Consolidators: Crash Champions Grows Florida Presence with Tampa Acquisition
What traits and skills does the perfect body shop owner have? We set out to find out and build that person block by block.
If you have kids or grandkids, you know Bob the Builder. His rallying cry is, “Can we build it?” And the hearty chorus of his animated construction-equipment crew is, “Yes we can!”
It’s with that same can-do attitude that I took on this challenge: Build the perfect collision shop owner, trait by trait, equipping them with the exact skills needed to keep everyone happy, all the time.
To review, the many different camps my ideal must please include the vehicle owner, their insurance carrier, the shop’s employees and the money tree. Whether it’s the local banker, good ol’ Uncle Rex, the owner’s savings account or the corner pawn shop, anyone who invests money in the shop needs to remain happy about it too. Let’s start at the front door and stroll (stumble?) through with my ideal shop owner.
Happy Vehicle Owners
First impressions are immediate and lasting. My perfect body shop “Captain” (captain of the ship of Super Successful Collision Repair = SSCR) knows that no matter how Mrs. Smith (my perpetual vehicle owner) got to the front door, what happens next matters a bunch. She arrived at the shop’s door because the app on her phone suggested it, or the email from her vehicle manufacturer recommended it, or her insurance company demanded it, or she saw the shop’s ads on cable and was impressed. The Captain, my Captain, gets the part about clean shop presentation. Survey after survey proves that collision shop customers prefer a truly clean facility and judge the likely skill of the shop by the front office. Knowing how important the two visits to the office that Mrs. Smith makes, drop-off and pick-up, are to her satisfaction (and hopeful recommendation), the Captain has a regular cleaning person on staff. After each early morning’s dust, vacuum and Windex of the entire front facility, that person spends the rest of the day detailing cars for delivery.
Keeping body shop consumer Mrs. Smith happy all the time is tough. Once she pronounces the shop acceptably clean, she wants to know that her vehicle will be OK when you’re done. But she mostly wants you to treat her like she matters. The Captain and all the estimators/salespersons/customer service reps in the shop have learned the patience to listen to Mrs. Smith’s story, the skill to reassure her of the good outcome, the knowledge to describe the repair process, and the tenacity to get the sale. The Captain is so concerned with the satisfaction of all the future Mr. and Mrs. Smiths who will rotate through the shop’s front door that he or she pays to send all the front office people to formal customer service training. From how they answer the phone to the fresh flowers on the counter, to the smile on their faces, they’re committed to the idea that the customer is king and should be treated like royalty. Mrs. Smith wants the shop to act like she is unique and important. SSCR drives that message home at every opportunity.
The ideal shop owner recognizes that the insurance companies pay for 90 percent of all collision repairs and treats them appropriately. The Captain of the SSCR ship belongs to multiple direct repair programs (DRPs), but not all that were offered. He recognizes that a successful partnership with an insurer is a two-way street. The DRPs that insist on micromanaging the repair process, egregious labor rate concessions or other obstacles to a safe and speedy repair are not good partners. Negotiation in good faith is a necessary part of our business; adversarial fistfights over supplements or concessions aren’t worth the hassle to the Captain. As a result, the ship at SSCR sails forward with several insurance partners while leaving the ones with the uninformed, argumentative adjusters behind. They’re proud to display their DRP partners’ signage, which reassures Mrs. Smith that she’s made the right choice.
One of the ways my ideal owner keeps his insurance partners happy all the time is to cheerfully meet their equipment and training requirements. Currently, more and more insurers require that their DRP partners own specific repair equipment. Plastic welders, pulse welders, aluminum-safe hand tools and various diagnostic scanners are soon to be required for more and more DRP programs. My Captain recognizes that using the latest correct equipment not only makes the insurers happy, it makes for safer and faster repairs – a common goal for both collision repair partners.
