Auto Industry CFO Robert Benn on Team Building, Data Analytics, and Innovative Compensation Structures

Intro  

Welcome to another edition of inspired stories where leaders share their experiences so we can learn from their successes, how they’ve overcome adversity, and explore current challenges they’re facing.

Anthony Codispoti
Welcome to another edition of the Inspired Stories podcast, where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. My name is Anthony Codaspodi and today’s guest is Robert Ben, CFO of STG Auto Group, a collection of used car dealerships in Montclair and Bellflower, California. This family owned and operated business first opened in 1997 and since then, they’ve continued their tradition of providing quality,

well-maintained pre-owned vehicle options across many different makes and models of cars. Robert has been a senior executive and CFO with over 25 years experience in the auto industry. He consistently exceeds profit goals and delivers efficiencies in a volatile market. He has been involved in many corporate turnarounds and he can often do it without replacing the management team. He has a very specific lever that he likes to pull, which has a tremendous impact on the profitability of a company. And we’ll find out what that lever is.

In one case, he helped the company go from losing $500,000 to generating $600,000 in profits in six months. He’s helped manage over $500 million in revenue and 12,000 units sold annually. Robert was also named one of the top 25 CFOs in LA in 2023. Now, before we get into all that good stuff, today’s episode is brought to you by my company, Ad Back Benefits Agency.

where we offer very specific and unique employee benefits that are both great for your team and fiscally optimized for your bottom line. One recent client was able to add over $900 per employee per year in extra cashflow by implementing one of our proprietary programs. Results vary for each company and some organizations may not be eligible. To find out if your company qualifies, contact us today at addbackbenefitsagency.com. Now back to our guest today, the CFO of STG Auto Group, Robert Ben.

Anthony Codispoti (11:54.048)
I appreciate you making the time to share your story today.

Robert Benn (11:56.994)
Thank you very much for having me.

Anthony Codispoti (11:59.05)
So Robert, you’ve got a long career of delivering results for your clients and employers. Tell us how you found your way specifically to the STG audit.

Robert Benn (12:10.638)
Well, I was actually finished up a contract up in Northern California. I was looking for something and they were looking for somebody. And that’s how you do it. You the old thing is I was looking for a job when I found this one. I got to the interview and first thing I noticed, and this is going to sound crazy.

But the first thing I noticed was on a Saturday they had a janitor working. Now you go into most dealerships, new, and I really have never worked in pre-owned before, but Saturdays are Saturdays. Nobody pays attention. And here they’ve got somebody cleaning up the place, making it look good. And this place in Montclair looked as good as most used new car dealerships.

And like, these people care. There’s something going on here.

Anthony Codispoti (13:14.474)
There’s an attention to detail that you respected.

Robert Benn (13:17.246)
I wasn’t expecting. How was that? There was action going on, of course, you know, because it was a Saturday, but the place was immaculate. Okay. The restrooms were immaculate. Okay. Now know that sounds crazy, but I grew up in the campground business. Okay. And after a long trip, I say grew up in the campground business.

I used to clean the toilets and pick up the trash. Okay. So the first place that somebody goes after a long trip is the ladies room and the place better be clean. Otherwise you’re not getting the client. They’re not staying. So it’s something that I pay attention to when I go into a place and that made a big difference because at STG they care.

and it shows.

Anthony Codispoti (14:18.516)
And so what’s kept you there? So that’s a little bit about what attracted you there. What’s kept you there?

Robert Benn (14:21.187)
to

Robert Benn (14:26.192)
I work a lot with Tony who’s one of the two owners. Okay. And Tony is just really sharp. He’s not a, he’s actually educated as an engineer. Okay. He’s really sharp. understands not just the, he understands the business. I mean, he’s been doing it since he’s been 14, but

Robert Benn (14:54.282)
He doesn’t look at it as just, you know, the normal car guy. He’s very analytical. I’m very analytical. Okay. He’s looking at things through a sales lens. I’m looking at it from a financial lens. Okay. He’s looking at certain metrics. I’m looking at other metrics. So we sort of are able to mesh.

what we’re looking at. And that makes it fun to be with.

Anthony Codispoti (15:29.598)
What are some of the things that STG is doing different from others in the car industry?

Robert Benn (15:39.63)
I think one of the things that makes them a little bit different is that they’ve omitted the finance department itself. instead of going into the store, getting shown a car and sold a car by a salesman, then having to go and sit in a finance booth and sold a bunch of products by a finance person, and wait around three hours for that process to happen.

and then leave. They’ve eliminated that so that the salesperson is able to take it end to end. Okay, the salesperson works with you. The documents are actually produced by the receptionist, which means that they’re making sure all the documents are being done correctly the first time. Okay, trying to make sure that everything goes through correctly and all the compliance is done correctly.

the first time and you’re able if you know which vehicle you’re coming in on you can get in and out in about an hour okay and that that’s a major difference between most organizations

Anthony Codispoti (16:49.481)
Wow.

Anthony Codispoti (16:55.658)
So in most organizations, you’ve got your salesperson, the customer says, okay, let’s do this. And then he’s got to pass them off to somebody else that can sort of handle the financing.

Robert Benn (17:05.891)
Well, you got a salesperson, you negotiate a price, and then once you get done with the price, then you go deal with the financing, okay? And then you get delivered your vehicle. Here, you got the salesperson who once you’ve, you sit down, you negotiate the price, then you do your paperwork right there with the salesperson. Getting done. Meanwhile, the vehicle’s getting ready for you to be delivered.

Anthony Codispoti (17:29.958)
That’s great. So the whole process is streamlined for the customer. They’re not getting handed off from one person to another. I have to imagine that…

Robert Benn (17:35.692)
And you don’t have to, it’s not like we have to, there’s one person that’s a bottleneck that you’re waiting for.

Anthony Codispoti (17:42.1)
Gotcha, right? And so I have to imagine that in order for this to happen, that your salespeople have to go through some additional training as compared to a salesperson at another dealership.

Robert Benn (17:53.122)
They do take some time to train them and they’ve got people coming in weekly to train them from the to make sure that they’re getting trained properly.

Anthony Codispoti (18:01.856)
What were some of the interesting things that you put into place in STG when you first started to kind of help with their business?

