Process-Driven Dream Shop
Many shop owners aspire to a lifestyle where their business is capable of running without them. Bob Loro, owner of Loro Auto Works Collision Repair Center in Oak Park, Ill., achieved this lifestyle by hiring excellent people, establishing thorough processes for every position, and empowering his staff to make decisions on their own, as long as they can back them up.
Located roughly 10 miles west of downtown Chicago, Loro’s decades of hard work have paid off with accolades including the Angie’s List Super Service Award, and recognition by the Better Business Bureau for having zero complaints.
The best payoff of all? Loro spends one to two weeks of every month taking it easy in Palm Springs, Calif., where his family has vacationed for years.
After working at body shops for several years, I had a pretty good following and was doing pretty well as a 26-year-old kid, the year I started my business. I bought a 24,000-square-foot building that needed a lot of work. There were five light bulbs that worked in the whole building, but through a series of events, I soon had three mortgages and a big building that needed a lot of work.
I made good money when I was a body man and bought several apartment buildings. I lived off the positive cash flow of the buildings while I built the business up for the first two to three years.
To say I was a driven workaholic is pretty mild. I was working 12–14 hours a day at the shop, then I’d go work 4–5 hours on the apartment buildings I owned, and then I’d come home, eat dinner and take a bath, because I didn’t even have a shower in my first house. I got four hours worth of sleep, got up, and did it again—seven days a week.
I built the kind of place that I always wished I would have found when I was looking for a place. The building was approaching condemnation when I bought it. The first year, I had to rebuild eight truss ends, replaced 4,000 square feet of joists and deck work, had to rebuild all the saddles for the drains and put a rubber roof on the place. I put $80,000 into the roof alone my first year in business.
It was 1982, and I never could have afforded that if it wasn’t for Reaganomics. They gave you a dollar-for-dollar write-off for every penny you invested in your business.
I treat my techs like they’re partners. We equally share in the profits, and equally share in the responsibility of getting the job done. The litmus test here with all my staff is, is it the right thing to do? If it isn’t, don’t do it. I’ll never complain about a guy doing the right thing.
My business model would have never worked in the city of Chicago. Where the shop is in Oak Park is a very affluent downtown business district that backs up to a residential neighborhood.
People in Oak Park are highly educated, and may drive a Volvo—not because they like the color or the way it looks, but because they’ve researched the car and understand the pros and cons of owning a Volvo.
We have an extremely high customer-pay percentage. I train my people to explain to customers what insurance claims really cost them. If they have a $1,200 loss, I say, “Listen, you’re going to get a surcharge on your policy for three years, you’re going to lose your good-driver discount for three years, so that means about a 25 percent increase in insurance, plus your deductible. If you’re paying $2,000 a year, it’s going to cost you $1,700 to make this claim. Why would you pay $1,700 to make a $1,400 claim?”
I’m doing what’s best for the customer, who I believe is the person who owns the car, not the insurance company.
We’ve been shooting Glasurit 90 Line waterborne for eight years. I’m the longest running Glasurit user in Chicago. We recycle all of our sheet metal, cardboard and any reducer for the small amount of solvent product we use. I think it’s the right thing to do, and that’s the test. Is it the most economical? No. Is it the easiest? No. In the long run, it is the best for everybody concerned, my customers and my neighbors. No one will ever call me a tree hugger, but if it’s available and it makes sense, why not do it?
Recycling sheet metal might sound ridiculous, but not only are we saving precious raw materials, we actually get money for it. My janitor loads up the truck, takes it over to the scrapyard and we make a couple hundred dollars a week recycling sheet metal. It helps pay his salary!
We’re process driven. We do follow-up calls, and actually have a script for everything that we do. We follow up every estimate with a call, we follow up every repair with a call, and then we follow up every repair with a CSI card.
People in Oak Park are not shy. They will tell you when they are not happy with something. We are not perfect—no one is—but the difference is, if it’s brought to my attention, we’ll fix it and make it right. There’s never a doubt that we’ll stand behind our work.
I give a lifetime warranty, and have for many years, because we do the right thing. We also have a check-in sheet process where we check every car in and look for every scratch, dent, nick, anything that’s wrong with the car when we bring it in.
Sometimes we have customers that say this or that mark wasn’t there, but if I pull out my check-off sheet and it’s listed there, I will stand behind my people 100 percent. If it’s not, then we fix it.
My people know this, so they know they have to be extremely careful when they’re checking the car in. We actually even write down all the radio preset and return the car with the same radio station on. That’s how anal-retentive I can be. People appreciate little things like that.
I have a formula I use to qualify employees—talent, time, attitude, divided by attendance. You can be the most talented person in the world, but if you only want to give me 60 percent of what you’ve got, or you don’t show up two days a month, that’s worthless to me. A guy with 60 percent talent who gives me everything they’ve got, and they’re here every day and on time, I can work with that, because I can teach you what you don’t know. I can’t change the person you are.
During the interview process I don’t ask one thing about the collision repair industry. Most people are hired for what they’ve done and fired for who they are, rather than the other way around. The right person will learn what you need them to learn.
I’ve done most of my business education after school since I’ve started my business. I’ve belonged to many different 20 Groups, and the one that was the most influential was called TEC (The Executive Committee), now known as Vistage. You sit with 14–16 other business owners from outside the industry. In my group there was a printer, an insurance agent, an arms dealer, a travel agent, an office supply person, a machine shop guy—it doesn’t matter what the business is.
We think our business is so unique, but all business basically boils down to the same problems. Everyone in that group doesn’t have the handicap of growing up in the industry you are and thinking it’s unique. They bring an outside perspective to your business, which was invaluable.
You also meet with a coach who helps you decide what issues to bring in front of the group. One of the things he said hit home: “If you want your company to have value it needs to run without you, because, if it needs you to run, then it’s really not a business; it’s just your job.”
One of the things I learned was that, often, a bad decision is better than no decision. I don’t want to make every decision. I’m paying my employees to make decisions. Make a good one, make a bad one, just be prepared to defend the reason you made it and show me that you thought about it carefully. So many body shop guys don’t get that, because they haven’t been exposed to that thought process—they’re there to fix cars.
I really don’t have any struggles where I’m at now. My people do all the hiring, and we’re constantly looking to the future. To say I’m pleased is an understatement.
I do this for the betterment of my family and the families of the people who work here. My wife has never been a part of the business, my daughters are not part of the business, but everything I do has them in mind.