Eyes Wide Open: Two Techs Make the Transition from Shop Employee to Shop Owner! - BodyShop Business

Eyes Wide Open: Two Techs Make the Transition from Shop Employee to Shop Owner!

With 60 years of industry experience between them, these two techs decided it was time to make the transition from shop employee to shop owner.

It’s not hard to get in business, it’s just hard to stay in business,” says Tony Newell, co-owner of Collision Performance Center, which opened in May 2004.

Although Newell and his partner/co-owner Danny Ray are veterans of the collision repair industry, they knew it wasn’t going to be easy to make the transition from shop employee to shop owner – and they went in with their eyes wide open.

Newell says that in his 30 years in the industry, he’s seen seasoned techs – fed up with management – decide to strike out on their own – only to encounter problems six months to a year down the road.

“He’s behind in his taxes and he doesn’t know what his expenditures have been – he’s over his head,” says Newell. “He does great quality work, but he’s let the business side eat him up. Or else he’s grown so quick that he kind of eats his capital up, his spending money.

“I was fortunate enough to absolutely, totally run the shops that I’ve been at as far as the management side. I purchased the equipment, set up the pay plans, took care of all the taxes. I’ve done the business side of it for about 12-15 years. On top of that, I also have technical experience.”

But Newell will be the first to admit that he’s spent most of his time in the front office in recent years. Ray, on the other hand, has spent all his time in the back of the shop. Together, these two have 60 years of collision repair experience.

“We both used our backgrounds and what we had, pooled together and made one good person,” says Newell.

A Shop Is Born …

Ray was just 16 years old when he landed his first job in the collision repair industry.

“I went to work in a body shop, and at the time, it was just a job – but it became a career,” says Ray, who started out as a painter’s helper. He went on to become a painter, and after that, he also did combination work and some estimating.

“At one shop I did everything – estimating, metal work and paint work,” says Ray. “But the majority of my time I’ve been doing metal work.”

As for Newell, he says that he never intended to move away from the technical side of collision repair, but a shoulder injury in 1992 changed his plans. He was forced to take a cut in pay and get a job at a dealership as an estimator. He ended up becoming the body shop manager there, and one of his employees just happened to be Ray.

“Danny and I met at that dealership while he worked for me,” says Newell. “I had heard of Danny – he and I had been bodymen at the same time, but we’d never actually worked together until the dealership.

“I asked him, ‘Have you ever considered opening up a body shop?’ And he said, ‘Yes, but it would have to be with the right person.’ “

The two sat down and seriously talked – and when they finished, they were partners.

“We got into our mid-40s and decided that we’ve made other people a lot of money because we do it right, so why not do it for ourselves?” says Newell.

First on the pair’s agenda: figuring out how to pay for the venture. Thanks to both of their frugal natures, they didn’t have to look far.

“As far as our financing goes, Danny and I took that strictly from our pockets,” says Newell. “We had saved a little money along the way. If you knew Danny and myself, we kind of squeak when we walk. I told everybody that I’d spent my kids’ inheritance, or invested it, and hopefully they’ll get a return.”

Next, they determined what roles each would play in the business. Together they decided that Newell would handle the business aspects including estimating and running the front office, and Ray would take on the technical side of the business and make sure they had properly trained technicians, the right equipment and good quality-control procedures.

Location, Location, Location
The location of the new shop would be critical, and the pair knew they didn’t want to be in the Nashville metropolitan area since there were too many shops there already.

“We really wanted to ease out of this market into a different one,” says Newell. “So we looked into the outer-lying areas, to areas that had no collision centers of substance. And then a strange thing happened: I abruptly left a shop I’d been at for about eight years.”

Citing disagreements in management styles, Newell says that things with his employer “went bad overnight.” What he didn’t realize was that as he left that shop behind, his reputation preceded him.

Says Newell: “The insurance companies began to call me and say, ‘We heard that you’ve left. We hate this. We’ve done business with you so long. You’re the guy we’re doing business with, not the owner. Would you consider staying in the area and opening up a collision center here?’ “

Absolutely, said Newell, citing the right location as the only thing stopping him. But not for long …

On the outskirts of Nashville in the suburb of Madison was a piece of property that used to be part of an old GM dealership. And the facility was ideal for the pair’s needs. Its used car office could serve as the shop’s front office, and the dealership’s original body shop building was right behind it. But first, it needed a little cleaning up.

