The collision repair industry is witnessing an exponential growth of private equity (PE) interest, with no signs of this trend abating. Large multi-shop operators (MSOs) now stretch beyond traditional collision repair services, moving into auto mechanics and advanced driver assistance systems (ADAS). Amidst this shifting business landscape, we should be bracing for impact.
Private Equity's Impact on the Collision Repair Industry
PE's recent romance with the collision industry has drastically increased our competition and changed the game for smaller operators. These firms, known for their substantial investment pools, have increasingly bundled smaller companies into sizeable MSO conglomerates.
Why do we care?
Retention, that's why.
In a rink that is acquisition-rich, the capital is distributed under a different set of rules. Job-to-job profitability suddenly becomes an afterthought, and all eyes tend to be driven toward acquiring the next big deal. Therefore, the budget to keep the current locations staffed is higher because if they can't move the work through the stores, it simply bogs down the acquisition rate of the next purchase. Then, as smaller shop owners, we struggle to reimburse our team members for all they're worth while still turning a profit, and these MSOs sit lurking.
Strategies to Cultivate Loyalty
Balancing Recruitment, Retention, and Training
In an era where "Loyalty isn't the only card to hold," as shop owners we must emphasize refining recruitment, retention, and training protocols. Traditional loyalty faces a serious threat from the lure of private equity's deep pockets.
It's essential to assess and redistribute budgets to boost benefits packages, sending a clear message to your team that their services and loyalty are both recognized and rewarded.
The Visibility of Value and Benefits
Talk is cheap. Today, transparency remains more critical than ever in fostering a loyal workforce. Clearly outline the benefits your shop provides, ensuring every employee knows their total compensation package. This should include company-provided lunches, vehicles, gas, shorter work weeks, agreeable holiday scheduling, and training/personal development investments. These outlines must include credentials and timelines and clearly communicate the capital investment your store will be investing in the long term. Understanding what's at stake can squarely place your shop as an employer of choice, outweighing short-term monetary gains from elsewhere. Without it, this PE money creates a high risk of converting some of our most loyal folks simply because they generally play in a totally different sandbox. Therefore, in many cases, the capacity they can offer doesn't always have to pencil the same way we would need it to.
Preparing for the New Generation's Expectations
Today's employment landscape is often blindsided by a workforce unfamiliar with traditional protocols, such as a two-week notice before departure. Recent statistics have exposed that today's generation doesn't understand what a two-week notice is. This reality check calls for proactivity; back in the day, we received a notice, performed an exit interview, and saw an ex-team member off to a brighter future. Critical information was gathered at the end of employment to influence best practices moving forward.
Not today.
Today, you get no-call no-shows from team members who have potentially spent years working for you. Today, you get told on Friday that "today will be my last day." What's causing such random acts of jumping ship? It’s the deep pockets of PE money offering salaries and rates so aggressive that even owners might consider making the move. Are you prepared?
Conclusion
The collision repair industry stands at a crossroads where attracting private equity backing lifts the competition bar while simultaneously increasing the complexity of sustaining a dedicated team. Shop owners must not only grasp but prepare to adapt to these changes to thrive.
Adapting to the PE effect isn't required immediately. Still, by emphasizing training, compensation transparency, and open dialogue with your teams about their critical role in your business's future, you can chart a course through these stormy waters.
Above all, stay informed, stay flexible, and keep your team at the core of your strategy to ensure that as the industry landscape evolves, your business does more than cope — it flourishes.
