RV Weekly

Here’s yet another example of our federal government punishing small business owners for being successful. I learned that the Small Business Administration limits the amount of loan money it will guarantee to people wanting to buy profitable RV dealerships. In fact, any retail business that grosses more then $6.5 million annually does not qualify for SBA financing.

In fact, it’s not even “financing” we are talking about; it’s just a signature that indicates if the loan goes bad the SBA will cover up to a certain percentage of the loan amount. Banks like these deals because they don’t absorb 100 percent of the risk. The SBA jumps in to reimburse the bank for something like 40 percent of the loan amount.

The issue came to light when someone forwarded an article to me that appeared on a business Web site about one guy’s attempt to buy an RV dealership. The buyer needed an SBA loan to close the deal.  The dealership posted net profit of $440,000 and the owner was selling the business for only $550,000. It looked like a good opportunity for some entrepreneur. Here’s the catch. The business grossed $13.5 million annually in sales — more than double SBA’s common size standard for a small business.

I’ll admit to being an idiot editor with limited business sense, and when it comes to banks I am pretty sure I will never understand how they arrive at loan decisions. I also recognize that this is a federal agency I’m talking about, not a bank, so all common sense goes out the window. But, if you buy a business with a cash flow of $13.5 million for $550,000, and that business drops $440,000 to the bottom line every year for three years — doesn’t that prove the business is healthy and that the loan is relatively secure? A simple loan calculation shows the payments would be about $80,000 a year which still leaves ample profit for the new business owner to personally use or reinvest into his business.

Few people will disagree that small business is the engine of the American economy. More jobs are created in small business every year than all corporations combined. It is essential that we create an environment that is attractive to entrepreneurs and rewards them for working hard and taking risks. As I see it, the purpose of the Small Business Administration is to help business owners either buy or start small businesses that will create jobs, and thus taxpayers for the federal government. They should be willing to support any reasonable effort to start or buy a business, especially those that are proven successful in creating well-paying jobs.

In the process, the federal government can’t be stupid. They need to be reasonably certain that the business will survive and thrive before they risk taxpayer’s money. I could understand the SBA being nervous if someone were to need a $13.5 million loan when the business only had $440,000 available to pay it off. But this isn’t the case. And why should it matter what the top line of the business is anyway? It’s what he keeps that counts, isn’t it?

The $6.5 million SBA cap is unreasonable and unfairly applied across the board to all retail operations regardless of what it sells. A theater owner selling $8.50 movie tickets and $8 tubs of popcorn would have to serve 393,939 customers before it crossed the $6.5 million threshold. On the other hand, an RV dealer would only need to sell 162 $40,000 RVs before he reaches the same ceiling, not including service, F&I, parts and accessories.

So, if banks won’t lend 100 percent of the money without collateral or some type of federal loan guarantee; and the federal government won’t loan money to buy a reasonably successful dealership because it sells expensive motorhomes, not movie tickets or widgets; what is an RV dealer suppose to do when it’s time to exit the business? 

Ironically, the SBA’s own Web site features a section on exit strategies for small business owners.  One of the articles posted to that site contains this gem:

The process for getting out of business successfully requires the same amount of planning as going into business. While the process should be easier, it is likely to be less enjoyable and more stressful. The best advice for business owners is to think about the future during the early stages of getting into business. Exert managerial influence to ensure that complications and problems which could affect dissolution and net value do not develop into roadblocks. When the time for getting out of business comes, engage the invaluable expertise you will need, and prepare a plan.

So there you have it. The SBA says it takes planning in the early stages of business development to successfully get out of a business. Apparently that means you should plan to only grow so much. Limit your sales, reduce your profitability, don’t sell many $100,000 motorhomes, don’t hire staff to service customers and you’ll be a true “small business” as defined by the federal government.

You might not have many customers, but at least the poor schmuck who will eventually buy your business will qualify for an SBA loan.

