Secrets to Business Partnerships
Stillwater, Okla., is a small city of about 40,000 off Highway 177 in central Oklahoma. Its main claim to fame is the Oklahoma State University campus, whose 25,000 students make up a good proportion of the city’s residents. The nearest big city, Oklahoma City, is about 60 miles away.
East of town on Sixth Avenue is Diamond Autobody. Diamond does the same body work that other shops in town do, but it’s different in one important respect: The shop is owned by not one, not two, but three former employees of another shop that has since closed down. They own a business together, they hunt and fish together, and they defy the conventional wisdom that says you should never go into business with friends.
How do they do it? They each do what they do best, and they leave what they don’t to the others. They talk or even argue until they’ve decided what to do. And then they go with it and forget it. They repair 12 to 15 cars a week and do about $80,000 in sales a month in a 10,000-square-foot shop with 10 employees (including the three of them). The shop has a paint booth, two frame racks, a laser measuring system, two post lifts and a scissor lift, and a mixing bank and computerized system for paint.
The Three Musketeers
Jim Bilodeau is originally from Pennsylvania. After an eight-year stint in the Air Force and some time in California, Bilodeau bought a parts business in Oklahoma, which he owned for 12 years. After he sold the business, he took a job at the body shop where he met Craig Schupp and Jon McAlister.
Schupp is also from California, and he learned auto body repair at a vocational-technical school in Arkansas. He came to Stillwater because his wife’s family lives there. McAlister, on the other hand, is a local boy from the get-go; he was born and raised 30 miles from Stillwater and went to school for auto body at the vocational-technical school in town.
Working together, the three men learned that they could trust each other to get the repairs or the front-office work done, and that they could work together without unnecessary friction. It helped that the owner of the previous shop wasn’t around much; between the three of them, they more or less ran the place, and before long it was obvious to them that they would have no problem running their own business.
So the three pooled their personal savings (and their tools), and Bilodeau got a loan from a relative for some of the big equipment. They leased a building and did as much of the refurbishing work as they could, such as putting in the air lines for the booth. Then, on September 1, 2001, Diamond Autobody opened for business.
Talk about uncertain timing. “After September 11, we kind of sat back and thought, Oh, boy,” Bilodeau says. “We thought we were just going to have to tighten our belts and live on Beanee Weenees. But our work has been accepted and we’ve had some customers follow us here from the previous shop, and we’ve got a lot of businesses that trust our work. It’s been a blessing right from the start.”
How They Do It
The three each own a one-third interest in the company, which is set up as an S-corporation. The incorporation papers spell out how everything is divided, and the only thing the co-owners haven’t set up is what to do if someone dies or wants out of the business. “We’ve talked about it, but every lawyer wants us to handle it in a different way,” Bilodeau says. “One suggested that we each get a life insurance policy made payable to the corporation, so that if one of us dies, the business then pays the family and it reverts to two owners.”
To run the business day in and day out, the three take a draw each month, and a quarterly draw if business has been good. They always keep the company debt-free and wait to square up what’s left over until the end of the year. The loan for the frame racks, measuring equipment and paint booth was paid off the first year. “The business always comes first, and we’ll suffer if we have to in order to make sure all our bills are paid,” Schupp says.
While Bilodeau handles the front-office work, Schupp and McAlister run the shop. When the workload gets to be too much for the technicians they’ve hired, Schupp and McAlister pitch in, whether it’s frame, paint, detail work or the final buff and finish. “Even if all our employees quit tomorrow, the shop could still function, because Craig and I can do anything that needs to be done,” McAlister says. “And with Jim taking care of the customers, it’s a nice flow.”
That flow is what allows three guys to work together without driving each other crazy. “I trust that their decisions for a vehicle’s repair are based on what needs to be done for that vehicle,” Bilodeau says. “We all have whims and desires, and we all think we know best, but all it takes to get together on it when we don’t see eye to eye is to take a few extra minutes to make the decision.”
It’s About Trust
The theme of trust comes up a lot with these guys, and it’s a trust they’ve developed over years of working together. Those years of experience and observation of each other’s styles and work habits protect them from the temptation to second-guess each other. “I’ve got two guys I’d trust with my life,” Bilodeau says.
They make all of their decisions together, whether it’s hiring decisions or how to handle a certain type of repair. “If we can’t agree on something, we talk about it,” Bilodeau says. “If we still can’t agree, we take a break and then talk some more. But the basic premise of the shop is that we’re going to get the job done right for the customer, and we only have to compromise when we don’t agree on how to do that.”
Part of that compromise is to go straight to the source if they’re not sure how best to finish a repair job. “If it’s a manufacturer’s design question, we go to the manufacturer to find out what the best repair method is, and then there’s less to disagree about—if we were disagreeing to begin with,” Bilodeau says. “We have great relationships with our manufacturers and suppliers, and we use those relationships to get the information we need.”
The main thing, Bilodeau says, is that eventually they settle on one thing whether they fully agree or not. None of the three is officially “the manager,” but employees know to go to Bilodeau for estimating questions. They also know that if a repair question comes up that either Schupp or McAlister don’t have a ready answer for, they’re not going to get three different answers. In that sense, all three men are the manager, in that they talk amongst themselves and come up with a unanimous answer.
Getting the Message Out
One of the most fundamental things the three agree on is that their size means they can’t offer the quickest cycle time in town. One big shop in Stillwater has facilities on the east and west side of town, and that’s the big-box store in town; there are also two smaller shops, one associated with a dealership and one independent. With that kind of competition, the Diamond guys have staked their reputation on doing a good job and maybe taking a little extra time to make sure it’s done right. With three-quarters of their business coming through insurance companies (they work with two direct repair programs), it doesn’t hurt to have a reputation for careful work, nor does it hurt the rest of the business, which is all walk-ins.
In a small town like Stillwater, both the options and the pool for marketing are limited, but the shop has a notable presence. By advertising at sports events at Oklahoma State University, they drum up a fair amount of business. They also advertise in the phone book, on the radio and on related Web sites. Of course, word of mouth helps too. “We get a lot of customers who have had collision work done before and haven’t been happy with it,” says McAlister. “Repeat customers are really good for us, and they’re a major part of our business, so we have to keep our quality high to keep them coming back.”
Web of Friendships
With such an easy working relationship amongst themselves, it’s not surprising that the three owners have a network of relationships both in town and beyond, and that kind of network can be essential to doing business and generating word-of-mouth recommendations in a small market.
But the three are on the same page about growth: It would be interesting and probably profitable, but it’s not in the cards just yet. They’ve considered buying a piece of land and building a new facility, and both Schupp and McAlister have children that they hope to interest in getting involved in the business. But with the times being what they are, they focus on the cars in front of them. “Just having a job right now is a good thing,” Schupp says.
McAlister, not surprisingly, agrees. “We all know that if this business doesn’t survive, we won’t have a job and we’ll have to depend on someone else for a livelihood,” he says. “We’ve chosen to depend on each other instead, and so we have no choice but to survive. We’ve seen a lot of problems at previous workplaces and it’s helped us to decide what we’re going to do—and what we’re not going to do.”