0:00
/
0:00
#398 - Don't Wait Until December- Tax Season Prep Starts Now!
#398 - Don't Wait Until December- Tax Season Prep Starts Now!
0:00
0:00
0:00
0:00
About this episode
Preparing for tax season is crucial for car dealers, and starting early can make all the difference. Luke and Jeff discuss the importance of developing a buying strategy, assessing cash needs, and evaluating current inventory to maximize sales during tax season. They emphasize the need for effective marketing and the significance of hiring the right staff ahead of the busy period. With actionable steps and insights, this episode provides a roadmap for dealers to ensure they are ready to capitalize on tax season opportunities.
Topics:
tax season preparation
buying strategy
cash needs
inventory assessment
marketing strategies
staff evaluation
outsourcing
customer engagement
Why September is the PERFECT Time to Start Tax Season PrepThink it's too early to plan for tax season? Think again! Jeff and Luke break down the 5 critical steps every independent dealer needs to take RIGHT NOW to maximize their biggest sales opportunity of the year.Key Takeaways:* Tax season isn't just for buy-here-pay-here dealers* Start preparation in September, not December* Your current customer base is your goldmine* Higher down payments can help you control inventory flowSupport the businesses that support the podcast!Blytzpay for your credit card processing and text communications. Tell them IDP sent you to get 3 free months!https://www.blytzpay.comBuckeye Risk Services for all your education and reinsurance needshttps://www.buckeyerisk.comTaxmax for flexibility with your tax returns. Use the code “Podcast2024” for 40% off sign up!https://www.taxmax.comIgnite Consulting Partners are there to identify problems, create solutions, and help your business thrive!www.ignitecp.comPlease subscribe, leave us a review, and share with a friend.Connect with us online: / independentautogroup / jlukegodwin / sendtojeffwListen to all our episodes on Anchor:https://anchor.fm/theindependentdealer
Select text to request an explanation
And it's simple math, Jeff, just like you said.
If I know that I'm gonna sell the same amount of cars
between now and February 1st,
but I also know that I need an extra 150 cars,
and let's just use 10,000 as an ACV.
I know I'm gonna need 1.5 million dollars.
That's a lot of money.
That's a lot of money.
Where is it gonna come from?
No idea.
Whoa.
Hello and welcome to the Inda Pendant Dealer Podcast,
brought to you by Buckeye Risk Services.
Good job.
Yeah, nailed it.
What's up, Buckeye?
What are you gonna go on?
Well, you know, I'm in the office this week.
You and I unfortunately didn't get to continue
to be in San Diego, because it's so nice down there.
But in the office, and catching up on some things
that I was behind on, and thinking about the future,
and just thinking about the things
I would typically do this time of the year
that I'm not actually having to do right now.
Yeah.
Like you would typically be golfing or?
Well, you know, I really wanted to play golf a lot this week,
but I only got to play once, so.
You would be typically thinking about
our most wonderful time of the year
is what you're thinking about.
Yeah, tax season.
And it's never too early to start preparing,
because it means so much for retail sales
and buying or paying your sales.
And it matters for both.
And there's, I think a misunderstanding
that tax season's only about buying or paying.
It's not the case.
And there's also a misconception
that tax season no longer exists,
but I can tell you it does.
He's seen it.
He knows it exists.
He believes.
So people might be confused.
They say, Luke and Jeff, you guys are crazy.
It's September.
You haven't even had Bill Nyland on yet.
Like, why are you gonna be talking to me
about prepping for tax time?
Luke, how would you answer those people?
It's never too early to prepare.
And you're getting the fourth quarter
of the car season prices dip.
And it's the best time to buy.
And things sometimes slow down.
So it's a great time to keep your shop busy
or keep other shops busy for recon.
So you gotta prepare right now.
And I'm not saying to start buying right now.
We have a way to look at inventory
to see what prices are dipping and what aren't.
But I think you just need to be prepared.
I want you to have a written path
to make sure that you're ready
by January 15th or February 1st.
Yeah, so let's go over that.
We got five steps we're gonna share with you today.
They're gonna walk you through
kind of the idea that you need to start thinking about.
The reason we're doing this in September, obviously,
is you've got to get the plan down.
