Entrepreneur's body shop ownership presents golden business prospects

July 6, 2016
He owns three full-service collision centers that also provide mechanical repairs, yet Tom Bemiller still contends that “I’m not a car guy.”

He owns three full-service collision centers that also provide mechanical repairs, yet Tom Bemiller still contends that “I’m not a car guy.”

“I’ve been in the business since I was 14, so I’ve been around long enough to know the business inside and out, but I have never repaired vehicles myself.”

At a glance:
The Aureus Group
Pennsylvania
Location
Top Bemiller
Owner
3
No. of shops
3
Years in business
7
No. of DRPs
19,000
Total square footage
25
No. of employees
39
No. of bays
6 days
Average cycle time
$2,000
Average repair order
$90,000
Average weekly volume
45
No. of customer vehicles per week
$4.68 million
Annual gross revenue
PPG
Pain supplier
Car-O-Liner, Chief
Frame machines used
CCC
Estimating system used
www.aureusautobody.com
Website

With a Bachelor of Science degree from the University of Notre Dame and a Master of Business Administration degree from Villanova University, “my approach as a body shop owner comes strictly from a business perspective. I decided to make a career in the collision repair industry because I saw it as a great opportunity to make money,” he says.

“I do feel that my education gives me an advantage in the way that I run my business. As an owner, I don’t get caught up in the day-to-day of what’s happening in the production area. Instead, I focus my time on what can make my business more productive, efficient and marketable.”

The three shops in Pennsylvania’s lower eastern corner are located in small communities throughout three counties – Montgomery, Chester and Delaware. Aureus Auto Body is in the borough of Zieglerville, Mercer Auto Body is in Kennett Square, known as the Mushroom Capital of the World, and Ed’s Auto Body is in Brookhaven, about 15 minutes from South Philadelphia.

For the most part, the customer base consists of middle- to upper-middle class commuters to the Philly area who are long-term residents.

Measuring 9,000 square feet, Aureus has 15 bays; Mercer and Ed’s each encompass 5,000 sq. ft. with 12 bays apiece. The workforce numbers 25, and Bemiller puts considerable efforts into ensuring employee longevity.

“I am very focused on the work environment. I believe that happy employees will make happy customers, and my shops have a really low turnover rate,” he reports. “As we grow, I do not want to become like a large organization – I want to keep it personal. I’m focused on creating an organization where I put the power in the hands of my people. I not only allow people to make decisions, I expect them to make decisions.”

When interviewing a candidate for employment, “first and foremost I look for people that fit our culture, meaning they have similar values as the company. Then I evaluate their leadership skills/potential to determine if they can lead a team. Finally, I look at their work history/experience to determine if they are ready for that position,” he says.

“We are very aware of the extraordinary cost of hiring someone who doesn’t fit in our culture so that is our primary quality we look for. Hiring for cultural fit is the No. 1 thing we do that results in low turnover; when we hire someone we have a good feeling that they will be with us for the long term.”

Operational efficiency “is definitely our biggest strength,” according to Bemiller, “which is no surprise given that my background was in operations.” Other functions are continually under development such as enhancing the sales, marketing, finance and information technology capabilities.

“I now have an operations director on my staff, which has freed up my time to start working on the other aspects of the company. For me, it’s not as much about fixing cars, it’s about what I can do to grow my business,” he explains.

“I spend a lot of time looking to other industries for fresh ideas. I don’t just benchmark my company against the collision repair industry: I benchmark it against companies in all industries. For example, Apple and Enterprise are companies that do great in customer service. I look at what they do to consistently achieve high NPS scores, and try to figure out how I can apply some of those best practices into my business.”

NPS, or net promoter score, is an index measuring the willingness of patrons to recommend a company’s products or services to others while gauging overall satisfaction and customer loyalty.

Owner Tom Bemiller

“ERAC (Enterprise Rent-A-Car) is an amazing company in that they only hire people for their entry level position and then they train and promote from within to fill higher level positions. When we talk about developing talent within our company in order to fuel growth, we frequently discuss ERAC and the success that they have had with that model. We have not yet developed this robust training and promotion from within, but as we go down that road we will be striving to emulate ERAC in many ways.”

Bemiller is constantly reading the latest industry news and concepts to augment his operational and marketing expertise. “I regularly meet with other shop owners to discuss industry trends and ideas, and I solicit their opinion on what’s happening and where things are going. I talk to suppliers, vendors, insurance companies, etc. to get their perspectives on the industry and the future. This helps me to see the road ahead to make sure we are positioning ourselves for future success.”

Pursuing these strategies result in a company-wide commitment to being forthright with the customers.

“Above all else, we are always honest and upfront. I know that we are not perfect, but when we do make mistakes we take responsibility and make it right,” he says.

“We treat everybody the way we want to be treated. We are going to be honest with you upfront, even when it means telling you something you don’t want to hear. Sometimes we lose jobs over that,” says Bemiller.

