Core values guide growth at Paceline Collision Centers

In some ways, the company almost happened by accident. When owner and CEO Shannon Martin started Paceline Collision back in 1995, he actually had no intention of launching a multi-shop autobody repair company. In fact, it wasn’t until he already had three locations and more than a dozen employees that running Paceline officially became his full-time job.

In the 1990s, Martin was in college working on a business degree, and buying and selling old cars to earn money. He rented a stall at a transmission shop and hired an out-of-work technician he knew to paint the cars he was selling.

Before long he was pulling in paint work from local car dealerships as well. The business soon outgrew the stall, so he rented a larger building and started taking insurance work. “By that point I had three employees, I was 22 years old, and I realized I was in over my head,” Martin says. “I read through Proverbs, prayed for wisdom, and listened to a lot of audio books on leadership from guys like John Maxwell and Andy Stanley.”

According to Martin, he found a mentor in John Deal, a guest speaker he met at church, to help him craft a more positive direction for his life, and taught himself the body shop business by reading industry magazines (including ABRN). “[John] taught me the value of character over wealth, and we would absolutely not be where we are today without him,” Martin says.

“That’s really when the foundation was laid for who we are as a company,” Martin says. “An insurance agent in another town was sending us work, and the only shop they had there was a few months backlogged. He convinced me to open a second location in 2000. We just took over an empty building.”

In the meantime, Martin also continued working at a number of different jobs. He was a partner in a car dealership with his father. He built houses. He still bought and sold cars on the side. “I was really focused on a lot of different things,” Martin says. “I read a book called Good to Great by Jim Collins on a recommendation from my uncle Todd, and Collins talks in that book about becoming great at one thing. So in 2007 I put everything down except the body shop business and we opened our third location.”

Troubled acquisition refocuses company

Up to that point, Martin had grown through converting brownfield locations. The company made its first acquisition in 2010, but Martin says the experience was not a happy one. “That went wrong,” Martin says. “The shop had 90 percent of its work coming from one DRP, and they decided not to stay.”

The faltering acquisition put Paceline in survival mode, and Martin says the company was struggling. They reached out to consulting firm Symphony Advisors to help create a plan for the long-term future of the company and to carve out a place as a top shop in the small and mid-size markets they served in Texas.

“That process really restored our confidence,” Martin says. “In 2012 we opened our fifth store in Abilene, and we really gained momentum again.” Over the next five years, the company grew through acquisition and went from 50 employees to 150.

The executive team and Symphony put their heads together to outline the company’s strengths and weaknesses, and to formulate a vision for Paceline and a set of guiding principles. Among those core values are candor, accountability and continuous improvement.

“We strive to have honest, proactive communication with the customer, the insurance partners, and our team members,” Martin says. “We’re always fully transparent. We’re looking for ways to change outcomes, and looking for better ways to do the right thing.”

With that plan in place, Paceline grew from three stores in 2011 to six by 2014, and expanded into markets that met its needs and fit with the company’s core values and vision. The company also doubled its car count over that period.

A lean approach

All of Paceline’s recent expansion has been accomplished through acquisition. “When we’re looking at a shop, we are really considering our insurance partner needs, and whether we even need to be in a particular market,” Martin says. “We are also looking for good people, so there has to be a fit there.”

The shops are all outfitted with approximately the same equipment and capabilities. The company serves three geographic markets, and has one shop in each that is fully ready for aluminum repairs. In the Lubbock market, the company has shops that specialize in light hits, and others that handle heavier work. “In that market, we send work to the shops based on the type of repair needed,” Martin says. “In central Texas, all of the stores can do everything.”

From a production standpoint, the company has emphasized blueprinting, teardowns, and taking a lean approach to moving cars through the shops.

While Paceline will load level between shops if there is a surge of work, Martin says it can be challenging. “We try to avoid it if we can,” Martin says. “It’s difficult to maintain the customer communication when you are subletting to another store internally. It’s also difficult if the car is already torn down.”

From a corporate standpoint, key operations are centralized at the company’s Lampasas headquarters. The central office handles accounting and most of the bills, as well as human resources and all new hiring/recruiting. The company also operates a central call center that handles assignments coming in through the DRPs.