Robert Benn (18:08.652)
Well, my, what I’ve been working on mostly is on the finance side. So it has to deal with their ERP system. Okay. And it’s the way that their ERP reported information. So most of the stuff was all consolidated into one big batch of financial and the information that I pull out.

is I break it down by store. Okay. And then I’ve built a, for lack of better word, a view where we’re now able to break that stuff down by store. Okay. By price within store. So how much the vehicle cost or where the vehicle came from. Okay. And able to analyze all these little metrics within from a system that

is not designed to do that. We’re also then also able to break down and get P and L statements by each individual when I say by store by location, we’re able to break it down and refine it from that level on there. Basically, I import all this information, we’ve got about 8 million lines of data that we bring in.

Anthony Codispoti (19:08.0)
and

Robert Benn (19:38.603)
We analyze it. We output it to, we keep about, we put about a million, you’re limited to a million lines in a spreadsheet. So that’s what we put out. And.

With that, we’re able to put together quite a few views. Our stored procedure that updates all that information is about 33 steps. So it takes a little bit of time to…

Anthony Codispoti (20:07.594)
takes a bit of time to set up. do you have some kind of tech or programming background yourself? Were you working with the development team on this?

Robert Benn (20:16.435)
I did all the work on this myself. So I’ve got some technical background myself and then with the help of Stack Overflow, now ChatGPT and other tools, I’ve been able to expand it and make things work better and better as we go along.

Anthony Codispoti (20:38.154)
That’s great to hear. Tell me more about your use of AI, either in that particular use case or other ways that you’re leveraging it.

Robert Benn (20:45.004)
Well, I’m not really leveraging it a whole lot. In that case, I’m using it to figure out how to get a query done that I want made. So I want something to pull or combine information in a certain way to output it.

into a certain column on a, or update a certain column on a, in a database. So I will, after I’ve tried to do it myself a couple times, I’ll go there and say, I’m looking for this particular column to do this, to do this, and have these functions occur. Okay, and what I find with chat, okay, is that usually you have to run through it about five, six times.

to actually get the output that you’re looking for.

Anthony Codispoti (21:46.826)
So takes a little persistence.

Robert Benn (21:48.483)
It does because it’s not always going to get you exactly where you want it go first time.

Anthony Codispoti (21:55.102)
And the whole goal of this, using the AI, using the stored procedures, the end output are different views. The uninitiated, could we call those different reports, like different ways to kind of look at data that you’ve pulled together?

Robert Benn (22:08.878)
It’s different.

Well, yeah, different reports, ways of looking at the financials. So you’ve got a basic financial statement that may have your sales, your gross profit, and all your accounts. And then you may have some that have it where you’re looking at. I want to look at

sales of vehicles that between this price and this price. And I want to be able to drop down and look at them in different ways. But I still want to be able to see it with all these different expense levels or whatever the case is. So to do that and to get it in a format that they’re used to seeing it, which is a spreadsheet style, we have to…

break it down and then put it back into a spreadsheet. My next move will be to put it into some more visual style, you know, with the graphs and charts to make it a little bit prettier and make it.

Anthony Codispoti (23:24.916)
Because the whole point of creating these different views, combing through the data, look at these different reports, is to help fuel educated decisions about how to take the business forward. We’re seeing this trend or that trend. How do we continue to ride that wave or how do we fix what’s going on here?

Robert Benn (23:38.22)
Right, so you can just start.

Robert Benn (23:45.194)
It helps you figure out where you’re doing well and where you’re not doing as well. Okay. Are you, you know, for example,

Anthony Codispoti (23:53.013)
Good summer.

Robert Benn (24:02.574)
Two years ago, vehicles were, the average price of a used car was $35,000. We’ve driven that price down to 25,000 in our inventory. Okay, why? Because that’s what is, that’s where people have to be. Okay, that’s where people can afford. Okay, furthermore, what we’re finding out is that where we can make money on a vehicle,

is in that $25,000 bracket. Okay, we can make more money at that $35,000 bracket, but we can’t serve as many clients. So it’s a matter of where can you do it? Additionally, we have to look at where we’re getting the vehicles from.

Okay, depending on where you can get a vehicle by the vehicle, that impacts how much you can make on it. transportation costs and other things.

Anthony Codispoti (25:01.716)
in your experience are, sorry, I cut you off. What were you saying, Robert?

Robert Benn (25:07.263)
transportation costs, buy fees, et cetera. Those are all gotta be taken into consideration.

Anthony Codispoti (25:15.092)
Yeah. And from your experience, Robert, are other dealerships looking at the data in such a granular way as what you do at STG?

Robert Benn (25:24.002)
No, no, that’s very unusual.

Anthony Codispoti (25:29.002)
So you’re kind of like money ball for the. Yeah.

Robert Benn (25:31.57)
We’re very granular. We got to get down to the very small levels so we can determine where things are best at.

Anthony Codispoti (25:39.232)
Can you give me a specific example of where looking at data in such a granular fashion has helped you make a decision that has impacted the business in a positive way?

Robert Benn (25:51.032)
Well, I’m looking at it in this fashion and I’m able to feed Tony the information as to, for example, where to buy a vehicle. So we know that buying vehicles from people who are selling them individually is much better than buying them from the auction. But how much better is it? That’s the question.

And that’s, so those are the things we have to determine. Okay. Is it really worth going out and spending time trying to find those vehicles? And if so, how much is it worth? So those are the types of things that we’re, we’re looking at. Okay.

Anthony Codispoti (26:31.936)
you

Anthony Codispoti (26:39.348)
Got it. So buying a car or many cars from an auction is probably a more time efficient process for you, but you’re going to pay more per car on average. So what is the savings to buy from individuals directly? And is it worth the additional time spent to have to interface with each of those people?

Robert Benn (26:49.493)
Absolutely.

Robert Benn (26:57.506)
Right. And then the next question becomes, is there a reconditioning difference? So if I’m buying something at the auction, is it a better quality car that I’m buying from somebody on the street? Okay, based on the reconditioning costs. Okay. Basically, it’s about the same. Okay. So, but these are the things that we’re able to drill down and find out.

