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Giving away business? In today’s competitive and consolidating marketplace, how could such a thing happen?
Shop Name: Collision Revision
Location: 19 shops in Florida, Illinois and Indiana
President: Roger D’Orazio
Number of Employees: 270
Average Repair Volume: 210 cars per shop per month
Average Repair Ticket: $2,300
The sign on the door read, “If your damage isn’t more than $500, please come back in four months.” While being able to display such a statement might seem like a dream for most shop owners, it was a reality – and a predicament – for Roger D’Orazio, CEO of Collision Revision, a franchise based in Joliet, Ill.
In 1988, a sign with the above message hung on the door of one of Collision Revision’s first Illinois locations. “Our parking lot was full of vehicles in need of repair, our technicians were overworked. … We were simply overwhelmed with business,” says D’Orazio. “We got to the point where we had to give away business to our competitors.”
Giving away business? In today’s competitive and consolidating marketplace, how could such a thing happen? Ever since D’Orazio opened his first facility 25 years ago, customers have continued to flock to Collision Revision. So many, in fact, that D’Orazio now owns 18 locations in three states. But this successful entrepreneur started like most business owners – as low man on the totem pole.
A Humble Beginning
D’Orazio was the first member of his family born in the United States, and his parents had high hopes for their young son. But as D’Orazio became a teenager, his parents’ dreams that he would attend law or medical school vanished as his primary love turned out to be automobiles. When he turned 18, he left his hometown of Joliet, Ill., to attend Wyoming Tech in Laromie, Wyo. Six months later, with an Associate Degree in collision repair, D’Orazio returned to Joliet to work in a local body shop.
In 1976, the young technician became a young entrepreneur and opened a “facility” in a rented garage. “It was definitely a bare-bones shop,” says D’Orazio. “We had no running water and only 2,000 square feet of space.” He also only had two employees – both of whom are still with him today: technician Bud Eungard and his bookkeeper (and mother), Sally D’Orazio.
While things were progressing smoothly, it wasn’t until the early 1980s when D’Orazio’s business really took off. “I’ll never forget 1980 … Jimmy Carter was president, and there was a recession and 20 percent interest rates,” he says. “There were 90,000 body shops in 1980 – but only 70,000 in 1981. It was definitely the toughest time of my career, but it was also when the automation phase began.”
While most shops in the country were hesitant to automate their processes, D’Orazio embraced automation, and it’s become one of the key factors for his success today. “It forced us to streamline our processes and really establish a strategy for growth,” says D’Orazio. “It also laid the foundation for our relationships with insurers, as they were also just beginning to automate the estimating process.”
Thanks to his acceptance of automation, D’Orazio’s business skyrocketed. Within the next two years, he opened three more facilities. Each shop grew very quickly – too quickly, in fact. D’Orazio couldn’t find enough qualified employees, and his current staff was overworked and underpaid. At this point, Collision Revision was forced to refer business to its competitors. A change needed to be made, so D’Orazio decided to institute his own training program, which quickly changed the atmosphere of Collision Revision.
Thorough Training + Minority Ownership = Loyal Employees
Many shop owners complain about a technician shortage, but few actually do something about it. In the late 1980s, D’Orazio took matters into his own hands and created his own training program, which included a full-time instructor and a bound training manual.
Called the “Accredited Training Program,” Collision Revision’s training takes five employees at a time through six weeks of classroom training and two years of shop experience (although the shop experience can be accelerated for quick learners). The classroom section covers a variety of material – from practical information such as the proper sequence of repairs and how to order parts to theoretical information like Collision Revision’s mission statement and goals. To ensure that his “students” are paying attention and learning, tests are given regularly, which D’Orazio reviews himself.
And he believes in sending each of his employees through the program, whether they’re an administrative assistant or a technician. Of Collision Revision’s 270 employees, more than 70 percent have already taken the training program.
Over the years, Collision Revision’s training program has expanded and established quite a reputation in the industry. Its reputation was so strong, in fact, that D’Orazio’s competitors began to notice it – and his trained employees.
“We were finding that once an employee completed our training program and achieved a certain level in our facility, our competitors would offer a pay raise and take away members of our staff,” says D’Orazio.
Again, rather than complain about the situation, D’Orazio created a solution: the Managing Partner program. This program empowered employees by not only offering training, but a piece of the business, if they so desired. In essence, the Managing Partner system is a “sweat equity” program. Upon completion of the training program, a Collision Revision employee has the opportunity to become a Managing Partner. Each Managing Partner makes a minimal monetary investment in Collision Revision (company financing is available) and becomes a business partner. The Managing Partner is then given a Collision Revision location to operate and is responsible for the facility – including hiring, firing and profitability. To make the partner a visible member of the local community, D’Orazio also requires that he or she reside in the same city as the facility.
“Our Managing Partner program keeps us in line for future growth,” said D’Orazio. “We have so many employees who want to be Managing Partners that we have to keep growing to meet their needs.”
Location. Location. Location.
