Consultants help MSOs transform their business

June 3, 2014
Many MSOs say hiring a consultant has helped them manage a growing business, bring new ideas and develop systems to help them get to that next level.

It might seem like MSOs would have less of a need to bring in outside business consultants than a single-location shop. After all, as MSOs grow, they can hire in-house expertise to handle human resource, financial or production issues for all of their locations.

That may be true, but many MSOs say hiring a consultant has proven a successful way to help them manage a growing business, bring new ideas and develop the systems and processes to help them get to that next level.

“There’s only so many solutions that I’m going to come up with on my own,” said Torie Mahnke, chief operations officer for Mahnke Auto Body, a 4-shop MSO with more than 60 employees in Colorado. “I’m going to continue to think about things in the same way until I have someone come in and completely rock my world by saying, ‘What about this? Have you ever thought about it this way? I’ve seen this be a solution.’ It’s not easy to think outside the box without having someone else there to brainstorm ideas with.”

Here’s a look at how Mahnke and other MSOs have worked with consultants to improve their business.

Change without turnover
Ryan Cropper said it was his involvement in a “20 group” that helped him realize he needed assistance from a consultant – and helped him find the best consultant for his business.

Cropper owns Able Body Shops, with two locations in Anchorage, Alaska, and annual sales of about $6 million. He also operates a separate truck accessory shop, giving him three locations to oversee.

“I noticed that when I was a single location, I’d come back from my 20 group meetings with ideas and I could make that stuff happen,” Cropper said. “As we grew, that story changed really quickly. What I could do before at one shop, I couldn’t do at multi-locations because I was bouncing back and forth between them. That was a breaking point for me: realizing what I could do in the past, I could no longer do effectively.”

Mike Anderson

Cropper’s choice of consultants was relatively simple: He had been in 20 groups led by Mike Anderson of CollisionAdvice for five years, so Anderson was familiar with Cropper’s business and was someone Cropper felt comfortable hiring for more one-on-one help.

Cropper’s overarching goal was to improve his company’s performance relative to insurer metrics.

“I talked with Mike about what we needed to do to get there, and he and I and the key members of my staff all agreed on a plan,” Cropper said.

He had transitioned the shop to a team flat-rate compensation system a couple of years earlier without losing any key employees, and wanted that to continue as the shop shifted to a complete teardown (or “blueprinting”) process.

Since last fall, Anderson or other members of his team of consultants has spent several days each month in Anchorage, working with Cropper and his staff and then providing a list of things the staff needs to accomplish before the next visit.

“We do a lot of the work ourselves, but this keeps us on track,” Cropper said.

Once the shift to blueprinting was under way, Anderson and Cropper worked to improve the company’s administrative and customer service processes, including scheduling. Parts processes, and accounting and financial practices, followed.

“As we would get improvement in one area, we’d look for the next area that seemed to offer the most room for improvement,” Cropper said.

The regular ongoing visits, he said, help address issues that come up as new processes get put into place, and helps keep the company from slipping back to old ways.

Like Mahnke, Cropper said an outside set of eyes looking at your business can be invaluable. Some relatively simple layout changes suggested by CollisionAdvice helped improve how the shop handles parts, for example.

“You get stuck in your own world so much that thinking about it in different ways is difficult,”  Cropper said. “This opened my eyes to different things.”

The results? More than six month in, Cropper said, not a single key employee had left. Touch time and cycle time have improved.

“But probably the single largest difference so far is ‘hours produced per day’ with the same number of techs we had before,” Cropper said. “We’ve seen about a 60 percent increase in the hours we can produce per day.”    

‘Naked with the truth’
Like Cropper, Mahnke chose a consultant she had known for a number of years. She’d interacted with Ron Kuehn of Collision Business Solutions through her involvement with Fix Auto, she said, and knew Kuehn had an understanding of her company’s market and key competitors.

Ron Kuehn

Also like Cropper, Mahnke was looking for help in getting blueprinting and improved parts management implemented more consistently in all of her company’s locations. Bringing in that extra set of eyes has been valuable, she said, because in some cases Kuehn spotted things that needed to be addressed first before some of the process changes Mahnke was looking for could occur. He’s also been able to communicate with employees differently, she said.

“Sometimes an outside voice has more credibility (with employees) because that person don’t have any skin in the game like someone does within the organization,” Mahnke said.

Mahnke said Kuehn typically spends one day a month at her business, including several hours at each of two shops, then a wrap-up meeting with her where he provides an action plan for the next 30 days.

She said how successful working with a consultant will be for an MSO can be as much based on the business as the consultant.

“I think any time you have someone come into your shop, you have a tendency to be defensive about who you are or how you do things,” she said. “But why would you pay somebody to come in only for you to impress them? If you can get past that and be willing to share your imperfections and be honest about them, then you can get value out of it.”

Mahnke said that why that in addition to Kuehn, her company gets outside help from such organizations as VeriFacts Automotive and Fix Auto.