Super owner also recognizes that extraordinary space or equipment demands are not always the right fit for their shop. Losing an entire work stall to house just aluminum or exotic fiberglass repairs makes no sense unless the local market has lots and lots of those vehicles. Dealership body shops are often required by their OEM franchisor to build, acquire or train to specific standards. My perfect independent shop owner makes all the equipment decisions based on a return on investment too, not just the desires of his insurance partners. If the investment in equipment enables the shop to perform repairs to meet both pre-accident condition and OEM procedures faster, it clears my Captain’s first hurdle. The second hurdle is the potential vehicle repairs that could employ it. The zippiest, smartest MIG brazing machine with copper silicone wire may not be a good buy if the shop never fixes Hondas, Volkswagens or Jaguars. My guy does the math first.
Proof of training and certification from an OE manufacturer is desired by both the insurer and Mrs. Smith. The good ship SSCR has been I-CAR Gold Class since that program was introduced, and they started taking I-CAR classes when they were first presented in 1979 (plastic identification and repair was no. 1, and I took it!). As we roll into the future, more and more insurance partner shops will have to demonstrate certification by a particular vehicle brand to perform repairs on those cars. No one knows more about how to correctly repair exotic new vehicle construction schemes than the engineers who built them. My Captain knows that only about one-third of new-car dealerships have a captive body shop, and he has done his best to partner with all the well-run local dealers who don’t have their own collision operation. He uses their connection to each vehicle manufacturer to get his technicians into their training schools. He makes sure to buy the crash parts from the dealer who sent the work, and he takes donuts to all the dealers’ service writers regularly. Those folks see lots of minor collision damage as they write the mechanical ROs; the Captain wants them to recommend his shop every time.
Earning OEM certifications and displaying proof of all technician training are part of the Captain’s plan to keep the insurers happy with their level of education while at the same time reassuring Mrs. Smith that SSCR is the best place to repair her ride to pre-accident condition. Just look at all the badges of honor hanging on the walls!
The Captain knows that the absolute best way to maintain employee satisfaction is to communicate with them. Recent human resources surveys all confirm that happy employees produce more work with less stress. A big part of that is knowing what’s going on at work. Communication is the key. The ideal shop owner shares the shop’s history along with their current situation and any future plans with all employees. They can’t help if they don’t know where we’re going is the Captain’s motto. New employees assume that the owner was born in his office and all the shop equipment magically appeared one morning. Talking about how the shop got started, how it got to where it is today and what it hopes to be tomorrow is the best way to get everyone on the same team. The Captain wants all his employees to have a feeling of belonging and that they’re contributing to the shop’s success.
To that end, my ideal owner has all-shop meetings every quarter. He has quick breakout meetings every morning with the production crew to talk out the day’s work flow. He has Monday morning sessions with the people in the front end to block out the week. At the quarterly all-shop meetings, early before work begins (he pays overtime to attend), they talk about all sorts of stuff: how are shop sales, when is the A/C going to be fixed, where is the company picnic, what do we need to do to raise our close rate, and many other topics. This is not a meeting to criticize anyone’s work; the Captain does that behind closed doors. It’s an opportunity to recognize those employees who have gone the extra mile, though. My superman knows that a public “thanks” and pat on the back in front of others makes for a happy crew. The Captain even stole an idea from his dealer customers and has an “employee of the quarter” parking space right by the door.
The ideal shop owner has gone out of his way to re-staff their bench by actively recruiting young people to work there. Whether in the office, on the teardown lane, taping up cars or vacuuming the trunk, these millennials need some extra care from the Captain. He understands they need to know why they’re doing whatever it is, and they need frequent feedback and assessment. (“Yes, good. No, not like that. Try it like this.”) He’s really clear that his future success is tied to a shrinking workforce. My guy is on the board of all the local vo-tech auto body programs and offers a scholarship at some schools and has an internship program at others – all to reload with technicians. The Captain knows that no matter how pleased Mrs. Smith was with the CSR, how dazzled she was by the front office presentation or how content she is with her insurance company, they both need someone to actually fix her car. The estimators drive sales, but the folks in the back touching the car are the engine that drives the ship forward. Super-owner guy knows that if he pays fairly and treats them with respect, his technicians will remain part of his successful team.
