“Build a better mousetrap, and the world will beat a path to your door.”
With the exception of a few younger readers who’ve probably never heard this familiar line, most people would quickly recognize the underlying principles this conveyed: that the marketplace values quality above all else and will be responsive to a business when it produces superior products compared to those of its competitors.
During my early years, the “build a better mousetrap” expression probably held true more often than not. If businesses treated customers right and provided products and services of high quality and value, they generally thrived.
The foundation of our parents’ generation was built on idealism, loyalty and common sense. Dads and Moms practiced these values in their daily dealings and passed them on to their children, who were encouraged, if not expected, to carry on their good name.
The mousetrap adage and other truisms that many of us were taught conveyed a sense of responsibility and moral living that our parents wanted us to grasp and put into practice as we began making decisions for ourselves. Because my father was a minister, I received a sermon about honesty and values nearly every day – and, no doubt, I needed it.
My mother took advantage of every opportunity to set me straight, too. In fact, she taught me the lesson on honesty that I’ll never forget: After a good scolding for being less than truthful, I was marched to a neighbor’s house with about a dollar’s worth of change (that I’d been saving) to pay for a milk jug I accidentally knocked over and broke earlier in the day. (I still can’t believe my brother told on me!)
With tears in my eyes, staring intently at the cracks in the floor, I made the sincerest of apologies. In fact, it garnered enough sympathy from the neighbor that she offered to let me off the hook. But Mom wouldn’t hear of it and set about prying open the little fingers that held tightly to the coins. I paid the entirety of what I owed, and then some.
The lesson I learned: It would’ve been far better to have told the truth than to hide the fact that I broke the milk jug.
As a teen taking on my own identity, I disregarded some of my parent’s guidance. Thankfully, however, I was permanently branded by the lessons they’d taught me. I recall, as a young adult, the obligation I felt to be honest. When I advertised my shop as a place where consumers could receive high-quality repairs and be treated fairly, I felt a compelling need not to just do the work good enough, but to over-deliver on that promise.
My dad wanted to make sure the business mogul he’d raised was truthful, too. So he stopped by my business nearly every day until his passing to make sure I was doing right by those who’d placed their confidence in me.
Nowadays, however, there seems to be less tolerance for idealism among the ranks of the self-employed. Competition is fierce and, oftentimes, dishonest. The general opinion of most businessmen today is that you must cheat to survive.
While I don’t believe that to be true, many business owners I’ve met, both large multi-store operators and small Mom & Pop facilities, believe that it’s unwise, even irresponsible, to be totally upfront with consumers about quality, timeliness and other issues that put sales in jeopardy. They argue that the welfare of their employees and families comes first, justifying any action they deem necessary to maintain and grow the business to a more profitable level.
Consumers, likewise, have learned to play the game to improve their own financial positions. Generally speaking, consumers as a whole view most businesses with a certain amount of suspicion and distrust because they, themselves, aren’t beyond lying, cheating and stealing for personal gain. This is a mega-shift in the attitudes of society, to be certain.
Another shift I’ve noticed is that the majority of people no longer value quality first and foremost. Instead, emphasis is placed on how inexpensively a product can be purchased and how quickly a job can be turned around. People seem willing to accept a flaw here and there if it means getting the job finished a day sooner or picking up an item for a dollar less.
Loyalty is all but forgotten.
These societal shifts are forever altering the way business is done. Likewise, quality-driven shop owners are going to have to alter their businesses if they hope to continue to survive and thrive in today’s fiercely competitive marketplace.
Societal Shifts & Me
I’ve experienced my share of business change over the years. I closed my body shop in 1999 to become the first full-time mobile WreckCheck operator – a move I felt forced to make to combat insurer’s incessant steering and legal maneuvers, admittedly designed to weaken me financially by constantly forcing me to defend myself, even though I’d done nothing wrong.
While I was disappointed to give up the business I’d invested so much time and money in, the change invigorated me. I knew the possibilities that were in my future as a full-time post-repair inspector; only a few years earlier, I’d been one of the first to plop down a few thousand dollars for WreckCheck’s revolutionary program for calculating diminished value. As a result of that earlier purchase, I had, for three or four years, been cultivating relationships with attorneys who’d use my inspection and appraisal services.
Post-repair inspection wasn’t a new gig for me, so my future wasn’t as uncertain as it might otherwise have been. In fact, being mobile eliminated the overhead of a huge repair shop and employees and added an element of convenience for my newfound legal clients. It was a move that made good business sense, allowing me to make a living by selling the knowledge I’d acquired as a collision repairer.
The change also elated me because I knew the move would turn the heat up on insurers, possibly forcing them to finally pay claimants the entirety of what they owed instead of the paltry payments they typically offered them. Shops, too, would have to step up to the plate and provide repairs of better quality. The good news was that in doing so, shops could make more money. I reasoned that when shops and insurers received word that someone backed by a team of legal professionals was assisting consumers with complaints, consumers would have safer cars returned to them.
The change seemed to spell win, win, win for all parties. There was no downside at all, unless you consider the increase in severity that DV payouts would cause insurers, payouts that I reasoned they should have been making to consumers all along anyway. For me, the decision was a relatively easy one, and one I’d make again in a heartbeat.
But I wouldn’t want to lead you to believe that the only road to profitability is by closing down your body shop and joining the ranks of post-repair inspectors. I believe shops can weather the attitudinal shift of patrons and even thrive while operating honestly and without becoming dependent on DRPs. Some body shop owners seem to have found strategies that have allowed them to maintain or, in some cases, even gain, in the area of profitability – all the while thumbing their nose at insurer offers to give them preferred status.
7 Strategies of Successful Businesses
Our industry isn’t alone in fight-ing shifting attitudes of consumers. And we’re not the only ones who’ve had to redefine the rules that govern profitability to stay in the game. Insurers and government agencies can change the rules and consumers can change their minds, seemingly, without a reason, forcing all providers in the marketplace to scramble to regain firm footing.
But businesses can survive and even thrive when consumer attitudes shift. The key is to be creative.
Below are seven ideas I’ve taken from some of the more successful businesses I’ve watched over the years. These businesses seem to thrive regardless of the economy and even when other businesses of the same type are failing all around them. Perhaps you can glean some insight that will help you come up with creative solutions to outlast the shifting economy and to provide value for an increasingly fickle customer base:
Add profit centers that will complement and feed your main business – A couple of years before going mobile with WreckCheck, I added a Pennzoil fast lube business in one end of my body shop. The cash flow and momentum gained as a result of the fast-paced business was a blessing. Additionally, it allowed us to meet many new customers, some of whom eventually spent money in the body shop as well.
Maybe the oil business isn’t for you. What about vehicle accessories, handicapped van-conversion, rental car, auto detailing or auto restoration?
With Barrett-Jackson Auctions putting blood-pumping collector cars on prime-time TV, the interest and need for auto restoration businesses are at an all-time high. If taking on the humongous challenge of restoring life into a project car overwhelms you, maybe you should consider a restoration sideline, such as smoothing engine blocks, polishing aluminum and stainless parts, or even in the plating or powder-coating businesses utilized by car builders and bike builders alike.
Can you think of profitable or even break-even businesses that will complement and drive more customers to your real profit center?
Buy in bulk, save money – Tallmadge, Ohio, shop owner John Padula began Preferred Collision Professionals (PCP) in 1997, in part, as a buying cooperative to save money, and he’s recruited a handful of likeminded shop owners in the Akron/Canton, Ohio, area. Padula noticed that all shops were spending money on the same things – paint, supplies, parts, various forms of advertising, worker’s compensation, liability insurance and long-distance telephone services, to name a few – and each shop had no clout to negotiate significant savings on its own.
Set up as a full-fledged franchise opportunity, PCP shops use their collective bargaining strengths to secure the best deals for all shops in the group. Being a part of the PCP network has another advantage, too – it allows participants to share knowledge with one another. Franchise shops also have access to a bank of potential employees through the network’s apprenticeship program.
If you’re an Ohio shop owner and wish to take advantage of this full-blown franchise opportunity or just the buying cooperative, give Padula a call at (330) 630-2444 or check out PCP’s Web site at www.collision-pros.com.
Buying cooperatives of one sort or another are available in most major cities. And, as simple as it sounds, many people haven’t even yet invested in a business membership at Sam’s Club. That alone could save you thousands of dollars per year on consumable products your shop uses in bulk.
