FenderBender - January 2025

SoCAL STRATEGY

BY NOAH BROWN

LINDSEY GAINER

EDITORIAL

Chris Jones Group Editorial Director

Jay Sicht Editor-in-Chief

Abdulla Gaafarelkhalifa Associate Editor

Kacey Frederick Assistant Editor

Emily Kline Special Projects Editor

Leah Marxhausen Special Projects Editor

Drew Bryant Contributing Writer

Tiffany Menefee Contributing Writer

Greg Lobsiger Contributing Writer

Noah Brown Contributing Writer

Lindsey Gainer Contributing Writer

Todd Kortemeier Contributing Writer

Steve Trapp Contributing Writer

EDITORIAL ADVISORY BOARD

Jordan Beshears Steve’s Auto Body

Sheryl Driggers Collision Advice

Frank Rinaudo Industry Consultant

Jason Mundy Mundy’s Collision Center

Stan Medina Certified Collision Works

SALES

Chris Messer VP/Market Leader - Vehicle Repair Group

Andrew Johnson Associate Publisher ajohnson@endeavorb2b.com

Mattie Gorman-Greuel Associate Sales Director

Cortni Jones Director of Business Development

Diane Braden Account Executive (National Accounts) dbraden@endeavorb2b.com

Marianne Dyal Account Executive (National Accounts) mdyal@endeavorb2b.com

Chad Hjellming Account Executive (National Accounts) chjellming@endeavorb2b.com

Lisa Mend Account Executive (National Accounts) lmend@endeavorb2b.com

Annette Planey Account Executive (National Accounts) aplaney@endeavorb2b.com

Kyle Shaw Account Executive (National Accounts) kshaw@endeavorb2b.com

Sean Thornton Account Executive (National Accounts) sthornton@endeavorb2b.com

Ryan McCanna Administrative Assistant

ART AND PRODUCTION

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ENDEAVOR BUSINESS MEDIA, LLC

CEO Chris Ferrell

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LETTERS TO THE EDITOR editor@fenderbender.com

Opinions expressed in FenderBender are not necessarily those of Endeavor Business Media, and Endeavor Business Media does not accept responsibility for advertising content.

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ROLLING INTO THE NEW YEAR

AS WE ROLL INTO another new year, along with the typical personal resolutions, you likely want to see how you can improve your business to make it more resilient during sales slowdowns. If so, you'll want to check out all three columns this month, including Greg Lobsiger's strategy for fighting labor rate suppression, Tiffany Menefee's thoughts on reviewing operations for improvement, and Drew Bryant's advice on how to adapt to better serve customers and maintain your business' health.

If you've ever worked with a little toolbox with a jumbled mess of SAE and metric sockets and wrenches and then experienced the ease with which you can now find your tools once you've graduated to a roll-around cabinet with labeled, organized drawers, you might appreciate the productivity enhancements an organized parts department can bring. Read about three shops' experience with Mike Anderson's Collision Advice parts department overhaul. Finally, I had the chance to recently speak with an expert on OEM materials on how the second Trump administration's views on EVs might impact their sales. The takeaway from that discussion was that it's too early to tell. Federal tax incentives for the purchase of new or used EVs may go away, but but at most, he predicts EV

sales to plateau, not decrease, and OEMs might squeeze a little more ROI from existing platforms. The first 100 days of the administration, not that far away, will tell. Don't count out EVs just yet if you are on the fence about investments to repair them. As always, drop me a line if you'd like to share your thoughts with me, and I extend my best wishes to you and yours to have a prosperous new year!

JAY SICHT EDITOR-IN-CHIEF jsicht@endeavorb2b.com

I TRIED I-CAR’S VR, AND THIS IS WHAT I THOUGHT

BY ABDULLA GAAFARELKHALIFA

I MAY WRITE FOR a collision repair magazine, but I am no collision repairer. Close to my one-year anniversary, an opportunity arose. At the SEMA Show, I-CAR had a booth where you could have a virtual reality (VR) experience to do actual repair.

The VR allows technicians to practice hands-on techniques in a risk-free environment. VR training also boosts technicians’ confidence and readiness, equipping them to solve complex challenges with greater precision and efficiency, according to I-CAR’s website. For a tool to help solve the technician shortage, it’s a neat way to get gamer kids into it.

This fulfilled two needs I had: to work in a garage and have an excuse to play video games while working.

I donned the VR headset, then the hand controls, and I will admit, I felt like a fish out of water. I recall saying, “Wow! This is trippy.”

Normally when I play games, I am either shooting Nazis, zombies, or zombie-Nazis, but instead, I was doing tasks.

I was changing a high-voltage electric vehicle battery, which is a dangerous task in real life. No wonder why I-CAR wanted kids to go through this before doing it “IRL,” (in real life) as the kids I-CAR is trying to attract would say.

To someone who might be more experienced, it might be weird to click instead of grab — or click instead of simply walk from A to B. But a younger generation — as well as the overall industry that is going through a tech shortage — would certainly benefit.

While observing another I-CAR exhibitor taking on the VR set, I had the chance to chat with I-CAR Learning Innovation and Technology Manager Michael Mertes.

He shared a story that will tell you that I-CAR’s approach to solving the tech shortage is on point:

“We were at a career day and this young gentleman saw the headset. He was a big gamer and just wanted to check out what was on the headset, so we had a paint spray refinisher on there. He went through it, he loved it, he was excited. He took the headset off and he said, ‘Is this a real job? Is this something I can actually do?’, and we told him it sure is. We gave him a brochure from the Collision Repair Education Foundation. And two years later, this year, we went to a local college to show off our latest demos. That same student walked through that door and said, ‘I remember you guys! I’m now here to do paint spray refinishing!’ We’d like to say

there were other factors, but he said he had never seen anything like this before and he’s now doing it for a career.”

I think back to a lot of my old friends in middle school and high school who were gamer heads. I don’t know what they’re all doing in life now, but I can’t help but wonder if we had an organization like I-CAR come to our school and show us something like this, would this have changed our career paths? Would the tech shortage even be a thing?

One thing is for sure, I can imagine this would no doubt bring more people, and even Gen-Zers, into the collision repair space.

Hands-on but Risk-Free Abdulla Gaafarelkhalifa works virtually to de-energize a highvoltage EV battery at I-CAR’s SEMA Show booth.

HOW TELEMATICS COULD TRANSFORM THE COLLISION REPAIR PROCESS

SEMA Show showcases how telematics will be used to help collision repairers and insurers.

By ABDULLA GAAFARELKHALIFA

THE 2024 SEMA SHOW was packed with cool cars and cutting-edge tech, but one theme stood out for collision repairers: Moving the repair process to the 21st century.

This year highlighted how telematics is changing the game for vehicle connectivity, safety, and efficiency. From advanced tracking systems to smart data tools, the show was all about how telematics is making our rides smarter and safer, as well as making the post-collision process more seamless for all parties involved.

Entegral

Entegral, a provider of software solutions for the automotive repair industry which is owned by Enterprise Mobility, showcased its full product suite in an interactive and immersive demo at Resorts World Las Vegas. The event highlighted how Entegral’s platform connects repair shops,

insurance providers, and customers to streamline the automotive claims experience.

According to Entegral , the demo aimed to educate and engage Entegral customers, prospects, and partners across the auto insurance, OEM, fleet, and body shop industries about how its global product platform connects people, systems and data to streamline the automotive claims experience. This was the first time that Entegral demonstrated the power of its global, connected product offerings in North America.

One thing that many Entegral employees emphasized throughout the event was the configurability of the of the overall platform, allowing shops and insurance companies to integrate Entegral’s technology into their own apps and workflows

The tour of their product suite began with the first notice of loss, with the company’s Smart Locator and Smart Assist solutions.

Smart Assist uses AI-driven analysis to enhance efficiency from the first notice of loss to damage assessment and rental car selection.   Smart Locator provides recommendations for repair shops. It integrates verified vendor certifications and capabilities into claims workflows, helping insurers match customers with qualified repair centers based on location, vehicle, and customer preferences.

After the customer’s vehicle is taken to a shop, in the repair workflow section of the demo, the body shop can provide updates on the repair and facilitate communication between the customer, shop, and insurance company through Entegral’s Assignment Management solution until the completion of the repair process while customers, through Entegral’s Consumer Repair Tracker, can know where their vehicle is in the repair process.

Entegral wasn’t the only business in Vegas during the SEMA Show showcasing how they can evolve the repair process. A lot of magic was happening right where the SEMA show was.

