OVERLAND PARK, Kan. — NCM Associates' Brent Carmichael pinpointed what he believes is the No. 1 decision any dealer principal needs to make before venturing into or expanding in the buy-here, pay-here market.

Carmichael — NCM's executive conference moderator who specializes in BHPH — told more than 400 store managers and others who registered for a Webinar this week that they must decide what kind of financial plan is utilized to fund the BHPH rooftop.

Is this store going to be on an equity plan? Carmichael indicated an equity plan means that the store has an open budget with capital resources available indefinitely to get the BHPH operation profitable.

Or is the BHPH dealership going to be on a cash plan? Carmichael acknowledged that the majority of BHPH start-ups fall into this category, with dealers having a set amount of money available to venture into this market.

Beyond making that decision, Carmichael delved into many best practices in how to run a BHPH store, ranging from the demographics of the BHPH customer and building an inventory that sells to managing cash flow and structuring deals that minimize risk and maximize profit.

"To me it's a phenomenal industry," Carmichael told the Webinar gathering this week.

"I'm not going to go out on a limb and say it is recession proof, but our sales from the dealer clients we represent have increased," he continued. "In the first quarter, it was about 6 percent, which doesn't sound like a lot, but many of our dealers are not growing because they don't want to borrow money at this point. They want to grow organically with their current cash flows.

"This is an industry where we have not seen any overall ill effects from the recent economy, even with gas prices going up," Carmichael added.

The NCM executive acknowledged that many dealers who have heard his presentation have been apprehensive about entering the BHPH space because of the amount of time it takes to make the store, "cash positive" as well as the amount of risk working with customers with poor credit.

"They are great people," Carmichael said of typical BHPH buyers. "I've been doing this 20-something years. I think I've only come across one or two people who I would call bandits. They're just hard-working people who want to be treated with courtesy and respect like the rest of us. They've wanted to do the right thing but couldn't due to a life circumstance.

"It's a great industry that's not going anywhere any time soon. The majority of the customers out there who don't have any credit are in our market already. It's just a matter of capturing them," Carmichael went on to say.

A recording of this week's NCM Webinar focusing on the BHPH business model and Carmichael's accompanying presentation that he says can be beneficial "if you're already in the business or can help you make a good decision to get into the business" can be downloaded here.