“There are times when we have to turn away business and tell people that we are in a backlog situation and can’t start on their car immediately. I don’t want to be one of those shops that lies to the customer just to get their car in the shop, and then start making excuses that we’re waiting on parts, supplies, etc. We would rather just be honest with them. Even if we don’t get their business today, I believe that when they leave our facility that they will have a good impression of us and appreciate our honesty,” he observes.

“Additionally, we are really focused on turnaround time. Will not sacrifice quality, but everything that we do is through the lens of speeding up the repair process by cutting out delays. We don’t reduce the hands-on time, but by eliminating delays we can eliminate waste in the process. I have extensively studied the Theory of Constraints and have applied it throughout our production process. That being said, the best ideas now come from our employees, who are very involved in process improvement.”

Reducing costs

Maintaining a cooperative attitude with the various vendors has proven to be a key element in producing timely repairs, and that goal is best obtained by Bemiller’s insistence on disbursing prompt payments.

“Pay them on time! Being a businessman, I recognize the critical importance of something so simple,” he emphasizes. “We also try to take it one step beyond that: When we work with them we try to be conscious of their needs. If we can stay ahead of ourselves and reduce the number of orders we make each week, it will reduce the number of deliveries that they make, which will reduce their costs,” Bemiller points out.

“If I can reduce their costs, then they are going to service my account better and give us more support. If we can help them, they will help us.”

With seven direct repair program (DRP) affiliations, “when it comes to insurance providers I know that to maintain a great relationship we have to give them what they want. They make the rules and we play by them. We have to be flexible enough to adapt to their needs. Each company has different metrics; we have to know what’s important to each company and be able to deliver that to them,” says Bemiller.

“That doesn’t mean that we agree with everything they do or ask us to do, but we maintain open communication with them, allowing us to work together to solve problems. We are not afraid to stand up for what we believe in, but by keeping all communications respectful and focused on our shared goal – serving our mutual customer – we are able to achieve very positive relationships with most insurance companies.”

Little is done in the way of traditional media advertising. “Our efforts are focused on our existing customer base and on being present in the community through sponsorships, charities, etc. Admittedly, we do not track the effectiveness of our efforts very well; however, our revenues continue to grow each year so I know we are doing something right!”

Pursuing goals

For someone who is not a “car guy,” Bemiller’s collision industry career began at an early age. “I started working at a body shop because it was the only business within bicycle-riding distance that would give me a job at 14. I tried convenience stores, gas stations, the neighborhood vet and more. They all turned me down. I kept trying the local body shop because that owner was the only person that didn’t say ‘no.’ I was finally able to wear him down and get hired to wash cars.”

This employment opportunity remained steady until Bemiller, who wanted to become a doctor, went off to Notre Dame. “Halfway through my senior year, I decided that I didn’t want to go to medical school.” Even after earning an MBA from Villanova, “I didn’t really have much of a plan. At that point I decided to go back and work at the body shop until I figured out what I wanted to do,” he recounts.

“The guy I was working for, Dave Niestroy of 3D Collision Centers, had three shops at the time. He was a pretty progressive thinker and offered to teach me the business. That’s when I started to do research into the business side of the industry and decided this was a good opportunity,” says Bemiller.

“I was admittedly a little arrogant at first, and I definitely under-estimated the challenges of what it really takes to succeed in this business, but I saw that there was great opportunity in body shop ownership so I decided to make a career out of it.”

By this time Bemiller had worked with Niestroy for half his life. “I had made up my mind that I wanted to start my own shop, but I didn’t want to pursue that goal while I was still working for him.” Thus after leaving 3D in 2010 “it took about two years,” but Bemiller was eventually able clinch the purchase of an enterprise known as Dave’s Auto Body.

Bemiller’s initial foray into ownership was financed with a bank loan. “To buy the second shop, I took on investors because I bought it only six months after the first shop, and my bank wasn’t willing to lend me more money until I had a proven track record as a business owner. I was able to buy out the investors in September 2015, and then my bank financed the third shop,” he says.

“Long before I bought my first shop, I had all of the ideas of what I wanted it to look like. I had the name, I knew what the colors were going to be, and I had a logo designed,” Bemiller recalls.

“I immediately changed the name to Aureus Auto Body, changing the signage and everything right away. That ended up being one of the first lessons that I learned. I quickly found out the name change hurt the customer base,” he continues.

“I got feedback from the market that I had actually lost some customers as a result of the name change. When I bought the second and the third shop, I didn’t want to lose the existing customer base because these were long established businesses with good reputations in the community.”

Upon acquiring his second and third shops the original names were retained. “At that point I started calling my business the Aureus Group. My two new shops are still named Mercer Auto Body and Ed’s Auto Body, but they now have the same logo style as my first shop, and under the logo we added the words ‘An Aureus Company.’

The Aureus moniker came from several directions. “I knew I wanted a shop name that started with the letter ‘A’ because I wanted to be at the top of the alphabet. I picked the colors blue and gold for my logo because I went to Notre Dame. In doing some idea research, I found out that an Aureus was a gold coin in ancient Rome. That worked to tie everything together. And, of course, anyone who starts a business wants to make money, and I figured that this will be my pot of gold, so it all worked together.”

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