OEM Collision Repair Technology Summit

The second session of the OEM Collision Repair Technology Summit, presented by the Society of Collision Repair Specialists

as part of its Repairer Driven Education sessions at the SEMA Show, introduced a curious audience to industry leaders in a panel discussion on “How Telematics Technologies are Evolving the Consumer Experience.” Panelists included:

• Ryan McMahon, senior vice president of strategy and corporate development for Cambridge Mobile Telematics (CMT)

• John Eck, head of product – Accident Assistance, Global Strategy & Innovation for General Motors

• Hilary Cain, senior vice president of policy for the Alliance for Automotive Innovation

CMT is a telematics service provider focused on making roads and drivers safer. Its AI-driven platform, DriveWell Fusion, gathers sensor data from millions of devices, including smartphones, connected vehicles, and dashcams, to name a few. This data is then combined with contextual information to create a comprehensive view of vehicle and driver behavior.

For the collision repair industry, CMT offers significant benefits through its telematics technology. By providing real-time crash data, CMT helps streamline the claims process and improve the efficiency of collision repair operations. The technology can deliver information about a crash to insurers within minutes, allowing for quicker assessment and resolution, as McMahon explained in his presentation. This capability reduces cycle time, which is crucial for minimizing costs related to rental cars, storage, and the number of open files on adjusters’ desks.

CMT’s telematics data can also help collision repair facilities by providing visibility into crash severity, identifying the vehicle’s change in velocity, and determining the point of impact and the degree of damage.

By leveraging this data from the customer’s smartphone as they drive, collision repair shops can improve their operations and provide better service to their customers.

“Insurers continue to push in this direction because for them, time is directly money, whether that’s the storage costs or rental costs,” McMahon said.

CMT partners with several major American insurance companies, including State Farm, Liberty Mutual, Travelers, and others both domestically and internationally.

Eck introduced a new digital product called the GM Collision Assistance app, designed to help customers navigate the steps following a vehicle collision. This app provides additional support to consumers after their OnStar experience, offering a comprehensive guide through the postcollision process.

The goal of the GM Collision Assistance app, he said, is to reduce the stress and confusion that often follows a vehicle accident and get drivers back on the road more quickly and ensure that their vehicles are repaired to the highest standards.

When a collision is detected, the GM Collision Assistance app contacts the driver at the accident scene and helps guide them through the necessary steps. This includes documenting what occurred, obtaining the other driver’s information, and choosing a certified GM Collision Repair Network facility. The app sends a popup notification to the driver’s phone about 10 minutes after the crash, ensuring that it doesn’t interfere with the immediate assistance provided by OnStar.

The app, Eck said, helps ensure the driver’s vehicle is repaired by professionals who understand the latest ADAS technologies and other advanced features. This can be particularly helpful for drivers who are unsure about where to take their vehicle for repairs.

“General Motors is not doing anything internally with this data,” Eck said. “All we see is aggregate numbers, total numbers of events that made it happen.” He also emphasized

that the data is not sold, a common concern for consumers in the 2020s.

Down the Road (Phones Down, Please)

“Crash avoidance and post-crash care is where a lot of our companies want to go,” Cain said. She also added that the data can help determine who is at fault. “There’s a lot of ‘he said/ she said,’ you know how this goes.”

Further data access also has more life-saving solutions, Cain proposed. Such as knowing how many people are involved in a crash, knowing the speed of the vehicles, direction of force, and other items of information that phone data can provide.

“That additional information can provide more robust situational awareness to first responders who may be responding to the scene of a crash,” she said.

She went on to explain how, as the use of data and technology progresses, it will have to flow with government policy. In the U.S., policymakers and lawmakers are aimed at protecting consumer data. Cain also commented that our current “notice and consent model,” like how a device might ask to save a password or proceed with an OS update, could play as a limitation. Data legislation is also propelled by fear of the Chinese government accessing private data of Americans, she said.

Cain proposed an idea where companies can simply use the data without requiring a customer to allow it manually under strict guidelines of use by parties using the data in the collision repair cycle. What comes next in how consumer phone data is not yet known, but Cain said one thing that anyone could make a safe bet on, especially in Las Vegas:

“The sense I get from our companies is that (telematics) is where a lot of the focus is right now. You’ve already seen some products in the market and you’re going to see more products.”

LIGHT HITS

OVER 132,000 GM PICKUPS RECALLED FOR TAILGATE LATCH DEFECT

General Motors (GM) has recalled over 132,000 heavy-duty pickup trucks due to a defect in the tailgate’s electronic gaterelease switch, which may short-circuit and cause the tailgate to unlatch unexpectedly while the vehicle is in park.

The recall affects certain 2024 models of the Chevrolet Silverado HD 2500, 3500, and GMC Sierra HD 2500, 3500.

The National Highway Traffic Safety Administration (NHTSA) identified that water intrusion into the switch can lead to a short circuit, increasing the risk of the tailgate opening and potentially causing unsecured cargo to fall onto the road.

GM advises owners to ensure their tailgates are securely closed and latched before driving. Dealers will replace the exterior touchpad switch assemblies free of charge, and owner notification letters are expected to be mailed on January 13, 2025.

WIN ANNUAL CONFERENCE REGISTRATION NOW OPEN

Registration is now open for the 2025 WIN conference, according to a press release by the Women’s Industry Network.

The Women’s Industry Network (WIN) has announced that its 2025 annual conference, themed “Create Your Own Magic,” will be held from May 5 to 7 at the Hilton Orlando Lake Buena Vista – Disney Springs Area in Lake Buena Vista, Florida.

The conference will feature sessions with industry leaders sharing insights on AI, VR training, OE Standards, ADAS Calibration, and more. Attendees can also look forward to powerful breakout

sessions on elevating their professional brand, networking sessions, and an exciting welcome reception event at EPCOT.

Top Five Reasons to Attend the 2025 WIN Conference:

• Empowerment Through Networking & Mentorship

• Skills & Professional Development

• Advocacy for Women in the Industry

• Regain Focus

• Be Part of a Growing Community

Orlando, home to more than a dozen theme parks, including Walt Disney World and Universal Studios, offers the perfect setting to combine learning, leadership, and teambuilding with relaxing, dining, shopping, and cultural experiences.

NAPA AND UAF OFFER $50K IN SCHOLARSHIPS, INCLUDING FOR COLLISION REPAIR STUDENTS

NAPA has partnered with the University of the Aftermarket Foundation (UAF) to provide 20 scholarships for aspiring automotive students.

As part of this commitment, NAPA is awarding 15 $2,500 scholarships to individuals accepted or enrolled in a transportation technician program, along with five $2,500 scholarships specifically for women. This initiative aligns with NAPA’s dedication to developing young talent and addressing the ongoing technician shortage.

“With the technician shortage still impacting the industry, we understand the importance of nurturing individuals interested in a career in the automotive trades,” said Emily Schneider, senior director of marketing at NAPA. “These

scholarships are designed to celebrate emerging talent and create opportunities for those beginning or continuing their journey in technician education.”  Students can visit AutomotiveScholarships.com to complete a single application for multiple scholarships and view details of all available scholarships.

Eligibility Requirements:

• Applicants must be attending or accepted into one of the following:

• Any 2- or 4-year U.S. accredited college or university.

• Any ASE/NATEF-certified postsecondary automotive/heavy duty/ collision technician training program.

• Any licensed and accredited vocational school.

• Must have graduated from high school or received a GED education certificate.

For more information, reminders, and updates about the University of the Aftermarket Foundation scholarship program, interested parties can text their name and email address to 720-9032206. To learn more about the University of the Aftermarket Foundation, visit UofAFoundation.org.

NUMBERS

ARE YOU BUDGETING FOR TRAINING?

THERE APPEARS TO BE an increase in how much shop owners and operators invest their total sales into training in comparing responses to the last two annual FenderBender Industry Surveys.

The portion of people claiming they don't invest anything in training dropped by one percentage point. There are also some survey respondents saying they invest as much as 16% to 20%, whereas in 2023, no respondents said they invested that much. However, there are also slightly more people in 2024 claiming they have no set budget, although this still implies that they do invest in training.

WHAT PERCENTAGE OF YOUR BUSINESS’ TOTAL SALES DO YOU ALLOT FOR TRAINING INVESTMENTS?

0%: 5% 1-5%: 31% 6-10%: 16% 11-15%: 3% 16-20%: 3% 21% or more: 2%

I don't have a specific budget for training: 41%

WHY SHOULD YOU FINANCE YOUR NEXT EQUIPMENT ORDER?