You've got to talk with your staff,
your management, your accountants.
You've got to figure out how you're gonna execute on this
over the next 60, 90, 120 days.
Because if you wait until December
to start talking about this, it ain't gonna happen.
And there's a lot of reasons why let's get into it.
So Luke, the number one tip you have, what is it?
Yeah, it's develop a buying strategy
and an inventory strategy for tax season.
It's so important.
When I go into dealers and we start talking about,
when I'm there for consulting on site,
and the first thing I ask is, do you have a buying strategy?
And typically the answer is no.
And I understand that.
And some of them will say, I have a no buy list.
Well, okay, you have a no buy list,
but does that mean you can buy everything else?
Because that's not the case.
Not everything else, no.
I've definitely got a buy list.
I know what I want to go after.
And I know, and interesting you say this,
because this was timely.
I spent all day yesterday walking the lanes.
Oh, spraying damage.
Dude, just like Jack Carter,
like I just felt, I felt Jack Carter-esque.
And it was incredibly painful.
It was literally the first time I'd set foot
inside of an auction in probably five years.
And we came away with a little stack of vehicles,
almost filled the whole truck.
Wow.
So productive.
But within that frame,
when you talk about buying strategies,
we made our pre-sale list beforehand.
We know what we want to go after.
We know we were trying to chase a lower ACV,
but we wanted to actually put our hands on it
because my opinion, that's the only way
to buy something sub eight grand these days
is to physically go check it out.
So Jeff, if I told you,
you had to between October one
and February first,
have an extra 150 cars,
ready to go and recon.
And you didn't have a strategy.
How much of a brain damage would that be?
Yeah, it'd be incredibly painful
to try to add that much more volume
to my processes because I wasn't set up for them.
And with your change last week,
I'm moving so that my shop manager
can be a full-time buyer.
And this is very timely, right?
We hired someone to replace him inside the shop
to order parts.
He is gonna be now outside of the building
just strictly hounding the streets,
Facebook marketplace, auctions, new car stores,
everywhere he can go to find inventory as we gear up.
But inside of that, when you say buying strategy,
he does have guardrails, right?
We have an ACV we wanna hit
and we have certain makes and models
that we wanna keep our eyes on.
So yeah, I mean, what I would encourage people to do
is go and you know what you wanna buy.
And you know what works for you.
You know what works in tax season.
Sometimes different things work in tax season
that don't work in other times
because you can get these larger down payments, right?
So sometimes you can scale up
and sell a little higher price car
because your cash in deal can go down, right?
Or it can be the same even with some better inventory.
So I wanna scale down, I'm scaling downwards.
And that's fine.
And that's fine, it doesn't really matter.
That means you can have more cars ready for tax season.
So let's talk about the step number two then
because that leads us into the new cash needs.
Like what is it gonna,
if I gotta have an extra 150 cars ready
and my average ACV is gonna be in, you know,
I don't know, eight grand area,
I don't do public math, but that's a lot of money.
It's a lot of money.
So how much cash are you gonna need available
to accomplish this?
And it may not be cash.
How much flooring line am I gonna need
to have available for this?
Or how much can I borrow against my portfolio
to make sure, do I have enough basis there
to make sure it works?
And it's simple math, Jeff, just like you said,
if I know that I'm gonna sell the same amount of cars
between now and February 1st,
but I also know that I need an extra 150 cars,
and let's just use 10,000 as an ACV.
I know I'm gonna need 1.5 million dollars.
That's a lot of money.
That's a lot of money.
Where is it gonna come from?
No idea.
Okay, so we may have an idea that we need 150,
but we may also realize that we have the cash
for 75 extra, right?
Good point.
And so we may have to say, all right,
I've got $750,000 available to make tax season really hit,
and I'm gonna use it wisely.
And Jeff, like you talked about, that could be,
you know what, I'm gonna go down an ACV a little bit
to make sure I can get the amount of cars I want.
Or, you know, I'm gonna say, you know what,
I want 75 extra cars and $10,000 ACV.
Yeah, well, it's a good time to tap
into my reinsurance money.
Oh man, what a great segment,
and to a buck I add, Jeff.
It's really interesting
because it is a great forced savings account.
