By John Yoswick
While spending money on a consultant or business training can be worthwhile for shop owners, sometimes there’s no substitute for spending a few minutes talking to the real expert up the street: another shop owner. Build a network of other shops you know across town or across the country, and you can get great ideas, like these shared by shop owners interviewed in recent months:
Understanding the value of education
As someone with an advanced college degree in business, Rhonda Phillips understands the value of education. That’s led her to earn the I-CAR Gold Class designation for her shop, Courtesy Auto Body in Portland, Ore.
“It’s important for people to have education, whatever they do,” said Phillips, who pays for technician training provided they stay with the company for at least a year after taking a course. “And the guys actually like learning. One of them was previously at a facility for years that never paid for them to do any I-CAR training. So he had a lot of it to do in his first year here, but he was happy to have the opportunity to take the courses.”
Philips has a long history with the shop she now owns, having started with the company as a receptionist in the 1980s. She purchased the business from its second owner in 2001, and now has six employees, including manager Joe Miller, who also worked at Courtesy in the 1980s and who Phillips rehired about six years ago.
Phillips is not a fan of insurance direct repair programs, and although the shop participates in a few for smaller insurers, she said she makes sure those customers understand they have a choice as to where they take their car.
Instead the company relies on its website, a long-time large fleet account, and the repeat and referral business developed over 40 years in business in the same location.
“I think we’re here because we don’t have unhappy customers,” Miller said. “We don’t have to go on TV and tell everybody how great we are. People who have had their cars fixed here will tell other people. Our customers are our marketing department.”
Miller said he and Phillips also agree on making the shop a pleasant place to work, unlike some of his previous employers.
“Maybe those people get huge production numbers, but nobody’s happy,” Miller said of those other shops. “I didn’t respond well to that. Happy employees are productive employees as far as I’m concerned.”
Three-shop business partners with dealerships, uses only OEM parts
Even after Jeff Ryan’s opening of a third location for Michael J’s Collision Centers two years ago, it’s still more likely to find him in a shop production area rather than behind a desk.
“I work 12 to 16 hours a day, Monday through Friday, but I usually spend 95 percent of that time out in the shops, writing estimates, running production,” Ryan said. “I have a general manager and an operations manager who take care of a lot of the day-to-day business functions. It’s not that I can’t do that kind of stuff. I just don’t want to. My niche is being out in the shops, even though that’s the last place many shop owners want to be.”
Ryan and his wife, Janie, purchased Michael J’s in 2005 when the company had one location and five employees.
“Within two months, we had 28 people working for us,” Ryan said, noting that the employee count doubled from even that in the 10 years that followed.
That growth has come in part because of the company’s relationship with the Del Grande Dealership Group, where Michael J’s has estimators at nine dealership locations. But Ryan said his company does several things that set it apart from its competition and that lead to significant numbers of referrals from customers.
“We don’t use any aftermarket parts at all,” Ryan said, for example. “It’s part of our company philosophy. Once we get those parts out in the shop and they don’t fit, there’s downtime and supplements. And at the end of the day, when the customer picks up the car, they don’t think about what their insurance company paid for; they look at it as this is the work of Michael J’s. So we may take a little bit of a hit on parts profit. But where we get that back is the continuous growth of our referrals and repeat business, which is just incredible.”
Buy and expand when others pulling back
Bob and Jeannie Park are proof that sometimes when everyone else “zigs,” it can be the perfect time to “zag.”
While others were scaling back during the recession a few years, the Parks took an opportunity it offered to expand. After 15 years of operating Superior Performance out of a 5,000-square-foot shop well outside the city, the Parks five years ago moved into a space 10 times that large just blocks from a trendy downtown Portland, Ore., neighborhood.
“All the buildings in this area were for lease back then, and we were able to negotiate a great deal because nobody wanted them,” Bob Park said. “We actually were able to purchase this building, which is very unusual for this part of town. Nobody sells. This area is very desirable both because it’s so close to [downtown] and because there’s no competition.”
The Parks leased out 20,000-square-feet of the building, and use the rest for their eight-employee business, which focuses on collision repair but also offers restoration and complete retail mechanical services as well. It’s that diversification, Park said, that has helped the business grow while others have struggled.
Park said not having any direct repair agreements with insurance companies results in more fluctuation in work volume, but he feels that is offset by not having to accept the price concessions the programs require. And he’s not interested in become a high-volume, high-pressure shop.
“We’re having fun and we like to make sure our employees are happy and want to come to work,” he said. “That’s my strongest draw to get quality help, to attract them from other shops that are highly stressed, working Saturdays. We don’t do that. We don’t pay on commission, but we pay them very well, so they can do high quality work yet still get the same pay.”
Park said there were those who questioned the move to a much larger facility in a down economy, but the gamble has paid off.
“Most people thought that would be the nail in our coffin. Most people told me that I shouldn’t do it,” he said. “If I tried to do this now, with the economy picked back up, there are no buildings available, certainly none for sale. So the fact that we did it during a down economy was definitely the key to our success.”
