Most collision repair shop owners are skilled tradesmen – body men or mechanics that have spent years in the business, learning how to make mangled wrecks look like new again. By accident or design, these technicians have found themselves in the role of business owner, heading up repair shop operations that in many cases generate hundreds of thousands (or even millions) of dollars in revenue each year. But when it comes to running those businesses, not every owner is up to the task.
“We call them checkbook shops,” says Gene Hamilton, owner of Sports & Imports Collision in Duluth, Ga., and a former member of the Collision Industry Conference’s education and business management committees. “They look in the checkbook and see if they have enough money to buy a truck, and then they buy a truck. They don’t worry about taxes or the rent.”
Unfortunately, many shop owners either don’t know, or won’t admit, how much help they might really need when it comes to finances.
Lou DiLisio, president of Automotive Industry Consulting, has seen this lack of basic knowledge during management seminars. “Most of the time you’re looking at a room full of deer in headlights,” he says. “It blows me away. So many of these people really don’t understand business management at all.
“People in the collision business are ingenious,” DiLisio continues. “They can figure out a way to fix just about any vehicle on the operational side. But on the business side, it’s more difficult for them.”
That’s why basic business training – the fundamentals of economics, finance, accounting, etc. – is so important.
“There’s a whole lack of understanding of financials,” says Teresa Kostick, owner of All Line CARSTAR Auto Body in Bollingbrook, Ill. Kostick recently led a session on understanding financial documents at the Women’s Industry Network (WIN) Conference. “At those functions, you find very energetic people that are very involved in their business, and the level of knowledge tends to be several steps ahead of the average. But there are a lot of owners that don’t want to admit that they don’t know about these things. It’s not a comfortable thing for people to discuss.”
Some shops are able to keep a bookkeeper or accountant on staff, while others rely on a CPA just to get them through tax season. Owners, though, have a responsibility to understand how to evaluate their business using key performance indicators (KPIs), and how to determine if they are actually making a profit or just breaking even.
“Many of the owners don’t know what their sales volume should be to cover their expenses,” says Tim Ronak, services consultant with AkzoNobel. “They think they do, but they don’t. They don’t account for annualized and amortized costs, or capital depreciation. Spray machines and frame machines wear out. Every time you pull a car, that’s one less car pull that frame machine is capable of doing before it requires maintenance.”
“They have to have exposure to what it takes to run their business on a monthly basis,” Hamilton says. “If they can’t keep track of it monthly, they are not going to be around long. I think we’re going to see 30 percent of those types of shops dropping out of the business in the next two years.”
Training opportunities
One easy way for owners to brush up on their financial skills is to take advantage of training programs offered through the paint companies. AkzoNobel (Acoat Selected), BASF (VisionPlus), DuPont (SMART Management Seminars), PPG (Maximum Velocity Performance), Sherwin Williams (A-Plus Program) and most other vendors offer some type of basic business training for body shop clients.
“The paint companies really care, and they want these guys to survive,” Hamilton says. “They have an interest in helping the shops grow their business.”
Mike Schoonover, owner of Schoonover Bodyworks in Minnesota, has taken advantage of AkzoNobel’s training, and participates in the company’s regional performance group. “That’s been huge for us,” Schoonover says. “The information you get from the training and from interacting with the other shops is so valuable. You see how they handle expense management, production management and their overall operations. No matter what size facility they are, it’s great to be able to learn how they do things in the shop and in the office.”
National and local industry associations like the Automotive Service Association, the Society of Collision Repair Specialists and others also provide an opportunity to receive formal training and brainstorm with other shop owners.
“Join an association,” Hamilton says. “Then you’re getting around other people that know what they’re doing. An association can do a lot for you in that way.”
Hamilton also encourages shop owners to get involved in local 20 Groups, where they can network and learn from other shop owners.
There are plenty of other sources of financial training as well, with programs available through I-CAR, industry conferences like NACE, the University of the Aftermarket, private consulting firms and other groups.
Getting shop owners to actually attend these courses, however, can be a challenge.
Many owners “don’t know what they don’t know,” and may be missing out on ways they could save money or reduce their tax burden – and potential financial disasters that could be around the corner if they don’t get a handle on their books.
“As difficult as it is to give somebody up for a day, if you don’t participate in this type of training you are really losing more in the end,” DiLisio says.
Stacy Bartnik, assistant vice president of franchise services with CARSTAR, says that in her experience working with CARSTAR franchises, many shop owners, particularly at mature facilities, have difficulty with change management and team building. “It’s a big eye opener for them, and the training we do in that area is really beneficial for them,” Bartnik says.”
CARSTAR has developed a multitiered, required training program for shop owners that starts with basic courses on financial management, change management, production management and other topics. As shops improve and work their way through the program, they build toward implementing “lean” production practices in the shop.
“We don’t introduce lean into the process until they have a solid business foundation,” Bartnik says. “We take our stores through the basic business of running a shop, then we get into business refinement and production management.”
Regional service managers serve as consultants to the stores, and CARSTAR periodically audits the shops to make sure they’re on track. The company also encourages stores to get I-CAR gold certification.
“Times are tough, but we’re pretty big on training because you have to keep current with what’s going on in the industry,” Bartnik says.
That’s a message that all shop owners should take to heart, Kostick says. “If they don’t get a handle on this, they are not going to make it through these rough times,” she says.
Here’s a partial list of business training resources:
University of the Aftermarket
www.northwood.edu/aftermarket/
Automotive Service Association KEYS Program
http://www.asashop.org/keys/
AkzoNobel Acoat Selected
http://www.akzonobelcarrefinishes.net/default.asp?sid=65385
BASF VisionPlus
https://visionplus.basf.com/PAINT_vp2.html
DuPont SMART Management Seminars
http://pc.dupont.com/dpc/en/US/html/visitor/s/training/smart.html
I-CAR Collision Repair Training
www.i-car.com
PPG Maximum Velocity Performance
http://corporateportal.ppg.com/NA/Refinish/PPGRefinish/6-0-Programs/6-3-MVP/EN
Sherwin Williams A-Plus program
http://www.sherwin-automotive.com/vehicle_repair/aplus_new_benefits.cfm
Audatex Online Lean Six Sigma Training
http://www.audatex.us/repair_facility_solutions/lean_six_sigma_for_collision_repair.aspx
