Finding Your Niche - BodyShop Business

Finding Your Niche

What’s had the living daylights kicked out of it and smells like a herd of horses? It could be your next job. Repairing horse trailers, offering rental cars or spraying on bed liners are just some insurer-free services that can boost your bottom line.

A shrinking pool of repairable collision-damaged vehicles compounded by the effects of consolidation, direct-repair partnerships and many other factors have led many repairers to pursue other auto-related niches to boost their shrinking profits. The purpose of this article, then, is to stimulate repairers to think beyond the narrow realm of autobody repair. None of these suggestions may appeal to you, but if you’re in a small market area, you’ll likely have to supplement your income — as I have — with auto-related niches into which insurers haven’t yet gotten their fingers. One or more of these niches might be just what the auto doctor ordered to boost your bottom line Awhile making you less dependent on the whims of insurers.

Food for Thought
As you read through the list of niches, keep in mind that, though you may already replace windshields and do mechanical work at insurer rates, you aren’t held to those rates if it’s a customer-pay situation — though it’s your privilege to do so if you want. This may sound elementary, but we’ve been working under dictated labor rates for so long that many repairers can’t fathom anything else. Your state’s laws may require you to post rates for labor and materials, but nothing says these rates have to be as low as what insurers pay for the same services. Not many years ago, body shop rates were higher than those of local mechanics. But insurer interference has artificially suppressed our rates to the point where many mechanics often charge 50 to 100 percent more than insurers allow us for identical mechanical operations.

Write estimates for customer-pay services in dollars rather than hours or time units, remembering that these same consumers are accustomed to paying the television repairman, plumber and electrician — each having little training and next to no outlay of tools and inventory — two to three times what insurers pay you. Who knows, you might find, as some have, that you can make a better, more stress-free and more profitable living working around the fringes of autobody repair.

Also keep in mind that more people walking through your door translates into more opportunities to advertise and up-sell them on services that generate more profits for you. Do whatever it takes to get them in your office, then sell them on all the other services you provide — remembering that what they don’t need, their neighbors do.

The first key in reaching this utopia is to find niches that are unfilled or poorly performed by other businesses in your market area and then to make your mark in them. The second key is to pursue customer-pay services to which your existing staff and technicians can easily adapt.

Nifty Niches
• Rental vehicles — Since there were no rental-car companies within 30 miles of my shop, we originally entered that market by turning totaled vehicles into rental vehicles. As demand increased, we added to our fleet; presently, we maintain about 25 vehicles, which keep our detailer and mechanic constantly occupied. We have a dealer’s license and now purchase replacement vehicles from customers, as well as through reputable "dealers only" auto auctions.

If you ever find yourself at an auto auction, here are some hints:

1. Buy only well-maintained former rental and lease vehicles from major rental-car agencies.

2. Prior to the auction, seek the advice of Consumer Reports magazine, trusted mechanics and transmission specialists for which vehicles are most trouble free and best suited for your particular customers.

3. Have auction houses fax you a list of information on upcoming vehicles that fit your needs, highlight them on the faxed sheet and write the low "blue book" price next to each.

4. Arrive early and test drive as many vehicles as you can.

5. Avoid vehicles that have had extensive body and frame damage, signs of abuse (cigarette burns, corrosion damage, oil-soaked undercarriage, etc.), and those with gaudy or flashy wheels and trim. People who haven’t kept up the aesthetics of their vehicles certainly haven’t maintained them mechanically. Don’t be fooled by the professional detailing each auctioned vehicle has received. Their detailers are professionals at visual deception. You want attractive, functional, maintenance-free vehicles. Also avoid vehicles originating from more than one state away from yours — flood and disaster vehicles tend to migrate.

6. When the vehicles you’re interested in come up for auction, stand quietly until the bidding gets down to only one bidder and then go into action. Remember that sometimes the seller of the vehicle is out there bidding against you to get your bid up, so don’t get railroaded. And don’t bid much over low book value because there are lots of other vehicles to choose from. Usually, the first vehicles up for bid go for higher prices. Best buys are usually made when other bidders leave for lunch, later in the day or at auctions held close to holidays.

7. Don’t become an auction junkie; if your sixth sense tells you to avoid a certain vehicle, avoid it.

8. Economical transportation of the vehicle or vehicles you’ve purchased can be arranged at the auction.

Once you’ve found the right rental vehicles, do a little prep work before you begin renting them. Install new batteries and check all belts, hoses, brakes, etc., for wear. Taking the time to give them the once over is a much better option than paying for towing back to your shop and dealing with disgruntled customers.