By ABDULLA GAAFARELKHALIFA

BIG OR SMALL, everyone has to make a financial decision. Whether you want to buy an extra patty during lunch at your favorite burger joint, or you decide to replace an old lift at your shop, it all requires money.   Paul Knowlton, an automotive service and collision repair equipment sales executive from Huntington National Bank, sat down with FenderBender to discuss what separates bankers like him from the banker down the street when it comes to financing your equipment.

Editor’s Note: Paul Knowlton's answers in this interview are not necessarily those of Huntington National Bank.

HOW DID YOU GET INTO THE WORLD OF AUTOMOTIVE EQUIPMENT FINANCING?

"I started in banking back when I was on a bank scholarship, and they put me through college," Paul Knowlton said.

"I've been in banking my entire career, mostly on the lending side. About 30 years ago, I moved into the equipment finance world, where there's more niche and specialized lending."

WHAT ARE SOME THINGS A PERSON NEEDS TO ACQUIRE SERVICES LIKE YOURS?

Knowlton explained that they generally look for companies that have been in business for three or more years and have established some credit under the business name.

"We also consider the personal credit of the owner, looking for credit scores of 680 or higher," he said.

WHY SHOULD A SHOP OWNER GO THROUGH A BANK THAT SPECIALIZES IN SHOP EQUIPMENT FINANCING VERSUS A “REGULAR OLD BANK”?

"We're designed to be convenient and efficient, so what takes us hours may take days or weeks for your bank to respond to because they don't know,” Knowlton said. “We know the equipment, whether it's a measuring system or a welder, from something else on the sidewalk."

FROM YOUR SIDE, ARE THERE ANY MAJOR DIFFERENCES BETWEEN WORKING WITH A SINGLE SHOP OWNER OR AN MSO?

“There are some nuances, An MSO might be forming an entity every time it opens a new location, so it takes some industry

expertise on the finance side to know how to structure those deals and get them approved [for a loan].”

He explained that it’s difficult to finance a new business in the banking world, but with the right banker and knowledge that the financial services are being done for a pre-existing and an already expanded franchise, it makes the process easier.

WHAT ARE THE BENEFITS OF FINANCING EQUIPMENT VERSUS PAYING CASH?

Leasing can offer tax benefits. For example, for a $100,000 equipment capital lease, a three-year payment plan may be $3,000 per month. But the business may still be eligible to take a tax deduction for the full amount of the purchase price under Section 179 of the U.S. Internal Revenue Code for equipment purchased or financed during the tax year.

"You're able to maximize the tax benefits while minimizing the effect on working capital. It’s the lifeblood of the business.”

That working capital is needed for paying employees, and for rent for those who don’t own the building they operate out of.

Knowlton often hears, “I always pay cash,” but he believes it's not always the right decision. “Consider whether paying cash is the best decision at the time or whether spreading out the payments is better,” he advised.

ANY FINAL THOUGHTS OR ADVICE FOR SHOP OWNERS?

"Maximize the number of financing options you're considering whether it's cash, SBA [Small Business Administration loan], and such, to make the best business decision."

Fighting Labor Rate Suppression

Why do insurers push back so hard on just a $2-per-hour increase?

In the December column, we discussed the effect of adding one to four more hours to each estimate. This month, we discuss why insurers suppress labor rates, and some different tools we can use to combat this.

Let’s say, for example, in ABC Auto Body’s market most insurers pay $65 per hour for body and refinish labor with an average 40 estimate hours. How many dollars in labor sales is ABC collecting at an insurance-pay rate? $65 per hour X 40 estimate hours = $2,600. Let’s say in ABC’s market that most independent mechanical shops are charging $150 per hour. ABC also has several OEM certifications, new equipment, highly skilled/trained technicians with not only I-CAR Platinum, but specific OEM training, excellent customer service, and a first-class facility. What if ABC figured out they need to charge $130 per hour to achieve their business objectives no matter what repair process was needed (body, frame, mech, etc.)? The catch is they no longer add for not included operations like “safety inspections,” “corrosion protection,” “denib & buff,” “pickup & drop-off for sublet,” etc. Now instead of 40 average hours of labor per RO, they only charge 30. Sounds insane, right? Here’s the math: $130 per hour X 30 hours = $3,900.   By doubling their labor rate and cutting their average estimate hours by 25%, they still received a 50% labor dollars increase. Otherwise, $2,600 + $1,300 = 50% increase. Now we understand why insurers push back so hard to go up just $2 per hour.

The tools to fight this

1. Remember, if you download insurers’ estimates or accept an “Open Shop” assignment, their estimate rules/rates come with it. You MUST change their rates to your rates on every supplement, even on supplement three, four, and five. Make the insurer change it back. Also, along with downloading their “estimate rules,” you must watch out for their paint and clearcoat cap scams.

2. Let’s take, as an example, ABC Auto Body’s market. Insurers are still paying $65 per hour and ABC’s door rate is a whopping $67. What’s the most ABC will ever get? $67! What do you think would happen if ABC raises their door rates to, say, $90? They would soon realize not one customer-pay job would get pushback at $90 per hour. Consumers know $90 is still a pathetic rate for skilled labor in the US. They would even

find some insurers calling and stating, “We will not pay your $90 per hour but will only go to $72.” Their reply should be, “OK.” It’s a win for them, as its still $7 higher than they would have normally gotten.

3. I participate in Mike Anderson’s 20 groups, and he advises to focus on selling customer-pays. We used to avoid these jobs. With hidden damage, safety inspections and calibrations, the initial estimate could easily double and result in an upset customer. We found out that just educating the customer up front is where the gold is. At our door rates, we have had several $10-15k+ plus jobs. And what a win they are. Lately, insurers have been rapidly raising premiums, and consumers are scared.

4. As far as mechanical rates or the small (m 4.5) on the LH side of the labor time vs the big (M 4.5) on the RH side in CCC: Some insurers love to use the line from their 1980s playbook by stating, “We’re only paying body rate, because a body tech is likely changing the radiator and condenser.” The best way to handle this is to turn their logic back on them. “If we have our certified mechanic do bodywork, then you will pay mechanical rate to repair the fender, right?”

5. Insurers are very good at instilling fear in the shops that they cannot have any labor rate discussions. Here’s the deal, we can have limited discussions; we just can’t set any type of pricing (colluding) etc. Please consult your attorney first to confirm what you can and cannot talk about. FYI: Quite often, insurance executives talk with other insurance executives. Then the labor rate “surveys” are privy only to CCC/Audatex/Mitchell and insurers. I wish someone could explain to me how this is even legal.

6. Do you know what your “effective labor rate” is? If not, find out and track it monthly on a graph. Up is good; flat or down is bad. The effective rate is defined as an average of all your rates added up (body, ref., frame, mech, detail, structural, etc.).

7. Show your customers examples of other insurers paying a higher labor rate than their carrier when scheduling and why they will need to pay the difference at pickup.

8. Input your shop’s rates on www.laborratehero.com and use it to show insurers your market’s rates.

GREG LOBSIGER

Greg Lobsiger has owned Loren’s Body Shop in Bluffton, Indiana, for over 23 years. He has been a member of Mike Anderson’s groups for ten years and had extensive lean manufacturing training.

EMAIL: greg@lorensbodyshop.com

ARCHIVE: fenderbender.com/lobsiger

Is your parts department hampering your shop’s efficiency? Learn how an overhaul might supercharge your team’s productivity.

LIKE CLOCKWORK

By NOAH BROWN

Photography JOHN BAKER, BRYAN HARRELL, CODY RINAUDO

Any watch, whether it’s a cheap $20 plastic timepiece you get from a local dollar store or a $5,000 Citizen Eco-Drive One, is a complex machine made up of many small, intricate moving parts.

Each piece has a very specific purpose, and every other part around it is dependent on that one component performing its job. Some components, such as a subdial, have more central roles in making sure that the rest of the components sync up.

And, as anyone who has owned a quality watch before knows, if even one of those parts gets misaligned or otherwise out of line with the rest, the whole operation shuts down.

For some watches, all it requires is a new battery — 20 bucks and a little elbow grease, and it’s brand new. For others, though, it may need an entire overhaul, costing hundreds of dollars and taking weeks, if not months, to get back into tiptop shape.

You can likely see where this analogy is going: collision shops are very similar to the watches described above. Each technician and department in your shop is reliant on all the others doing their jobs correctly every time.

Bryan Harrell, president of Port City Collision in Wilmington, North Carolina, says that the parts department acts as the subdial in most collision shops.

“Nothing else can be done without the correct parts. It's extremely crucial that during the blueprint process and tear down that we create a perfect parts list,” Harrell says. “When the parts department functions efficiently, it allows the entire shop to run smoothly, leading to higher productivity and reduced cycle time.”

