COVER STORY

Four locally owned

small MSOs share
their thoughts on how
they plan to retain
their market share
should one of the Big
Four consolidators
move to their block.
By Gina Kuzmick
1 July 2014 | BodyShop Business
I
n a world where Walmart and McDonalds reign
supreme, its sometimes difficult to even see the
mom and pop shops of yore beyond the bold
red letters and golden arches that seem to adorn
every other block in America. But we as consumers
know theyre out there, and they still retain their
own loyal followings to
stay in business and
stave off competition.
As members of the
collision repair industry,
we often divide the
industry into two cate-
gories: the big guys vs. the
little guys. But what about the
in-betweeners? What are they
doing to keep their businesses
thriving and out of the hands of
mega-consolidators?
Ask Pat Beavers, managing partner of
CollisionMax in Philadelphia, and hell tell
you that his businesss experience and
knowledge of their market gives them the
upper hand. Since its inception in 1977, the
business has grown to 11 locations between
Pennsylvania and South Jersey. With Service
Kings recent purchase of Sterling Collision Centers,
the large-scale consolidator will be moving into
CollisionMaxs area, which means it could potentially
disrupt their relationship with insurance carriers.
As we view it, the Big Four all have national re-
lationships with insurance companies and we are a
pro-direct repair organization, said Beavers. So
we are concerned that [Service King] could have an
impact on our claims and customer base. The high-
level relationships they have could impact our rela-
tionships that weve worked to develop for years,
but thats the unknown for us.
Despite this concern, Beavers is reassured that
CollisionMax will uphold its longstanding presence
in the Philadelphia market.
Were local, family owned and operated, and
were not a franchise, said Beavers. Almost a third
of our people have been with us for 10 years, so
theres a strength over a new corporation thats not
from the market and doesnt understand some of
the market nuances. We can touch our 11 locations
in any given day, so were accessible to all our stores
because of proximity.
To maintain that feeling of proximity, Beavers reg-
ularly meets with his management staff to discuss
performance and how to maximize the business in
its market as much as possible, which includes ex-
panding the companys brand identity.
Were working on our name in our market and
having some top-of-mind presence with the retail
consumer so they identify us in the markets we
serve as the shop of choice, he said.
Forming Alliances Beavers also points to
another unlikely reason for CollisionMaxs success:
his current, local competition. By keeping an eye
on one another, CollisionMax and similar well-
established shops in the area have been able to
stay on their toes and create their own exclusive
and competitive marketplace.
If we didnt have some of the good operators in
our market already, we probably wouldnt be as ad-
vanced as we are, he said. I think because of our
competition locally, we and our competitors have
made a market that may not be that easy to come
into and take over because we have all watched
each other and didnt ignore each other and our
companies got better as a result.
Similarly, Richard Fish, owner of Coast Collision
Centers in Oceanside, Calif., actually admires collision
giant and local competitor Caliber.
Theyve always had great prowess in terms of
marketing, and theyve been able to strike big deals
with insurance carriers, Fish says. That gives them
great precedence over other MSO organizations, and
thats always a challenge.
Fish has been in charge of Coast since 1996 and
now owns four locations in the San Diego area. He
attributes his success to implementing lean practices
and Six Sigma in his business, but also allying with
Fix Auto.
Being aligned with Fix Auto allows me to have
my cake and eat it, too. Im the owner and operator of
four body shops. If I were branded on my own, I
would have felt the market demand to be up to six to
10 body shops, so [my alliance with Fix Auto] will
allow me to grow at a pace I feel good about.
Fish says that aligning with the Fix Auto name
will give his shop boosted marketing power as well.
In addition, hes linked to a number of peer shops,
which grants him opportunities to scope out the
friendly competition and gain ideas as to how to
improve his business model.
When you see someone doing something notably
COVER STORYBattling the Bigs
www.bodyshopbusiness.com2
better than you time in and time
out, theres a paternal feeling there
that allows you to reach out to those
shops and ask how theyre doing it
so much better than you, he said.