“The front office is a great little facility with plenty of room,” says Newell. “We redesigned the inside of it and made it customer friendly. … Then about 200 yards behind that building, we’ve got our body shop, which is 8,500 square feet. That’s our paint facility and body shop. It was in pretty poor condition at that point. We went in, and after several tractor trailer loads of garbage and redoing the roof, the doors, the line and everything else we could do and cleaning it up good, it was ready for some equipment.”

And since the facility had already been a body shop, Newell and Ray were grandfathered in, meaning they didn’t have to meet any codes that would require them to do additional updating. They simply changed the signage out front and put up some fencing.

Getting Set Up
Once the facility was ready to be laid out and equipped, Newell had the right experience to handle the task.

“I had just designed the last shop that I came from,” says Newell. “We built an 18,000-square-foot facility at the dealership. I’d worked with the architects myself to get everything laid out like it should be so I had a little insight.”

One of the first challenges of laying out their shop was adapting to how the building was originally designed, which included the old “one door in, one door out” type of layout.

“At the time the last shop was here, it was only a drive-in booth and not a drive-through, so we adjusted and went from there,” says Newell, explaining that through modifications, like adding doors to create a workflow from the metal shop to the paint shop, they were able to make it all work.

As the shop took shape, it was time to start filling it with equipment. Newell says there are a lot of equipment venues in the Nashville area, but he’s never been one to take the first price he comes across.

“We really, really researched and found out exactly what we could use,” he says. “We didn’t go with the shiny new equipment with the fancy names and high dollar price. We looked at exactly what we’d used in the past, what worked for us and what we could afford to pay for.”

Newell kept his eyes open for deals – and found them. The first piece of equipment he purchased was a 360-degree, two-post drive-on frame rack, and because it had been a demo, he was able to save thousands of dollars. He also saved big on the paint booth he purchased.

“We were looking for paint booths, and I contacted several venues and even went to NACE,” says Newell. “Then I got this call from a guy in Atlanta who said there was a gentleman who’d ordered a paint booth, but he’d run into some building code problems and couldn’t receive it. It was sitting on a dock here in the Nashville area.

“It was a $58,000 paint booth and mixing room, and he said, ‘I’ve got to get this thing taken care of. I’ve ordered it, it’s built, it’s sitting there and somebody’s got to have it. I don’t care to make any money. I just need my money back.’ So we got this paint booth and installed it with everything for $35,000.

“It worked out perfectly, and it just fell into our lap.”

The Right Staff
The next thing that worked out perfectly was finding employees – because they didn’t have to. The employees came to them.

Newell says that after he quit the dealership, his employees all quit too, even the wash boy.

“They said that they didn’t want to work for that person if I wasn’t there, so every person there left,” he says. “At that point, I didn’t have any place for them to go, so I told them that they needed to stay there. I didn’t have a shop. I didn’t have anything. But they didn’t care. You’re talking about people making more than $100,000 a year, and they just walked out and left this guy, due to the fact that they were uncomfortable with the way he’d done business.”

Newell says this group of people played a significant role in getting the new facility up and running. They helped with everything from cleaning and putting up signage to washing and hauling out trash. Sometimes they worked 14-hour days.

“And this is all at no pay,” says Newell. “Nothing. They were doing it just to get the shop up and going.”

Also helping out were friends and family members, along with people in the community, such as electricians whom Newell had worked with in the past.

While all this activity was taking place, insurers were keeping tabs on the project’s progress. Newell says he received phone calls daily from insurers who were anxious to get the shop on their direct-repair programs. But before that could happen, the shop needed a staff.

“We picked from those [dealership people who quit] the employees that we needed at that point, and then told everybody else, ‘As we grow, we’ll try to include you,’ ” says Newell. “They knew going in that we couldn’t take everybody, but as soon as the opportunity arose, they’d be the first people on the list.”

Newell says that three of the dealership employees are currently working for him and that a fourth will start soon. In addition, Newell’s wife of 28 years, Debbie, works at the shop several days a week as the office manager. She also helps to handle legal affairs.

Open for Business
The business came together prac-tically overnight.

“I left my last job Feb. 27th,” says Newell. “We looked at this piece of property on March 10th, signed the paperwork and were open for business by April 15th. That was getting our equipment in place and getting our office in place. We did that with a lot of help.”