So there's all sorts of things you can do
with your reinsurance money.
You can reinvest it, you can borrow it back,
you can, I don't know, stick it in a sock somewhere.
You can do all sorts of stuff,
but one of them is you can put, you know,
leave your cash in a long-term CD,
or a short-term CD, a six-month CD that, you know,
matures every August or September,
and you use it the next six months for your inventory,
and then as it comes back in,
you sock it back into that CD or something.
So, I love that idea.
Interesting idea is if you have that capital available,
and that's the beauty of the reinsurance
is it's that forced savings account.
Yeah, and that's a great idea.
Instead of using someone else's capital,
instead of hitting your foreign line,
just hit your reinsurance company,
pay yourself 5% during that time,
and then pay it back at the end of tax season
as the money comes in
because it is a forced savings account,
and a lot of us have 750,000 sitting in there.
Yeah, exactly.
So, step number three, Luke, you're gonna kind of,
when you look at your buying strategy,
you look at how much cash that's gonna take.
Now you're reassessing what you've got on the ground,
right? Yeah.
What do I have here currently
that's either aged out that I,
maybe I wanna keep it over until tax time,
maybe I need to get rid of it
so I can replace it with something fresh
and generate cash out of that aged inventory,
or maybe I've got something sitting in the back lot
that I just really need to bite the bullet on
and order that engine and get it ready in time.
Yeah, it's the best time of the year
to get inventory ready as right now,
but the second best time is for tax season, right?
Because I know that cars
will bring the most money
and they're the most valuable between February 15th
and let's call it April 15th.
I know wholesale wise and retail wise,
I'm gonna get the most for it.
And what happens a lot of times
you make bad buys during, let's call it, April and May.
You make bad buys, everybody makes bad buys
and you're tired of looking at that car,
you pay too much for it.
Well, get real what it's worth
and let's mark it down,
let's get it ready for tax season
and let's blow it out.
Either wholesale, cash, scrap
or get it ready for buy or pay here,
you need to make sure that that inventory
and the city is no longer costing you money
and every tax season, just wipe everything out
and start over, start over fresh on March 1st
because it'll make you feel better, I promise you.
I'll tell you what,
nothing makes me more excited than throwing stuff out.
That's one of my absolute passions in life
is just throwing things in the garbage can.
And so it does feel good when,
I mean, you've been in my backyard,
there's not a lot of bones in the back there.
I don't have the space for it.
A, if I did, I would love to have a parts field,
but I don't.
So I got to make decisions on those things quick.
I either got to get them repaired,
put, throw good money after bad and get them running
and try to sell them retail or cash car,
or I got to yank the cats out of them
and send them to the scrap yard for 200 bucks.
So it's a decision you got to make.
It definitely, as we get into parts being more available,
and I'm seeing some parts come down in price a little bit,
get a little more reasonable maybe,
it becomes more attractive to fix that car.
And I need this kind of time
because when we talk about getting more cars ready,
my shop is already running at maximum capacity.
So for me to ask them to do an extra five cars a week
to be ready for tax time in four months,
that's a lot, that seems doable.
It's not easy.
That is very, very hard for my shop to do without,
even though I'm utilizing four or five outside shops,
like I got cars everywhere.
Yeah, and this is a great time of the year
to utilize outside vendors
because typically outside service departments
will slow after the summer season,
especially where it's hot
because the weather starts to cool down a little bit.
So you're not worried about AC repairs.
Cars aren't running hot as much.
And so there's outside vendors
that need work this time of the year
and you need to make sure that you're contacting them
and getting work done on these cars that are sitting.
These cars sitting is just tied up a capital.
Doesn't need to be sitting there.
Yeah, so we got the strategy.
We know we got the cash.
We're looking at our current stuff and getting it cleaned up
and those that are ready, ready.
We're dumping the rest.
Now we got to start talking about
how are we going to market these suckers?
How are we putting them out there?
What's our game plan going to look like
now that we've got to bring in all these customers
on these cars that we just bought?
It's a good time to start thinking about that strategy, yeah?
Yeah, and tax season marketing needs to start
in my opinion, December one.
Like you need to hit the ground running
and of course we'll talk about tax max later on
and their fourth quarter program.
