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Ask the Executives

There’s no better place to go for advice than to those who’ve reached the top. To help you climb your ladder of success, we asked Clark Plucinski and Russell Verona – both industry leaders and BodyShop Business Executives of the Year – questions ranging
from productivity to customer relations to future trends:

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Q: What are some tips for making a shop more efficient?

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Plucinski: "I think the biggest thing that most of
us fail to do is look at our flow. If you’re going to have a 10,000-square-foot
shop with a goal of $3 million in sales, you have to make sure
the shop’s laid out efficiently. Many times we get stuck. You
can’t see the forest for the trees. Most of the shops I walk into
have no obvious place for anything. There’s too much clutter;
there’s too little layout design; and even some of the people
who call themselves professionals don’t necessarily understand
what our specific needs are when it comes to helping us design
[our] shops."

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Verona: "Management programs, belonging to a local
association, looking at your budget, knowing general business
rules and practices and knowing your costs. Budgeting is more
important than the management of the entire [repair] process of
the vehicle."

Q: What strategies have you used to increase profits over the
years, and how have you cut costs?

Verona: "Cutting costs is just reviewing your budget
and looking at all of your overhead, trying not to keep too many
nonproductive people versus productive people. That’s a difficult
one because as the industry evolves, there’s more of a demand
for attention to detail on the administrative side. Management
systems require so much more data input, the DRP programs require
a tremendous amount of data input, and communication to the insurance
company is constant. To process a claim – I don’t care if you’re
a DRP or a non-DRP – there’s just a lot more administrative work."

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Plucinski: "One of the big things I learned many,
many years ago is that you had several ways of looking at this
whole income issue. The strategy we used in the old days was to
try to push as much through the smallest amount of square footage
that we could. So rather than have a 20,000-square-foot building
doing $2 million a year in sales, we would prefer to have a 7,000-
to 10,000-square-foot building doing $5 million in sales. Of course,
we haven’t achieved the $5 million, but we try to push as many
sales through as we can and get the best utilization out of the
actual floor space.

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"As far as cutting costs, when you increase your sales to
that level, your costs automatically shrink. You increase your
sales, reduce your costs and, by increasing your sales, the percentage
of your costs shrinks proportionately. We’ve looked into and worked
successfully with a budget tool, where we budget each line item
for the expense side, look at that and review it annually. One
of the things we’ve had problems with recently is this whole issue
of the DRP environment and adding administrative costs."

Q: What’s been your hardest business challenge to overcome,
and how have you done it?

Plucinski: "I think the hardest business challenge
has been this whole issue of multiple locations and dealing with
the issue of consolidation. Most of the businesses that have multilocations
don’t have any real standards in place, so they run each of the
locations more or less under separate management styles – even
down to ordering materials and parts from different venders. There’s
just no cohesion or unity. We’ve worked very, very hard as we’ve
opened our fourth location to try to bring that level of consistency
into each location, with each of our personnel trained to understand
that we can plug any person into any store and should, in theory,
receive the same amount of efficiencies from them. We do that
primarily through training and, more importantly, through understanding
what the best practice would be.

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"If, for example, we find in the paint department that there’s
a particular methodology that a paint manufacturer would suggest
us to use, then we try to make sure each of the paint shops are
dialed in and have received adequate training in that level. When
you get into the office environment, it might be a DRP issue,
where we have up to nine agreements or arrangements, and in that,
we had to find consistency from each store to make sure everyone
understood what the requirements were. We developed a book to
do that and trained people with that book – a very serious challenge
if you consider that making one mistake can cause you to lose
a DRP contract."

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Verona: "The education process is probably the biggest
challenge. How have we overcome it? We haven’t. We’re still working
at it. We’re past the stage of needing people – we’re desperate
now. There are no people working in the service industry. …
What can we do? There’s no immediate cure. … Nothing’s worked
so far. Big shortages. But, that doesn’t mean we can’t continue
to pursue this. It has to come all the way back to the grass-roots
level, to the individual shop owner who has to see what he has
to do to train and entice people to come into his business to
work. That means creating career ladders and so forth.

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"When an industry gets to this level, it has reached its
maturity. From its maturity, it takes itself to another level.
And the next level – we don’t know what it’s going to be – but
you do know that it’s going to have to be total professionalism
in the handling of a business, from consumerism, CSI, to business
practices to profit and so forth."

Q: How have you dealt with insurance companies and their programs?