There is also a centralized IT department. The company uses CCC One for estimatics, and Nexsyis shop management software across all of its locations.

The vice president of operations, Scott McDowell, and two regional vice presidents (Charles Williamson and Jeremy Mulcahy) manage a team of operations specialists and trainers. “Our corporate operations have grown, and we’re actually a little top heavy right now in anticipation of growth and the training needs were’ going to have,” Martin says.

The VPs also help coordinate with the shops regarding DRP requirements. “Those requirements are ever changing,” McDowell says. “We keep everything update don our intranet site and have a set of knowledge sheets our team can access. I try to get together with our point person at the insurers once a month to keep on top of these things, and then we roll that information out to the rest of the company.”

If there is a dispute on a particular claim, the regional vice presidents work with the insurer to work o a solution. “The insurance partner point person would get in touch with myself or the vice presidents,” McDowell says. “We go out and take a look at the vehicle and meet with the customer. We try to work something out to minimize the escalation and make sure the customer is happy.”

Communication is key

Communication is one of the biggest challenges the company faces as an MSO – it can be difficult to make sure everyone knows what is happening across the shop or across the company. Regular meetings and teleconferences have helped keep things on track. The company pays close attention to daily sales, parts profitability, outstanding returns, 30 and 60-day AR, and CSI scores, among other key metrics.

“We look at key KPIs and CSI scores, we look at cycle time, daily and weekly sales during those meetings,” Mulcahy says. “We look at those on a weekly basis, per store and per team, and then meet on a monthly basis with the team leads.”

Every other week the regional VPs and managers meet to discuss what’s happening across all of the markets. “We’re focusing on unity between the markets,” Williamson says. “Communication is tough, and you have to be intentional about it.”

That communication also helps ensure the stores are meeting the company’s standards. “From my perspective, consistency is the biggest thing, along with accountability,” McDowell says. “We have to know what we’re supposed to do as far as or processes go.”

Technology also plays a role in improving communication. The company uses GoToMeeting for conference calls so everyone can see data presented on the same screen. “We also use our intranet site as repository of knowledge that different people in different roles can use for their jobs,” says company controller Lonnie Bear. “That also helps with consistency.”

Continued growth

For Paceline, expanding to multiple locations has improved relationships with both insurance partners and vendors. “As we have gained more scale, we are more valuable to each other,” Martin says. “The bigger you get the more heavily you rely on each other.”

Employees also have a path for advancement and growth as well. “We have mentor checklists that can take them from entry level on up into being a lead technician or store leader,” Martin says. “We consistently monitor that. We want to do a better job of that moving forward.”

With growth, there are also challenges. For Martin, one of the biggest is keeping the company’s culture intact as they add more locations. “We’re still evolving and trying to get better and learn each time we make an acquisition,” Martin says. “We send a team in for a few weeks for our other stores, including trainers and regional managers. Once we get through that process, then the regional VPs monitor and reinforce that.”

In terms of competition, Martin says Paceline mainly competes with consolidators in central Texas, while the west Texas region is mostly dominated by independent shops. “In either case, you have to be the best in your market,” Martin says. “I guess the consolidators probably make it even more important to be the best, because they bring a level of consistency and a single point of contact that the carriers like. We’re providing that as well.”

Paceline also shares some challenges with the rest of the industry, including a shortage of trained technicians, keeping up with technology and equipment, new competitive pressures. “There is a lot of consolidation and just pressure in the market,” Martin says. “You’ve got to be the best at what you do, or you are in danger of not being there anymore.”

However, Martin sees his company as being well positioned to continue to thrive, and continued expansion will add to that success. “The most promising thing about growth is the level of excitement and momentum it brings, and the opportunity it creates for the team,” Martin says. “The scale really strengthens our partner relationships, too.”

Martin cautions that it’s important to get better before you get bigger. “We are in that mode right now,” Martin says. “We’re hiring, training, reinforcing processes, emphasizing or culture, and making sure we are truly restoring peace of mind to our team, customers and partners,” Martin says. “We aren’t just chasing scale.”