The news over the past few days is filled with such lunacy that I had to double check to make sure there is not a full moon over North America. There isn’t. In fact, we’re in a new moon phase which might explain the void in thinking that is impacting people in politics and business. Each of the subheads below links to a different story, if you’d care to read them.

Don’t smoke in your RV in California

The news out of California this morning is that the state just passed a ban on smoking in motor vehicles if children are present. I’m hopeful that RVs have been exempted from this further encroachment upon the freedom of Americans, but I don’t know for sure.

What I do know is that I’m smoking mad at politicians who are constantly hammering at the rights of smokers. Don’t get me wrong, I’m not a smoker and I don’t like hanging around those who do. However, for years, state, local and federal government has hammered away at smokers through stifling taxes and a barrage of laws prohibiting where they can smoke. Excuse me, but if smoking is so harmful to people why doesn’t the government just ban it?

For the answer, just follow the money. Government generates scandalous amounts of money from smokers and tobacco companies.

So, until the 25 percent of Americans who smoke actually stand up and blow it in the faces of politicians, or until politicians actually work up the courage to actually ban the product outright, expect more of the same.  Today, that means if you’re traveling down the highway in California, you can’t smoke in a vehicle – even with your window open.

I certainly hope the looney legislators in California never figure out that campfires produce smoke around children.

Auto workers go on strike

Only in unionized America! Let’s say your company is being hammered by the competition. Your sales plummet and marketshare goes out the window as consumers abandon your company in droves for products that are better built, less expensive and offer more features. If you worked for that company, wouldn’t you likely scratch your head trying to come up with ways to increase buyer confidence and, thus, sales? Apparently, not in Detroit.

In the Motor City, where workers build inadequate vehicles consumers don’t like and won’t buy – and where workers have successfully backed their companies against a financial wall – the response would be to dig yourself into a trench. That’s what union workers basically did at Chrysler and General Motors this week and last. These crybabies who have extorted billions from their firms now want the company’s to guarantee job security.

It’s not like the companies have grown 5.5 percent this year, but cut their workers’ pay anyway because they didn’t hit the 6 percent forecasted growth. No, these are companies in deep trouble. Yet the workers pulled themselves off production lines (as if anyone could tell they were actually working), picked up signs and pouted until the company caved and basically said, “Yes, we’ll guarantee that you can continue building cars consumers don’t like and won’t buy. And, yes, we will continue to pay $18 billion in long-term retiree health care costs we were forced to give you years ago on another occasion when you stopped ‘working.’”

Give me a break. Where’s Ronald Reagan when we need him? Either send in more robots or fire these boneheads, hire people who believe in good old American work ethic, and put the companies back on track to long-term profitability.   

Congressional staffers encouraged to get shots before attending a NASCAR race  

It’s no secret that people elected to and employed by Congress are seriously out of touch with the rest of the country. It’s also no secret that these elitists loathe working class people who pay big bucks to sit in the sun and watch others burn barrels of fossil fuels in high-speed racing events. But this story out of Washington defies all logic.

The House Homeland Security Committee planned a fact-finding trip about public health preparedness at mass gatherings and decided to conduct the research at two of the nation’s most heavily attended sporting events, NASCAR’s Bank of America 500 event this weekend and the UAW-Ford 500 last weekend.

Staff who organized the trips advised the NASCAR-bound aides to get a range of vaccines before attending — hepatitis A, hepatitis B, tetanus, diphtheria and influenza.

In other words, Congress thinks its as dangerous for people to visit NASCAR events as it is to visit some backward country in South America (or central Detroit).

Too bad we can’t inoculate Congressional staffers — and their bosses — with an extra-potent dose of common sense.

Democrats propose a $1,000,000,000,000 tax increase

We are in such desperate need of common sense in Washington, an entire 50-mile area around the capital city should be cordoned off and nobody allowed to enter until he or she can prove successful completion of sixth grade economics.

