~ “No one is ever going to love you more than you love yourself.” Controversial folklore, but it is the perfect summary of what happens in this industry that is either directly or indirectly artificially lowering the value of the services provided by the Field Service Repossession Company and this article may well be more of a note to self than anything else.~
GUEST EDITORIAL
Replace “love” above with “pay” and as an entrepreneur you will understand exactly what I am talking about. No one is ever going to pay you more than you pay yourself!
Keep in mind we are discussing the value of our service, so this article focuses on the value of you, your business, and your business services so by definition this is all about the money. If that is a problem, STOP reading now.
Before we can fix a problem, we must define the variables so time to call some “balls and strikes” around fault, blame, and responsibility. For most of us, me included, this will force us to “put our big boy pants on” to quote my mother when I was a child.
THE PITCH
“Among X companies surveyed….” – The problem with pay in the repossession industry: Forwarders (brokers of repossession assignments) is likely the number 1 answer.
BALL – 1
Now I have not taken any formal surveys, but many of the Field Service Repossession Companies would state that brokers/forwarders are to blame. Many of the arguments have merit, but to lay the entire issue at the feet of the broker implies that the broker/forwarder controls our business and there is nothing we can do about it.
There is plenty we can do about it and some of today’s approaches will have positive impacts. The consolidation of ARA and TFA with the idea of bringing the forwarders into the conversation is a perfect example. Agree with it or not, it is a different approach and helping these clients understand the industry better will assist them in properly pricing their services to lien holders.
~ Side Note – WILL OUR ASSOCIATIONS PLEASE FORMALLY DEFINE WHAT A FIELD SERVICE REPOSSESSION COMPANY IS AND FORMALLY DEFINE WHAT A FORWARDER (BROKER OF REPOSSESSION ASSIGNMENTS) IS FOR THE REST OF THE WORLD.
If the CFPB, legislators, and lawyers have an industry standard definition they can begin to understand how the industry works. Otherwise, everyone will continue to define it for themselves or rely on someone else to define it which at a minimum will make a mess and at worst leave the broker/forwarder with the ability to maneuver in whatever direction best suites their legal purpose.
And why is everyone afraid to call a forwarder what they are. They are brokers! Nothing more, nothing less. I know, just call all brokers forwarders, right? ~
THE PITCH
The issue is not necessarily with the broker/forwarder, it is with their lack of knowledge or their denial of understanding on how their decisions upstream of the Field Service Repossession Company impact’s the ability of the Field Service Repossession Company to operate efficiently, safely, professionally, and profitably.
STRIKE – 1
Brokers/Forwarders have long been denying how they are “strong arming” the industry into a twisted version of “compliance.” Their strategy has created more confusion and propped up more “noncompliant” companies with the intent of undervaluing the markets then they will ever admit.
Luckily, attorneys are starting to understand and draw liability links to their “Check Box Compliance” practices and damage it causes downstream. For example, when a broker/forwarder asks for “proof” of workers compensation and you send them a letter stating you are not required to provide workers compensation coverage they just “check the compliance box.”
When attorneys start asking for numbers of recoveries for this company and read the contract the forwarder has with your company, they will see one of two things.
- You are either being allowed to purposefully violate the terms of the contact by “subcontracting” work or
- You should be carrying workers compensation and you are not
By “checking” the compliance box with your letter, the argument could be made easily in court that Mother Broker Forwarder Company is responsible for all the back wages Bad Repo Dude owes his employees as well as the taxes owed to the US Treasury. They certified Bad Repo Dude compliant or at least were aware enough to know they were contributing to 1 or 2 above.
Now the attorney goes one step further and asks to see the records I Got Money Financial reviewed during their last audit and presto I Got Money Financial now has a connection with the “undervalued” and dangerous services Bad Repo Dude was damaging society with.
~ Ever listened to Repo Man Magazine’s Pod Casts? Listen to the one about the compliance software and the conversations with the lien holders as he was building it. Talk about ammo for attorneys and YES I am aware of the disclaimer at the beginning referring to the pod cast being for entertainment, but “dime to a donut” under deposition the guest of the pod cast would testify that lien holders were not at all happy with being able to really understand who is “compliant” in the industry. ~
THE PITCH
Bad Repo Dude argues that he cannot price his services any higher because his competition is lower than he is, and they will get all the work or some other version of “it’s my competition’s fault” argument.
BALL – 2
We encourage one another to undervalue services with this argument. My mom would say, “If your friends jumped off a cliff, would you do it?”
Change requires you to do something different than you are doing and if you want to increase the value of the service in your area increase your rates to give your competition the courage and cover to do the same.
