Hello i'm in the process of opening up a collision shop in michigan and i really need help in learning how to run my office end. Can anyone help please?
Alvin, if your starting small and want a quick easy way to take care of book keeping i would strongly recommend quickbooks online. In about and hour a good CPA can have your accounts set up. For around $60 a month i have accounting and payroll. It is brain dead. When payroll taxes are due you get a reminder email. When 940, 941, state sales taxes are due, you get a email. You really need to screw up to miss deadlines. And here is the great part, its in the cloud, your computer crashes, you just sign in with a new computer and your are up and running. I did most of the setup myself, including payroll and actually my accountant screwed it up out thinking the software.
A lot of folks are in love with mitchell, CCC, Audatex, and so on. (Expensive) If you need affordable, useable, Web-Est is a great way to go for $100 a month. I have used the others, if you want to pay someone to sit in front of a computer all day trying to keep up with all the, (stuff) in the other programs, well lets say its a non profit producing activity. Write the estimate and be done with it. My customers do not want to know when the car is in the shop, when the parts arrive, and so on. And they really dont want pictures updated daily when there car is gutted and all over the floor. They just want to know when it will be finished.
Another thing to think about, I dont care how well your tech's are trained. If your going to work on frames, or structural components you need to keep AllData in mind. The way we repair vehicles can change on a daily basis. This software also is cloud based and will give you every possible look into a vehicle. If you need to know what the cut purple wire goes to at the rear end of the vehicle this will tell you. It will ID HSS steel, and give you the correct way to repair or replace it. Did you know that on a 2005 Jeep Grand Cherokee, you cannot use heat to assist in repairing the frame. This is the type of stuff you need in you back pocket when one of the 10 worst insurance companies asks you to save a frame rail when it should be replaced. Its called liability, cover your butt, remember to do what's right. I can stand tall and say that i have never repaired a vehicle in a way that was unsafe, or unethical. Its going to be your shop with your name on the door, fight for your customers and do things right. I have customers that have been coming to our shop for over 25 years. Your customers can become family, you will see success, and generations of customers.
Another hint, I PDF everything, Estimates, Email, and photos for each customer. You will be amazed how many folks loose paperwork and its great customer service if you can say, i have that let me send it to you. Set up a work PDF folder, Customers, Venders, save everything by name. Now obviously this stuff is saved on the computer. So if you crash your screwed. So, www.carbonite.com, for $50 a year you get unlimited storage online. And the files are accessible from any computer, ipad, droid. Its a great service for the cost. And if your computer goes down it will restore all the files you had onto the new computer.
Security, Again, small shop, have one computer for reading everyday email.
Keep the estimate, and accounting computer separate from the everyday email and only open known email. Too many bugs come through email and this will help immunize your system. I have paid to use all the security software out there and it was ridiculous. Just run Microsoft Security Essentials and you should be good. I have been running it for 3 years and have been fine. Keep it simple.
Develop an intellectual, or electronic activity policy for your employees. IE, no personal email, facebook, or web surfing on company computers. Yea sounds hard ass, but some folks are forgetting that the 8 hours you are at work is for what. To work, not upload pictures to facebook. What i did at my shop was install a wireless router with guest access that keeps them off the company network but still allows them to do personal things during their breaks, and lunch time on the internet.
I hope some of this helps, again keep it simple, dont be talked into a lot of garbage. You dont need anyone to verify what you can do, or not do. Good folks in the shop, equipment, and ability to know what your doing is to the best of your ability. And be able to back the decision you make in your repair plan. Do we repair, do we replace, will that aftermarket fender serve my customer the best. (NO)
Mr. Reynolds I can't thank you enough for taking the time to type all of this out to help me. I really appreciate it.
I have a few more questions that need answering if you don't mind please.
1. Do your estimates really even matter considering that the insurance companies go with their own estimates?
2. What's a good point of sale program to use for completing a transaction. Don't you need one so you can give your customer a final invoice or is the estimate sufficient enough?