Unfortunately, if a parts department isn’t meeting expectations, it’s going to cost more than just a couple hundred bucks and a visit to your local jeweler to get it back up and running.

However, John Baker, director of operations for Wallace Collision Center in Bristol, Tennessee, says that making sure your parts department runs as smoothly is “mission critical,” and regardless of the expense, it’s well worth it to fix.

“I have always considered the parts department to be the heartbeat of our operation. If

The Heartbeat of the Operation

the

is

you're missing one part, that can completely stall a repair leading to delays in the repair,” Baker says. “That leads to poor customer satisfaction and a decrease in technician productivity, and that ultimately impacts the bottom line of our collision operation.”

Both Baker and Harrell, as well as Cody Rinaudo, general manager of Unique Collision Center in Gulfport, Mississippi, all recently went through a parts department overall process with Mike Anderson’s Collision Advice team. Though the overhaul was a major investment of time and money, all of them say it was well worth the cost, very noticeably improving the efficiency of their overall operations.

THE PROCESS

The first step in watch repair is to not only identify which component is causing the problem, but to also figure out how it’s affecting the rest of the timepiece. Similarly, Rinaudo says Mike Anderson’s parts overhaul process doesn't just focus on the parts department, but rather on where parts are and how they’re organized throughout every stage of the repair.

The process sorts parts into a Remove and Install group and a Repair and Replace group. R&I parts go into numbered buckets and are placed onto a jacket. Repair and Replace parts are sorted onto parts carts, which are put into organized corrals. The process is designed to make it apparent where every car in the shop is in the repair process. The goal is efficiency, but

Ensuring

parts department runs smoothly

“mission critical,” says John Baker, director of operations for Wallace Collision Center in Bristol, Tennessee.

shop cleanliness and organization are byproducts of that. The goal is efficiency, but organizing and cleaning up the shop are a big part of that, too.

“If I've got a car that's coming out of paint and going to reassembly, everyone knows where the parts carts are going to be in the paint shop slot,” Rinaudo says. “It's a very visual way to organize what parts are where and vehicles are in what phase of the process.”

For his shop, Rinaudo says a consultant for Mike Anderson’s team first came out to take a look at how the shop was currently organizing its parts, as well as what storage options and other equipment would be needed for the overhaul.

Once Mike Anderson’s full team came, they did a master class on 100-percent disassembly, disassembling every vehicle that was in the shop and building up each of the storage tubs and parts carts from the ground up. Rinaudo says it took his team of 17 people two full 8-hour days to go through the process, but he ventures a guess that it could take up to three or four days for some other shops.

Operational Efficiency

Rinaudo says part of that rigorous time commitment comes from the fact that you’re not just moving things around in your shop, but instead you’re changing the entire approach to how you process vehicles pre-repair.

“When you go through a process like Mike’s, what you're doing is putting in place the core of what you're going to follow, but it's not a one-and-done thing,” he

Creating a Perfect Parts List

Bryan Harrell, president of Port City Collision in Wilmington, North Carolina, says to achieve higher productivity and reduced cycle time, it’s crucial to create a perfect parts list. As part of the Parts Overhaul process, parts are sorted onto a Remove and Install cart and a Repair and Replace cart.

Cody Rinaudo, general manager of Unique Collision Center in Gulfport, Mississippi, Rinaudo says there’s a clear ROI in operational efficiency from conducting the Parts Overhaul process by Collision Advice.

says. “You’re learning the ideas of what you want to do and what you should be doing. If you're not refining it constantly, you're falling behind.”

THE CHALLENGES

Harrell says that his first meeting with Mike Anderson, which happened at a Collision Advice conference in Nashville, Tennessee, didn’t go quite as he had envisioned it.

“To be honest, I left pissed off with my tail between my legs,” Harrell says. “The truth hurts, man. I've been in this business all my life, and it only took a few days to find out I knew half of what I thought I knew.”

Hearing that his shop wasn’t doing everything it should be doing was hard to hear, but after a phone call with Anderson a few days after the conference to talk more in-depth about how his shop could improve, Harrell says he was ready to take on the challenge of undergoing the overhaul.

The first step in that process was making sure that his team was on board.

“Your team has to understand the big picture, and it’s your job to make sure they see that and that you’re committed to the change. Throughout the process, I had to learn how to communicate better so they could see what I see and that's something. You have to do things with your team, not to your team.”

Harrell says from his technicians’ perspective, he was bringing in a drastically new way of doing things that was going to require a lot of learning. If they can’t also see what the payoff for such a big change

will be, it’s going to be hard to get them on board.

Rinaudo says the best way to get that buyin is to have a strong explanation not only of what you’re doing, but why you’re doing it now and why investing the amount of time energy and resources into this kind of overhaul is absolutely necessary.

“People need to have an open mind to change. Some people may be stuck in the way that they've been doing it for the last 20 years,” Rinaudo says. “Cars today aren't like they were back then. They're rapidly increasing in complexity, and our processes need to change to accommodate. The one constant is change, and if you don't change, you die in this industry.”

THE RESULTS

After his shop went through the process, Baker says some of the improvements were noticeable almost immediately.

“We no longer had a sea of boxes of parts and a sea of parts carts throughout the collision center,” he says. “Everything's a lot more organized now; there's certainly a method to the madness.”

In addition to the visible differences, he says it’s also helped alleviate his technicians’ frustrations that were caused by waiting on parts or having the wrong parts in the shop for a specific repair.

“It's been a huge win for our team's culture as well as our bottom line since going through this workshop,” he says. “Our collision center is operating at the highest level it ever has.”

Rinaudo says that while the process, whether you work with Mike Anderson or another consultant, is going to require a large investment, that there’s a pretty clear ROI if you think about it.

“It's costly. You're talking about at least two full days with Mike and his team,” he says. “But there's a massive return just in the pure efficiency of what you're doing. It's pretty simple math to see how that improved efficiency will help you move more vehicles through your shop.”

Harrell says his shop, like many others, fell victim to the habits and processes of his predecessors. It’s easy to do things the way you’ve always done them. However, he says shop owners have a responsibility not only to themselves but to their employees and future generations as well to make sure that they’re putting in the effort necessary to keep improving the industry.

“Mike Anderson talks about leaving the industry in a better place than when you found it,” he says. “Doing this process is one of the most vital things that we can do as an industry, to improve the business and the throughput, which also legitimizes everything that we do.”

Though it’s a lot of work, Harrell says he and his team think going through the overhaul process is “100 percent worth it,” and that any shop out there can get their parts department running like clockwork.

“There's nothing special that we did,” he says. “We’re just putting things that we learned into practice, and we’ve got a team of people that's totally committed to the outcome. That’s all you need.”

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FROM HUMBLE BEGINNINGS KINGS OF THE VALLEY

Brandon Photianos and Mike Oh built a booming DRP business across Southern California from the ground up.

By LINDSEY GAINER

MARIO FIMBREZ, VALLEY OAK PHOTOGRAPHY

Photos

HUMBLE TO THE

Rapper Drake made famous lyrics about starting from the bottom but now having reached success through the efforts of his team.

But Brandon Photianos and his business partner Mike Oh are living them every day.

After working their way up through the mechanic and collision repair side of the industry from young ages, Oh and Photianos started MB Collision in 2007 in an 8,000-square-foot shop in Thousand Palms, California. As a DRP-heavy business, MB focuses on expanding into areas where their key account and OEM partners need them most, and it’s an expansion model that’s proven extremely successful for them.

Growth was slow and steady at first, with the duo operating four shops between 2007 and 2022. In the last two years, however, expansion has been fast and furious — the team has acquired four additional shops simultaneously throughout the San Fernando Valley, bringing the current total to seven (after one of the first shops was recently sold). And they don’t plan to stop there; expansion is set to continue in 2025.

“We're really focused on growing in the Los Angeles market with our insurance companies; 2025 will be all about expanding in L.A., 100%,” Photianos says.

STRATEGIC PARTNERSHIPS AND CALCULATED MOVES

When it comes to DRPs, you don’t want to partner with just anyone, Photianos warns. You have to be selective about who you enter into business with, to ensure it’s advantageous for both parties.

Once you identify these “key accounts,” focus on their needs and how you can help meet them, he advises — especially when it’s time to consider expansion.

A great way to do this, he says, is to study “heat maps” from your paint company.

