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Keeping the Towel

Small-Shop Burdens…..and a Turnaround!

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Name: Schroll
Body & Paint

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Location:
Manhattan, Kan.

Owners:
Darrell and Janet Schroll

Established:
1979

Square Footage:
6,000 – existing building; 4,800 – new building in progress

Number of Employees:
5

Repair Volume:
275 to 350 repairs per year

Average Repair Cost:
$1,000 to $1,500

Darrell Schroll had his hand raised, the towel
in his grip. He was going to throw it in.

He had a negative attitude about his business
and the industry in general: His shop was too small to compete,
insurance companies wanted too much, he couldn’t afford the latest
equipment, his location was too challenging.

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Even good advice offered by other shop owners
was shot down by his mind-set: "We couldn’t do that."

A shop owner for 18 years, Schroll was seriously
thinking about quitting the collision-repair business. But, after
a change of attitude – which allowed him to believe in himself
and to make some needed changes – Schroll is holding on to that
towel and turning his shop around.

Small-Shop Burdens

Part of the reason Schroll had a negative
attitude was because he realized that most Mom-and-Pop shops –
his included – can’t compete unless they modernize. Schroll’s
realization is in no way unique – many small-shop owners across
the United States are coming to this same conclusion. What separates
Schroll from the group, however, is that he decided to do something
about it.

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His biggest problem was that he needed to
keep up with industry standards and buy more equipment, but he
couldn’t afford those fixed monthly expenses being a two-man operation
(the shop employed only three people, including the Schrolls).

His equipment woes included working with an
older, crossflow paint booth, when he wanted – and needed – a
heated downdraft booth. "New paints need more airflow for
productivity and quality," says Schroll, who’s stubborn about
quality and turns down work if he can’t do it correctly. The problem
was, he was feeling as though the quality of his shop’s work wouldn’t
remain high without a big expenditure.

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He also didn’t have a computerized estimating
system – something most insurance companies require for DRP work.
State Farm and a few other insurance companies had expressed an
interest in doing business with Schroll’s shop, but he needed
the equipment first. "We were going to be out of the mainstream
with insurance work," says Schroll. "We were just going
to have to pick up the side work, and I didn’t want to be a second-rate
shop doing scrounge work."

The shop’s location also poses a constant
challenge – one of a changing and unpredictable customer base.
Located in a college and military town, the shop repairs about
275 to 350 vehicles a year. It’s hard to make a monthly estimate,
though, because incoming traffic varies so much from month to
month. For example, Schroll’s business suffered during Desert
Storm, when military units moved out, and "when college [lets
out], you drop about 8,000 cars off the street within two days,"
Schroll says. "We may have a $50,000 month and then a $20,000
month."

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Grow or Go

All of these concerns were discouraging and
depressing Schroll. So much so that in March 1996, Schroll and
his wife, Janet, were thinking of giving up their business. Luckily,
it was also in March that the Schrolls attended a seminar and
discovered that many shop owners have the same problems – and
those shop owners told Schroll he just had to work around the
problems or solve them.

At first, he didn’t want to hear it. He had
a self-defeating prophecy he was determined to fulfill: "How
can I, with my small shop, solve all these problems and make all
these changes? These shop owners have no idea what my situation
is."

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The thing was, his situation wasn’t unique.
Schroll just thought it was. He heard the other shop owners’ advice,
but he didn’t really listen.

At least, not until he returned home. Back
in Kansas, Schroll got to thinking and became a bit motivated.
He knew his shop had to grow; if not, he was going to have to
leave the business. It was the how that posed the biggest challenge.

Schroll thought long and hard and, in mid-September,
he made a commitment to make it work.

Survival Gear

To turn his shop around, Schroll broke down
and purchased some equipment: a Blowtherm heated downdraft spraybooth,
an ADP estimating system, a portable dust-vac system, parts carts,
a fax machine and more office folders to track jobs.

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He also hired another body technician and
his brother. His brother – who has management, insurance-adjusting
and ADP-estimating experience – does the estimates and helps manage
the shop. The decision to hire his brother, along with installing
the estimating system, played a major role in turning around the
shop and changing Schroll’s mind-set.

