The Three-C Comeback
If Harry Truman was right when he quipped that it’s what you learn after you know it all that counts, then Bob Juniper is an educated man.
More than a decade after Juniper and his Three-C Body Shops Inc. were making headlines with a rogue advertising campaign that led to growth unheard-of in the collision repair industry, Juniper has come out of a drastic downsizing period leaner, smarter and maybe even a little bit humble. But you’re not done hearing from Bob Juniper, Three-C’s president and CEO. Three-C is a smaller enterprise these days, but it’s on another growth cycle, and Juniper says he hopes to have his company back up to the size that followed its inclusion on Inc. magazine’s list of the 500 fastest-growing private companies in the United States in 1995 and 1996.
“I feel like I’ve seen the whole circle,” reflects Juniper, who says he could put on his résumé that he can do company turnarounds. “There was a time when we were downsizing I thought maybe we weren’t going to make it. That’s scary when you’ve been in business 50 years. I’m more mature and more relaxed now. I’ve seen it all. I can handle it all.”
THE RISE AND FALL
When Bob Juniper Jr. took over Three-C from his father Bob Sr. in 1984, it was a one-shop operation near Columbus on the “3C” highway that connects Ohio’s three large cities of Cincinnati, Columbus and Cleveland. At that time, the shop did $104,000 in sales per year. By 2000, at the height of the Three-C reign as one of the country’s largest repair shop companies, revenues exceeded $12 million.
The reason for Three-C’s wild success: Juniper’s abhorrence for the auto insurance industry’s direct repair programs, in which insurers urge customers to use approved shops for collision repairs. In a series of radio ads that filled the Ohio airwaves in the mid-90s, Juniper aggressively railed against direct repair programs (DRPs)—and competing body shops that participated in them. Juniper developed a can’t-miss fluorescent-pink logo, he bought billboard space, flew hot-air balloons above football games and created a branded Collision Survival Kit filled with Three-C literature. He even spun off a company called Jupiter Marketing to focus on Three-C’s advertising.
Juniper had hit a nerve. He was black-balled by the insurance industry, but sales soared—as did the company’s operational expenses.
“It’s easy to get sloppy when things are good,” says Juniper, who admits that at Three-C’s high point, he was keeping 20 or 30 extra people on staff, waiting for the next growth period. “That was one of my weaknesses, was watching costs. We always had such good sales on the top line, I didn’t pay any attention to the costs.”
Then in the early part of the millennium, the industry started shrinking. By 2003, when the company started suffering financial losses that landed it in a mess of red ink, it became apparent that Three-C was vastly overextended.
“We were in this rapid growth mode, so we were hit very hard” by the downturn in the collision repair industry, Juniper says. “When you’re superextended into growth like we were, it doesn’t take much of a hiccup to feel the punch in the gut.”
With sales dropping and technicians standing idle in his shops, Juniper knew he had to think fast and make some major changes. Or Three-C wasn’t going to make it.
A company can do two things when times are slow, says Doug Williams, president of Portland, Ore.–based Doug Williams & Associates LLC: You can decrease expenses, or you can increase sales. Williams, a small-business consultant who has himself gone through massive downsizing during his career, points out that the goal, of course, is to do both. And the best way to do that is to cut your operational costs while keeping your advertising budget steady.
“The smart people are investing in marketing during a downturn,” Williams says. The temptation among small business owners might be to trim a seemingly unimportant part of the budget like advertising and marketing when things get tight. But that’s a mistake, Williams says.
“You have to keep those sales orders coming in,” Williams says. “If you cut the advertising, you’re going to hurt your ability to bring in sales.”
Even Juniper, the marketing wunderkind, initially cut advertising costs when his business started to falter.
“I’m guilty of cutting my ad budget,” he acknowledges. But he attributes part of his company’s recent spike in growth to refocusing on marketing. When the dust settled in 2005, Three-C had revenues of $5 million. Now, Juniper says it has a run rate of $10 million.
In the past year-and-a-half, in fact, his advertising campaign has been as aggressive as it’s ever been, and this has paralleled a steady growth rate. “I never used to name insurance companies by name, but now we’ve started naming the worst of the insurers, and every time, our shops fill up with work.”
Juniper says his marketing also pushes the company’s Web site hard. “The Web site is an extension of your marketing,” Juniper says. “Your marketing has to drive people to your Web site.”
For the past seven years, the Three-C Web site has had an option for customers to get a repair estimate “with one click.” Customers submit information about their car through the Web site. Three-C then sends out its Mobile Claims Service, a van containing a laptop and a small office, to the customer’s location. The estimator makes the estimate on-site, makes arrangements to get the car to the nearest Three-C location, and can even bring out a rental car.