“The big question is…where’s the work and what type of work is there? Heat maps answer those questions by showing how much potential work there is in any given ZIP code. The paint companies use it to stock their inventory, because it shows every manufacturer and car that is living in those ZIP codes. For

collision shops, it basically gives us the net worth of potential work.”

From there, Photianos says, consider population, number of competitors, and whether you can obtain the manufacturer certifications that make sense for the area based on the data. Then, approach your insurance partners and let them know what you’re thinking. Do the homework ahead of time, he says, and give them all the answers up front to make it easy for them. It’s a lot of research, admittedly, but it pays off in a big way.

“Find the places that aren’t saturated… that's the key.”

That, and investing heavily in OEM certifications.

At minimum, every MB Collision location carries Collision Performance Network certifications, in addition to whatever additional certifications make sense for the market it’s in. As a whole, the business either has or is in the final audit stages of having certifications for nearly 15 manufacturers, including BMW, Mercedes (Elite), Honda/Acura, Toyota, Ford, Hyundai, Kia, Fiat, Nissan, Infiniti, Genesis, Chrysler, Jeep, and Dodge, as well as certifications to fix semis and RVs at their new location in Chatsworth. They’re also actively working on EV certification.

“Certifications don’t just get you more business from an insurance partner, they’re also ‘badges of honor’ for your employees,” Photianos says. “That’s another reason we invest a lot in certifications and training; it’s an investment in our team."

TEAM BEFORE ALL

A true “family-owned” business, it’s the people associated with MB Collision who truly matter to Oh and Photianos.

“We only have two sides in this business… we have employees and customers,” Photianos says. “That's it.”

Without their customers and employees, jokes Photianos, “We’re just two guys with giant, empty warehouses and lots of expensive equipment.”

But in all seriousness, he says, MB Collision would be “nothing” without the people working for him, and the customers who entrust their business to them. Most of his and Oh’s energy and time, he says, is focused on keeping those two groups of people happy.

The company boasts an incredibly low turnover rate and lifetime employees,

thanks to the effort Oh and Photianos put into treating the team like family. It’s simple, Photianos says: be loyal to your employees and they’ll be loyal to you.

“We’re not the corporate people but we are the corporate people, if you know what I mean,” he says. “We’re that in between. No one who works for me is just a number. They’re all incredibly important to the success of this business; without them, we wouldn’t have MB Collision.”

Having worked in body shops since he was 18 years old, Photianos says he knows a thing or two about being treated like “just a number,” and it was a top priority for him that none of his employees ever felt that way when he opened his own shop.

“I wanted to create something different, something out of the ordinary.”

Photianos says his staff knows they can call him or Oh directly anytime, about anything, and “Everyone in the shop knows how to do everyone else’s job.” Photianos doesn’t like titles, so no one really has them. The team just works together to get the job done, regardless of their role in the process.

And while there’s plenty of accountability, there’s also a lot of grace at MB Collision. When someone messes up, says Photianos, they learn from the mistake and move on to do better next time. No one in management is in the business of pointing fingers.

“We’re in this together. It's not about what you've done in the past…it's about what you're doing right now. That’s all that matters. You learn and move on. Accidents happen; that’s why we’re in this industry, right?”

PERSONALIZED SERVICE

Employees aren’t the only ones who are more than just a number at MB Collision; customers are treated with the utmost respect and appreciation, too.

“Our customers are not just an RO number on a file. Our customers mean the world to us. Without them, again, we just have a box with some fancy equipment inside of it.”

Customer expectations have vastly changed over the years, admits Photianos, and he understands how important it is to stay nimble and adjust processes to live up to those expectations. It’s all about making the customer’s life as easy as possible

A Family Business

Much of the owners’ time is focused on keeping employees happy.

these days, because that’s what people have come to expect.

“Being available for customers to drop off and pick up outside of normal business hours, keeping our customers properly informed, setting proper expectations, and delivering on those commitments is key,” he shared. Take Amazon as the perfect example, he continued. “Five years ago, things took weeks to get to you. Now you can get same-day delivery pretty much anywhere.” That kind of evolution to meet customers’ needs is what MB Collision wants to emulate.

INSURANCE MADE EASY

Thanks to the cumulative experience and expertise of MB Collision’s leadership team within the insurance sector, Photianos says, the shops have been able to streamline their SOPs to expedite the repair process.

“We have a strong leadership team led by ex-insurance professionals with 25+ years of experience managing, overseeing, and growing DRP shops, to help us eliminate the backand-forth with insurance companies. So we can really focus on providing quality repairs and industry-leading customer service. I would put my leadership team up there with anyone else in the industry. Their collective unique experience is going to play a key role in MB's growth in the years to come.”

A continual focus on providing support and training dedicated to the insurance companies’ KPIs helps the team keep up with the ever-evolving industry, too.

And speaking of the ever-evolving industry…

FLEXING FOR THE FUTURE

New technology — whether it’s attached to a car, being used to simplify shop processes or new equipment, or even digital marketing — is embraced with open arms at MB Collision. The team, Photianos says, is focused on creating a lean, seamless repair process and leveraging AI capabilities to increase efficiency.

The company’s estimating software is a great example.

“With CCC One’s estimating software, we’re able to digitally generate an estimate in about 10 seconds. Now that’s not a full and complete estimate, obviously, but it’s a tool to get the process started and save time.”

Things are moving and changing so fast, says Photianos, that you have to embrace

Personalized Service

As customer expectations have vastly changed over the years, MB strives to stay nimble to live up to those expectations.

novel technology and continue learning and training or you'll fall behind.

“The industry is evolving, and we have to evolve with the times, too. That's one of our key things: continue training, keep everything up to date, and make sure we're ahead of the curve. It's going to be something new tomorrow and something new the next day; you just have to learn to roll with it.”

Digital marketing, he says, is no different.

“You have to do TikTok, Instagram, Facebook, and LinkedIn; we need all that stuff. You have to these days.” TikTok and Instagram, especially, says Photianos, are the wave of the future and have proven very successful for MB Collision...thanks in large part, no doubt, to the team’s French bulldogs (both owned and fostered) who regularly grace the page in their tiny, neon green Lamborghini.

If you’re feeling lost and overwhelmed by it all? “Hire people that know how to do it…that’s what you do. It’s too important to be ignored.”

THE ROAD AHEAD

As the business continues to grow in 2025 and beyond, Photianos and his team will keep operating the way they always have, with people as the company’s number-one priority, giving back to the community and industry through participation in organizations like the California Autobody Association, I-CAR Committee, Collision Industry Conference’s Repair Process and Procedures Committee, Roadogs Southern California Dog Rescue (look for more Lambo passengers soon @mb_collisiongroup), and the National Auto Body Council’s Recycled Rides, for which the team is currently working on six cars.

“Build a family around you, people you can trust,” says Photianos. “Once you have that, the sky's the limit. I have no fear of anything. I can open anything and move it forward tomorrow because I have the people behind me. I couldn’t do any of this on my own.”

Editor’s note: At the time of publication, the fate of TikTok in the U.S. is unknown. This interview was conducted before the Dec. 6 decision by the U.S. Court of Appeals for the District of Columbia Circuit’s denial of TikTok’s petition to overturn a law which would require TikTok to break away from its China-based parent company ByteDance or be banned by mid-January.

STRATEGY

THE SOP

NEW YEAR, NEW MARKETING PLAN

Start 2025 off on the right foot with a solid digital marketing plan for your business.

THE NEW YEAR is all about resolutions. Losing extra weight. Breaking bad habits. Saving more money. It’s the perfect time to evaluate your life and look for changes you want to make — and that includes changes and improvements in your business.

One of the most important things to take stock of in the new year, says Daniel Burkholder, owner of BodyShop Marketing, is your digital marketing strategy. Few things in your business have the kind of far-reaching ripple effects on your profitability and growth potential, he says, and there’s no better time to start than now.

As told to LINDSEY GAINER

Define Your Goals

The first thing to consider is where you are and where you’d like to go over the next 12-24 months. We’re talking things like revenue, car count, the value of your average RO, ef-

ficiencies, sales closing ratios, customer experience, capture rate…everything.

In addition to thinking about your goals, ask yourself questions like:

• Who is my biggest competition? How are they marketing?

• What sort of population am I working with? Is my shop in a small or large market?

• Where does my workflow come from? What percentage are DRPs? Fleet? Referral? Independent?

• Do I need more work immediately? Or is slow growth an option for me?

• Can my shop support growth? Are my facility and staff equipped for more volume?

Thinking through the answers to these questions is important to find a starting point for your digital marketing plan. A great marketing strategy takes time to build… six to 12 months, on average, so the sooner you start, the better.