Schroll’s brother brought with him a positive
attitude, insight and a chance to lighten the load for Schroll,
who was trying to do everything – write estimates, order and check
parts, work on cars, talk to customers, etc. Having an extra manager
freed Schroll to concentrate on other things, such as working
with new employees. "It was hard to know what the industry
was doing out there when I was always tied up in the shop,"
Schroll says. "I had tunnel vision. … [Now] I feel I have
complete control over what’s going on; it’s not chaos."

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Increased traffic flow has helped to improve
Schroll’s outlook, too. His current location was built on a dead-end
street that was, at that time, supposed to open up within six
months. Six years later, in October 1996, it finally opened up
– and has since become a major thoroughfare.

In light of his new, positive attitude, Schroll
has also made plans to add on. A new 4,800-square-foot building
is being built on Schroll’s property near the existing 6,000-square-foot
shop. The new building will be separate from the shop so it can
have a sterile, contamination-free environment for all paint prep
and painting. The existing building will house all metal work.
"Right now our paint booth is our bottleneck," says
Schroll. "I can’t hire more employees because we can’t get
through the paint booth."

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In addition to increasing the size of the shop, Schroll incorporated
his business last month. He says this comes with tax advantages
and lowers the shop’s liability risk.

Debt Control

How in the world did Schroll afford all these upgrades? He secured
a bank loan – something that was easy for him to do.

Being able to get a loan when you need one is extremely important,
but the only way to make sure your loan application is approved
is to get your debt load down.

Schroll did this.

When he built his current location only six years ago, he set
up a 20-year payment program. He’s paid aggressively each year
on the principle, and he’s within four years of being debt free
on everything he owns, including his house.

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Instead of taking his earnings to buy a new truck, he’d pay off
that amount on the shop. He may be driving an older pickup, but
when he talked with his banker about a loan, records showed that
Schroll had so much collateral the bank had no problem working
with him.

"My banker knows that I’m a very conservative person,"
says Schroll. "I just don’t jump out and do something without
knowing where I’m coming from and where I’m going. It’s very important
for [small-business owners] – before they even think of expansion
– to get their debts in order, and they’ve got to have some collateral
to work with."

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Positive Projections

As a result of and in addition to all the improvements and planning,
Schroll has set growth goals. To attain these goals, Schroll says
it’s very important to have a good accountant – his is setting
up cost and work-flow projections and will provide monthly cost-analysis
reports so Schroll will know where he’s at each month. "Control,
control, control," Schroll says. "As you grow, you have
got to be in control all the time or you’re going to lose it."

Schroll stresses control because he wants to get his business
running effectively and efficiently enough to become a DRP shop.
To do this, Schroll knows that a strong management system must
be in place. "It’s important, if you’re thinking of growing,
to get an idea of what kind of management system you’ll have,"
he says. "Don’t grow and then try to figure out how to manage
it."

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Schroll says he and his brother have already mapped out what employees
are going to do once production is up to speed, how parts are
going to be handled and who’s going to handle what.

With the management system decided, Schroll’s next step is to
spend some time working with insurance companies to gain their
business. What he won’t do, however, is work with any company
that asks for unrealistic discounts or wants to compromise quality.

Because Schroll plans to increase his business volume, he’s also
looking to hire one or two more metal men and one painters helper,
and he also plans to purchase more equipment, such as a stationary
dust-vac system, a prep station, a portable radiant-heat unit
and more parts bins. In one or two years, he’d like to buy a Genesis
measuring system, to put up a lighted sign and to do some landscaping
in front of the shop.

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As far as advertising goes, he’ll experiment with it as the shop
grows. For now, he’s sticking with ads in the Yellow Pages, which
are heavily relied upon in his transient town. At some point,
Schroll may also design color brochures .

Staying in the Game

Within just two months after Schroll implemented his initial changes,
the shop doubled its income.

But Schroll isn’t stopping there. He wants to double the shop’s
gross this year – hoping to reach $600,000 to $700,000 by the
end of ’97 and to be close to grossing $1 million by the end of
’98.

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Some might be tempted to call this turnaround a miracle – but
it’s not. It’s simply a result of Schroll changing his way of
thinking and going after a goal. The turnaround was always possible,
but it couldn’t happen until Schroll believed it could happen.

Nearly one year after almost throwing in the towel, Schroll is
not only a successful shop owner, but also a happier person. He’s
glad, now, that he stuck it out and hung onto that towel – he’ll
need it to help wipe the perspiration from his brow while he works
on all the cars rolling in to be repaired.

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Writer Eileen Benedict is associate editor of BodyShop Business.

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