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Survival Strategies for Independents

Consolidation or Independence?

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The collision world is rapidly changing. Independent shops are consolidating into large corporations, and manufacturers are buying independent shops, as well as certifying dealership shops. And it seems everyone is trying to get on insurers’ direct-repair lists. For the last two years, virtually every call our consulting firm has received from collision shop owners can be broken down into one of two questions: "Should I sell my shop now?" or "Should I become a consolidator?" Essentially, both of these groups are asking the same question: "How can I survive?"

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First, let me say that, in my opinion, after this consolidation fad wears out, there will be many well-run independent collision shops still left in operation. If you look at other consolidated industries, well-run independent operators have always survived. The hardware industry provides a good illustration. In Charlotte, N.C., where I live, we have three choices for hardware: Lowe’s, Home Depot and Faul Brothers, an independent that has been here since the turn of the century. My first choice for hardware is always Faul Brothers, for several reasons. For one thing, I can park right at the front door. I don’t have to drive around a 10-acre parking lot on a treasure hunt for a spot. And when I’m inside, there’s always someone ready to assist me. It doesn’t matter if I bring in a part from my washing machine or a carburetor from my lawn mower. The people there always know exactly where to find what I need, and they’ll lead me to it. When I ask someone a question in Lowe’s or Home Depot, he or she always sends me to another aisle – one mile long with 100 different valves for my washer and no one to tell me which one I need. I also like the atmosphere and people at Faul Brothers. It’s like seeing an old family friend every time I go there. They know their customers and how best to serve them.

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The survival of Faul Brothers is no accident. Sure, I know that I’m paying a premium when buying from them, but the convenience and personal service they provide more than offset the higher price.

Like Faul Brothers, how can independent collision shops survive consolidation? How can you prepare for the future and ensure your business will continue to grow and prosper? You’ll need three key items:

1. a strategic plan for the business,

2. a marketing plan and

3. business processes that cater to your customer base.

Let’s explore these items in depth.

Devising Your Strategy
A strategic plan defines the procedures you’ll implement to assure a continued stream of customers to your shop. Strategic plans begin with a proper definition of your business’ purpose. This is sometimes referred to as your "vision." Over the years, I’ve advised many shop owners to define their vision. To do this, many have gone somewhere like McDonald’s, copied their vision statement and re-worded it for the collision business. Usually, it ends up reading something like, "Our vision is to provide quality services to our customers." Let me assure you that this is not the way to properly determine your vision.

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Instead, ask yourself this question: "Why did I decide to operate a collision repair business?" Was it because you thought that if you owned the company, you could repair vehicles better than your competitors, faster than your competitors and at a lower cost than your competitors? Generally, the reason you decided to own a collision repair facility is the vision.

Once you’ve properly defined that, you can decide which marketing strategy will be needed to find and attract the customers you want to serve. Many businesses fail when they lose sight of their vision and start to attract customers they either don’t want to serve or don’t know how to serve. This sets off a string of events: The customers and employees become disgruntled, the workmanship is unsuccessful in meeting expectations and the business eventually fails.

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Once you determine why you’re in business and what you can do better than your competitors, you’re on the right track to defining your vision. Your next step, then, is to develop strategies that get your business’ name, address and telephone number in front of those potential customers. The more well-defined your strategy, the easier it will be to target your customers. Also remember that you might need different strategies for different customer groups. For example, a strategy designed to attract high-line vehicle owners probablywon’t attract soccer moms with minivans.

Developing a Marketing Plan
Once you’ve defined your vision and developed strategies to reach your target customer groups, you need to develop a marketing plan. What’s a marketing plan? To put it simply, it’s everything about your business that communicates who you are, what you stand for and what you can do for your customers. This includes both verbal and non-verbal communications. Some examples of non-verbal marketing communications that put forth a positive or negative image, depending on their presentation, are the visual appeal of your facility, the shrubbery, grass and flowers, customer parking areas, the reception area, employee dress and point of purchase materials, such as warranties.

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These non-verbal elements can say much more about your business than any words ever could. For example, if your vision is to be the highest quality provider, then your facility must reflect quality to the customer. If your vision is to be the friendliest provider, you may want the look and feel of a Cracker Barrel Restaurant. The high-tech shop would desire state-of-the-art furniture and a brightly lit reception area with modern amenities. The customer-friendly facility might want to have rocking chairs, soft lights, throw rugs and old-time signs on the wall. Your marketing plan should reinforce your vision to your customers and should tell your customers they made the right decision by choosing you.

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Defining Business Processes
Finally, your business processes must be designed to deliver the business promise (your vision). Properly defined and written business processes guarantee that your employees will deliver a consistent type and level of service to every customer, every time. This can be achieved by documenting how you want things done and then training your employees to do it your way.

Ultimately, every business’ success or failure is determined by the quality of its processes and how well they’re executed. These processes should include every phase of the business, from opening the door every morning to closing it at night – and everything in between. The processes should be clearly written and easily understood. I recommend you start with the obvious and easier elements, like how you want your telephone answered, how you want customers greeted and how you want finished vehicles delivered. Your strategies should define who your targeted customers are and what your collision shop can do for them. Your marketing plan assures customers that, yes, they have come to the right place.

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A Blueprint for Survival
Indeed, the collision repair business is changing. Up until recently, simply repairing the damaged vehicle was all that was necessary to succeed and prosper. But consolidation and other industry changes bring competition – and that competition will be actively pursuing your customers. The good news is, in this type of war, the size of the business doesn’t matter. The shops that win will be the ones that do the best job of defining for the customer what makes the business unique and then delivers that uniqueness to every customer, every time.

This article was written by Larry Edwards, CMC. Edwards is president of Edwards & Associates Consulting, Inc. located in Charlotte, N.C. Edwards & Associates consults with body shops, manufacturers, paint suppliers and government agencies throughout North America. You can reach Edwards at (704) 454-5208.

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