The challenges and opportunities of adding collision shop locations to small to medium repair business enterprises reveal some interesting lessons.
A panel at the annual “MSO Symposium” in the US focused not on the largest collision repair organisations, those with dozens or hundreds of shops, but smaller MSOs, those with three or five or 10 locations. What challenges do those shop operators face, and what opportunities does adding one or more additional locations offer them? Here are some thoughts from operators of small but growing collision repair businesses.
Finding new locations
One common question for those wanting to grow is; how do you locate shops to acquire?
“I think it helps being involved in your state and being involved in your industry, but I guess the best advice I can give is to make sure everybody around you knows that you are looking to buy,” Andy Tylka of TAG Auto Group, which operates 14 shops in Indiana and Illinois, says.
“Because then everybody starts looking for you. And that’s actually how things happened, people reaching out to me and telling me a rumour here, a rumour there, and then I would be able to have a conversation with the [shop] owner from there.”
Doug Martin, the owner of Martin’s Body Shop, which has three locations in Indiana, agreed, saying being involved in the industry in your area helps you build relationships with people who may at some point be potential sellers.
“We prefer the greenfield model, so we partner with our paint company to help us do a marketing analysis of different areas of the population densities,” Ryan Clark, vice president of Eustis Body Shop, which has six locations in Nebraska, says.
“And while doing that, there’s sometimes shops that come to us, and we’re going through both right now.”
Casey Lund, owner of Collision Leaders, which operates eight shops in Missouri and Kansas, also says networking is the key.
“Be nice to your paint vendors. Be nice to the 3M guys. They’re your eyes and ears out there,” Lund says.
“It was really challenging to start the growth cycle. You’re shaking the bushes, begging people to sell. But fast forward to once you have multiple shops: They’re beating your door down. and you’ve got awesome deal flow with no work. You’ve got to start somewhere. And I would start with the networking.”
Staffing up before or after
Is it better to build up staff before acquiring or building a new shop? Or is it better not to carry that overhead and wait to add staff when needed?
Lund says he’s done it both ways.
“I much prefer to staff ahead of time, before you’re ready to grow,” Lund says.
“It is expensive, but it allows you to grow in a more prescribed, proactive way rather than burning people out. It allows you to kind of be prepared.”
Clark agreed. “We also staff prior to,” he says. “It’s also helped us give a career path for some of the people in our organisation that may not have anywhere else to go from their current position in the company.”
Martin says staffing has been more of a hybrid model.
“For us, the second location was just an asset sale, a shop that closed with no employees,” Martin says.
“So, we tried to insert people there who had our morals and values, and then built around them. The third location was already staffed up. Moving forward, ideally the best thing would be for us to take our own people who want to grow and insert them to disperse our core values, obviously with the help of leadership, to make the new team.”
Developing a company culture
Single shop owners are able to develop a company culture because they are there on a daily basis to shape it – either actively or passively. But if you’ve built a good company culture at one shop, how do you develop and nurture that at additional locations?
“We realised within our organisation there’s enough people who know about the industry, and so what we’re doing is hiring from outside our industry,” Tylka says.
“I just hired a regional manager that was a supervisor for [a cable television company], and he is one of the best motivational and training people, and just raises everybody’s happiness while still holding them accountable. It was awesome that we were able to hire for personality and work ethic over just knowledge of the industry. One of my best managers used to be a golf pro. He just understands people and understands the motivation and the culture that he needs to create at his location. So, we love to find leaders who can lead first and then know the industry second.”
Martin says he’s sent six of his people through a multi-day leadership program, calling it “instrumental for my team.”
“It’s been great to see that empower my crew, to help them understand that, that there is no ‘I’ in ‘team,’ and that everybody matters for the customer,” Martin says.
“Everybody is responsible each day to pull their weight. That’s been huge for my team. Because for years, that wasn’t preached. It was whatever the leader said, that’s what you’re going to do, whether you liked it or not. That, to me, didn’t foster the growth that we needed or that I wanted to see in my team. Discover Leadership has really helped not only me have a different mentality, but for my team to really understand that they do matter.”
Lund says about 10 years ago he was “kind of fed up with the industry” and realised he either needed to leave the industry or change.
“That was kind of the pivotal moment that we started to change our culture and became much more deliberate in taking action to improve that,” Lund says.
“We started having a morning meeting that isn’t just a production meeting but is about learning something new every day. A different person leads the morning meeting every day as we’re trying to grow people. As we kind of switched from a commission-based environment to a team-based environment, everything was great until we finally dove in and I’m like, ‘Oh my god, y’all are going to kill each other. Let’s back up and talk about some communication skills.’ We had consultants come in. We read books. We went on field trips. We did lots of things that were outside the norm of collision repair to help build the culture that we have today. But it kind of started with me looking in the mirror and deciding to take deliberate action. It was not organic. It was deliberate action time set aside every day for a decade to build to that point.”
Lund says he gives employees a lot of authority.
“We don’t just allow them to make improvements; we ask them to make improvements,” he says.
“So, we teach them how to make decisions, and then make things better or worse, and then sometimes suffer from those decisions and find a way to fix it. You know: You break it, you fix it. Whenever it’s their turn to lead the morning meeting, they have to understand all of our scoreboards that they’re presenting to the group, and they have to pull our KPIs so they’re inadvertently learning how to run our management system.”
“And at the end of that, you have all these people’s hearts and minds that can step in and help make your organisation better. Whereas before, I never even asked.”