Any advice for a body shop on the path to bankruptcy

herman maire · 03-13-2012, 06:23 AM

I have known this guy for a few years now, really nice person. I am currently having one of my projects painted.

Things at the shop are SLOW and if things keep up like this, he will not be there in a few months. Of course his house and cars are all tied to the business so if the shop goes under, he will loose pretty much everything.

There is maybe 3-4 other Auto body shops in town and one large franchise body shop that seems to be doing all the Insurance repairs. From what he told me, that is really what is hurting his business the most.

I am no financial adviser but with what its costing to keep the doors open every month, he is paying to go to work. Its just not making sense.

Anybody have any ideas to turn things around? He would even be willing to split the shop and downsize the auto body portion and maybe offer something else in the other half BUT WHAT??

Details-

-shop located right in town.
- year round population about 9000 ( its a tourist/ski town)
-rent $3000 per month + utilities ( has 3 weeks to decide to renew lease)

I told him that currently, things are just unsustainable and that and you need to make some changes quick !!

Any suggestions.

Joeaksa · 03-13-2012, 06:26 AM

Would try to get some advise from Kevin73 and others on the list who are business savy...

Sure sounds like his rent is a bit high unless he has a really big shop or utilities are included...

Zeke · 03-13-2012, 06:32 AM

If he doesn't pull out and go to work for the big shop, then he needs a business guru to ramp up the PR. Seems to me everyone doing a specialty is doing OK. General piddly stuff, not so much.

sc_rufctr · 03-13-2012, 07:16 AM

As Zeke posted he needs to get the word out about his business.
Of course the problem is he needs money for advertising on TV or anything like that but maybe he can try a different tact.

What about sponsoring the local soccer club? Just some shirts and stuff but people hear about his business and that will help.
Also... Radio may be a cheaper alternative to TV. But he needs to get value for money.

Can he approach the major insurance companies directly? That really is were the steady money is in the repair trade.

It breaks my heart every time I hear about people struggling like this.

kach22i · kach22i's Garage

If you were bleeding, you would do something to stop the bleeding.

I agree, rent sounds high.

If he can get the rent cut in half will that save him?

I did that at my old office, but still ended up moving out three years later. In retrospect I should have never taken on the overhead in the first place.

RANDY P · RANDY P's Garage

blow up the other shop?

(J/K)

Actually, he needs to work on getting his name out there with the Insurance Adjuster guys- they refer the business to whomever is the cheapest. The big box is winning because it's a known quantity. Virtually all the successful (thriving) shops rely on ins. work to make it through. Undercut the other guys and hope for volume to make up for it.

Tell them you are cheaper and are ready to go NOW. Chances are the other guys are booked up.

PS- frankly if he's only got 90 days he's hosed. Too late....... Might call the landlord and explain the situation see if he can get a break while he tries to pick up more biz..

rjp

kaisen · 03-13-2012, 08:11 AM

$3000 rent is high? The norm is $1 per square foot per month if it is zoned for auto body and/or auto repair. Think you can run a real auto business in 3000 square feet? My residential 3 car garage is 40 x 25 = 1000 sf.

ronster · ronster's Garage

Groupon?

rnln · 03-13-2012, 08:34 AM

Smog check needs license and license takes time.
Simple maintenance such as oil changes won't make money, but brake job and such will helps.
It makes more sense to hire another guy to do the major mechanic tasks while he can do the more simple mechanic tasks while still keep up with his current body works.
Just a simple thought.

Quote:

Originally Posted by herman maire

He would even be willing to split the shop and downsize the auto body portion and maybe offer something else in the other half BUT WHAT??

KaptKaos · 03-13-2012, 08:42 AM

Go to the landlord, and cut a deal on the rent. He can't bluff. He's got to make sure the landlord knows if he doesn't cut a deal, he's leaving.

what are his other expenses? look for creative ways to trim those.

