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Setting Your Shop Up for Expansion

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Specific. Measurable. Achievable. Results-focused. Time-bound.

When Scott Schaefer considers the future of Schaefer Autobody Centers, he doesn’t just casually mention that he’d like to increase his company’s footprint by 33 percent within three years—his detailed, specific, measurable, achievable, results-focused, time-bound plan (commonly referred to as “S.M.A.R.T”) for growth in St. Louis County, Mo., lays out exactly where the shops will be located, how many staff members he’ll require, and what dealerships in the area are in need of a collision repair partner.

It’s a long, arduous planning process that requires focus, time, effort, documentation.

And for Schaefer? It’s a rush.

“My favorite thing about working at Schaefer is the excitement and rush you get from opening new stores,” he says. “Hiring, getting things set up, watching them grow and become profitable.”

And with the 11th Schaefer Autobody Center opening in 2017, and two more shops planned for 2018, and another two slated for 2019, Schaefer is setting himself up to experience that rush more often. With a population of just over 1 million—including the 300,000 people located in metropolitan St. Louis—he knows the Southeastern Missouri county inside and out and understands exactly how he can infiltrate the market over the next several years.

And he can expect to hear Jake Buhnerkempe’s name along the way.

“With trends in the industry going toward consolidation, we’ve been mindful of that,” says J&R Collision Centers’ owner, who is slowly expanding his operation from Southern Illinois into the St. Louis County market. “With three shops in three towns, we want to see what our options are for expanding in the future. We know how much work it will be to build new shops.”

With one owner dipping his toes into the art of expansion, and the other well on his way to becoming a household name in the St. Louis area, Buhnerkempe and Schaefer aren’t just standing back and allowing the consolidation of the collision repair industry to swallow them up—they’re taking it head on.

So, if you’re looking to expand and gain the upper hand over an MSO in your market, the plans these two operators have crafted over the past several years of growth can be your guide. In this article, you can find how they’ve streamlined market research, established processes across multiple locations and built a cohesive team.

 


 

Know Your Markets

Effingham, Ill., where J&R Collision first started, has a population of about 13,000. Shelbyville, Ill., just 30 minutes away, hosts 5,000. And St. Louis, home to J&R Collision’s newest shop, is home to 300,000.

And you better believe Buhnerkempe has a plan for each market.

“We have to have a hybrid business strategy,” he says. “Obviously, things that work in St. Louis do not work in Effingham. That’s been the unique thing for us to figure out.”

There’s a map that rests on the corner of Buhnerkempe’s desk, with various locales and municipalities highlighted with different colors. With 523 square miles to choose from, Buhnerkempe’s evaluation of the St. Louis County market might still be in the baby stages, but it reflects the research Schaefer already performs on a weekly basis.

Schaefer’s knowledge of the area comes from years of research and planning, studying the demographics and financial stability of various areas to determine if they can support a new body shop. That dedication positioned Schaefer Autobody to open five additional shops after Schaefer came on board in 2007, and achieve a 15 percent year-over-year growth over the past five years.

“You can always go on the local library’s websites, and they’ll give detailed information on demographics, median household income, population growth—all kinds of good stuff to make those decisions,” he says.

As small business owners who, at one time, had very limited resources with their small staffs, both Bunherkempe and Schaefer understand the necessity of forming partnerships with area experts to study markets.

 

Your Research Partners

Day-to-Day Partners

Before Schaefer decides to expand anywhere, he’s sure to speak with his insurance partners about the potential for certain markets.

“We ask where they have high demand for body shops,” he says. “They recommend areas that need a good shop, where they have influence on the municipalities.”

Schaefer adds that paint companies offer individual market breakdowns for how much paint sells in the area—likewise, rental car companies show how often people are without a car because of an accident.

 

Universities

For students to graduate from Saint Louis University’s MBA program, Schaefer says they are required to perform case studies with local businesses and help them achieve long-term goals.

“They do a lot of research,” he says. “A couple years ago, they provided a ton of detailed information about markets outside of St. Louis. There's a market that’s a three-hour drive from St. Louis, and they found it’s the No. 1 place to open shop in Missouri.”

 

Dealerships

Each new Schaefer Autobody ensures it can have an immediate influx of work thanks to its dealership research. For each new locale, Schaefer is sure to find dealerships without body shops and sell his business as a potential partnership.