Verona: "When we look at their programs, we make a
conscious business decision as to whether we want to be involved
in it. We also try to look at the DRP programs as wholesale accounts,
which puts us in a different position, a different light. …
If we’re going to play in their arena, with their rules, we have
to respect and understand their rules – we don’t even get into
it if we don’t feel we want to play in that game, that arena.
It’s strictly a business decision."

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Plucinski: "Realizing that the poor guy [the insurance
adjuster] who comes in off the street to analyze what it is that
we do doesn’t necessarily understand what we do as well as we’d
like him to. We try to work to train those individuals what it
is that we do, get them involved in the I-CAR classes that we
put on, really get them involved in our day-to-day process to
help them understand that I believe we do things differently than
the [body shop] down the street – and that the people down the
street don’t always do it well. If you prove to [insurance adjusters]
that you’re doing it right, then they grow fond of your methodology
and would like to, I think in many cases, be more of a partner
with you, helping you to get through the process, versus the old,
‘let’s-beat-each-other-up’ routine. It’s basically working with
them and trying to help them to achieve their goals as we achieve
ours."

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Q: What advice do you have on how to improve insurance-company
relations, and how should you choose a DRP program?

Plucinski: "The best way to improve relations is to
treat people the way you’d wish to be treated. Is it necessary
to win the battle? Every time that individual walks through the
door, if he has a grudge against you, then are you going to necessarily
end up the winner? That level of conflict, I will tell you, from
a morale aspect, destroys your whole environment. I don’t think
anyone can be successful – and I mean truly successful – if he’s
battling every person who walks through the door, or even 20 or
30 percent of them.

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"As far as picking DRPs, you want to work toward the ones
you feel you’re the most capable of working with – who understand
your particular philosophies in business; who, more importantly,
appreciate that and try to work with you or partner with you to
achieve the goal of keeping the customers happy."

Verona: "We have a new saying around here: We look
at everything, whatever it might be, as if we’re in pursuit of
a solution, not a conflict. If you’re looking to become a DRP
or if you’ve been approached to become a DRP, you should study
the program, review it, make sure you can handle the workload,
and make sure you have the equipment and the ability to do certain
jobs. The shop has to be equipped to handle all types of collision
[work]. [Shops] don’t need to specialize in something … but
they need to be able to repair a vehicle. They just have to have
the equipment.

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"This industry has reached its maturity; you can’t work out
of a three- or four-stall shop and expect to sublet everything
out. It’s a business, and it should be conducted as a business
– it should operate as a business."

Q: What have you found to work well when dealing with difficult
customers?

Verona: "A very pleasant, diplomatic approach. …
It’s all up to the individual who has to train himself to present
himself in a very professional fashion. There are some excellent
books out that help you, but it still comes back to the individual."

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Plucinski: "If you look at what we do daily, there
are so many people who come in feeling bad because of their experience,
and sometimes we don’t do such a great job of making them feel
better. Our goal has been to try to make everyone feel like [he
or she] is No. 1, to create the raving fan. In doing so, if there’s
a problem, most of the time people are sincere in that problem.
Regardless of whether or not it was a result of the accident,
is our goal to win the customer or to win the battle? I think
our goal is to win the customer and to keep the

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customer."

Q: How can shops comply with regulations and keep the costs
of doing so down?

Plucinski: "If you really look at this with an open-minded
perspective, you’ll find that by complying, you do keep costs
down. Why? Because most of what we’ve done has added dollars to
our bottom line, not cost us money. It’s when we don’t do things
that [cost us]. For example, if you don’t look at the OSHA rules
and regulations, if you don’t understand the EPA regs and you
don’t design your programs around that, then the first time the
inspector walks through the door and you end up with a $20,000
fine, you understand that by following a different, more prudent
level of training and standard operating procedure, you would’ve
saved money.

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"In 1985, we went on a full campaign to reduce our hazardous
waste. At that particular time, we were using about 2,000 gallons
a year between the locations. I found, with our sales increasing
by better management of that process, we were able to reduce our
overall cost for materials and, at the same time, not pay that
outrageous fee to have waste hauled away. It went right straight
to the bottom line. And all it took was my taking some time to
do an inventory of what we were doing, writing out a simple plan,
getting the buy-in from the painters and the paint-shop managers
and, more importantly, working to manage or inspect what you expect.
That’s probably one of the keys to any success in management:
If you want to do it, you’ve got to stay with it until you see
the change."

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Verona: "That’s a cost of doing business. You must
comply. If you view that as a burden, then you better review why
you’re in that business. If we’re talking about OSHA and EPA regulations,
we’re talking about good housekeeping and education in those areas."

Q: What business magazines, newspapers and/or books do you
read and why?