As it stands now, nearly 23 million Americans will be hammered with extra taxes next year thanks to the brilliancy of the Alternative Minimum Tax. The ATM was proposed by Congress many years ago after a few wealthy individuals proved they could scam the system and avoid paying taxes all together. But today, thanks to lazy and stubborn elected officials, the ATM ceilings haven’t been changed and middle class Americans get to pay the tax. In fact, if reforms aren’t passed by the end of the year, one out of six working people will be tapped in April for ATM taxes.

So, in a classic Congressional smoke-and-mirrors game, Democrats have proposed eliminating the ATM tax that generates $800 billion in revenue with one that will generate $1 trillion. According to Politico.com,

Robin Hoods expect (Dem. Senator Charles) Rangel to swap the AMT for a new tax targeted exclusively at the highest-income payers. One often-mentioned idea, proposed by Leonard Burman, director of the Urban Institute’s Tax Policy Center, would impose a 4 percent surcharge on unmarried taxpayers making more than $100,000 a year and couples making more than $200,000. 

Yeah, let’s punish unmarried people! And we’ll certainly want to punish anyone with income high enough to afford a recreation vehicle.

Seriously, as of this nanosecond, the federal government estimates there are 303,099,171 people living in America. The Department of Labor estimates there are 146,300,000 people employed in America (not including congressional staffers). That means 48.3 percent of America is actually employed in a job that produces something to generate income. The rest are children, retirees or autoworkers. According to the Tax Foundation, 121 million Americans will pay absolutely no federal tax this year — and that doesn’t include children.

So, when Congress proposes a $1 trillion tax, it will fall on about 150 million people to pay for it. That means, for this one new tax alone, the average share per taxpaying America (not all Americans are taxpayers) will be roughly $6,667 per person.

When you think about it, our federal government spends $2.6 trillion per year. If every single man, woman and child paid his “fair share,” it would come out to $8,472.47 per person. The average family of four would need to pay $33,889.90 in federal taxes alone. Remember that the next time you hear some yahoo complaining that “the rich” should pay their “fair share.”

Just like unionized auto workers will certainly bring about the demise of the America auto industry, unionized federal employees and their accomplices in Congress will bring about the demise of the American taxpayer.

It’s looney tunes, folks!

Who said little consumers don’t have any power against big businesses?

Never before in the history of the world has a single person enjoyed the ability to take on a huge corporation for as little money as it takes today. Welcome to the YouTube generation. 

For those of you just waking up in the 21st century, YouTube is a phenomenon in which ordinary citizens post their own videos that others can watch over their computers.  You can watch silly things, serious things and the most ridiculous time-wasting material to ever clog the information super highway. You can post a video of your wedding, your kid crawling, your father snoring, your dog smiling pretty, and your RV dealer scamming you out of your hard-earned money. The Internet is filled with videos and stories about people who are unhappy with their RV or their dealer. For example:

One complaint about Recreation Plantation in Illinois was viewed 196 times. Check it out here: http://www.thesqueakywheel.com/complaints/2007/JUN/complaint14351.cfm

A Canadian RVer took issue with the construction and amenities inside all RVs. Read his review here:  http://www.ucalgary.ca/~schultz/culling.html

A customer from Todds RV in North Carolina looked for others who had similar poor service problems. See his complaint here: http://www.rvusa.com/forum/mbbs22/forums/thread-view.asp?tid=6009

The point is that all this was found in less than five minutes by doing a few Google keyword searches. In the past, people who bought a lemon had little recourse other than painting their unit yellow and driving it around town bearing a sign saying “I bought this lemon at XYZ RV.”

Today, they can take a $100 video camera or free cell phone and prepare a walkaround video showing everything wrong with their RV. Or, they can launch a sneak attack on a dealer by recording a service call conversation or a sales conversation trapping a dealer in a lie or a hostile response, only to post that conversation on the Web for everyone to hear.

But, isn’t recording a conversation illegal? Yes and no. Most states require that only one party in a conversation consent to being recorded.  The federal government and 27 states don’t have any laws prohibiting “hidden cameras.” You can check out your state’s laws by clicking here.