Stop worrying about what everyone else is doing and run your company. Run the math and price based on what you expect to earn. Do not forget to include inflation rates, expansion costs, and the rest in your budget. Develop your 5-year plan.
If you do not understand how to properly value your services reach out to me or someone else in the industry.
Should you share the same markets with the other companies, that is better. Clients, especially brokers/forwarders benefit when your competition has a lack of understanding as this allows them to keep prices low so having your competition understand basic business math is a healthy thing.
~ Do not attempt to set prices or agree on pricing as this may violate federal and state laws. Look up anti-trust laws for more information. ~
THE PITCH
It is almost a certainty that if you are struggling at your current rates your competitors would love nothing more than to get off that same train.
STRIKE – 2
When you are successful (and this is where I failed and a big reason for me writing these articles), this is the time to dig in and develop healthy relationships with your competitors. Share in your education. If all of you have a healthy understanding of business, it is going to be hard for another company to come in and undervalue your services.
This is also where our associations can make huge headways. This industry can not spin on a dime, but it can and does spin. We just need to help everyone develop a solid foundational understanding of the importance of profitability and how todays profits impact tomorrows decisions, abilities, and safety.
THE PITCH
Let us increase the focus on business training where it rivals marketing training at our conventions.
~ Undervalued rates need no marketing to be successful, just “check box compliance.” ~
Strike – 3
We should all know by now that having confusion, complexity, and ignorance (meaning the lack of understanding) in the industry allows our services to be undervalued. Conversations take place every day and at all levels about how the Field Service Repossession Companies are being taken advantage of.
We often look the other direction and rarely within although if you spend any time listening to Podcasts, reading curepossession.com or other industry web sites you will see there are several “influencers” out there attempting to articulate their own versions of the issues and solutions. You may find yourself disagreeing with what I say, what Kevin at curepossession.com says, or maybe even with Dave at repo.buzz, but you should consider the information and use what makes sense to you and your business to better value the services you offer.
Stop buying into the same industry hum/drum. Strip away those clients, colleagues, associates, associations, and friends who encourage a defeatist mindset from your daily routine and align yourself with those who can offer solutions, knowledge, and support your new ideas and energy.
It’s important to understand that the more we educate one another the clearer the actual problems become and the less complex the problems will be. Having everyone function on the same page is the equivalent to a data company linking several thousand computers together to create AI.
Ask yourself “why” when trying to understand an issue. With all the discussion around compliance today, why are companies like VTS or training like Recovery Standard silenced as quickly as they hit the industry scene. With today’s technology, how hard is it to truly evaluate and track Field Service Repossession Company compliance? Can clients ever get serious about compliance without paying for it or would doing so create solid avenues of liability to their businesses? If it does create liability, should we not be pushing for it to increase the value of our services? Should we be forcing the issue rather than being scared to death of it?
Can we, as an industry, come together and set a price that is right for every company? Legally? Objectively?
Personally, I am convinced I know why clients (brokers/forwarders and lien holders alike) do not want to implement actual compliance or see more robust training come forward. I am certain attorneys will continue to draw liability links between compliance and bad business practices which will help eliminate some of the “check box compliance” problems but will open a new pandora’s box. Lack of any compliance monitoring by our clients would require either compliance through regulation or serious standards, education, and monitoring by other industry vendors and/or associations. The days of ole would be seriously frowned on today.
It is clearly a violation of law and would lead to more fights than an umpire’s calls at the world series if we tried to set standard pricing in the industry. Our businesses are unique as are our markets, equipment, employees, and many other variables so it cannot be “objectively” accomplished either. Pricing should be understood at the individual business level. Looking at your competition and worrying what their charging is admitting that you are not confident in your skills to properly access your own business, do not know how, or are willing to undervalue yourself and be paid less just to outdo your competitor. None of which are healthy for your business or the industry.
In summary, we oversee the industry we service and by laying the entire responsibility for the undervaluing of the services at the client’s feet, we are giving them the power over our industry as well as our businesses. It is our responsibility.
As to the value of an involuntary service today, I disagree with most of the individuals that took the MBSI survey and agree with Kevin. I believe the minimum value lies closer to $500. I do, however, understand the complexity in getting from the $270 contracts of 10 years ago to the $500 mark of today as I have plenty of examples in my client portfolio to show it is “easier said than done.”
To the forwarders/brokers and Lien Holders ~ You must do a better job of understanding the cost of operating in today’s world before “controlling” prices. It is really causing a lot of harm to your vendors, consumers, and society.
How close are the rates between forwarders anyway? How does that happen? Are we all just willy nilly pulling the same undervalued rate out of the sky that we are willing to get paid by a forwarder?
Maybe that is the next thought I put to paper, but I think I like “Check Box Compliance” better.
Wes Carico,
Nostalgic Towing
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