Verona: "I try to read all [the trade publications].
Just about everything that comes out, if we get it across our
desk, we try to read it because there’s always something we’re
going to learn, always something that refreshes our memory, that
we can reflect back on."

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Plucinski: "Everyday, I read the ‘Wall Street Journal’
and ‘The Washington Post,’ and I try to stay very in tune with
… the ‘Harvard Business Review.’ It helps us to get out of the
box. … As we move closer and closer to the new millennium, I
think our businesses are having to become more and more dialed
into a business environment. By reading the periodicals that get
us outside of the day-to-day trade magazines, we can have a much
better understanding of what’s going on around us, which helps
us to understand and not necessarily put the blame on the companies
we deal with day to day – especially when you understand the general
dynamics of it all.

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"If you look at the ‘Wall Street Journal,’ it’s amazing how
many articles relate to automobiles. They look at trends with
the car manufacturers, at business cycles as a whole, at when
the time is right to borrow $1 million. Where are the real-estate
investments today? Is it the best deal to buy your own building
today, or are you better off leasing it? It’s things like that
that you find by getting outside of your normal day … If, indeed,
we’re moving into a level of consolidation, then shouldn’t we
understand that as well as we can?"

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Q: Describe a typical workday, from the time it begins until
the time you go home.

Plucinski: "I’m a very early riser, so I’m usually
up and working by about 5 a.m. I have an office in my home, so
I do a great deal of my thinking and planning and working in that
stage. At around 7 a.m., I get out on the road to start to visit
stores or to do sales for new accounts or existing accounts. I
travel a great deal – last year, it was more than 100,000 miles
– so you have to learn to be a good time manager. If you don’t
do that, you can’t be successful – regardless if it’s a one-store
or a 10-store operation. And, more importantly, you learn how
to delegate your time. I spend a lot of time working with my managers,
either by phone, fax or face-to-face visits. If I’ve had a weakness
over the last couple of years, it’s been that I’ve been so involved
with so much that it’s been harder for me to get that face-to-face.
And there’s definitely a problem when you don’t do enough of that.
Things start becoming more their deal and less of a personification
of your deal."

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Verona: "A typical workday is to come into the shop
and make sure that all of the technicians have their assigned
work, handle any particular daily tasks or problems that I’m confronted
with and write the estimates. It’s a busy day for us, generally.
… Just keeping track of all the vehicles and trying to keep
your finger on the pulse of everything so that it all goes right.
By the time you get through to the end of the day and you close
everything down, you find that you’re putting in about 12 to 14
hours a day. [We have] two buildings, so for us, that means we’re
running back and forth to each building all the time."

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Q: What do you think will be the biggest challenge facing collision-repair
shops in the next few years, and how can they prepare for it?

Verona: "Again, I believe our industry has finally
reached its maturity, and you must run the business very, very
professionally and be totally aware of your CSI. … Expectations
are so high. I was in McDonalds waiting for a sandwich. I bet
I waited five minutes, at the most, and I couldn’t believe how
impatient I got. You see, it’s the expectation.

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"Every market will dictate what the collision facilities
will be like. Let’s say you’re in a metropolitan area, and you’ve
got 4 million people to deal with – the demand for your facility
would be totally different than if you were in a marketplace where
you had 50,000 people. … This is knowing the business. … Having
in-depth knowledge of what this industry’s all about is what’s
going to help bring or keep the facilities abreast of everything.
The other thing that will have a traumatic effect on everything
is how far the DRP programs will go. Will they be like the medical
industry?"

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Plucinski: "Within the next 10 years, I believe we’re going
to see more [consolidation]. Many believe that it’s not real.
I believe that – from the higher-level talks I’ve had with insurance
companies, vendors and equipment companies – there will still
be a lot of shops around, but there will be fewer owners. I think
multiple locations will become a very strong trend – it already
is a trend – but it will become even more so. My biggest concern
is that, as an industry, as business owners, we won’t be business
owners; we’ll have a tendency to be more body shop owners. By
that, I mean we have a tendency to get too tied up in the philosophical
aspects of what we do and why we do it. Business people come in
and look for bottom-line return on investment. We’re going to
have to get better at doing that and continue to keep the customers
happy – but we’re going to have to figure out how to do it at
a lower cost.

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"I think the biggest struggle will be for those learning
how to do that and accepting the fact that that’s the reality
of today’s environment. Regardless of what it is, we’re going
to have to figure out how to do it for less, and shop owners are
going to have to step up to that – or someone will probably be
taking their place."

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