For $20 and a seventh grade understanding of technology, anyone can purchase a domain name and publish a Web site in 45 minutes that will be indexed by Google and available around the clock to people throughout a specific marketplace or the world. The Web site can document every phone call with a dealer, every broken promise, copies of invoices, sales literature, letters, service contracts and photos of every problem with an RV. RV owners can even place hidden cameras in their units to catch service techs rifling through drawers.

Big deal, you say? It is — really.

For another $20, any consumer can purchase 2,000 links to appear when anyone Googles a specific dealer name or manufacturer. If they are really mad, for a few dollars more they can buy top position in the search engine results. Heck, if they generate enough traffic, they can pay for the site by posting Google ads linking to your competitors.

Imagine Joe Consumer looking for XYZ RV’s website — the dealership he passes every day on the way to work. He enters XYZ RV in Anytown into his Google search bar. Less than a second later, up pops a bunch of potential sites, including:

• www.xyzrvsuperstore.com
• www.xyzrvstinks.com
• www.avoidxyzrv.org
• www.xyzrvhorrorstories.net

Which site do you think he’ll visit first? How about second? And let’s not get started on blogs and forum sites. Every week, I get alerts from Google and Yahoo in which their electronic web spiders have stumbled upon another disparaging remark in a blog or forum directed against a specific RV manufacturer or dealership.

You’ll sue ‘em, you say?  Sure. Three years and $20,000 later you might convince a jury of consumers to support you in the action, but only after the irate customer posts a daily blog about his underdog case against the big, bad dealer/manufacturer.

So what’s the point? Be careful. Train your staff to deal with disgruntled customers. They will never know when they are being recorded. And work hard to resolve EVERY customer complaint to the point if he isn’t completely satisfied, at least he won’t be blogging about the transaction with his faceless buddies around the globe. 

Last week, hundreds of RV dealers gathered in Las Vegas for the 2007 RV Dealers Convention/Expo — and hundreds of dealers returned to their businesses this week fired up and flush with new ideas for improving and expanding their businesses.

For the thousands of other RV dealers who ignored this year’s convention, an unsettling question remains: What can RVDA do to make the convention more appealing to more people.

That was actually the talk of the convention as even RVDA staff noted attendance was down about 8 percent this year. In fact, during the association’s annual meeting Sept. 27, RVDA President Mike Molino reported that this year’s show attracted 1,827 people and that 325 RV dealerships were represented. That means less than one in 10 RV dealerships were represented at the show. It’s hard to educate people when they don’t show up for school.

In talking with dealers and suppliers before, during and after the show, I’ll pitch out these observations and suggestions to give the RVDA Show Committee something to discuss at this year’s post mortem session.

Let’s start with dealer concerns. First, the show is prohibitively expensive. Prior to the show, many dealers I talked to indicated they couldn’t afford to participate. It’s not that the show dates conflicted with one of their busy business periods; it’s that the show itself is too expensive.

For example, the cost for a single person to attend the show is $888 for RVDA member dealerships or $1,088 for non-members — a hefty price considering that’s just the cost to attend the educational sessions and trade show. Dealers must tack on the cost for airfare, four or five nights of hotels at $149 per room per night, cab fares and extraordinarily expensive Las Vegas meals.

RVDA claims the value of attending the convention is actually $1,611 and they’ll be quick to point out that people registering before July 31 only needed to pay $507 per person for the first registrant and $443 for each additional participant. At those prices, it is hard to argue against sending several people to the show. However, taken in context with the high costs of attending anything in Las Vegas, dealers already facing a dubious year were understandably cautious in spending money on another show.

Other dealers who were not planning to attend the show indicated the fact the show itself was in Las Vegas — again — as the primary reason they were taking a pass. Las Vegas seems to be an exceptionally popular destination for RV-related tradeshows. Many dealers visit Vegas four to six times per year and, frankly, they are bored with the twinkling lights, beeping machines and scantily-clad waitresses. RVDA will note that they held the convention in other locations in years past, but the best attended shows were always those in Las Vegas.