Anthony Codispoti (27:15.016)
And what have you found there? What’s the general trend?

Okay, thanks.

Robert Benn (27:26.752)
Okay, you’ve got all the, go ahead.

Anthony Codispoti (27:28.256)
So Robert, I know that you’ve got vast experience that precedes SCG and even work at other dealerships. And you’re brought in, in many cases, to do a turnaround. And you’ve got one lever in particular that is very powerful for you that you like to employ most of the places you go. Can you talk us through what that is?

Robert Benn (27:54.26)
It’s actually compensation. Using people’s pay plans and making sure that the pay plans create teams and making people work together. Very often, especially in the auto industry, comp plans are designed to create competition as opposed to teamwork.

Anthony Codispoti (28:18.047)
Hmm.

Robert Benn (28:22.578)
best example I can give you is going back to 1995 when I went into a Toyota store. They were upside down, close to $500,000 for the year, and all the positions, the new car department was fighting with the used car department. Okay? And when I say fighting with the used car department, what I mean is when the new car department went to take in a trade,

Okay. The used car department felt that it was always overvaluing the trade because they were going to get the trade and then they had to sell it. Okay. And they felt that, well, if you’re overvaluing the trade, then I’m not going to be able to make enough profit on it. So there was a competition between the two.

Anthony Codispoti (29:13.076)
Mm-hmm.

Robert Benn (29:17.49)
The reason they felt that was because the used car department got paid on what they made in their department and had nothing to do with what the new car department got paid on. So the first thing I did there was I linked it so that the overall department, new and used, got paid on the same…

group, same pie. They were, in other words, they weren’t paid on two separate sets of money. They were paid on the same, same pie of money. Okay. So normally they get, one gets paid on the gross profit in the new car department. One gets paid on the used car. I made it the sales department as such. Okay. Now they’re not fighting over who’s

Anthony Codispoti (29:59.652)
okay.

Robert Benn (30:13.74)
dollars those are. Okay, so the new car department had a reason to call the used car department and say, hey, what do you think about this car?

Anthony Codispoti (30:23.249)
Now they’re working together.

Robert Benn (30:24.74)
Yeah. Okay.

Anthony Codispoti (30:26.91)
And so you’re getting a more accurate value placed on the vehicle.

Robert Benn (30:31.074)
Well, because they’re going to make money on it when it sells. It’s all part of the same department. The next thing I did was made it so that the management team was not fighting each other for who got paid on what deal. In many stores, you’ve got managers who are paid individually on the deals that they’re producing.

Well, that in, and I’ve actually seen it since then, where one side of the street will fight and give against the other side of the street for a deal in the same store.

Anthony Codispoti (31:16.424)
And so they’re driving down the price of the car that they’re competing with each other.

Robert Benn (31:19.478)
Yeah, they’re competing against each other. And the only loser there is the house. Okay. What we did was we met it so that they were in the same pool. And as a result, the team got paid on the entire gross and it got split up based on how they decided it was going to get split up. Okay. Now,

Anthony Codispoti (31:24.66)
Mm-hmm.

Robert Benn (31:50.124)
Why did I do that? Because now you had your general sales manager getting paid a percentage. Now, of course, I limited the size of the pool, right? It’s only going to be so big. But the general sales manager had to take their slice. The used car manager got his slice. And then the other sales managers were going to get their slice.

The next part of that was, now I’ve controlled my expense. That’s the first thing.

but I’ve also got them working together to try to get more.

The next thing, part of this though was that in order to grow the business, they realized they get to a certain point they want to grow the business and they need another manager.

Anthony Codispoti (32:40.384)
Now you got to cut that same pie up a little bit smaller, more pieces.

Robert Benn (32:43.094)
Well, or are you going to expand the pie?

The objective is to expand the pie. Okay? But they’re making the decision to expand the pie.

So what you’re doing.

Anthony Codispoti (32:58.4)
So it’s not like it’s being forced upon them by somebody else. They’re saying, hey, we’re doing pretty well here. We could do better, but we need another guy.

Robert Benn (33:03.01)
We need another guy. And we need another guy. Right? So who’s making the decision? Okay, you’ve got your team making the decision.

So from a financial standpoint, you’ve kept everything tied to what your budget is.

and you’re not fighting with the team as to who’s getting what.

Anthony Codispoti (33:30.538)
Yeah.

Robert Benn (33:32.054)
And this particular case, when I got there, they were spending more on their expenses than they were taking in.

Anthony Codispoti (33:41.418)
So they were losing money.

Robert Benn (33:45.186)
just before they even got to paying the overhead, just paying salary salesman’s people, okay? They were real goosy money, okay? Advertising, sale salaries, okay, or commissions, interest expense.

Anthony Codispoti (33:50.651)
so they were really losing money.

Robert Benn (34:06.483)
advertising, Okay. So I devised a plan that we would pay you a little bit of the gross profit.

and a whole lot of what was left after those selling expenses.

Anthony Codispoti (34:23.252)
you

Anthony Codispoti (34:27.828)
you’re really getting people’s incentives aligned there. So they’re not just looking to sell cars, they’re looking, how can we help to reduce costs and overhead in the places where we can influence it?

Robert Benn (34:30.688)
I gave him a turnability.

Robert Benn (34:37.646)
Well, accountability. Okay. So instead of saying we’re going to give you a $500 bonus for selling that car.

Okay, saying, hey, we’re going to give a hundred dollar bonus for selling that car.

Robert Benn (34:58.638)
Okay, instead of spending $500 on lunch, spending 125 on lunch.

Anthony Codispoti (35:09.824)
So let’s talk a little bit about the people aspect of this because what you’re describing on paper sounds nice. But if I’m one of those sales reps and I’m accustomed to getting $500 for selling a car and now you’re coming to me and you’re telling me I’m going to give you $100 for selling that car. I’m not happy about that.

Robert Benn (35:29.518)
That’s not to sell the car. These are bonuses. the salesperson’s pay plan is not changing. This is the manager’s, but you’re making the manager accountable on things like bonuses.

Okay. The things they

Anthony Codispoti (35:46.804)
Does the manager have the foresight to understand what’s in place there and to understand that they have the ability to make a lot more? They do. Okay. Okay.

