ABRN ARTICLE  Hands-On Management: Consultant Checkup

 

2005   Automotive Body Repair News

The steps you take caring for your personal health provide an interesting parallel to the way you manage your business. Think about the logic behind a yearly physical. You entrust your body, a vessel in which you spend 24 hours a day, seven days a week, to a doctor who might see you once a year. After investing 30 minutes examining you and perhaps an hour looking over test results, your doctor confidently prescribes a regimen of diet and exercise, perhaps some medicine. As long as you’ve selected a quality doctor and follow the prescription, you can count on prolonged good health. The lesson here is that a little time spent under the care of an expert translates into a long period of prosperity.

The same holds true for your shop. Invest in a qualified business consultant, spend some time on a thorough evaluation and follow a prescription and you can shore up problem areas and make the most of what you’re already doing well. The key, just as with your doctor visit, is seeing the right expert. Business consultants, like doctors, specialize in a variety of fields and treat a range of ills.

Unfortunately, determining just what those specialties are and whether a consultant is genuinely talented is no easy task. It certainly involves more than simply making a phone call. Hiring a consultant and making the most of that person’s expertise is a skill in itself, requiring work, knowledge and some patience.

Setting your goals

How should you begin the consultation process? Consultants recommend asking yourself a single question: Exactly (not generally) what type of help would you like to get? “Shops need to start by setting goals,” .... “A good consultant will thoroughly evaluate an operation, but he needs to know what a shop wants to address—sales, productivity, advertising and so on.”

After answering this question, shops must then address a series of other consultant-related issues. The most significant of these is determining whether they truly are committed to making the changes necessary to improve an operation. Advice without action is useless. It’s also wasteful because consultants don’t come cheap. Shops can count on spending at least several thousand dollars and perhaps many more. This investment, along with a prime opportunity to upgrade, both will be squandered if commitment is lacking.

Other factors to consider are minor pain and discomfort. Ownership, management and employees have to be willing to accept constructive criticism. “You’re going to hear some things you won’t like, but it’s necessary. You have to be open minded,” says one shop owner, body shop manager at a Ford Dealer in Salinas, Calif. the owner's shop recently hired a consultant, whom the owner credits with various improvements at the shop—among them, shorter cycle times, more accurate estimates and a closer relationship between management and ownership. But the shop couldn’t have made these upgrades unless the owner and others were willing to set egos aside and work toward a common good.

If you’re looking for the same type of rewards, you’ll similarly need to be dedicated to change and willing to make the necessary sacrifices. When you’ve reached this stage, you’re ready for expert help.

Not all consultants are created equal

If you’re like a lot of operators you may have caught the consultant bug after hearing some of your colleagues talk about their consulting experiences. (Why should they have some advantage you don’t?) Time to ask for a business card and make a call, right? That could be the worst mistake you make.

Hiring a consultant is much like finding a specialist to deal with a rare medical condition. You need to locate a consultant whose background, skills and temperament are right for your particular business. More than that, you need to find someone with whom you can form what amounts to a partnership.

Where should you start your search? Aside from recommendations from your colleagues, check shop associations, search phone directory business pages or try the Internet. One of the best ways is to ask your vendors. Paint companies and other suppliers often have lists of preferred consultants who have experience in the collision industry.

Once you’ve pieced together a list of candidates, contact each and begin checking for the proper business background. Go beyond general collision repair industry experience. Find someone with experience in your particular niche—independent or dealership. There are critical differences in the skills necessary to work in each of these areas. Don’t allow yourself to be a consultant’s first experiment in working outside his or her field.

Also make sure a candidate’s experience touches all parts of the industry. John Steadman, president and CEO of Autobody Consulting (a JOVI Enterprises, Inc. Service describes a shop as a puzzle, with the consultant’s job aimed at making each piece—each part of the operation—fit. For your consultant to complete this puzzle, he or she must be able to use a variety of viewpoints. You’ll therefore want to look for someone with experience, for example, in insurance and other related fields, such as paint or equipment manufacturing.

