Cropper: Shore Up Your Finances

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A Balancing Act with Finances

I can tell you dealing with debt was much tougher than I had anticipated and it needs to be one of the top priorities. Another thing that comes to mind that I still talk to a lot of people about is the market. In simple numbers, as much as the consolidators are growing, consolidators, nationally, still only own 10 percent of the market, or even less. You have 90 percent that are independently owned, single shop or multi-shop organizations. 

Everyone thinks that the end of the independent owner is near, but I disagree. Because of the news on FenderBender and all the announcements, it looks bigger than it is. I can tell you there’s still a market for the independent shop owner—for sure. Will we still see growth? Yes, without a doubt. 

We’re in a business that is rare when it comes to how segmented it is. To have 90 percent that are still independently owned is unlike most businesses that do the volume that auto body does in America. I don’t feel anyone should be scared, but if selling was in their business plan, which for a lot of people it is, there are options out there, and that’s when they have to dig deep. I want to be clear, though, that I don’t think the day of the independent shop owner is done. 

I think it was done for me, in my market, in my location, and without a doubt I don’t regret making the decision I did, but I also know that if I was a single shop owner, I would not be scared.

What I can say on the debt side is having control over that and taking care of it is critical if you want to sell. If there’s any debt like SBA loans, which are a great option for independents to use, they are not easy to get back out of. They can become extremely cumbersome in the sale process. I had a fair amount of real estate that was tied up by bank loans and SBA loans. I did not work on that early enough in the process. It caused me a lot of grief, a lot of issues. If you have equipment loans, vehicle loans, any of this stuff takes time—lots and lots of time to clear up. There’s one SBA loan you can only pay off on the third Thursday of the month. Now I missed an entire month because I missed that third Thursday. Was that good or bad, I don’t know, I don’t think that really matters, but it could sink a deal. It blew my mind that I could not just write them a check and be done. It does not work that way.

Dealing with banks these days because of their reduction in staff, the bankers and people that I used to go to are not necessarily available. For me, to get payoffs and all this stuff that was important in those final stages, it was crazy difficult and took so much time. We would ask for it on a Monday, hoping to get it on Friday and I would see what I asked for three weeks later after hounding people.

We faced some of those routes when I hit a point that growth was going to be very, very tough for me. I hit a crossroad at that point. It was, do I get more creative with financing rather with just the bank and the SBA and what they can all do, or do I go after venture capital or private equity money and go that route? I’ve had friends do that and be very successful. Typically when you do that, you remain in charge for the most part and you have some guys to answer to, especially when it comes to the financial side. Or do you partner or do you sell? 

Being really in control of your debt is probably the biggest thorn in my side. We didn’t have bad debt, but we still had some debt. That was tough and it kept me up at night and caused delays. That’s probably the No. 1 thing that caused me issues. Just making sure all those little things—everything you write a check for every single month— you need to be questioning. Can I take care of this in advance? Some of it is very difficult to be taken care of at the end.

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