Evidence in Example
Cossette bought Lehman’s Garage in 1969 from a family who’d owned it since 1917. In 1977, he added a shop in Bloomington, Minn., a southern suburb of Minneapolis; in ’86, he took on another business by purchasing an existing shop in Egan, the next suburb south of Bloomington; and in ’95, he opened a fourth shop in Savage. Recently, however, Cossette did the unexpected: Instead of adding another shop to his résumé, he sold his shops to The Gerber Group, one of the industry’s leading consolidators, based in Chicago.

Schoonover — like Cossette — took over a family business. For Schoonover, however, it was his family’s business. Schoonover Bodyworks, Inc. got its start by Dick Schoonover’s dad in 1938 — on a borrowed $50. Today, Schoonover operates two Minnesota locations, one in Shoreview and one in Stillwater. The two locations together, according to Schoonover, will produce about $5.5 million in sales this year.

The Interviews
BSB: Being the first recipients of the BodyShop Business Executive of the Year award, let’s take a look back. What are the major differences/changes in the industry today compared to 10 or 15 years ago? Do you think they’re good or bad?

Schoonover: "In the last 10 to 15 years, I’ve seen rapid changes in technology. Our technicians need on-going training, and it’s important to stay on the cutting edge of technology. The cost to start a business today for just equipment and computers is roughly $400,000 to $500,000, so the desire has to be there if you really want a state-of-the-art facility for collision repair."

Cossette: "One of the major changes that I think [meant a lot] was the development of I-CAR. It brought the training to the industry that was needed to repair the newer-style cars."

BSB: What’s the best change? The worst?

Schoonover: "The DRP programs that have entered our industry have caused a great deal of controversy. We feel as long as the programs are run fairly, they can be a win/win for the customer, the repair facility and the insurer. There must be a trust factor for all sides; the program can’t be one-sided. As of now, we have a good working relationship with our DRP insurers. The customers and the insurance industry are seeing the professional changes being made by many [collision repair shops].

"On the down side, we (collision repairers) are seeing shrinking profits. We need to find ways to work smarter and get paid for everything we do."

Cossette: "I think the development of I-CAR was one of the best changes. It was a very exciting change and a good one because not only did it [address] the training issue but, ever since then, we’ve seen the collision industry, the manufacturers and the insurance industry work closely together on that project and other projects.

"The worst thing I think I see — and it still bothers me and is a great concern — is the lack of unity in the collision repair industry. I think it’s going to take industry leaders who believe in the industry to put differences aside and sit down and talk about what they want for the industry in the future."

BSB: What’s the biggest challenge facing the industry today?

Schoonover: "The challenges are many. First and foremost is taking care of our customers. If we deliver repairs on time, stay in touch with customers, keep them informed as to the progress of their vehicles and treat them like family, they, in turn, will tell their friends.

"Another challenge facing all repair shops nationwide is the lack of young people entering our industry. Finding good, qualified young people is a huge problem. Ambitious, positive and drug-free people are very scarce. Years ago, there was a real commitment to the trade and employers. Today, that’s not the case. We find a lot of people who jump from job to job, not knowing what they really want from life. The situation is too large for I-CAR, ASE and others to solve on their own. The solution will take a commitment from all involved in the automotive industry, including trade associations, suppliers and manufacturers."

Cossette: "The biggest challenge facing the industry, especially what we here in our market are experiencing, is the lack of qualified people. The lack of workers at all levels in our industry, as far as I’m concerned, is a critical problem, and the amount of people available is shrinking. That, over the next five to seven years, is the biggest problem we all face.

"Everybody’s got their [own] thing they’re doing [to alleviate the problem], but I don’t see any large, organized national activity doing anything about it. We at Lehman’s are actively working with the schools, even at the high school level, visiting them regularly, trying to recruit people to our industry and letting them and their parents know this is an opportunity for people to make good livings. … You hear different things happening all over the country, but it’s not a real organized thing yet."

BSB: What’s the one industry area most in need of improvement and why?

Schoonover: "The collision and insurance industries [working together]. I can see glimmers of that happening; time will tell; but we can make it happen."

Cossette: "If I look at my business, as I know it today, it still goes to that qualified person. I don’t know of another really critical problem facing me that has slowed my growth."

BSB: What’s the most important improvement you’ve seen made in the industry in recent years?

Schoonover: "I know people who may disagree with me, but in recent years, the collision industry and some insurance companies have started to improve communications. We know the two industries don’t always agree, but the respect for each other has improved somewhat. We all have to be concerned about the customers and their safety after their repaired cars leave our facilities."

Cossette: "The development of I-CAR."

BSB: What changes have you made in recent years in how you manage your business, and why did you make them?

Schoonover: "My job in the past 10 years has been mentoring young people. I’m as eager to teach as they are to learn. As they grow with the company and continue to learn, we hope they’ll be a part of our business for a long, long time. We always try to promote from within."

Cossette: "As we’ve grown, we’ve gotten the leadership people within our business more in tune with the total business, and we’re more sharing with them when it comes to numbers and all phases of the business — so they have a better feel. There was a time when a businessman would tell his people, ‘This is what sales we need to have,’ and that’s fine. But now, if you’re going to have good, solid people who are helping [to lead] your business, they need to know where you are with the gross profit, the gross sales and the margins on parts. You need to share that with them so they can feel like they’re more a part of the

business.

