A Winning Business Sense
Opening five shops in the span of four years is no small feat. But, when Shane Steele, owner of Georgia’s five-location Elite Auto Collision, knows what he wants, he goes after it. And what Steele wanted was to own the property of all of his locations.
“I didn’t want to wake up 20 years from now and have put all of this money into a business and not own it,” Steele says.
So, when the landlord he was leasing his flagship Athen’s location from refused to sell him the shop rather than lease, Steele decided to find a new location that he could own. A self-proclaimed process and systems person and student of PPG’s Green Belt training , Steele knew that if he was going to transition his flagship location, he would need to have a solid plan in place. Within nine months, the new location was up and running. The time frame is typical of many shops that are opening, but what is unique is the fact that—for almost three months after the new location was opened—Steele made the conscious decision to have both the new and existing Athens locations running in order to make a seamless transition. Not only that, but those extra three months of leasing his original location allowed him to broker a deal with his landlord that allowed him to have a say in who took over the lease.
By making smart business decisions and having a detailed plan, Steele is on pace to continue to grow his empire at a rapid rate.
Steele found the perfect building in a nearby furniture store. It had a prime location on a busy street in Athens and was 33,000 square feet. The only problem? It wasn’t for sale.
“I had searched all over for a place that was for sale that sparked my interest,” says Steele. “When I finally saw a location I liked, I picked up the phone.”
It was lucky he did. The current tenant was actually preparing for retirement, so he was ready to sell the location to Steele at a fair price. He purchased the furniture store with the help of an SBA loan because he had to put less down (10 percent vs. 20 percent) than with a traditional loan. By doing this, Steele had more money to purchase equipment for the shop.
Upon purchasing the new location, the store was gutted and made to Steele’s specifications. The floors were stripped and replaced with concrete epoxy floors. New air piping was installed and two new paint booths were added.
During the move into the new shop, he acquired another shop and its equipment. Steele was able to take some of the equipment from the original Athens location, as well as from the shop he acquired, and use it in the new shop. Because of this, he didn’t have to spend as much on brand new equipment. From the acquired shop, Steele brought a frame machine and a spot welder.
With the location purchased, it was time for Steele to execute his plan.
Over 90 percent of the first time customers that Elite Auto Collision sees is sent from insurance companies. Because of this, Steele knew that it was essential that they were not inconvenienced in any way, which meant there could be no lags when it came to cycle time. The same went for the shop’s high rate of return and referral customers.
To keep things running smoothly and accommodate the same amount of work it always had, Steele made the decision to keep the original location as long as necessary, and even had a few months where both locations were up and running and performing repairs. He created a financial plan for the transition that included all of the costs that he could foresee during the transition. He factored in $50,000 for overhead costs, the amount he would have to pay any staff members that were needed at both locations during the overlap period, construction, equipment costs and rent for the original facility until he found a desirable tenant to take over his lease.
Once the shop was ready to start making repairs, Steele brought a small team to the new location where some of the work from the original location was sent to.
Steele started by moving his lead technician, painter and estimator over to the new location. As more work was completed at the new location, he continued to move people over. Within two and a half months, the majority of all of the repairs were happening at the new location.
This period of time is what he refers to as the “test and tune” period. During this time, the equipment and processes at the new shop were tested out. This helped worked out any kinks before the transition was complete.
When all of the construction at the shop was complete, it was time to make the move. Since Steele had slowly been transitioning the staff and the majority of the repairs were already happening at the new location, there wasn’t much left to do.
When the time came, Steele alerted all of his partners to the change of address for the shop and just like that—it was done. He made the call on a Friday in March and by Monday, the insurers were referring work to the new location. The old shop remained open with a staff member that let any walk-in customers know of the change for one month. Since the majority of the shop’s work came from insurers, there weren’t too many customers that weren’t aware of what was going on.
“For the first half of the month, she had maybe 2–3 people per day. After that, she was really bored,” Steele laughs.
Would he have done it differently? No. Having her there was all planned ahead of time and the money that it would cost to do that was laid out in Steele’s plan.
The last step of Steele’s transition involved finding a tenant to take over the lease for his previous Athens location. It wasn’t necessarily his responsibility, but because the new location and the original location are only a mile away from each other, Steele wanted to ensure a direct competitor didn’t move in that closely. There aren’t many commercial buildings in the Athens area that are ideal for body shops, so Steele knew his original shop would be a hot commodity when he moved out of it.
Since Steele had such a positive relationship with his landlord, he was able to convince him to let him decide who would take over his lease. Because Steele was under a month-to-month lease, he was able to scope out candidates as long as he agreed to pay the monthly rent until the space was filled.
“I was looking at dealerships and parts departments,” Steele said.
Then, Steele found what he was looking for—a MAACO shop.
“MAACO isn’t a direct competitor of ours, we offer different services,” Steele says.
Even though it cost him more money out of pocket right away, keeping the competition at bay will save him down the road.