|
The December 2001 edition of Bodyshop Magazine
carried an article charting the success of bodyshop
owner Julian Allen. The 'Mr
Motorvation' article attracted a lot of interest
from reader’s - some critical, some sceptical
- but also from those who wanted more information on
the programme that seemed too good to be true. Here
we catch up with Julian Allen, who is now embarking
on a £2 million expansion programme.
‘To be honest, I wasn't too sure that I wanted
the press exposure all over again after the abuse I
got from a few people last year,' said Julian Allen,
owner of Motorvation in Bridgend. 'Part of me said "keep
it all for yourself" but having met up with some
of the people who read the original article and, as
a result, had managed to improve their own business,
I thought if what I have done can help my industry colleagues
then I'm glad to share it. It also gives me the chance
to explain some of the issues from last year.'
Whichever way you look at it, any man that contemplates
putting his own house on the line as part of a £2m
expansion plan in the UK crash repair industry must
have something special up his sleeve or else be completely
mad. Julian may not, fortunately, be mad but he says
that not only has his business changed but he has as
well. 'A couple of years ago I would have described
myself as a damn good bodyshop owner,' said Julian.
'Now I have no hesitation in labeling myself as a businessman.
It's not that I didn't have good business sense before,
it was just being lost in all the day-to-day problems
of running the bodyshop. That has now stopped.'
So what happened? As you may remember from the December
article, Julian went through what is now the Business
Improvement Programme (BIP) from BodyShop Management
Systems (BMS) using a unique combination of IT and a
long-term managed implementation process. One of the
key issues for Julian was to make Motorvation more successful
and, at the same time, remain competitive and attractive
to its work providers. As Alex Leonard, the current
chairman of BMS explained, 'The real success here is
made possible by balancing the needs of the parties
involved. Insurers have already come forward and publicly
declared their interest in having healthy, profitable
suppliers and forward thinking bodyshop's who also appreciate
that insurers are always looking to control costs. Anybody
who only addresses half of this see-saw will end up
in the mud.' The BMS remit was to provide a system that
delivered the fabled square egg that keeps everybody
happy -a lower average repair cost delivered more profitably.
The last thing Julian wanted was a pile of new products
dumped on him. 'All I was interested in was the result,'
he said. 'I couldn't care less if the people were from
Mars and the computers were bright green with pink spots,
as long as it worked.'
The BIP has allowed Julian to accurately analyse the
needs of his customers and then align his business to
deliver the goods. As with many things in life, it has
not been all plain sailing from day one. Bodyshop's
who have been through the programme nearly always encounter
a similar problem - work supply.
'To be honest, I wasn't too sure
that I wanted the press exposure all over again after
the abuse I got from a few people last year'
The impact of the BIP in the early stages for Julian
was that he effectively ran out of work every Thursday
morning at 11 am. The inflow of work to his business
remained fairly constant although now he was processing
it more efficiently. This explains why the 12 month
projection printed in the original article shows a two
man drop. 'I wasn't happy with that, so I used the time
that the programme gave me to go out and market myself
to fill the gap,' said Julian.
Julian produced some serious marketing material including
radio advertising. He also made the effort to go and
personally see potential work providers, not 'cap in
hand' but with a professional business case. BMS makes
no guarantees of work supply at all. However, bodyshop's
that are able to process work cost-effectively and efficiently
are going to be more attractive to work providers.
'As a result, I managed to successfully negotiate with
a couple of new work providers and today Motorvation
consistently turns out over five weeks work for every
month,' added Julian. 'With even more work available
to me you can see why I have decided to expand the operation.'
'I managed to successfully negotiate with a couple
of new work providers and today Motorvation consistently
turns out over five weeks work for every month'
Another aspect of the programme looks at repair methodology
and focuses on the most cost-effective way of completing
the job. This is not just for the bodyshop but takes
into account the needs of all parties. 'I am fortunate
enough to have a chunk of work with no parts discount
and, while the parts profit is okay, it does not compare
to the 65-70% GP that is available on labour sales.
The real-time TRIM system makes sure that the shop floor
remains under control and I suppose the old saying is
true - look after the pennies and the pounds will take
care of themselves.'
Buying and selling time is Julian's core business and
that includes his own time. In Julian's opinion there
is nothing more valuable than the time it takes to manage
rather than cope in any business. 'Motorvation now has
a highly structured growth strategy that is founded
on the resources available in this industry today,'
said John Driscoll, managing director of BMS. 'Many
bodyshops, including Motorvation, cannot be blamed for
their hopes and wishes. Obviously Julian would like
nothing more than £50 per hour the same as any
businessman would. However, until that day comes, it
is vital that the industry controls every cost and employs
as much new thinking as possible in order to move forward.
After all, if the old thinking was so great why are
we in a mess?'
John Driscoll has spent nearly all of his working life
in the crash repair industry and understands the problems
and restrictions of the market. 'When I first met John
and his team, it was like me talking to me,' said Julian.
'Except this time I was listening. What I liked about
the BIP programme was the fact that it was a long-term
and sustainable managed process. Not just "deliver
the kit and clear off". John was quick to point
out that this was a partnership. I was expected to commit
and not to just sit back and expect it to fall in my
lap.
'The initial period was a bit of a nightmare but then
it all began to take shape. In any case, if someone
gives you a proposition based on having a vastly improved
bottom line then I'm up for the pain. I also had the
comfort of knowing that if it didn't do what it said
on the tin then I could have my money back. I like deals
like that. There were also some good spin-offs such
as higher staff morale and I know everyone is excited
about our expansion plans. The only downside so far
is the 20 pounds in weight I've put on!'
Like all bodyshop owners, Julian realised that there
were always going to be things outside of his personal
control. 'It is what you do with what's left over that
makes the difference,' said John. 'Working smarter with
the resources you have makes a lot of sense and sometimes
the commitment and the discipline created when you work
within a managed programme are the magic ingredients.
It's possible that some of us can be too close to the
problem to see the solution.'
'I admire Julian,' added John. 'Not just because of
his success but also because he has allowed others to
share his experience. Not everyone would be willing
to do that once, let alone twice. His story was well
received by insurers as well as bodyshop's where the
Motorvation story has triggered the "well if he
can do it then so can I" response. Julian is well
aware that most repairers would like a substantial rate
increase but, for now, will have to make profit from
controlled costs and volume. I also like the way he
is prepared to take his tie off and get stuck in on
the shop floor controlling workflow. After all, you
do need to understand the machine that makes you money
and a little time spent checking under the bonnet always
pays dividends.
Bodyshop
Magazine article
Award winning Bridgend based bodyshop, Motorvation,
found that, despite good financial planning and business
expansion, the return on investment was not meeting
expectations and blamed a poor return on labour rate
and intense competition. Here, we discuss how a business
health check and a bodyshop management solution dramatically
changed it all.
Julian Allen founded Bridgend based Motorvation in
1989, winning the Local Authority Young Entrepreneur
of the Year Award and achieving a turnover of over £50,000
in his first trading year. An ambitious but controlled
expansion programme followed; resulting in the tripling
of the original bodyshop space to 15,000 SQ/ft, staff
numbers increasing to 32 and turnover rising to £1.6
million in 2000.
By most people's standards, Motorvation would be judged
a success. However, Julian's close management of the
business highlighted that, despite good financial planning,
the return on his investment was not meeting his expectations.
Increasing costs, a poor return on labour rate and intense
competition were all limiting the continued growth of
the business. In the 12 years since it's formation,
the company had changed beyond all recognition, but
so had the business environment.
In a bid to identify potential areas for improvement, