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Building Your Auto Body Shop by the Numbers

Here’s how I went from sweeping floors to managing three body shops with a complex financial footprint.

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When I was 15 and took a job sweeping floors at a local body shop, I never imagined those boring math classes I had to sit through would ever be important. After all, I became a great body man because I didn’t want to have to do math, right?

Flash forward 40 years and numbers, math and some pretty sophisticated accounting are more my daily tools than sandpaper, body filler and tape. It’s a pretty big leap to go from that high school kid who entered the collision repair business just to fix cars to a guy today managing three collision repair facilities with sales exceeding $6 million. And overwhelming, to be honest.

Here’s how I learned accounting 101 – body shop style – and built upon that to manage a more complex financial footprint with three shops, more than 50 employees and an outlook for growth, equipment purchases, investment in future property and more.

Learning the Basics

I got the basics early on – sales, fixed costs and profits. That was pretty easy when I looked at one store with a lower weekly car count. But when you multiply that by more business, more people and more DRPs, that becomes more complex.

My accountant was a great, trusted resource in helping me understand business operations issues. He helped guide me through taxation, finance, depreciation and other challenges.

The most important advice from him was 1) establish a budget, 2) maintain strict monthly accounting and 3) keep strict control of your costs. That was a lesson well learned through my CARSTAR family and my CARSTAR EDGE Performance Group.

There’s also a financial education in things that are way more sophisticated than my high school math prepared me for: taxation issues, EBITDA and future investments, just to name a few. That’s where I decided I needed some more help. I was too busy running a body shop to go back to school, but I knew I needed a broader financial understanding to be successful.

When I joined CARSTAR, I became involved in what at the time were called 20 Groups, now known as EDGE Performance Groups. You might feel isolated like one fish in a barrel trying to address all these issues, but with a group like this, you learn new skills and resources and you can swim in the same direction. These other great body shop operators helped me understand how to manage my financials, grow my sales and contain my costs. They were going through the same things I was, so their input was tremendously valuable.

Community Involvement

I had a business and a family, so putting that on hold to go to school wasn’t an option. Through my community involvement, I was able to tap into the business expertise of local leaders running car dealerships, real estate companies, insurance agencies and home-building companies. We all faced the same challenge – managing the financials – when our real skill was selling cars, building homes or selling houses. We learned together and created a team to share everything we learned.

We were able to share local resources, solutions and ways we could work together. If you aren’t involved in your local chamber of commerce or another business group, you’re missing out on a valuable resource.

Multiple Challenges

Managing the financials for one large collision repair facility is challenging, but when you add a second and then a third, the challenges multiply. All of a sudden, you have 100 employees, you’re dealing with a significant payroll and you’re seeing your sales grow to $5 to $6 million.

That seems likes success, but to make that level of growth and sales pay off, you have to go back to the numbers. Just like when you were trying to track your numbers for a small growing shop, it’s even more important when you start dealing with bigger numbers.

I’ve learned to lean on my colleagues in my network who have been through similar challenges. I’ve also been able to tap into the resources of my network’s operations team, who can lend their expertise on accounting management, financial planning and growth investment.

Bottom line, you have to run your business by the numbers if you want to make money today. And the numbers are complicated – the more successful you are, the more challenging it becomes.

I’m a guy who started out sweeping the shop floor and never expected to be running a collision repair company with more than $6 million in sales. I think I started with maybe $6 in my pocket. But learning the financials, accounting standards, budgets and forecasting from my colleagues and my research has made me a much better operator.

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