No doubt you’ve heard the expression, “If it ain’t broke, don’t fix it.” The flip side of that expression is more likely what we encounter in real life: If it ain’t working, fix it. At a recent buy here pay here performance analysis meeting in Tampa, Fla. I surveyed the dealers in attendance and asked them, “What is the single biggest challenge facing your buy here pay here business today?” Here are the top 10 replies submitted (not in any specific order):
1. Sourcing capital to fund my business
2. Finding inventory at the right price
3. Improving delinquency and collections
4. Finding the right business model for the capital I have available
5. Hiring the right person for a specific job
6. Increasing sales volume without increasing charge-offs
7. Getting my business cash flow positive
8. Determining staff requirements based on our business plan
9. Improving cash flow
10. Working with customers to help them keep making payments in this difficult economy
If you’re in the buy here pay here business, you can probably relate to all of these challenges. The question becomes, how do you solve these problems? The advantage the dealers in this group have is that they are members of a performance analysis group, therefore they have access to ideas, discussions and input from other BHPH dealers from across the country.
Whatever your biggest challenge might be, the process for solving it is calculated and specific. It is a five-step process the dealers in this group participate in every quarter called the “performance group dealer challenge.” The first and most important point to understand is that solving all of your challenges at once is virtually impossible. Therefore, the first step requires you to identify one specific, quantifiable part of your business that you will improve in the next 90 days.
The second step requires writing down specific action items that you will implement to achieve your stated objective. The third step is to identify and quantify the impact statement, meaning you need to quantify the results of your objective so you will know if you accomplished your goal. For example, let’s say your goal (or action item) is to generate an additional $36,000 of cash into your business by increasing sales from 25 units per month to 35 units per month. If the average down payment is $1,200 per unit, then the impact statement would read that the increase in sales will produce an additional $36,000 in cash for your business in the next 90 days, plus the cash generated from the loan payments themselves.
The fourth step is the most important. It requires that you monitor your performance and measure your results. After all, what’s the point in having a stated objective with a quantifiable impact statement if you don’t measure the results? Monitoring performance should be a weekly occurrence if you want your staff to focus on the objective and implement the action items required to make it happen. Instead of monitoring their performance on a weekly basis, many dealers wait until the 90 days have elapsed before they realize they haven’t accomplished their objective. In those cases, the effort was a waste of time. To avoid this mistake you will need to monitor performance weekly, measure results, and then make adjustments where necessary to ensure the action items you have implemented will produce the desired results.
The fifth step, making necessary adjustments, is the toughest. As you monitor your performance, you must be prepared to make changes to the action items you have listed if your weekly results indicate you are not headed towards accomplishing your objective. This is where most dealers fail.
It sounds difficult, more difficult than it really is, but I can assure you, with some practice, this process can produce some significant improvements in your business. Ask yourself this question: How much better would my business results be if I could improve one part of my business each quarter? No matter what challenges are facing your buy here pay here business, you can conquer them with specific objectives, a game plan, some hard work and weekly monitoring of your performance.
Vol. 7, Issue 6