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Joining an MSO offers expanded training, learning opportunities

Wednesday, February 1, 2017 - 09:00
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As many of us are aware, over the past several years our industry has been marked by consolidation. We have seen countless MSOs being sold to private equity groups, franchise companies buying other franchise companies and single shop operators looking to expand, but sadly, many have not been successful. For some, this rapid pace of consolidation is just what they have been dreaming of. 

Consolidation is not a bad thing if you prepare. Successful business owners that have worked hard on building up their businesses in the hopes of one day selling are not as far-fetched as one might think. Let's face the fact: years ago, profit margins were much more appealing than they are right now. This trend has led some owners to start drawing a solid succession plan, and there are others beginning to look forward to the future and how they are going to survive. There are options, however, to help guide you in either direction. As mentioned prior, if you are happy and content and ready to sell, then now would be the best time.  

If you decided to sell to a consolidator, there is always the possibility that you may move into the management of that location. This "move" would help the buyer keep the business that you built familiar to your repeat customers as well as keep you in the day-to-day scope of what you've built, and of course, limit the financial burden. The other option, should you just not be ready to turn over your business or perhaps you may even simply feel that you haven't accomplished what you started out to do, would be to consider franchising. I understand that many owners will ask, "Why would I buy into a franchise and give up control on the ways that I have been doing things that have built my business to a point? I get it; trust me. 

Allow me a moment, and consider this: Joining a franchise or an MSO model is not all that bad! There are many advantages for a shop joining a network. For example, a shop might be too small to accomplish big things on their own. This wouldn't mean that you are completely giving up your culture. It's a mere task of "'tweaking" things a bit to keep up with this ever-changing industry. And brand power is huge. Think of what a network of stores can attain on a marketing aspect compared to what an individual store might afford. Speaking of branding for a moment, studies show that people on average are involved in an accident every six years and, coincidentally, people tend to relocate in that same time frame. Wouldn't it be great to have a consumer following to a national brand?

There are many benefits to consolidation, including greater purchasing power with vendors and suppliers, marketing, education and training and of course, an increase in insurance work (DRPs). Another advantage of an MSO is the ability to measure KPIs. Everything in collision repair today is driven by KPIs. Insurance companies with DRP programs in place constantly watch a shop's performance based on KPIs, whether it is length of rental time or cycle time, and the result is customer satisfaction.

Furthermore, insurance companies prefer to deal with MSOs over independents for several reasons. They normally have a single point of contact, brand recognition, KPIs and warranty their work. This creates a greater customer sense of well-being and less worry for the insurance company.

It's getting increasingly harder to survive as an independent. With a declining, aging work force, it is becoming more and more difficult to find good help and keep them. In addition, with all the newer vehicles having advanced technology, you must continuously purchase the newest necessary equipment. Vehicles are becoming increasingly more complex. Blind spot awareness, back up cameras, automated parking and heads-up displays are just a few common issues to deal with in all this crazy technology. Additionally, in this rapidly changing industry, training is essential for your technicians.

There is a tremendous pool of resources available through being a part of a MSO: training, education and advice, just to name a few. You can also brain storm an idea or problem with many others of expertise.  To be able to have access to these resources in varying fields such as collision repair, finance, marketing, etc., is a great asset! 

In the end, you as an owner have to decide. It is clear the industry is changing and we as owners have to be able to change with it or face the sad realization that we will be left behind.

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