It doesn't seem to me that he's in a position to ramp up business. He needs to stabilize, and then go from there.

Rick Lee · Rick Lee's Garage

I've heard from an indy Porsche shop that they make tons of money on oil changes and basic maintenance. Try getting an oil change in a 993 at the stealer. What they charge leaves plenty of room for the indies to compete and make a profit.

rnln · 03-13-2012, 08:47 AM

Talking about Porsche mech is another story. To be able to get your name trusted with mechanical in P car area while doing body shop is almost impossible. Normal cars oil change is from $20 to $25 bucks everywhere around here.

Rick Lee · Rick Lee's Garage

Well, if it's a resort area, there probably are a lot of nice cars there. It's not like visitors on a one week ski trip are going to use a body shop in a resort area. I'd try to focus on the local clientele's ongoing service needs. The one time I had to go to a shop while on a trip far from home, the guy was great and I'd always give him a referral. But who the hell goes to Bullhead City, AZ for tires unless you live there?

Every time I've tried to come up with a model for a new business, the first question I ask myself is "Who in the area can I beat in price, service and quality?" If the answer is no one, you're better off going to them instead of trying to beat them. And that's why I still work for the man. I haven't figured out a niche for how I can do it better than someone else in my area.

RANDY P · RANDY P's Garage

Even listing discount bodywork on Craigslst, Silicone windshield fills, heck even industrial goods painting...

rjp

McLovin · 03-13-2012, 09:07 AM

Not clear what you mean by "of course his house and cars are all tied to the business so if the shop goes under, he will loose pretty much everything."

But I think one thing he should focus on, for sure, is pre-bankruptcy planning. This sounds like a fairly small business, which should be set up as a corporation or other legal entity, so that his personal assets are separate.

There are a lot of factors involved, such as how he is set up currently (a DBA, corp., etc.), exactly how his personal assets are tied to the business (is it b/c he is a dba, or because he's guaranteed loans, pledges his assets as collateral, etc.).

Also, whether he is in the US or Canada, etc. Not sure what Canadian bky law is like, but my guess is it is somewhat similar to the US??

Bottom line is he can try whatever he wants to make the business work, but at the same time, he should get some advice or otherwise figure out how he can protect his assets in case it doesn't work out.

mikesride · mikesride's Garage

Quote:

Originally Posted by McLovin

Not clear what you mean by "of course his house and cars are all tied to the business so if the shop goes under, he will loose pretty much everything."

.

Most small business loans and lines of credit will be secured with a personal guarantee. Start planning now to avoid the biggest losses.

cairns · 10:17 AM

As noted he needs to get the word out. But note also that the auto body business is run by the insurance companies. He needs to go to every dealership and every insurance agent and adjustor that are nearby; introduce himself, state what he can do and how it will help them (convince the dealership that a referral to him will make their customers happy and convince the agents/adjustors that he can save them money). He should look (a good- but not expensive- suit and tie- polished shoes and a haircut) and act like a professional. Many insurance companies have adjustors located in large dealerships- these people aren't high on the totem pole so flatter them. He should ask the dealerships to let him leave his cards and a small display/brochures there so that potential customers know of him (talk to both the service and general manager and the owner if he can- he should let them know he'll give them referrals too). That's where the volume is.

RANDY P · RANDY P's Garage

He needs to start paying / bribing the adjusters or sleep with one of the bigwigs at the big Canadian Insurance Socialist superstore centre or whatever they call Ins. Co's up there...

rjp

Zeke · 03-13-2012, 10:20 AM

Maybe the guy doesn't want insurance work. I know it would be tough to be in the biz not doing ins work but maybe he doesn't have up to date equipment. It's a whole new game nowadays. I think he needs to sit down and redo his business model.

RANDY P · RANDY P's Garage

It's fast and the clients aren't usually that specific. It's the custom jobs that beat the crap out of you. That's why completes are tough to come by reasonably priced....

rjp