Ep. 25 - Steering through the Challenges of Family Entrepreneurship

But I do have a very special guest here in the studio with me today . This is one of my former students , nick Kilgore . Nick and his brother , chris , have a car business which the name of it is Market Auto . Is that not right , nick ? That's correct .

They are entrepreneurs , they own multiple businesses and have had all kinds of things , both parents and grandparents . His grandfather is a friend of mine who is a very interesting guy . He's a real character who was a Methodist minister , was a test driver for tires on a track , has bought and sold businesses . Very interesting character .

Everybody knows your grandpa around this town , bob Cantrell .

He would try to buy broken phones off of people or just have them bring their broken phones to him and he'd fix them . Then he would buy some of the broken ones that people didn't want to get fixed and he'd actually sell them on Craigslist .

The only reason I mean I always wanted to make money , but the end goal was always to make money to buy cars , more or less . So I never really you were there , I understand that . I didn't really care about getting it for any other reason . So , that was kind of the end goal . Once I got in I mean I think I was 14 .

I started going tagging along in the auctions with them and I had saved up a little bit of money because ever since I was little , my dad had always told me it's like hey , you better start saving now , because I'm not going to buy you a car . He knew that obviously that's something I was interested in .

Sure , he's like you just better save every penny you can . So I'd saved up some money At some point . Whenever I was younger I was trading stock , which is a weird thing to be doing whenever you're like 14 . That's smart . I was doing well with it . I did well for a while and then I kind of put in the penny stuff and that didn't go so well .

So I lost most of that . But I had like $1,000 saved up and went to the auction , went and bought a cheap car and I just sell that . I never touched the money and I just roll it continually . I did that all throughout high school .

Once I got into college I was doing it a little bit here and there , but I'd mostly tied up all that and just like what I was driving at the time .

But I had some money left over and I was putting that in the stock again , which at the time was doing really well , which not so much anymore , but I was the market's back up again now Not for me , but maybe you got to stay in the whole .

Robert Parker was moving out of his location and I knew him . I knew him . I'd met him a couple of times through the auctions and stuff and we bought and sold some cars through and with him .

I didn't have a dealer's license personally , so I would just register the cars .

So I just registered it for a month , drive it around and sell it just to make a quick profit and have a little bit of fun with it , because I always buy stuff I like whenever it was personal .

So I'd get on all these websites and I'd be just looking at $200,000 cars and I'd go and find the best deals on them and I'd hunt every site and I'd just scour the US for these things and I'd end up finding stuff that my friends would then like people that I knew would end up picking up just because I was like , hey , this is a really good deal .

And sometimes they would be close enough to where I was , like I could weasel my brother into it and be like , hey , man , you should go in with me on this and we'd do stuff like that here and there .

But it was just purely for fun , honestly , and I knew that obviously I did it to make a profit , but also it's just an excuse to buy stuff that I already wanted to mess around with . So I was the same way .

No kidding , people look at it and they're like , oh , this thing looks dingy and it's like you spend a couple hours cleaning it up and it makes a massive difference .

It's like I know what it should be worth and usually I can eyeball it and just I mean , obviously I have my books and stuff , I have resources to use to value these things , but a lot of times those aren't incredibly accurate , especially with some of the more niche stuff .

For example , whenever I went to go sell my M3 , it was a 58,000 mile E46 M3 , and it was like a really crazy color and super rare car at that mileage and everyone would message me whenever I listed it who didn't know what they were talking about and they're like oh well , kelly Blue Book is this and I'm like it's one of 202 in that color , it's got 58,000

miles , it's just I'm not going to get this away . I'm getting a decent amount of money out of it . But I was cracking up at some of that stuff because I mean you're always going to get that and you're always going to get the people that just message you specifically to tell you that you're either overpriced or I know it's a good life .

Essentially , Mark presented me with the opportunity . He told me that Parker was wanting to move out of his lease , and so I sat on that for a minute and I was like I really would like to do this .

I think this is a really good opportunity , but at the time I didn't even know about floor plans or any other ways that I , as someone with very little credit and very young not a ton of money to my name could essentially stock that lot and keep up with the burn rate . Basically .

