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When there’s blood in the streets, buy real estate.

Sponsored by Spanesi

Money is just lying there for the taking right now. Before you even think about saying, “But ….”, just stop right there. Right in front of you, there are thousands (even hundreds of thousands) of dollars just sitting there waiting for you to pick them up and find them a home in your bank accounts.

Now, hear me out. Right now, forward-thinking visionaries are quitting their 9-to-5 jobs and going into business for themselves, current business owners expanding their operations, individuals becoming millionaires for the first time, millionaires turning into billionaires and so on.

In the collision repair industry, we can look at current trends from OEMs, insurance companies, other business segments and the current economic environment in order to guide our own businesses and decision-making. There are definitive takeaways that we have been tracking for the last few years. Several of these trends are major business disruptors to our industry; much like Uber in the transportation sector, Amazon in the retail sales sector and Netflix in the entertainment sector.

Here’s what we see as the major trends taking place in the collision repair industry for the next 5 years:

  1. The current economic environment will continue to effect collision repair operations for the next 36 months. Smaller business operators will continue to meet with challenges preventing them from the business growth required to stay competitive against larger, more efficient collision repair operators.
  2. Shop owners, operators and managers will need to make critical adjustments today in order to take business from competitors who are unable/unwilling to meet the challenges of a prolonged economic downturn. This includes: expanding business production flows and enhancing technical repair capabilities through new equipment purchases, employee training and increased marketing budgets.
  3. Customer vehicle data will flow to insurers, information companies and OEMs at an exponential rate. Players such as Google, Amazon, Apple and other major technology companies will plant their flags in the console of your next vehicle.
  4. OEMs will take the “First Notice of Loss” (FNOL) claims process from the insurance companies.
  5. OEMs will more assertively drive insurance claims to OEM-certified collision repair facilities.
  6. Advanced driver-assistance systems (ADAS) will drive claim severity increases in paid claims and, at the same time, put downward pressure on the number of claims. The cost of ADAS systems will continue to lift the price of new vehicle prices and cause used car values to increase.
  7. At least one major consolidator will be absorbed by a competitor, hedge fund or investment firm.
  8. Purchases by the major consolidators, which has slowed dramatically during the previous two years, will take a much a slower pace over the next five years.

When there is fear, there is opportunity. Fear is the strongest human emotion and an incredibly bad driver when we are making business decisions. We don’t have to make bad business decisions. We just don’t. What we need to do is make sound business decisions based upon our updated and current business plan. You do have a current business plan…right? If you don’t, get to work and get yours updated. If you don’t have a business plan at all, there is no time like the present to create one. You desperately need a current business plan.

So, what are the strategies that a collision repair operator should be looking to employ in the next 60 months? Based on our research, continuing industry trends and some – let’s be honest – reading of the tea leaves, we have several suggestions for moving your business to the next level.

1. Become OEM certified.

  • Analyze your vehicle flows and determine the top 5 vehicle OEMs that you repair.
  • Pay special attention to local dealerships that do not have an attached collision repair facility.
  • Become an OEM repair facility for your top 5 OEMs.
  • Equip your facility with OEM-approved collision repair equipment.
  • Train your technicians on all of the OEM-approved collision repair equipment.
  • Market your OEM certifications.

2. Bring ADAS calibrations in-house.

  • ADAS calibrations are rapidly becoming a necessary operation on light, medium and heavy-duty vehicles.
  • Build ADAS calibrations into your repair processes.
  • Create a new position within your facility for a Vehicle Electronic Specialist.
  • Locate and/or create a place within your facility for ADAS calibrations. The floor must be flat and at least 1,200 square feet in size.
  • Purchase the targets for the top 5 vehicle OEMs that you repair.
  • Locate and/or create a place within your facility for ADAS calibrations. The floor must be flat and at least 1,200 square feet in size.
  • Purchase the targets for the top 5 vehicle OEMs that you repair.

3. Look for opportunities to expand your business footprint.

  • Right now, money is cheap to borrow.
  • Purchase new equipment that expands your OEM certifications list and improves your repair process efficiency. Equipment should pay for itself within 24 to 36 months. Focus on the repayment timeline and not the price of the equipment.
  • Competitors are facing financial pressures. Keep an eye out for distressed purchases of your competitors’ businesses.
  • Evaluate your team. If you’re missing a needed skillset, locate someone who can fill that gap. If you have a weak link on your team, replace it.
  • Expand your marketing, build your network out further and position your facility as the “go-to” collision repair facility in your town. Any obstacles to you claiming you’re the “Best Body Shop” in town need to be overcome and removed.
  • Reach out to your vendors for advice. They talk to a lot more shops – in a lot more towns and cities – than you do. You’ll be surprised what can happen when you take a “sales” relationship and turn them into business consultants. That being said, not every vendor possesses those skills, so choose the vendors that bring something to the table for your business needs.
  • Make sure that no single business entity provides more than 20% of your business’s revenue.

Remember, there’s no such thing as “tomorrow” when you have opportunities in front of you. Making sound business decisions based upon facts, research and industry knowledge are key to capitalizing right now. Use your business plan to shape your decisions, create your objectives and define your goals. The opportunities that are created by uncertainty in the marketplace are ones that provide lasting positive impacts to your business operations, profitability and repair service offerings.

This article is sponsored by Spanesi.

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