There is a lot to consider when you’re contemplating expansion, whether it be adding more square footage or another shop. If you’re considering it at all, it probably means you’re experiencing overcapacity for extended periods of time.
You should figure out how many hours you can produce in a single day, week and month in any one store and then look at how many hours are continually booked. If there is a steady demand for your services that is far more than what you can produce, it’s time to add square footage or another store.
I am not a believer in scheduling out work for more than a week; people want their vehicles back to pre-accident condition as soon as possible, and I want the sale.
Once you’re convinced of the fact that you’re going to expand, you will need to analyze if you’re going to be better off opening a new location within the same market area, say within five to 10 miles, or add to a current location. If you’re going to attract more customers by adding a location to your brand and the new location will be able to handle the overflow from the existing shop, then I would advise opening a new location. Your customers will travel five or so miles to another one of your stores to get serviced faster. If there is no way to open another location, then expanding onto the existing one will work.
You will need to have your standard operating procedures (SOPs) in place before adding a new location. You will not be able to manage two or more stores that don’t operate the same way. Your staff should be able to work at any location without missing a beat.
When customers visit one of your stores, they will expect things to look and function the same. When you get bigger and add locations, your job should be all about managing the SOPs and creating reports that give you daily knowledge of how the business is doing. Customer satisfaction, sales and profitability, cycle time in all phases of the repair and cash flow should be part of your reporting mechanism.
You will need the funding for a new location or expansion. The land, building, buildout, equipment, staffing, supplies, professional fees, advertising and reserve cash are all required. You will need to create a business plan for your bank, unless you have the cash on hand. You should make sure that your money request is carefully planned out; you can’t run short at the 11th hour, or else it makes for a very stressful opening. There are some vendors that will help with some funding also. Check with all of your suppliers to see what’s out there.
When planning a new location, you will need to get zoning approvals, DMV approvals and building permits. It is sometimes a drawn-out process, so I suggest trying to find a property that’s already zoned for auto body repair.
You will have to find staff, so you should work on recruiting months in advance of opening. Keep in mind that you may have employees already working for you who are worthy of moving up the ladder. Plus, it’s much easier to promote from within; that way you don’t have anyone else’s bad habits infiltrate the new shop.
You will need to analyze the equipment needs for the shop. Things are changing fast, so make sure your purchases are for the most up-to-date equipment.
Staffing and training will be the most important things that you’ll have to plan for and do. I have a process to train the new staff that took awhile to develop and implement. First, I have them sit through a new employee orientation that takes the better part of a day. The orientation gives them an understanding of the company’s history and offers an overview of the collision repair business. We review each department’s accountability and function so they understand where their role fits into the shop’s global process.
We have something that’s called “mini company,” and it’s rather easy to understand. Basically, each department has an internal customer, and they need to satisfy their internal customer so that they can succeed. Each department has a process and a check-off, and there are written rules of engagement that are followed when a vehicle moves through the shop.
You’ll need to set up vendors to supply the new shop, and each one will need credit applications submitted. You may want to renegotiate with current vendors if your sales and purchases are going to increase. The more you buy, the better your leverage is to get better discounts.
In my next column, I’ll talk about some of the lessons I’ve learned in growing my organization.