That's a long history Now , absolutely , and so if people can get those kinds of opportunities to take over existing businesses that have gone out of business and this one hadn't gone out of business , but it was going to , essentially it was going to be a long run law , it wouldn't be in it any longer those are some good opportunities for people .

I can't figure out how I'm gonna fund it , more or less because and at the time I wish I'd known more about certain other ways of getting capital that I was unaware of in that particular market , like like floor planning and stuff like that but so I basically turned it down .

And Then I get a phone call about a week later and market told me he's gonna pass it on to someone else . Well , I had no idea that someone else was a friend of mine . I was actually a someone I'd known from from hosting meats and stuff .

Back in the day , ryan Malone and I Get a phone call from from Chris and he's like hey , ryan just called me and he's wondering if if I wanted to do this Dealership thing with him , and I was wondering if you want to do it with me , and I was like , yeah , absolutely , I mean this . And we kind of came to some terms on you know how we were gonna .

Basically , he was gonna be primarily the capital guy , right , and we were gonna be the .

I mean they had more cars but they keep them off to the side and one right , keep them tucked away , yeah , but um , behind your grandma's building there . Yeah , right , either that or yeah , they were parked in my parents house . Sometimes I keep cars parked over at my house . Yeah , this is a whole tangent of itself .

But one time my my mom gets so irritated and my brother was parking cars at Her house that they got into an argument about getting it out . It was an old Mercedes SL and it was bashed in in the front . It was undrivable . It was sitting on a trailer in their yard .

And I'm just sitting there at the kitchen table listening to my dad , my mom , my neighborhood right . I'm just sitting there listening to my parents and my brother argue about this car and him getting it out of there and I got sick of hearing it and I said I said , let me just buy it , I'll go put it in my house . I'm tired of hearing this .

And so I bought the car from him for like what he had in it . He kept the hard top , so that's the profit for him , because what tops are . They're pretty expensive and I ended up I mean it was cheap . It was like I paid him like 200 bucks for it .

We'll , needless to say , when , when Thanksgiving came my first year of college , my dad calls me up and says , hey , son , I'm like , yeah , he goes , get your blankety blank car out of my garage . I need to park in it . I parked it in the middle so they couldn't door ding it . Oh my gosh , that didn't fly . But no , I had , I had that car .

Then I had a 55 Ford Two-door wagon that we were gonna turn into a hot rod and that was parked alongside my mom's house . When I brought home a third 55 Ford , parked it in the garage , rip the seats out , looking for change , which is always the first thing we did whenever we bought a used car . Yeah , my mom started crying .

I mean , I've only seen her cry like three times her whole life . Okay , another old car . So I can identify with you .

Yeah , to a certain degree , yeah , I hadn't really sat down with them too much . So , you know , we sat down , we had some meetings , you know , just discuss some terms of what we were gonna do and everything and , and you know , just start hanging out a little bit more and quickly became friends .

He was , it was one of those people that you know , right , it could have not like him .

Everybody love Ryan , one of them , one of the nicest guys I've ever met and really was super helpful , and I mean anything that we were trying to fix , because I mean , we understood , like the , the dealership side , we understood the car side , but the filing , you know , doing everything for getting it ready with the as far as taxes are Concerned , ein number ,

llc formation , all that right um ,

that was Ryan . So , ryan , he knew his way around businesses and yeah , that was a huge part of the reason we wanted to work with him , to be sure , just cuz I mean , he knew exactly what he was talking about whenever it came to that , and Well , he knew a lot about cars and he had a good network .

On the car he bought it it was sitting at his buddy's place in st Louis , the dealership , and somebody came along and offered more for it . Yeah , I don't know if you heard that story . No , I didn't . That was just the kind of stuff Ryan did all the time . Everything he did he turned to touch , turned to gold .

So we were running all the auctions and stuff and all the headaches that come with that , you know , just driving around all over the place going to pick stuff up , and I'm granted , there's still a lot of that . But Whenever you have to secure all that volume all at once , it's a little different than replenishing it , as you go Exactly .

