It’s been said that about 70 percent of the way collision repairers do business has changed in the past five years. It’s also been said that the only way independent collision repair shops will survive in this big-business era — with consolidators and franchisers breathing down their necks — is to expand into multiple locations.
While this statement isn’t totally true — savvy independent business people will always have their place in the collision repair industry — expanding to more than one location can be a smart move for some.
Determining whether or not to expand your business into a multi-shop operation is a complex decision — a decision that must be made carefully and strategically. But once the decision has been made to go the multi-shop route, you’ll quickly find that a lot of time must be spent researching potential acquisitions — or building a new facility — meeting with bankers, working to assimilate the new facility, etc. And all the time spent doing these things takes time — time away from the original business.
For this reason, you’ll often find you need to hire a manager — or managers — to run the existing facility or both facilities. But who should the manager be? Should the manager be the previous owner of the shop acquired? Maybe. But, typically, the former owner will only stay on for a short period of time to assist with the transition of the business. Then what? Or what if the previous owner’s vision of the future doesn’t mesh with yours?
What about the person who’s already managing the shop? Granted, this person is a possibility, but he’ll need to be open to change because, after all, there will be a lot of it. Integrating the new shop into your way of doing business may be difficult — or impossible — for some of the existing employees to accept. And if the manager of the acquired shop isn’t open to all this change, he’s probably not the right person.
Regardless of who you end up hiring — the former owner, the former manager, a key employee, an outside person — you need to be looking for a specialist. The key to successful management in our industry is to place the right person in the right position — giving him the right direction, the right focus and the right tools, and then following up on the results.
Note: Even if you’re not considering expanding with multiple locations, the information in this article will still help you to hire the right manager for your operation.
Getting the Right Person
Much has been said about "McDonaldizing" our industry; this is particularly true when it comes to the administrative portion of our businesses and, to some extent, the production side. Consumers and insurance customers are better served when they can depend on us for uniform collision repair and for estimating and invoicing "best practices."
But, customers are still served one at a time, cars are still fixed one at a time, and there are many more variables in our business than one would find in a fast-food restaurant. Our managers must make decisions based on values and principles. They must be executives. And executives get paid for doing the right thing at the right time.
Shop managers and executives get paid to make the right decisions — the kind of decisions that help our businesses achieve long-term success. Estimators get paid for doing the right things, which result in profit for our companies and in satisfied consumers and insurance customers. Our reception staff gets paid for doing the right things, which result in happy customers who keep coming back. Our technicians get paid for fixing cars the right way and for keeping the estimators informed of needed changes to benefit the customer.
Everyone needs to be a leader in his or her area, and everyone needs to do the right thing. This is especially critical for your location manager.
Four major characteristics are shared by successful location managers:
- Is a great people person.
- Understands numbers.
- Knows where his time goes.
- Makes the right decisions.
Let’s examine these four characteristics in more detail.
The Traits of Successful Managers
- Has a way with people. Because our industry is a people and relationship business, a manager needs to have great people skills and must relate successfully to three groups of people:
- The people bringing in their vehicles (consumers).
- The people paying the bills (mostly insurance companies.)
- The people doing the work (team members).
Asking which group is most important is as useless as asking which came first, the chicken or the egg. If employees aren’t happy, they can’t possibly satisfy customers. If we don’t have happy customers, we probably have no need for employees. Without insurance companies, to what extent would people have their cars fixed?
These are the three legs of the "people stool." Without any one leg, the shop will probably tip over.
• Has an understanding of numbers. Good managers need to understand numbers. This means being able to read the monthly P&L and relate it to the actions taking place in the shop. A P&L is an abstract document generated some time after the shop activity has occurred. Accountants and lawyers would truly earn their high fees if they could tell us what to do in the future but, as you probably know, they can only tell you if your books aren’t in order. Unfortunately, you can have the cleanest books in the country and still go broke.
The manager’s job is to know where his shop needs to be and make those adjustments based on P&L.