Robert Benn (35:54.978)
Yes, yes. yeah. They saw it real quick. They said, okay, yeah, we see this. And that’s why none of them saw the change. They knew that they were in trouble. Okay. They knew that things were upside down. And that’s where transparency also comes in. Okay. Now, before I did this, of course, I studied. Before I ever even took that job, I studied it for about a month and a half.

Anthony Codispoti (36:08.191)
Okay.

Anthony Codispoti (36:23.37)
Okay.

Robert Benn (36:23.98)
laid out spreadsheets, looked at their best and their worst, compared their best and their worst to each other, okay, to find out, you know, do they have that opportunity? You know, was it always this bad?

what was the situation? can’t just go in there and say, gee, it’s going to be this way. You got to look and study and make sure that you have the opportunity. Where can things go?

Anthony Codispoti (36:53.566)
And what did you see in the data that suggested to you that the plan you were going to put in place could work?

Robert Benn (36:59.222)
Well, because they had, in their history, they had their places where they were doing really well, where their expenses were really controlled. Okay? And then now they were totally out of control. So historically, it wasn’t this bad.

Okay, they just let it get this bad.

And being able to show it to people transparently allows them to understand.

Anthony Codispoti (37:29.022)
And

Anthony Codispoti (37:33.204)
Transparently meaning you opened the books.

Robert Benn (37:35.68)
opened up and say, listen, here’s last year, the year before, the year before, the year before, if we take the best of the best and the worst of the worst, this is what you look like. Okay, so let’s just for the sake of argument, take the average and this is what it looks like. So if you guys can just be average, this is what you look like.

If it can be a little bit better than average, look at what you look like.

Robert Benn (38:04.342)
It’s a sales job. You have to sell.

Anthony Codispoti (38:04.448)
So, okay, that was gonna be part of my question is what’s the receptivity like when you first roll this out? It’s new, it’s different, people aren’t always comfortable with change. In this case, maybe the big thing you had going for you is that folks knew that things were bad, things were upside down, they needed to turn around. But.

Robert Benn (38:22.092)
They knew that.

Robert Benn (38:26.131)
They also knew that, gee, you know, we like working here and the boss isn’t happy with what’s happening. Let’s give it a try. And all of a sudden they saw their paychecks started going. Okay. They also knew that they were in a rut. Okay.

Anthony Codispoti (38:35.402)
Mm-hmm.

Anthony Codispoti (38:42.708)
Yeah.

Robert Benn (38:54.432)
a bad month they would make, you know, 7,000, a good month they could make 9,000.

With this plan, the bad month, would make maybe 3,000. A good month, they was unlimited.

Anthony Codispoti (39:08.832)
Mm.

Robert Benn (39:10.926)
Within a year, they were making $30,000 a month.

Anthony Codispoti (39:14.208)
Okay, that’s a significant increase.

Robert Benn (39:17.634)
Yeah. And they could see it.

Anthony Codispoti (39:21.226)
But how quickly could they see it? I mean, it’s one thing that…

Robert Benn (39:23.692)
Within about three months, things really started cranking. Okay.

Anthony Codispoti (39:28.672)
Okay. Did you have any turnover in that three months? People are like, this isn’t for me, I’m out.

Robert Benn (39:34.89)
No, the regular sales team there, they stayed because they saw what was there and they knew they had confidence in themselves.

that they could do it.

Anthony Codispoti (39:47.104)
This lever that we’re talking about here, Robert, of compensation programs that are very strategically constructed to align incentives, is this a common lever for someone in your position to pull, or is this maybe a little bit different? Like, as you’re starting to explain some of the challenges in that company, like, you know, they’re spending $500 on lunch. Well, hey, now we put this in place. Now they’re only spending $125 on lunch.

I hear that and I’m like, well, we got to put, you know, controls in place to, know, hey, you’ve got a budget, a cap, you can’t spend more than this on lunch. Like that’s the approach, but yours is a more holistic view.

Robert Benn (40:23.01)
Thank

Robert Benn (40:27.968)
It’s, I don’t think it’s a common way looking at it. Everybody likes to put the hard bar. Making people, and that takes away responsibility.

Anthony Codispoti (40:34.986)
Mm-hmm.

Robert Benn (40:45.25)
When you make people responsible, they tend to react.

Anthony Codispoti (40:48.927)
Yeah.

Robert Benn (40:51.426)
Okay. You, it’s, and that’s just one example, okay. You gotta give people responsibility and let them have that, the ability to do what they’re supposed to do. Okay. You know, it’s, you know, I have other areas where we’ve done stuff with, you know, service advisors, which people thought I was crazy at the time, but are now commonplace.

Anthony Codispoti (41:21.437)
Okay, like what?

Robert Benn (41:22.918)
Okay, so this is going back to 2002. Yeah, 2002 I did this, where we pooled the gross profit to a percentage. But everybody got paid based on their percentage of contribution to the pool in this case.

with kickers. Okay. Now I wanted certain performance things to be done. All right. So in this case, it was hours per row and effective labor rate. So we’ve created a matrix for it. If you did in this case, two hours per row, and this is going way back, $72.00 repair order. I’m sorry. Repair order.

Anthony Codispoti (42:16.4)
RO is that repair order? Okay.

Robert Benn (42:21.006)
and $72 per hour effective labor rate, this is going back a few years, remember, you would get 0.15 increase in the percentage that you received. And that could go all the way up to 0.50 if you did three hours per repair order and 77 hours per hour effective labor rate.

It was a grid going up. But it held you accountable so that you couldn’t just blow up and say, I’m three hours per row, but not increasing the effective labor rate. Because you could do one or the other very commonly. And it gave us the ability to do that. And then,

Anthony Codispoti (42:51.552)
Yeah.

Robert Benn (43:19.126)
The other part was that we wanted the department to hit its budget.

Okay, so we put out what the budget was for the year.

And if you hit the budget, there was another kicker. So we’re giving all these incentives. If you hit your customer satisfaction rating, there was another kicker.

