became, it became impossible to, to do anything more without, you know, without employees and, and something else, you know, stuff would, you know, I would find myself, you know, with no way to possibly get everything done that I needed to get done. So then, you know, you're, you're not able to maybe get this car moved or, you know, go to the auction because you got to do all this other stuff. And then there's always, let's not forget guys, at some point you have to meet customers, you have to sell cars, you know, so that's A problem, too. So then I found myself, you know, that I'd be closed half the time. You know, my gate would be closed, and then that was costing me business. And, you know, so really, I mean, if we're being honest, I probably should have, you know, maybe had some help before then. But it was just one of those things where I didn't want the expense. And it doesn't sound like a lot, you know, the. The 10 bucks an hour, but I mean, I was literally, you know, obsessing over, you know, every dollar spent. I mean, I wanted to build that, you know, and I was literally, you know, building that up. And I was being very conscientious of. Of everything I was doing.

Yeah. Do you remember, like, I. I find that interesting. You know, the first person you hire is kind of a lot attendant or lot tech, someone to help you kind of move cars and shuffle stuff. Do you remember what the next couple of hires were like? What else did you delegate as you started to realize that you couldn't keep all those balls in the air? What were you let go of first?

So sales was actually something that I met a guy that had been in the car business for quite a while, and he actually had worked at that dealership that I was buying cars off of, you know, years before. And that was great for me because it allowed me to go out and focus on, you know, buying cars, you know, you know, obtaining inventory. I could go out and, you know, build relationships, you know, buying used cars. At the time, you know, those days are pretty much over. But at the time, you guys remember, too, that you could go and buy these trades from these new car stores and, you know, you could really, really get some good deals if you could build those relationships. And it just allowed me to step away from the lot so that I could actually, at that point, work from, you know, what would seemingly be normal business hours, whereas before, I would spend, you know, most of the. The late evening, you know, moving cars around and doing this and doing that. Because during the day, I had to be at the. I had to be at the dealership.

Yeah, Yeah.

I think sales. I think sales is the easiest thing to give up. Right.

Clerical stuff. Yeah. I. I think you have dealers that fall in two categories. Right. It seems like you have some that are like, I am the salesman. I am the face. I can sell these cars better than anyone, get top dollar, get, you know, and then you have a lot of dealers that also fall in the other category of I like to buy cars. I'm the buyer, you know, I like to do that. And I think that's where most of us fall. Right?

Yeah.

I think we'd argue that's the most important thing. Right. The money's made in the buy, and that's almost the last thing that dealers can ever let go of is the acquisition part, right?

100%. And when you think about it, you know, there's something about if I buy a car and I make a mistake, that's on me. But it's really hard for me, and it always has been to, you know, if I've got a buyer out there and he buys something and he makes a mistake that, in my head, I would have never made, it's very hard to get past that. You know, it really is. At least it's hard for me to get past that. And I believe that, you know, this isn't true, but I believe I can buy cars better than, you know, better than most people. So whether that's true or not, you know, you know, who knows?

Ben, you and I are. You and I are covered in the same cloth. And that's. It's. I don't ever have to sell another car in my life. Right? And so I've hired people to do that. And then I think the next thing is, okay, I've got to help. I've got to hire somebody to make sure my financials are where they need to be. And then we just. You keep building that. That base of employees up until you have 30 employees or so.

When.

When did you. When did you make the. The jump from this small lot? So did you go from that smaller lot to this place you are now, or was there a. In between there?