“(The customers) never even have to come to the body shop,” says Juniper, who estimates that 15 to 20 percent of Three-C’s business is channeled through the Web site, and that in the coming years that number will increase dramatically. Currently, the Web site takes about three to five online estimates per day. Without good marketing, however, even the best Web site in the world will languish, Juniper says.
THE PINK SLIP
When there’s a slowdown in your industry or at your company, the most effective way to cut operational costs is to cut payroll, says John Greene, senior project manager for International Profit Associates, a business consultancy in Buffalo Grove, Ill.
“It’s the labor costs that kill the small body shops,” says Greene, who had 30 years in the automotive industry before he became a consultant. “That’s one thing I always look at, is whether labor costs are out of whack with sales.”
The best way to cut payroll is to get rid of people, Williams says. Many business owners try to avoid laying employees off by doing things like cutting everyone down to 30 hours. But this strategy usually backfires.
“What you find is that when hours are reduced, the best people leave and the worst people stay,” he says. “The top talent says, ‘I can’t afford this, I’m a high producer.’ You end up ruining the quality of your workforce.”
Williams acknowledges that you can get away with reducing hours for maybe a week or two, but it’s not a good long-term solution. For Juniper, cutting the workforce was a big part of his turnaround. At the height of his company’s growth, he had 130 employees, and he shed about 80 of them during the downsize. He doesn’t like to let people go, but he says the ability to make objective decisions in difficult areas is what makes a good business person.
“I’m being very blunt and direct,” he says. “It’s not a very popular thing to let people go. But what you end up with after that process is a lean organization of people with good attitudes who all share the same goal of keeping the doors open. They now value their jobs, and when they value their jobs, everybody’s interest is the same.” Juniper says the decision about who to get rid of isn’t as difficult as it might seem.
“I think every shop manager knows, you have a ranking of people in your mind. You know who goes first and the guy you want to keep no matter what,” he says. “You go with your gut. Sometimes there are no numbers to justify it. Sometimes it’s your largest producer, but his attitude is such that his negativity really hurts the shop.” As for that one employee you’re really ambivalent about, Juniper knows exactly what to do. “If I’m on the fence about a person who has some good traits and some bad traits, those are the first people to get rid of,” he says. “Those are the ones, when you get rid of them, you never have any regrets.”
Juniper has found that trimming his workforce down to the very best has meant that per-employee production has increased significantly.
“We were running production numbers on people and what we found was that, compared to the standards we used to do, they were beating those numbers by 150 percent,” he says. “You think you need 10 metal men, but you might only need eight if two of those spend all their time standing around talking.”
SAFE AS HOUSES
During the company’s retrenchment, Juniper also unloaded quite a bit of real estate. From 13 locations in 2000, Three-C has shrunk to four. Since the company owned four of the nine locations it shed, it got some large injections of much-needed cash during a tough time.
“We couldn’t get our costs down fast enough, so as we sold off real estate, we got some good working capital,” Juniper says.
There are different opinions within the collision repair industry about whether it’s best to buy or to lease property. Juniper says he’s always leaned toward buying property.
“I’ve heard that it’s a German philosophy, to always own the real estate,” says Juniper, who claims German ancestry. In the end, Juniper credits the sale of real estate with saving his company. “Those properties provided a nice chunk of money when we were running a million in red ink,” he says.
Juniper reports that Three-C now owns three of its four remaining properties, and has no plans to expand anytime soon.
“I’m happy to grow within the existing facilities,” he says.
GO YOUR OWN WAY
For some companies, the focus shouldn’t be on downsizing as much as re-examining the priorities of the owner. And for some owners, that might mean making a drastic decision, says Bill Baren, founder of Bill Baren Coaching in San Francisco.
“Some people come to me talking about downsizing, when in fact they’re talking about departing the industry,” Baren says. “If in the current state the company is bleeding money, how will they get to the point where they’re in the positive? For some people that might mean selling, it might mean closing a division, it might mean laying people off.”
Baren says the focus shouldn’t be on downsizing so much as getting the business back to where the owner wants it to be. “If that means letting it go, then let it go,” Baren says.
Whether you decide to stay in or get out, Baren says he encourages his clients to do a thorough internal inventory of their priorities and goals.
“The inner game of working on a business owner is the most important piece,” Baren says. “Emotions are a huge piece. I work equally with them on the emotional piece as well as the business piece.”
Baren says when someone comes in feeling like a failure and they’re trying to force things to happen that just aren’t working, he works on helping them neutralize their emotions so they can start making good decisions.
“I try to get them back to their grounded and centered self, so they can make decisions from an intuitive and not an emotional place,” he says. “From that place, the mind works a lot better.”
Juniper says that he’s started to reach a point like that. The most important lesson he’s learned through the rise and fall and rise again of Three-C is that while he has been the company’s biggest asset, he has also been its biggest liability.
“You need to stop blaming the insurance companies for not making any money,” Juniper says without a hint of irony in his voice. “Watch your costs, control your costs and stop whining.”