To meet the needs of his future Managing Partners, D’Orazio has ambitious goals for growth. “My dream goal is to own 500 shops, with each maintaining $2 million – making Collision Revision a $1 billion company,” he says. Because he believes he can sustain growth by adding two to five locations annually without any outside financing, he’s always on the lookout for new places to expand.
In choosing new locales, D’Orazio says it all comes down to population and location. “The average consumer will only drive five miles to have his car serviced,” he says. “Knowing that, we try to keep all of our locations in highly populated areas. We go where the service is needed.”
To assist in finding new locations, D’Orazio looks to his contacts in the insurance industry for advice. With more than 100 DRP contracts, Collision Revision has strong ties to the insurance industry. “Our insurance contacts often recommend areas that are lacking dependable collision repair facilities,” says D’Orazio. “Our new locations in Indiana and Florida are a direct result of insurance recommendations.”
When D’Orazio is introduced to a new market, he typically goes through a three-step process, completed in-house, to determine whether he’ll open a franchise in that location:
Step 1: A Feasibility Study
Collision Revision’s employees take a close look at the demographic base of the local community to see if this is an area where people are likely to need collision work. If the location passes, D’Orazio moves to:
Step 2: A Competition Study
D’Orazio reviews the competitive nature of the marketplace, including the presence of consolidators. Too much competition means potential oversaturation of shops, which is something to avoid. If he’s comfortable with the results of this study, he moves on to the final step:
Step 3: Acquisition
Preferring to acquire rather than build, D’Orazio looks for independent shops in the area that meet Collision Revision’s criteria for acquisition. These standards include a production-friendly facility encompassing at least 8,000 square feet on one acre of land, located on a busy thoroughfare – on a dealership row, if possible. Since few locations like this exist today, D’Orazio will instead approach car dealerships to pursue their interest in leasing a facility or adding a shop onto their existing facility. Finally, if he can’t find a dealership partner, he’ll look for land on which to build a new Collision Revision facility.
Once D’Orazio gets to the final step of the market analysis, he typically meets with the local mayor or city council and the Center of Economic Development to dispel any myths they may have heard about collision repair.
“Unfortunately, body shops still carry a negative stigma – we created our own monster,” says D’Orazio. “Most communities would prefer a medical center or bank over a body shop. Our strategy is to convince them otherwise.”
To aid his efforts, D’Orazio has created an eye-catching, four-color brochure that explains the history and mission of his chain of shops. It also contains individual summaries of each location, including customer testimonials. “By the end of our presentation,” he says, “local government officials are normally very impressed with Collision Revision.”
Repairs Done On Time
Government officials aren’t the only ones impressed with Collision Revision – so are the customers. “It almost made me want to wreck my car again to deal with Collision Revision,” reads one testimonial in the company’s brochure.
How do they boast such strong testimonials? “When I started this business in 1976, I made a commitment to create the kind of vehicle repair shop that customers wanted – a business that delivers what it promises,” D’Orazio says. “I wanted my customers to tell their friends that they had a good experience at my shop. And I wanted them to come back the next time repairs were needed.”
To ensure such timely service, D’Orazio runs his business like an airline, but without the lost luggage. Customers receive a delivery date when their vehicle is dropped off. Collision Revision also offers free pick-up and delivery, as well as 24-hour towing. The facilities use state-of-the-art equipment, including unibody/conventional frame racks, computerized laser measuring systems, MIG welders and heated downdraft spraybooths. D’Orazio also recently switched to a new paint supplier. The reason for the conversion resulted from a bankrupt shop D’Orazio acquired.
“At the time, most of our shops were using a competitor’s paint line,” D’Orazio says. “But the paint jobs from the Fort Wayne facility were better than any I’d ever seen.” So after the acquisition, D’Orazio decided to use the Fort Wayne location as a test shop for this paint system. Because of the paint’s success in Indiana, D’Orazio has now converted all of his other locations to the same product.
Poised for Growth
With more than 25 years in the collision repair industry, 18 facilities and a solid growth strategy, D’Orazio is definitely a force to be reckoned with. And he fully expects to reach his milestone goal of 500 Collision Revision locations. But, he adds, “We’ll only expand as fast as we can handle – both physically and mentally.”
Solve the Problem
Problem: Once employees completed Collision Revision’s training program and achieved a certain level of experience, competitors would lure them away by offering more money.
Solution: Upon completion of the training program, an employee has the opportunity to make a minimal monetary investment in Collision Revision (company financing is available) and become a partner in the business. This Managing Partner program is then given a Collision Revision location to operate and is wholly responsible for the facility – including hiring, firing and profitability.
Equipped for Success
- Measuring System: Car-O-Liner
- Spot Welder: Various brands of MIG welders
- Paint Booth: Americure and Garmat
- Paint System: Sherwin-Williams Automotive Finishes
- Shop Management Systems: In-house
- Estimating System: CCC, ADP and Mitchell
Writer Tim Pugh is business development manager for Sherwin-Williams Automotive Finishes Corp.