• Manages time efficiently. A good manager attempts to manage his time, which isn’t always possible. The bigger the shop and the higher level the manager, the less he can call his time his own. Good customers come in and want to talk endlessly about something, employees have problems and crises that need discussed, and fires constantly need put out.
The better managers at least know where their time has gone. I know something is wrong when I walk in the shop, the manager gives me an exasperated look and says, "I’m so busy I haven’t even been able to go to the bathroom today!" I might say, "That’s terrible, but what have you accomplished that you set out to do?"
What’s the one thing your manager needs to be focusing on now to make the shop successful?
The location manager needs to set aside blocks of time to accomplish projects, whether it’s bonding with employees, making sales calls or studying his shop processes. Excellent managers have a record of what they spend their time doing.
• Makes good decisions. The location manager must make the right decisions. If he’s right only 51 percent of the time, at least he won’t lose. But we’re here to win big, not avoid losing. In business, there are often gray areas — answers that are either "probably right" or "probably wrong." This is why we agree on our value system to guide us when we have doubts. Our managers get paid for making the right decisions, not to please our corporate staff, so our principles should be based on the letters Q-TIP:
When in doubt, the manager needs to go with integrity and do the right thing for the customer, the employee and the company.
A Location Specialist
For the past several years, we’ve been using the predictive index in our hiring decisions, and we’ve found a distinct profile for most jobs in our office. For example, a good DRP estimator needs to be detail oriented and have a propensity for following the rules, while a driveway guy is more of the sales type who enjoys negotiating adjusted claims. As for location managers, they need to be able think on their feet and to persuade people, have a high level of integrity and be leaders of the shop. A good location manager needs to think and act like an entrepreneur. And he needs to be right most of the time.
We’ve always been somewhat reluctant to bring in outside people directly to the location manager position. Although it isn’t always possible, we like to have time to get to know the person and trust his integrity. The career path tends to start with estimator, then assistant manager, then location manager. Sometimes we even begin with a parts man. The problem is that a great DRP estimator doesn’t necessarily make an excellent manager. He may find himself doing exactly what he’s done successfully in the past, but failing miserably in his new job. To be an effective manager, a person has to be a leader.
Types of Shop Management
So what does it take to be successful as a location manager? It depends on the location. For you — as the owner — the first step is to consider the business you’re acquiring or building when expanding to multiple locations. Your next step is to hire a manager who suits that particular shop’s needs and is in agreement with your goals for the business.
With that said, keep in mind the business you’re expanding with and then consider these four basic types of shop management:
- A Man of Many Hats — this is at a smaller shop with primarily walk-ins and return customers.
- Direct-Repair Coordinator — this is at a medium to large shop with primarily DRP customers.
- Mr. Dealership — this is at a small to medium shop that’s primarily dealership oriented.
- The Communication King — this is at a large shop that handles all collision customers and programs.
Let’s take a look at these in more detail:
• A Man of Many Hats — A smaller shop, when absolutely loaded with work, can be a leader in net profit percentage. The drawback is that these shops tend to be overlooked by insurance DRPs and don’t have the capacity to service large dealers correctly. However, with the right manager at the helm and a steady influx of work, the chance for success is high.
The right manager at a location such as this is a do-everything guy. He knows all aspects of the business, keeps a close watch on expenses, writes a large portion of the estimates, knows the customers by name and helps all the team members — from the body men to the detailers — with his personal knowledge and enthusiasm. He gets the job done no matter what the obstacle. He puts in more time than most and doesn’t make excuses. He’s honest and trusted by all, and his results speak for
• Direct-Repair Coordinator — The DRP shop manager is a specialist in insurance and customer relations. DRP customers tend to forget their loyalties to the shop and think only that the insurance company sent them. And, when a problem arises, they can be quick to call the insurer to complain.