“In some cases, they’ve already pursued us as their body shop because of our reputation,” he says. “A couple years ago, a local BMW dealership asked us if we’d be interested in running their department. They had BMW-trained technicians ready to go. That was a really nice growth year for us.”

 

Competitors

If you’re heading into a new area, you might not even need to build a shop from the ground up—you could very well utilize the expertise accrued at an area shop looking to become part of a network.

Buhnerkempe, who purchased his shops from ready-to-retire owners, says researching shops in your desired area will not only tell you how much work is available, but could also present the opportunity to vastly improve an area shop’s market share.

 

Marketing as an Independent 

San Francisco is a huge market. And if you’re not prepared? You’ll get dominated by competitors.

A shop Michelle Nelson consults found this out the hard way, when an MSO rolled into town and Geico—which provided 75 percent of the independent shop’s business—decided to end its DRP relationship and switch up partners.

“They didn’t have any marketing plan set up,” says Nelson, the founder of B2B Automotive, a marketing consultant for collision repair shops. “It’s important to not be so DRP dependent. It’s important to have other angles of business coming in.”

Whether you’re looking to expand or remain a one-shop entity, that local feel is what appeals to your market. Here’s what you need to practice to stay ahead of the competition:

 

Remember: You’re Local

It’s something no consolidator can deny when they roll into a new town—they’re not local; they’re not already ingrained in the community. They have market research, sure, but that doesn’t mean people will welcome the new competition with open arms.

“Your local feel should be part of all your marketing,” Nelson says, “from visiting insurers to hosting local events, email campaigning, TV, social media.”

 

Utilize Customer Information

You automatically have a leg up when it comes to reaching your local market—if you have a well maintained customer database.

“You should have down every bit of contact for customers,” Nelson says. “You should be able to set up email marketing campaigns, direct mail, different advertising campaigns in place.”

 

Partner Up

From insurance agents to local TV stations to rental car companies to the area chamber of commerce, Nelson says the partnership opportunities in your area are boundless and will provide resources for your marketing.

“One thing we encourage people to do is PR for car safety,” she says. “Each state has specific grants for auto body shops to have one day per month to fit car seats for parents around the area.”

 

Make a Schedule

Many of the major MSOs have dedicated marketing personnel and “faces of the business” that are consistently out in the community. To combat this, Nelson says you should have someone dedicated to spending 25 percent of time per week on marketing activities outside the shop.

“Go to every insurance agent in the area and offer a free car wash. Go to the area rental car companies and offer a free five-day car rental,” she says. “You’ve got to have some specific things that consolidators won't do.”

If you simply can’t dedicate the time, Nelson says, in the long run, it’s worth the money to hire a marketing manager, even if it’s just starting a $15-per-hour position or an internship for a marketing student at an area university.

 


 

Build the Infrastructure

Too often, employees feel like numbers as opposed to people at MSOs, Buhnerkempe says.

“‘I work at shop No. 123 and I’m employee No. 6.' We try to be very mindful of that as we grow," he says they think to themselves.

The key to breaking from that mindset is forming a streamlined process across all shops. But, as Buhnerkempe takes on new locations and meets with different regional managers, he knows his one-on-one time with shops and individual employees will deplete, making it tougher to personally ensure his processes are being followed.

When you’re managing one location, it’s hard enough to tightly control workflow, morale, training, culture. But when you add two, five, 10 shops into the mix? Both Buhnerkempe and Schaefer understand the importance of laying out processes in a way that will be easily replicated at each location. Once that unification is nailed down, it becomes easier to build your team and find employees that fit into your organization.

 

Streamlined Processes

SOPs

Streamlining processes means getting everything into writing, says Buhnerkempe; define the procedure, ensure locations can adhere to it, and duplicate that process across all shops.

“For shop owners across the country, the most stressful thing is having eyes on the car and making sure each repair is being done to their specifications,” he says. “Having multiple locations, I can't do that. I can’t see every car. It's not practical.”

Thus, SOPs should fully outline said specifications, so there’s no question among management what needs to be done on every car, from repair procedures to blueprinting to teardowns to parts inventory management to customer update schedules.