Okay, but the department had to hit it. So we’re giving these kickers for people to work as a team Okay, but also individually

Anthony Codispoti (44:00.384)
Kind of conceptually, what I think is really interesting about your approach, Robert, is that there are components of it that I would expect from a CFO, right? You understand how the numbers work. We can afford to give this much of a kicker if this metric increases and everybody still wins because the pie is bigger, we can share more of the pie. But the part of it that…

And maybe I’m a little short-sighted here that I wouldn’t expect from a traditional CFO is the psychological component to it. How do we get everybody on the same page? How do we, you know, conceptually explain this to people in a way so that they can see that bettering the company is better for themselves? You know what I’m getting at?

Robert Benn (44:50.362)
I understand, yeah, and a lot of people don’t see that as being a common CFO trait, okay? But, and I’ve talked to other CFOs and a lot of them, some do and some don’t, but even our groups, okay, we do talk about that and that’s one of the things that we’re all striving for is making the company better, okay? You’re not there to just count beans.

You’re there to better the company. So that means you have to look holistically at the

Anthony Codispoti (45:25.341)
That’s probably a pretty common misconception about the role that a CFO plays, right? You’re just counting the money that comes in. But let’s dispel that. Please continue.

Robert Benn (45:34.166)
Right. Yeah, it’s just your job there is you look at things, you analyze things. Your job is to help the CEO in their job.

Okay. It’s.

to but it’s to help better the company overall. It’s not to just be that guy. Some CEOs do pigeonhole you. know, they like to pigeonhole you. That’s the CFO. sit in that corner. Okay. All they do is analysis all day.

Others understand that there’s a relationship, that it’s a partnership. Okay, and your job is to help them do their job better. Okay.

Anthony Codispoti (46:23.776)
It sounds like you and Tony have that kind of relationship.

Robert Benn (46:26.646)
We work very well together. He’s good to work.

Anthony Codispoti (46:32.308)
Are there examples in the past of where you have introduced one of these compensation plans and maybe it’s backfired, not been super well received, at least initially?

Robert Benn (46:43.89)
I’ve had it where people are not crazy about don’t want to implement something like this and it’s like, you’re the boss.

Anthony Codispoti (46:57.192)
I can lead you to water, but you’re gonna have to drink, my friend.

Robert Benn (46:59.866)
Yeah, yeah, you know, there’s an old joke about how many psychiatrists it takes to change a light bulb. You know that, right? One, but the light bulb really, really, really, really has to want to change.

Anthony Codispoti (47:07.156)
How many?

Anthony Codispoti (47:17.056)
Same case with your comp plans. If the power as it be, you don’t want to put it in place, it’s not going to go anywhere.

Robert Benn (47:21.256)
It’s not just, it’s everything. It’s whatever you’re working on. It’s, you know, you have to, you have to be in the entire, it’s an entire package. Okay. You know, one of the other things that CFOs work on are compliance. You know, we work on compliance issues and, you know, that’s a cultural thing.

Anthony Codispoti (47:48.136)
What sorts of compliance?

Robert Benn (47:50.618)
You know, you’ve got in our business, there’s all sorts of compliance. You’ve got.

Anthony Codispoti (47:55.552)
You’re talking about like reporting taxes, that kind of a thing?

Robert Benn (47:58.942)
that’s minor. No, we’re talking about, you you’ve got HR compliance issues. Privacy is a big issue in our business. OK. You are talking about, you know, in HR, there’s all sorts of rules in HR, as you know, in your business. It’s unbelievable. Making sure your ADA compliant can be just brutal, especially if you’re

in a small group environment. We have all sorts of safety regulations. We deal with hazardous material.

Robert Benn (48:40.98)
We sell cars. That means we have all sorts of regulations with the… we’re considered a financial institution.

Okay. So that opens up all sorts of stuff. You know, yeah, the, we have the state and then right now the federal trade commission is pushing through, pushing through what they call the CARS program. Okay. That’s a whole nother set of regulations we’ll be dealing with. It’s just.

Anthony Codispoti (48:54.942)
many different layers there.

Anthony Codispoti (49:13.418)
What is that? I haven’t heard of that one yet.

Robert Benn (49:16.497)
Cars deals with how you have to sell, literally how you have to sell a Okay.

Anthony Codispoti (49:23.146)
Okay. The way that you talk about it or the paperwork that goes with it or all of the above.

Robert Benn (49:27.29)
A paper worth how you actually talk about it. This is a place where AI is going to come in because when you present a price, it’s going to have to be presented in a certain way. OK, every time. And that’s where AI will come in as far as people calling in for a price. Because AI will be able to

use those word tracks to make sure that it’s done 100 % the same way every time.

Anthony Codispoti (50:01.76)
So the AI will record the call and help you do quality control to make sure that it’s being talked about the way that it should.

Robert Benn (50:07.598)
Actually, I think the I is going to be used to actually answer the call. So, you know, I’m interested in the, you know, I’m interested in the 2023 Camaro. Well, that car is offered at this price. Somebody else calls in, I’m interested in that 2023 Camaro, the exact same script without fail. Whereas a human might say, well, it’s offered at this price, but.

Anthony Codispoti (50:36.842)
For you, I can make a special deal.

Robert Benn (50:40.339)
But so yeah, so the AI might be the way, you know, using that almost as a bot to be answering those things.

Anthony Codispoti (50:50.932)
Have you seen a company offering that type of service yet?

Robert Benn (50:54.242)
There’s some of them that are out there beginning to do that, yes.

Anthony Codispoti (50:57.096)
Have you tested the quality? How close are they, you think?

Robert Benn (51:00.403)
Not yet, it’s not a, it’s not a, the rules are not in place yet, so we’ll see what happens.

Anthony Codispoti (51:07.06)
Yeah, more of a wait and see on this one. Robert, let’s talk a little bit about budgets, why those are so important and how to use them effectively.

Robert Benn (51:12.28)
Okay.

Robert Benn (51:19.379)
Well, budgeting is something that takes two parties to work with. When I was with AutoNation, we used to always get our budgets pushed down. Here’s your budget for the year. Great.

Anthony Codispoti (51:39.314)
It’s just imposed upon you.

Robert Benn (51:41.154)
imposed upon you. And my question always is, what do we got to do to make it happen?

