Shop Owner Profile - BodyShop Business

Shop Owner Profile

You can’t go one month without hearing or reading about a consolidator buying an independent collision repair shop. In the past few months alone, ABRA Auto Body & Glass acquired East Marietta Paint & Body in Marietta, Ga., formerly owned by Donnie and Ruth Reeves; Sterling Collision Centers acquired JSI Collision Centers, with four locations in Northeastern Ohio; and Caliber Collision Centers acquired California shop owner Don Long’s three collision repair facilities, two drop-off sites, a greenfield location that’s under construction, a towing company and a freeway service program that assists stranded motorists.

"Independents are dropping like flies," said one shop owner about industry veteran Dick Cossette selling his four locations of Lehman’s Garage, Inc. to Gerber Collision & Glass in late 1998.

To say they’re dropping like flies may be a bit extreme, but countless independents have sold out to consolidators in the past few years — and, it appears, they’ll continue to do so. What effect is this having on the industry? Eventually, it will likely decrease the number of shop owners. For example, instead of Bob, Frank and Sue operating three independent operations, some consolidator will buy all three shops and slap a corporate name on them, decreasing the number of shop owners in the industry by three. Over time, these types of buyouts could have a significant effect on the overall number of shop owners.

Consolidation may also have an effect on the overall number of shops in the industry if current speculation and predictions prove true. Says Jon McNeill, co-chief executive officer for Sterling: "There are about 55,000 shops in the United States. The average shop does $400,000 in sales and $35,000 in profits. This is not sustainable." Meaning some shops will die.

And some probably will. But, again, it’s all speculation.

Others have even gone so far as to predict that once consolidators are through, only 10,000 shops will remain. Going to the other extreme, some say consolidation will change nothing — that it’s business as usual today and always (which, by the way, McNeill calls the "ostrich approach." "Burying your head in the sand and pretending that nothing is happening will cost you your business," he says).

Regardless, the fact remains that consolidators will play a role in the collision repair industry. Exactly how their role will affect everyone else, however, has yet to be determined.

But what may be even more interesting than shop owners who’ve already sold to consolidators are shop owners who haven’t sold — yet. In BodyShop Business’ 1999 Industry Profile, we asked, "Would you sell out to a consolidator if the price were right?"

Forty-five percent said they would.

Here’s what a few of our respondents had to say about why they’d sell:

• "Eventually, only mega shops will survive. Period."

• "Everything has a price."

• "I’d do it for the money — and because I feel independents are being pushed out."

• "To get rid of the hassles and the headaches."

• "I’d then build and start a new ‘hidden’ location where I feel a shop is needed." (Independents go underground. It sounds like a movie title.)

• "Why fight? After you say no, they buy your competition and still put you out of business."

• "I’d take the money and run — to a different business."

• "Because sometimes this business is just too stressful."

• "I get tired of bickering about prices."

• "I’m getting burned out after 23 years and looking to retire."

• "I don’t like the idea of bigger is better, but I’ve worked very hard at quality and service and it isn’t what I thought I’d be making 15 years later."

Don’t get depressed. Granted, it’s hard after listening to that bunch, but I gave you the bad news first. The good news is, a lot of shop owners out there (54.8 percent) wouldn’t sell their businesses. Why? Here’s what a few of them said:

• "I’m an independent and I want to stay that way."

• "The American dream of owning a business cannot be bought!"

• "This is my life. I’ve worked for years to accomplish this."

• "I’m the second generation of this family owned shop, and my son wants to take over after he graduates from business college in two years."

• "I’m too young to retire."

• "This shop has been owned for 54 years by the same family."

• "I like my business, and it’s not for sale."

Perhaps the biggest difference between shop owners who’d sell and shop owners who wouldn’t is the fact that those who wouldn’t sell expressed taking pride in what they do. "It’s not a job," says one shop owner about his business. "It’s part of my life."

Writer Georgina Kajganic is editor of BodyShop Business.

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