3. What's a good point of sale program to use if your doing automotive repair too?
4. For example, if a customers frame needs to be replaced due to severe damage, oem repair process says replace it but the insurance says fix it and you say I can't do that, considering it's putting whoever is driving the vehicle in danger and me liable. Can't they say ok it's cheaper for us to just total it than to fix it? Than you lose a job? How would you rectify that kind of situation?
5.How do you decide which parts to replace or repair?
6.What are my profit margins?
7.If I want to give free rental car to customers that don't have rental coverage on the insurance policy how would I insure them?
8.Any idea on how I could work my way up to get on a DRP?
Honestly I'm sorry for all of these questions. I just have no one to help me. I can't tell you how much I appreciate your help.Thanks again
1. Estimates matter, you need to know where you stand before the adjuster arrives, if your not using a estimating system you will immediately be discredited.
2. Quickbooks online for small operations, you can set up wholesale and retail customers, labor rates, and you even have inventory options. So you could run mechanical also and stock oil, and misc parts with dropdown menu at point of sale. If your going to do mechanical, set up an account with NAPA, they can get you online and in there system so you can write basic mechanical estimates and know the cost of your parts.
3. See above.
4. You are the repair professional. This is where AllData can help, if it says do not repair, replace only, you now have documentation to use when the insurance company asks why cant you pull it and save the frame. Its your shop, your liability, your lively hood, fix it correctly or not at all. If your more worried about saving the job than taking care of the customer then you could be in the right mind set to be a DRP.
5. Repair or replace, simple to figure out. What will get you the best end user performance. Filling a door with (mud), (bondo), (body filler), on a new car is not the best way to go. At least put a new skin on the door. In many cases we can put a new door on for the cost of cutting one up to just skin it. The cost to repair the panel shouldn't be more than the cost to replace it.
6. There is no set profit margin in this industry, That can quickly be changed depending on how much you decide to serve the insurance companies. Keep this in mind, last time i had my lawn mower worked on it was $80 an hour, your going to enter an industry where insurance companies still think $48 an hour is acceptable. Think about that as you purchase the $20,000 resistance spot welder. Profit margin?
7. If your just getting started and you want to provide loaner cars, contact a local rental car agency and set up a rate for your shop. Let them handle the paperwork knowing you will only pay $30 a day for the car. Later you can look into your own fleet. Many of the dealerships in my area have stopped providing the loaner cars from there lot. They just take the customer to Enterprise and let them handle everything.
8. DRP, here is where you need to decide if you want to serve the customer, or the insurance company. If you become a DRP, you will be required to give discounts, no storage on vehicles, short cut repairs. You had mentioned before the possibility of fighting an insurance company over frame repair or replacement. If you already have concerns about a fight, you will have issues as a DRP. Keep in mind if you talk to your customers about the aftermarket parts, the used shocks or spindle, or reconditioned wheel the insurance company wants you to use you will quickly have problems. This is just my opinion. I just hired a very good tech that worked at a DRP, there shop was cut off, or in other words, the customers are not being steered to that shop because the cycle time for repairs had dropped. Some of the situations that affect cycle-time is when the shop is asked to use a clip, or used panel section. The end result is the wrecking yard sends the worst part first, you reject it because its useless. 3 days later you get a usable one. Would have been more cost effective to just get a new part from the start.
You are entering a very slippery slope of variables that could bankrupt you quickly, you need to have practical experience in this. I have been in this 30 years and everyday i see a new way where the insurance companies are turning the claims department into a profit center. Saving $10 isnt much, but when they have 1 million claims in a year that becomes $10 million for them to take home. So you could imagine the greed taking place.
You need to go to www.crashtalk.com go to his shows that he has archived. If you do itunes you can search crashtalk radio show, he has a few episodes there, listen to these shows to know what your getting into. He was a drop shop, he later was blackballed for telling his customers what the insurance companies wants him to do to repair their vehicle. Things like reconditioned wheels where they shave half of edge off to make it look good. You hopefully know thats a bad thing. My shop will never put a reconditioned wheel on a customers car.