If you’re plenty busy at the moment — say, for example, 90% of your work comes from DRPs and that’s the way you like it — you might not have much need for new business right this second. In that case, you may want to focus on building your shop’s brand recognition through social media and local SEO efforts — things that take time to build, but are hugely important in the long run.

An independent shop that needs more customers immediately, on the other hand, might want to consider paid advertising, which puts you front and center with potential customers actively searching for a repair shop now.

Consider Your Options

You’ve completed a thorough evaluation… now it’s time to plan. There are plenty of “tools in the digital marketing toolbox,” so to speak, and the ones that can bring you the best return are largely dependent on your unique goals and budget.

Here’s a high-level overview of different digital marketing options, and who they might work well for:

• Social media: Facebook, Instagram, YouTube, TikTok, and X are all examples. This orks great for brand building and maintaining a presence in the community. Every shop, regardless of their marketing goals, should be active on social media.

• Local SEO: Optimizing your website and digital business listings and gathering online reviews will help your shop rank organically for keyword phrases that people are searching for in your city. This is a long-term strategy that, again, is important for all shops.

• Geofencing: Allows you to target ads to customers in a specific geographic area — for example, when someone is near your competitors’ shops, or they’re within a several mile radius of your shop. It’s great for businesses who want to target their marketing dollars in a very specific way.

• Social media paid ads: Ads on social media platforms can keep your shop top of mind where people spend a significant amount of time online.

• Pay-per-click (PPC) advertising: Paying for an ad through a search engine — a Google ad, for example — is considered PPC. PPC ads are highly effective because people see them in the exact moment they’re performing a search for an auto body shop — you’re meeting them in their exact moment of need. This is great for shops who need business quickly while they wait for longgame efforts (like social media and local SEO) to gain traction.

A shop with ambitious sales goals, for example, would likely want to utilize a combination of local SEO, PPC, and geofencing to reach as many people as possible. A shop that’s well-established and busy may just

want to focus on one effort — like building their local SEO — to keep their shop ranking well in search.

And now for the question on everyone’s mind…how much will this cost you? Generally speaking, a shop’s recommended marketing budget can often be determined based on growth goals and a percentage of annual revenue:

• 5% – maintain market share

• 6%-15% – moderate growth

• 15%+ – aggressive growth

Anywhere between $2K-$5K per month is a reasonable estimate — but this all depends on your goals, size, competition, and many other variables.

A Step-By-Step Guide to Get Started

Depending on how much you want to do, digital marketing efforts can take up quite a bit of your valuable time. Many shops turn to professional services to help manage their marketing plans. But if you’re more of a DIYer, there are plenty of things you can do on your own, especially in the beginning as you get started.

1. First, determine your goals.

2. Next, dive into research. Figure out what people around you are searching for online when they’re looking for a shop, and how many of those searchers are finding you. Google has a free tool called Keyword Planner you can use to get started and track popular searches. To see your website statistics and learn how many visitors you’re getting each month and where they’re coming from, you can monitor your site with Google Analytics and Google Search Console, which again are free tools that you can access with a quick Google search. Keep this information top of mind as you move through the next steps.

3. Start posting on Facebook consistently at least three times per week.

4. Leverage your shop’s Google Business Profile (GBP) — that’s the profile that pops up on a search results page when someone searches for your shop — to its max.

• Request 5-star reviews from EVERY happy customer, and then be sure to reply to every review.

• Post updates to your GBP a few times a week, and include a photo and a paragraph that includes keyword phrases (the ones you researched above).

• Use the Q&A section to ask and answer questions relevant to the collision industry.

• Upload new photos of your shop, work, employees, and customers a few times per month.

5. Build a simple website — preferably on WordPress — and optimize it for your keyword phrases.

6. Get your shop’s info onto as many free online directories as possible (making sure your name, address, and phone number are correct) — places like BBB, Yelp, Google, Apple maps, and YP (Yellow Pages). This helps with your local SEO strategy.

Finally, make sure all of this hard work is paying off by following up with every new lead and closing the sale. And don’t give up too quickly; you’ll need to stick with these efforts long term to see results!

Evaluating Effectiveness

With consistent effort and a solid plan, you should gain traction and really start to see your efforts paying off in around six to 12 months. You should see more traffic to your website, and more sales and new customers coming into the shop. Be sure to track where every job comes from — ask all your customers how they’re finding you and make decisions on how to adjust your efforts based on their answers.

DIMINISHING THE HEADACHE OF

DIMINISHED

VALUE

Your customer may be entitled to recovery of diminished value after a loss. Here’s how to help.

By TODD KORTEMEIER

YOUR SHOP STRIVES to communicate and educate the customer. You fix cars every day, but the average driver in the United States will experience only three or four accidents in their lifetime. But some aspects of a repair don’t present themselves right away.

“ALL INSURERS I’VE EVER TALKED TO DO NOT TELL CLAIMANTS THEY’RE ENTITLED TO DIMINISHED VALUE.”

—Mitch Buhr, owner, Nexus Claims Services LLC

Picture this shocking scenario for your customer. Your shop has done its job; you’ve followed all the proper procedures, restored the vehicle perfectly to pre-accident condition, and sent your satisfied customer on their way. But years down the road, when your customer goes to sell that vehicle, they’re told that because it was in an accident, it’s worth less than it should be. Your shop did nothing wrong. But maybe a bit of education could’ve saved that customer money and enhanced your shop’s reputation.

What this hypothetical customer has run afoul of is called diminished value, and it can cut thousands of dollars off a vehicle’s sale price just for popping up on a Carfax report. Recouping the diminished value is ultimately between the customer and their insurance company. But helping the customer at the time of loss, as opposed to at the time of resale, is advantageous.

“There’s so much they can lose out on if their vehicle gets damaged and they go to trade again,” says Mitch Buhr, who as owner of Nexus Claims Services LLC helps people with diminished value claims every day. “Without that additional money from the diminished value, they might not even to have the money to be able to pay off their vehicle or cover the whole trade-in without that additional money being on top of it.”

Buhr takes a hands-on role in assisting clients, personally handling negotiations

with the insurance company and utilizing his experience working in a body shop to help get people the help they need. But Buhr’s approach is not the only solution to this problem. Jeff Zigman’s TRUEclaims platform seeks to remove some of the manual work, generating electronic reports in just minutes that can be effective tools in the negotiation process.

“TRUEclaims makes it so that a diminished value report and/or a fair market value report can be produced in two to five minutes, equivalent to — I’ve heard from numerous appraisers — two to four hours of manual work,” says Zigman, a tech entrepreneur who has designed or led the development of more than 300 software systems.

FenderBender spoke to both Buhr and Zigman about how they come at this problem from different angles — and where body shops fit in.

“What’s

in it for me?”

Buhr began working in a body shop in 1994, and even back then it was clear to him that insurance companies were not giving claimants complete information. He started Nexus Claims Services a bit more than four years ago, and today he helps clients with not only diminished value claims but also total losses and associated claims. And he still is fighting an education gap.

“All insurance companies I’ve ever talked to do not tell any of the claimants that they’re entitled to diminished value,” Buhr says, “which I personally think that’s wrong, myself. Unfortunately, the average Joe in the public doesn’t know things like that.”

Buhr says he gets most of his clients referred to him through body shops, and for obvious reasons. Most people don’t know this is something that exists until it happens to them. That’s where the body shop can be such a valuable resource.

“Some of the shops reply with, ‘OK, but what’s in it for me?’” Buhr says. “And that’s pretty easy. I mean, you try to help your customer out to where they can actually recuperate more money that’s deserved to them.”

Nexus Claims has produced its own documentation and metrics to produce reports that outline the basis for a claim. Consider things like lost certifications — as for some manufacturers, an accident means that vehicle can no longer hold certified pre-owned status, which of course affects the resale value. That’s worth a certain percentage, and spreadsheet tallies all that up, and that becomes the starting point for the negotiation with the insurance company. How that goes varies a lot, but it’s rarely easy.

“Each insurance company has a different way of looking at it,” Buhr says. “Some of them, it’s a fight, other ones — I did one

today that was fairly easy, I spoke with a gentleman from the insurance company, was very knowledgeable, and he was able to see my point of view on it, and we were able to come to a really good agreement. But that’s a rarity.”

Buhr would like to see more body shops be proactive in communicating with customers. His consultations are always free, he says, meaning it costs customers nothing to become more informed. But they need to know what services there are to assist them.

“My discussion with (body shops) is, every claimant that they have, they need to send to me to talk to about diminished value,” says Buhr. “Whether they’re able to get it or not, it’s still something that we can educate them on.”