No, like I said, I went from the, the small lot to our initial location in Carmel. Okay. Not the lot that you guys were at, but the other building, and that was in 2010. Okay, back up. I, I. So for. For one year, I did have a. A slightly traditional lot that actually, it was. It was. It was in Indianapolis. It was. It was just. It's one suburb over from Carmel in Fishers, and it probably held 25, 30 cars, but I had both lots, so I guess I still had my lot in Muncie, and I also had that lot, and I was using the lot in Muncie as like a holding. Kind of like a holding lot, just because I didn't have enough room because I was building this business up, and I just ran out of space. And then I just decided it was just a random fluke thing where I had a family friend that was A realtor. And she said, oh my God, I've got a space that's really, really nice, that's in Carmel. She knew the owner of this building. And I went, checked it out and I leased the building. And to this day, I actually still have that building. I keep some of my personal stuff in there, you know, boat stuff, just cars that aren't for sale, things like that. But it's a great location and it really, it catapulted my business when I moved there because the demographic was, was great there as well.

I mean, Carmel seems to be a fluent an area, right?

USA Today, number one. Number one city in America.

Hey, everybody, Real quick, just to jump in and make sure you guys are aware of Buckeye Dealership Consulting. And I say that like you're not aware. Of course you're aware. Interesting fun fact. The way we met Ben was through Buckeye Dealership Consulting, correct?

It was. I, you know, we didn't go in that. We didn't have time to go in that with Ben, but I know that he's really selling that many cars. And using reinsurance is just a way to, to create a ton of money. And you're not giving it to everybody else, so we can't stress enough. Go call Buck out today, get it done. And that leads me to another idea. You're around all these new car stores, right, and around some really large independents, but you've decided to have all your inventory inside. You don't take advantage of, of being on the outside having the, the traffic, I guess, notoriety. You depend all on your cars being online and, and your presence there. Is there any hesitation to, to advise another dealer to do that, or you think it works fine for you?

So I don't know what the exact metrics are, but, you know, I think it's something like, you know, like 70% of people do, you know, 80% of their research before they ever even go look at a car. I mean, it's not like the old days where, you know, are you kicking tires? Yeah, yeah. They'd go around to all the lots in town and, you know, kick tires and take a peek at what they had. Consumers and we all know this, are doing their homework. They're doing their research, their price shopping, you know, that they're doing their shopping ahead of time, and they're not just driving by and seeing something that's shiny and stopping and buying it. So in my eyes, I would rather spend my money on, you know, this, this indoor facility that could save me money in other ways rather than Have a location that may have a lot of frontage or may have more visibility when in fact, I mean really what, how much of an advantage does that really give you? You know, being visible from the road like that?

They get to see the front bumpers of your front row.

Exactly, exactly.

It's just, it's been a real big shift in the last, you know, 10 years on this. Nobody in their right mind would have a building like you had 10 years ago. Right. Or not many people. But now it seems like to me it makes a lot of sense and I could even see buy here, pay here dealers going to this model because I mean essentially Carvana is this model, right. That you, they have a couple dealerships but if you do the pictures right and you have everything there, anybody can shop from anywhere. How many states are you selling cars to?

Oh gosh, I mean, you know, in any given week we may ship to 10 different states. Sometimes I mean we, you know, obviously, you know, the, the states bordering Indiana would be the most prevalent. But you know, we've shipped just in the last couple weeks. I know that we've shipped several cars to Florida. I know that we shipped a one ton truck to Texas. So I mean we again, we ship cars. I know maybe a year or two ago we shipped a car to Alaska. So I mean they go, it was, it was somebody in the military. So we go and, and you know, we, we branch out to, to pretty much, pretty much everywhere. And, and that's the way I think most, most dealers are.

Yeah, I'd be really interested to know the price. You know, if someone did a search in their, in their area, say you wanted an acre or two acres to, to get that land on a prime, you know what the cost would be as opposed to a covered warehouse off the beaten path. You know, I wonder if those are equivalent cost per acre.

I don't think you're going to find, you know, a piece of property that big, you know, on, you know what, you know, every town has car dealer row. You know, in, In Indianapolis it's 96th street and that's where all the dealerships are, at least on the north side. And to my knowledge there's no, there's no properties that are, that are.

You couldn't, you couldn't find what you have, you couldn't find there at all. Like just doesn't exist.