You are entering a very entertaining, and educating area. You will quickly learn the difference between greed, and respect for your customers. I only deal with one insurance company that treats there customers with respect, that is Mutual Of Enumclaw. They ask to see the damage and your estimate. If it makes sense they write a check. The other guys, well good luck, i had Farmers refuse to pay for a good used fender, saving them money from new. They wanted me to mail order an aftermarket fender from no seller i have never delt with before, we were talking $20 to $30 dollars.
Alvin, if you have no experience in this line of work you should seriously try to find a partner that is aware of what is going on. If you go into this with no experience or knowledge of what is happening you will have serious never ending issues. Marketing, (Consulting), will not prepare you for what is going on. Most of these folks are just running around trade shows and not in the trenches.
Glenn, thanks a lot for responding. I appreciate all of the wise wisdom included in the text above.
I figure I'd tell you a lil bit about myself, so you can have a bit of an idea about who I am considering all of your help.
I'm 23, I've graduated from oakland community college for collision and autobody repair. I'm platinum I-car
I'm taking the state tests for Unitized body structural repair &
Collision related mechanical next month.
I'm epa certified, I was the head painter at a production shop for about a year & I also did the ordering for the supplies.
I was painting with nexa auto color, so I am very familiar with water bourne paint.
My father's been a master mechanic for about 40 years so I've been around cars pretty much my whole life.
I don't want a partner in my business because like you said people get greedy. I've worked hard my whole life to make something of myself so I won't let anything get in the way of that, especially someone else.
I've worked in customer service for about 8 years & my best friend is a cpa and works for a big auditing firm so he's going to help me with the accounting end of things.
I do understand what you mean when you say how the insurance company's are. It kinda sounds like a political race. Lol
I've tried so hard to get a job at a shop working in the office but no one would give me the opportunity. I even offered to work for free but they still didn't give me a chance.
I get people contacting me all the time about consulting or schools that teach you how to operate but I sometimes feel that it's a rip off. Like masters school. $2,400.00 for ONLY 4 days not including the hotel fees.
That why I started this forum, I figured there's gotta be someone out there who can help me.
I just wanna know some of the loop holes that take years of experience to learn. Am I kinda cheating.... Maybe lol
I just wanna get on my feet. I wanna help my family and I wanna start my own family. I don't care how much hard work I'm gonna have to put into this, I'm gonna do it. I also have GOD'S help so I'm not alone.
Any thing you think you can tell me that's going to help, I would be most grateful.
Thanks for taking the time to read and reply.
You need to contact 5 or 10 shops in the area, find out what paint supplier is taking care of them, and there happy. Then make contact with that paint store, talk to the owner or manager. The paint store can be your best friend, if you need info, training, an idea on business they can help you. See if they know of a shop that maybe on the edge of closing. You could have a way in there and obtain a owner contract to take over the business. Maybe they know of a shop that closed and just getting in contact with the property owner could find you a lease on a building with a couple of months free rent.
It sounds like you have the training, you need to just start working at a shop and keep up with the way things are flowing and what is going on in the industry. At the same time keep an ear out for a place to set up. Try not to do this by going into debt.
There are going to be a lot of folks who will want your money, and they know how to run your shop. Don't do it, again your paint supplier will have sales and equipment support, they can look at you building and give you years of experience on equipment placement, how to operate a clean a safe business, its what they do.
Don't worry about the office, that is the least of your worries, Quick books online, and Web-Est will have you solid there, your accountant friend can sign in from home and set you up. And before you know it you will be writing estimates and invoicing for work performed. Both companies offer free trials, Web Est can help you set up preferences and profile. It offers photo storage that is associated with the estimate.
The main thing, think about how you have been treated as a customer, im sure you have had bad experiences, and good ones. Duplicate the good experience and atmosphere for your customers and bring that into the storefront. And never lie to your customer, it will come back to haunt you, I worked for a large glass company and watched my manager at the time constantly lie. It was comical when someone would catch him and he would back peddle to save face.
