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Mike Anderson of Collision Advice recently explained how to turn eight common collision shop owner mistakes into life lessons to benefit their businesses.

“When you look at mistakes you’ve made, you have to realize that they aren’t mistakes if you’ve learned from them, and when you learn from them, they become life lessons. I’ve got a lot of life lessons I’d like to share today,” Anderson began.

While presenting “Life Lessons of Collision Shop Owners” on Sherwin-Williams’ Ecolean University, Anderson was joined by Mike Lanza, manager of business consulting services at Sherwin-Williams Automotive Finishes, as they discussed why shops struggle and how to fix it.

Anderson’ s first life lesson focused on the importance of cycle time. He explained, “Cycle time should be important for DRP and independent shops alike because the basic goal in business is to get to breakeven as soon as you can every month. Fixing cars in a reasonable and timely manner will improve your customer satisfaction rate, and if you fix vehicles faster, that allows you to bring more cars in sooner and make more money.”

Consumers aren’t the only ones who care about cycle time. This is a vital factor for insurers, particularly those with which the shop has a DRP relationship, because it leads to improved loss adjustment expenses, reduced rental expense and higher CSI scores.

OEMs also care about cycle time because it impacts their brand; customers inconvenienced by shop delays are more likely to have a poor opinion of the vehicle manufacturer.

Shops should strive to repair vehicles two to four days faster than their market average. “Cycle time is important to all stakeholders in the repair process, but it should be most important to you as a business owner because it’s the key to your breakeven point, which is how you put more money in your bottom line,” Anderson emphasized.

Cycle time can be broken into three micro-cycles: pre-repair, repair and post-repair.

Pre-repair cycle time can be positively impacted through scheduling innovations, streamlining the administrative process, 100% disassembling, obtaining the right part the first time as fast as possible, dispatching in a timely manner and avoiding the pitfall of having too much work-in-progress onsite.

Mike Anderson

According to Anderson, “Pre-repair is the biggest opportunity for most shops.” Post-repair delays occur when there are issues with paperwork, last minute supplemental approval delays, notifying the customer the repair is complete too late in the day and struggles with payment verification.

“These are self-inflicted,” Anderson stated. “Most of this is caused by doing things incorrectly during pre-repair.”

The second mistake shops make, which can be turned into a life lesson, is inappropriate staffing. Build the team’s bench by cross-training technicians to fill each other’s shoes, and improve gross sales per collision tech by alleviating admin work from their shoulders.

Anderson urged shop owners to consider the value of a parts person as well: “Shops often tell me they can’t afford a parts person, but I’ve found that the average tech makes a shop between $100 to $135 per hour in gross profit—you can hire a parts person for less than that, allowing techs to focus on fixing the vehicle, so the vehicle moves through the process quicker, making room for more cars and allowing the shop to ultimately make more profit.”

Undervaluing culture and trust was the next life lesson discussed. Obtaining the trust of the OEMs, insurers and employees is vital for a shop to dominate in the future.

“Broken promises lead to a loss of trust. Sometimes, we have to go the extra mile to earn someone’s trust,” Anderson said.

Lanza added information about weekly Personal Responsibility in Delivering Excellence (PRIDE) meetings held at Sherwin-Williams, where everyone shares their needs, successes and failures.

“Everyone in the business is responsible for providing excellence, plus this allows management to hear everyone. Just being heard is so important,” Lanza said.

Regarding the fourth life lesson—having a lack of financial knowledge—Anderson explained the purpose of a profit and loss statement is to determine where you’re making money, losing money and not maximizing profits.

“When a shop is making a lot of sales, we don’ t focus on what made us profitable,” he pointed out. “Lots of sales cover lots of sins.”

Relying on position statements to get paid is another common mistake amongst collision repairers, according to Anderson. The 14 manufacturers that represent 98% of U.S. vehicles sales have position statements, but when asked what to do about the OEMs that don’ t, Anderson insisted, “Quit relying on position statements. We need to dig deeper into OEM repair procedures. Often, repair procedures indicate that a scan is needed to complete a process.”

Anderson’ s sixth life lesson focused on the importance of hiring an in-house mechanic as it pertains to labor hours per estimate, the growth of mechanical labor operations and the impact this can have on both cycle time and gross profit.

The penultimate mistake shop owners make is not mentoring others.

“In the old days, people learned by working alongside a master, and everything they did was observed by the master,” Anderson shared. “Today, things move so fast that managers often aren’t around when their people first use their new knowledge. Many managers also have a ‘let me just do it’ mentality, but great leaders tell, show, watch, correct See Shop Owner Mistakes, Page 54

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MINNESOTA Luther Bloomington Subaru Bloomington (800) 451-5078 Direct (952) 887-0600 (952) 881-1787 Fax Mon 6:30-6; Tue-Fri 6:30-9; Sat 8-4 parts@bloomingtonsubaru.com www.bloomingtonsubaru.com

OHIO Ganley Westside Subaru North Olmsted Toll Free (888) 850-0633 Direct (440) 788-7060 (440) 788-7085 Fax Mon-Fri 8-7 jtjoyce@ganleywestside.com

OHIO Waikem Subaru Massillon (800) 225-0281 x2189 (330) 478-2800 x2189 (330) 639-0140 Fax Mon 7:30-8; Tue-Fri 7:30-5:30; Sat 8-4 dandager@waikem.com www.waikem.com

SOUTH DAKOTA Courtesy Subaru Rapid City (800) 658-3054 (605) 342-1178 Fax Mon-Fri 7:30-5:30; Sat 8-Noon parts@courtesysubaru.com