Building A New Body Shop

The purpose of this article, and the subsequent follow ups I will be writing, is to share with our customers what we hope will be valuable information in not only starting but running a successful collision repair facility.

When someone decides they are going to start a business, it usually comes from the thought that “Hey…not only can I do that…but I can do it better than the other guy….AND I can make some money doing it.” As such, the entrepreneurial spirit in us kicks in. We put together a business plan, we weigh the options of cost/loss versus profit and we decide to roll the dice, as it were, because we know we can build a better mouse trap. It is this spirit that drives us all in business.

In starting a collision repair facility, there are essentially two schools of thought. The first being the “corporate” path where one looks to build large scale, borrowing heavily either from banks or investors to finance the designing, building, staffing and managing of a larger facility. The second, and far more common is the “mom and pop” approach. Now arguments can be made as to which one is better for the ROI of the investment, but I tend to believe that the smaller shop is a better investment, long term for the ownership. I recently spoke with a long-time customer of mine about his thoughts on a start up body shop. He had successfully expanded and maintained a very large facility over the past 20 years. His annual gross numbers are well above 2 million. When I asked him his opinion on a best case scenario for starting a body shop, I was surprised to hear that his views are very much like mine considering he chose the “corporate” method and it has done extremely well for him.

When my friend Robert went to the bank 8 years ago, he was asking to borrow about one million dollars to build his new shop. He was looking at increasing the size of his operation by over four times its current state. Expanding his operation from a 4200 square feet facility to a building well over 22,000 square feet was a mammoth undertaking. He rolled the dice, borrowed heavily and has since made a very good living for himself as well as his employees. Yet when asked if he would recommend doing the “corporate” start up, he said he would not and that the “mom & pop” approach was a much better decision for a new shop owner. As we discussed the issue over a few phone calls, these were some of the key points we agreed upon.

1. You should not start any business without a business plan and you will not borrow money from a bank for a new business without a business plan, period. My advice is to seek professional help on this. Look to the Small Business Administration to help you with establishing your plan. They have a large library of “how do I’s” for the small business starter. They can recommend advisors, give ideas about money management and in some case help you secure some funding sources to help in the startup process. Additionally, with the current economy having banks scared of lending money to anyone regardless of your credit score, borrowing history or cash flow, they can help you solidify your smaller business plan. Also getting a bank to lend you a smaller amount of money maybe a little easier if you have a well thought out and structured business plan as long as they feel comfortable with the amounts and the diligence you have put into the research of the plan. Be sure to include studies of the surrounding marketplace. How many other shops are in an immediate proximity to your proposed location? Is there sufficient egress to the property via main intersections or other businesses in the area that can generate potential “drive by” advertising for you? Do you plan to build or perhaps lease an existing building?

Have you made any contacts with potential clients such as rental companies, delivery companies, cab companies, or perhaps municipalities for bid work? Getting secured, contracted work will add bottom line receivables to your business that banks like to see. Be sure to approach suppliers and work out some soft numbers for discounts on parts and materials so you know your margins based on percentages. As you are looking for a location or perhaps looking to build, remember that you can always expand if the business calls for it. Avoid going into “building” debt and not being able to afford to install the necessary tools you need for opening day. Try not to over extend your business on Day 1 by over borrowing. Establish the track record with the lender by borrowing what you need to get your shop up and running and perhaps a small operating cushion. Sell them on the fact that you will be profitable quickly.

2. You will need to further decide how your business plan will be incorporated into a complete business model for your shop. A common misconception is that “bigger makes more money”. This can be true as we see in the larger consolidators. It means, however, as we are starting up more cost, higher risk and an inability, far too often, to survive. Start with what you know. Perhaps you are a good painter/body man. You have a good body man ready to come on board. Perhaps another fellow is a frame man. All you need is a small space, perhaps three bays, a small Chief rack and a paint booth to make it all happen. It is as simple as that. Start small and grow. Do not over commit unless you have something you can fall back on. In Robert’s case, he was maintaining his original shop while he expanded and built his new shop. As you establish your business, your customer base and your reputation, you will see opportunities to expand as your bottom line grows.

