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The dealer owner where we buy most of our parts for a certain line of cars approached us with a proposition. In return for an extra discount on parts, he wants us to pass along customer names as new car sales prospects. Anything wrong with that?

Not for the dealer. He’s entitled to use whatever information he can dig up. But without the customer’s unequivocal prior permission it’s a foolish risk for you, no mater what the additional discount is worth. Your knowledge of the customer’s identity is not your property to use to your benefit. In any case, in this age of privacy sensitivity, sooner or later a customer will claim to have been damaged somehow by your “unauthorized” disclosure. Incidentally I know of some DRP’s where even a first offense in this department will result in immediate and irreversible termination.

Our competitor seems to have just about all the city and county vehicle collision repair business pretty well locked up. Does this traditionally go up for bids? How do we go after it?

Don’t you have enough in your life to depress you already? This is highly political, low-profit, low-quality, shop-clogging business. Unless you like doing $2000 jobs for $1600, leave it to the guys that fix taxis.
Try this instead: Go make some good sales calls on the HR departments of at the one or two non-profit agencies in your area with the most employees. Provide them with special cards for them to give their employees that will produce an automatic $10 or $25 contribution to the agency for each employee’s car fixed at your shop.

Dale, Settle a bet. My brother says me driving my most expensive car to my shop every day makes the employees resentful. I say that good employees are motivated by seeing the material benefits of hard work.

You lose. I hope you bet him the car.

We have been a dues-paying member of our state trade association for many years. It’s been beneficial learning and sharing best practices. But recently the association has become very aggressive politically, hiring a lobbyist to confront insurers with the Insurance Commissioner and publishing “consumer education” materials that have an anti-insurer flavor. Is our membership going to cost us business?

Not unless you’re a conspicuous spokesman for the new aggressiveness. But at some point you will have to ask yourself whether everyone your dues are supporting are worthy fellow members of your profession. If you can’t remember the last time your association kicked out somebody for not being up to its standards, what’s the point of being part of it?

We used to belong to a paint company “20 group” where we compared numbers three or four times a year. What are considered good basic operating numbers these days?

Circumstances and regions vary, of course, but you really need to be at least in the low 40’s at the gross margin line to have enough left over for sufficient retained earnings to keep strengthening the business. Nobody on the property should be cashing a bonus check for a month below 40%. With margins on parts typically below 30%, you need your gross margin on direct labor at 60% or more including benefits. Also, if your paint & materials sales are less than 10% of total sales in any quarter, your estimators need some more training. Indirect labor needs to be at or below 12% of sales, and rent shouldn’t get much beyond 5% of sales unless you’re the landlord. Get back in a 20-group, but pick critically. They range from pointless to priceless.

We never had DRP relationships and have heard horror stories about them. But some days it seems we need to become a DRP shop just in self-defense. How do you make the decision?

For years DRP vs. non-DRP was supposedly a dividing line between opposed schools of operating thought. But “Should we be a DRP shop?” was always more about owner temperament than a business decision. A political mood isn’t a strategy.
Today, the useful question is “Is there an available business mix of adjusted claims and DRP relationships which would make my business stronger?”
Getting the answer is hard work, but indispensable for a seriously competitive repairer. Dozens of operators who traditionally wouldn’t have dreamed of a DRP deal in the 90’s have quietly added one or two very carefully selected ones. They have also politely declined many more than they added, a decision requiring discipline found only in facts. An even larger number who always had many DRP’s have gradually “weeded out” half or more of them, leaving just a few that met their needs. For either of these sets of owners the question “Are you DRP or non-DRP” is unanswerable and meaningless.
Every market is different, and every insurer. Even with the same insurer’s standardized DRP terms, interpretation and enforcement can vary greatly from region to region, sometimes justifiably, occasionally indefensibly. How many cars can you expect? Don’t bother to ask. They don’t know, and couldn’t guarantee it anyway.

But it’s essential to ask four questions:

● Exactly what discounts and allowances do you require?
● Exactly what will you or won’t you pay for in the repair? (Go over a closed file)
● What additional paperwork and administrative processes are required?
● How exactly will my performance be measured, rewarded, corrected?

Never argue with the answers. Just ask and make notes. Read the agreement from beginning to end, and make sure it matches. If it doesn’t you’re entitled to ask why. (Obviously, anyone who can’t or won’t provide specific answers has saved you further work on this “opportunity.”) Now run several recent typical adjusted claim repairs against the DRP profile and look at gross margin dilution. You could be in for a surprise. Remember, all that insurer’s adjusted repairs you’ve been doing will now come under the DRP terms. Also ask yourself if you will have to add indirect labor for the admin requirements.

In the last analysis you have to believe that the impact on your processes and the margin dilution (above the line and below) produces enough absolute dollars of net additional income from each DRP repair to be clearly worth it.

