If you were in a business development class and asked to create the best possible small business opportunity, no doubt you would want to work in a robust market with a minimal investment and high profits. That’s the pot of gold every entrepreneur is chasing and one that will escape all but a few lucky business owners who come up with the right idea at the right time.
Ironically, it’s also the opposite of the business model in your current field of choice. The collision repair market can be strong at times (even for long periods of time) while brisk competition can sap your revenue, which likely is being regularly carved away by insurers anxious to cut costs. As for investment costs, the need for a working facility with trained and experienced workers and costly equipment would be a deal breaker for many entrepreneurs.
That’s the world of collision repair. If you’re going to succeed in it, you’ll need to operate wisely and invest like your livelihood depends on it – because it does.
Equipment purchases pose a particular challenge since there’s no real formula for the right mix of equipment that can be applied to every shop or even the majority of shops. You buy what you need – frame racks, paint booths, welding equipment – and then roll the dice on costly purchases like expensive diagnostic tools that seem to continually grow in number. Throw in the fact that it’s way too easy for shops to waste critical investment dollars buying equipment they don’t need or risk the quality and safety of their work by not buying tools they truly need, and one can see just how difficult being a repairer in 2020 truly is.
What’s the solution for your equipment queries? Look to experts in the field who have studied this issue and take their advice. Consider the following five-step plan aimed at getting the equipment you need under your roof while keeping some significant dollars in your pocket.
Step 1: Rethink your equipment buying policy. Shops are like most small businesses in their approach to buying tools. They invest in the pieces necessary to do their work and then replace what breaks or upgrade when required. Sticking strictly to this practice is a big problem. “Few businesses, especially shops, can survive if they’re simply maintaining what they have,” says consultant Riley Fondriest. “You eventually have to adopt some policy or philosophy that’s more specific, one that gets you more revenue, more busines. Most shops think they’re already doing that, but they’re really not.”
Shops need to adopt a more specific approach, or multiple approaches, that produce results. Kye Yeung, President of European Motor Car Works in Costa Mesa, Calif. and Immediate Past Chairman of the Society of Collision Repair Specialists, recommends shop concentrate on areas like “improving what they have” and “minimizing risks.”
For example, in the paint department, he says shops should invest in tools that reduce comebacks instead those that promise to help the paint more vehicles. In his own case, he said his business was seeing a small spate of comebacks due to paint imperfections. After investigating, the shop discovered that its compressed air dryer wasn’t operating properly and allowing moisture in the air. Along that same line, he recommends shops pay better attention to the equipment they’re using – like checking airflow meters – and making sure they maximize what they have.
The lesson here: Investing in equipment doesn’t end with the purchase. Care for and make the most of what you do have.
Step 2. Get a better grasp on where your business is. What’s your car count these days – both the number of vehicles you see in a month and the most common brands? Domenic Nigro, owner of Nigro’s Auto Body in Philadelphia, says shops must start by knowing their car counts if they’re going to invest wisely. After collecting this information, they can then look to other resources to ensure they have the equipment they actually need – instead of equipment intended for vehicle brands that typically fall outside their business.
Nigro recommends consulting the requirements for each brand’s certified repair program. “Even if you aren’t going to get certified, you’ll know what repair equipment is necessary,” he says. “Twenty programs might use a certain piece of equipment while ten might use another. Check your car count to see which brands you’re most likely to see. The equipment that required by ten programs might work better for your shop.”
From here, take one more step and do research on equipment if it can save you some time. Nigro suggests calling manufacturers like Car-O-Liner and ProSpot who can provide valuable information on time savings. “Saving minutes per job might seem small but together can make you far more efficient,” he says. “Say you have 300 jobs and save 3 minutes per job. That’s 900 minutes or 15 hours of production you could put into another vehicle. That could be $1500 you could put towards a tool.”
The lesson here: Buy what makes you effective., according to Nigro.
Step 3: Look for small purchases that make big differences. Yeung says one of the best investments, dollar for dollar, his shops has made in a long time is glue pull equipment. Glue Pull Repair, formerly the central hub of mobile dent and ding repairers, involves attaching specially designed glue tabs to panels and then pulling dents out. Yeung notes that this technology has been around for years but has steadily been perfected. Glue pulling allows shops to repair panels that would otherwise require $10,000 equipment or that would involve cutting and welding and costly paint work. Yeung says this equipment lets his shop operate much more efficiently.
Nigro says one of his best purchases was a pair of Guniwheels. A Guniwheel is a universal wheel and tire that can replace damaged or missing wheels during the repair and allow repairers to more easily move vehicles through their shops or move vehicles that would otherwise have to sit until the wheels were replaced, saving appreciable time.
Lesson here: Don’t overlook small investments or dismiss them to save a little money when a small purchase could significantly upgrade your operation.
Step 4: Bring in less complex work and send costly, challenging tasks out. Another small investment Yeung made was the latest generation of glass repair tools. He notes that oftentimes shops send out all their glass work, not simply windshields, when all this work can be done in house. “Your techs can do glass work. Now you can get paid,” he says.
While you’re bringing some work in house, turning other tasks over to third parties can be a good choice. This is especially true with vehicle diagnostics and recalibration. Purchasing calibration tools is an expensive proposition. Vehicle brands can require multiple tools across models and then add new tools for upcoming models. Sometimes OEM tools are the only option (and only available to dealer shops), and using these tools can prove a challenge for many techs.
Yeung says it can make good sense to turning this work over to the growing number of mobile third-party companies. He says they frequently have agreements with OEMs for using manufacturer tools, can assume liability for this work and can perform tasks that might be beyond the training and experience of your staff.
Lesson here: Keep your options open for in-house and leased work.
Step 5: Fix your bottlenecks. After your shop is set up with the tools it needs, you’re still going to need other make other purchases as you right-size and perfect your operation. Yeung suggests looking for areas where your business is experiencing bottlenecks and remedying them with the right tool.
For example, your blueprinting process might be slow because you have one only tool cart; adding another would solve the problem. In your paint department, you could speed up lagging cycle times with panel stands that allow your staff to paint the top and bottom of hoods at the same time. Adding a frame can make a big difference if you find your shop has vehicles on frames waiting for supplements while others vehicles have to sit and wait for repairs.
Yeung notes that bottlenecks will differ from one shop to another, but these are areas that always need to be addressed if you’re going to bump up your efficiency and revenue.
The lesson here: Be flexible with your investments to allow for continuous improvement.
Of course, deciding what you’re going to budget annually for equipment is a challenge. Both Yeung and Nigro say there are no easy answers or formulas for investing. They agree that your shop doesn’t need a yearly budget. This can change from one year to another as your revenue grows or declines.
Gauging purchases in the terms of ROI also can be difficult. Yeung says the need to buy equipment upgrades or additional tools can skew the returns on some equipment. Case in point, a shop might purchase a $10,000 diagnostic tool for an OEM only to have that same manufacturer add an additional tool for a new model or model year. The original purchase probably will bring in a reduced ROI, but does that make it a poor purchase? Probably not.
Making wise equipment investments involves planning, understanding your business flow and doing what’s effective. With that, you should take into account the cost of not investing enough. Nigro notes that making good purchases that makes your staff more productive in turn makes them happier. This isn’t simply an investment in machines; it’s an investment in your most important capital, your people.
Putting the right equipment in their reach is a pursuit always worth the cost. It’s not the ideal business scenario one would want, but one that shops can win with if they take the right approach.