This shop probably has two to three estimators and 25 people total in the shop. A successful manager at a shop such as this makes sure his estimators and receptionist keep the customer and insurance company appraised of anything out of the ordinary in the process.
It takes a special management style to flourish in this scenario. The do-everything type of guy will probably fail here. The success in this shop is achieved by allowing people to do the right things on their own. They follow the rules and so does the manager. He promotes the company values to his team members as guidelines to be used when they have their doubts about the right thing to do. Conservative in nature, he’s well-respected by the insurance industry, and he and his people follow the guidelines agreed upon. His honesty and integrity are respected by all.
• Mr. Dealership — The shop serving primarily dealers can be a real handful, especially if you’re serving two or more of them. From used cars to new cars to customer-paid repairs, the demands can be excessive — and each department at the dealer has its own boss who must be taken care of in his own special way. Of course, the hope is that satisfied customers referred through the dealer will become loyal return customers.
To manage this type of shop takes a special person. More flexibility is called for — he needs to rock and roll, he must be perceived by his dealers as extremely loyal and his integrity must never be in doubt. When there’s a problem, he’s always "at fault" and apologizing with his tail hanging between his legs. But, he must quickly be able to bounce back with a smile on his face and keep charging forward. Like I said, this takes a special person. Not everyone can eat crow and then smile about it!
• The Communication King — The manager of a larger shop must be a people person and a communication specialist. The larger the shop, the more time that must be spent in meetings discussing changes and agendas. By definition, we can either meet or work. We can’t do both at the same time. Although this leads to some inefficiency at the larger shop, the manager makes up for it by hiring more specialized people and by putting their strengths to work. People can wear less hats, specialize and, hopefully, be more productive. This works best if the manager doesn’t make too many changes, stabilizes the shop and lets people get good at what they do best.
Because this type of larger shop caters to dealers and insurance companies alike, this manager is burning the candle at both ends. He’s probably giving discounts to insurance companies and commissions to dealers. The dealers want everything yesterday, and the insurance companies are monitoring cycle time.
If the shop owner is smart, he sets up the facility for smooth workflow. If the manager is smart, he segments the dealer jobs from the insurance jobs so they won’t hold each other up. This means either separate crews during the day or a night shift painting dealer cars and small jobs.
With so many things going on at once in a large shop such as this, it’s extremely important for the manager to focus on one thing at a time. Again, the guy who tries to do everything will probably fail here. The manager, with some guidance from the owner, needs to determine the one area that needs his attention more than any other and then focus primarily on that area. For example, if quality and production are suffering, the manager may decide that morale is the real issue and focus on that for a period of time. He asks himself, "What can I do that no one else in the shop can do as well that will make a significant difference to the company?" He then zeros in on that and doesn’t quit until he shows results. But this doesn’t mean he lets everything else go. There are other people to handle day-to-day issues.
Once You Find Him
You’ve run your one shop for years and have been in charge of everything, down to the last detail. Now, you’ve brought in a guy to run your second shop, and you suddenly realize you’re going to have to relinquish some of your authority to him. Ugh.
As strange a feeling as this may be, you have to let the manager manage. While he does need to know his authority boundaries when it comes to spending, hiring, etc., he also needs elbow room.
Granted, you have your years of experience behind you and are obviously much more familiar with your business than he is, but he needs the same opportunity that you had long ago: the opportunity to make mistakes, to learn from them and to grow.
The industry is changing, business in general is changing and your business is changing — it’s becoming a multi-shop operation. What this means is that you, too, are going to have to change. You can’t run two shops the same way you ran one.
With that in mind, once you’ve gone through all the hassles of finding the right manager for your business, give him the opportunity and the freedom to grow. If you do this, you’ll find that your business will grow with him.
Writer Tom Holmes owns and operates eight shops in Southern California.
Note from Tom: Many of the ideas I’ve used in the autobody business have come from the writings of accepted business authors like Peter Drucker, James Delasco and Ralph Stayer. I encourage each and every one of you to continue reading, learning and changing.