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Entering a Risky Business

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In 2008, it was a one-man operation with Jason Battistelli at the helm. He was brought up in the industry by his father and, after attending college, realized he wanted to be an entrepreneur.

That year, Battistelli opened the doors to Mirror Image Automotive in Seacoast, N.H. He purchased a pre-existing body shop and the equipment from two previous struggling owners who struggled. The shop only produced $62,000 per year in revenue.

Their shop was a “sinking ship” and was only surviving because the owners bought out the equipment and property outright for cash, so they had a lower overhead.

The shop didn’t do any retail collision repair work, despite having the equipment to do so. The owner only did dent repairs, scratches and dings, as well as dealership work.

Despite those potential red flags, Battistelli felt comfortable taking on ownership. For one, it was the best option. But in addition, he had a plan for how to jumpstart sales.

It was a year of risk-taking for Battistelli.

A risk, by definition, is a situation involving exposure to danger. And, business risks often involve financial or marketing investments that might result in the loss of a business’ reputation.

Battistelli took the risk of buying an operation that was failing under previous owners and grew the business from one person into a team of six. The shop’s finances are strong, too, producing $1.2 million in annual revenue.

 

The Backstory

Battistelli’s father owned an auto body shop in the 1980s. The younger Battistelli grew up in and around his father’s business. After college, he decided to follow in his family’s footsteps and take on a “turnkey” operation.

When he took over his own facility in 2008, the shop did a lot of dealership work and fixed bumpers for very low prices, Battistelli says. The prices were so low, in fact, that the shop wasn’t profitable.

 

The Problem

Battistelli knew that the business wasn’t doing well. It was obvious from the first time he looked at the books; in 2007, the shop produced $61,000 in annual sales with average tickets of $175-$600, with the odd $4,000-$5,000 job thrown in the mix.

His options were slim, though, he says, because at the age of 25 he didn’t have enough capital to build a body shop from the ground up.

First, Battistelli found the business listing on Craigslist. He met the owner in person and then started working on his own business plan.

The next year, from 2007 to 2008, he spent time with SCORE, a free organization in which small business owners mentor others, to put together a financing plan.

Unfortunately, the market crashed in that time and he was turned down by every bank.

Battistelli still gained helpful advice on making sales projections. Created in Microsoft Excel, he based it off cash flow reports of the current business, and his marketing strategy to grow the business. He had a column for startup expenses, one showing the capital on hand, and columns for each month of the year. He based some projections off the previous owner’s P&L.

Battistelli says, despite the low revenue, he saw the business as an opportunity.

“I looked at this as an opportunity to pick up all the equipment I needed, in place, turn key, with at least a drizzle of work coming through the door,” he says. “To purchase all the equipment separately, lease the space, and have zero business would have been much more costly.”

 

The Solution

So, Battistelli brokered a deal: He purchased the shop, including all the assets and equipment, for $100,000 and put down a $13,000 down payment with a balloon payment due in five years. He also received a loan from his then-girlfriend (now wife).

Beyond the financial aspects, though, he also built in a plan to mitigate the risk of taking on a less-than-favorable business:

1) Network with other business owners.

He also joined Business Networking International (BNI), which is an organization in which local small business owners meet every week offer advice and refer business to each other. Battistelli paid $400 in a yearly fee and was able to recoup $4,000 of business within his first week of attending a BNI meeting.

2) Budget for equipment upgrades.

The shop is 6,000 square feet. Battistelli decided to carefully make a budget for the equipment he needed in his shop. And, by budgeting his purchases over the years, he was able to closely monitor the money coming in and avoid overspending.

He allocated roughly 10 percent of the shop’s gross sales toward investing in new technology and equipment. This has increased as business picked up over the years, he says. Now, it’s closer to one-third of the shop’s profit put toward equipment, technology and tools.

3) Increase number of customers.

“Back in the early 2000s, going and putting your shop on Google sites was like word-of-mouth on steroids,” Battistelli says.

In today’s industry, it’s more common than not for shops to be on a Google business page or Yelp.

Battistelli focused on staying a smaller shop that provided excellent customer service.  With the shop being in a constant state of flux over the years, going from business owner to business owner, he didn’t want the customer to get lost in the shuffle.

He set up the website so that it will direct customers to leave a review on Google. Today, 20 percent of the time, customers will follow that direction and leave a review.

The shop staff will also send their customers an option to take a survey and provide feedback two weeks to one month after the customer’s car was repaired. The survey is sent through the CustomerLobby.com site, he says.

Battistelli took over as the one to track the customer reviews. He receives emails from the CustomerLobby.com site on a monthly basis and then will organize them into an advertising folder on his desk.

 

The Aftermath

Battistelli was able to grow his business by 50 percent for the first few years and then by 80 percent soon thereafter, he says.

“I felt like it was my only choice,” Battistelli says. “I know I overpaid but it paid off very well in the end.”

Currently Battistelli says he’s looking into doing more mechanical repair work and licensed car sales work. He’s now going to move forward with more automotive applications.

The shop also subletted diagnostic work to mechanical repair shops in the same town and those mechanical businesses changed locations, moving further away from Battistelli’s facility.

Since the shop produces a healthy profit, Battistelli recently added a 1,100-square-foot mechanical bay, he says. Now, there are no more delays in repairs from having to drive the car back and forth, and the shop receives an additional income from mechanical repairs.

 

The Takeaway

Battistelli realized that he needed to also work with consultants over the years. By asking for advice from his father and consultants in the industry, he also learned that it was better to not focus so much on DRPs but to focus on the strong customer base that the shop has built-up over the last two decades.

“We’ve grown the collision business to a comfortable level over the years,” he says, “and, if we went to big DRPs, we’d fall into the same pit that our competitors have of relying on how they want the car repaired.”

 

SHOP STATS: Mirror Image Automotive   Location: Seacoast, N.H.  Operator: Jason Battistelli  Average Monthly Car Count: 50  Staff Size: 6  Shop Size: 6,000 square feet; Annual Revenue;$1.2 million  

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