Delegating with Confidence
As Kareem Abouzeid’s shop grew, profits shrank. Still a hands-on owner, he would have to completely change the way he worked to stay in business.
A NEW DIRECTION: Kareem Abouzeid had to learn to let go of the day-to-day tasks in his shop. By taking a more hands-off approach, he helped Knockout Collision Repair turn around, and start turning a profit. Photo by Austin Lyons
It’s a natural response, Kareem Abouzeid admits. “When we run into a problem, we tend to do what we know, rather than looking for a new way to do things,” he says.
As Abouzeid’s shop began to struggle, he fell back on his experience as a technician.
“I always felt that if we weren’t doing well, I just had to work harder,” he says. “We just needed more cars, more work, and then we’d be fine.”
It had always worked before, and it was how he helped grow his shop from a one-man operation, occupying a 1,000-square-foot space below a local dealership, into a stand-alone, five-person business that was quickly becoming a favorite in the Chico, Calif., area.
The only problem was that the shop, Knockout Collision Repair, wasn’t making any money.
“We had cars and customers and I always felt like we were doing OK—until I went to pay our bills,” Abouzeid says. “It was like the money was just slipping through my fingers.”
So, Abouzeid put his head down and put in the hours—some 70 to 80 hours every week, working Sunday through Saturday, trying to keep up with the workload and his high standards for repairs.
“Frustrated? Yeah, that’s an understatement,” he says. “I wasn’t sure what to do. It was always my dream to run a shop, and now, it felt like I was running it into the ground. I didn’t know how long we could keep it going.”
Abouzeid started his career with a broom, sweeping floors in a local Chico shop.
“I told the owner that I would do whatever I had to do,” he says. “I wanted to work in this industry, and I wanted to learn. So, I just worked my way up.”
He learned to paint. He did body work. He worked the front counter. During his late teens and early 20s, Abouzeid held nearly every position possible in a collision shop. So, when the opportunity arose to rent out that space below a dealership in 2000, he jumped at it.
Slowly, he built up a client base, and his bank account.
He felt confident enough that when a 7,500-square-foot space opened up across town, he jumped again. In 2003, he opened Knockout Collision Repair.
With the new facility came a new opportunity to increase revenue and his market share. It also came with a long list of new responsibilities as an owner.
He can see now that it was a mess, but he didn’t know a better way to do it at the time.
His way was simply doing everything himself.
He had three employees, and his wife was his bookkeeper.
Yet, if any issue came up in the shop—a mistake in a repair, a customer complaint, a broken piece of equipment—Abouzeid leapt to put out the fire.
He also hustled to get work into the shop, often creating a backlog of jobs that clogged up operations and forced employees to frantically move from job to job.
Still, the shop did quality work, he says, and customers were, for the most part, very pleased with the service. They were certainly happy with the prices, Abouzeid says, as he regularly adjusted his estimates to make jobs more affordable for his clients.
“I was always trying to be the good guy,” he says. “To my employees—helping them constantly, doing some of the work—and to customers.”
The problem was, he realizes now, he wasn’t being a good owner.
At the end of 2004, he went through his numbers. Revenues were just north of $400,000, a respectable number, but profits were low. He was barely covering his costs, and nothing was coming into his own pocket. Essentially, the shop was broke. He knew something had to change.
Abouzeid finally realized that simply working harder—his go-to solution in the past—wasn’t going to turn things around. There weren’t any more hours in the week to get jobs completed; he was already using them all. And he had more cars than he could work on.
It left him with two choices, both of which involved a tough confession.
“I either had to admit I didn’t know how to run my shop and go back to working for someone else,” he says, “or I had to admit [that I didn’t know how to run my shop] and go find some help.”
Abouzeid chose the latter, and started using every scrap of leftover money to pay for seminars and training sessions, all focused on improving his skills as a business owner. He took some locally; he took some from consulting firms and from various other industry organizations. He took everything he could.
Luckily, one of his first seminars dealt with setting prices.
“I realized I was just giving away my shop,” he says. “Trying to be people’s friend shouldn’t have been the focus. I should have been trying to fix their cars at a fair price—one that’s fair to me, too.”
Using a formula that took into account his shop’s fixed and variable expenses, as well as profit goals, Abouzeid changed his labor rate and began charging prices that would actually yield a profit.
Then, he set about fixing his shop’s operations. Jobs were getting backed up, and efficiency was far below what he felt it should be, or at least he assumed it was. He wasn’t actually tracking it at the time.
“I was looking at the problems, and I just realized that the problem was me,” he says. “I was trying to do everything. I didn’t delegate any responsibilities. If people had questions, I would just do it for them, rather than making sure they can do their jobs correctly.”
He says his staff was highly qualified and capable of producing great work, and he needed to simply get out of their way.
He began designing job descriptions and standardizing all of his shop’s procedures. He gave his estimator, whom he hired as a manager, more responsibility.
And Abouzeid slowly backed off to focus on continual improvement of practices and the long-term vision of the company.
It took several years, he says, to get things the way he wanted them.
Still, just a year after making changes, revenues doubled. Two years later, he topped $1 million for the first time. Today, the shop generates roughly $1.3 million annually with nine employees, all of which have specific and highly articulated job descriptions.
More importantly, though, the shop is profitable.
“It’s night and day,” Abouzeid says. “It’s always a process. We’re still making changes and trying to improve, but we’re on a much better track now. We know where we’re going and how to get there.”
And it takes a lot less effort to do it: Abouzeid rarely works more than 40 hours in a week anymore.
Abouzeid says he hopes, if nothing else, that people can learn two things from his story. The first is that seeking help, whether it’s through training, a mentor, friend or consultant, is essential when you don’t have the solution to a problem.
The second is that it is impossible to effectively grow without trusting your staff.
“I was always trying to help them out, but all I was doing was hurting,” he says. “It worked fine when we were smaller, and even as we started growing, because all that mattered was that I cared. But you can’t manage people that way, or a shop that way. I’ve always had great employees, and I needed to help them by letting them do their jobs.
“Everyone needs a clearly defined role, and that helps you achieve your goals.”