No. And you know, I mean there's, a few years ago there was an HH Greg. And you know that would be, you know, that Property was on 96th street and it was actually sandwiched in between a couple car dealerships. And, you know, I would guess that that probably sold for between 15 and 20 million dollars. So. And then you have to also build a building. Oh, this is so, I mean, so it would be, let's say, five times as much.

So that's a lot of money you can spend on Internet advertising.

Exactly.

Tron eyes to your website.

You know, one thing we hadn't discussed is, is financing and, and how you got involved with getting the right banks in your store and how important that is. Ben, how'd you, how did you figure out how to do that? And, you know, where are you now?

Okay, so one of the, you know, selling cars, as we all know, is a very, you know, capital intensive business. Okay. So a floor plan, you know, it's, it's. Let's call it a necessary evil. I think for most people, especially most people that, you know, start from zero. I mean, it would be very, it would be very hard to, you know, to grow with any sort of. You reach a certain level when it's kind of hard to go anywhere further without some sort of cash infusion. Okay. So I started out with, with afc, like, you know, I'm sure a lot of dealers have with AFC or next year. And I think that, you know, at the time, you know, when you're, when you're first getting started out, you don't really have a bank. A traditional bank is not really an option because they only want to loan money to people that don't need money. So, you know, I went that route. I started out with, I think my first, My first contract was maybe $200,000, I think. And then when I left, it was, they called it a, you know, a platinum dealer or whatever. And I think I was at maybe, you know, 2 million and kind of a fascinating story. So I, Someone that I had known for a long time that was, that worked for a different bank, partnered up with another guy, and they were, they basically started the floor plan division from a bank out of Wisconsin, First Business Bank. And I was actually their first customer. Okay. And they gave me, obviously they would kill me if I, if I said the number, but they gave me an absolutely amazing deal. Okay. And I. The. My very first year with First Business Bank, I saved over $300,000 in interest. So it was just, it was incredible. And I think that, and we touched on this earlier, I really think that floor planning has really put a lot of people out of business. And you really need to be careful with that because you can you know, you can really get in over your head pretty quickly. And then before you know it, you know, you've got curtailments due every day and you've got, it's just a slippery slope that I think, and I've seen this happen to people that you know, to people in the business, to people that I know. And they are, they are. Remember, they're borrowing money from a real bank and they, I would, I would call it one step down from loan sharking. And when you were actually at the store, we talked about how they even, they'll even make you pay interest and charge you fees on cars that they haven't even paid for. So if you buy a car from Mannheim and, you know, even if Manheim doesn't have the title, the clock's still ticking and you're paying interest, even though this lender hasn't even wrote a check for the car yet, they're still, I.

Bet they are making millions of dollars a day because of that.

Absolutely, absolutely. And I actually know somebody, I can't say his name, but he works, he's a high level executive at Next Year and he actually has told me next Year doesn't even use, you know, AFC at least uses Prime. They at least tell you, okay, you're at prime plus two. Here's the fees. Next Year actually has the audacity to make up their own next year rate. What that's based on, nobody knows, probably including them, but they actually, you know, they're charging, you know, they're charging, you know, credit worthy people, you guys, 10, 12% interest. And these are people that, that have established businesses and are reputable people and they're still, they're still getting away and charging that kind of interest.

Yeah, I think we're gonna see that.

We'Re gonna see that more and more in the coming months. Like you said, floor plans are taking down dealers. And I think that's going to keep playing itself out over the next, you know, three to four to six months with the drop in prices, the rise in interest rates, curtailments. You had mentioned one thing, Ben, that you said. Some of those reps actually just get together and they decide they just need to put someone under. And so they'll just increase their audits until they can catch them out of Covenant.

Well, what they'll do is so they'll, they'll come in and they have different ways of doing this. But if they think that your, if they think that you're doing something or they've decided that, you know, like, let's say the area manager decides that, you know, you're.

Yeah.