Okay, because that’s the biggest thing. Even now, okay, we don’t really run with a ton of budgets and the reason being that I need people to engage. You need people to engage to be in your budgets. Okay. It’s not, my feelings are, shouldn’t be a top-down item. Okay. You have to know how you’re going to get there. For example,

If I am going to, if my target is to sell 700 cars this month, what’s it gonna take to get there?

How many leads do I have to have?

What’s my conversion rate on leads?

Robert Benn (52:41.23)
Okay, as far as people coming into the store or getting appointments. What’s my conversion rate on appointments? In other words, how many people show up? From the number of people that show up. Okay. How many salespeople do I need?

to actually talk to those people.

Anthony Codispoti (53:02.452)
How much do I need to spend on ads to get that number of people in the door? Kind of working backwards.

Robert Benn (53:06.712)
much do I have to? Right, that becomes the lead portion, right? But how many salespeople do I need to actually talk to those people?

Robert Benn (53:19.154)
You have to get all the way down to that granular piece. Okay, if I’m talking about the service department, I need to know how many bays do I have? How many technicians do I have? What’s their efficiency? How many vacation days do they have? Okay, what’s their, how many training days do they have? When are they gonna have that?

People don’t get that granular usually. They say, I got 21 days, 15 texts, bing, bing. That’s all I got. Well, it’s not quite that easy. Especially when you got things that get very, you know, a bit more granular. So, I’ve built tools for all this so you can actually divine what that’s going to be and what it’s going to look like. So you can actually get to it and…

Anthony Codispoti (54:04.992)
Yeah.

Robert Benn (54:17.442)
But my view is that the CFO shouldn’t be the one to fill out that tool.

You need somebody to, even the controller shouldn’t be filling out that tool.

Anthony Codispoti (54:30.772)
Who should it be?

Robert Benn (54:32.366)
It’s got to be in conjunction with the manager who’s going to actually implement the tool.

Okay, the number’s no good to me.

Anthony Codispoti (54:39.04)
because you want their buy-in to it. They’ve got the data, they’ve got a sense of what’s going on, and they’re the ones who have to actually execute.

Robert Benn (54:46.638)
Exactly, they’re accountable. If you’re accountable, then it’s got to be your number. Okay? You’ve got, it’s not, I don’t have the 15 texts, you have the 15 texts.

Okay, where you’ve got the 20 salespeople, you’ve got the four teams, you tell me how they’re gonna perform and you tell your four team leaders to tell me how their guys are gonna perform. Which means.

Anthony Codispoti (55:19.466)
So you’ve created a tool, you get the input from the managers, and then the tool gives you what kind of output.

Robert Benn (55:26.23)
Well, we need to get that down right. And that’s how you build up things. And that’s how you actually, that’s how you really budget to figure out where you’re going. And you can do this on an annual basis, a weekly basis. It doesn’t matter. Okay. My tool is actually built so that it can expand quarterly or monthly quarterly. All you got to do actually is change one number and it’ll change the entire tool.

Anthony Codispoti (55:52.692)
And what is the tool? it macros based in Excel? Is it something? Okay.

Robert Benn (55:55.766)
It’s Excel. It’s not macros, but it’s Excel. I’ve built it over the years and it’ll do. It’ll bake in, bring in your financial information, and then that’ll actually help you build the results also. So you can look at what’s going on and then you can plot it out also the other way. And it’s also good for doing acquisitions.

Anthony Codispoti (56:18.122)
Robert, us a little, sorry, go ahead.

Anthony Codispoti (56:24.731)
Is that something you’ve got a lot of experience with as well?

Robert Benn (56:27.096)
I’ve done a few.

Anthony Codispoti (56:30.536)
Is any of that on the horizons for STG or? We’ll see. Okay. Not at this point. Talk to us a little bit about the ups and downs of the car industry during COVID.

Robert Benn (56:33.774)
and not at this point.

Robert Benn (56:43.544)
For the used car business, COVID was great. Okay. It was all up. There’s this thing called the Mannheim Index, and it works on the price of a three-year-old car.

and I’m gonna use my memory on this but I believe it was…

2021, March 2021, was at about 200. The index, went all the way up to 257. And it’s now back down to about 200. Okay. It went up higher, it was about June of 2022.

Anthony Codispoti (57:29.672)
And so that just indicates what a big change in used car prices we saw. went up 25 % and it’s come back down to.

Robert Benn (57:35.536)
Huge inflation, Huge inflation, right. More than 25 % actually. But now we’ve seen a deflation. So what you saw was, you know, these car prices go way up and it was great for the business. Everybody made, you know, seemingly made a lot of money because everything’s going up, up. And you bought it this week, next week it was worth more. Everything’s good.

You thought you were in a third world country with lots of inflation and your biggest problem is replacing it at a decent price because next week you’re going to sell it for more. Then like any bubble.

I came to the backside of it and it was very challenging because now you’re selling something for you’re buying it and next week it’s worth less than you bought it for.

Okay, and therein lies a big challenge, especially on a product like a vehicle that’s you’re trying to turn every 30 days or less.

Okay, that vehicle pricing is going down. And if you think about it, what people don’t realize is that you’re dealing with loan to value.

Anthony Codispoti (58:58.304)
Talk to us about that.

Robert Benn (58:59.97)
Okay, well.

When you, when people buy a car, okay, you’re paying, you’re paying for it. Most people finance their cars. That’s, know, the bank will give you loan to value. So if the car is worth, let’s just say $20,000 and they’ll give you 130%. That means they’ll give you, you know, $26,000 on the car.

But the price of the car goes down to 19,000.

They’re not going to give you $26,000 anymore. They’re going to give you closer to $25,000.

Okay, so not only are you losing $1,000 on the car, it means you can’t finance $26,000.

Anthony Codispoti (59:53.214)
Mm-hmm.

Robert Benn (59:55.771)
And that means that the total package is worthless. It means you can’t finance as much sales tax, you can’t finance as much aftermarket products, you can’t finance as much gross profit, everything just shrinks.

Anthony Codispoti (01:00:18.186)
So we’re recording this interview in November of 2024. Do you feel like you’ve fully re-stabilized from the COVID whiplash?

Robert Benn (01:00:25.388)
Yes, yes, it’s been, it has been re stabilized. It’s the market has been stable for about four months now. Okay, but it took a while for it to stabilize.