OMG, I think im sick to my stomach, Running a Body shop has nothing to do with the skill of the repair.
I do not recall where Alvin was asking about money. His questions were specific. He may be set financially.
He sounds like a person who cares about the people he will be serving. Much like my father who started this shop over 30 years ago. Dad had no business credit, his relationship with the paint store alone got him his first phone line. Yes the paint store co signed for him and those relationships built his business, not his checkbook, that came later as the shop grew.
So Alvin, im bowing out, go get a loan for $500K, put some equipment in a building and your up and running. Hire a bunch of unskilled labor to work on the cars and just wait for the checks to roll in. It doesn't matter how good the repair is. The fact that you have 3 months of operating cash in the bank will fix the comebacks.
Thanks for the recommendation. I have sent Alvin some ideas, as you know the objective of my company has always been to make the industry better, in that respect I have offered Alvin a link to some of my articles and the blogs I post so he can read them and make a determination on his own on what he needs. Additionally I have offered him a list of my Best Practice series so he can pick and choose which ones he feels will help move him forward. Picking through the advice Glenn has given him I do support the statement that he find a "business" partner to handle the business side if he is not familiar with it. I would also encourage Alvin work as an appraiser in a good shop to see how the business side is run. I have seen several technicians open their own shops and met some of the obstacles you mentioned. I have since coached them to be successful business men that are outperforming the shop they left as a technician.
I just helped a client get a shop established in Wilmington NC and after I met with him for two days he decided that he needed to wait another month to open. He wanted to ensure he opened correctly and he followed my advice to position himself with three months of operating cash prior to opening. We also created a business plan to present to vendors to qualify him for purchasing parts and paint on purchase orders.
The success of Collision Hub is through opinions, ideas and looking at things outside the box. I encourage everybody to look at the information provided in these forums, look at the tidbit or nugget that fits your objective and learn. I don't think anybody has the right answer for anybody because greatfully we are all different, however, there is a lot of talent replying to inquiries, their knowledge is free and openly shared.
Kind Regards to all,
Great reply John, im thinking a little more on your track as far as him getting his feet wet and get into a shop and work the 4 corners. He is young and getting relationships with vendors will help him get established.
Im concerned he may have too much knowledge for the front office. He will need a combo office manager appraiser to work the front. And he should manage his technicians in the back. He has a long path to travel and a little more experience on the pavement would really help.
First of all i would like to say thank you to all of you who have replied on my blog, especially to you Glenn. You have really helped me clear up a lot of the gray areas i had in the office end of the shop. To clear up the money issue, I'm not worried about the money, i know i have to have at least 3 months worth of working capital. I was actually planning to use more. I might not own my own business yet, but every one of my family members does. I have been fortunate enough where i have a lot of people who will help me if i get stuck in rut, also the great blessing of having been able to be around that and gain all the knowledge i have in running a business has been very rewarding as well. Starting new relationships with people and vendors is not an issue for me, i do that all the when when i meet new people anyways.
I have most of it figured out. I'm going to use web -est in the beginning for my estimates + I've dealt with Matt the owner before he's a really cool guy, so i know if i have any questions he'll be more than happy to answer them for me. I have quick books for my book keeping and creating invoices for the mechanical repairs and all data for making sure repairs on on point. I already have the paint supplier I'm going to go with. The Company is very reputable and is the same company that was at the shop i was at last, so i know their good. We all love ppg :D The rep is also a really cool guy and has offered to help me and get me a good set up for my shop. I'm starting with solvent then moving to water boure as business increases GOD willing.
