“I’d deposit $100,000 and write out checks for $101,000,” Beavers said. “I wasn’t getting anywhere. I had all this work, and we worked 11 or 13 hours a day but were still losing money.”
|How to choose a consultant |
• Ask for references. Any reputable, experienced consultant should be able to supply you with a list of current or former clients who they’ve helped with issues similar to those facing your business.
• Check for industry experience. Some consultants have or currently work within the industry, perhaps as a shop owner themselves. This may or may not make them more qualified to help you, but at a minimum it gives them some understanding of the industry. If they do not have such experience, ask why they feel they are qualified to consult in this industry.
• Be focused – and look for focused expertise. Before choosing a consultant, decide which two or three things you want to focus on improving in your business, the things that most keep you up at night. Then remember that some consultants are better experienced at focusing on the production end of a shop, while others are better at front-office issues (conflict resolution, systems and paperwork, leadership and communication, numbers).
• Don’t overlook the compatibility factor. Working with an outside consultant is more likely to succeed if you choose a consultant you respect, trust and enjoy interacting with.
Beavers realized that if he was going to stay in the industry, he’d need help to improve his business. But, he wondered, is bringing in an outside consultant the right move? Where can you find a qualified consultant with the necessary experience and understanding of the collision repair industry? And will it be a worthwhile investment – or just more money sunk into a failing business?
To get a better sense of what shops might expect when hiring a business consultant, we tracked the experiences of two shops who sought out some outside expertise to help their business.
Growth in profit, not just sales
Chuck Zimmer said he vividly remembers his first impressions when he visited Noaker’s Auto Body in Duncannon, Pennsylvania, in the spring of 2005.
“I wondered: Why is this guy calling me?” says Zimmer, a trainer and consultant with the Illinois-based Masters School, which focuses on collision repair management training and consulting. “The shop looked real nice and organized. They had a computerized shop management system. The owner was a nice, well-spoken guy who knew the industry. Everything looked like they should be making good money.”
Those looks were deceiving, according to shop owner Bob Noaker. He’d launched the company as a one-man show in 1998 and although his sales had been rising rapidly – from $440,000 in 2003 to $820,000 in 2005 – he found himself, much like Jeff Beavers, not having any profit at the end of each year.
Noaker found a 4-day class at the Masters School helpful, but trying to determine which of the ideas and information to implement – and how – was a challenge. So he hired Masters instructor Zimmer to conduct a one-day on-site review of Noaker’s to provide some direction.
During such days at a shop, Zimmer says he talks individually with every employee in the shop. “I just ask them about how things work every day around the shop, what processes get followed, and they’ll quickly tell you what never happens or what is screwed up,” Zimmer said.
Noaker cites a laundry list of changes he’s implemented based on Zimmer’s input, including:
• Accounting system improvements that enable Noaker to better track, for example, purchases, inventory and sales (as a percentage of total sales) of materials.
• Goals and more regular feedback to technicians in terms of productivity, and to office staff in terms of sales.
• Customer satisfaction improvements by “under-promising” on delivery dates and regularly updating customers throughout the process.
• A more detailed job assignment process that involves going over estimates with the technicians and using markers to indicate on the vehicles what needs to be done.
In addition to some subsequent email and phone exchanges, Noaker had Zimmer back into the shop for what he calls ‘fine-tuning.’ After spending a Friday afternoon at the shop, Zimmer met with the entire staff the next morning, using examples of specific problems he saw at the shop and getting buy-in from individuals on things they now understood should be done differently.
Noaker said he’s spent about $10,000 between the two consulting visits by Zimmer. He’s confident it’s been a worthwhile investment. The shop, for example, went from losing 10 or 15 percent on materials to making 12 percent on them one quarter, and 32 percent in another.
“And since Chuck was out here the first time, we’ve averaged between 5 and 6 percent net profit, which is a heck of a lot better than zero,” Noaker said.
To continue in business – or not
As shop owner Beavers considered whether to stay in the collision repair game or get out, he began searching the internet for an outside consultant and eventually spoke with John Steadman, president of JOVI Enterprises, Inc., which offers consulting to both dealership and independent collision repair operations.
Steadman spent four days at Car Crafters Collision Repair in March of 2006, after which Beavers signed on for a six-month contract under which Steadman spent two days a month at the shop.
Together, Beavers and Steadman focused on ways to improve the shop’s productivity and profitability. Daily sales, for example, are posted in the office to help Beavers and his staff understand where they are in terms of their break-even point for the month.
A software system that Steadman’s company developed helps the shop determine expected cycle time for each job, making it easier to track which vehicles are falling behind. The system also has improved the shop’s scheduling by showing how many hours of labor are scheduled in each day in relation to what the shop is capable of producing.
“We used to take everything in on Monday and promise it by Friday,” Beavers said, “That created havoc on Friday, trying to get all those jobs delivered. Now we deliver one or two cars just about every day.”
Perhaps the biggest change Steadman recommended and helped Beavers implement was a shift to a team system within the shop.
“Instead of just dedicating one man to a job, if something has to go today, they can all pull together as a team and get it knocked out,” Beavers said. “It took a while to get everybody to buy into it. But it seems to be working pretty smoothly.
Beavers said he’s seen gradual improvements in his shop’s numbers. He’s no longer dipping into his own pocket to pay the shop’s bills. And the help gave him the confidence to go ahead and build a new 12,000-square-foot facility.
Beavers said he spent about $12,000 for Steadman’s initial consultation and 6-month contract.
“I really didn’t have a choice (about spending the money) if I was going to keep the business running,” Beavers said. “But I would recommend it to anyone to get on track, to understand how the business side of the body shop is supposed to work.”
Hard work, not just consultant, is key
Beavers and Noaker both say that although they are both pleased with the results their consultants have helped them achieve, no one should look at bringing in a consultant as an easy cure-all their shop’s problems.
“You really have to want to make the changes they recommend,” Noaker said. “They can’t do it for you. You just have to keep plugging away at it. It’s a lot of work.”
John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988. He can be contacted by email at jyoswick@SpiritOne.com.