In 2002, 22-year-old Daniel Panduro was fresh out of college with a degree in economics, a minor in business management and years of experience working in the family collision repair center, J&L Body Shop in Sun Valley, Calif.
Poised to take over the operation, he agreed to help his dad, company founder John Panduro, to expand the business. But after five years in management, the collision repair industry had lost its luster for Daniel and he was considering other career options.
“Right at that five-year mark, I was about to quit,” he recalls. “All of the inefficiencies, the same old problems, same old complaints and frustrations—I didn’t know if there was another way to do it.”
Up until that point, Daniel had been running the business the same way his dad had run it, which had allowed the shop to grow from 8,500 square feet to 45,000-square-feet during a span of three decades. But the business was barely profitable, and challenges with parts delays, insurance company communication, vehicle scheduling and other issues were constantly weighing on Daniel. He had to make a change or get out of the business to maintain his sanity.
“Nothing against the way my dad had learned to run the shop because it worked for the ’80s and ’90s, but as we all know, times really have changed,” Daniel says. “Running a shop today is certainly different than even five or six years ago when I was getting into it. It’s already a different game.”
Daniel is part of a new generation of shop operators who are leading the industry forward by embracing change and approaching business operations with a new-school train of thought. Daniel and two other rising stars shared their strategies for growth in today’s collision repair industry, and the industry of tomorrow.
During his first five years of management, Daniel was heavily involved in the day-to-day operations of the shop. He wanted to step back into more of a true management role so he could focus more on big-picture process improvements, but he wasn’t sure how to do it until taking part in a course on damage analysis.
“That was the very first [collision repair] class I ever took… . It was the first time I really heard an outside perspective on how to really do something within your business,” Daniel says.
The course emboldened him to break free of old methods and focus on improving several key areas of the business:
Estimating. Cars used to sit in the lot until an insurance company came by to take photos—the shop was not proactive in communicating with insurance companies, which led to poor relationships with those companies and customers. An estimate would eventually be written, parts would be ordered and the vehicle would move into production. Bottlenecks were the norm because critical parts were often missed and supplements had to be written.
Now the shop is quick to connect with insurance companies as soon as vehicles arrive and it performs 100-percent disassembly of damaged areas to ensure nothing is overlooked. Supplements have all but disappeared, relationships with insurance companies are far less hostile and customers are happier. Because of the changes, the shop’s cycle time dropped from around 13 days to between 4.5 and 6 days during the last few years.
Parts. In the past, when parts arrived they were put in a corner or went directly to a vehicle as they came in. Now the shop has a staging area, so when parts arrive, they are mirror-matched with damaged parts and checked for quality. When everything has been gone through, the new parts are tagged and put on carts dedicated to specific jobs. Techs know not to start on a job until the parts are tagged, so they know everything has arrived, is in good condition and is ready for installation.
Technology. Daniel started using ALLDATA to further improve the estimating process. He says shops that rely solely on the parts databases in their estimating systems are probably only seeing 70 percent of the parts and procedures that pertain to any specific vehicle.
“In order to write a thorough, 100-percent blueprinted estimate, you must have alternate sources for parts and information,” Daniel says.
Today, at 32, Daniel is confident in his career. Revenue has held steady at $2.5 million, but net profit margins, which used to hover around 1 percent, are now at 5 percent, and he’s working toward a goal of 15 percent. Daniel says it was initially difficult for his dad to grasp some of the changes, but not after he saw the impact they made.
Daniel spends much less time working hands-on in the business than he used to, which has allowed him to be a better manager, take more industry courses and participate in a 20 Group. He says looking beyond his shop for help has been the biggest contributor to his success.
“If you’re trying to do it by yourself within your own walls, I just think that distance between you and the people who are leading this industry is going to grow farther and farther,” he says.
Before Nathan Nix joined Kelley Automotive Group as manager of its collision repair shop, it was known to local insurance adjusters as a black hole—cars went in and never came out.
Nix was recruited to the helm of the dealer shop—the largest shop in Fort Wayne, Ind.—after a decade of work in the industry that took him from parts chaser to manager of an independent shop.
“Between ’93 and ’99 I just learned as much as I could, made a lot of mistakes and kept at it,” Nix says. “By ’99 they put me in charge of a small estimating center with a small amount of production work and that grew into a full-fledged facility. By the time I left in 2007, it was the second largest shop in town to Kelley’s.”
Nix carried those lessons learned to his new position and transformed the Kelley collision center reputation, helping it grow to a two-facility, $5-million-a-year operation. His growth has centered on one key area:
Customer focus. “In the last 15 years that I’ve been in the business, it’s more about the customer now,” Nix says. “It’s about helping them through a situation rather than writing an estimate and selling a job.”
Nix says when he worked as a parts runner, he was surprised by how many shops reinforced the stereotypical dirty body shop image. He was determined to make sure his facilities weren’t presented that way. He wanted to wow customers and capture them right away with a modern office stocked with ample amenities.
“I thought our office should look like a doctor’s office,” he says. “There’s no reason for it not to.”
