November 2005


Ron, All I Need Is More Money!

I get so many calls from folks who insist that their only problem is that they need more money. Read my lips: “If your only problem is that you need more money, then you don’t have any problems.” This is true in almost all the cases I have seen. Trust me: there is PLENTY of money out there. The banks NEED to loan it. Investors are sitting on the sidelines with loads of cash.

I do believe that you think you need more money. It’s a battle, day after day: trying to buy enough cars, pay bills, etc.

I have seen it over and over. A recycler gets a new loan, or a line of credit, and then runs it up to limit, usually buying cars or funding operating losses. Sales spike temporarily and then level back off at previous levels. But now there is new debt!

The main reason you think the whole problem is money? It’s because your profits and cash flows have deteriorated. They have been declining for years, but it’s subtle, and you can’t or don’t want to recognize it.

Other underlying reasons (in some semblance of order) are these:

1. Too many employees - It’s the number one poison. If you aren’t doing at least $15k/month per employee, you have too many. Many have a third too many!
2. Too many brokered parts, not enough of your own inventory.
3. Not understanding the true cost of goods, with period correct statements, or not projecting sales at time of purchase. Remember, as my good friend Jim Counts says, “ We don’t buy cars; we buy sales.”
4. Lack of pay for performance - Paying dismantlers by the car, drivers by the stop, and parts pullers and order fulfillment personnel by their performance.
5. Failure to understand how much your current computer system is handicapping you - It’s unfortunate, but you don’t know what you don’t know. Sounds silly, but it is so true. You’ve upgraded your trucks and equipment, so why don’t you consider what’s new in computers and software?
6. Failure to plan - Very few folks have anything resembling a plan which includes operational and financial goals.
7. Failure to get help – There are lots of peers, associations, and folks to help you out there.

I always say there are four hurdles to success. Who will get through them first—you or your competition? First, you have to realize that things are tougher. Everyone is getting that one. Second, you have to figure out what is wrong. Third, decide on a plan to improve. Fourth, execute the plan. Sadly, many folks don’t get past the first hurdle. In spite of this, those who are paying attention are doing very well; don’t let anyone tell you that it’s bad everywhere or that it’s okay to do poorly since “everyone” is. In every region of the U.S. there are folks doing well. Trust me, while you are wringing your hands, some of your competitors are doing well.

Don’t forget to subscribe to Ron's free monthly auto recycling e-newsletter, with news and tips, register at www.autosalvageconsultant.com.

Remember, only you can make BUSINESS GREAT!

Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. In 2001, he founded North Texas Insurance Auction, which he sold to Copart in 2002. In 2002, his book “Salvaging Millions” was published to help small business owners achieve significant success, and was recently reprinted. In June 2003, he joined the new ownership and management team of GreenLeaf. He also manages his real estate holdings and investments. You can learn more about him at WWW.autosalvageconsultant.com He can be reached at 5940 Eden, Haltom City, TX 76117, rons@rdsinvestments.com or 817-834-3625 ext 6#.


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