“More word of mouth”

As a CTO and tech entrepreneur for the past 11 years, Jeff Zigman has led his share of multimillion dollar enterprise software projects. But what tops all of those in complexity, he says, was developing the TRUEclaims platform. Zigman met with

an appraiser in the summer of 2023 who told Zigman that he had spent 15 years and hired 19 different software companies to try to develop an automated process for diminished value and fair market value reports. Most said it couldn’t be done, and one said it would cost $1 million just to find out.

“I built a first version of a fair market value report by around one and a half months after that,” Zigman says. “…Then I repurposed it for a diminished value report made for attorneys. Then I built a different module made for appraisers. I also created a way that body shops could help their clients with an intake process that feeds it in so the attorneys can take on the diminished value claim.”

It is likely for reasons of complexity that expert adjusters like Buhr are still in demand, and TRUEclaims has no competitors, that Zigman is aware of. His platform is in use so far by more than 20 body shops, but by many more adjusters and attorneys. Individual claimants can also start their claim on the TRUEclaims website, taking just minutes to submit their information, which then gets sent to an appraiser, who

generates a report that the claimant can take to their insurance company.

“It creates eight- to 20-page reports, with an extensive comparable vehicles analysis, using more than 30 data points and doing over 60 calculations, showing all of the numbers in the report clearly,” Zigman says.

Zigman reports that while there is more of a track record of success with total loss claims submitted through TRUEclaims, the early indicators show a large number of successes, with one claim settling on the amount the appraiser asked for, more than $32,000. That’s a great sign that the platform is accurate in replicating a process that takes hours manually. However it gets done, both Buhr and Zigman agree that when the customer is more educated, the body shop wins.

“I imagine they might get more good reviews and happy customers, leading to more word of mouth,” Zigman says.

“They’re going to remember that the next accident they have,” Buhr says. “Or, the next person they know who has an accident, they’re going to send them to your shop.”

TETIANA LAZUNOVA / ISTOCK / GETTY IMAGES PLUS

PLANNING FOR SUCCESS IN 2025

Create a budget and CapEx plan for 2025 and beyond.

By STEVE TRAPP

WE HAVE ALL HEARD THE SAYING, “Don’t just work IN your business; you need to invest time working ON the business.” As the new year begins, it’s time to work ON the business to plan for the year. In this article, we will outline some things including creating a budget and CapEx plan to help you plan for success in 2025 and beyond.

In preparation for this exercise, we suggest joining an industry performance group to get access to current benchmarked KPIs to better prepare you to build a budget. These groups provide a networking opportunity to learn from others who have been successful and have tried the process improvements necessary to achieve best-in-class performance.

As you start the budget process, you will first want to determine which members of your staff (and advisory group) you want to include in this budgeting process. Then, you may want to invest time during the meeting reviewing how an income statement and cash flow is best understood so that everyone understands the KPIs you want to focus on. Remember the “Rule of Three (focus areas)” and focus on one (lead one project at a time). Let’s get started budgeting!

Completing the Budget

Start by creating a spreadsheet like the one below to enter your historical values for each of the KPIs and then invest the time to adjust as necessary to follow all the steps described in this article. Remember, budgeters think like economists and round numbers, so don’t fret the decimal points. You’re looking for areas of focus. NOTE: Blue cells are where you enter the data.

Projecting Sales

First, project your annual sales by taking the number of vehicles repaired per year times the average RO # (Figure 1). Many successful companies strive to grow 10% per year, which represents 3% inflation

(average RO growth) and 7% real growth (in number of vehicles repaired).

Next, we spread that projected annualized sales over the 12 months. To do this, we look at what percentage of the annual total sales we closed each month of the previous year or years. Then, distribute the annual goal via 12 monthly goals), considering seasonality. NOTE: These values need to add up to 100% of the projected sales.

Sales Sourcing

Once you set an overall sales goal, it is helpful to look at your referral or sales sources and project with whom you expect to grow the number of repairs and with whom you might back off a bit (due to profitability or service requirements) and then create a formal marketing plan with a projected dollar spend to attract the work you have projected per source (See Figure 2).

Projecting Sales Mix

Next on the budget sheet (Figure 1), enter your current or targeted per department sales mix. Your strategy to either focus on selling more repairs (versus replacing parts) will depend upon whether your shop has production capacity or has backlog over two months. We suggest shops with less than six weeks of backlog continue to repair to sell more labor to optimize higher labor gross margins and if you’re a DRP-oriented shop, your scorecard results should be better.

Projecting Gross Profit or Vehicle Related Costs

Next, go to the gross profit % section (Figure 1) and enter historical or projected values. When it comes to gross margin, you want to look at your weighted gross profit overall – we often use 45-50% overall gross profit as a target. Play around with the sales mix and your per departmental gross profit to achieve the optimal gross profit percentage. Then, the hard part begins, implementing the process improvements to achieve these results.

Don’t just assume these changes can be easily made; engage your staff to gain buy-in for the process improvements necessary to achieve the improved results.

Staffing Planning

As you evaluate your sales, you need to determine the (journeyman to apprentice or office support) staffing plan for the next year to achieve the sales and GP % results projected. If you need to attract new staff, you may need to ask yourself, “Am I the employer of choice?” and, “Do we have a positive culture to retain our staff?” Therefore, we need to budget education in your overhead budget for solid hiring, training and development costs, and incentives for our current staff to retain them.

Projecting Overhead

Next you will want to look in the budget (Figure 1) and review your current overhead expenses as a % of sales, and either enter that percentage or adjust by a percentage to take advantage of improved projected sales. Remember, overhead expenses are all expenses NOT directly related to a specific vehicle. Here is an example…

IT expense of $30,000 / $3,000,000 total sales = 1% of sales if sales grow total sales to $4,000,000 (assuming you don’t need more “seats”), this overhead expense is reduced to .75% and the result is .25% more net!

Look closely at the General Journal at month/ year-end to see where you’re investing your overhead and consider plans to keep these expenses at or below 30-32% of Sales. Again, involve the staff to help you get ideas on where to possibly invest more wisely or save money.

Projecting Operating / Net Profits

Next look at the bottom of the budget sheet (Figure 1) to see if we have achieved the operating profit target we have set after we have grown sales, achieved the sales mix planned,

optimized GP %, and optimized overhead expenses. Now is the time to see to what degree we have improved the operating and net profit with a target of 15-20%+.

CapEx Planning

Due to space limitiations, please refer to the online article in the link/QR code on the first page for a sample capital expenditure plan.

While some of these maintenance, facilities or capital expenses can be budgeted as expenses, it’s valuable to look at a CapEx planning tool like the one shown to plan for these expenses, replacements or upgrades (especially related to OEM procedures).

Further, you need to plan for building maintenance on the signage, awning, lot, roofs, interior paint, lighting, pre-deck, booth, HVAC, and so much more. Planning to gradually replace these things in a logical timeline can prevent surprises to your cash flow. This plan needs to be refreshed annually, and cash allocated, and expense projected in overhead expenses.

NOTE: We intentionally separated rent from the other overhead to allow for benchmarking which is not clouded by tax avoidance

strategies relative to rent and vehicle/equipment companies with different fiscal periods.

Projecting Growth in Cash Flow

Too many inexperienced financial managers forget that net income is NOT cash flow. Cash flow needs to consider principal on loans or payments towards capital leases.

Near the bottom of the budget sheet (Figure 1), we estimate cash flow by considering net income, principle payments, limitation of AR, managing AP, and limiting WIP and physical inventory has a direct impact on the cash flow which can be used to pay for facility updates, expansion, setting up a PDR, glass, mechanical / ADAS business or even acquisition and short term can be invested in money markets while the business finds the best ways to invest these funds.

Steps to Implement the Plan

Once the plan is refined and distributed, you want to gamify the results, by putting up scoreboards (sales $, GP %, cycle time, closing ratio, etc...) and meeting with the staff to perform a pulse check on the 10th of the

month, the 20th of the month, and last day of the month to make sure you are on track towards the month-end goal. We will do an article on this topic at a later date.

Month-end Review

Finally, we suggest you (and senior leaders) invest one hour per month reviewing your financials and comparing them to this monthly budget. The good news is that many accounting systems allow you to enter these budget values and the accounting system will create a budget variance report to focus your improvement efforts.

During this review, you will certainly also want to review gross profit reports (look at the notes screen for any ROs below 45% to see why), cycle time reports, sales sourcing, closing ratio, employee efficiency reports, and others...