When you look at it critically in advance (or afterward in the light of real experience), if it doesn’t make it, it doesn’t make it. But if it looks good, give it your uncompromising support. Unless or until they change the rules arbitrarily (in which case you courteously resign), be the best repairer in their local network. You will get cars from their underperforming alliances.

We have a very skilled and intelligent Production Manager with one fault that drives me nuts. When he occasionally needs to be corrected on some minor issue he simply can’t say “Thanks, I’ll take care of it”.  No mater how routine, he makes it intensely personal, and turns it into an hour-long soap opera.  He loves to debate, and he’s very good at it.

You’ve got yourself a subclinical drama queen, a not-uncommon species these days. Assuming he’s worth keeping, otherwise, the cure called for here is changing the transaction from a conversation to a drive-by. Never correct him while either of you are sitting down, in an office or standing still. A corrective direction is not a chat.
First, mentally rehearse the point into twenty words or less, e.g. “Dick, please don’t leave the keys in the gate any more”.     Then, while he’s right in the middle of things, get the needle in and out in less than two seconds, keeping your voice level, and keep moving right on out of sight.
Avoid him for at least an hour, more if you can, and then make the next contact upbeat and on an entirely different subject.  If he still absolutely insists on re-opening the point you must, no matter what, never, never say a single word other than the exact same words you said before, even if you have to say it several times. At some point, he should break the habit. If he can’t, and he isn’t a blood relative, replace him. Your organization can’t afford him.

When I see a problem and bring it to the attention of the manager responsible they never seem to have an immediate answer that makes any sense. I’m beginning to wonder if I have the right people.

• You probably have perfectly good people. How does the poor guy instantly know why it happened at the same moment he’s hearing about it? If I saw it in your shop before you did and asked you, you wouldn’t know either. Change the way you do this. When you see a problem, go to the manager responsible and simply report it. Tell him you knew he’d want to know about it immediately, but don’t question him about it. Walk away; watch and wait to see if he fixes it. Start wondering about him only if he doesn’t. But my guess is you won’t see that problem again.

What works best for a second location, buying an existing shop, converting a “brownfield” industrial site or building a new shop from the ground up?

• Before you go into serious planning for a second location, be honest with yourself: Is your first shop absolutely full and totally tuned in? (You wouldn’t be the first owner just trying to get away from chronic unsolved problems at Location #1. Trust me, they will follow you.) The “brownfield” and the “greenfield” second locations are both gross additions to your market’s already excess capacity. Unless you (and your banker) know exactly whose shops you’re going to empty—and how—to fill the new space, look for sellers who already have a good book of business and are just tired. You’ll find them.

I have a long-time key manager who keeps asking for a way to own part of the business. How does this work?

• Almost without exception, it doesn’t. You’re risking a mess for you both unless he knows cold that becoming an employed minority shareholder in a privately held corporation will buy him zero increased authority and zero increased job security. Ask him if he realizes that there would be no market, other than you or some future buyer, for his shares. Also ask him if he’s OK, when it’s occasionally necessary, with skipping a paycheck or two just like you do, and if he’s ready for a year-end dividend that’s sometimes a negative number. Then ask his wife the same questions. You may find the ownership subject coming up a little less often.

How do we keep the technicians from wandering all over the shop looking for parts, or trying to find the Estimator or Production Manager?

• You can use leg irons on short chains padlocked to the floor, very popular in New Jersey. Alternatively, tear down every car completely beforehand and never, ever, start a repair until every single part is in the bay with the tech. Every minute that body technicians are not touching cars your shop is producing nothing but costs. Make a rule that the minute a tech’s job is stopped the first thing he does is blow a police whistle, which brings the Production Manager running. If they don’t like the whistles, go back to the leg irons.

We started off great with the General Manager at our second location. But now it seems every time I try to show him how to do something or help him get something done, it obviously turns him off. I have 26 years of experience to offer him, to save him all kinds of trouble, but he doesn’t seem interested. Now he almost never initiates anything on his own. I’m almost ready to replace him, but it takes forever to find a good one. How do we get him to come around?

• True, really good GM’s are rare, and maybe you got a bad one, but the probabilities suggest otherwise. Unfortunately, particularly in our industry, owners who actually know how to manage a GM effectively are even rarer. It’s not a natural act. Look, any GM that’s any good at all doesn’t want a daily co-manager any more than you want a daily co-owner. It is absolutely impossible for him to occupy that role to your satisfaction while you insist on sharing it with him. Your owner-habits of deciding and ordering aren’t the right tools. Instead, you now have to describe the goal and provide resources. Like trying to hit a baseball with a golf swing, it’s a very different talent. Incidentally, rest assured that your whole organization is watching you and your GM interact like a slow motion train wreck, and my guess is they’ve seen this movie before. While he’s still in his right mind stop telling this GM what to do (tasks), and start telling him what to accomplish (results). Be available for advice when asked for it, but get out of the way. Get a hobby if necessary, or buy a Porsche or take a trip to Italy. Either quit pulling up the flowers to see how the roots are doing or stop complaining about the gardener.