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Under Pressure

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Rachelle and Solomon Parsley had been in business just four years when the recession hit their shop hard in 2007.

Early growth at their facility, International Collision Repair Center in Columbus, Ohio, had prompted plans for a new $1 million shop. But by the spring of 2008, customer traffic was cut in half and revenue dwindled.

With the business sliding, the expansion threatened to be more of a hindrance than a step forward.

THE BACKSTORY

The Parsleys opened their shop on a small side street in Columbus in 2003. Solomon has spent nearly 30 years in the collision industry, beginning at age 13 helping his uncle. Rachelle started in the industry as a file clerk for a dealership service department. Before she and Solomon opened the shop, she spent more than 10 years working her way through dealership service department roles. The couple met at a Mercedes dealership, and decided they wanted to run things their own way.

When they started their business, Solomon ran the shop alone—he wrote estimates, did the repairs and painted all of the cars. The first year, they did $350,000 in sales, and then doubled that the next year. They doubled it again the following year, bringing in $1.4 million.

The Parsleys saw the potential for further growth. They relied heavily on direct repair programs (DRPs) and didn’t see much walk-in traffic because of their obscure location.

So they invested $200,000 from their reserve account in a down payment for a new, larger building on a main thoroughfare. The idea was to continue with their DRPs, attract more walk-in customers, and increase efficiencies with a better shop layout.

The plan was solid. They could afford the improvements. But they weren’t prepared for the economic blow that was about to have a major impact on their operation.

THE PROBLEM

The recession, in one way or another, touched most people across the country. In the Parsleys’ community, people were losing their jobs, many of them at industrial warehouses, Rachelle says.

NEW DIGS While the Parsleys guided their business through the recession, they also began construction of their new facility, which is now open.Courtesy International Collision Repair Center

At the shop, sales fell 50 percent. Their customers told them they were only coming to the shop to get their insurance checks, which they used to buy groceries or pay their mortgages.

But the Parsleys were still expanding. Construction was already halfway done. They were not prepared for this bomb.

“You can’t be prepared for sales dropping 50 percent,” Rachelle says. “Nobody was prepared for the recession. It just happened.”

THE OPTIONS

The Parsleys had to find new ways to cut costs and increase revenue—and do it quickly.

They had spent a large portion of their reserves on the new building, and construction was too far along to halt the project.

“We had signed the papers,” Rachelle says. “It was going to happen whether we wanted it to or not.”

The bottom line was that they needed to spend less and save more in order to weather the storm.

“There was nothing we could do,” she says. “It was just a loss.”

They also needed to drum up new business. That’s where Rachelle’s marketing savvy came in handy. She was constantly thinking about ways to stay top-of-mind with community members and insurance companies.

“You have to keep yourself in front of people,” she says.

It was either that, or close the shop, which could have easily been their story, the Parsleys say. But the decisions they made helped them stay in business.

THE DECISION

Like many businesses during the economic downturn, the Parsleys laid off staff. They went from 18 to 12 employees. Four layoffs were in the shop, and two were in the office.

They drew on the rest of their reserves, and then they looked at all the ways they could save money. For example, they realized they could spend less on office supplies, shop materials, uniforms and any other unnecessary costs. The Parsleys even cut their own pay for two to three weeks at a time to make sure all the technicians and other staff got their paychecks.

“It’s almost like you go into survival mode.… I have to make sure they earn a living,” Solomon says. “As money came in, we pulled out what we needed.”

The Parsleys also worked with vendors and operated on credit each month when they couldn’t pay for all the parts up front. They tightened scheduling to order parts as needed, rather than keeping thousands of dollars worth of parts inventory in the shop.

“The shop had to run that way, bare minimum,” Solomon says. “There’s no putting back money for a rainy day or whatever.”

They also had many shop meetings, he says. They would talk about performance and communication. They knew they had to do repairs quickly and efficiently to keep customers and insurance partners happy, as well as to save money. This also helped the shop work together better.

Solomon also used these meetings to tell shop staff how much money they needed to make in order to keep the shop running. He estimated the national average of a repair bill, about $2,200, and used that figure to calculate how many jobs they needed per week.

“I told them that that was not the shop making any extra money,” he says. “That was just breaking even.”

All the while, Rachelle marketed the shop to insurance agents, community groups and business associations. This was a good way to maintain business, and even grow it.

“You still want to keep yourself in front of them so they know who you are and what you’re doing,” she says.

And they did all of this while moving to the new building. From planning to construction, it took about 13 months, Solomon says. He estimates that he and Rachelle probably spent a total of eight to 10 hours a week on tasks related to construction and moving.

As they got closer to opening, Solomon says he took on a lot of duties himself. For example, he installed airlines and compressors himself. He and Rachelle also did their own painting inside the new facility. He figures they saved $7,000 to $8,000 doing some of this work on their own.

They moved in fall 2008, beginning with tearing down and moving the paint booth. Then, all in one weekend, the Parsleys and their staff closed the shop on Friday and took the welders, toolboxes, shelves, office furniture and other equipment over to the new building. On Monday, they opened in their new space.

THE AFTERMATH

The Parsleys’ efforts worked. Sales remained down in all of 2008, but in 2009, sales increased by 3.5 percent. It was a meager increase, but a boost, nonetheless.

Things have continued to get better; 2011 was their best year yet. That’s when they brought in $2.6 million in sales, Solomon says.

It took about six months to recover from three rough months, he says. But they have brought their employee count back to where it was, and even increased it to 20 staffers.

The new building, and the recession, was “the worst and best thing” to happen to them, Rachelle says. They had the stress of a new building that they owned rather than a familiar building that they leased. But, she says, moving to a main thoroughfare increased walk-in traffic and DRPs. When they began, they had four or five DRPs. Now they have 17.

“Had we not moved here, we wouldn’t be in business,” she says.

THE TAKEAWAY

The Parsleys learned a lot from this difficult experience.

“The recession has changed everything,” Rachelle says.

Among the biggest lessons is that they can run the shop “a lot tighter than we think we can,” Solomon says. When there’s an abundance of work, you can get complacent, he says. If a customer or insurance partner gets upset, for example, there’s nothing to worry about because there are plenty of other cars available, he says.

“The bottom line is you need to make money,” he says. “You have to be able to make money to survive. You can be good and not profitable.”

They also learned about the importance of quality work. Great customer service and efficient, high-quality repairs lead to more business, Solomon says.

“If we don’t strive to be the best, then we can’t make it,” he says.

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