Richard Galati, president of Quality Werks Collision Center, learned the perils of moving an auto body repair shop the hard way. After owning and operating an increasingly cramped shop in Barrington, Ill., for four years, Galati moved his company to Algonquin, Ill., in 1991. Although both locations were in the northwest Chicago suburbs, they were separated by nearly eight miles—and few customers stayed with the company after the move. “The first few years in Algonquin was almost like starting over,” says Galati. “It took years to build the business back up.”
After more than a decade at the new location, however, Galati again contemplated a move. “We couldn’t expand at the old location,” he says. “We had three or four landlord changes and increasingly had the feeling that there was no sense of security. We wanted to build equity in something—and to grow, we wanted something more aesthetically pleasing.”
Since the company moved to a newly constructed location just a block away from its previous facility in April of this year, it has seen a steady uptick in business. “It’s a lot easier to secure business in this building,” Galati says. “It’s a matter of getting them here and then it’s pretty much a done deal.” The business, he says, “looks more like an office building than a body shop.”
Galati’s experiences provide valuable insight into how to manage such a transition and how to make a move that creates growth opportunities. Although Quality Werks is currently on track to earn $1.5 million in revenues for this year, the facility could handle up to $3.5 million—and Galati’s goal is to reach that level within five years.
Anyone making a move such as Galati’s must persuade himself that the move will generate sufficient additional revenue to justify any additional expense—which in his case was significant. With the move, the company would about double its monthly real estate costs.
To help offset the additional expense, the company made plans to open its own rental car franchise, which would have the added benefit of providing an extra level of convenience for collision customers, particularly during harsh Illinois winters. Previously, when customers had no choice but to go offsite for a car rental, they sometimes became aggravated before any work on their car even started. Another synergy is that the company is able to use existing office personnel to handle the rental operations. Although the rental operations do not generate a large profit, the increased revenue helps pay the additional monthly real estate expenses.
Those expenses are also shared with a separate business that Galati owns, which was started in 1992 as an offshoot of Quality Werks Collision. The new business, known as Quality Werks Remarketers, disposes of damaged vehicles for fleet owners. Galati got the idea for that company after working with fleet owners, who represent about 20 percent of his repair business, and noting that disposing of damaged vehicles was one of their challenges.
“We decided that this was something we could do,” says Galati. “Now, if we get slow, we can buy and rebuild cars and keep people employed. Over the years, we’ve built up rapport to where we buy cars over the phone. People count on us to get the cars out of their location and to process them. It takes a long time to develop those relationships.”
Having the remarketing business also helps in attracting and retaining fleet business for the body shop. “We can serve all of their needs from one location,” says Galati, adding that he has already gained some new fleet accounts since the move.
The move to the new location also enabled Quality Werks to improve the efficiency of its repair processes through a new shop layout. Most ideas for that layout came from Galati’s own people. “People involved in the shop should be involved in the process,” says Galati. “They know better than the owner about how things flow through the shop.”
Another smart decision that Galati made about the new project was to pay his builder on a percentage basis. That way, he says, he was able to have input about which subcontractors to use and could make modifications without creating conflicts. He relied heavily on his builder in getting him through municipal approval processes. These were challenging in Algonquin, where the village management went so far as to specify what types of shrubbery the company could plant.
“Talk to the village first and see what they would accept; without their approval first, you’re dead in the water,” Galati advises other shop owners contemplating new construction. “From the start of the municipal process you’re looking at 12 to 14 months,” he adds.
A strong staff was another critical factor in enabling Galati to manage the relocation. “I devoted most of my time for a year or year and a half to the project. I couldn’t have done it without reliable people,” he says.
Once the company had a partial occupancy permit, technicians helped make the relocation a smooth one by moving things to the new shop whenever they had a slow period. The company also purchased some new equipment just prior to the move and had it installed in the new location. “You can install the new equipment while working off the old,” says Galati.
Because the new location was only a block away from the old one, the company only had to close down for one day when the time came to make the final move. Now that the company is installed in the new location, more aggressive marketing has become a priority for Galati.
Snapshop
Name: Quality Werks Collision Center
Location: Algonquin, Ill.
Volume: 65 repairs per month
Revenue: $1.5 million annual revenues
Employees: 15
Size: 14,000 sq. ft.