Finally taking the plunge

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Finally taking the plunge

Postby hedwards79.10378 » Wed Apr 24, 2013 2:20 pm

Hey guys and gals,
I have been in the automotive industry for the past 13 years. I started in sales and have been a finance director for the past 11 years. I work in a store that sales 300 plus new and used cars a month and have loved every minute of my career. I am not planning on giving up my job in finance yet but I also dont want to be doing this when I am 60 years old. I am 34 now and have been contemplating starting a small BHPH lot for the last few years.
I have finally decided to take the plunge with the support of my wife who will hekp me with the day to day operations while I am not able to be there. The good thing about me still working my full time job is that all the money that is made out of the BHPH lot can go back into the store since I will not need a paycheck from it for many many years. The bad part is I am very hands on and I will not be able to be there as much as I would like.
I would love to pick some of you guys brains on your day to day operations and how you started, your normall business practices, and collection strategies. I am going to start with selling 1 or 2 cars a month and move it up from there as time and money allows.
I would love to see some discussion on your buying strategies of uses cars, your average cost per car, average mileages, and your best selling for the money. I would also love to see some talk on collection practices on late charges and how long before you charge a late fee, how long before sending out demand letters, and steps to be able to get the car back if the time comes and that has to happen.
Again, I am extremely new to BHPH and am planning on going to the next boot camp when it is available. I value yalls opinions as most of you have been in business for a long time and have been very succesfull in the process. Any advice or guidance would be greatly appreciated.
Thanks in advance, :)
Heath Edwards,
Hedwards@autoadvantagesc.com
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Joined: Sun Aug 05, 2012 5:09 pm

Re: Finally taking the plunge

Postby penmar826.10501 » Mon Apr 29, 2013 10:43 pm

So Heath,
A couple questions, what state are you located in, what are you doing for software, are you going to do your own sales and collections?

Just a few, first of all welcome! You are going to have a lot of fun or a big headache. Just depends on what you are willing to put into it. I did buy here pay here for 15 plus years. Have did everything from cleanup to owner and everything in between. I would be happy to give you some ideas. Email me at mpfairbotham@yahoo.com and I will try to help you out.

Have fun, be safe.

Mark Fairbotham
penmar826.10501
 
Posts: 5
Joined: Thu Oct 04, 2012 11:47 pm

Re: Finally taking the plunge

Postby combs.3602 » Thu May 02, 2013 10:45 pm

Hi Mark - Why not carry on your posts and conversations here so all the folks get to learn something interesting or new ? I will also follow up here afterwards and offer my thoughts and ideas. Thanks Dennis Combs Boise
combs.3602
 
Posts: 75
Joined: Sat Aug 25, 2012 4:31 pm
Location: Nampa and Boise,Idaho

Re: Finally taking the plunge

Postby combs.3602 » Mon May 06, 2013 11:43 pm

Hi Heath - Its very exciting starting your own business;congratulations and the best of luck.Here are a few of my thoughts - Im a little concerned that you are keeping your job and not giving this your full commitment;this business requires taking risk to succeed.I understand wanting to have Kate and Edith too,but sometimes we need to make a choice.ha! :D If I were starting out today and wanted to build my store without much debt, I would begin with very inexpensive cars.My cars cost about 5200.00 average,that includes cars that cost 2500.00- 7500.00.We usually get about 1000.00 -2000.00 down and try to get some pic payments over the 1st 3 months, and then get from 200.00 to 300.00 per mth.If you start with cars that cost around 1500.00 that you sell for 2999.00 to 3999.00 and take 500.00 down plus pics and 200.00 per mth you will have the good beginnings of your BHPH store.You will find that your interest(finance charge) will become your biggest asset,so do not neglect to charge a healthy rate.Depending on what your competition is doing,20-30%.This is an important point because your rate of repossession will be around 1/3 or 30%+.From that point forward as you build accounts and have more income you can offer a higher grade of car and ask a little more profit.Dont let others tell you that you should make 4500.00 per car,you will not do well unless you are selling cars that cost about 7500.00.Income tax will be a problem,so be aware and save X-amount of every dollar earned.About collections ? Remember you are dealing with folks that have not paid their bills well ,so call them the day before their payment is due for a friendly reminder,then each subsequent day thereafter till paid.The further from due date the more serious your request will become.Sometimes you will have to make arrangements,but only give slack to those that have the payability.After 5 -10 days late depending on the quality of your customer ask for them to bring the car back to your store till they can make the payment.Some guys use GPS/Collection devices on their cars which isnt a bad idea ,but I never have because our volume would make it not feasible.It might work for you with a small volume of sales.You might elect to take possession of the car after 10 days,again depending on the circumstances.You will need a shop that will do inexpensive repairs.We have 5 of our own shops and provide a service repair agreement that helps keep the cars running.The number one loan failure is due to mechanical breakdown.Dont try to get judgements from the defaulted customer;re-con the car and re-sell it.It is the most profitable method.Well Heath,there are a few of my thoughts.Post up any questions you have. Good luck - :D Dennis Combs Boise
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Location: Nampa and Boise,Idaho


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