Improve Business Sensibilities with a 20 Group

Nov. 1, 2010
Tech-minded shop owner Jim Hill resisted joining a 20 Group. Then he realized other shop owners knew a heckuva lot more about their financials than he’d ever imagined possible.

The lightbulb moment that changed Jim Hill’s business came in an unremarkable conference room of an Orlando, Fla., golf resort. The year was 2005, and Hill, the co-owner of Master-Tech Paint and Collision in Bear, Del., was a guest at a Sherwin-Williams A-Plus Network Vision Group meeting. In front of him was a folder containing the composite financial data of more than a dozen independent collision repair shops just like his.

Hill was stunned. “I had no idea what any of my numbers were,” says the Master-Tech co-owner. “I didn’t even understand what they were talking about.”

Over the next eight hours, the group, led by Square One Systems Inc’s Elainna Sachire, analyzed the numbers, and Hill’s mental switch got flipped. “I realized that my peers had information that I didn’t have, and that’s when I realized I needed to know the business side of collision repair, not just the technical side of it,” he says.

Thus began Hill’s self-described transformation from bodyman to businessman, as he learned to create a budget, set financial goals and adopt lean processes. That process, and his Vision Group work, helped Master-Tech grow to a $5 million operation.

Building a Better Business

Master-Tech was a bustling business well before Hill became a 20 Group member. Founded in 1991 by Hill, a trained bodyman, and Enoch Anderson, a painter, the shop started with a 1,500-square-foot space, no employees and no DRPs. Word of mouth helped build the business, and a year later the shop doubled in size, hired its first employee, and bought a spray booth and floor system frame equipment. When Hill joined the Vision Group, the shop had revenues of $3 million and three DRPs.

In those early days, both owners were hands-on in all areas of the business, but as Master-Tech grew, Anderson began to oversee production, while Hill started focusing on the business side of the operation.

Despite his interest in the numbers, Hill had the history of a man raised in the auto business, having worked in his uncle’s auto body and towing business while still in high school. He was skeptical about joining Sherwin-Williams’ Vision Group. “I knew nothing about the financial side of the business,” he says. “I was running everything by what I could see, feel and touch. I didn’t feel it was worth the expense and the fact that I’d have to be gone three days a week, four times a year.”

Sherwin-Williams rep Bill Thompson convinced Hill of the Vision Group’s value. “I was trying to get a better discount on paint because I didn’t feel that we were making enough money on his product. [Thompson] asked about our percentage of profit in different areas, especially paint and material,” Hill says. “And when we talked about the issue, I realized that I really didn’t know what my profit was and had no idea what our expenses were.”

That’s exactly the kind of situation a Vision Group works to correct.

“What shop owners [get in the 20 Group] is basically their own board of directors, to share their successes and failures, and to collectively come up with solutions to help them succeed,” says Brandon Devis, A-Plus Network Program Manager for Sherwin-Williams Automotive Finishes (SWAF). “If you’re looking for ideas to continue to improve your operation, and you’re willing to make a small commitment and see if it’s the right fit, the reward is tenfold.”

Thompson offered to host Hill at a Vision Group meeting for free. Hill agreed—and discovered a whole new way to attend to his business.
Today, Master-Tech boasts a 23,000-square-foot facility, 30 employees, seven DRPs and 200 repair orders per month. Hill attributes the early growth to the shop’s dedication to customer service (“That was key way before the 20 Group,” he says), high-quality work, and employee loyalty.

Learning Curve

Hill began to create a budget, set financial goals, incorporate lean processes into the shop’s day-to-day operations and run Master-Tech “based not on what I thought was happening, but on what the numbers said was happening,” he says.

Budgeting Smarts. Budgeting was, not surprisingly, a key factor. Previously, Master-Tech didn’t have one. “Not having a budget, you don’t know where your company is going,” Hill says. “You’re flying by the seat of your pants.” At the Vision Group meeting, he saw that each shop had a budget and was responsible for meeting its financial goals. His fellow shop owners knew their expenses down to the exact percentages of things like labor, parts and materials, as well as gross and net profits.