So they might do a jacket audit. And then if they find, you know, that you paid off a car two days too later, this, that or the other, then they can come in and, you know, they'll, you know, they can systematically, basically. And let's be honest, the floor plan is the lifeline for most of the. You know, for most dealers, you know, if you just floor plan overnight, you know, you're in a lot of trouble. And they have the ability to do that. They really do. And something else that I don't know if you guys knew this, but when Covid, when these lockdowns first took place, and Covid first, you know, hit or whatever you want to call it next year, locked every account. So they froze everybody's account. Well, you know, I was out. You know, I spent every dollar I had because these prices fell so hard and so fast. I just knew. And I mean, I act. I mean, I'll never forget this. I went to a CarMax sale, and there were 90 cars, and I bought 70 of the 90 at 1 sale at CarMax Dayton in March of that year.

Because you were the only one with money.

No, they just. Everybody thought the sky was falling. Forget. But, I mean, there were a lot of people that were dumping cars at the sale that were, you know, there were maybe on there. This is before CarMax was online. So you had to be in the lanes to buy. There were five, maybe, you know, six, seven people there.

Ben, real quick, talk to us about the other side of the financing spectrum. The other side of the equation. Right, because you got your flooring plan, which is really, really important as a dealer. But at what point did you start signing up the lenders that you needed for your customers? Like, when did you start bringing on the. The banks that would. That your guys could get people approved on? Because that's the whole other piece to the puzzle that dealers have to have. They've got to have a place to put this paper. How did you get those guys signed up?

Hey, everybody. Just to break in again. Prom land, we talked about it. Cash is king right now. If you don't have it, you could be in some serious trouble. You know, money's gotten more expensive, but I know that the people with primaland will help you make sure that it's the right money for you and also get you through maybe one of those times where you are cash crunch and you do need the money. Because, Jeff, you know, I'm stocking up right now, and I got ahead of cash.

I am too. And I have been pulling money from out of the mattress to make sure that I can pay for the cars that I just bought today. But as we talk about in this episode, it's good to have options. So even if you're happy with your bank, you're happy with your lender, your line of cred, talk to the guys at Primalin and make sure you have a backup. They might be able to give you an overflow or reserve or at least have that conversation so they know who you are when you do call them and meet them.

So pretty traditional path. So, you know, we initially, we started out, we were, we had relationships with a couple banks, you know, local banks where we would actually have to send the customer. There's, there's a, there's a credit union, Indiana members that comes to mind that, that, that is actually the largest, I think Lienholder, besides the Department of Revenue and maybe child support in Indiana. So they're a huge bank. But. So we would send, send people there. But we were, again, we weren't getting anything for it except for maybe around Christmas time, a free lunch, who knows, you know, nothing of any importance. And then, you know, everybody at one point has, you know, cac Westlake, these banks that will, you know, sign up, you know, pretty much anybody. But then beyond that, we had to have financials. And, you know, I, I got CAC in Westlake after I moved to that first karma lot in 2010. Okay. And I maybe around about 2012, 2013 is when I actually started signing up, you know, indirect, you know, in the industry that, you know, the term is indirect lending, where now you're getting paid, you know, the bank will actually pay you to, to do these loans. And, you know, you may get, you know, 2%, 3%, but it makes it much easier to sell your product, like gap your warranty, things like that. So that, that took place, let's say, you know, I mean, it was 10 years in the business before I was able to do that.

And you had to prove to these.

Guys you had financials. You had a track record to even get in the door and get signed up. You weren't some fly by night that was going to screw them over.

So typically they want to see two years of tax returns and as an, as a dealer, principal you have to have. And now, especially now more than ever, they're going to look at this, but they want to know that, you know, that you are financially, you know, financially Solomon, you know, they want to know that you're not a fraudster that's going to write a bunch of bad paper and skip town. And I think, I think, you know, we've already seen it. You know, you guys have seen the same stuff I have. But, you know, a lot of banks are doing away with the indirect side right now.