But I can tell you this,
if you start on February one advertising for tax season,
you're not going to have any penetration.
Nobody's going to know you.
So what we always did was we just dialed up
our advertising spend on December one.
And man, I tell you by the time,
now I'm going to tell you this,
it will bring in a lot of tire kickers
because they're waiting on their money, right?
They doesn't matter.
You got to get them in the pipeline.
They got to know what you're going to have ready
and my inventory would just swell that time of the year,
right?
And I would have 108 cars, 110 cars sitting on the lot.
And when people did come to like,
oh man, as soon as I get my tax money,
I'm coming right back to you.
But it was all because we took that advertising spend
and let's say it was typically three or $4,000
with our provider, we would double it.
And we would double it.
We would double it for December, January,
and then we would turn it off.
And so we weren't really spending any extra money.
We were just putting them into two months
instead of spreading it out over four months.
Yeah.
That is interesting.
When you think about, you know,
it makes me think about two things there,
the strategy of what other marketing channels
do you step into that might be seasonal, right?
Even, you know, we talk to big time advertisers
and they say it's not a set it and forget it type
budget situation with your Facebook stand or you Google.
You do need to vary it based on season,
based on time of the week, based on pay days.
I mean. Based on inventory availability.
Yeah, a lot of people get that stuff to sell.
Yeah. And that's a big deal.
The worst time to advertise in the car business
is when you don't have inventory ready to sell.
And so what happens is, you know, at the end of,
at the end of February, the end of March,
you should have no advertising going
because you typically won't have anything left to sell.
So, and all the advertising you did prior to that
will really help.
So you kind of can just put it on coast after that.
Yeah.
What about like my issue is when I do that pre-advertising,
I start getting those people in in February.
For me, it's more like November, December
with the fourth quarter program.
Right.
All the good stuff goes first, man.
All the four wheel drive SUVs and Z71s
that just happen to steal and get ready
and make them work for buy here, pay here.
Those are always the first ones to go.
Is that, is that do it?
Can I help that or is that just?
Yeah, you can help that.
You can help that.
One thing, that's the reason we gotta have
the right buying strategy in place
because we do, we can,
if we know that the right type of stuff is gonna sell
and we start now and we just load up on it,
and I'm talking about building searches within Mannheim
and within Odessa and your pipeline,
build searches that you buy a little bit further out
and you normally would.
So you make sure you get that right product.
So the first thing to prevent that is to have more
of them.
The second thing is, and this is key,
there's two strategies to this one strategy.
Up your down payment number one, just up it.
And what if you-
Put a required down payment on recall.
Put a required down payment.
So let's just say you typically,
your average down payment's $1,800,
which is a lot of places I see is about $1,800.
Let's just say from December 1st until March 31st,
the down payment on an SUV that's our best seller
is gonna be $3,000.
So you can, you can slim out people pretty,
you can make sure you put the right person.
I'm not saying the right person always has
the biggest down payment.
I'm not saying that.
But what I'm saying is by adjusting down payment,
you can thin the people out and get the right person
in that, or if you 100% have the right person,
you put them in.
Yeah, that's the only thing I worry about is I say,
okay, if I put a required down payment on that car,
that's exactly what my salesman's gonna say to him.
Hey, sorry, Mr. Customer,
it takes four grand to get into this Tahoe
and Mr. Customer's gonna walk,
where he's like, oh, he was great,
he was well qualified,
he would have done him with two grand down.
Well, that's the reason you have to have an F and I person
making the right decision.
You just can't leave it to a sales person
making that decision.
Yeah, and that's probably when I say,
when you say required down,
it's almost like the salesman don't know that.
They don't know what the required down is
on that car.
The F and I, or your underwriter,
your manager, yourself, whoever it is,
comes back and says, hey, Mr. Customer, great news,
got you approved,
you're gonna need four grand down on this one.
You know? That's right.
Well, why?
You said I was approved on the Ford Focus
with two grand down.
Yeah, you're right, you were.
They're the same price.
Why can't I get either?
They're both the same price.
It's just the way it is.
That's what the underwriter said.
I can't help you.
That's the way it is.
Just the way it is.
