There’s a scene in the beginning of the holiday movie favorite “The Santa Clause” where, after Tim Allen completes his first night as Santa Claus and still believes it has all been a bad dream, he flies off in his sleigh to the North Pole and shouts, “Merry Christmas to all, and to all a good night…and in the morning, I’m getting a CAT scan!”
In the face of dwindling profits, increasing insurer intrusion, increasingly head-scratching technology in vehicles, increasing environmental regulations, a decreasing technician pool and decreasing crashes in today’s collision repair industry, body shop owners might have also suggested a CAT scan to Ben Krom when he first proposed opening his own shop several years ago. But it wasn’t for all those reasons that Krom had never opened his own shop; it was simply funding. But a customer solved that problem.
The customer had asked Krom to restore his 1963 split-window Corvette, and one day during the restoration asked Krom why he didn’t have his own shop.
“You’re great with customers, and you do great work,” the customer said.
“Well, it takes a lot of capital and I don’t have the money,” Krom replied.
“Well, what if you had someone to help you?”
A deal was struck: Krom would restore another of the customer’s cars, a ’58 Corvette, and the customer would give him the $18,000 needed to restore it up front. Krom followed that up with $15,000 from his local bank and $35,000 from a county economic development agency, which was used to purchase equipment. But it wasn’t that easy, and it didn’t happen lickety split.
“I kept getting shot down after going to eight different banks because I had a poor credit history and no collateral,” says Krom. “What I would tell any business owner or someone who has a dream like this is that the key to it is persistence and who you know.”
Krom got to know several different people who became key players in opening his business, one being the chairman of the board of his county economic development agency. He worked on a couple of his cars and was introduced to him by a friend.
“You have to talk the talk and be persistent and show you’re going to make this happen one way or another,” Krom says. “Every time I left the bank, I said, ‘This is going to happen one way or another, with or without you.’ A lot of guys try this, get shot down, put their tail between their legs and walk away saying, ‘Well, I tried.’”
After two long years, during which he also wrote a business plan (something most aspiring business owners never do, greatly increasing the odds they will fail) and researched industry statistics and trends by visiting www.bodyshopbusiness.com, the powers that be finally decided to give Krom his chance and take a risk on him.
As fate would have it, Krom found the perfect building to house his shop – an old dealership. He had his eye on it for several years, but it was never for rent. Then one day as he was driving by, he noticed a “for rent” sign, called the owner and scheduled a meeting the next day. Three weeks later, the building was his, and West Branch Collision & Classics was born.
On Nov. 4, 2013, the business celebrated its one-year anniversary. Krom exceeded first-year sales projections by more than $100,000 and took home a comfortable salary for himself.
“I was able to hire people and give back to the community in more ways than I can count. My office manager complains and says I would have more money if I would stop giving so much away,” Krom says. “We support local athletic teams and donate to libraries, theaters and other organizations. And we don’t do it to get customers; it’s my personal philosophy that I have a responsibility to give back to the communities that support us.”
Located in rural Walton, N.Y., Krom admits some might feel his market was an easier one to succeed in. But the fact is that, with six body shops in a town of only 5,000 residents and two in the village, it’s a highly competitive area. Krom learned from his experience working in other shops for 20 years and set out to do what no one else was doing.
“I saw what was going on in all the different shops,” he says. “You had one shop that did great quality work but the owner was a jerk and treated customers poorly. There was another shop where the guy was nice but the quality was poor. At another shop, the quality was great, but it took six weeks to get a car done. I saw no shop in this area that was providing all these qualities under one roof, so I made that my ultimate goal. You put all those things under one roof, including getting the car done as quickly and safely as possible with high quality, and it’s a home run.”
Also, Krom decided to put special emphasis on being as friendly as possible and showing empathy.
“The first thing I say [when a customer comes in] is, ‘I hope everyone is okay and no one was injured.’ We also inform them so they’re empowered with the knowledge to make the right decision.”
At 7,000 square feet, Krom’s shop is the largest of the eight in his area. The other shops are generally one- to two-man facilities, but are well-known and established. His shop is the only one in the county that has both a Facebook page and a website, another factor he considers critical to
“I cannot emphasize enough how important social media is to a business owner,” says Krom. “We get so many customers off Facebook. A customer came in a year after we opened and said, ‘I’ve been watching your Facebook page since the day you moved in, and I always said to myself if I ever need body work done, I’ll go there.’”
Krom will also get messages on his Facebook site from customers saying, “Hey, I hit a deer this morning, so I’m going to stop in,” or “Hey, are you open on Saturday? I need an estimate.”
Krom has also advertised in local newspapers, radio and billboards. He advertised on a billboard twice last year, once in the spring and once in the fall. He also bought a 30-second spot on the radio that plays every time a school closing or weather delay is announced. He spends less than 10 percent of his gross sales on advertising, but even still he wonders if it’s too much because word of mouth is so crucial.
