American Recycler, October 2009 - Salvaging Millions

Recyclers have been talking about Cash for Clunkers, and whether it was good or bad for our industry. I won’t opine much, other than to say the answer probably depends upon how prepared you were to take advantage of the opportunities the initiative presented.

Ever noticed that some folks seem to do well no matter what happens? A fire in their warehouse? Not a problem. They’re prepared with backup systems. Insurance buys a new building, and they keep growing. Big hail storm destroys most of the inventory in the yard? This one happened to me. I was the only recycler in the area to get help. I got $500,000 in SBA disaster relief because I had adequate inventory records and valuation methods in accordance with GAAP.

Everyone gets some good and bad luck. Some do better at enduring the bad and leveraging the good. Within days, we sent postcards to everyone in the zip codes that had hail and sold thousands of pieces of glass. Mostly 100 percent gross margin stuff we wouldn’t have sold otherwise.

Many recyclers only change when events force them to. By then, it’s often too late to make the most of opportunities that appear.

What have you done recently to anticipate what might change in the next few years? What have you done to change your business in a meaningful way or made specific plans to grow? That mailing you did a few months ago was great, but it isn’t the answer, it’s a temporary tactic.

You need to anticipate how business is changing. How are your customers’ needs changing? What steps have you taken to plan? That talk with your operations manager about improving quality doesn’t qualify. Again, it was a response triggered by too many returns. It’s good, but it’s not strategic.

Some recyclers are thriving because they are thinking on a strategic level. They make time to meet, think, share, and create written strategic plans and measurable goals. They appear luckier, but they’re really better prepared. They are the ones who invest in a better computer system. Many of you have been considering that for years, but haven’t made a move. You don’t know what you don’t know.

Many of the best prepared recyclers are also in study groups, where they benchmark their operations, exchange information about what works, and discuss current issues, problems, solutions, and plan for the future. My good friend Jim Counts facilitates such groups, and so do I. I don’t know how Jim’s meetings work. I haven’t attended one, but I hear only good things.

My groups focus on business metrics, financials, and strategic planning. We review the key initiatives of each participant. We look at the strengths, weaknesses, opportunities and threats of each initiative (SWOT analysis). Participants come away with an actionable list of ways to improve their operation and several vetted new initiatives focused on growing sales or reducing expenses. We have meetings planned in the coming months, and I know Jim also has similar opportunities to move a business to the strategic level.

If you can’t write down exactly what you are planning to do to improve your bottom line, then you haven’t done the strategic planning needed to really grow. These groups work. You should make certain you are part of one.

Don’t forget to subscribe to Ron's free monthly auto recycling e-newsletter, with news and tips, register at www.autosalvageconsultant.com.

Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. In 2001, he founded North Texas Insurance Auction, which he sold to Copart in 2002. In 2002, his book “Salvaging Millions” was published to help small business owners achieve significant success, and was recently reprinted. In June 2003, he joined the new ownership and management team of GreenLeaf. He also manages his real estate holdings and investments. You can learn more about him at WWW.autosalvageconsultant.com He can be reached at 5940 Eden, Haltom City, TX 76117, rons@rdsinvestments.com or 817-834-3625 ext 6#.