3. Pay “cash” as much as possible until you have established your cash flow patterns. Many shops I have talked to over the years get strangled in a cash flow net. It is easy to do regardless of the industry but in our collision repair industry, it happens more than most due to the nature of the business. Fronting repair costs of parts and labor, awaiting payment for past repairs, fleet accounts that pay on 30 or 60 notes or getting stuck with abandoned vehicles are only few of the problems shops face. These and many more lead to faster cash out and slower cash in. So do what you can to minimize credit exposure. Pay cash for parts when possible. Try not to give away profits by “financing” deductibles whenever you can. As you establish your profit margins, you could consider this as an alternate revenue source but I caution against it in a start up shop.

4. Try not to bog your shop down with “stall sitters” such as severe hits or restoration projects. If you have the physical space to store them or move them easily from the work areas, it isn’t a big deal but remember, we are looking at a small shop scenario. The longer a car sits on the frame rack or in a tear down stall waiting on another car to come out means higher turn time and less flow through your shop. Try to establish a quick fix mentality. “Hang and Paint” repairs, while considerably less dollar amounts, tend to be as high or higher profit percentage than heavy hits. The turn time for fender benders is obviously less and can lead to attracting clients such as rental companies or service companies that need their vehicles on the road. A faster turn time for repairs on a rental car equates to more money for the rental company. This can obviously lead to more work in volume from the rental company to your shop. So consider keeping a streamlined process to handle smaller hits more efficiently to be more profitable. I am not suggesting you turn work away but rather be a little selective on the scheduling if you can.

5. Work to make sure your customers are the top priority in your business. They are the reason you are here. Go the extra mile. Make them realize they came to your business for a reason. A business man I know is fond of saying “the difference in ordinary and extraordinary is the extra.” When you think about it, it is the extra things one does for the customer that offsets them from the competition. Taking care of your customer is the easiest way to secure another customer. Generations of family member continue to take their vehicles the same shop because they have an attachment to the repair facility by some means. If you can establish that type of relationship by taking care of the extras, you can grow your client base laterally without much cost. Remember, every job we do in a body shop is like a rolling billboard for the next potential customer. Friends know that “Joe Consumer” wrecked his car. When they ask, you clearly want “Joe” to tell them that every aspect of the repair process was handled professionally, quickly and without incident. Since on the average, drivers only come to need repairs done once every 7 years. That is a long stretch if you are not ambitiously going after more customers. You do this by taking care of the details, the extras.

While these steps might seem simplistically drawn out, they are the cornerstone to a thriving business. What needs to be understood is that there are a lot of moving parts to getting a shop open. These are more fundamental practices. In my next article, we are going to get more involved with the actual shop set up, discuss DRP relationship and how we go about marketing to the public for our new body shop.

Should I Use a VGA Splitter or DVI Splitter for Video Signal Input and Output?

Technology enhancements in video signal transmission has ensured analogue and digital signals are transmitted using different devices, for instance there are several types of video splitters on the market to select from for video duplication.

The decision must be canvassed thoroughly before buying a VGA or DVI video splitter. Therefore let’s outline what VGA and DVI are, as well as the timeline they were both released.

Video Graphics Adaptor (VGA) technology has been available since 1987 thanks to IBM for development of this analogue video display technology that went onto become a standard used when referring to analogue video display standards.

VGA hardware and the software enable the data processed to become graphical data that can be displayed on a display monitor. The actual resolution for VGA is set at 640 x 480 pixels in display resolution for width and height respectively. However VGA display resolution has been enhanced with higher video resolutions such as SVGA, XGA and UXGA et al. In addition, the majority of manufacturers and resellers still refer to a VGA splitter as ‘VGA Splitter’, even though VGA has higher analogue video resolutions available, such as mentioned early like SVGA, XGA and UXGA.

VGA can carry only analogue video signals thus if you require audio as well, a separate audio connection is required. There are numerous VGA splitters that have audio capabilities built-in to the VGA splitter, for instance several Smart View devices have models available with an audio stereo 3.5mm socket for each video connection.

