Staffing Your Buy-Here Pay-Here Facility
By Steele Gudal
In earlier columns I have discussed the importance of being well-capitalized. In this column I would like to discuss the importance of human capital. This is an area which has traditionally not been the strength of this business. Picture the stereotypical used car salesman. Even new car dealers who get into buy-here pay-here tend to believe that it is the choice of last resort for the customer and that it is therefore the choice of last resort for their employees. If you have someone who is not performing up to expectations in the new car store, but you don't want to fire them, put them into the buy-here pay-here operation. Well, a business is only as good as its people and this business is certainly no exception. A common theme throughout all of my columns is that if you approach this business with the professionalism and sophistication typically applied to the new car business, the rewards are tremendous. That professional approach holds true for your employees as well.
One of the first key positions you need to fill is that of the finance manager. This is the person doing the underwriting and making loan decisions. It is also the person controlling the checkbook and the one most directly responsible for your operation's success or failure. Choose this person wisely and try to find someone with consumer finance or collections experience. When considering their compensation, make sure that it is tied to the performance of your loan portfolio and not sales volume. This may create a little bit of an adversarial role with your sales people, but that is healthy. I would also like to point out that car dealers bring particular skills to this business-they can buy cars, they can sell cars and they can service cars. However, they are more used to battling lenders than being lenders. If this is not your strength, recognize that fact and bring in someone with the consumer finance skills you lack. I should also note that the pay scale in the consumer finance industry is generally below the auto industry, and you should be able to offer a compensation package which is attractive enough to get a quality hire.
Obviously, your dealership will need sales people. Don't think that you absolutely need to find experienced car salespeople. You are selling financing more than you are selling cars with features and benefits. I have found that your local mall can be a good source. Someone with general retail sales or customer service experience can do well, such as a salesperson at a local department store or a big box electronics store. In this business, it is simply about treating the customer with respect and finding a way to solve their problems. Advanced sales techniques may not hurt, but they are not a must.
You will need a general manager to balance the volume goals of your sales staff with the credit concerns of your finance manger. Consumer finance skills are also very important in this position since they will be overseeing the finance manager and stepping in to perform the finance manager's role when needed. But if you have a particularly strong finance manger, it is not as important for your general manager to have a consumer finance background. What he does need is a solid understanding of that side of the business. The general manager will also be managing and motivating the sales people, so it is important to find a balanced individual with good business management skills and strong leadership.
I realize that I have only discussed three key positions. They are the ones you need to fill first when putting together a team to run a buy-here pay-here operation. They are also the most visible since they are the ones interacting directly with your customers and establishing your reputation in the community. While also very important, I have not even touched on service because I plan to discuss the role of the service department in a future column. In addition, as your sales volume and loan portfolio grow, you will need to add buyers, service technicians, and collectors. Again, these areas deserve more attention and are topics for future columns. The positions I did discuss are the people who will be the face of your business. If you want to approach this business in a professional manner, and if you want to treat your customers with dignity and respect, those qualities will need to be displayed by your employees.
Steele Gudal is the President and COO of J.D. Byrider Franchising, a chain of more than 100 buy-here pay-here dealerships operating in 35 states and Canada. Byrider and its franchises own and service approximately $400 million in BHPH receivables. Gudal personally owns three locations in the upper Midwest with $20 million in receivables. sgudal@dealeronline.com