Create your brand and expand it – Sean “P. Diddy” Combs is a rapper who’s expanded his Sean John label to include clothing, fragrances and most recently, a line of custom automobile wheels priced between $700 and $3,000 each. There’s a long list of people in addition to Combs who’ve created a brand in the auto business, either converting cars and trucks into rolling works of art or creating and accessorizing the parts that provide the bling. Carroll Shelby, Boyd Coddington and Chip Foose are but a few names most would readily recognize.
I can personally attest to the fact that your reputation for quality will be enhanced when you start churning out cars or parts that command notoriety. I once custom built a 1931 Model A Ford, which ranked 23rd in the International Show Car Association’s (ISCA) final 50 ranking. As the chopped, polished and powerful street rod sat on display in coliseums, shopping malls and in the showroom of my body shop, I marveled time and again at the dividends those advertising dollars paid me.
Many people care passionately about their car and want only the most qualified in the business working on it. Having your name associated with a prestigious trophy-taker may be all it takes to secure the position as most qualified in their mind.
Crossmarket with other businesses – Many businesses take advantage of the customer base of non-competing businesses to invite more
traffic into their store. Your monthly bank statement may come with a discount offer to buy a dozen roses at a local florist. The concept of crossmarketing is most clearly seen on the Internet, where nearly every Web site offers affiliate links that increase ranking and allow webmasters to make a few extra bucks by recommending non-competing products and services.
Consider this innovative idea: I’ll bet you’ve seen the really neat furniture being created from noses and tailsections of old cars and airplanes.
These nostalgic items are bringing phenomenal dollars, considering the limited amount of work required to produce them. Perhaps you could custom-create tables, couches, beds and automotive wall art for furniture stores or art galleries in your market and find a whole new customer base poised to appreciate your abilities.
Are there businesses that you can befriend that would allow you to cross-market their customers? Perhaps you can consign some of their products in your store, or vice-versa.
Most forms of vintage auto furniture are fashioned in restoration shops, the same ones often found reviving old gas pumps, pedal cars and oil company signage. One craftsman I spoke with confirmed that it takes about 60 hours to produce a couch from the rear body section of a 1957 Chevy, the company’s most popular seller. The core auto parts, reproduction trim and
lighting, upholstery, paint and miscellaneous hardware such as casters and reinforcement tubing eat away about $2,000 of the $7,500 price tag. Divide the remaining $5,500 by 60 hours and you’ll find a labor rate of $91.67 per hour. Interested?
Buy or merge with a competitor or complementary business – Huntington, W.V., shop owner Jim Graley contemplated adding professional auto details to his menu of services at Graley Auto Body. But rather than start from scratch in a business he knew little about, Graley made Bryan Hensley a deal he couldn’t refuse.
Hensley owned a detail shop that Graley considered “the best in the business.” Graley was always amazed at Hensley’s talents but felt Hensley’s services were undervalued and his capabilities underutilized.
For years, Graley took his personal cars and even some VIP customer cars to Hensley, who would work magic on them. His detail business was well-known among auto collectors and enthusiasts, but it was stuck in a rented alley location in the small town of Kenova, W.V., away from the flow of traffic. After 9/11, Hensley’s business tanked, and he was concerned for his future.
Graley offered to retool Hensley’s business with the latest and greatest equipment, keep a bulk supply of the best products on hand and provide an attractive, high-traffic location in the hub of downtown Huntington, just behind the body shop’s drive-in estimating center. Graley also offered to have his office staff solicit details from present and previous customers and handle all scheduling and billing.
With a deal in hand – and in typical Graley fashion – he used his clout to hammer vendors to the lowest dollar on new equipment, products and signage. He even found a product vendor willing to front much of the needed capital in exchange for exclusive use of its products. As a result, Graley’s investment was minimal.
Hensley, once weary of business ownership, now gets a fixed salary and a percentage of the income from every detail. He pays no rent, no advertising, no utilities, no insurance and no payroll, and isn’t concerned with audits or bookkeeping. He’s free to concentrate on what he does best – make cars glisten. With half a year under his belt at the new location, Hensley is detailing 50 percent more cars now than he was in his previous location, and says he’s happier than he’s been in years.
Graley’s happy, too. Hensley’s reputation for high-quality work brings a prestige to the body shop that Graley felt was lacking. It also brings in customers who have nice cars and money to spend.
