Running a Shop Operations Multi Shop Operations (MSOs)

Breaking Point

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It just wasn’t working, and they couldn’t figure out why.

Dan and Bill Brothers founded Brothers Collision & Mechanical in 1979, just a couple of miles south of Lake Ontario in Rochester, N.Y.

The next 30 years were a whirlwind. Early success led to a large expansion. Midlife struggles led to an equally large contraction. And all of it led to where Dan and Bill stood in early 2009 with a once-successful, single location struggling to remain profitable.

They were spinning their wheels, Dan says, working long hours that weren’t paying off. Thirty years in, they’d reached the breaking point.

“We knew we had to do something,” Bill says. “It was just figuring out what to do.”

The Backstory

The business had thrived for nearly 20 years—expanding to two additional shops and adding a mechanical component—before another MSO started sucking up all the insurance work in the Rochester area during the early 2000s.

Suddenly, all three Brothers shops suffered to generate car count, and numbers declined sharply. After steady struggles for several years, they closed two facilities in late 2006.

“We’re not people who are too stubborn to make the right decision,” Bill says. “We knew it was stretched too thin at that point. It wasn’t working well, so we made the decision to go back down to the one shop.”

Dan says it was a choice to step backward in order to move forward. They wanted to grow through profit margin, rather than scale.

“We felt that, with a more watchful eye on the one shop, we could really improve,” Bill says.

The Problem

By early 2009, Dan and Bill had put roughly two-and-a-half years of intense focus into their one location. And nothing changed.

The shop was inefficient: Cars were coming in at a quick enough pace, but they were going back out too slowly. With just three employees at the time (one solely dedicated to mechanical repair work), the brothers had to pick up a lot of the extra workload. They were doing the estimating, the service writing, helping out in the shop and dealing with customers, all while trying to keep up their duties as owners and finding new avenues for growth.

The shop was stuck, pulling in roughly $40,000 in collision work each month—enough to keep it afloat, but too little to curb the brothers’ frustration.

“We were trying a lot of things—different advertising, some other things—and none of it worked,” Dan says. “The most frustrating thing was that we’d made that shop successful before, and now we couldn’t.”

The brothers started attending seminars and found help through a consultant. With some guidance, they discovered that every breakdown in their shop was due to faulty processes and procedures: Either the processes were too vague, or their people didn’t perform them correctly.

The Options

Bill and Dan knew the way they operated had to change—and quickly—if they were going to turn things around. That left them with few viable options.  

They knew they needed new standard procedures throughout the shop, ones that would allow for better workflow, more efficient repairs, and more opportunities for upselling on jobs.

They just weren’t sure if they had the people to do it.

Dan says they could implement new procedures and wait for employees to catch up, or they could re-staff with people that fit their new model.

The Decision

Dan says the brothers decided to take it “one area at a time.” They focused on key inefficiencies first and worked their way down by addressing each situation individually.

One large holdup was that both brothers were still wearing too many hats, and their roles were blended together. Neither brother had a specific position.

That was the first thing that changed. Bill took the lead as the collision shop manager. Dan oversaw the mechanical end, and focused on the bookkeeping and operational tasks of both components.

They also hired a full-time service advisor, who assists with customers in both collision and mechanical, and cuts the brothers loose from the front desk.

Then, they started focusing on shop procedures.

“We started recording our ‘best practices’ for every situation,” Dan says. “And I mean everything.”

From how to conduct test drives (e.g. no radio, certain roads, certain speeds, etc.) to when to show up for work (they now have 7:30 a.m. meetings each morning) to how to inspect vehicles (e.g. what to look for, what order to go in, what components, how to blend mechanical and collision), the brothers recorded it all and went over it with their employees. Each process had to be signed by the brothers and each employee, and everyone kept reference copies.

Their existing employees struggled to adjust. The brothers gave them some time to adapt—a couple months or so, depending on the role—but ultimately, the shop still wasn’t where it needed to be. So, they started replacing their staff.

By the end of 2009, just six months after they started making changes, all of the new processes were in place, and every one of their original staff members was gone.

The Aftermath

The brothers set out to create growth, and that’s what they ultimately did.

Within 18 months, collision work doubled. They were now bringing in $80,000–85,000 each month. In 2012, the shop added another 12 percent in revenue, and Dan believes the shop can average $100,000 each month during 2013.

There were some missteps, some misguided new processes or ineffective new systems, but the brothers say that the ability to focus more on their business allowed them to adapt quicker to correct those issues than they would have in the past.

A lot of that stems from the extra help at the front desk, Dan says. The shop’s service advisor, Jaime Brooks, is a 30-year veteran of the industry, having worked mostly at GM dealerships. Her experience and her ability to handle customers correctly has helped the shop with customer retention.

“She makes it a comfortable experience for customers,” Dan says.

And Brooks says the shop’s efficient processes make it a comfortable place to work.

“To have a small staff and do the type of numbers we do, it’s the organization, it’s how organized we are,” she says. “If someone’s not here, it’s just a hiccup—someone can step right in and just keep going. “

The Takeaway

The brothers still say it was difficult letting go employees.

“They were good people,” Bill says. “You get to know them, but it’s business. We had to make changes to go the direction we wanted.”

The brothers say they now realize how important the hiring process really is.

They adapted theirs, and now have a much more thorough interview system to make sure their shop is the right fit for each candidate.

Systems are crucial, Dan says, and every business needs thorough and accurate procedures to follow. But the best processes are worthless without the best employees.

“We really realized how everything is about having the right people in the right places,” Bill says. “That’s the only way to be as efficient as you can be.” 

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