Financial Crisis in the Collision Repair Industry
Dick Strom's article in Autobody New Southwest November 2005 edition (page 17), nails the erosion of profitability and failure of bodyshops in recent times. Speaking from first hand experience in which a large shop in Abilene recently filed bankruptcy, shops have got to get their act together and be on top of their "business" game not just marketing, DRP's or "doing a better job than that other shop". Strom lists 4 things he believes have contributed to the financial crisis most shops find themselves:
--Inaccurate information and detrimental alliances such as PPG's LYNX Network that actually erodes a shops profitability.
---Purchasing agreements that lock shops into a dead-end deal that result in no profit and poor performance and supplier support.
--Insurance practices that coerce business into illegal and fraudulent activities.
--Mandatory systems used to bill and manage that are biased and titled toward the buyer, leaving the seller with inaccurate information and inadequate compensation.
From this jobber's perspective, it makes no sense why an independantly owed small bodyshop business would ever rely on a global paint manufacturer to assist with profitiabilty when the number one driving force for these big monster companies is quarterly sales gains and not long term stability or growth in small increments. Between contracts and so-called "marketing" programs that the paint companies offer, I personally wouldn't be caught dead in the bodyshop business if I let a paint company silp that noose around my neck.
This business is like thousands of other business' in thousands of other industries . . . there's only one way to make money and that through hard work and bringing more revenue than you are spending on expenses. Why would anyone let a customer (or rather insurance company) dictate the selling price and a supplier dictate your expenses (i.e. paint contracts for up front money)---you the business owner have given complete control over to somebody that has absolutely no interest in you making any money.
--Inaccurate information and detrimental alliances such as PPG's LYNX Network that actually erodes a shops profitability.
---Purchasing agreements that lock shops into a dead-end deal that result in no profit and poor performance and supplier support.
--Insurance practices that coerce business into illegal and fraudulent activities.
--Mandatory systems used to bill and manage that are biased and titled toward the buyer, leaving the seller with inaccurate information and inadequate compensation.
From this jobber's perspective, it makes no sense why an independantly owed small bodyshop business would ever rely on a global paint manufacturer to assist with profitiabilty when the number one driving force for these big monster companies is quarterly sales gains and not long term stability or growth in small increments. Between contracts and so-called "marketing" programs that the paint companies offer, I personally wouldn't be caught dead in the bodyshop business if I let a paint company silp that noose around my neck.
This business is like thousands of other business' in thousands of other industries . . . there's only one way to make money and that through hard work and bringing more revenue than you are spending on expenses. Why would anyone let a customer (or rather insurance company) dictate the selling price and a supplier dictate your expenses (i.e. paint contracts for up front money)---you the business owner have given complete control over to somebody that has absolutely no interest in you making any money.
posted by David at 1:19 PM
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