“Word of mouth in a rural area is so important. You know, ‘My brother got his car fixed there and you did a great job.’ It accounts for 90 percent of sales.”
Collision vs. Restoration
Krom estimates that 15 percent of the work his shop performs is restoration. The difference, he says, is that his shop charges a higher labor rate for restoration than collision – $75 per hour vs. $50 – whereas most shops don’t.
“I think it’s a huge mistake with the amount of time and effort that goes into restoration,” he says. “I spend as much time doing research and communicating with customers and parts vendors as I do out there on the car, and I’m not getting paid for that. Also, consider the attention to detail we provide, the documentation and the photos. Each tech has a dedicated digital camera and documents every single little patch and piece of trim. The customer ends up getting 300 to 400 pictures on a flash drive. That’s why we charge more.”
Krom understands the conflicts shops and insurers frequently have, but after smooth sailing in year one, he’s frankly mystified at the concept of shops blaming insurers for their problems.
“I hear body shops complain all the time that insurers are screwing them, and I’m sitting here laughing,” he says. “I’m turning a great profit in my first year in business and having a blast. What are these people complaining about? What are they doing wrong, and what am I doing right? Run a tight ship, watch how much paint you mix, don’t throw stuff away – a lot of it is common sense. You know how a lot of other shops are making a profit? They’re getting paid for an OE part to put on an aftermarket part, or they’re getting paid to replace a part and they’ll go ahead and fix it. But I don’t play those games. Everything I do is straight up on the books.”
Krom says he writes straightforward estimates that aren’t “fluffed” because he thinks the insurer will knock it down. As a result, he has gained a solid reputation with local adjusters.
“They know the quality of work I do and that I don’t mess around. I’ll even ask them what labor rate they’re paying. If it’s $48, I’ll write it for $48 instead of arguing with them for $50. If that’s what they’re paying, then that’s what I’ll do it at – and I still make a profit.”
In his 14 years working with adjusters in his area, Krom says he got to know the adjusters well, and he said in general they will pay him for everything he wants to get paid for.
“I have been in this industry for 20 years, and I have yet to see an adjuster come in and say, ‘We’re going to cut back on this’ or ‘We’re not going to do this anymore.’ The key to it for me is documentation. I just want to get paid for what I’m going to do to the car. If you want to argue with me on whether something is really necessary to do to the car, sure, let’s talk about it. But if I’m going to do it to the car and you agree to it, then you will pay me for it.
“It comes down to your attitude and mindset. Adjusters walk into a typical shop and they’re under a lot of stress, packed with work and overloaded with estimates, and they face an owner who has that old-school mentality of, ‘The insurer is the enemy,’ so right off the bat you have bad attitudes flying around. I don’t do that. It’s rare I have an issue. In one-and-a-half years, I’ve only had one issue with one adjuster, and after he realized I just wanted to repair the car correctly and get paid for it, he ended up putting in a supplement and paying me for everything I needed to do. The next time he came in, we had no problem at all.”
Krom isn’t taking a very numbers-like or scientific approach to his growth plans in the future. To him, it’s more about the feeling he gets in his stomach when he goes to work.
“My goal is really to wake up and drive to work happy. If I’m making a certain salary, paying the bills, able to give back to the community and repair people’s cars on time, then whether I’m doing $750,000 or $1 million doesn’t concern me. I want to be happy and have fun.”
Keeping an Open Mind
Krom feels like one of the biggest mistakes small business owners make is not keeping an open mind.
“Far too many times, I’ve seen shop owners I worked for who rest on their laurels, become king of the mountain, feel like they’re the best and feel like there’s no way they can improve and are not willing to change or think outside the box,” he says. “From day one, I always said I have to be willing to keep an open mind as far as my business philosophy is concerned.”
An example of that open mindedness is the approach Krom took with a woman he hired as his office manager. When he found out she was also a talented artist, he decided to start offering airbrushing and marketing the service. She is now airbrushing motorcycle and snowmobile helmets, Harley fenders, cars and more.
This same woman also convinced him to change his front showroom. Initially, he was showcasing classic cars in that space that he had restored, but it gave people the impression that restoration was all his shop did.
“They forgot about the word ‘collision’ in our title,” says Krom. “People would say, ‘Why don’t you bring it down to West Branch?’ And they would say, ‘No, they just do old cars, not modern ones.’”
So she suggested that Krom turn the showroom into a gift shop filled with art by local artists: pottery, hand-blown glass, photography, paintings and handmade jewelry. Which he did – and now it’s yet another thing that sets his shop apart from the rest. And he feels that’s key, especially if a consolidator were to move to his area at some point.
“You’re writing an estimate, they’re perusing the cases and the next thing you know they’re buying gifts for Christmas,” says Krom. “I don’t think the ‘big boxes’ will find this market viable, but keeping an open business philosophy and knowing you have to make changes – not only because the public wants something different but because you need to do something different to keep the public coming in – is crucial.”