You might end up even going to
visit them to share their best practices,
and that collaborative atmosphere
is something thats very powerful.
Eye on the Competition Fish
believes in acknowledging the com-
petition rather than ignoring it.
I think ignoring the competi-
tion is shortsighted and would
prevent you from learning about
some innovation that a competitor
might be bringing to the table,
he said. Having said that, I
wouldnt spend too much time
focusing on it. Were focusing on
our own level of excellence, know-
ing full well that if we achieve that
there are very few competitors who
can keep up.
However, like many businesses,
some worries still creep up in the
back of his mind.
I plan on being in the business
for many years to come, so the
prospect of selling my company isnt
on the table. Im a buyer, so the
thing I worry about now is the fervor
thats happening in the marketplace
in terms of valuations. With Service
King coming through the market re-
cently through the acquisition of
Sterling, and Caliber continuing to
expand in Southern California, you
would think they have enough mar-
ket positioning in the area, but ap-
parently they dont think so. I hope
I dont get priced out of the valuation
marketplace.
Still, some shops say that large
consolidators havent had any impact
whatsoever on their respective busi-
nesses. For Jacob Nossaman, owner
of Collision Works in Del City, Okla.,
the key to keeping neighboring giants
Caliber and Service King away is to
implement a strong company culture
and employee environment.
I feel that if you focus on your
organization with 110 percent each
day, then the competition is not an
issue, he said.
Established by Nossaman in 2001,
Collision Works has grown from
two to four locations in its market-
place. One of the factors that allowed
his business to grow was using a
management software platform thats
specifically designed for large
single-shops and small MSOs.
The management software is also
your accounting software, so
you do everything out of it,
he said. It improves accuracy and
allows you to look at multiple loca-
tions off of your PDA. You can be
anywhere and youre still at your
office.
While Service King and Caliber
have more buying power as corpo-
rations, Nossaman is confident that
Collision Works stable, small busi-
ness model will give him the ad-
vantage.
Im the owner and Im in-
volved, Nossaman says. We run
a family-oriented, locally owned
business. Theres no corporate red
tape; we make decisions and con-
nect fast.
No Threat in Sight While con-
solidators continue to sweep across
the nation, there are still some parts
of the U.S. that havent yet felt the
impact. Conner Brothers in Rich-
mond, Va., is a small, family-owned
business with four locations and no
mega-consolidator in sight. But that
doesnt mean its not on owner Kevin
Conners mind.
Wed have to step up our game
if they did come to town, he said.
They could really take a lot of work
from us.
Although the shop is out of the
hands of consolidators for now, Con-
ner says he still wants his staff aware
of the potential threat they pose. He
meets with his manager every few
weeks to discuss strategies that can
help to improve their business model
and keep the big guys at bay. Be-
cause according to him, losing to
the competition stems from ignorance
something he doesnt want to suc-
cumb to.
Having not experienced [consol-
idation in our market], I think my
biggest fear is ignorance. We dont
know what to fear.
While some might turn a blind
eye and deny the fact that consoli-
dation is indeed a threat to many
shops, Conner says he actually looks
forward to learning more about the
topic.
If you dont know your competi-
tor inside and out, all youre doing
is setting yourself up for defeat.
Theyre going to eat you alive.
These four businesses each
shared one commonality thats al-
lowed them to keep mega consol-
idators at bay: the involvement of
an active and proximate owner-
operator. And as long as their own-
ers stay active, the customers will
keep on coming.
I plan on being in the business
for many years to come, so the
prospect of selling my company isnt
on the table, said Fish. BSB
COVER STORYBattling the Bigs
3 July 2014 | BodyShop Business
Keys to Maintaining
Market Share in a
Consolidation
Environment
1. Aligning with an established
name or improving your
brand identity
2. Understanding market
nuances
3. Establishing a strong
company culture
4. Being an active and
proximate owner
5. Knowing your competitor in
and out