Would you do it over?

[joelholmes]

Looking over financials last month I came to the conclusion that I probably wouldn't re-open the same company in today's market. Actually I remind myself of this every month about the same time but thought it might make for interesting conversation.

Thirteen years ago when I went on my own fuel was @$1.25 a gallon yet we were able to bill $1.00 per mile to go anywhere outside our normal service area. Everyone paid key fees. Everyone paid storage fees, many starting with day one of possession. Everyone paid close fees. Everyone paid skip/locate fees. I could build a VERY nice repo truck with $30,000.

I don't need to go over what fees and expenses are like today, that would be preaching to the choir. I am lucky enough to still have a few clients that pay like the old days and treat them like royalty but what was once considered an insult ($395 contingent repo) is now considered to be fantastic by many.

I will be the first to admit technology has allowed to us to do more with less resources but the numbers don't come anywhere close to making sense.

Being established and owning all our equipment outright has allowed us to make it through the lean times, just can't imagine how a startup with truck payments, camera payments etc can thrive enough to make it worthwhile.

Thoughts?

[jclark]

I was recently on the 2nd Quarter report webinar by Experian and while the number of months financed has increased and amount financed has increased I didn't get the feeling that there would be any significance in number of repossessions is in the near future. The report did show me that the largest increase, in delinquency and purchases, was in the sub prime markets however the percent of past due accounts were at an unrealistic delinquency rate. There may be increases in recovery rates this fall and winter as normal but it will take drastic employment conditions to bring a sizable increase in recoveries.
I firmly stand on the estimate that nearly 50% of the recovery companies that were in business six years ago have gone, either by closing the doors or selling to someone else. New companies are opening with owners who have little to no experience in the industry, they are working involuntary recoveries for as little as $175.00.
The lenders have placed their business with forwarding companies and companies that say they cover an entire state. Lenders have relied on the vetting companies to do their do diligence to see that the recovery company is within the guidelines of the CFPB, or the forwarder has had the recovery company vetted. The sad fact is I have seen proof of one or possibly more of the vetting companies have given their blessing to companies that are so far away form being compliant it is unbelievable. Many of the companies that say they cover the entire state, and in some cases numerous states, use contract labor of companies that are not employees and are not covered thru their insurance to the extent required by the lenders and would not pass an inspection and probably be an embarrassment to the lender if they meet them.
It is sad to see the destruction of an industry that once was a creditable industry to work in. We have some lenders who could care less about the welfare of the men and women who work in the industry today, double assigning accounts, demanding you break the law, and threatening to withhold business if you don't play by their rules whether lawful or not.
Those Recovery companies that are trying to pull everyone together to have a voice and bring this industry back to a viable place, to own a business but also work in one are pursuing the golden ring that is just out of reach. While it is a noble cause to many in the industry, some will jump on the wagon while they are not operating their business in a way that would make that wagon reach it's goal.
In order to succeed one thing all who proclaim they are in the repossession business, whether owner or employee, should educate themselves with anything pertaining to the industry. Be educated in the laws and be able to discuss them with facts to the lenders or forwarders, learn about contracts instead of just blindly signing them, understand how to figure what the cost is to do business, read and comprehend reports from Experian and other reporting companies with facts and figures on the auto financing market as well as the federal reports on employment and finance. Owners of Recovery Companies are charged by the CFPB to see their employees are educated in the laws both federal and state and have continuous education, in addition (not addresses by CFPB) drivers should have safety classes by certified companies for driver training and renew this drivers course every year.
The future of this industry is in our hands, the need for our industry will always be there regardless of the number of companies needed to fulfil the lenders need. Either we take control of our destiny by having rates that not only pay the bills but pays employees a livable wage as well as letting the owners make a reasonable return on their investment. By not working contingent, get paid for those expensive keys, no free storage to help offset the insurance expense to cover them, and see the lenders are educated in laws as well as the cost of doing our business.
After 30 years in this business I can say I would do the first 18 again but it has really been a down hill ride for this industry the last 12 so I would have to think real hard on those 12 to do those again.
I do have a passion for this industry and those who work in it, to bring this industry back to where it once was would be a God send for me to see before I get called home.