Nix says he has also tried to get rid of the mind set that the dealership will provide all of the customers the body shop needs. He has tried to instill in his staff that they should work hard for every customer.
He has implemented processes such as pre-repair washes and blueprinting, but rather than simply performing those processes, the shop explains the methods to customers in office literature and in person. Tours are also encouraged.
“We really try to bring the customer into our world a little bit and show them what we’re doing,” Nix says.
Customers can track the repair of their vehicles through online photo updates and receive emails, texts or calls from the shop. The photo updates can even be linked directly to a customers’ Facebook page, helping to spread the word about Kelley Automotive Group.
The shop also serves a specific niche of customers through a special service: the repair of handicapped accessible vehicles. Kelley Automotive Group is partnered with a company called Mobility to produce the vehicles, which the shop repairs. The specialty has drawn inquiries from customers and insurers throughout the region.
Nix, 36, says his goal is to become so strong with customer service that the shops don’t need DRPs. Its 13 DRPs currently account for 40 percent of sales.
“I’m not against them and I’m not talking bad about them,” Nix says. “But I feel it is our responsibility to establish our customer base and take care of our customers in a way that they tell the insurance company ‘this is the only place I will go.’”
During Ryan Cropper’s first visit to his newly acquired shop in Anchorage, Alaska, the then-22-year-old was met with some skeptical veteran staffers who had worked at Able Body Shop longer than he’d been alive.
“I remember one of the seasoned techs was leaning against a wall, and he said ‘I’ll give you two weeks and we’ll see what you can do. If I don’t like what you’re doing I’m out of here,’” Cropper says.
It was never a goal of Cropper’s to own his own shop, but with four years of experience as a technician, he knew he wanted to stay in the trade. So when he spotted Able Body Shop for sale in a local newspaper, the ambitious young repairer struck a deal. Cropper’s savings paid for a third of the business and the seller was willing to owner-finance the rest. In January of 2002, the 13,000-square-foot shop and its eight employees were in Cropper’s unseasoned hands.
But it didn’t take long for Cropper—through fresh ideas and a willingness to stray from the norm—to lead the shop to its first $1 million year. A decade and one new location later, the business is generating $5.5 million annually. His keys to growth:
Listening to staff. Cropper was a solid technician, but he lacked knowledge of several key elements of running a shop, such as writing estimates. He wasn’t afraid to admit his shortcomings to employees and lean on them for guidance. They wanted the shop to be successful just as much as he did and were willing to guide their new boss and share ideas for improvement. Cropper was eager to listen and work with his new team to make the shop perform at its peak.
“I was able to take a business that had a lot of potential and run with it,” Cropper says. “I had great staff that backed me up.”
Tapping insurers. One of the first things Cropper set out to do was get Able Auto Body on as many direct repair programs (DRPs) as he could. The shop only had one when he took over. Cropper says he sees DRPs not only as a way to bring in business, but also as a way to keep pushing his shop to improve.
He reached out to insurance companies to learn about their requirements, invested in new equipment and additional staff to meet those requirements, and started growing almost overnight.
“Once we got heavy into DRPs, our growth was just crazy,” Cropper says.
The shop averaged 25 percent growth every year for the first four years and was ready to expand into a second location after about four and a half years, thanks largely to DRP partnerships. It now has nine active DRPs, which account for about 85 percent of the shop’s business.
Learning from peers. In 2004, Cropper joined a 20 Group, to which he attributes much of his success. “The 20 Group let me see what’s happening nationwide because Alaska is like an island,” he says. “We’re totally separate.” He also makes a point of touring facilities in the continental U.S. whenever he gets a chance.
Looking outside the industry. Cropper says he pays close attention to retail stores outside of collision repair to see how they evolve to meet increasing customer demands. Quality is simply an expectation now, he says, and shops need to go beyond that to attract and retain business.
“I think looking at what successful businesses are doing and applying that to the auto body industry is what is making these MSOs so successful to where they’re gobbling up shops like crazy,” Cropper says. “The old-school mentality of a car is done when it’s done is gone.”
One customer-friendly tactic Cropper has implemented is offering a variety of communication methods. The shop will call, email or text customers based on what they prefer.
Diversifying business. After a few years leading his shop, Cropper was given an opportunity to purchase a local truck accessories shop that he frequently purchased from. He bought it, giving him more control over parts and adding a $1.5-million-a-year revenue stream to his operation.
Working as a team. Cropper moved his employees to a team-pay system and restructured production so all technicians work together on jobs, rather than individually. “We all win together or we all fail together,” Cropper says.
Cropper, now 33, still has a couple of his shop’s original employees on staff. The one who gave him a couple of weeks ended up liking Cropper as a manager and worked at Able Body Shop until he died.
Cropper says he’s still looking to advance the operation. He has implemented some lean processes, but he avoids that terminology and instead focuses on constant improvement. He says lean is often taken too literally, to the point of excessive reduction in staff or processes; he just wants to make sure everything is run as efficiently as possible.
“You’re never going to be perfect, so every day you’ve got to improve something,” he says.
