Give Him Credit

By Hannah Wallace April 30, 2005

Carbiz Inc. has been specializing in software and consulting services to new and used car dealers since 1984, and now counts more than 3,000 automobile dealerships in the United States and Canada as its clients. Last year, under the leadership of chairman and CEO Carl Ritter, the company launched a retail auto-finance division with locations in Palmetto and St. Petersburg and plans to open additional locations in Florida, beginning in Tampa. The company is publicly traded on the Canadian TSX Venture Exchange (CZ:V).

1. Many of your directors and senior executives are from Canada, and your company is listed on a Toronto exchange, so why did you choose Sarasota as your headquarters?

Sarasota was home to one of several U.S. businesses we consolidated into one company [Automotive Dealer Services or ADS]. The Sarasota business had several long-term employees and the location was appealing. Many key people from the other acquisitions happily moved to Sarasota-Manatee. Last year saw the final move to Sarasota for all of our staff and we are in the process of moving to a U.S. stock exchange. Sarasota-Manatee is a great community for living and working. Young professionals comprise most of our management team, and they find the Sarasota area an added benefit to working at Carbiz.

2. How have you raised capital to fund your business growth?

With all capitalization projects, whether at startup or further along in the development cycle, some fundamentals have to be in place to make the investment attractive. Carbiz combines a recurring revenue stream from software and consulting sales with a proven retail credit business where outlets become profitable in less than a year from startup.

The next consideration is the company's market. Does it provide enough growth capacity? What happens in a recession or a boom market? At Carbiz, we sell into a vertical market that is over $50 billion in annual sales, so the opportunity is huge. Our software and consulting divisions have tremendous room for growth, particularly as the used automobile industry gains in sophistication and management expertise. The auto credit division serves a clientele of people with poor credit, which exists regardless of economic conditions.

The other critical question is execution. Knowledge gained from providing software and consulting to the industry allows us to create and monitor our own credit centers as we expand at an aggressive pace. All three of our divisions are expected to reach profitability this fiscal year. Combine that achievement with the scalability and market potential of the auto credit business, and you have a company with good potential rates of return in a business sector that is relatively insulated from recession.

3. What is your advice for local entrepreneurs seeking capital to fund their companies?

Make sure the fundamentals are in place and clearly understood by everyone in the company. I frequently quiz our key managers on the company's big picture so everyone recognizes that their roles and results are interconnected.

4. How have you positioned Carbiz to exploit industry trends?

One of our financial innovations is designed to help us grow more aggressively in the auto credit division. The initial cost for a credit center, which sells and finances used cars for customers with poor credit, is cash-intensive. We recently took on a joint venture partner to provide the startup cash while we provide the rest. Then we'll share the profits down the road. I've said that Florida could absorb 100 Carbiz Auto Credit centers, and the joint venture approach will help us achieve that long-range goal.

5. What's next?

Our company does virtually all its business in the U.S. and is located here, so moving our stock to a U.S. exchange makes sense. We are in the process of applying to be listed on the OTC-BB. We recently announced an expectation of earnings for the first quarter, which will be a milestone for Carbiz.

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