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 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 (however,
that could change in coming months).
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. Getting more money without solving the fundamental,
underlying problems is "Ron's Watermelon Story".
A farmer is bringing in watermelons from Mexico,
where he gets a great deal at 80 cents each. He sells them for
78 cents but, mysteriously, is always broke. When asked about
it, he snaps, "need more volume."
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.
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 have deteriorated. They
have been declining for years, but it's subtle, and we 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/mo. per employee, you have
too many. Many have a third too many!
2. Too many brokered parts, not enough of your
own inventory - If you are brokering more than 10% of sales
in most cases, the $15k (#1) is out the window.
3. Not understanding the true cost of goods, with
period correct statements— also, it's critical that you project
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 performanced— Come on, folks;
many of your peers started paying their salespersons on commission
over a decade ago, 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 their current
computer system is handicapping them - It's unfortunate, but
you don't know what you don't know. Sounds silly, but it is
so true. Just minor advances in being able to price your parts,
inventory better, buy just a smidgen better, (the list goes
on and on) can save or make you thousands, and the cost isn't
$20 per day for a newer system, amortized over 3 years.
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.