Mark Stewart said that by digging into his shop’s financials, he found one basic way he could cut costs: He reduced his staff overhead somewhat, taking on a few more responsibilities himself.
“I’m just filling in the shoes on certain tasks,” he said.
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Stewart purchased Cathedral City Collision in Cathedral City, Calif., less than four years ago after spending two decades as a service writer at a nearby dealership. He said in addition to learning the many nuances of the collision repair industry, he’s also still learning much about business in general – aspects that he didn’t have to tackle when running a department within a dealership. He said, for example, he’s learned a lot about understanding shop financials from his father and business partner, Don, who had experience running other businesses.
Another way Stewart hopes to shave some costs from those financials: He had the shop’s electrical utility provider replace all the lighting and ballasts in the 8,000-square-foot shop.
“That should reduce our electric bill, and it makes us more green by being more conservative with energy,” Stewart said.
Even with the economy rebounding, many shops learned tough lessons during the recession. The cost-cutting they were forced to do then may thankfully feel slightly less necessary now, but the tough times then still has many shop owners, like Stewart, continuing to look for ways to reduce expenses.
Digging into costs
More recently, for example, Shane Courtney of Jim Stevens Autobody was finding that even though his shop in downtown Portland, Ore., was still fixing plenty of cars, its bottom line had eroded.
“I’d been doing the same thing for 17 or 18 years, and all of a sudden it wasn’t working,” Courtney said. “The workload hadn’t changed. But all the prices had gone up, way up. That was what I wasn’t watching very well.”
Courtney started as an apprentice technician at the shop 27 years ago, eventually moving into the office and then into ownership. He said that managing the financial end of the business has never been one of his core strengths.
“I can do production standing on my head,” he said. “I enjoy working with customers and with employees. What I do daily, I enjoy. The accounting stuff is work. But the business side of this industry has changed, and you really have to keep an eye on the books, which have become the lifeblood of the company.”
Fortunately for Courtney, one source of help was as close as his company’s name. Though retired for about 20 years, company founder Jim Stevens came back in about three years ago in to see what kind of help he could offer Courtney. Together they made some personnel changes, and Stevens dug into the shop’s expenses.
“One of the first things he did was look at all the bills on a monthly basis,” Courtney said. “The garbage bill is the one that sticks in my mind. He called the competition and asked what they would do it for. They’d do it for half. Our original provider said they’d do it for that. So we stayed with the original company but it just took one phone call to cut that expense.”
Other ideas came from the shop’s eight employees, Courtney said. The shop’s long-time painter took some training related to new environmental regulations and came back with the idea of using any leftover paint from one job as the ground coat on another job.
“So our waste hauling expenses went way down, and we’re mixing less of the new color to finish that subsequent job,” Courtney said.
Share the burden
There’s also can be power in shared sacrifice. One Southern California shop owner said that at the depths of the recession, he pulled his crew together and offered them a choice. He could either let one or two or them go – or else everyone, including himself, could take a temporary 15 percent pay cut. No one was thrilled with the idea, he said, but they all agreed they should all sacrifice a little to avoid any one or two people suffering a lot.
This type of a cut is not a long-term fix, the shop owner acknowledged, but it bought him the four months he needed to make other changes to improve sales and find other ways to save money.
“And down the road, we didn’t have to take the time and expense of trying to find people to replace those we’d have let go otherwise,” he said.
As the shop owner looks at another double-digit increase in health insurance premiums, he said, he’s considering working with his team to build a consensus on what everyone is willing to do in order to make it viable to continue the benefit.
“Nobody likes feeling like they are getting less than they were before,” he said. “But if changes are made in a fair and across-the-board manner, people are willing to give a little for the good of everyone in the company.”
Laundry list of ideas
Here are a dozen other ways that shop owners say they have found to reduce costs and expenses without skimping on quality, productivity or customer service.
1. Cookie Landauer of Scottie’s Auto Body in Hillsboro, Ore., said she recommends looking at expenses line item by line item.
“We’ve reviewed stuff like uniforms, and right down to what we were paying for the bottled water we provide for people,” she said. “Just look at things more closely to ask, ‘Do we really need that,’ or ‘Do we need to pay that much money for that?’
2. Consider if you’re getting the most out of your shop management system. The manager of a dealership shop in Reno, Nev., said he felt the shop could forego having a stand-alone management system by analyzing and managing the business using the dealership’s financial reports.