It's got more miles,
they can't do those long a term, blah, blah, blah.
Yeah, all sorts of good reasons to come.
And there's good reasons.
And honestly, your salesperson,
and this is a whole different thought process,
your salesperson really doesn't need to be discussing
down payment with your customers.
But that's just, it's my philosophy.
And Jeff, we talked about this,
step number four, Luke, it's its own thing.
I mean, this is its own episode.
We really feel this one off in a couple of weeks
and talk about the marketing side
of tax time completely separate.
We don't have enough here.
But the last one is kind of goes hand in hand.
It's pretty important.
Let me tell you one thing though on number four
before we go too far.
Yep.
When we talk about Blitzpay and our sponsors,
that's a great spot to start with your marketing
because you can mail and blast text your current customers
that are not only low balances, but long age.
We all know customers don't want to be in their cars
longer than 18 months.
By 24 months, they're chomping at the bit
to get out of it.
So just because they still owe you eight grand
doesn't mean that you can't get that customer in.
They've been in it 24 months.
They want out of that car.
They're going to take that tax money somewhere
and trade that thing,
even if they're a little teeny bit flipped in it still.
So make sure you're marketing to your current customers.
Those are the best, best, best ones to get first.
So you know them, you know how they pay.
We, every Christmas, we send a Christmas card out, okay?
To all current customers, to all previous customers
that had bought and not been repossessed
in the last 48 months, okay?
Payouts, all of it in the last 48 months.
We'd send out typically 3000 Christmas cards
and it would give them $500 off of the down payment
of the car.
And we would have customers that for some reason
fell off the list that would come in and be like,
I did not get a Christmas card this year.
I demand my $500 off my down payment.
No problem.
Here you go.
So, you know, you're so right though.
Your customer base is the most valuable.
It's the least cost to acquire a customer.
It's the least cost to acquire their referrals.
They're the highest closing percentage.
All these things matter so much.
Do not neglect your customer base.
And Jeff, you're right.
Blitzpay and their text package,
probably you could probably set up something in there
and send out a great coupon for everybody.
Yeah, absolutely.
Okay, let's wrap this up with step number five.
Evaluate your staff.
What does that mean?
Yeah, you know, unfortunately,
we get to this time of the year
and for a vast majority of buyer pay here
and smaller retail dealers,
they don't have enough staff to handle the volume
that's gonna come in during tax season.
And if you're already running a little thin,
it's time to hire.
Because if you can get someone hired,
let's say in the next two to three weeks,
you can train them up ready to go
and hit the ground running in a tax season.
The worst thing to do is have more leads
than you have people to cover.
And more people on your showroom floor
than you can cover.
Because taking it from someone that has happened to,
it's gonna happen, no matter how many people you hire,
it's gonna happen.
You know, you can hire for tax season
and you may find someone that's your new rock star
and maybe you have to get rid of someone
that's been with you for a while.
Or you may not find anybody new
and you get rid of the people who came in
but you had them during tax season to help you.
Don't, whenever you hire someone,
don't believe it's the last person you're gonna hire.
Just think of it as the next person you're gonna hire.
Because you can get rid of them whenever you want to.
And I know that's a bad way to think about it,
but they'll do the same thing to you.
So if you put in the effort to train them,
they're gonna be good
and they're probably better than what you have.
So just hire.
Interview, find a great person and hire them.
Don't just hire an average person, hire great person.
Yeah, and I honestly,
we could move this step number five up to step number one
because I almost feel like that's something
that can be done right now.
Cause to your point,
even if you find them in the next 30 days,
which will be hard to do and you get them hired,
by the time you get them onboarded
and trained enough to actually be fully running,
like a salesman, that's a solid 90 day,
I don't care how good a training program you have,
you're 60 to 90 days to have someone really being able
to run on their own to understand it.
Technicians.
Well, that's the reason,
that's why you gotta do it October one.
You gotta have a hire, yeah.
Yeah, your technicians, if you're behind in detail,
if you're, you know, all those areas,
that's a long lead time to not only find a qualified
applicant, but get them in and get them up to speed.
And when we talk about evaluating a staff,
from experience, because detail can be
one of those laggards,
find you a good detail shop
that you can take your cars to.
