Why Do Many Body Shops Fail as Businesses?
After spending 25 years in the car refinishing supply business, I can confidently say that our industry struggles to help body shops remain profitable in the long run. Many collision repair shop owners fail as entrepreneurs.
When I say “failing,” I’m not just referring to bankruptcy. Of course, when a business goes under, it’s a failure. But often, these businesses continue operating while struggling to maintain profitability and healthy cash flow. This leads to accumulating debt, unpaid suppliers, underpaid employees, and late payrolls. Add to that delayed tax, rent, and social security payments, and you’ve got a recipe for ongoing financial stress.
Certainly, every business case is unique, but I see a common issue: most failing small business owners are unprepared to manage anything beyond the technical side of their business. Body shop owners focus solely on repairing vehicles, wearing only the “technician’s hat.” To succeed, however, they must wear six additional hats. Let’s take a closer look at these essential roles.
- A Salesperson’s Hat
Sales are at the core of any business, regardless of its size, location, or industry. If you own a business, you need to know how to sell, attract new customers, and retain existing ones. Unless you enjoy the luxury of being a monopoly, you must constantly work to improve your sales skills.
- A Marketer’s Hat
We live in a world saturated with marketing messages from screens, billboards, magazines, TV, and radio. Ignoring marketing in a body shop is a big mistake. But what is marketing? It encompasses everything from your business name, logo, and signage to your website, social media presence, and search engine optimization (SEO). Marketing helps your shop stand out. Relying solely on word-of-mouth and yellow pages is naïve. You may be the best car painter in the world, but if no one knows about you, you’ll remain in obscurity.
- An Administrator’s Hat
Every business needs someone to handle the back-office tasks: issuing invoices, managing bills, and submitting documents to insurance companies. If these tasks aren’t done efficiently, the entire business suffers. I’ve seen many shops experience cash flow issues simply because they were late submitting paperwork to insurers. No documents, no cash.
- A Purchasing Manager’s Hat
Every business relies on supplies. For body shops, this includes spare parts, paints, clear coats, abrasives, tapes, and tools. Many shop owners treat purchasing as a simple task, but it’s not. The cost of materials directly affects your bottom line. Purchasing starts with inventory control:
– Do you know what materials are on your shelves at any given time?
– What’s the average consumption rate?
– How often do you place orders?
– What’s the re-order point for each critical item?
Many shops lack a structured process for choosing suppliers or controlling spending—a familiar problem for many, isn’t it?
- An Accountant’s Hat
Keeping accurate books is one of the most challenging and tedious parts of running a business. While many small businesses outsource this function, accounting and finance go beyond filing forms and paying taxes. Monitoring your financial health is a primary responsibility as an owner. Do you know your balance sheet inside and out? Is your liquidity ratio sound? Choosing the right accountant, providing accurate information, and staying informed about your finances cannot be entirely outsourced.
- An HR Manager’s Hat
As soon as you hire even one part-time employee, you must learn how to manage people. This is no easy task. Every employee has unique needs, goals, and personalities. Being “bossy” won’t cut it. Today, when body shops struggle to attract and retain employees, strong leadership skills are more important than ever. Even if you plan to keep your business small, you’ll eventually need help. Running a one-person show is no longer an option in today’s complex business environment.
Final Thoughts
To sum up, being a skilled mechanic, panel beater, or painter is not enough to succeed as a business owner. As Michael E. Gerber wrote in his best-selling book *The E-Myth*, every entrepreneur must embody three personas: the Entrepreneur, the Manager, and the Technician. I’d add that these personas must wear different hats simultaneously. Ignoring any of these roles will lead to significant challenges.
The good news? You can learn to juggle these hats. Many successful technicians, who started their own businesses, have done it, and so can you. Just ask for help!