Financial Goals. Hill began to set financial goals based on the industry-wide statistics he learned. For example, he says, independent body shops, on average, usually run about 25 to 30 percent on parts profits. Once he was armed with that knowledge, he had a realistic target to hit—and a group of peers that would hold him accountable.

Lean Processes. The Vision Group also introduced Hill to lean processes, thanks to the guest speakers and shop tours at each quarterly meeting. One big lean change: the elimination of a storage space for parts. “We started contacting parts vendors to see if we could get them on time, so now I don’t have to store parts, and [we] use that space for production,” he says.

Another lean change is the use of parts carts. Technicians now get all of their parts delivered to them at once, rather than foraging for them themselves—a tactic that usually resulted in delays, Hill says.

More DRP Work. The lean changes have helped the shop become more efficient—which, in turn, has helped it nab four more DRPs. Today, DRPs account for 70 percent of Master-Tech’s business.

“When I meet with insurance companies, I know what my numbers are and I take [them] with me,” Hill says. “If they tell me my CSI is seven days and I know it’s five, I can prove it. When you go into a meeting and know what your business is doing instead of having them telling you, it has a major impact on them.”

New Knowledge, Old Philosophy

An undeniable part of Master-Tech’s success comes from what it’s always done well: customer service. Master-Tech has a 94.6 percent customer satisfaction score (as measured by CSi Complete). “We want to maintain our ‘the customer is always right’ attitude, and we include our insurance partners as our customers,” Hill says.

Master-Tech leverages its customer service reputation and DRP relationships by strategically turning its DRP customers into word-of-mouth marketers for the shop. Part of what makes the shop referral-worthy is, of course, the quality of its work. Every vehicle goes through multiple quality checks, and estimators keep in touch with customers throughout the repair process.

To Hill, the shop’s personal touch matters as much as anything else. Employees are encouraged—even trained—to be friendly and to be good listeners.

“Being in an accident can be a stressful and unfamiliar position for some people,” says Justin Ware, an appraiser at Master-Tech who is himself involved in a Vision Group for managers. “We want to make sure our customers are educated about their current situation, and we want to instill confidence in our shop so the customer knows that they are in good hands, and that they are going to be taken care of.”
Hill is so focused on providing excellent customer service that he even hired an estimator recently who had no industry experience. “His customer service skills were so good that it’s worth me training him to do the estimating part,” he says. But at Master-Tech, the personal touch starts at the top. “As a customer, you don’t have to talk to a manager, you can talk to the owner,” Ware says. “Jim isn’t out golfing, he’s approachable, and the first one to handle an issue head-on. And when you say, ‘Mr. Smith, this is Jim, the owner of the company,’ it makes people feel more comfortable. There’s no substitution for having the owners onsite and being able to talk to customers. When you have business owners like Jim and Enoch who are hands-on, 40 hours a week, approachable, and the first one to handle an issue head-on, it really sets our business above the rest.”

Even so, that approach may be tough for the growing business to sustain, says Devis, because Hill’s situation is a classic one: “The challenge is to be able to work on the business and not in the business,” Devis says.

Making the Right Moves

The Vision Group will undoubtedly help Hill put best practices in place so that his shop runs as well without him as it does with him. “Other repairers in his shoes have gone through similar things in their growth,” Devis says.

That challenge aside, Master-Tech is thriving. Last year, it received SWAF’s A-Plus Network Vision Group Collision Center of the Year award for having the best and most consistent numbers in relationship to the goals set. “Master-Tech understands the needs of both of their customers—the consumer and the insurance company—and they’ve been able to deliver on that and grow their business and their profitability,” Devis says.

For his part, Hill credits Master-Tech’s current level of success to the Vision Group, and says it’s well worth the monthly fee and the cost of getting to the quarterly meeting destinations. “I don’t think we’d be where we are today, because I’d have no clue, from a financial standpoint, how to run something this size,” he says of his shop. “The Vision Group [helps me] to know I’m doing the right thing. I’m making the right decisions, not pulling a straw out of a hat. And if I don’t have that confidence, I have 17 people I can call to confirm that the move I’m going to make is the correct move. When you have that information, you can lead your company and your people with confidence.”

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