Because you don't want detail limiting your production.
It's, it's just, it's, detail's a nightmare.
I know there's plenty of success stories out there,
but it's a nightmare.
And so, as you, what's that?
That we've never had a problem.
As you're evaluating your staff,
evaluate how you can do it better sometimes.
And sometimes that means cutting out a department
and have a subcontractor do it better.
Yeah, it definitely is good at these times of years
when you're going to be fluctuating
for short periods of time,
that might be something to evaluate.
I don't need to hire another detailer.
I just need to outsource for the next three to four months
my overflow.
That's right.
I don't need another technician
that I'm just gonna have to lay off in February.
Let me just outsource some of this work
to these other shops,
because we know this is a temporary bump in the road.
Yeah, and bodywork, CPI work,
you don't want to drag your recon process down
because you're working on CPI cars
or because you got one technician that can paint bumpers.
Man, send that junk out.
Like your technician needs to be turning wrenches.
Yeah, and if you were debating on firing that guy.
Firing that individual.
Now is the time to do it.
I give you permission.
They're bad culture, they're no good.
Get rid of them now, open that seat up.
It's okay if it sits empty for 30 or 60 days,
you'll find someone first in November,
you'll get them trained up by the end of December,
but you're never gonna go looking
if that sub par employee is still sitting in that seat.
You're just gonna be like,
ah, it's good enough, he'll be fine.
And there's more people to hire.
Yeah, there's more people to hire right now
than there has been in the last five years, okay?
So if you've gotten frustrated two years ago
when you're trying to hire,
I get it, I was frustrated too.
There are qualified people looking for jobs right now.
We hired a new service advisor last, he started Monday.
Really good guy, he didn't have a job.
I mean, he didn't have a job.
So he was willing to start work immediately.
He's had so much experience
and just the transition compared to what we were looking
for and able to hire right now
compared to what we were looking for
and had to hire two and two and a half years ago,
it's night and day.
Don't be afraid of it.
Reach out to me, I'll help you write a quick job description
or whatever and we'll get it loaded on to Indeed
and off you go and it's, they're out there.
There's a lot of color, three color dealership
employees that got laid off recently
that probably looking for jobs.
If you're in Texas, Arizona and California
and you need some staff,
I think there's 1,100 of them that got laid off.
So I'm sure that you'll be able to find somebody.
Cool, Luke, this has been great, man.
Yeah, what do we got coming up?
We got some cool things coming up, Jeff.
Yeah, we're excited.
Obviously, you guys saw our episode last week with Tracy.
Next week, Luke and I are gonna be in Dallas
recording just 48 hours of straight podcast interviews
and content.
So our promise to you a couple of weeks ago
that we're gonna step up the production value
and the entertainment and the education value.
This podcast is we're putting our money where our mouth is.
Yeah, you're gonna see more social media stuff
that I see already starting to come out.
Saw some stuff on Instagram.
You can see more reels, you're gonna see a new look.
Next week's gonna be fun, Jeff's gonna be tiring.
But if y'all are, well, by the time this comes out,
we're already be back, so nevermind.
But the people we are visiting,
we're looking forward to it.
And hopefully we'll just have some wonderful content
to bring y'all.
So you should like, subscribe, and share, right?
Yeah, and to that point, Luke,
I don't think that's the thing anymore.
But to that point, if you do have an idea,
please submit it through our website,
TheIndependentDealer.com.
We've got a great submission form.
If you wanna be a guest
or you know someone who'd be a great guest
that you wanna hear from, definitely send that in there
because we wanna make sure we're taking everyone's
requests and dedications seriously to bring you.
And topics, and topics.
If you need us to try to research your topic for you,
I mean, what else am I doing, Jeff?
Yeah, he ain't got nothing.
If it's cloudy, rainy, he can't go golfing.
So he's just researching topics.
Yeah, so I kinda like that.
And vendors too, they can make a lot of layers.
All right, let's see, here we go.
Request an explanation for:
Request an Explanation
Heard something you'd like explained? We'll add it to this episode.
Sign in to request explanations for terms you heard.
Want to learn more?
Browse our glossary for plain-English explanations of automotive terms, jargon, and concepts.