Digital Visual Interface (DVI) is a newer technology that was released in 1999 by Digital Design Working Group. DVI superseded VGA, and as the name implies, DVI is uncompressed digital video data that is displayed on monitors and projector screens via DVI connectors. There are three main DVI connector types available on the market each with a specific pin arrangement interface, for example DVI-I, DVI-D and DVI-A. Moreover the three DVI connectors support certain video formats, for example:

• DVI-I is integrated video both analogue and digital signal support

• DVI-A is analogue video signal support

• DVI-D is digital video signal support

The key feature about DVI is its compatible with VGA. The two video interfaces work well with one another when an adaptor is utilised.

DVI has two methods available to stream the video signal between devices, which is known as Single link and Dual link. DVI single link maximum resolution is up to 1920 x 1200 (WUXGA) @ 60 Hz, while DVI dual link can produce much higher resolution, but depends on several factors, such as cable copper bandwidth limitations, DVI source limitations, and DVI sync limitations. Additionally DVI supports hot plugging meaning it can be connected and disconnected without powering down the system. However VGA isn’t suitable for hot plugging hence requires the system be shut down first before connection of VGA cables.

In the early days of DVI it was envisaged that DVI would become the recognised standard for digital format. However, DVI was mainly used with computer display monitors and not so much with household TV scenarios.

DVI can stream digital video very well however it can’t transfer audio signals. To enable audio on a DVI splitter you’ll require digital audio capability built-in to the devices with separate audio connections. Furthermore, the release of High-Definition Multimedia Interface (HDMI) technology that can transmit uncompressed digital video and digital audio signals together has ensured HDMI quickly became the popular choice for digital video output to display panels.

The new computer desktops don’t have VGA connections available on most systems. Usually there are DVI or DisplayPort connections instead. The DisplayPort digital interface superseded DVI in 2006 however you still see DVI utilised. Occasionally Information Communication Technology (ICT) hardware staff may be required to mix-and-match connections with adapters, for instance, if a machine has a VGA socket but the display monitor has a DVI connector, an adapter can be utilised since DVI is backward compatible. Note: the signal will still be VGA quality that is transmitted unless a dedicated electrical VGA to DVI converter is used.

When selecting a DVI or VGA splitter ensure you check the specifications for the product, for example resolution supported, frequency rate, the display video type supported, connection types for interface input/output, power adaptor required, switching off/on functions, built-in amplifier booster and whether incorporated with audio socket or not.

The most common video splitter is the type ‘one input video source to two outputs video’ destination. However there are numerous configurations to select from for video input and output setups. Another type of splitter is called a ‘video matrix’ that can have two or more video inputs and two or more video outputs. This can be handy for multiple sources that can be switched on/off to achieve the desired video output display. Each video splitter will suit a particular scenario for video presentation so choose wisely. In addition, several brand video splitters can be cascaded, such as Smart View.

To maintain the integrity of the video signal high quality VGA cables with ferrite filters should be interconnected with the devices. If the installer decides to skimp on the cost of VGA cables for the installation signal degradation can lead to problems such as ghosting and pixelation.

There are DVI splitters and DVI boosters with High-bandwidth Digital Content Protection (HDCP) incorporated into the devices. Authorised digital video content is only allowed to be transmitted and received between HDCP devices while VGA analogue signals aren’t restricted with this security protocol. Some users have reported interconnection issues when using HDCP enabled devices, such as handshaking connection problems and continuity in live video streaming.

If you have the newest high-definition display monitors you should consider HDMI splitters as well. VGA can be problematic when outputting video signals to large panel screens like Plasma TV, LED widescreen TV and OLED TVs. Especially video quality degradation issues and pixelation problems may occur when VGA is the source to high-definition products.

VGA splitters have generally been more popular with computer display monitors over the years than DVI. The cost for a VGA splitter is usually less than its equivalent DVI product. Furthermore with the popularity of the superior HDMI technology integrated into high-definition TVs and notebooks has ensured DVI splitters are less common. With most people selecting a HDMI splitter for their digital video and audio solutions over the less-features of DVI.

Finally, you should consider several pivotal factors for your decision, such as the quality of the video resolution broadcasted you require, and whether it’s digital, or analogue equipment utilised in your setup. Furthermore check the product specifications before purchase, and consider if you require audio as well for the video broadcast? Moreover if you implement a VGA splitter or DVI splitter choose one with a booster built-in to the device. The costs should be secondary to ensure you’re satisfied with your ultimate decision.

