#378 - Passing The Torch

This is the Independent Dealer Podcast, Education by Dealers for Dealers. Now here are your hosts, Luke Godwin and Jeff Watson.

Hello and welcome to this special edition of the Independent Dealer podcast brought to you by Buckeye Dealership Consulting. Luke, we're still on site at Buy here, pay here, United 2025.

Yep.

We found ourselves a creepy little dungeon of a room to do an interview here.

An expansive dungeon. Jeff, if I was ever going to be put in a dungeon, this would.

Be the best place. You got a lot of room for, you know, calisthenics, the activities, karate, things like that.

Yeah.

You may recognize Dela from our earlier episode last week and we interviewed her this morning.

We did. And we found her story after kind of, we talked to be very interesting. So we wanted to bring her on and talk about second generation dynamics and just what it's like to be in the buyer pay your business, you know, up through all this yummy stuff.

So introduce yourself to the podcast community a little bit about just where you're located, maybe the size and scope of your operation, the business model, some of that stuff.

Yeah. Thank you for that introduction. I'm super happy to be here. Thank you for this opportunity. We're located in Grand Prairie, Texas, which is pretty much in Dallas. My dad started this operation when I was about nine or ten years old.

So like five years ago. What year was that?

Yeah, 1997.

Okay.

Around there. And so I was raised in this business.

I'm sorry, that's. It's a tough, it's a tough childhood.

I went through it and Luke will interrupt you. Every other stuff.

Every other.

And ever since then, I've just been super involved. I think it was two year that I decided I'm never coming back. I'm leaving 22. And then here I am.

That, that, that. So I, I finished college and I was like, again, I am never coming back to buy here, pay here. Right. I'm not going to do this. Seen the struggles of my parent, my dad and I, I just want to go far, far away. Is that what you felt?

Yeah.

So what brought you back?

Well, my dad never stopped begging me to come back. He was always persistent and I was like, no, you know, you're doing great. My sister was very involved back then and I would talk to her and I'd say, you know, am I needed? You know, is he just being a big crybaby?

Yeah, yeah, yeah.

She'd be like, no, no, you're fine, you're fine. You know, you're. You like what you're doing? Well, Anyways, my husband, once I met him, he was in the car industry, and he was like, why you leave again? Are you crazy? You know, you need to go back.

Oh, wow.

That's it.

That was a little different than what would typically happen. So what. What. What did he do in the car industry?

He was this. He sold parts. Parts. So he knew a lot of dealers. And some doors closed for me where I was, and I was actually applying at another dealer. And he was like, why are you applying that? Like, you know, your dad's begging you to come back. And I was like, is because I'm stubborn. That's why.

Yeah. Yeah.

But I finally came back, and it's.

A tough dynamic to work for family.

It is.

Especially with your dad where I. I mean, obviously he wanted you there, but did he. Does he see you as. Do you feel like you're seen as, like, a valued employee, or do you feel like he sees you as like my daughter that I can't trust with things?

I think it was more of a trust thing. He definitely trusted me. That's why he wanted me back. But. But it wasn't that we could. That I could make a decision for the dealership. So I was just kind of under his rule.

Yeah.

Has that changed now?

For sure.

Okay.

Yeah.

So talk to us about that. What is your current role at the dealership? What would you say is, like, the bulk of your time now that you're there full time?

Yeah.

So about six years ago, my parents left the US To El Salvador, which is our native country, and they started a project over there. And it was just temporary, but when they saw that we survived and we thrived without them, they were like, okay, we can actually retire now.

Oh, cool. So did they retire in El Salvador?

Pretty much, yeah.

Okay.

Yeah.

Wow.

So it's been about six years. Me and my husband have been running the operation on our own. And you? I mean, I talked to him on FaceTime about maybe every two weeks about the business, but, I mean, he's just very, you know, not making.

Wow. Wow. Okay. So. So you brought your husband in. Did he come in at the same time you did when you went back? Almost.

Now it's been about 11 years.

Okay.

Yeah.

That's great.

So.

So what?

So your parents are gone? It's you, your husband, and your sister?

No, my sister left about the same time. My dad was exiting for his. No, she got tired of the industry. She had never had. She had never worked anywhere else. She's older, so I think she. She was just ready for New waters. And so went to the real estate. Yeah. And so now she's doing great with that. But that kind of left me. At first I was upset, feeling lonely, like my parents are on, my sister's gone and, you know. But it gave me a really big opportunity to really start questioning everything that we had been doing for the past, you know, 20 something years and really questioning like, are we doing this because.