Anthony Codispoti (01:00:38.706)
And what were you guys doing there internally in the meantime? Wow. There was all this fluctuation going on. And then for you guys, was fluctuating in the wrong direction.

Robert Benn (01:00:49.602)
Well, we were, yeah, you’re right. It’s exactly shorting. We actually closed our point in Garden Grove, okay, because that was too close to our point in Bellflower.

We cut expenses in every way we could.

We reduced head count.

And we’re always looking for ways to reasonably cut expenses.

Anthony Codispoti (01:01:26.08)
You had to tighten your belts.

Robert Benn (01:01:28.622)
Yeah, you want to cut fat, you don’t want to cut bone.

Anthony Codispoti (01:01:32.49)
That’s good way to put it.

Robert Benn (01:01:34.796)
Okay.

Anthony Codispoti (01:01:36.148)
Robert, I want to shift gears on you now. I would like to ask you to maybe talk a little bit about a particular challenge, either professionally or personally, that you’ve gone through. What that was like going through it, lessons that you learned coming through the other side.

Robert Benn (01:01:52.042)
So probably the biggest challenge I had was I had a dealer management system company back in the 80s where we built, it’s ERP basically for everybody else, we built a enterprise system before people called them enterprise systems for dealerships. in 1989, the economy really took a turn and…

I ended up closing it down. I lost everything but my wife. She was a couple of months pregnant at the time, took a job out in Phoenix. We were expecting our first child January 1st, 1990. That child was born. She lived for four hours. She had diaphragmatic hernia that nobody saw, even going into the hospital nobody saw it.

Robert Benn (01:02:49.954)
And this is terrible to say, but as an individual, I that company was my baby.

I I’ve been working six years on it. It was heart and soul.

Robert Benn (01:03:06.348)
What was the worst loss?

Robert Benn (01:03:13.218)
Being stupid and young, six months later, my wife was pregnant again and we lost that child. So I guess God slapped me in the face and said, you stupid idiot, wake up.

Anthony Codispoti (01:03:29.662)
Hmm.

Robert Benn (01:03:31.148)
Realize what’s important in life.

Okay, fortunately about a year later, we were blessed with my son, who is now 33.

Robert Benn (01:03:45.549)
And I also have a daughter now that’s 25. But the thing is that family and it’s not just the dollars. It’s a lot more. You have to understand that there’s a lot more to

although CFO by profession, okay? And I’ve done a few other things, but you have to understand that there’s a lot more to it to make it all happen and come together. And that’s probably the most important thing.

Anthony Codispoti (01:04:16.928)
So as an entrepreneur and also a father myself, for those folks listening, just to put a little context around this, because I’ve gone through the loss of a business before. Very grateful that I haven’t experienced the loss of a child like you have. But the loss of a business is very destabilizing. You described it as your baby.

There’s an emotional attachment to it. You’ve invested so much time, energy into it, and it’s become part of your identity. And so when I hear you say, was such a tremendous loss, and I didn’t know what was worse, there’s a part of me that really understands that. Because, you know, I had people tell me that the loss of a business is like, it’s like, it’s like a death, you know, and it takes a lot to get over. to kind of add that context.

Robert Benn (01:05:08.003)
Yeah.

Anthony Codispoti (01:05:11.988)
But then to hear your story, Robert, and I think that context is helpful, especially for people who haven’t been through that type of situation before. But then to hear your story, Robert, where, okay, then after the loss of a business, you’re still reeling from that and your head is spinning, kind of a loss of identity, I have to assume, you lose a child. And you’re dealing with the grief of both. And then…

several months later to go through that experience again.

Anthony Codispoti (01:05:48.83)
What was it that kept you going during these times?

Robert Benn (01:05:54.177)
My wife.

Anthony Codispoti (01:05:56.626)
Say it again. Yeah.

Robert Benn (01:05:57.462)
my wife. mean, yeah, she’s the strength behind me.

Anthony Codispoti (01:06:08.372)
What was the point where you started to feel like…

going to be okay. It’s going to be okay. Things are going to be okay again.

Robert Benn (01:06:21.003)
I, you just, you just keep on going, you know.

Robert Benn (01:06:28.301)
And remember…

Robert Benn (01:06:32.888)
We were in Arizona at the time.

Robert Benn (01:06:40.33)
After the first child, we just went up to Sedona set in a restaurant, know, soccer, and it was snowing up on the mountains. You could see the snow hitting the red rocks. Did you know it was going to be okay? No. Did you ever know it’s going to be okay? Yeah, you just assume it’s going to be. I think after my son, we knew it was going to be okay. Yeah.

and

But you just keep on charging.

Anthony Codispoti (01:07:15.838)
I’d like to hear more about that perspective shift that you went through, have gone through. It seems like maybe you’re wired just a little bit differently now.

Robert Benn (01:07:25.571)
Well.

Robert Benn (01:07:31.06)
Yeah, you just

Robert Benn (01:07:41.111)
I mean.

Robert Benn (01:07:45.23)
Once we had my son, it was really important. I did, I was…

I was actually doing finance and insurance for a while, which means I was working that, you know, that box that takes three hours to get through. I was doing that, but I gave that up and stayed over on the accounting side of the business so I could spend more time with him.

Robert Benn (01:08:19.118)
It was just more important to be with the family.

Robert Benn (01:08:28.92)
There’s a lot of things that.

Robert Benn (01:08:36.78)
you just realize that there’s more important things than just driving the business all the time.

Robert Benn (01:08:46.738)
I’ve worked with some very good people over the years, but sometimes you got to realize that the business, the business, while it’s extremely important and it’s got to go on, it will go on when you’re not there. Okay.

Robert Benn (01:09:08.11)
You know, there was a group down in

And I was not part of it, but there was a group called Crown Group down in the South years ago. They’ve sold and they’re gone. But they used to take all their managers out of the organization for a week, once a year, and let the line people run it.

Anthony Codispoti (01:09:33.866)
Okay.

Robert Benn (01:09:34.87)
Okay. And the organization actually did better that week.