“I think there’s immense value in being able to be naked with the truth and have somebody come in and peel back the curtain and say, ‘Here’s what you’ve got going on,’” she said. “You can’t use 100 percent of other people’s suggestions, but if you’re open to listening, something is going to stick.”

Difficult, but needed, change
Joe Amodei can attest to the fact that working through key changes to your collision repair business with a consultant isn’t always easy. Amodei, founder and CEO of The Collision Center, which has three locations in Long Island, N.Y., said he had nearly an 80 percent turnover of technicians at one of his shops over the course of a year as he, too, worked with consultant Anderson on changes to pay plans and shop processes.

“It was very, very painful. There were many nights I could have just killed Mike,” Amodei said. “I asked myself, ‘Why is this guy doing this to me?’ But you know, in the end, I can actually say he did the right things for us. It was not an easy change.”

It’s hard to argue with results. In 2013, Amodei said, the company saw its sales jump by $3 million despite a drop in employee count. Most of his technicians are making more money, he said, and the company’s gross profit on labor had jumped by 15 points.

“It turns out we didn’t just need improvement on little things. We needed improvement on a lot of things,” Amodei said.

Amodei said he always figured hiring a consultant would be a lot of money for something he could do himself. Opening his third location, a greenfield, had gone smoothly, and the shop did $100,000 in sales its first month and grew from there. But that’s when Amodei found himself “beating my head against the wall” as his focus on the new shop was pulling him away from the two shops that had long been “our bread and butter.”

He brought Anderson on board about two years ago, five months after opening the third shop.

“As I thought about it, I decided, ‘You know what? I’d rather make less money and pay a consultant to come in here and help,’” he said.

The two decided to focus on the company’s largest shop first. Amodei said Anderson confirmed his suspicions that he had “a lot of people not working to their potential.” They shifted to a customer service representative system in the front office, moving estimators into the back for blueprinting. They also shifted to a team flat-rate pay plan. It was a tumultuous six to nine months, Amodei said.

But the staff turn-over was not all negative, he said. Some technicians who left have come back. Others were not replaced with no hit to production.

“I think we started with four technicians on some teams, and we’re down to three techs on each team and they’re doing the same amount of work as the four,” Amodei said. “So they’re all making more money.”

Things stabilized,  he said. and the transitions at his other locations have gone more smoothly with significantly less turnover.

Amodei said Anderson was at his shops for more time earlier in the process, but he still talks with Amodei weekly and is onsite once a quarter to help him set goals and sustain the change.

“That the hardest part of culture change,” Amodei said. “It’s easy to change things. You have to sustain it. That’s the hardest thing.”

For someone who struggled after opening his third location, Amodei is now not afraid of more growth, looking to open a fourth location soon.

“I live and breath this business,” he said. “I have sons involved and I want to grow. The bottom line was I knew I needed to think out of the box and hire a consultant to help me succeed in my growth plan.”

Building new layers
CEO Paul Krauss has used a variety of outside schools and training for his team as Virginia-based Craftsman Auto Body has grown to 11 locations and 275 employees. But he’s turned to Symphony Advisors over the last seven years for consulting help with several key elements of business development.

Paul Krauss

Krauss said Symphony Advisors helped him strengthen his relationship with insurers, connecting him with national contacts at the insurance companies to supplement his regional contacts.

As the company broke the 100-employee mark, Krauss said, a new layer of management – such a human resources director – became necessary.

“We were really crossing that boundary where you couldn’t have that jack-of-all-trades owner anymore,” Krauss said. “It exposed the need to start growing that middle layer to specialize in certain things.”

Krauss said he worked with Symphony’s Matt Ohrnstein (until his death last year) and Marcy Tieger to help develop and refine that “middle layer.”

More recently, Krauss said, he and his brother have wanted to step back somewhat, and sought help from Symphony Advisors as they built an executive team that could effectively run the company.

“We kind of hand-picked that group over a period of time, and we needed someone who knew the industry who could help us facilitate and guide a strategic planning exercise with the team,” Krauss said. “I think it worked fairly well. We’re added three locations since we did that strategic plan, with that team moving into more of an operational role and doing a lot of it on their own.”

Tieger, Krauss said, has also participated in some of the company’s weekly conference calls with Craftsman’s operations team and site managers.

“She was keeping them on topic and coaching them on transparency and openness,” Krauss said. “If one personality was kind of dictating the pace of the call, she’d coach that person and the others about being more inclusive. I can see them acting differently because she’s a well-rounded consultant who understands that kind of thing.”

Getting the help
Like the others, Cropper said some MSOs may be able to implement on their own many of the changes for which he’s sought outside help.

“But to be honest, the most successful MSOs I’ve seen are the ones who hire consultants,” Cropper said. “It’s tough to do your daily job and get the changes that need to be done as fast as these insurance companies are changing the game. What they care about today changes tomorrow, and you have to be able to react to that instantly.”

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