The business model for 1-800 Car Cash is simple: purchase cars for cash in volume and quickly sell them for as much of a profit as you can. However, before The Profit, the business was in trouble. Owners and brothers Andrew and Johnathon Baron hadn’t made a profit for a long time, and neither had taken a paycheck in months. Then they appeared as the very first business featured on The Profit show, where businessman and philanthropist Marcus Lamonis invests his own money into promising companies that have struggled to make a go of it.
How 1 800 Car Cash Got Started
Car owners wanting a place to quickly and easily sell their vehicles have long been in demand. Bruce Baron was ahead of his time when he began 1 800 Car Cashback in 1977 and had success with a new and effective business model. Sons Andrew and Johnathon joined their father’s company, and business was good and growing.
The Baron brothers took over the business after Bruce’s untimely death. The emergence of the recession in 2007 put the car buying and selling business in a tight spot. As their debt began to grow, they weren’t able to keep inventory stocked to help climb out of the hole in which they found themselves.
The brothers found themselves with over $200,000 in debt and rising. The average profit margin per car sold was around $800 per vehicle, and they were looking for a way to collect additional profits they felt were being left on the table.
Along Comes The Profit Show
The Profit: Season 1 Episode 1
A company that sells and buys used cars was the ideal business for the debut episode of The Profit. Host Marcus Lamonis has been buying and selling cars since he was a teenager and loved the concept of 1 800 Car Cash. Used car businesses have been profitable ventures for many years, and Marcus saw a chance to help a troubled business rebound in an industry in which he has had a lot of success.
Johnathon and Andrew began by giving Marcus the grand tour of their dealership and answering questions as they moved through the building. The brothers shared with Marcus that they both were working six days a week, yet had very little cash, and they were finding it difficult to draw customers into the dealership.
Among the first things, Marcus learned was the shocking $20,000 monthly rent, a very high overhead of about $100,000 a month, and noted that the dealership had not been updated since the patriarch of the family opened the doors in 1977. Disagreements between Andrew and Johnathon had stymied business decisions from what color to paint the garage to marketing and advertising campaign plans.
Marcus discovered that the brothers at 1 800 Car Cash were using a wholesaler to sell cars to the dealer and felt it was unnecessary, seeing a chance for the business to make up to several thousand dollars more with each sale by facilitating sales themselves. Long term, Marcus saw an opportunity in licensing the business for franchising purposes.
As Marcus presented the changes and adjustments to the daily operation of the business, Andrew and Johnathon tried to work through the siblings’ differences of opinion. Ultimately, the two realized that in order to make the business work, they would have to click as business partners and brothers.
An Offer is Made, Marcus Takes Over
Marcus offered 1 800 Car Cash $200,000 to resolve the company’s debt, but there was a catch. He wanted to take control of the facility for a week to facilitate the changes necessary to clean up the building, begin turning a profit, and start the process of franchising of the business. Johnathon, who was not happy with the idea of giving up control of his business even for a week, asked for $300,000 at 5.5% interest, feeling Marcus was primed to make millions of dollars on the deal. They agreed to a 7.5% interest rate, and Marcus took charge of the business.
His plan for turning things around included eliminating the use of wholesalers and adjusting the appraisal process to make it easier for customers to see what is wrong with the car. He explained that the franchising of the business would require a more efficient and consistent branding and marketing plan, which would mean upgrades to the building and the appearance of the company.
Andrew and Johnathon began arguing about specific changes that Marcus wanted to be instituted. They disagreed about modifications to the building and the best way to use their marketing budget. The brothers were having trust issues with each other. Marcus let Johnathon know that he was not a good manager of the people around him.
Growing, changing pains continue from confrontations to success
Contractors arrived and began tearing through the 1 800 Car Cash building for significant renovations and improvements. Clashes between the Baron brothers continued, with Johnathon screaming at Andrew about the cost of new office furniture and demanding all purchases be run through him first.
Marcus acted as a mediator between the two while facilitating improvements to the building and the business. He paid for studio time for Andrew to create radio ads, hoping to show Johnathon their worth.
Johnathon tried to push back on the edict to sell cars only to dealers and not go through wholesalers, telling Marcus that he knew more about these wholesalers who have been doing business with 1 800 Car Cash since their father ran the company. Marcus laid down an ultimatum: Either the wholesalers left or he would, which his money. Johnathon wisely relented, and the wholesalers left.
The commercials were a success, and the remodeling made the building look new and fresh. 1 800 Car Cash was again becoming profitable, and Johnathon was impressed. Profitable franchises began soon after that.
1800 Car Cash Since Appearing on The Profit
Since being featured on the first episode of The Profit, the brothers still argue, but the business continues to run, and more successful than ever. 1 800 Car Cash has added over 100 locations and became a NASCAR sponsor for national car purchasing.
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