Montana-based MSO Big Sky Collision invests in staff to foster growth

July 3, 2018
Big Sky Collision operates three stores in Billings, Bozeman and Livingston, Montana, but its service area stretches for hundreds of miles.

Everything in Montana is vast, and the state’s biggest family-owned multi-shop collision repair companies has to cover a big area. Big Sky Collision operates three stores in Billings, Bozeman and Livingston, Montana, but its service area stretches for hundreds of miles. The Livingston location is 120 miles away from Billings; the Bozeman store is 150 miles from the headquarters.

Montana is the fourth largest state, but third most sparsely populated, so expansion into new markets can spread an owner thin. According to Big Sky owner Matthew McDonnell, investing in his staff and focusing on customer service has helped keep the company’s growth manageable.

At a Glance:
Big Sky Collision Center
Billings, Montana
Location
1
States served
3
Shops
65
Employers
$12 million
Revenue
Spies Hecker/Axalta
Paint supplier
ProfitNet
Management software
CCC, Mitchell, Audatex
Estimating software
http://bigskycol.com

McDonnell is a second-generation owner. His father started the business in 1978, but the younger McDonnell didn’t really join the family business until later in life. “I swept floors there when I was younger, but I actually went away, went to school and worked in the restaurant industry,” McDonnel says.

While his two brothers did work with his father, McDonnell didn’t join the fold until he was in his thirties. “I was golfing with my dad and he just asked me to come back and work for him,” McDonnell says. “He wanted me to handle insurance relations.”

His introduction to shop-insurer relations was eye opening, to say the least. “My dad is pretty old-school, and the first week I was here I saw him yelling at an insurance adjuster,” McDonnell says. “My jaw was on the ground. That’s how you do business with each other?”

The insurance company reps weren’t any better, at least at first. “I became an estimator, and if I made a mistake I would get browbeaten over the phone,” McDonnell says. “We had 12 different DRPs to satisfy, there were all these demands, and it was just absolutely stupid. Except for one thing – that was when we delivered a car back to the customer, and they were thrilled. That’s what kept me going.”

McDonnell says he is a stickler for repair procedures, as well as pre- and post-scanning. “Over time we got kicked off all but two DRPs,” McDonnell says. “What I learned was that you have to find people who want to do things right, and partner with them. If the other ones aren’t focused on that, I’m not interested in what they’re selling.”

The fact that his background is outside of the collision industry has helped make insurer relations more business-like, McDonnell says. “I run a business, and there are customers and employees who I need to take care of and protect,” McDonnell says. “I care about my people, and they care about our customers. I tell the insurance companies, if I don’t like what you’re selling to me, I’m not going to buy it. It has nothing to do with liking or not liking them. We are transparent on our invoices, and I give them everything they need to make the right decision to pay the full bill. I want to deal with people who can say yes. If you can’t say yes, then I need to get to a person who can.”

Big Sky now works with three DRPs, and McDonnell says they have developed good partnerships with those companies.

Rapid Growth

As his responsibilities grew at Big Sky, McDonnell bought his brothers out, took over the company, and applied his experience in running restaurants and bars to the body shop. In 2014, he took part in the Discover Leadership Training program, which he credits with helping him lead the company into new growth areas.

“It really opened my eyes,” McDonnell says. “So many people in this industry play the victim card. They can’t do something because of the insurance company, or their employees won’t go for it. They make up their mind they can’t do something before they try. We changed that, and in 2015 we started a whole new adventure here.”

Within the year, Big Sky made its first acquisition almost by accident. “I was good friends with the owner of A&D Auto Body Repair in Bozeman, and he was a mentor of mine,” McDonnell says. “We had planned to open a store in Bozeman because that was next market nearest us.”

McDonnell reached out and let the owner know about his plans so it wouldn’t come as a surprise. “I told him I hoped we could take business away from his competitors, but it doesn’t always work that way,” McDonnell says. “I told him, ‘We want to be friendly competitors, unless you’re willing to sell,’ and I said that kind of as a joke, because he was doing really well.”

The next day, the owner surprised McDonnell with an offer to do just that. “He wanted to spend more time with his family,” McDonnell says. “We made the transition in a few months and it went really well.”

A short time later, McDonnell received a similar call from the owner of Crash Repair in Livingston. “He said he wanted to do the same thing, but we really weren’t ready,” McDonnell says. The owner offered up his financials, and explained that he wanted to sell the autobody business so he could focus on a more lucrative storage unit business he owned. “We did owner financing and he gave me a deal I couldn’t refuse,” McDonnell says. “That store has been a little moneymaker ever since.”