So when we first started out , I I mean it was rough like we were . We were all over the place trying to pick stuff up and you know , sometimes you , you get a good one , sometimes you get one that maybe you get a little unlucky on or something . Then , obviously , the market's been a little bit weird past couple months in general .

I mean the last two years you used cars as a whole .

Who are the people that that by you know ?

Yeah yeah , it's a , it's a dealer site . But , um right , whenever I get on the site , sometimes if I see a car that looks like something we could buy but might be a little bit hard to move quickly and Looks like a good price , I'll just ballpark the price based on what car mono pay .

So I'll just go and I'll send it in like I'm trying to sell it to him . I say , and if that number comes up higher , then I know there's money to be made .

So if they can , if they're willing to pay you know more than what I can pay I mean shoot , I'd be happy , even even if I only make , you know , couple hundred bucks or thousand bucks on a car , or whatever it might be right , be more than happy to turn in the same day .

Um , I Don't know if it's the , I don't know , I wouldn't say it's the least risky , but it's um . It feels less risky to me , specifically because of their arbitration policies . So let's say you got an auction , you go test drive a car , you're test driving it in there a lot and you know right area . You have maybe a hundred yards to accelerate it .

You can get sure , depending on if it's a man , you're like you can get through maybe one , two , three gears right , right . So you get up maybe 40 miles an hour at the very most right . Sometimes issues don't show up at 40 miles an hour .

Whereas you buy a car on , say , you know , one of these auction sites , they go and they run their own inspection on it and they give you little check marks on everything they've tested and they tell you exactly . You know what should be working and tell you what's not supposed to be working Right Now .

If those two things don't match up and they had specified that that works and you get the car and that issues they have some liability there . Exactly , and so they're gonna end up paying for that or they're gonna buy the car back Right , whereas a lot of the auctions , their arbitration policies , just aren't very great .

We had one day and I mean , I don't even wanna think about this day we had one day where we bought three cars . Every single one of them had a bad transmission . Wow , and it's like you couldn't tell One of them was just a mistake on our part . We bought it without test driving it . It was dirt cheap and it rolled through the line .

It looked like it was driving okay and I can't take responsibility for this one . I didn't buy it . But Chris we picked that up and it was a little wrap for , so we're waiting on it .

That's been a headache of itself , but because we've gone through two transmissions I guess it might be a computer issue actually , because we put it into and still it's not working . So I'm thinking maybe ECU , but we had that . And then we had a Ford F-150 that we did test drive and everything ran great on the lot . Turns out fourth gear is gone .

So their arbitration policy doesn't cover that Exactly . You can't get it in the fourth on the lot . We test drove it , looked it over , everything looked good . And you get it out on the road and it goes three and then it just basically skips four , slams into it Whatever it wants to do at that time . So that's a full rebuild . And then we had a Tahoe .

That just it felt fine . I mean it drove fine , but it was just only when it was cold you could feel it was kind of a little bit almost vibrating . It turns out it's a torque converter and so we had to get that replaced and stuff . So it's just sometimes you can't tell just based on driving them .

But it's really nice to have that assurance whenever you have an arbitration policy that lists out the things that you're supposed to do and this is auctions you're talking about that . Do that , or online sources . The online sources are the ones that do the inspections . I see the auctions . They don't really inspect them .

They only inspect them if you send it to arbitration and it's something that's covered under their policy because they're very specific as to what they cover .

So that's a pre-purchase inspection , okay , and there are all sorts of companies that'll do it , some of them , I mean , you could just take the car to Mechanic and have them do it , right . But if you're not there , yeah , so that's what you're buying online . Right , and I've done this for personal vehicles before .

Basically , you call a company out there and some of them are nationwide I can't remember the names of them off the top of my head and it's flat fee , couple hundred bucks . Maybe They'll send a guy out there . They'll go run through it , list every single thing they can find wrong with the car . They'll test drive it for you .

And so I'm just kind of like all right .

And since then we've done some other updates

as well . But we didn't get opened up officially until , well , we had to get a business license , obviously , and that was part of the only thing that kind of impeding us in the beginning was the business license and getting the dealers license transferred over to where it was also in Ryan's name , right .

