Consolidation – the way forward? - BodyShop Business

Consolidation – the way forward?

Now, more than ever before, body shops are reinforcing their services with additional offerings to remain profitable. Steve Leal provides his insights into the trend.

Sponsored by ProColor Collision

Business consolidation is a hot topic these days, and almost everyone I know seems to be talking about it animatedly. Not just shops but everyone from dealers, parts distributors, paint suppliers, tire vendors, software providers and OEMs have been looking at augmenting or reviewing their business models. 

Consolidation marks a quantum shift in the industry as body shop owners increasingly look for greater operational efficiencies that guarantee more profitable margins. The momentum picked up over the past two years when many independent shop owners contemplated either selling their business or reinforcing their revenue streams with additional aftermarket services.

We were once perceived as a one- or two-person operation and associated with images of grease-soaked technicians working in unsafe, junkyard-like environments. Over the past three decades, the game has changed dramatically, as evolving customer behaviour, advancing innovation and growing competition increasingly dictate our survival. 

According to a 2021 Romans Group report, consolidation in mature markets such as the United States and Canada has accelerated during these critical years. The report points out that consolidators and multi-shop owners (MSOs) now control 31% of the North American collision repair industry’s Total Addressable Market.

In an increasingly competitive marketplace, with tightening margins and new players entering the business, shop owners are always looking to consolidate market share, moving from partnering with local aftermarket businesses into full-scale acquisitions. As buyouts become commonplace, shops are increasingly looking to take over aftermarket businesses in their communities or incorporating these services within their offerings. 

Many shop owners consider consolidation as the next logical step in their aftermarket journey. The idea is to offer customers a one-stop shop for all their requirements while reducing turnaround times on repairs, instead of farming out these services to another shop. For the shop, it means better control on the repair process and, of course, an additional and profitable revenue stream. 

At Fix Network World, our team works closely with franchisees who nurture such ambitions, equipping them with the right training, operational counsel and technological and marketing support till they are confident of running their operations independently. Within our network, you will therefore see many owner-operators who offer collision repair, mechanical and glass repair and replacement services – all under one roof.

But is consolidation for everyone? Ownership of a new business or adding a new service to your existing business is not as difficult as it sounds, but it’s important to consider a few factors before making the BIG decision.

Design the road map: Assess how much work you currently outsource to other shops. How much time and money would you save if you were to incorporate these services in-house? How does this complement my existing business? A good idea would also be to run the diagnostics to determine how well you can thrive in the new environment. Keep in mind that your existing businesses and prospective ventures can keep up with the pace of change in the coming weeks and months.

Assess your capabilities: Adding a new service requires careful planning and investing in recruiting, training, and equipment. Ask yourself – how can the new business or service addition enhance your existing business? Can your team manage the new services in addition to their existing workload? Are your technicians trained and certified to handle the new services?

Review finances: Buying a new business involves investing in equipment and tools that can ensure that your business runs without any disruptions. While there are significant long-term gains, your initial decisions will have a huge impact on the operational efficiency of the new venture.

Address the challenges: Look at how staff at both businesses can operate together seamlessly. Spell out your vision for the overall business to both teams. Also, plan to hold regular team-building initiatives so the staff can understand each other well and can synergise their efforts.

Explore accessibility: If you are keen to acquire a new business, check if it is in close proximity or in the same community as your current shop – unless you are incorporating the services in the same location as your workshop. Doing this will help you reduce turnaround times on repairs and ensure that your customers are always satisfied.

Maintain your focus: It’s natural for you, as an owner, to be excited about your new venture, but it’s important for you not to lose sight of your current business. Remember the original mission you set out with – complementing your new business with your existing one – and look at how you can build on the efficiencies of both. 

It would help to run the idea of acquiring a new business with your team and based on their feedback, identify the right people who can supervise the day-to-day operations of the future business. A good idea would also be to run the diagnostics to determine how well you are prepared to thrive in the new environment.

Change is good, and those who have adapted and changed their style of working will agree with me that only by moving forward can you survive this competitive business. I wish you the very best in your search for the right acquisition.

Steve Leal is the President & CEO of Mondofix, Inc. dba Fix Network World, the leading global automotive aftermarket services network which includes ProColor Collision. The family of brands spans over 2,000 points of service internationally. In the United States, Mondofix, Inc. has granted an exclusive license to 79411 USA LLC to the FIX AUTO brand.

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