In my experience, the scariest thing a shop owner can do is change the pay plan. Everyone is anxious when they hear the word “change.” The Captain is an especially good communicator about wages, a subject near and dear to every employee’s heart. Over his many years, the Captain has changed the pay plan at SSCR several times, each time trying to reduce expenses and increase production – a tough task, for sure. He has made it work by explaining upcoming pay changes one-on-one in his office. He starts 90 days out from the change and guarantees each employee that their pay will not decrease for the next 45 days, even if they’re not meeting all the new goals. The most decisive communication device the Captain uses is the bi-annual (twice each year) performance review. Each employee session is private and specific. “Steve, I feel your attitude is turning negative and your work is suffering. What do you think?” Rather than let these meetings turn into a bitch session by either party, both employer and employee need to communicate, and my super guy is killer at it.
The Captain lives by the business rule: If you can’t measure it, you can’t manage it. He tracks both production and profitability numbers every month. Because he’s an imaginary super-powered guy, the Captain enjoys doing the math. Wait, you say; so far this guy is a super salesman, super marketer, tight with the insurance companies, awesome with all employee communications, AND he likes math? Bob the Builder, and Jason the Editor, both say “Yes he can!” have all those traits. Not only is he handsome, athletic, free of bad habits and always happy, he likes spreadsheets.
One stellar habit the Captain has is paying his bills on time. Many PBE vendors offer a discount for prompt payment. Often around 2 percent of the statement total, it adds up to a 24-percent return on an average month’s accounts payable. Great return for no risk is the way my knowledgeable numbers guy sees it. The Captain has creditors besides his vendors. To expand the shop’s square footage several years ago, he opened a credit line at his local bank. He knows his banker wants to see him display good bookkeeping skills along with making payments on time.
His banker wants to know SSCR’s ability to pay back the loans and requests three numbers from the shop. Debt to Equity (total liabilities divided by net worth) measures that the money to re-pay exists somewhere. The Current Ratio (current assets divided by current liabilities) establishes that the Captain can re-pay without selling the shop. The Quick Ratio (cash + accounts receivable divided by current liabilities) answers the question, can you pay me right now? The bank also wants to see some profitability numbers to keep SCCR in line for additional funds.
Fortunately, those are some of the numbers the Captain crunches for his own profitability measurements. Among the figures that the Captain produces each month is the shop’s close rate on written estimates, sometimes called a batting average (number of ROs divided by number of estimates), and uses that number to coach (more good communication skills!) his CSRs to get more “yesses” from Mrs. Smith. Additionally, he tracks his parts-to-labor ratio (total parts sales divided by total labor sales) with a goal of 1:1, as many DRPs frown on too much replace and not enough repair. To generate that number (parts:labor), he’s halfway home to figuring his entire sales mix. Sales mix measures not only how much of the shop’s total dollar sales were parts and labor but also how much paint and material (P&M) and sublet sales accounted for. My super collision repair finance guy knows that refinish labor hours sold (times the local allowance) should be about right when they represent slightly over 10 percent of the total dollar sale. He resigned from the DRP programs that forced his P&M sale percentage down around his cost (6 to 7 percent of sales) and doesn’t miss them.
Happy, Happy, Happy
Just so you know, I’ve yet to meet my ideal owner Captain in person in my five decades in the body shop industry. I have, however, met super shop owners who did lots of these things well and were smart enough to hire people to fill in their missing skill sets. Can’t do the business math? Hire a bonded CPA who’s also a nice person. Can’t speak in front of a group, even your employees? Then write it down. Say in print what you want them to know and call it a company newsletter. Can’t keep your temper with the adjuster from XYZ Insurance? Have someone else make those contacts or send them down the road. Life’s too short.
Love Potion no. 9 was mixed right up in the sink, smelled like turpentine and looked like India ink. My potion for the Captain’s clones include a pinch, a dash and a squirt of the following skills: patience, honesty, accuracy, electronic savvy, precision repair knowledge, persistence, cleanliness, ethical behavior, negotiating and marketing. And remember, he LOVES math!