Some dealers told me they had no intention of sending additional staff members to the RVDA show in Las Vegas due to all the distractions they had to deal with. Dealers who sent staff in prior years claimed they were frustrated to discover employees in the bars, restaurants or casino area rather than in the classrooms. A few were disgusted with the behavior of staff members who stayed up all night drinking and carousing only to sleep until noon the next day and, thus, missing the primary reason why they flew to Vegas in the first place. These dealers opted to avoid the issue entirely by entirely avoiding the convention.

Finally, many people were complaining that the RVDA Show has morphed into a venue at which the same old stuff is presented by the same old people. I will strenuously disagree with that claim. Yes, the presenters in the breakout sessions are often the same people. But we’re a small industry and the experts leading the sessions are generally accepted as the best in their fields. Besides, I feel the topics are always pertinent and relevant to all RV dealerships, especially new staff members. However, the stale factor remains a perception the RVDA Show Committee will need to deal with.

Several suppliers also confided they were none-to-happy about the costs and schedule related to this year’s show. Not only did they have to pay between $2,271 and $2,595 for a 10-by-10-foot booth, they also had to pay $145 per person to get badges for each person manning the booths. Those exhibitors who wanted to sit in on the educational sessions had to pay $380 per person.

By comparison, the cost for a booth at the National RV Show in Louisville ranges from $630 to $1,585 plus a $350 per-booth surcharge tax redirected toward the GoRVing campaign. Badges for that show are free, but no meals are included. And, yes, it would be very easy for RVDA to rack up $145 per person in Las Vegas just for food at a reception, two lunches, a few coffee breaks and an evening celebration.

For many suppliers, the most frustrating aspect of exhibiting at the RVDA Expo is the schedule for which the displays are open. The expo technically opens on Tuesday with a three-hour reception in the exhibit hall from 4:30 to 7:30 p.m. It continues on Wednesday with a five hour and 45 minute session followed by a three hour and 15 minute session on Thursday. It’s the ancillary costs that deter many suppliers from participating.

Consider that most exhibitors can easily arrive on Tuesday and set up the booth prior to the 4:30 p.m. opening at which heavy hors d’ouevers are provided. But many exhibitors wind up taking out dealers for dinner on Day One. The next day, they must feed their staff breakfast and dinner for the 5.75-hour work day and pay for a second hotel night. Day Three is only a 3.25-hour workday. But, unless they can break down the display right at 2:30 p.m. and book it to the airport in time to wade through security lines and catch a direct flight home, they’ll likely have to spend another night in Vegas — and that means another dinner, another breakfast and another night of hotel expenses.

One supplier estimated the total cost of participating in the show easily exceeded $7,000 for 12 potential hours of face time with staff from 325 dealerships after he factored in booth space, hotel rooms, badges, breakfasts, lunches, dinners, cocktails, airfare, cab fare, program advertising, a door prize, golf tournament, marketing materials, shipping costs, internet connections, booth furniture and staff time. That’s a hard expense to swallow, especially when the entire industry gathers again eight weeks later for the National RV Show.

In a few weeks, the camping industry will gather in Phoenix for the first-ever combined show. In the past, Kampgrounds of America held its trade show/educational programming on different dates and in different locations than the independent campgrounds affiliated with the National Association of RV Parks and Campgrounds. By joining forces this year, both groups are expected to see more people participating than ever before. More exhibitors have already committed to participating at the joint expo. Perhaps there is a lesson to be learned here.

I would strongly encourage the staff at at the RV Industry Association to work with the staff at RVDA to create a joint convention. It would be the best of both worlds.  RVDA could continue providing exceptional educational programming to thousands of people from thousands of RV dealerships. With that programming, RVIA may offer a reason to keep more dealers at their show on Day Three, or even during fourth day.

Louisville may not be as exciting, glitzy and ritzy as Las Vegas. But, it’s likely a better venue for a true business meeting. Until RVDA gets its hands around the declining participation in Las Vegas, I suspect the association will continue to gamble with their convention.