So I think we opened in August , midway through , I'd say Okay , and our first month was actually really good and we'd done really good at the options , we'd bought a lot of good cars . And I wanna say month one and bear in mind we were paying for expenses backdating , like essentially a month and a half prior , so two and a half months expenses .

I wanna say that I mean we netted pretty good profit first month and that was and I'm not saying it was surprising , but I mean it was . You know , we had half a month to work with and we more than covered our expenses for two months and had a strong profit , so I couldn't complain there .

And unfortunately , though , two weeks after we opened , our third business partner , ryan , ended up passing away in a car accident , so that kind of threw everything off a little bit . We were on a good start , good roll . Obviously , everyone around us .

We didn't know what was gonna happen , what we were gonna do , and obviously we didn't have all of the inventory that we had planned on having at that point Right Little bit less capital to work with . But I mean , at the time , obviously that was very bottom , that wasn't even in my mind , but it just it makes it a little bit .

It made it a little bit harder continuing , but we're starting to kind of get a feel for it again and get the hang of it . But a ton of people stepped in , helped us out and gave us some guidance on the backside , so I can't complain . I mean obviously for that again , because Ryan was a good friend of ours by that point .

Whenever we went through our original operating agreement and everything although it was a little confusing , a little bit vague , he kind of ran us through it and I was good with everything and I actually remember reading through it with him and there was a and this isn't funny but there was a clause for death and he read it through it and he was kind of

explaining it to us and I said , well , I don't plan on dying anytime soon . We all threw it like , well , me either the ride .

You know how things were structured originally . Right , it's been a little bit messy , but you know we're getting all that figured out , so it's Right .

It's just not a good way to go . Spend the money you got to spend . Get some professional advice from people who've actually done it . You know , and not every attorney is good at this stuff .

No , you know , that's another one I've always hammered on is specialization is the rule of the day , no matter what your legal needs are , find somebody who does that and that's all they do . Is stuff like that , yeah .

Oh my gosh , it's insane . It's like I mean you could double your money if you just bought it and sold it . The only problem was getting the piece of paper that says you can buy it . So what do you see ? And having the money , up front .

But , of course , used cars always appreciating asset , unless and that's part of the reason we like the niche stuff Right but May not be depreciating . Yeah , there is a certain turnaround point After a certain amount of time . just , some cars take longer than others , like , for example , say , a Honda S2000 , bmw M3 , porsche 911 .

After 20 years those cars are going to start coming back up . Yeah , there's just history . It's not going to fall back again . I mean you might get incremental dips here and there .

I mean , the thing is , at the end of the day , I look at them as just purely physical assets and it's going to retain some kind of value as long as it works , or even just material cost . It's always going to retain some kind of value , right ?

Right , I think it's safer there than it would be in cash . Right , because cash is just going to keep . The value of the dollars is going to keep dropping , whereas that's going to retain some kind of value . But I understand , obviously , certain specific things , like the stuff that I like to buy tends to it's already on the way back up .

But nobody wants to work for anyone , and that was one of the things I always said when I was growing up is I was like I never want to have to , always , I mean , I don't want to spend my whole life having to work for someone else . I want to work for myself , sure .

It's like if there is a high level problem , that's your problem and you have to be prepared to solve that . And I don't know if I mentioned this , but I guess that's why I mentioned it . But I've been running car washes for my dad .

I ran one of his car washes for the last seven or eight years and well , I started helping out with it and I more or less took over running it for him later on . And that is where I really learned . That lesson is just because you'll get calls at all hours and everyone wants to own or manage their own business or whatnot .

But you have to understand that if you want to do that .

And yeah , he's still not walking or anything like that , but he's improved vastly . But because of that he was running the Springdale location and because of the dealership I was dialing back a lot on working at the car washes .

I'd hired someone to help out a little more and I had him more or less stepping in for me a lot and I mean I'd still show up there , usually once a day , but not for very long , just to check everything out and make sure it looked good .

But because of that I more or less had to take over everything he was doing over there Because he's been in bed and he has been able to do that . So I've been juggling a little bit trying to , because I'm running both locations now and before .

