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. (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.
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:
- 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!
- Too many brokered parts, not enough of your own inventory.
- 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.”
- Lack of pay for performance – Paying dismantlers by the car, drivers by the stop, and parts pullers and order fulfillment personnel by their performance.
- 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?
- Failure to plan – Very few folks have anything resembling a plan which includes operational and financial goals.
- 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 go the web site for my new book, www.greenweenies.com, to learn all the backroom business terms. There are 1,200+ terms in over 300 pages, with hilarious illustrations by world famous Gahan Wilson. You can register there for your free weekly “green weenie.” If you want to know what a three fingered booger is, or what’s in a train wreck envelope, it’s the only place to go!
Remember, only you can make BUSINESS GREAT! Next month, more from Chapter Seven of How to Salvage Millions from Your Small Business.
Please email if you would like me to send previous articles.
AutoSalvageconsultant.com was formed in 2001 to help recyclers improve their businesses. With over fifty years of experience in three staff members, the group is THE definitive source for recyclers’ management and training needs. The founder, Ron Sturgeon, is past owner of AAA Small Car World. You can review his resume, with skills and experience, at our web site. In 2002, his book How to Salvage Millions From Your Small Business was published to help small business owners achieve significant success. It was recently reprinted in the U.S. and published in China, Korea, and the Czech Republic. You can learn more about how to help your business at www.autosalvageconsultant.com. You can reach us at 5940 Eden, Haltom City, TX 76117, or by calling or sending an email to Mike Gibson or Tammy Sturgeon. Mike can be reached at 817-925-0061 or email@example.com, and Tammy can be reached at 817-999-1224 or firstname.lastname@example.org