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It takes a lot of nerve. Where do two brothers without
"M.B.A." behind their names get off writing a business plan that says
their three-shop family auto body business is going to grow to $33
million by 2004. Maybe being in the San Francisco Bay area with all of
those dot-com wanna-be millionaires made them think big.
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Rick (L) and Don Wood
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| Dublin, CA location |
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USI spraybooths
The
Wood brothers explained that one problem of buying shops is that you're
stuck with the old owner's choices of equipment. Now that they're
buying equipment, paint and supplies for nine shops, they choose
vendors very carefully.
To get the best spraybooth, they actually traveled to Europe and
checked out the best on the Continent. Their choice: USI. "They make
great equipment," said Rick.
"It's well insulated, which helps to cut the energy bill. It gets up to
temperature fast and keeps it steady. But the biggest factor to us was
reliability and low maintenance." The booths and prep stations were
purchased from Nor- Cal Vada, the USI dealer in Sacramento. "If we have
any issues, and there haven't been many, NorCal is right on it."
All
of the shops spray Standox paint. The jobber (Color Supply, Woodland,
CA) visits every store, every day. Their vans carry practically
everything that Cooks Collision stores use in the paint department and
the daily service permits Cooks to maintain a very minimal inventory.
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Unlike the here-today gone-tomorrow
dot-commers, brothers Rick and Don Wood of Cooks Collision in Walnut
Creek, California didn't approach any venture capitalist and ask for a
couple million dollars in seed money, nor do they claim that their way
of doing business will be taking over the world - well, at least not
right away. They executed their business plan one shop at a time,
buying out body shops with a small down payment (25%- 30%) and giving
the seller a note (usually 5-7 years).
Fast
forward to 2001 - with the acquisition of their ninth shop in August,
Cooks Collision will have reached pro-forma annual revenue of $32
million. Their 165 employees work in shops from Redwood City to
Sacramento, all tied together by a high speed data network and a new
central call center. "The insurance companies will call one central
location where we'll track the available capacity at each shop. We'll
be able to send their customers' cars to the shop that can handle the
work most efficiently." The call center is what the Wood brothers refer
to as a "value added program" for their insurance partners, which on a
DRP basis include USAA, State Farm, AAA, Farmers, and Progressive.
No consolidators here
Please
don't refer to the Wood brothers as "consolidators". "Those are guys
with VC money and exit strategies, like 'going public' or selling out
to an insurance company," said Rick Wood. "We're a 'regional network',
and we're in it for the long run. We've got a passion for this
business, and we're very competitive."
What's
more, if the Wood brothers wanted to sell out tomorrow, they don't
believe that an insurance company would be the buyer (vis-a-vis
Allstate and Sterling Collision). "First off, they (insurers) are going
to wait several years to see how this deal of owning repair shops works
out. Then, if they like it, they'll just build their own centers or buy
large consolidators or continue to invest in consolidators wherever
they need them instead of buying shops out," Rick predicted. The
exception, they believe, would be certain metro areas where building
new shops isn't feasible.
Similarly,
the updated expansion plan for Cooks Collision focuses on building
stores instead of buying them. "We're working on two greenfield
projects right now," said Don. And on those barren green fields will
rise repair centers where their insurance partners have told them they
are most needed. The brothers hastened to add that they will still be
buying existing shops, but not with the vengeance of recent years.
Family touch, big company benefits
Rick
and Don think it's good business to keep a strong family presence in
their operation. "We're personally in the stores on a daily basis,"
said Don Wood. "We still have the feel of a family business, and our
people like that. After all, our employees are the biggest factor in
our growth"
Their people also like the
flexibility of working for a larger company, particularly one that
allows them to move around in Central California while keeping their
jobs. "Guys want to move from the Bay area towards Sacramento because
it's so much cheaper to buy a house there," explained Rick. "With us,
they keep their seniority, vacation, medical plan, 401K, use of a condo
in Hawaii, and yet can still move around as their family needs change."
But
perhaps the biggest benefit of working at Cooks is consistent work.
With experienced body men and painters earning $80,000 - $90,000 a year
(door rate is $56/hr and techs get about $20/hr), it's easy to
understand why the employee retention rate is high. One employee just
celebrated 20 years with the Wood family.
Is it blood, or the Coyote Group?
Where
did this success story begin? "Our Dad (Robert Wood) worked at
dealerships in the '70's and then owned smaller shops around
California." Their grandfather, Clyde Wood, had owned repair shops
during the 1940's in Colorado and San Francisco. When Robert Wood
decided to turn over the reins in 1996, the business consisted of three
shops doing a total of $5.7 million. The brothers soon after got
involved with an association of successful inAt adependent shop owners
known as the "Coyote Vision Group". "We saw those people
succeeding, building bigger, more profitable businesses, and it gave us
confidence that we could do the same," related Rick.
Sounding
perhaps a little too much like a dot-com executive, Don added, "There
are inefficiencies in this industry. By identifying and eliminating
those inefficiencies, you gain an advantage." The brothers also enjoy
another advantage over many competitors: "Most guys in their late 40's
and early 50's don't want change. Change becomes more difficult later
on in life," said 35 year-old Don. That being the case, they'd better
keep things moving, because older brother Rick is already 41.
Delayed gratification
The
toughest part of building the business has been "delayed
gratification," Don reflected. "With the shops we had, we could have
lived very comfortably, played a lot of golf, you know, enjoyed the
good life."
"Investing so much of the profit back into the business - well, it was difficult, stressful, and still is, " Rick agreed.
The
brothers seem to agree on a lot these days, but it wasn't always that
way. "We used to not get along," Don admitted. "But we've matured,
recognized each other's strengths, and we've learned to complement each
other."
Another
critical change in executing the business plan was the switch from the
high-end "Mercedes" orientation of their Dad's era to the high volume,
consistent quality they emphasize today. "The Coyote Vision Group and
the consultants showed us the light. We saw our future, but making that
transition in rebranding Cooks Collision was difficult," said Rick.
At a glance |
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Cooks Collision
1367 Pine Street
Walnut Creek, CA 94596
(925) 935-4041
Rick and Don Wood
Locations: 9 (August 2001)
SF Bay area to Sacramento
Volume: 1,060 a month
$32 million a year (pro-forma)
www.cookscollision.com
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They
also enlisted the help of industry consultants. "We're big believers in
consultants," said Don. As the business grew, they hired more
experienced managers such as a human resources director, an information
technology manager, and a chief financial officer, Courtland Gates
(finally, a guy with M.B.A. after his name, and from Harvard no less).
They placed more responsibility for the daily shop management on repair
professionals such as Frank Quadrato and Mike Barber, their area
managers. They also made sure that everyone's earnings are tied to a
performance goal. "Those goals change as the business evolves," said
Rick. The pointed out that the job of an estimator, for example, is
evolving rapidly as DRP programs place more claims management
responsibility on the body shops.
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