Have you, have you felt that?

So we've only had one bank. We've only had one bank that we use with any, you know, with any regularity. Cease. Cease indirect lending. But. But it is. Is on the horizon. I would not be surprised if we don't see more of that, because really, when you think about it, they're paying us, you know, 2, 3%, you know, really, what's in it. What's in it for them? Because, you know, their money, they have to get the money as well. And I think that with interest rates the way they are, the incentives just not there. And I think a lot of them are hitting pause. I think that they're, you know, they're being much more cautious about. We're definitely seeing. Our calls are not as aggressive as what they used to be, you know, and I, I just think we're seeing an inward. An inward pull on a lot of. On a lot of lending in general. Guys.

What, what would you recommend dealers out there do to prepare for that?

Well, I would say, you know, number one, I would try to have a. An eclectic mix of lenders. I mean, you know, it doesn't hurt. You got to do business with, you know, some banks don't like it if you don't do a lot of business. You know, I mean, like certain banks, like, let's say cap one, it's a tiered system, so your calls get better the more deals you do. But I would develop relationships as a dealer principal. I would recommend getting to know. I'd start at credit unions. They're much easier to deal with. Usually you can get someone at a. At a high level, you know, and, you know, get to know them, you know, take them out to lunch, introduce yourself, and then from there. And it's funny how that works because the more banks you have, you know, the more, you know, people can see that you're doing business, you know, and you just kind of, you build that up, you know, and now we've got over 30 lenders, you know, we've got national lenders, you know, we've got, you know, your cap ones, your allies, you know, things like that all the way down. Do we still do business with these same credit unions that we started with? 10 years ago.

That's really cool. I think that's a crucial, crucial piece to the puzzle when it comes to lenders, when it comes to buying sources, when it comes to flooring lines, when it comes to maybe lines of credit or things to fall back on. I think as dealers, we get so complacent and we love the simplicity of just having a single go to that we don't broaden. We're not always looking to broaden our base and, you know, what's our insurance? Where can we go if this guy drops or that guy drops? Are we out of business?

Well, here's what you need to think to yourself. You need to think to yourself what would happen if, whether it be your floor plan, whether it be, you know, this lender, that lender. What is your plan if that ceases to exist tomorrow? And you need to have a plan, you need to have a backup, you know, And I think a lot of people just like what you just alluded to, I think they get comfortable with, especially if it's working, you know, I mean, if something's working and something's great, you know, it's human nature. You don't really want to think about anything else, you know, and especially in banking, what happens when that one guy, you know, that one buyer that, you know, leaves, leaves the bank or gets fired or. Then where do you, where do you stick, you know, these deals or that deals, you know, I mean, where do you stick that customer? What lender are you going to go to? You know, you've got to have, you've got to have different avenues. You've got to always have, you know, a plan B, a plan C, and at least as it pertains to, you know, to lenders and floor planning and things like that.

Awesome. Ben, this has been great. Any other parting words of wisdom? I mean, there's so much we didn't get into that I really wanted to. But taking so much of your time closing advice or, or words of wisdom for the dealers that are listening.

Yeah, I would say the number one thing, you know, we haven't really touched on it, we ran out of time. But I would say, you know, your employees are going to make or break you. You know, so many times in the last, especially as I've grown, it's been those one or two, you know, I've got the, you know, I've got my best friend who you guys met, Gordon. I've got my brother, you know, I've got, I've got some people that have really, that without them. There's no way that I think that I would have made it this far that I owe, you know, so much gratitude to. And I just look back and, you know, let's say that over the years, I've had, you know, 200 employees, you know, over the last, you know, 10, 15 years. You know, people come, people go, but it's those handful of people that make the difference between success and failure.

Yeah, I 100% agree with you.

Yeah. Ben, thank you so much. Appreciate your time, guys. It was great.

Thanks a lot.

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