He would order this stuff , and anytime there's a major problem , call people whatnot , and so that's kind of all fallen onto me and so I'm sorting it out . But it's definitely been a bit of a hurdle and you can't always expect everything to go the way you expect it to .

I get up , I go to the dealership , I work there until six , seven maybe , and then I usually go and try to do some rehab stuff with my dad , try to help him with exercise and try to get Sure , and then after that I'll go to the car wash , or sometimes before the dealership , and a lot of times I have to leave during the day at the dealership and go

between the car washes and check on them , but not including helping him out , because obviously that's not work for the businesses by any means . But I've had to dial back a little bit of the time I'm spending there just because I do have to help out with them too . Sure With my dad . You're a good son .

I appreciate that it's a bit much , but I'm getting the handle on it . I usually get home at night like nine or 10 , though , and then at that point I'm just ready to crash . Are you dating anybody now ?

I was going to say I wondered how that was going with this kind of work . I mean it's got to be a put a strain on that .

But I try to spend as little time there on Sundays as I can because that's kind of my catch-up day at the car washes too . So realistically it's not really a day off , it's just a transfer of where that work is going to , and sometimes I could find a couple hours to squeeze in , go do something fun , hang out with a friend , whatever .

It seems like every time you leave one of those places I think it was Tuesday I left the Springdale car wash and I just fixed a door , which it's a huge pain . I mean it's like it's one of those overhead doors and it's a roll-up door .

Right we had an issue with the pole essentially sliding out of the gearbox and it's just the place you stand is pole , because you can't get a ladder in there . You have to stand on this vertical pole on top of the pole to actually service this and you have to hold the tension while you're pulling everything over .

And I can't really explain it without visuals , but it is the most obnoxiously difficult thing that I have had to service there and I've had to do it like three times .

And essentially I had just left from doing that and I'd just gotten all the way back to the dealership and I was over there and I get a phone call and a guy's like hey , there's a problem over here . This thing's taking money and it's not given any time .

Sometimes these machines are so complicated they just or people spray the bill acceptors or something and just glitches it out . And so I went over there , reset it and whatnot . But I was just like man , I just left here Right Like literally five minutes ago . I mean not five minutes at this point , because I'd already driven back , but maybe 15 .

I gotta make these calls or at least get out there and go repair this stuff . Some of it is really hard to do by yourself too . Some of it I need another person , and we do have another guy who helps out at one of them and we do have a couple of people to help out at Springdale , but I only have one for Farmington and my Farmington guy .

He's got another job too , because obviously I can't employ him full time there . It wouldn't make sense , right ? So it's a little hard to sometimes get the two-man jobs done . Whenever you both are working outside of that in different hours , it's difficult to balance . But I'm certain that within the next year or two I'll have it balanced out a little better .

At some point I'll find out about a work-life balance .

But , nick , I don't worry about you because so I'm saying that . Could you restate the question ?

I'm sorry my watch is asking questions , but no , I don't worry about you because you are a hard worker and I know you're a really conscientious guy and you care , and I just have to believe that if you have those two characteristics , those are going to serve you very well .

You know , I appreciate that , you're used to it , you're used to working hard , you always have and you're going to get through this and at the same time you're demonstrating that you're a good son and you're helping out your mom and dad and you get to work with your brother and that's nice .

I never thought what , as of today , I think I will do better . I think I don't have not a choice , not feeling better Altogether having an experience to work with them . That's right . You know what ? It's .

A funny thing also another piece of advice that any small business is that people will get unreasonably mad over small things , it's like , and you have to know how to de-escalate that . Sure , and when necessary , I mean I always try to make people happy , but you know it's a you can't always win . Sometimes you can't make them happy .

Yeah , you can't win every battle with that , but I do try , yes , like so . People will get unreasonably angry and you know you just got to find ways to de-escalate it and , you know , calm them down .

And I've had plenty of situations where people come in real hot and I'm like , I'm like dude , I just want to make it right , that's sure , that's all I want to do and usually most reasonable people will kind of , you know , calm down and they usually leave happy , you know Right . I give something extra for whatever it was .

