CARLSBAD, Calif., April 1, 2016 /PRNewswire/ -- What will it take for an auto body shop to prosper in the future? Mike Anderson, owner of Collision Advice, shared tips on what shops need to do in order to "thrive, not just survive." His presentation was held during a California Autobody Association's chapter meeting in March at Mitchell International in San Diego, CA.
Regardless of the type of business, Anderson said a company that wants to "thrive and not just survive" needs to focus on three specific areas: marketing, production, and finance - human resources. Below are some of the highlights from his presentation. The full article can be found on www.autobodynews.com.
Sales & Marketing
Currently, if a vehicle owner does not have a shop in mind to go to after an accident, the insurance company will make a referral to a DRP (direct repair program) shop. Anderson said that moving forward, OEMs (original equipment manufacturers) will become more involved in this process.
In the future when someone is in a collision, Anderson said the technology in the vehicle will automatically notify the OEM about the drivability of the car. This will give the OEM an opportunity to direct where the car will be repaired, also known as "virtual steering." During his presentation, Anderson showed attendees a Collision Hub video released in 2015 titled, "Virtual Steering The Future Of Automotive Collision Claims."
Several OEMs have already incorporated this technology into their vehicles and are in the process of building vehicle networks. Meanwhile, insurance companies are in discussions with OEMs to be their preferred carrier of choice.
In regards to production, Anderson said it will be necessary for shops to retain more labor gross profit in order to pay for OEM certifications and training. Otherwise, they won't be able to afford it. "The body shop of the future is going to have to retain 65 to 70 percent gross profit unloaded without benefits," said Anderson. This can be accomplished through bonus-based pay plans, a team system, a tiered approach and labor rate increases.
Adding more non-included operations to an estimate will also help a shop's sales mix, said Anderson. One of his recommendations to improve additional labor hours per estimate is to utilize Automotive Service Association's (ASA) not-included chart. The free reference chart highlights the "non-included" operations when installing new replacement parts.
Finance & HR
In order to be successful, data will continue to remain key. "Data is going to be very critical to you as an OEM-certified shop," said Anderson. "If you don't measure it, you can't manage it."
The body shop of the future will use an accrual accounting system rather than cash, said Anderson. This means that they will adjust their work in process each month and reconcile prepayments with receivables. "Shops need to know how to manage cash flow and determine their ROI [Return on Investment]," said Anderson.
While taking steps to become a successful body shop in the future, Anderson recommended aligning yourself with people who will help you grow. "Surround yourself with people who are positive, not negative, and have the same vision and hope," he said.
"In my opinion, it's a bright future in the industry," said Anderson. "I don't think our industry is doom and gloom. It's one of the most exciting times I've ever seen in my life."
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For more information, contact Stacey Phillips, Assistant Editor at Autobody News magazine.
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SOURCE Mike Anderson