Further, don’t forget to review your balance sheet to see the impact WIP, AR, AP and other things are affecting your cash flow to ensure you are on track to achieve the growth in cash flow you projected.

Good luck with your planning for 2025!

Reflecting, Resetting, and Improving

Focus on the year ahead so your shop continues to thrive.

As I head into the new year, I always find it a good time to take a step back and reflect on the past year in the shop. I usually aim to do this in December, but with the hustle and bustle of the holiday season, it often gets pushed aside. Instead of stressing about missing that target, I’ve made it a habit to evaluate everything in January. Amid running the shop and handling the constant frustrations that insurance companies throw our way, it's easy to overlook key areas of our business. Many shops focus on things like paint discounts because they’re often being solicited by vendors, but when was the last time you took a comprehensive look at your business as a whole?

Reviewing Vendor Relationships and Discounts

One area I always revisit at the start of the year is my relationships with parts vendors. Over the last year, I’ve noticed a trend where discounts on parts slowly drop from 40% to 38% or even 36%, only to bounce back and forth, gradually settling at the lower rate. It’s as if the vendors are hoping we don’t catch the fluctuation and change. To avoid this, I track these changes closely and call vendors out when I see it happening. I also pull my invoices at the beginning of the year to compare spending with previous years. This helps me assess whether our purchasing volume is increasing, decreasing, or staying the same. If my purchases are steady and my discount is average, I’ll use this data to negotiate a better deal. After all, I’m a loyal customer who always pays on time, and that loyalty should be rewarded. If I’ve been buying more, I don’t hesitate to push for a better discount and contact the parts manager directly. Along with looking at discounts, I also evaluate delivery speed, return processes, and order accuracy. This is a good time to explore other vendors who may offer better terms, and I’ll reach out to negotiate with them if necessary.

Fleet Accounts and Referral Partners

Another key area I review annually is my fleet accounts and referral partners. These accounts play a significant role in our business, so it’s important to evaluate how frequently they’re sending us work and whether we’re maintaining good relationships with them. Some of my larger fleet accounts receive special rates due to the volume of business they provide. I’ll assess whether these rates are still valid, especially if the volume of work has decreased. If needed, I’ll raise the rates accordingly. For referral partners, I review what we’re doing for them to ensure the relationship is mutually beneficial.

Am I offering meaningful incentives for their referrals, such as discounted repairs or a free service like headlight restoration? Do we show appreciation with small gifts or gestures of gratitude? I also evaluate how often they refer customers and how we can keep those referrals coming in. Each referral partner should be treated uniquely, so I tailor my approach depending on the value they bring to our business.

Standard Operating Procedures (SOPs)

I also take the time each year to review our shop's standard operating procedures (SOPs), especially for capturing the keys. Are we following the procedures as outlined, or have employees made changes? If there have been tweaks, are they improvements we should adopt to save time and resources, or should we revert to the original processes? Efficiency in operations improves customer service, and ultimately, more profitability.

Reviewing the Budget and Financial Efficiency

Reviewing my budget is another crucial part of the annual reset. I constantly look to cut costs and improve financial efficiency. One of the best decisions we made a few years ago was to pay our charge accounts with a cashback credit card. This earned us between $35,000 and $50,000 annually, a great boost to our bottom line. However, this year, we saw some companies start charging a surcharge for credit card payments. To offset this, we’ve had to switch back to paying some accounts with checks, as the cashback reward was no longer worth the surcharge.

The Big Picture: A Comprehensive Reset

The point of this annual reset is to review everything in the shop and identify areas that need attention or improvement. Even if things seem to be running smoothly, there’s always something that can be improved upon. It’s easy to become complacent and turn a blind eye to issues that are affecting efficiency, customer service, or profitability. By taking the time to do a comprehensive review of your shop’s operations, you’re not only identifying areas for improvement but also ensuring that you stay proactive rather than reactive to challenges. Remember, you don’t know what you don’t know, and by conducting this review, you can prevent blind spots from damaging your business in the long run. Doing so will help you avoid letting pride or ego get in the way of growth and success. A little humility and self-assessment go a long way, and with a clear focus on the year ahead, you can ensure that your shop continues to thrive.

How Increasing Insurance Rates Impact Us

By strategically adapting, we can better serve our customers and maintain our business’ health.

Insurance rates are on the rise, and for many consumers, this trend brings added financial stress and anxiety. The collision repair industry, already navigating an unpredictable economic climate, faces new challenges as “business as usual” becomes more difficult. Understanding these dynamics and making strategic adjustments will be crucial for us as owners over the next few years.

Financial Pressure and Anxiety

It is no secret consumers are feeling the pinch. Increased insurance rates add to their financial burdens, leaving many anxious about their financial future. This growing concern means that our shops must be more sensitive to our customers' financial constraints and look for ways to ease the burden, all while educating consumers about your repair standards and safety. Consumers need to understand the importance of comprehensive repairs and why prioritizing quality over cost can save them in the long run. However, as industry professionals we have to provide clear, accessible resources that highlight these critical points for both our teams to communicate them and for consumers to digest them.

The New Norm for Payments

Gone are the days when consumers could rely heavily on deductibles. Today’s vehicle repair standards often necessitate payments beyond these deductibles. Our shops must help consumers validate and prioritize these payments, ensuring their vehicles are repaired to the highest safety standards rather than any “budget” or “allowance.”

Cost-control Measures

We need to implement more stringent costcontrol measures to help offset the impact of increasing insurance rates. By doing so, they can maintain competitive pricing without compromising the quality of repairs. It's inevitable that you'll give something away somewhere on your journey as a shop owner. Maybe it's on a caseby-case circumstance or obligation to a previous business decision by you or your team to incentivize a third party in exchange for work. Regardless, what I'm saying is if we continue to

give, give, give while predatorial business behavior chews at our overall gross profits, then plan to retire early. To protect our businesses from falling victim to not regularly controlling these costs, we should be:

• Regularly review and optimize operational costs: Rent, payroll processing, material, software, etc.

• Negotiate better terms with suppliers and vendors by leveraging consolidated buying power

• Invest in technology that specifically reduces our costs and increases margin over time.

Enhancing Customer Education

Educating customers on the importance of current repair standards and safety should be a top priority. Simple, clear communication can help consumers make informed decisions, leading to higher satisfaction and trust. To do so, we need to invest ourselves in activities we always talk about, and hear about, yet never seem to implement and or allocate time to invest in something alternative to the “way we have always done things.” If you are reading this, I challenge you to give the following a shot:

• Host informational workshops, social media lives, or webinars

• Provide detailed, easy-to-understand literature on repair processes and standards

• Offer personalized consultations to explain repair needs and costs

• Truthfully, we have nothing to lose here. Saying, “We're too busy,” “It won't matter,” “I'm not good in front of a camera,” etc., are all great excuses, but this mentality didn't get you to where you are today.

Cautiously Diversifying Services and Staying Competitive

To better accommodate financially pressured consumers, we should consider diversifying our services to include potentially more affordable repair options. I'm not saying reduce your standards by using lower quality products, parts, or jeopardize the integrity of any repair. All I'm proposing is that consumers like choices. If their perception is that they are in control and that they are calling the shots, then we are more likely to close the business

and have a positive consumer experience. We just have to ensure the standard in which we communicate the information to them leads them to an obvious repair direction that strategically aligns with our shop's reputation and usual standard. Just a couple examples might be offering reputable financing options or offering tiered service packages that allow them to choose the level of repair they can afford.

Fostering Consumer Trust and Loyalty

This isn’t the first time I've brought this up, and that’s because in today's market, building trust and loyalty among consumers is vital. Customers are more likely to return to a repair shop they trust, especially during financially stressful times. Strategies to foster this trust include:

• Providing honest, transparent pricing and a well-articulated repair plan

• Ensuring high-quality repairs with rigorous quality control checks

• Engaging with customers through follow-ups and feedback requests to continually improve service

Wrapping Up

Increasing insurance rates presents a significant challenge for us and our consumers. By understanding these pressures and strategically adapting, we can better serve our customers and maintain our business' health. Therefore, stop thinking about it. Now is the time to implement cost-control measures, enhance customer education, and diversify your services to meet the evolving needs of your customers.

While implementing these strategies, never lose sight of an overall commitment to quality, safety, and customer satisfaction. Doing so will position your shop as a trusted partner for years to come.

EMAIL: drew@orlandocollision.com

ARCHIVE: fenderbender.com/bryant

DREW BRYANT has been the owner of DB Orlando Collision since August 2011. A 20 group leader, in-demand conference speaker, and award-winning shop owner, Bryant takes a nontraditional approach to

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