Following these guidelines, next look for candidates who specialize in a wide range of business activities—operations, administration, marketing, etc. This can be tough because most consultants specialize in a limited number of fields. Never give up and go with someone who offers less than you need. Keep searching. Look to consulting firms since they often have teams of consultants who can cover all the necessary business fields.

After finding candidates with the proper backgrounds, check for a history of achievement. Make sure all your candidates can supply the names of references, shops where they have produced results. Contact all of these references and thoroughly interview them. Ask them how much time a consultant dedicated to their shop and what help they received. Be wary of certain dubious practices adopted by some consultants.

For example, we warn shops not to raise revenues by cutting labor expenses. “This is a short-term solution that raises revenues a bit and makes the consultant look good,” . “Long term it’s disastrous. You end up losing the loyalty of employees who take their skills elsewhere. Then you have to replace them, and that’s a real problem.”

Steadman cautions shops against adopting what he calls a “kamikaze” approach to consulting. “Some consultants want to essentially tear a shop down and rebuild it from scratch. That’s just not necessary,” he says. “There isn’t that much wrong with most shops to warrant starting over.”

After covering background and practices find out what services a consultant provides and what you’ll pay for them. Note that cost is no indication of value and that consultants use a variety of cost formulas. Carefully check the details of their charges. Some consultants may charge a flat fee for visiting your shop and then charge you for extras such as meals and transportation. That can get expensive, so obtain a detailed list of potential charges.

Determine what the shop evaluation will entail. A thorough evaluation should include an analysis of your financial papers (for example, your profit and loss statements), technical procedures, estimating practices, advertising, marketing and your front office. Find out how much time the consultant will spend at your shop and if that consultant will perform follow-up work. Follow-up can be critical because you’ll probably want to keep in contact with your consultant as you implement changes. While you’re considering costs, be aware that some consultants charge extra—sometimes significantly extra—for follow-up tasks.

Similarly pay strict attention to the type and quality of evaluation report a consultant will generate for you. These reports vary from one consultant to the next, but one rule should hold true. A report should reflect your investment. It should be thorough, concise, readable and professionally created. Consultants can differ radically in what they provide clients. In some cases, you could receive a professionally bound, detailed analysis of your operation with specific suggestions for improvements. In others you might get a sparse, general four-page report the consultant printed off in the company car. Go with a consultant who provides a quality product. Obtain sample reports from all your candidates. If a consultant can’t provide samples, move on.

One final factor to consider is a guarantee. Some consultants offer guarantees on their work. Review these guarantees and what they cover, for example, results, quality of work and client satisfaction. Keep them in mind when making your selection.

Ultimately, your choice should reflect a comfort level with a consultant’s ability to understand and affect your particular business. The same holds true for the consultant who must share your attitude and be confident in the client/consultant relationship. That being the case, don’t be surprised if a consultant turns down your business.

Ethical, high-quality consultants work where they can make a positive difference. That’s how they build a successful track record and in the process build their reputations and business. They pair their skills with shops they have the greatest chance of helping. That means sometimes saying “no” to offers if the consultant doesn’t believe the client is a good match.

Don’t be shocked, then, if you get turned down. Just be sure to find out why. A consultant may not feel he or she has the proper skills or experience to help you. Potential personality clashes also can be a problem. Take note of any of these issues. Valuable feedback like this can greatly aid your search for the right expert.

Make the most of your consultation

When you finally settle on an appropriate consultant, you’ll need to set aside time for an extended facility visit, evaluation and preparation of a plan of action. Most visits average a week. During that time you’ll need to make sure the consultant has access both to your financial papers and your workers. When taking care of the former, make sure the consultant signs a non-disclosure agreement (a standard and necessary business practice). To manage the latter, inform your employees they are being evaluated and ask them to perform their duties as they normally would. Ask them to respond openly and truthfully to any questions. Remind them that the consultant is there to help them perform their work and maintain their livelihood.