You know , sometimes if someone goes through a wash and the next person's already paid for a wash , that person might back up all the way and they'll run over the paddles again and it'll just think that it's washing the car and it'll run the whole wash again . But it'll those be taken , other persons wash and then someone will call me and they'll be all mad .

It didn't give me a wash . And I'm like , did someone back up in front of you ? And they're like , yeah , and I'm like , okay , look , I'll be out there in five . You know , just right , just zoom over there . And you know I'll get them there washed and I'll give them an extra one or something . You know , give them a coupon .

Sure , free $12 wash , whatever , just anything . Or if they're not there , they can't be there , I'll mail it to them . But you know I always want to make everything right , which it always kind of cracks me up .

Anytime I see like a bad review or something , I'll like message them on the review and I'm like , hey , you know , give me a call , I'll get you taken care of .

And like I , one time I saw a bad review from someone I knew from high school and I used to be friends with , and I was like I messaged them on there and then I hauled them and they just didn't even . They just completely ignored me . Like I shot him a text and they just ignored it and I was like I just I just want to make it right .

I appreciate you pointing that out . There was a problem there . I got it fixed . I wouldn't have known if you hadn't told me , and so I want to do something for you and they just didn't respond .

Obviously years ago ? And any cars that go through the auction they can't have a lien on them . That's like one of their policies , so it should right lien to begin with . Well , sorry , I had to clear my throat . The guy who bought it had to um take it to uh register it , but he waited two months to register it .

And so after he registers the car , we get a call , and very , very upset call about there being a lien on the car . And so I said I'll get that taken care of . There shouldn't be a lien , there's no reason for there to be , and so we call the um .

They end up showing up to the dealership yeah , we call the DMV , we call the bank that had the lien on it . We got balls rolling on that , but the bank is slow . We just needed a document that said they had no interest in , and right , it ended up taking like three or four days .

We gave them a dealer tag to run on the car in the meantime and you know whatever we could do to help , but the whole time I've just they were so mad like I mean the threatening to sue us , coming in screaming at us .

I'm like right , and the guy was just like I acknowledge this isn't your fault , but since you're the one sold to me , you're the one I'm going after and I'm like great , that was your first one out of the gate yeah , I'm like , oh my gosh . And we ended up getting him sorted out .

It's funny because he told me he was going to drop it off and you know what ? I demand his money . Back to the day that we ended up getting the document in . He said if I don't have it by today . And then they called me in there like , yeah , we got it . They faxed it to us , we had it ready for him .

He didn't pick it up that day , picked it up the next day , and so I had a good laugh out of that . I was like man for somebody so impatient you'd think it showed up the same day , right . And when he came and picked it up , he's like , oh , I didn't really mean any of that . I just I just wanted to uh , well , people get upset . Yeah , no doubt .

I just wanted to uh , get , get you moving on it . I might do . I had it moving on the second . You called me initially sure . I . The only reason that we got this today is because of that day , right ? Um , it took them a while to process it , essentially because the bank they don't care . I mean sure it's some bank in California we have .

No , I mean we have yeah no connection with yeah yeah , I mean , the only reason there was a problem is because the state of Oklahoma never got the documentation . Uh , the document was . If they'd registered in Arkansas , it wouldn't have been a problem . Yeah , but just Oklahoma's .

Their system is not up to date with some stuff , sure , but it's , it's wild , it's uh , it's uh . I have fun with it , though . I like cars . So you know , getting to drive and work on these things and you know , fix them up and eventually sell them to someone who and I love selling the stuff to people and they're excited about it yeah that's that's .

My favorite is whenever you know someone's actually excited to buy it , and that's why I like to sell stuff . That I think is fun , because I like to see other people , kind of you know , get that enjoyment out of it too hey , I bought a used car for a minute .

. I appreciate you having me on as busy as you are . Hopefully our listeners got some good insight from you , and so that's what we're all about here at Big Talk about small business .

So , in any case , I hope everybody has a great holiday coming up here as we record this , we are what three days away from Christmas , so I hope that goes well for those of you and you don't find it too stressful and you can actually find some time to to settle down and and appreciate what you have and and ponder all the the good blessings that we're all

graced with here , and and we will see you again next week on another episode of Big Talk about small business .

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