It'S what you used to do it.

Yeah. What we're used to doing or is it really what's best for, you know, for the business? And so we had been going to our, you know, local ida, state ida every two, three years just for compliance purposes, but not really to people to get better at selling or, you know, any strategy.

You were going there to get the, get the hours so you could keep your dealer's license, right?

Yeah.

Instead of actually taking advantage of what.

Was there just because back then my dad wouldn't have. I mean, I could have the greatest strategy for him, but he was not going to let do anything, you know. So then it kind of just, it allowed me to, to question everything. And so I realized that we, we had grown over time and we had no structure. We. Until about a year and a half ago, we didn't even have a collections department.

So how many, how many people do you have on staff now?

Now it's about 20 of us.

Oh, wow. Okay. And so when you came in, did, I mean, were a lot of those employees there then, or have you grown up to those?

We definitely have some people that have been there for a very long time. And so I've had.

Okay.

A lot of them are family members.

Yeah, yeah. What. How big is your portfolio.

Right now?

We're 1200.

The note.

Yes.

Okay. 875.

875. Oh, wow. Yes. Okay. Yeah. So I've, I've been, I've been to that number before. That's a, it's a lot of work. And 20 people is about what you need. You do you have in house recon and things like that or do you.

Yes, we do in house recon, not body shop.

That's why, I guess you do a lot of cpi. Yeah, yeah. They're in Texas, isn't there? Yeah.

Isn't everybody? Everything's bigger in Texas. Yeah, so, so I mean that, that's, that's a. You got a big operation going on. Like, that's a lot of moving parts. What do you find is like taking the bulk of your attention and time. Where do you focus on? Is it Hiring. Is it processes? Is it accounting? Are you the buyer? What is it that takes your time?

I'd say if I'd have to pick these processes and just overlooking at all the department and just kind of, you know, just kind of taking a day of the week and kind of just acting like one of them and, you know, what are we doing today? And just. Just kind of, you know, making observations and being like, okay, I don't like how that that's working out, so maybe I need to change that.

That's interesting. She's consulting in her own business. Insult. She. She is inserting herself into the daily operations.

Work on your business, not in it. Right.

But. But she's getting in it so she can work on it, which is really neat. That's what that. That's awesome. And do you take that back and. And process it yourself and. And see what you can do to fix it? I mean, is that how that. How that works?

Yeah.

When your husband. What does he do in the business?

He is in charge of buying.

Okay. Yeah, yeah.

Imagine to maintain that portfolio, you're probably doing 50 to 60amonth or something. Do you know how many.

I say right now we're at an average of 35.

Yeah. Okay.

That's not right.

Oh, really? Yeah.

It maintained 800 accounts.

Yeah. Okay. That's what we've always done. Really? Yeah.

Why am I so small?

Well, your charge house might be too. That's great.

So what else do you find is a challenge? Like in the dealership or. Have you. Have you pulled anything away from this week that you're taking home?

Well, there's lots of things I've been blown away by. By so many dealers. I mean, discovery.

Yeah, yeah, yeah.

Good friend.

Amazing.

Yeah. Talk about Harry is on another level. And if y' all know we're talking about. Go back and. And check out Harry on a couple episodes. Two episodes, right. Yeah. Just an amazing operator. And I'm here.

Maybe I can ask this. And you don't have to answer if you don't think it's too, like, in the weeds. But as far as maintaining the portfolio and funding it.

Are. Is your.

Are your parents helping fund that? Is that kind of their retirement? Do you pay them out or did you go out and get your own line of credit or sell a kidney or.

How did you. How did you cover that? Two kiddies?

I'm still recovering. No, so the way that my dad, you know, started this business, one of the big fundamentals. No debt.

Bootstrap. Bootstrap.

It's tough and it was like growing up, I remember he would sell as many. You know, sell as much as he could, and when he would run out of money, just quit selling. You know, I'm gonna go to El Salvador for a couple weeks. I'll be back. And when he was back, you know, they did some money in the account because he knew that if he'd go to the auction, he was gonna end up buying.

Dave Keller, and I've said this before, on the podcast, he said, you know, the best way to help cash flow. Yeah. Stop buying for three weeks. It's true. Your. Your cash just rises so fast, and that's the way you have to. If you're not borrowing money, you have to learn how to. How to stop selling cars. And it's hard as a car dealer to stop selling cars. Yeah. But if you stop selling. Well, if you stop selling, you stop buying. And if you stop buying, you stop selling.