"During the last few years, we’ve been very careful to include our leaders in the business — I like leaders vs. managers — and to get those leaders to be more of an integral part, even in the financials of the business, so they understand what we’re trying to accomplish. Profit is how a business grows, and if [the leaders] understand profit, they’ll understand that it doesn’t mean just the owner makes a lot more money."

BSB: How do you view the industry’s future — in a positive or negative light — and why?

Schoonover: "One of the major factors of change in our industry has been the entry of consolidators. Only time will tell how much larger this will become. [Consolidators] acquire a lot of debt when they [purchase shops]. If they have the money behind them with good management, it may fly, but only time will tell.

"I also understand from other industries that, after say a 10-year period, some consolidators decide to sell the business. If that happens, it could have a big impact on the collision industry [because] they would sell it off to somebody who’s bigger or break it off into little pieces.

"People with no collision experience are entering the industry. They’re excellent business people, but they come from other industries; that’s why they try to keep the existing management in place to run the business.

"Another issue is the possibility of, within the next year or so, some of the larger consolidators purchasing other consolidators.

"I’m not saying I don’t think [consolidation] is good for the industry; I’m saying that it’s an untested venture for the collision industry. And when you compare it with other industries, where insurers aren’t involved, it’s easier for those other industries to stay profitable. In other industries, you have the consolidator and the customer. Our industry is much different because you have the insurance industry involved, just like the medical field has the HMO and the patient involved. [In other industries], there’s not a third party involved like there is in the medical field and the collision industry.

"I’m not saying it’s bad; I’m not saying it’s good. I’m just saying it’s a change we didn’t have 10, 15 years ago, and it’s just another wait-and-see change with what’s happening. But I think it’s going to be tough for the ‘ma and pas’ as we’ve known them."

Cossette: "I think our future is always bright. I think the industry will change from the standpoint of how the insurance industry continues to interact with the shops, but if you have a good business, stay on the up-and-up and work hard to satisfy your customers, I think the future is very bright for anybody who wants to stay in the industry — no matter what level he’s at, whether he’s a single-shop entrepreneur, a multiple-shop owner or [an independent who decides to] join one of the consolidators.

"I think [insurance companies] will continue to try to exert more and more control over the shops but, at the same time, I believe they realize they can’t sell insurance if we can’t fix the cars. There will continue to be that push and shove going on, but if it’s handled professionally, I believe it shouldn’t be a big issue because each side needs the other."

BSB to Schoonover: You recently expanded your operation from one to two shops. Do you have any advice for other shop owners as far as owning and operating multiple shops?

Schoonover: "My advice for those thinking of opening multiple shops is to talk to those who’ve done it and research your locations. Ask yourself if you’re maxed out in your current location — if it’s possible to add on. [Ask yourself if] you want a larger market share. Research some more: Get to know your banker, establish a line of credit, make sure you have a positive cash flow. Get good people in place, and don’t be afraid to empower your staff; we’re only as strong as the people we surround ourselves with. Research your possible locations again. … Do your homework. Plan and go for it. It will be a learning experience!

"When you’re all set to open your doors, have a good marketing strategy, advertise, get very involved in the community, be a great neighbor and support the community that will be making you successful. Hire good people and pay them well, purchase the best equipment, find one good paint product line and stay with it, and continue to train your technicians."

BSB to Cossette: I’ve heard you’re going to sell your business in early April. Why that decision, and do you have any advice for other shop owners who may be thinking of selling their shops?

Cossette: "The decision was based on 30 years in the business and a great opportunity for my wife and I to take the revenues from the business to continue to enjoy life, travel and relax. … I’ve had great success in the business, but given the opportunity, I had to sell my business to The Gerber Group. … They approached us. I think it was our size, our sales and our standing in the marketplace. We were their opportunity to find a platform shop in this market from which they can grow because part of their strategy, of course, is to grow in this market.

"[Other shop owners who may be thinking of selling their shops] just have to decide if they’re ready and if they want an exit strategy. And [going through a consolidator] isn’t a bad way to do it. So many of us in the industry [are getting older] and there’s no easy way out. But now, with the advent of the consolidators, people are looking for good businesses, to buy businesses to grow their businesses — which gives those of us who would consider an exit strategy a great opportunity. And then you just have to get good advice from your in-house accountant and negotiate to find your best deal. And hopefully it works."

BSB: If you could give five points of advice about anything autobody related, what would they be?

Schoonover: "Succession planning is a must. Make way for the good times in life you’ve worked so hard for. Our son, Mike, will be the next CEO when I retire in a few years. He now oversees all day-to-day operations in both stores. He empowers people who work for him and makes sure our management systems are followed in both locations. If need be for vacations, illness, etc., the team can work in either location.

"Also, be organized, keep it simple, follow procedures, and take care of team members and customers. [If you do these things], your business will be successful."

Cossette: "I have one thought, and it’s repetitious of some things I said before: The most important thing, if you want to grow and stay strong, is to take care of your customers. If you’ve got a good customer base, [customers] are well taken care of and you continue to have a decent relationship with the insurance industry, there’s nothing to stop you from being successful as long as you want to be."

Writer/interviewer Eileen Benedict is associate editor of BodyShop Business.