Ditch the unprofitable stuff – We’ve all heard of the Pareto Principle (better known as the 80/20 rule), which tells us that 80 percent of our profits come from only 20 percent of our sales. Thus, one method to achieve profitability requires concentrating on the vital few as opposed to the trivial many. Find that 20-percent area of profit in your business and exploit it to the hilt. For example, if there are a lot of high-end cars in your market, you could profit by specializing in only one brand and raising your labor rate to offset the schooling and equipment necessary to set you at the pinnacle of that brand among the competition.
Where’s the goldmine in your market?
Tom Justice, owner of Cincinnati Ohio’s Valley Paint and Body, found his profitable niche in March 2000, when he sold a portion of his shop to Mercedes-Benz and began doing business as Mercedes-Benz of Cincinnati Collision Center. Although Mercedes-Benz has some shops that are general certified and dealer certified, Justice’s is one of 15 in the country with the highest level of certification bestowed by Mercedes – the advanced certification. This certification allows a shop to perform structural repairs on Mercedes-Benz newest aluminum-bodied cars.
Boasting the only Mercedes advanced certified shop in Ohio, Justice sees cars hauled in from all over, including from the neighboring state of Michigan, which has no Mercedes-Benz advanced certified shops in its borders.
Is it profitable? At a time when most people would be looking toward retirement, Justice is riding high. With no DRP affiliation, his shop is backlogged and booming despite the fact that he charges customers, on average, $3 to $5 more per hour than any other shop in his market. (The labor rate for structural and body repairs on aluminum cars such as the Mercedes-Benz CL models is a non-negotiable $75 per hour.)
Moreover, he’s actively seeking employees, both for his existing shop and for a new Mercedes dealership body shop he’s leasing on Cincinnati’s north side. The new venture will be known as Elite Collision Service DBA Mercedes-Benz of West Chester Collision Center. The entire facility, including the body shop, will be state of the art – a pilot model for all new Mercedes-Benz dealerships worldwide.
Sell your knowledge – There are a lot of ways to benefit from the knowledge you’ve gained in the automotive field. Tool and equipment inventions would fall into this area, as would post-repair inspections, pre-purchase inspections, technical writing and expert court testimony (for a fee). Your knowledge has value, and someone is probably willing to buy it if they know it’s for sale.
For example, Steck, in Dayton, Ohio, wasn’t always an autobody tool manufacturing company. In fact, it was started in 1946 as Steck Paint and Body Shop. George Steck assessed his knowledge of the industry and then used it to develop and manufacture a fastener used to install rear fenders on automobiles. For more than 50 years, innovative ideas have continued to flow. Although the body shop continues to operate, it’s now primarily used for research and development purposes.
Today, Steck Manufacturing is managed by Raymond and Lawrence Steck, sons of founder George. The pair continuously seek innovative product ideas from collision repairers that solve everyday shop problems. They’ll clean up, produce and market ideas that have merit – and pay a handsome royalty to the submitter. Examples of how repairers have profited as a result of their submissions are listed on the company’s Web site at www.steckmfg.com.
Illinois’ Mannie Gaston received more than $110,000 in 12 years for various innovations, including the famous Quarter Puller and Q.P.ll.
Douglas Bundy of Naubinway, Mich., received $7,900 in the first eight months after Steck made his Lug Off Lug Nut Remover available to shops.
And, who doesn’t have a hinge Pin Popper? That was the genius of John Hufnagel from Pittsburgh, Pa., who will be enjoying a better retirement as a result of his submission.
The Possibilities Are Endless
The possibilities for making money are endless for those of you who are creative and willing to think outside the box. Insurers are masters at maintaining profitability, even in bleak economic times. They capitalize on new profit centers such as banking, and redefine the rules as needed – much like they did with the creation of DRPs.
While I don’t espouse stooping to the level of some insurers, I do believe that each of us is born with God-given gifts, talents and abilities that make us viable and valuable in the marketplace.
Although market values may change, as might the attitudes of your employees and customers, there’s no need to fear. Security lies in one’s ability to produce or market something – anything – at a profit.
It doesn’t have to be auto repairs but, then again, there’s no reason why it shouldn’t be either.
Writer David Williams produced award-winning show cars and high-quality collision repairs from his Ohio-based shop, Precision Collision, from 1977-1999. Williams was the first WreckCheck licensee to operate in a mobile capacity, primarily assisting attorneys in the states of Ohio, Kentucky and West Virginia. Learn more about Williams and his work at www.SafeCollisionRepairs.com.