Get the shop organized
Walk through Luxe Collision in Fremont, Calif., and it’s easy to see evidence of the organizational and process improvements Lorenzo Avila and Norberto Salas have brought to the business from ideas they have picked up from industry seminars.
In the shop’s parts department, for example, all damaged parts are “mirror-matched” against their replacements when they are delivered to ensure they are correct. Every job is assigned a parts cart for both the removed and replacement parts, with the cart number included with other information written on the vehicle’s windshield.
“I don’t ever like to see parts on the floor,” Avila said. “We have racks and stands for all parts.”
In addition to the parts-cart number, technicians have access to lots of other information on the vehicle itself. The windshields are labeled with information about when the car has been promised to the customer, who is working on it, and any sublet work it will require. Color-coded tags indicate if the job is for a dealership, or is insurance- or customer-pay. Color-coded markings on panels or parts indicate whether damage is to be repaired or not.
Efficiency through production area design
White’s Collision Service in Oregon is going “paperless” at its newest location, more out of necessity than choice.
April White said her family’s business acquired another shop in a nearby community, but is operating it only as a satellite estimating center — without a production area — to serve that community. Customer vehicles brought to that location are transported to one of the company’s other three shops in nearby towns.
“Because of transferring that work, we’re 100 percent paperless over there,” White said. “All of the information needs to be in the computer so that everyone can access it. Once we have the system honed in there, we’ll make that transition to going paperless at our other shops.”
White said one of its other newer locations was laid out internally to maximize production and flow.
“When we were designing it, we were thinking that would help a little. I thought maybe you could add five percent to production, maybe 10 percent at the most,” White said. “I thought maybe we’d gain an hour or so a day, maybe not even that. But it was way more dramatic. We saw about a 30 percent increase in production with the same number of employees.”
White said it is minor changes in facility and process that individually don’t make a big difference but when combined really add up to improvement.
The new production area has all-aluminum airlines, for example, with drops from the ceiling providing air and power in every stall. Bays are angled off a center lane to improve access through the shop. Vehicles are repaired using a team system rather than the traditional one-tech-per-job. And as at Luxe Collision, carts are used to organize and parts and get them to the vehicles.
Best decision: Buy rather than rent
Neither Tamra Rogers or her brother Don Nordgren Jr. hesitate when asked what decision has most improved their business, Pacific Coast Auto Body, in San Diego, Calif.
“The best one we ever made was in 2000 when we stopped renting and bought this property and built the building, “ Rogers said. “When we built it, we cut it in half, and those two businesses that rent the two suites up front have been paying the mortgage this whole time. That was the smartest thing we ever did. It really helped us when we were slow [during the recession] in 2008 and 2009. It was a smart move. We would have been in trouble.”
“It’s hard enough to be in business, especially in an industry such as ours,” Nordgren agreed. “But when you’re making that payment for something you’re building equity in, it’s a good feeling.”
Inventory can be a benefit, not just a cost
John Kallen of Champion Collision in Sandy, Ore., said success in the collision repair industry is based in large part on good estimating, which he describes using an analogy involving loose change.
“You throw a handful of change on the table and any estimator is going to pick up the quarters,” Kallen said. “The better ones get the dimes. But only the really good ones get the nickels and the pennies. At the end of your month, it’s the nickels and the pennies that make the difference.”
Kallen opened Champion Collision in 2007, after more than two decades working in a variety of capacities for a number of shops. He acknowledges he probably maintains a little more inventory of paint products and shop supplies than some other shops, but says that helps avoid those emergency calls for some item needed immediately.
“People say inventory is a bunch of money sitting on the shelf, but I see it just as an initial investment,” Kallen said. “What costs you more? A booth sitting idle while you’re waiting for a hardener or a clear, or an initial investment in the product?”
Champion Collision currently has 14 employees.
“The good news is there are still good technicians out there who want to work in a safe place,” Kallen said. “It’s a lucrative environment for the right guys because we don’t give away anything. Nothing gets done for free at their expense. My belief is: Rather than wearing out your equipment and your shop and your technicians doing discounted work, work four-day workweeks [doing fewer jobs] rather than give away 20 percent of your revenue to get more work. You’d have a three-day weekend every week and run at a profit.”
Kallen said his shop has had plenty of work to fill its five-day workweeks, but he’s a stickler for technicians being done by 5 p.m. and the office closed by 6 p.m., with no weekend hours.
“You don’t get those Saturdays back,” he said. “The business being successful is a great thing, but it doesn’t amount to a hill of beans if in your personal life you’re too tired or you can’t maintain a family atmosphere. It’s pointless. I think the biggest mistake I made early on was sacrificing quality of life for the business. Sometimes I felt like I had to. Now I’m in a position where I don’t feel we have to.” •
John Yoswick, a freelance writer based in Portland, Ore., who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network bulletin (www.CrashNetwork.com). He can be contacted by email at john@CrashNetwork.com.