As the company and staff grew along with the business, though, McDonnel had to face a new problem – his repair processes were built around a smaller operation, and they were creating a bottleneck that dragged the team’s cycle times up to 18 days.

At the time, the original Billings shop was divided into 24 stalls. Each body tech was responsible for three vehicles at a time. The cars headed for the paint booth as they were completed, but that lead to a back-up in the paint booth because the workflow was so disjointed.

McDonnel decided to apply a lean approach to his shops after a visit to Marshall Auto Body in Waukesha, Wis., in order to reduce waste, improve communication, and streamline operations.

In 2014, McDonnel and his employees revamped their operations so that a team of multiple technicians (two A techs and two B techs) would work on each vehicle at once. Each has a set of designated tasks to complete based on the repair. McDonnel implemented a color-coded repair order system to indicate the severity of the repair, and also instituted a checklist of parts and repair steps for each vehicle.

One vehicle at a time gets released to the paint department, where a team of technicians take care of the paint and prep activities. The checklist and written notes that travel with the repair order help improve communication among the team members, customers, and appraisers.

As a result, the company cut cycle times from 18 days down to six. After just a few months of the new system, each repair team averaged 74 cars per month. Previously, the entire Billings store had averaged just 110 vehicles per month.

Big Sky also pre-washes and scans every vehicle to get a better idea of the physical damage and trouble codes/faults.

Staff Development is Critical

As part of the company’s growth, McDonnell has been careful to invest in his staff. “Your competition can copy every advantage you have except one,” McDonnell says. “That’s the investment you make in building leaders. There are a lot of KPIs to focus on, but if we invest in building leaders and really focus on building people up, they can take the business to the next level.”

McDonnell put 40 staff members through the same Discover Leadership program he had found so inspiring, and instituted ongoing education and training. He’s also encouraged a high level of community involvement at the shops as well. “We’re better people all around,” McDonnell says. “The stores are really self managing. We manage by the numbers, but we can’t be at all the stores all the time. Right, we’re on pace to hit $12 million between the three stores, but I’ve told the team I think we can hit $14 million, and everyone is focused on making that number.”

At the Bozeman store, McDonnell was able to help the number-two at the shop move into management of the Livingston location. “We also took a painter that wanted to be an estimator and got him where he wanted to be,” McDonnell says. “I just told him he had to teach someone how to paint before he made that transition, and I think he’s a store operator in the making.”

“We had an office manager that moved into an estimator position, and then an assistant manager,” McDonnell adds. “Now she operates the highest sales store we have. A few years ago, she was mainly answering phones. She had the skill set and respect of the team, and she wanted it.”

McDonnell also regularly stops production for training and to get the team’s input on operations. “You don’t do things to people, you do things with them,” McDonnell says. “If they can formulate their own input and make it their own, they will run a lot farther with it. They love it. They can put the tools down for a bit, and we learn stuff as managers about the people we’re working with.”

Leadership is divided between sales/marketing, operations, and accounting/HR. “You focus on what you are good at,” McDonnell says. “I’m a sales and marketing guy, and I have someone who manages production, and we hired a CPA to handle accounting and HR. The three of us meet daily.”

The company is also working on building its own technician development program to address a common issue – the shortage of trained technicians. “We’re not looking to take techs from another body shop, we want to build these guys,” McDonnell says. “We are building a program now that we believe can fast track them from zero to an A tech in two years.”

After Big Sky builds a pool of technicians it can draw from, McDonnell wants to keep the program expanding so that there’s a flood of skilled techs across the region. “Our idea is that if we don’t have anywhere to put them, we can send them off to the next best shop,” McDonnell says.

He notes that shops in Montana have a strong commitment to each other. There aren’t any consolidators there yet, and most of Big Sky’s competitors are small MSOs or independent shops. “We have a strong association here, and I’m talking to other shops all the time,” McDonnell says. “We’re all friends, and we do things outside of work. We have stuck together, and the best thing we have going here is that we are connected and have regular conversations with the insurance commissioner’s office, and hold our insurance partners accountable.”

Big Sky is working with OEMs on brand-specific certifications, which McDonnell sees a big growth opportunity. “In the future, the vehicles are going to tell owners where to take them for a repair,” McDonnell says. “The car will pull up a list of certified shops on the screen in a market, and that is where they’ll go, because that’s who they will trust their car with.”

He also says that a continued focus on quality will give more leverage to the collision industry moving forward. “The pendulum is swinging, and carriers are seeing that as severity goes up, they need to partner with good shops,” McDonnell says. “They will want to know up front who the good guys are and the smarter carriers are forming those partnerships.”

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