Who has time for conferences? You may not, so that’s why we went instead. Over three days of sessions and networking, we covered a lot of ground, and wanted to capture some of it for you. The conference drew 170+ attendees including speakers, owners and staff from single-shops, MSOs, and consolidators from across the nation. The best sessions we attended included “Lean Buy-In”, “Bounce Back from Failure”, “Adding Shop No. 2”, and “The Secret to Successful Insurer Negotiations”.
Here are our six major takeaways:
- Shops aren’t as profitable as owners believe just because sales are increasing. A higher proportion of parts increases sales but lowers gross margin. In fact, when adjusted for inflation, the shop labor rate has probably gone down.
- Overall, the industry still doesn’t fix cars the right way. OE procedures are too lengthy for anyone to read them all and insurers won’t pay for some of the most important checks and tests. Mike Anderson’s strongly recommends: Do them anyway and insurers will slowly catch up.
- Pay as much to employee retention as you do to hiring with bonuses structured to keep people and a culture that turns your employees into hiring ambassadors for you.
- Make sure you’re smart about making your DRPs work for you. If the majority of sales run through DRPs, but only a fraction of those jobs were referred by insurers, you are probably losing money on sales you otherwise would have made anyway.
- The next major opportunity for collision repair shops is mechanical work with a lot of demand (read: labor hours) and healthy margins. Collision margins will continue to decline as parts replacement outpaces repair. The other areas for growth are to bring ADAS and other calibrations in-house and to increasingly focus on getting OEM certifications, as they become more important and differentiators for consumers.
- Invest in software that allows you to document insurance interactions extensively. Every single line item should be grouped and include an explanation. The more paperwork you provide, the easier it is to get insurers to pay; they love invoices! It also allows you to more easily audit all your estimates, which you should make standard practice.
There was plenty more content over a busy three days and we’ve included some of our “notes” below for you to review. Look for our report following our attendance at next month’s CIC, MSO Symposium, and SEMA meetings in Las Vegas. Drop us a line if you’ll be there! We’d love to introduce ourselves in person.
Lastly, we took the opportunity at FenderBender to release our latest article, which covers eleven top tips to maximize the value of your business if a sale is in the near- or medium-term for you. We’re always available in case you want to confidentially discuss your financials or strategy with us.
Assorted notes from FenderBender Management Conference
- According to Enterprise, the average length of a car rental is 18 days. The average shop touch time per car is 800 minutes. So only 3% of the time the customer’s car is on site is of value to the customer. Try to change this up to free room in your shop for more work and boost customer satisfaction.
- Conduct exit interviews when an employee leaves. If you understand the departing employee’s concerns, there’s no shame in bringing them back in to tell them you’ve fixed the issue.
- Incorporate your staff into goal setting.
- If you’re interested in opening a new shop, you can use traffic and demographic tools like Axalta’s GMap tool to identify good markets for a collision repair.
- The lean formula: find the problem, fix a problem, prevent the problem from ever coming back. Most insurance agents and adjusters have never read their entire insurance policy. If you know the policy, you can have a lot of power in negotiations.
- If an insurer is being extraordinarily difficult, you can (sparingly!) use a demand letter. This is a letter that talks about the penal code for theft of services. It includes relevant state laws and lets the insurers know you will go to the regulators if your matter is not resolved.
- Find ways – big or small – to recognize your employees’ efforts, loudly and publicly. “Criticize quietly, privately, and without anger.”
- “Hire five, pay them like seven, work them like ten.”
- Affluence: (1) economize, (2) pay every bill under the sun, and (3) invest the rest into facilities.
- “Leaders don’t get to have bad days. Don’t bring whatever you’re going through to work.”
- “Winners lose more than losers lose.” Take calculated risks!
- Invest in using marketing tools like Podium. It costs $300 to $500 per month but allows you to be in constant contact with customers.
- Tesla’s new model is going to be self-calibrating, and more vehicle models might do the same.
- People in management positions don’t need to be managed – they need to be coached.
- “Think about the law of entropy – that order eventually devolves to chaos.” You need to make sure processes are documented and defined. A process is needed even for the simplest of tasks (even for opening the mail!).
About Focus Advisors:
Focus Advisors (focusadvisors.com) is a full-service FINRA-registered M&A advisory firm serving collision industry entrepreneurs looking for advice and representation in raising capital or selling their businesses. Managing Director, David Roberts has been the industry’s leading advisor to MSOs and single shops with more than 30 industry transactions in the last 7 years including recent sales of large MSOs such as Parsons/Middleton Carstar, Able Body Shops, Fix Auto USA, Quanz Auto Body, Price’s Collision in Nashville and Herb’s Body and Paint in Dallas. With the sale of Mills Body Shop to CollisionRight, Focus Advisors has now sold collision repair businesses to 9 different national buyers. For a confidential discussion about your future, your value, and the benefits of having an experienced advisor on your side, visit our website https://focusadvisors.com/contact/ or reach David Roberts at [email protected] or by calling 510-444-1173
Investment banking and securities offered through Independent Investment Bankers, member SIPC/FINRA. Focus Advisors and Independent Investment Bankers are not affiliated.