Since we aren’t a rental-car chain, we set limits of a 100-mile radius, 100 free miles/day, no drivers under age 21 and no pets in our vehicles. Check with your lawyer for legal responsibilities and needed forms. Shop around for insurance for the vehicles and avoid joining rental-car franchises — they aren’t designed for your profit.

Constant checkups and routine maintenance are keys to a successful rental-car operation. We have a 25-item check-off list, and each vehicle is inspected, cleaned and vacuumed each time it’s returned. Oil changes and mechanical services also are performed on a regular schedule by our mechanic.

You won’t get rich from rental vehicles, but if you buy, maintain and advertise them well, they’ll boost your bottom line. Believing that part of the pie is better than none, we gladly rent our cars and pickups to people who are having a competitor do their collision-damage work. Rental cars also serve to "calm the savage beast" as free loaner cars when you can’t deliver a collision-damaged vehicle on time.

• Auto detailing — Detailing is another good niche insurers can’t influence. Though we haven’t personally gotten deep into detailing (there are two detail shops close by), it may have great potential for you, considering the investment many have in their vehicles. Local, state and federal environmental concerns for wash-water runoff, soapy residue, oil and chemical contamination from pressure washing and steam cleaning may make a serious detailing operation out of your reach — an expensive coalescing filter system may be required to properly separate hazardous wastes from gray water. But consider the possibilities of a smaller, in-house detailing business run in conjunction with your autobody repair business. When you write an estimate for body repairs, let the customer know that, for a disclosed dollar figure, you can also professionally detail his vehicle. Magazines such as American Clean Car give helpful hints on everything you need to know to run a profitable detailing business. A detailer acquaintance once told me the most profitable part of his business was his coin-operated car wash that runs steadily day and night, 365 days a year.

• Mechanical repair — Next door to our shop is a mechanical shop that refers their customers’ with collision-damaged cars to us, so we don’t want to offend them by cutting into their customer base. However, we do perform some lube-oil filter, brake, CV shaft assembly and suspension repair and replacement, as long as the customer isn’t one of the neighbor mechanic’s regulars. You do many of these mechanical operations daily in restoring collision-damaged vehicles, so take them on in customer-pay situations, too. And be sure you’re paid at an hourly rate more in line with what local mechanics charge.

• Exhaust repairs and replacement — This is one niche that’s worked very well for us. Though you can get started by purchasing mufflers, catalytic converters and pre-formed pipe from aftermarket suppliers, you may be interested in purchasing a used pipe bender with all the necessary mandrels, spreaders and flangers for around $5,000. Using this machine, you can quickly turn bulk pipe into any configuration required. Again, you already have all the MIG welders, cutting torches, etc., required to perform all aspects of exhaust work, and you’re already doing it, to some extent, on collision-damaged vehicles.

Muffler shops typically charge three times the cost of the raw materials. For example, if the aftermarket muffler you used costs you $15, you’d charge the customer $45 to $50 plus tax for installing that muffler (including the price of the muffler, welding supplies and labor). That’s a much better return on your investment than insurers allow. Competing suppliers of bulk exhaust components will assure you the best prices, but take into consideration the pipe thickness and whether it’s aluminized or not. Use the thickest-wall, aluminized pipe available, advertise that fact and you’ll have happy customers who’ll send you their friends.

• Wheel alignment and suspension repair — The cost of a top-quality computerized wheel-alignment machine with printout capabilities and a drive-on rack is in the $30,000 range (demonstrator units will save you several thousand dollars). Used equipment may be a viable option, and you may even be able to use an existing rack. But remember one thing: Being able to hand your customer a computerized printout of the before and after specifications and then to store that information indefinitely is close to priceless should your work ever be questioned.

You don’t want to compete with the "$29.95 specials," so inform prospective customers that most cheap alignments are come-ons to sell them parts and services they don’t need. Assure them you’ll recommend replacing only those parts that are worn or damaged, and then stick by your promise. Honesty today will continue to reward you in the future.

If you decide to incorporate these mechanical services into your shop’s lineup, be sure to let the assigned technicians do their jobs uninterrupted. At one time or another, we’ve repaired body damage — usually the result of an interruption in the mechanic’s train of thought — for every local mechanical shop. We won’t pull our mechanic away from his alignment and mechanical work for any reason until he’s totally finished. If he receives a phone call, we write down the number so he can return the call after he finishes his work. As far as payment goes, we base our customer-pay prices on flat-rate times multiplied by our non-insurance mechanical rate.

