NACE symposium will focus on the challenges and advantages of multi-shop operators
Operating a collision repair shop is a challenging job. If you run multiple shops, then those challenges are compounded. But multi-shop operators (MSOs) also benefit significantly from having several locations, and not just by increasing market presence or boosting revenues.
MSOs also have greater negotiating leverage with vendors and insurance companies; can boost cycle times by load leveling across shops; and have a wider data set to reference to gauge their performance.
In recognition of the unique challenges that multi-shop operators face, this year's International Autobody Congress and Exposition (NACE) in Orlando features a new MSO Symposium that will include educational conference sessions and networking opportunities geared toward traditional MSOs with between four and 20 locations. Qualified MSOs will receive a complimentary admission to the event, with the session limited to the first 100 registrants.
"MSOs are a growing segment, but they interact with suppliers in a very different way than the traditional independent shop," says Lindsay Roberts, director at Hanley Wood Exhibitions and NACE/CARS show manager. NACE organizers surveyed the MSO community to help design the symposium. "What we heard from them is that they need somewhat of a different way to interact with a specific group of manufacturers; they wanted to be able to network with other MSOs without having to try and find them somewhere on the show floor and identify who they are; and they wanted content that was a little more high end and relevant than what we were providing within the additional programming."
The full-day event will include networking, as well as sessions on insurer relations, centralized quality control for estimating, centralization of call center, human resources and finance operations; finance and capital generation; and lean office management. Based on the interest in the MSO Symposium, Roberts says that NACE may feature similar events for consolidators or mechanical shops at future events.
For information on how to register for the MSO Symposium, visit: www.abrn.com/MSOSymposium.
Striving for consistency
Multi-shop owners agree that one of their biggest challenges is ensuring a consistent customer experience (particularly with estimating) at multiple locations.
"We want that same experience across the board," says Ron Nagy, NACE event chairman and co-owner, operator and president of Nagy's Collision Center, a six-location operation in northeast Ohio. "Even from the colors of the office to the tile on the floor, along with the same procedures. We've blocked out how the phone is answered, what verbiage they use, how to document what the DRPs want done, and how the car is delivered."
Consistent estimating is a primary focus at Keenan Auto Body, a nine-shop business in the Philadelphia area. "If you were to come to one our stores in Clifton Heights and get an estimate, and the next day your wife takes the same car to our store in Northeast Philly and gets a completely different estimate, that's not good," says Mike LeVasseur, COO at Keenan. "We are constantly calibrating our estimators so they write down the same specifics."
To manage the process, Keenan Auto Body's blueprint and estimating teams meet monthly to review the company's 10-step production process.
"We can go to any vehicle at any location, grab all the blueprinters and estimators, then put scenarios together and have them decide what they would do for that vehicle," LeVasseur says. "They discuss it and then we come up with the best method."
Economies of scale
Operating multiple locations not only increases your market reach, but it also provides your business with additional flexibility when it comes to scheduling. Well-run MSOs also have an advantage when dealing with insurance companies and vendors.
For owners who do not have the capital or the inclination to open up multiple shops, joining up with a franchise or a consolidator is another way to gain some of the benefits of being an MSO without the additional management headaches and the expense.
That's what Jerry Stander's Collision Works near Denver had in mind when the company became a Fix Auto location (Fix Auto Highlands Ranch). The shop was facing some competition from national consolidators that had moved into the market.
"That was one of the driving forces — being able to compete in more of a national market," says owner Dan Stander. "An MSO or a consolidator has a structure that an independent can't reproduce on their own."
With more than one shop, hiring reliable managers is important. Establishing a clear plan for employees to grow and move up through the ranks is even more important; if your best employees can't move up, their only other option may be to move on.
"You have to make sure you have the right people in the business," LeVasseur says. "The average tenure of a manager here is about five and a half years, and they've all moved up through the business, so they've been here for more than nine years in some cases. We've been fortunate, but you have to have a positive corporate culture. We work very hard in that area."
Finding that talent isn't always easy. Nagy, for instance, is trying to hire but is having trouble finding qualified candidates. "I really think we have to grow our own talent, so to speak," Nagy says. "It scares me that the labor pool is getting shallow. The really good guys are being taken care of by the owners, and the only guys looking are guys that are going to be looking for the next 20 years, because they're never happy or they're not that good."