Business Planning – Do You Make These 5 Marketing Mistakes?

What is the one thing every business wants more of? Money! Are you struggling with how to take your business to the next level? Do you feel like you’re stuck in a stagnant place and are unsure of what actions to take to grow? You are not alone! As a business owner, you are busy constantly. There is not enough time in the day for everything. Making mistakes with your marketing efforts can only magnify some of your struggles. Read this to figure out if you are you making these 5 costly marketing mistakes.Mistake #1: Winging itEver hear the expression: Proper Planning Prevents Poor Performance? This ties right into your marketing strategy. If you want results, you have to put in the proper planning and formulate a strategy, then execute accordingly. This is why it is called a marketing strategy. It takes time, effort, and research to develop the necessary marketing plan. This is crucial to the success of your marketing efforts. Too many businesses “wing it” whether it be for lack of knowing how else to attack it or pure laziness. You worked too hard to get your business up and running. Put some effort and time into developing a formalized Marketing Plan. Figure out who your target customer is and the best way to market directly to that target audience. You may already be wasting effort and money on marketing to the wrong audience! Do your homework. We promise… you will save time AND headaches in the long run.Mistake #2: Giving Up Too EasilyWhat would we do without instant gratification today? Searching for answers literally takes seconds on our computers or cell phones. We have access to more knowledge at our fingertips than we could have imagined 10 years ago. Technology has embedded this need for instant gratification in our minds. It has created a society of people that give up way too easily. Like most success in life and business, marketing takes time and persistence. In fact most prospects need to be exposed to your company, its services, the benefits received or problems solved, 7-13 times BEFORE they will decide to purchase. Don’t think that one attempt at reaching out to a prospect will magically make them open their wallet. Don’t think that even 3 times of reaching out will do so. It make take 3, 6, or 9 exposures to get your prospects comfortable with you and your company. Marketing is a marathon and you have to be in it for the long haul.Mistake #3: Not Adapting to Current TimesRemember when newspaper or radio ads were the most effective way for a company to advertise? Well along came the 21st century full of technology. Embrace it. If you don’t have an attractive, user-friendly website, you’re making a mistake that could turn new customers away and inhibit your growth. If consumers find it difficult to navigate or looking outdated, they may leave with a negative impression of your company and never return. Don’t allow this to happen.Are you refusing to get your company on social media or advertise using video? This is also costly. The internet, social media, and video marketing are here to stay. If you want to have your business thrive for many years and generations to come, it’s best to get on board… now!Mistake #4: Lack of ConsistencyIn order for marketing to be effective it has to be creative and consistent. Think “Out of sight, out of mind.” This is true with any prospect. You don’t know what situational changes are going to occur in their life that may cause it to be… The Right Time. You don’t want to miss the opportunity when it arises. If you haven’t been planting those seeds and nurturing them all along, you won’t be there when they are ready to harvest. The goal of marketing is to be the company in the forefront of the consumer’s mind when they raise their hand and need help. Many businesses make the mistake of sporadic marketing or marketing only when business is slow. Marketing needs to be continual to smooth out the seasonality of business cycles. Don’t let your business fall into this trap!Mistake #5: Backing Off When Goals are AchievedFinally, the 5th marketing mistake you may be making is backing off when goals are achieved. This mistake may be the worst one. It’s too easy to breathe a sigh of relief and relish in the success you have achieved. Successful businesses get comfortable when things are running efficiently. However, the issue comes with being too comfortable. As stated earlier, marketing efforts can take 3, or even 6 months to start showing results. This lag time is why discontinuing your marketing efforts, then desperately trying to ramp them back up can be extremely dangerous. It is much wiser to consistently maintain your marketing efforts, then amplify and enhance them as needed. After all, customers may come and go for a variety of reasons. Focus on keeping lifelong customers, and a marketing plan that will help generate new ones during good times and bad.Marketing is not always fun to do or think about when there is so much else going on. At the end of the day though, marketing is important to the success of your business. Treat it as such and avoid these 5 marketing mistakes. Taking the time to plan and actually prepare with the necessary research will make it so much easier to perform the steps outlined. Don’t forget, persistence is needed for successful execution of your marketing plan. You believe in your business. Make sure your marketing efforts reflect that!