Newell and Ray’s first job was a 1994 Toyota Camry that had damage to the front and the rear. Newell says State Farm was paying for the rear damage and the vehicle owner was paying for the front-end damage.

“While it was here, the customer came in, looked at it, liked what he saw and said, ‘I’d like you guys to paint the whole thing.’ So we did,” says Newell. “We detailed it out and cleaned it so it looked like it’d been pulled off the showroom floor. We gave him the above-and-beyond type of approach, and it’s come back tenfold. He’s told everybody, they’ve seen his car and it’s just kind of snowballed.

“I’d say we’re probably increasing anywhere from 8 to 10 percent a month so far in the volume of work that we take in.”

Although the business is growing steadily, Newell says the local business climate, overall, hasn’t been great.

“Business has been pretty slow,” he says. “Even the well-established people are probably down anywhere from 25-30 percent – sometimes, per month. We continue to grow monthly, but not at an excessive rate. I’ve tried to keep the reins pulled back and not let us grow too fast.

“I have a feeling that if you grow too fast, you grow yourself into bankruptcy.”

To keep that growth steady, Newell and Ray are relying on word-of-mouth advertising, a Yellow Pages ad and ads in some of the local trader post publications. Collision Performance Center also is gaining a name in the community by working with schools, charity organizations and community groups.

Deciding on DRPs
“We’re a direct repair facility for six insurance companies, but we’re the new kid on the block,” says Newell. “So we don’t get the pick of the litter at this point. But our names have been in this community for several years, mine along with Danny’s. So the customer base normally follows, especially in a little Southern town. We have a reputation for being honest and good at what we do.”

So far, says Newell, the DRPs are going well.

“We’re not giving them anything,” he says. “That’s not to say that we haven’t had our differences, but we’ve always been able to work them out to where it was beneficial for both parties.”

Newell says he and his techs are happy with the DRPs they’re currently on because they speed up production. Newell says he writes the estimate, takes the pictures, downloads the estimate and keeps everything documented very closely.

“We work hand-in-hand with all of our coordinators and re-inspectors,” he says. “We’ve got great working relationships. Do we have controversy sometimes on our labor times and stuff? Basically the job is maybe 20 percent a judgment call and the rest of it is cut and dry. Out of that 20 percent, we may disagree on 5 percent of it. If I compromise on 5 percent, then I’m only compromising on 2 percent. That’s how you have to look at it.”

Newell says that being on DRPs gets him paid faster, too, since most of them work through electronic finance transfers. And there’s less paperwork.

“For my shop and with my circumstances here, it’s a moneymaker for me.”

Doing It My Way
Most shop employees – at one point or another – have uttered the words, “If I had my own shop, I’d do it this way.”

So what are Newell and Ray doing differently now that they actually do own a shop?

  • Give free rental cars to customers without rental-car coverage. “I wanted to have compassion for the people who didn’t have rental car coverage,” says Newell. “You go to your insurance company and you’re trying to get the best deal you can and let’s face it, they don’t always tell us the fine print. You think you’re getting one thing and you’re not.

    “So when they have an accident, a lot of times they realize kind of late that they don’t have rental coverage. We supply them with a rental car through a local rental company. We do that as a courtesy to that customer, and we make him aware that it’s something we’ve done for him. We make the insurance company aware, too, and say, ‘We’re not charging you for this. It’s your customer here, he’s upset and it’s going to kind of take the edge off.’ “

  • Wash everyone’s cars and detail them “out to the fullest,” says Newell.

  • Offer lifetime warranties on paint work and parts.

  • Treat employees with respect and like family. Says Newell: “I go back in the shop every Friday, and we have a little meeting. I bring some donuts, some milk and stuff, and we just sit around and talk. And we don’t talk about the shop all the time. We sometimes talk about what we’re going to do this weekend, how the kids are. We try to keep it a family-oriented place.”

  • Be compassionate. “I think that most of the dealerships and very large independents have lost compassion for the customer,” says Newell. “You’re no longer Mr. Jones. You’re just another RO number.

    “I always said that I would make it personal, that I’d never lose compassion for the people. I’d always be concerned for their well being first and their car second.

    “I ask the question ‘Are you hurt?’ before I ask ‘How quick can you get the car here?’ ”

Writer Bob Bissler is managing editor of BodyShop Business.

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