• Air-conditioning (A/C) recharge and repair — Though we’ve been evacuating and recharging A/C systems and repairing and replacing components for years, we’re getting out of the R12 side of it. Freon is just too expensive for us to remain competitive.

But we do a good business in 134A refrigerant. The problem with 134A, though, is that it escapes through the rubber "O" rings easier. Therefore, we insert a dye — which will locate leaks under a black light — into the A/C system when recharging it. Make it contingent on your warranty that the customer return in two weeks to allow you to re-check the system with the black light. This gives you the option of upselling more repairs and parts rather than repeatedly recharging the system for free. Of course, if your shop is in Anchorage, Ala., there will be less demand for A/C work than in Phoenix.

• Spray-on bed liners — Another body shop owner and good friend of mine does spray-on bed liners, and we send people needing that service to him. But the sky’s the limit because your customers will come up with many new uses for your bed-lining service. The spray units come in either stationary or portable models, and the catalyzed polyurethane material provides non-skid, sound-deadening qualities; comes in a wide assortment of colors; and adheres to almost every surface imaginable: boats, interiors and exteriors of off-road vehicles, etc. They even sealed the baptistery in our church with it!

• Sandblasting/beadblasting — Antiques, rusty wheels, boat trailers, hand rails, etc., are among the many things needing restoring from time to time. You likely already have the air capacity needed (normally about 30 CPM at 120 PSI), and it’s a simple matter to plumb in your fresh-air supply so the operator won’t run the risk of oil- and carbon-monoxide-contaminated breathing air from air-compressor blow-by. An old paint booth, complete with lights and exhaust fan, makes an excellent blast-media containment area.

But check with the EPA and local environmental organizations for their input before getting deep into this niche. Also remember that, in some states, the used sand — intermingled with the lead-based paints it’s cut — is considered hazardous waste. From an economical standpoint, if you contain the blasting media and keep it dry, it can be used three times or more before losing its cutting ability.

• Horse-trailer repairs — There are a lot of "horse people" in my market area, and they’ll do anything to maintain the trailers their four-legged sweethearts systematically trash. Horses apparently display gratitude by kicking the living daylights out of their trailers and leaving piles of smelly horse pucky. If you can get past the smell, there’s money to be made in repairing these pony palaces. And the horses aren’t the only ones destroying trailers, as external evidence indicates that many horse owners back their trailers by Braille.

• Quick repairs on older vehicles — Here’s a niche that many shop owners either overlook or turn up their noses at. Many more totaled vehicles would be retained by their owners as cheap commuters or beginner cars for young drivers if you offered to make them street legal, which often requires only a few hours on the frame rack and a few used parts. If the owner isn’t extremely particular, you can quickly make them legal, safe and somewhat presentable, and you’ll both come out ahead. Be sure to check with your state patrol for re-inspection requirements.

• Complete re-paints on expensive vehicles — Though we don’t make a habit of it, we’ll occasionally do a $5,000 to $8,000 re-paint on a high-end vehicle. If the vehicle isn’t well-maintained, clean and straight, though, we let our competitors have it. Complete restorations belong at home, not tying up your valuable shop space.

• Towing services — The advantages of a body shop operating a towing service are obvious. Though you won’t be able to keep every vehicle you tow in, many of their owners will become your customers. Check with state patrol and local entities for "rotation rights" and requirements for impounding vehicles and impound lots.

• Steam cleaning and pressure washing — Again, there are many uses for this service, providing the EPA and others don’t take exception to them. Hazardous-waste fines are expensive!

• Aftermarket moldings, decals, pinstriping and ground effects — With many people desiring one-of-a-kind vehicles, this has become one of the fastest growing new markets, and it may be the niche you’ve been looking for.

• Auto glass replacement and repairs — Again, when it’s a customer-pay situation, you aren’t held down to insurer-mandated allowances.

Finding Your Niche
Hopefully, the list I’ve mentioned has inspired you to consider expanding the base of your operation to include more than just fixing car bodies. The idea is to find niches that are unfulfilled or poorly performed by others in your market area and then to make your mark in those niches.

Quote all transactions in dollar figures, record the price agreed to and the terms of the agreement with the customer, and have him sign his name to the contract. How much time it takes you to perform the services agreed to is your business. Many of the niches listed above can be performed by the less experienced employees in your shop, which will give them confidence and new skills and provide you with a better profit on your services — enabling you to become less reliant on insurer handouts.

Writer Dick Strom and wife Bobbi own and operate a 10,000-square-foot shop in Bainbridge Island, Wash. They’re in an area with a limited customer base and, for that reason, have broken into and profited from most of the niches mentioned in this article.

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