How to Start a Satellite Venture
Ernie Bordon believes that putting in an hour of thought can help make the most of 15 minutes of work. He’s stuck to this philosophy throughout his entire career—and now it’s paying off in dividends. Having successfully established his own shop, Autocraft Enterprises Inc., in Marco Island, Fla., Bordon decided that the path to growth involved opening a satellite estimating office in Naples 20 miles away. He opened that location in July 2006.
“Our main shop is on Marco Island, and it’s more of a seasonal location. Naples is always more busy,” Bordon says. “Our goal was to crack into the Naples market and expand the business.”
As with starting any new venture, though, Bordon faced some obstacles. “Our first challenge was location,” he says. “Part of our due diligence was to make sure that another direct repair shop wasn’t in the area.” Bordon explains that limiting the number of shops in the same location preserves competition—if customers have fewer choices when deciding where to take their car to be repaired, then a healthy competition remains between the local shops.
Once he determined Naples was indeed a good place to build the new office, Bordon faced the task of persuading insurance companies to work with him. “Before we opened, we touched base with some insurance companies we worked with to see if they would get involved,” Bordon says. “Most require a full-fledged shop to get involved, but a select few [agreed to our satellite approach].”
The satellite office started off small—the shop included three bays and only handled drive-in estimating appointments. Bordon was patient, though, and waited for the new location to prove its viability. “You have to be very, very careful,” he says. “You need to make sure your geographic location is good.”
While Bordon soon realized Naples was worth its weight in gold as far as location went, he faced another challenge—quality control. Because employees at the satellite office were responsible for shuttling cars back and forth between Naples and Marco Island for repairs, accuracy and timeliness were critical. Owners requesting additional repairs and those not satisfied with the original job meant more work for everyone—the most costly being the shuttling of the car back and forth for another round of work. “[There’s the] cost of fuel, time, paying the driver and redoing the car,” Bordon says. Getting it right the first time is critical. If you don’t, Bordon says, “Congratulations, it just cost you money to fix that car. Your whole effort is now in vain.”
In addition to facing the challenge of persuading insurers to work with him and establishing strong quality control, Bordon says he also needed to maintain a good relationship with his insurance providers. “If you can achieve all that, then [opening a satellite office] can potentially be a pretty good thing,” he says.
FIRST THINGS FIRST
Bordon counsels that there are a few considerations to keep in mind before launching your new site. The most important: “You need to have your house in order,” Bordon says about the state of affairs at the primary location. He advocates using a lean process that has:
• the right people in the right place,
• a good relationship with your
• a tight customer service index and
• a strong cycle time.
These considerations are critical. “If you are currently having problems, you will compound them by opening [a satellite office],” Bordon says. Even if your shop is performing well, he cautions, be prepared for lots of work. “When you open a new shop, get the bottle of Excedrin,” he jokes. “You have to do your due diligence—and it’s a slow process.”
WHAT YOU GIVE IS WHAT YOU GET
Bordon stresses the importance of being methodical throughout the process. “In our industry, you can’t afford to make a mistake,” he says. “We have such a slim profit margin.”
For Bordon, such caution—and perseverance—paid off in a big way. It was tough for a while, but he’s now seeing the fruits of his labor. “We worked long and hard at doing this to find the right recipe,” he says. “But our profit has increased, and it’s been a great experience. A satellite office can be a viable tool to [increasing] your already successful business.”
Nearly two years in, Bordon is now planning to expand the satellite office. “A satellite office can be a springboard for opening a full-blown shop,” he says. “You can hit the ground running.”
For Bordon, the bottom line to determining the success of a new location is, in fact, the bottom line. “When you’re realizing a profit, then it’s a successful venture,” he says. With his satellite office busy shuttling 25 cars back and forth each week, Bordon says he’s maintaining great cycle time and enjoying the rush that comes with a successful business venture. The best part of his success, though? “Getting thank you letters from customers” he says. “When you work hard for something and someone commends you, it’s a beautiful thing.”