For MSOs that want to continue to grow, the current banking climate may make things difficult. The Keenan operation took over its last location two years ago, and hopes to add additional shops in the future. LeVasseur says building a brand new shop would be a challenge in the current environment, but taking over an existing location is an easier proposition.
Nagy, who can boast 29 percent growth over the past year, has turned to land contracts for his most recent expansions. "That is probably the biggest thing right now, because banks are so regulated they have to show exactly what's what," Nagy says. "I've got two shops right now that I'd love to open and that I'd love to buy out, but the only people I can buy right now are ones that will carry me on land contract."
MSOs leverage increased resources
MSOs have a built-in advantage when it comes to cycle times because they can load level when a shop starts to get behind. Doing so requires a daily check on the work in process at each location by the general manager, as well as an organized process to transfer the cars and obtain the permission of the vehicle owner.
Nagy's operates primarily in a rural marketplace, so there is some drive time involved in transferring vehicles. The company load levels all hard hits, which frees up other shops to do fast-track repairs. "We use Google Calendar, and every morning the general manager checks each shop to see if anyone needs something moved," Nagy says. "We use the calendar for scheduling hard hits and fast-track repairs, and once a shop is out a certain number of days we load level anything else that comes in to a different shop so we can cut the cycle time."
In addition to managing workloads, multiple shops can share tools, equipment and personnel. "If a location manager is going to be off, we may move a No. 2 estimator from another store to assist that shop," LeVasseur says. "We're always cultivating talent to promote from within. Every location has an obligation to have a strong number two who can move up to manager."
Moving body technicians is a bigger challenge because of tool issues, but it can be done. "We got into a jam this summer because of vacations, and we did send three techs to another shop," Nagy says. "It actually worked really well, because we have the same processes at each shop."
MSOs also benefit from economies of scale and improved purchasing power. That provides more leverage with both vendors and insurance companies. For Stander, that was one of the primary benefits of joining Fix Auto. "There's a call center, which insurance companies really like," Stander says. "That gives us extended hours and gives the customer a better experience if we're not at our location. They also have staff working with the insurance companies in a way that we couldn't before."
Stander says that Fix Auto's partnerships with DuPont, 3M and Enterprise also have paid dividends. And although the other Fix Auto locations in the Denver area operate independently, the owners meet regularly to share ideas, and make referrals to each other's shops.
"We also have painters meetings that rotate through the shops so the painters can interact with each other and solve problems," Stander says. "The great thing about that is we've seen a fairly decent increase in gross profit in paint and material usage just by getting the guys together to talk about it."
Crunching the numbers
Multiple shops create multiple sets of operational data, which can be aggregated and shared across locations. Location managers can gauge operations against key performance indicators (KPIs) and other locations, and potentially share best practices with their counterparts.
At Keenan, managers at all nine shops can see profit and loss data across the company, and measure how they are performing against their own forecast and against other locations. Because Keenan is part of the Fix Auto network, they also have access to Fix's CSI and other reporting tools.
Nagy's creates weekly and monthly report cards based on KPIs that the shop managers have selected, and generates reports using BASF's VisionPLUS Online solution. "If the managers really want to work on things, they may go in there daily and monitor those statistics," Nagy says. "That's also how we screen who is going to move up the ladder. We chose our last general manager because they were constantly going in there and checking those reports, and telling us how they could gain another percentage point."
Data sharing across shops also creates some healthy competition. "If your shop is number three, you want to be number one," Nagy says. "You definitely don't want to be last, so it does create positive peer pressure."
Stander says that Fix Auto provides reporting tools for his shop that let him see how he is performing against other Fix locations in his market and nationally. That visibility is invaluable for independent owners that otherwise might not know how they measure up.
"We all think we're doing the best, we're doing the greatest job ever and we're not doing anything, and everything is perfect. In all reality there are a lot of us that are doing a lot of good things, and then there are things that we really fall down on, just like any other business," Stander says. "So Fix gives us that opportunity with the push reports and we get to see if we're really killing it in this area, but we're having a tough time in this area, so here's where we need to focus and work on. I think without being able to measure those items, you're never able to improve on them."