Consultants use a variety of methods to evaluate employees and operations. Surveys, observation and verbal queries are all part of the evaluation mix. Steadman makes it a practice to speak to every worker because he’s found that the most illuminating information often comes from the most unlikely of places, for example, from detailers. Steadman typically asks employees three questions:

1. What they like about their jobs.
2. What they don’t like.
3. What they would change.

Consultants spend much of his time observing, paying particularly attention to management personnel whom he evaluates for strengths and weaknesses in areas such as technical proficiency, business acumen, leadership, tenacity and communication.

Steadman places the weight of their focus on operational issues. While financial papers and other fiscal barometers reveal a lot about a shop, fixes must be performed through operational changes. Steadman  believes consultants do their best work when they move beyond fixes that solely address profits. “Consultants need to drill down and find solutions, not merely treat symptoms”  “Operational improvements will take care of the bottom line.”

When Steadman  creates his change proposal for shops, he focuses on operational upgrades. For example, Steadman notes that perhaps most shops don’t properly school their estimators. Only 3 percent receive formal training. That translates into inaccurate estimates and other inefficiencies that delay repairs and cost shops millions of dollars in potential revenue. In one instance, Steadman recalls helping a large shop locate more than $300,000 in missed charges on estimates.

Steadman  recommends training to deal with these shortfalls. He also assists clients one-on-one to help them write better estimates. Often, this means clarifying the work agreements shops have with insurers. Steadman notes that shops frequently don’t receive full payment from insurers because of misunderstandings regarding coverage. Sometimes adjusters misinform shops about what their companies pay for. “A shop may think a certain insurance company doesn’t pay for some types of work because that’s what an adjuster has told them. The adjuster could be wrong. The shop has no way of knowing otherwise if they work with the same adjuster,” says Steadman.

The shop owner notes that his shop has benefited from similar advice regarding the terms in its DRP contracts. He explains that some contracts forced the shop to make expensive tradeoffs, for example, paying for rental cars and providing steep discounts for some tasks. In some cases, the shop had to absorb the full costs of certain tasks. He now keeps a closer eye on contracts and negotiates terms whenever he can.

Other areas to which consultants pay close attention include time management and front office functions—specifically, what processes are put into place after a customer is greeted. Steadman’s company sells its own time management software Controlled Shop Systems® to help remedy the first challenge. For the second, he works with estimators and front office personnel to choreograph the steps they should take to deal with customers and sell their services. “Little things add up. Helping a shop often means taking care of a lot of little things,” he says.

When it comes to creating an appropriate number of changes for a shop to address, Most consultants keep that number between 12 and 15. “ny more and you’re giving a shop too much to do.  Consultants agree that many changes don’t begin bearing fruit until almost a year after they’ve been implemented.

A year later, a shop may be looking at another evaluation. Depending on the size of a shop, consultants recommend performing an evaluation at least once a year, more often for high volume shops. Receiving ongoing help makes sense. No shop is ever fixed in the sense that it is thoroughly efficient and without flaws. There’s always room for improvement. In addition, what’s the point in upgrading a shop one year only to let it slip into decline the next? The industry experiences change each year as does your shop. Much like your annual physical, an annual evaluation is the best way to help keep your business in shape.

Final Word: Lessons learned

Operating any shop is a major challenge. On top of being technically proficient, operators need to be talented, knowledgeable business administrators who can handle accounting, finances, human resources and an ever-changing business world. That’s way too much for even a team of managers to attend to. Throw in the challenge of continually stepping back and objectively evaluating a business one is personally tied to. Is it any wonder businesses seek out consultants to shake down their operations and suggest improvements?

If there’s one basic lesson about consulting, it’s this: Change comes from within, but it starts on the outside. Consultants use their special expertise to bring in all those outside lessons for shops to implement internally. Right now, they’re probably working with some of your closest competitors, offering them a significant business edge. Knowing this, can you afford not to call a shop doctor?