I have a list of the vendors i will be using in the beginning and it will grow as i get into the industry more. Vendors dealing with the supplies i need for my detailing department, my collision department and my mechanical department. I already have an LLC and i will be obtaining a tax id # as i get closer to opening up the shop. I have my Mechanic, My body & frame guy and i will be doing the painting myself in the beginning. I already have a detailer as well. The CPA that's going to be doing all of my accounting for the shop, not my buddy is also a great friend of the family and she has other shops as clients of hers now so she knows the biz and has offered to help me with anything i may need in the accounting end of things. i will be using either enterprise or rent a car in the beginning for my rental and maybe get my own line of vehicles later...We'll see, if it'll be worth it or not and i yet have found the towing company i want to use but that's no biggie. I'll figure that out later. p.s. i will NOT be buying new equipment for the shop. Nothing wrong with used equipment. Works the same as new and 100 times cheaper than new.
licensing i will already have taken care of, and last but not least customer service and quality is what i do. Watchya think Glenn? Am i ready? i have a few more questions please.
Do insurance companies care where i order parts from? Wont they tell me what kind of parts they want me to order on the estimate? like new, aftermarket or used? Do they have a policy on ordering parts off of the internet?
What do you do for customers that don't have rental coverage on their insurance?
How about the towing companies? When they tow a customers car into the shop, don't they try to sky rocket u when they know the insurance is paying? You have to pay it and wait until everything is complete and then the insurance company reimburses you .... isn't the right?
Well that's enough questions for today, talk to you guys later
Alvin, i didnt think you were as unequipped as others that replied to your post, i figured you had some ducks in a row. Some folks are so in love with just being a business, they forget there is another side to things, Having quality, customers satisfaction, and integrity in place before you start your business means your will stay in business. You have surrounded yourself with people who will give you the support you need. Use that free knowledge from others, And Alvin, as Glenn's Consulting, at no charge i will tell you the number one thing in business. (Dont spend more than you take in). No Charge for that, now to your questions.
Ordering parts, you order parts from the venders you feel comfortable with, The insurance will shove down your throat what they want to pay for. The easiest way to deal with this problem is to ask your dealer, IE Dodge, Chevy to price match the Ins. estimate. I do this everyday, you will be amazed how many will change pricing to get the sale. You will need an aftermarket vender, what i usually do if im forced into buying an aftermarket part is bring it into the shop try to fit it on the car. After you prove it doesn't fit well you document it with pictures and call the adjuster and let them know you have an unacceptable fit and finish. They will move to a oem part after that. Its a pain in the butt, its part of the game you need to play. The more paperwork you can bury the insurance adjuster in, the better off you will be for getting paid for everything on your claim. The adjuster answers to a boss and needs to justify additional costs. Dont order parts on the internet, return nightmare, keep it local, keep it personal.
Rental cars. Careful on offering cars, your bottom line will suffer, add benefits to customers as you grow and have a real good idea what your gross and net cash flow is. In short, watch you P&L sheet, weekly at the start. Ask you cpa to explain the basics on P&L sheet so you know where you stand. Your Rental Car company should give you a better rate you can offer customers. The customer can call the rental company and say Alvin's Advanced Collision referred me and i am requesting the body shop rate.
Towing, find a trustworthy company, set up an account so you have time to collect and pay. Accident tows can be out of control as far as pricing. Most start at $200 plus just to hook up the car. In this situation you have little control on cost, when the car shows up at your shop normally they expect a check unless you have an account. And yes, after the repair is complete you will get paid by insurance. Dont forget to ask the customer if they have AAA, tripple A. They may forget they have it and AAA will pay for the tow from the accident to your shop.
Get a rate in writing from your tow company, mine works for $75 to hook up and $2 a mile for a non accident dispatch and is a rolling vehicle.
We need to talk about Total Loss, Capture, Storage, Towing, and so on. The main thing, get it to the shop, help the customer determine the amount to repair and look up comps in the area if you think it will be totaled. Get the customer ready to respond to a low ball offer in the event its a total loss.
Last thing, Quickbooks Online, i had a computer crash with the bookwork on it and it just happened to be the day before taxes were due. I dont have that problem now with the online version, they have a free trial. Give it a shot before you put out hundreds of dollars for software.
Little Tired, crazy day hope this makes sense.