Then I did one of the managers were there. Okay. So what’s everybody else went out on a retreat with no commute, no communications. So what’s, what does it show? It shows that you don’t have to be on top of everything. When I was operations director for the Dell grand group, which is up in San Jose years ago, I told Kevin,

Anthony Codispoti (01:09:44.702)
No kidding.

Robert Benn (01:10:12.824)
said Kevin. After the fire department leaves, I’ll give you a call and let you know the building burned out.

because there’s nothing you can do about it. know, you have to, maybe it has to do with, and it was actually while I was going through everything that I realized that someone taught me, the only thing you can control is how you respond.

Robert Benn (01:10:42.84)
Okay.

It really hit me hard. the way, I spent a lot money to find that out.

Anthony Codispoti (01:10:53.94)
Hey, hats off to you for getting there, because a lot of people don’t.

Robert Benn (01:10:57.643)
But you have to realize that that’s the only thing you can control.

Anthony Codispoti (01:11:03.274)
can’t control what happens, you can only control how you respond. Robert, I really appreciate you opening up about those struggles, because I think those are important lessons for anybody listening to hear and to really completely embrace, because we spend a lot of time being stressed about things that feel really important in the moment, and driving for this, and giving up time with our loved ones.

Mandy, hear your story. It kind of, it reshifts a perspective. It highlights what’s really important. so I thank you for opening up about that. Really appreciate it.

Shifting gears into something a little bit lighter. You’ve been in the car industry for a fair bit now. What’s your favorite car that you’ve ever owned?

Robert Benn (01:11:58.976)
I’m terrible with cars. know why? Because they’re, yeah, they’re metal. Yeah, I mean, probably the most unique one I ever had was the I did have a 66 Mustang, which I hated because it wind the transmission on it wind. I know everybody would say, to have that today.

Anthony Codispoti (01:12:00.444)
Okay. You know how to make money from them, but yeah, it’s a widget to you.

Anthony Codispoti (01:12:19.232)
Okay.

Robert Benn (01:12:29.438)
Probably the most unique one I had was the i3 when it first came out, BMW i3, Rex. But that was like real early adopter stuff. But outside of that, for me, they’re basically metal, get me from place to place. Everybody else is like, I got to have this one. No, it’s, you know. What about you? What do you enjoy?

Anthony Codispoti (01:12:50.56)
Fair enough.

Anthony Codispoti (01:12:54.142)
Yeah.

Anthony Codispoti (01:12:58.772)
Well, you’re talking to a dad of two young boys. I’m a minivan nerd all the way for now. So I’m a little bit more in your camp where I can appreciate a beautiful car and happy, you know, for the folks who have them. And for me, it’s a little bit more about utility. And so that’s, that’s the most functional car that I’ve found to date. So for as long as I’m in, you know, dad mode of two young kids, that’s, that’s what I’ll, I’ll be toting around.

Robert Benn (01:13:05.166)
and

Robert Benn (01:13:14.732)
Yeah.

Robert Benn (01:13:19.178)
Hahaha

Robert Benn (01:13:26.936)
That’s your tour.

Anthony Codispoti (01:13:28.35)
Yeah, that’s it. I’ve got one more question for you, Robert, before I ask it. I want to let people know the best way to get in touch with you. What would that be?

Robert Benn (01:13:36.75)
Well, I’ve got my cell which is 860 869 1141. Okay, and my personal email, which is very difficult, is robert at robertben.com.

Anthony Codispoti (01:13:55.892)
We’ll include both of those bits of information in the show notes for anybody who missed them. But last question for you, Robert, I’m curious, what do you see being the big changes coming to the car industry in the next couple of years?

Robert Benn (01:14:10.744)
That’s tough. mean, everybody was talking about, you know, the getting rid of dealerships. OK, I think Tesla is learning the lesson that, gee, when you’re when you’re manufacturing, you drop your prices and there’s no dealer involved. Everybody’s mad at you. So that’s not going to be that’s not a winner.

Robert Benn (01:14:36.524)
The biggest changes I think are going to be not in California because California is really very, very regulated. But across the nation, the federal cars rule is going to make a lot of places change how they operate and clean up their acts. It’s going to make dealers have to get rid of lot of junk fees. It’s going to make them…

be much more transparent. And I think that’s going to be one of the biggest changes that you’re going to see happening in the business.

Anthony Codispoti (01:15:17.96)
to the dealership point you brought up about Tesla. So the lack of dealership when they drop their prices, everybody’s mad. What do mean that the customers are mad at Tesla people who had bought a car previously?

Robert Benn (01:15:27.116)
Yeah, well think about it. Last January, they dropped the price $7,000. Right? Who were they mad at? Tesla. Okay, if it was the dealership, if you had a dealer system, the dealer would have said, hey, these are the incentives right now. I don’t know what’s going to happen next month. Okay, you better buy the car now because next month we don’t know what’s going to happen. Now, if next month the incentives came out at $7,000,

dealer said, hey, I didn’t know that was going to happen because they wouldn’t because they don’t. Well, they get upset with the dealer, but not the brand. OK, but the fact is that the dealer really didn’t know until January 2nd that the prices were going to drop $7,000 or they’re going to be a $7,000 rebate. OK, so they’ve got they got somebody in between, you know.

Anthony Codispoti (01:16:00.938)
So now they’re mad at the dealer, not at the brand, at the car.

Robert Benn (01:16:24.902)
At Tesla, when they don’t want to do your warranty, it’s Tesla. Okay. At GM, it’s the dealer. Okay, well, I’m going to go to the factory rep and see if I can get it approved. When the factory rep says it won’t approve, it’s still the dealer who couldn’t get it done. You got a middleman that you can blame.

Anthony Codispoti (01:16:49.47)
You’ve put a layer in there somebody else to get mad at. Yeah.

Robert Benn (01:16:52.622)
Yeah, it keeps you a little bit at bay.

Anthony Codispoti (01:16:56.446)
Yeah. Well, Robert, this has been fascinating. I want to be the first to thank you for sharing both your time and your story with us today. I really appreciate it.

Robert Benn (01:17:04.769)
Anthony, it’s been fun.

Anthony Codispoti (01:17:06.772)
Folks, that’s a wrap on another episode of the Inspired Stories podcast. Thanks for learning with us today.