Not only do SOPs allow individual locations to run on their own, but they also help newly acquired shops more easily meld into the network.

“We can show shops: This is our process, this is what we’re shooting for, this is where we need to be,” Buhnerkempe says.

 

Delegation

Schaefer, who has filled in for virtually every position at this company over the years, now rarely gets the chance to make personal visits to shops. That’s increased the importance of expanding the company’s executive roles and delegating responsibilities so he can focus on growth while others ensure processes are being followed.

At Schaefer Autobody, there is now a marketing department that tracks area events and digital advertising; a call center that handles all the phone traffic; and an accounting department.

Each location has a general manager, and Schaefer even recently established a director of operations and two regional managers below him.

The company even has an internal auditing department that oversees repairs to make sure shops are ethically repairing vehicles and being compliant with insurance agreements.

 

Layout

One necessity both Buhnerkempe and Schaefer echo is an ideal layout for each location. Along with the SOPs, this allows any employee moving between shops to feel right at home no matter where they’re situated. From the customer greeting area to the amount of space between each bay to the location of equipment, a standard layout goes a long way in improving productivity.

 

Workflow

At each J&R Collision location, there’s a whiteboard set up that tracks delivery dates. It’s a simple addition but, again, it’s another commonality that gets every shop on the same page and allows Buhnerkempe to know each shop is running at capacity during his visits.

“They can communicate with each other and know where a vehicle is at—paint with body, vice versa,” he says. “Very seldom do I have to get involved.”

 

Repair Standards

When it comes to making sure everyone is following the same repair standards, Buhnerkempe and Schaefer ensure training is a constant at all facilities. On top of being I-CAR Gold-certified facilities, each of their shops will be home to classes from outside parties, including I-CAR, manufacturers, automakers and Assured Performance Network. Employees will travel between shops so multiple Schaefer Autobody staffs can attend a single training session.

Buhnerkempe will also host day-to-day process training for his managers at each location, teaching them how to better control processes and manage employees.

 

A Unified Culture

The Buy-in

Every shop owner has his or her vision for the company—but when it comes down to it, people have to buy into your vision for it to be realized.

“If you have an administration wanting to go one way and employees going another, you’ll have resistance,” Buhnerkempe says. “If they don’t believe in the goals, it’s going to be hard to hit those goals and those areas where you want to be.”

Simply put, lay out your goals on paper, review them with managers, and find a way to not only relay those goals to staff, but also embody those goals as a leader. Reminding staff members of the overall company mission has been huge in keeping morale up, Buhnerkempe says.

 

Discuss Growth

Schaefer’s S.M.A.R.T. plan for growth isn’t just written in some document, filed in a folder and locked away in a cabinet—he’s sure to relay his growth plans to managers and employees.

Every 90 days, Schaefer and his managers host an offsite meeting with a consultant to outline what exactly that plan for growth will look like. They identify the network’s weaknesses, review processes and outline specific, detailed S.M.A.R.T. goals that can be achieved within the next 90 days. Then, managers go back to their respective shops and relay those goals to employees.

 

Show You Care

For both Buhnerkempe and Schaefer, building a customer-focused company that cares about others means practicing what you preach. Just like their expectations for customer service, the shop owners dedicate time to keeping employees’ spirits up, getting everyone together for company outings and lunches.

 

An Ideal Acquisition 

With two acquisitions under his belt, Buhnerkempe now realizes how easy the transition can be if you find the right shop.

In both cases, Buhnerkempe has searched for shops that resemble his original location: updated equipment; I-CAR Gold certified technicians; cognizant of shop cleanliness. While Buhnerkempe was wary about his first acquisition, a visit to the shop eased his worries when he discovered the then-owner had outfitted each bay with dust and fume extraction units and silicon bronze welders.

“It was pretty much 90 percent of the way to where we were,” he says.

So, now, being in the early stages of negotiations for his fourth location, Buhnerkempe follows the same routine: tour the facility, take inventory of the equipment and meet with employees.

Also, in the beginning, he says it’s important to not bite off more than you can chew. For now, with his facilities producing an average of $1 million in annual revenue, Buhnerkempe is buying up shops that handle similar volumes of production. Because if you swing for the fences and take on a workload that’s above your expertise? The entire network could pay for it.

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