“The dealership has all the information we need,” he said. “You just have to know how to read it.”
On the other hand, Terry Mostul changed the management system he was using for his three Artistic Auto Body shops in Oregon because the change saved him money.
“I’m very hands-on, and I loved the management system we had been using from the standpoint of production management,” Mostul said. “I didn’t want to give that up. But we switched to CCC ONE because we essentially save a full-time overhead position. I just couldn’t argue with the fact that it was so much more efficient, requiring a lot fewer keystrokes to complete the administrative portion of the process.”
3. Several shop owners said they have saved some money by making changes in recent years in how they pay many of their shops’ bills. One said he switched several years ago to paying as many bills as he can by a credit card, which he pays off every month; the change simplified accounts payable and reduced the number of checks to vendors the shop has to process.
Another said he initially began using a credit card that allowed him to build up airline air miles. Although that was a nice perk for him, he said, he later switched to a card that has no annual fee and offers cash-back rewards. That changed trimmed more than $1,000 off his annual expenses, he said.
4. Many shops have found that skylights in the shop dramatically reduce the need for – and expense for – electrical lighting.
5. Paul Amato believes employees are far less likely to waste shop products – even down to a single piece of sandpaper – if they know they are being held accountable for any such waste. So all the paint preppers at Amato’s Auto Body in San Diego have their own rolling cart of materials, which are filled on Monday morning with that prepper’s name on everything in the cart.
“So if I see a piece of sandpaper on the ground that’s still good, I know which prepper it belongs to,” Amato said.
6. You or your insurance broker should make sure your employees are properly classified in terms of your company’s workers’ compensation insurance because the premium for technicians is often five or seven times the rate for office employees.
7. It can pay to find and fix compressed air leaks promptly to reduce the amount of time the air compressor runs. Providing all of your technicians with garage door openers can reduce the amount of time that overhead doors are open – and letting heat in or out.
8. There may be times when a subscription to a source for OEM repair procedure information can’t be avoided. But using I-CAR’s new “Repairability Technical Support Portal” may help you find a lot of repair information for free – or at least help you know what is available through the OEM subscription websites.
The “OEM Information” section of the portal, for example, includes a page for each automaker, listing what types of collision repair procedures and information each makes available and how to access it. But Jason Bartanen, director of industry technical relations for I-CAR, said the section offers not just links to the automaker’s repair information websites (and short videos explaining the navigation of each automaker site) but often some of the actual procedures, bulletins and information technicians or estimators may need.
The Ford section of the I-CAR portal, for example, offers free access to 51 collision repair instruction sheets for the aluminum-intensive 2015 Ford F-150. The documents offer instructions on removal and installation of front rails, pillars, rocker panels, roof and roof rails for the new vehicle.
The portal is available through the “Technical Knowledge” section of I-CAR’s website – www.i-car.com – or directly at http://rts.i-car.com.
9. If you’re in an jurisdiction in which companies must pay personal property tax, make sure you get rid of any company-owned equipment or tools that aren’t being used – and that you’ve taken anything you no longer have off the tax rolls.
10. Standardized processes and “best practices” within your shop can reduce your costs, too. If different technicians or painters use different processes or products, that’s more items you need to stock. Reducing these choices by making sure all technicians are using systematized processes and the same products will save the shop money (and lower the learning curve for entry-level technicians).
11. Make sure you’re getting the most out of every cycle of your paint booth. If your paint shop knows ahead of time of what will be painted that day, your team can help maximize use of the booth by, for example, painting all four bumpers for the day in the booth at the same time rather than in multiple booth cycles.
12. Ask your current vendors about any value-added services they offer. Steve Dillenbeck of Airport Auto Body in Aurora, Colo., said one of the dealership groups in his market saves him money by providing one such added service.
“They have contracted with a safety and compliance company, and as long as you buy parts from their range of dealerships, they give you that service for free,” Dillenbeck said.
That service, for example, provides all the necessary topics and information for the shop’s monthly safety meetings, Dillenbeck said.
Go after pennies
If there was one recurring message from the shop owners who shared ideas for cutting costs, it was that one single change that will reduce your expenses significantly probably isn’t out there. Instead, they said, look for multiple ways to save even just a little money. Those small reductions, they say, are easier to find and can really add up over time.
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