I know people that stop selling, but don't stop buying. That's a problem. So you've been doing it organically and you've stayed that way?

Yes. I mean, we've had a. We do have a for full plan account, and we've used it from time to time, but we. The most part, it's paid off.

Yeah. I mean, I can understand having a floor plan every once in a while because you do need to stock up, Right. Going into taxis and stock. Yeah. But, yeah, that. That's interesting.

And.

And plans to buy your dad out.

Yes, that. That is in the plan. The near future. Super excited and nervous at the same time. You know, it is a. A big step.

Yeah.

To stay debt free, to be able to pay him at the same time, that's. That's challenging.

That's impossible. Your debt may be his debt, which is a little family debt might be a little easier, but still, it's. I get it. That's a. That's a big deal.

Well, you all run into the same problem of you joined the dealership 11.

Years ago and grew it, and you.

Grew it for him, and all you did was create a larger dollar amount that you now have to buy him out for. Unless you guys have some sort of an arrangement that back dates back to when you started, but we see that all the time with dealers where it's like the sun is, hey, I built this since you left. And the dad's like, well, I gave you the springboard to even build that.

Yeah.

And he's like, well, why am I paying you now for all my hard work when I doubled your Portfolio and you want to cash out on it.

Yeah. You know, people know what happened to me. And the biggest. The biggest mistake I made was not drawing a land. A line in the sand. When we entered into our original. Our original me buying portions of the business or getting portions of the business. I didn't say, okay, on December 31, 2024, the buyout is going to be X. And it's already put in writing. It's a lot easier to do that then.

Yeah.

And when you double the size of your business and say, now I want to buy you out. Yeah, that's a. It's hard. It's hard.

Do you guys have anything in writing? Anything. Any just kind of verbal agreements?

We are working with people of Bean.

Oh, good.

To make that.

A sponsor of the podcast Ignite Consulting. And that is something I didn't do. You know, I. I used. Dave Keller and I discussed this, and he did a great job, but we didn't bring somebody like Steve in who. Who could have written the paperwork to benefit us both, and so we wouldn't have run into a problem later down the line. So Steve will take great care of you.

And what I find is it's good to have a trusted expert as a third party.

Right.

Because you're going to go, you know, I go to my dad and I say, hey, this, this, this, this. And he's like, you don't know what you're talking about. But when Steve comes in and says, this, this, this, this, he's like, okay, that makes sense. I get it. Because I think a lot of times the first generations can have very unrealistic expectations.

Yes.

Of what they think they should get.

Out of the portfolio and how.

What they think it's worth.

Yeah. Yeah.

How it should come to them. And it's like, that's. That's not reality. I'm not going to slave until I'm 80 to pay you off. Yeah, like that makes no sense. Yeah. So.

So if you, you know, if you could change one thing about your dealership today, what would it be? I didn't mean to stump you, but.

The number of sales to increase, for sure.

Everybody wants to increase.

Well, 20 employees with 35 sales. That seems a lot.

Well, not if you got 875 accounts.

Exactly. If you got the accounts. But at 35 sales, I don't think you're replacing 875. That math doesn't matter.

So.

Well, I don't know if you're losing accounts or if you're maintaining.

Well, if she has a Low charge off rate and can keep people on the books. And it's.

We've been in between. We've been stuck at like around the same number for a really long time. Okay, what are they going to take close to get to the 900?

So I asked Chuck years ago because our deal was we were going to get to a thousand accounts.

Right.

And Chuck told me, you're going to need to sell $42 a month to get there. And that was, you know, that was before COVID and during COVID we were selling almost what we were selling. I think we averaged 42, 44 cars during 20, 21, 22 in a time span. In that time frame. And we got to 960 accounts. So that. That was the number. It just. We could not get there. We could not push to. We could not maintain that push sense. Yeah. Cool. Daily.

Thank you so much for your time. I think this has been super educational. It's great. I mean, you don't even. Your first time at a convention.

Okay.

By her payer.

Yeah.

And still learning stuff. And has her dad and has been in it forever. And it's just like it's always.

It's inspiring to me to see that the younger people doing it for the first time. Yeah. Yeah.

You just said younger people.

Well, I'm old. You're old.

He seems old. I'm not that young.

All right.

Talk to you guys. Yeah, talk to you all next week.

Thank you for listening. Please leave us a review. We'll catch you in the next episode.