Are You Too Busy Working IN Your BHPH Business….
Instead of Working ON Your BHPH Business?
It’s time for a reality check! As a Buy Here Pay Here dealer, you know there are a “truck load” of things you need to accomplish every week to keep your business going. Just finding and buying vehicle inventory can be a full time job in itself. Then there is the job of initiating and approving new loans to grow your account base. After that come the hard part; collecting on your loans! That job requires taking payments, keeping track of delinquent customers, and tracking skips. If that wasn’t enough, and finding and repossessing vehicles when you have determined the customer isn’t prepared to work with you to bring their account current. Then there is the administration side of the business? You must devote some time to tag and title work, and verifying insurance coverage when you receive those annoying notices from an insurance company. In between all of those tasks, you still need to find time to manage your advertising, hire and train staff, maintain the lot and manage vehicle reconditioning. You may already have staff to do some or all of these tasks, but as the owner of the business; the buck still stops with you, and it’s your money on the street. Many Buy Here Pay Here stores operate with minimal staff and divide large workloads between only a few people. Many times the owner of the business buys the inventory in addition to doing many of the other tasks involved in running the business on a day to day basis.
The question becomes; are you too busy working IN your business, instead of working ON your business. It’s an easy “trap” to fall into. If you’re not monitoring crucial areas of your business on a regular business, your business can sustain serious problems before you even know it. One example of this is the cost of buying vehicle inventory. Based on supply and demand, a vehicle you bought last year for $4000 might now cost you as much as $4800. At a sales rate of 20 vehicles per month, the impact on your cash flow would mean an additional $192,000 just to acquire the same inventory as you did a year ago! Did you see that coming? Do you have a game plan to finance the additional cost of inventory, or do you have access to the additional capital you need to purchase the inventory?
The solutions are not simple. Even with this one small example, finding the additional capital you require may be a challenge is this tough capital market. If you want to get the additional capital you need, you should be prepared to demonstrate the financial performance of your loan portfolio in detail. This means tracking the historical