Q: With all the new technology coming out in vehicles, how is a repairer to keep up with all the necessary training and acquire the necessary equipment and other related expenses at the current labor rate?
The easy answer is, you can’t! Something has to give, and you, as the business owner/manager, need to determine what that “something” is:
- Is it the pay you provide your staff? Probably not. It’s hard enough to get good techs, let alone keep them. You start messing with pay plans and benefits, which are already suppressed, and you’ll likely have your employees jumping ship. Can you afford to lose them? Who do you replace them with?
- Is it the quality of workmanship and service you provide your customers? Probably not, unless you want to see your hard-earned reputation reduced to bad reviews and costly comebacks (something I refer to as “second efforts”).
- Cut corners and repair parts called for replacement to reduce costs and go day-to-day, hoping you’re not caught? I’m confident that’s not an option for most BodyShop Business readers.
- Beg the insurers for more money? You’ve probably been there, done that. How has that worked out for you?
- Modify your processes to increase efficiency, productivity, reduce touch time and improve cycle time…all industry buzzwords to get repairers to “do more for less.” While everyone should strive to improve their processes, they need to do so without losing the quality they’ve become known for and working their staff into the ground just to make ends meet. Besides, the businesspeople who figure out how to increase profitability through implementing good business practices should enjoy the higher profits and rewards of their efforts…not merely survive because of them.
- Conduct business as a businessperson and change your current processes to secure the ample funds necessary to provide a proper and thorough repair and a resulting profit. That would be the proper answer…but how, you ask?
There will always be those who refuse to keep up with current technologies. However, there are many more reputable repairers earning fair and reasonable profits while doing the right things for the right reasons in the right way.
The successful operator will recognize the opportunities and be aware of the liabilities. As a result, they’ll stay abreast of ongoing changes in technology and take advantage of the many opportunities that abound from them. Once the knowledge of what’s needed is gained, the businessperson will need to know how to go about providing the service in a manner that can be both profitable and limit unnecessary and avoidable liabilities.
One method is to acquire the necessary training, skill and equipment that’s required to perform the needed services and provide the services in-house at a price point that will pay for the equipment and its maintenance, and also data and information. That price point also should allow the business owner to set a percentage of the profits back (save) to enable ongoing upgrades and replacement when technologies and mandates change. A prime example is spot welders and onboard diagnostic tools that have become obsolete due to new advanced materials and technologies and OEM repair mandates.
Another method, should you not have the desire, funds and/or space to acquire the necessary equipment, is to find a quality service provider you can sublet the services to that you trust will always provide optimum service and quality. After all, when you sublet a service to another company, you and your company carry the burden of liability for the work performed. A prime example is subletting suspension alignments to a local service provider. I elected to do this at my shops as a means of independently inspecting our work rather than self-examining it. It was convenient, as we had several quality providers within a few blocks, and our primary provider knew our expectations and didn’t want to lose our business. We made a mark-up on their services and charged for transporting the vehicle to and from their location.
So how do you afford the added costs in an environment of third-party interference and cost containment? You need to seek assistance from the outside from organizations that were built around you and others who find themselves facing the same issues. Please know my intentions are not to insult or offend. It just is what it is, and the sooner repairers understand this, the sooner they can evolve.
First, more and more repairers are seeking industry consulting to help them address shrinking profitability and increased competition. Many insurers have become collision repairers’ most significant and savvy competitors due to their vested interest and concerted efforts to steer consumers to participating DRP/partner repairers and away from non-participants. Many DRP participants don’t like steering because they too are being steered against by insurers whose programs they don’t participate in. The steering situation has gotten worse over time and, due to the financial rewards, there’s no end in sight. Efforts to legislate steering have not helped to any significant degree, so we can’t merely wait for a white knight in shining armor to ride in and save the day. The “body man with a body shop” of days gone by (such as my former shop) needs to become the knowledgeable businessperson with a collision repair center!
The number of consultants is increasing as more shop owners and managers are displaced by consolidation and/or MSO buyouts and resulting shop closures and finding new careers as consultants. Many offer their versions of process-driven production, key performance indicators and other business analytics and advanced techniques, all of which are important to the businesspeople who have evolved to understand and appreciate such concepts. However, such teachings are generally far over the heads of the average body shop owner/manager who doesn’t know their hourly cost of operation, let alone the basic laws and regulations that govern their business. In fact, most shop owners/managers would admit that they’ve learned how to operate their business from insurance claims people or from the shop’s previous owner! I know because I was both of them, and I have had many shop owners admit that fact too.
When asked, I encourage repairers to analyze their market to determine the best opportunities to increase their sales. One is to obtain certifications for the highest number of registrations in their market, which would likely be GM, Ford, Chrysler/Dodge/Jeep/Ram, Honda, Toyota and Nissan. While it depends on their specific market and average household income, it’s likely these will be the majority of registered late-model vehicles with full-coverage insurance that would be repairable not likely to total. These can be broken down to determine which manufacturers require the same equipment needed to meet the OEM mandates and recommendations, which would enable a repairer to make the smallest investment possible in equipment with the greatest return on investment.
Of course, you can’t make those kinds of investments without a plan to earn enough to make them worthwhile. As such, repairers need to step out of that box and see their business through another lens. This again is where a proven industry consultant is invaluable to a repairer who seeks another way to conduct business and earn a fair and reasonable return on their investment and break free of “the ties that bind.”
A good consultant shouldn’t cost you…they should enable you to make improvements that will enhance your long-term profitability through improving your operations, marketing, salesmanship, employee management and branding.
The bottom line is, “When the going gets tough, the tough get going!” Repairers need to make a decision as to where they wish to be in the years to come and take the necessary steps today to get there tomorrow.