I have the pleasure of meeting buy-here, pay-here owners all over the country when I travel. I see dealers of both small and large operations. Sometimes, I meet a BHPH owner that is just starting out. Other times, one who’s been going strong for many years. I’ve even encountered retail dealers who are seriously considering a jump into our industry.
Even with all these differences, there’s one universal question that unites these people: What’s the best way to run a BHPH business?
You may not like my answer
It’s a question I take very seriously, so I answer it honestly. And, I’m not going to lie. So, generally speaking, they aren’t very satisfied with my answer!
Why? Because I genuinely believe that there are many successful ways to run this business. There’s no cookie-cutter solution. Success depends on your available capital and your day-today involvement, your commitment to collections, and so much more. How the business performs is heavily influenced by your temperament and your market—there are dozens of factors that can make or break BHPH dealerships. I see different business models every day that are highly successful.
Pick your method, but follow best practices
Even though I heartily believe that the right success model depends on your circumstances and attention to detail, each of the profitable BHPH businesses I’ve encountered operate with a few best practices that I believe you should follow to maximize your business and mitigate your exposure to risk.
1. Understand this is a collections business, not just a sales business
I see more dealers struggle with this idea than any other because they just don’t understand this simple, but crucial, point.
It’s especially hard sometimes for someone who has built a successful franchise or independent business where sales, gross, and expense control were the keys to success. In the BHPH business, we cannot just sell our way out of bad collections! To make the most of the business, our collectors have to be the dealerships most talented, best trained and best compensated employees. A well-run collections department can make up for a lot of mistakes in other areas.
2. Get serious about compliance
If you don’t have the wherewithal to devote time every day to compliance, I suggest not getting into this business. If you’re already in and still not serious about compliance, I suggest getting out while you still have a business and a choice!
The CFPB and the Department of Justice will do everything they can to put you out of business if they even think you are not following their rules. Ignoring compliance puts everything you have in jeopardy. If you can’t (or won’t) manage that reality, you shouldn’t have a BHPH dealership.
3. Be an advocate for BHPH businesses
Reread No. 2. If you want life in the BHPH industry to be easier, you have to fight for it. One way is to join the state and national associations that are fighting for your business' survival against the likes of the CFPB and DOJ. Not only should you be a member, but it is very important you contribute financially to these associations so they can fight for your rights.
Connect with your city council members, senators, and state/national representatives and other important political figures in your area. Make sure they understand just how much your business contributes to the local economy—and educate them about the industry, so they realize that you aren’t the “bad guy” that consumer advocacy groups like to make you out to be. Figure out their stance on the CFPB and DOJ and vote accordingly.
Remember the quote by Edmond Burke: “The only thing necessary for the triumph of evil is that good men do nothing.” Stand up for yourself and others.
4. Join a 20 Group
The best career move I ever made was joining an NCM 20 Group. Nothing else I tried made me a better operator—or provided a better ROI—than the insights I gained from my 20 Group.
The power of peer collaboration and accountability that you receive in a 20 Group setting is magnificent. Imagine sitting in a room with 20 other dealers talking about your business. You get to see the good, the bad, and the ugly and have, literally, hundreds of years of experience in the room with you! The one warning I will give you, though, is that you must have an open mind and be ready to go back to your dealership and make meaningful changes because your fellow 20 Group members will hold you accountable to making your business better. Even when you’d prefer they didn’t.
BHPH success is possible and important
I love this industry. Although we often get a bad rap, BHPH dealerships provide a valuable service to the vulnerable in our community. We help people learn to be financially responsible, and we give them the means to get up on their feet and improve their lives. It’s amazing.
So, no. There’s no perfect business model success in this industry, no matter how many times people may ask me to show them the way. But if you take our work seriously, commit to helping people while making a profit, and follow the best practices I’ve outline above, you will make it. And, if you encounter bumps along the way, give me a call and I’ll help you out!
Join the NCM Institute and Dustin Kerr for the upcoming class, BHPH Collections: A Customer-Centric Approach.
Article originally published in the March/April 2016 issue of the BHPH Report.