Without cash, you are out of the bhph business!

I recently had a very successful bhph client of mine have the bank that had their credit line seized by the FDIC. It had nothing to do with them because their track record is impeccable; however, it serves as a reminder of what can happen to a bhph dealer that runs out of money.

Every dealer I speak with that is considering getting into bhph I tell the same thing. Create an ironclad business plan and then stick to it.  The business plan must address the crucial processes and procedures with underwriting, collections, CID (cash in deal), volume, exceptions, verifications, and staffing. Volume and CID dictate the amount of capitol on hand needed. To get started, you need at least 18 months of cash and then you need to hold true to your business plan.

I have a client that maxes their CID at $3750 and does 40 a month and that is it. When they hit 20 deals, they are basically done for the month but this store nets almost as much as their Ford dealership that has a huge service absorption and sells 120 to 140 per month.

I have clients averaging $5000 per deal with monthly losses below 2% which translates into huge profits but if the cash runs out, they are out of business.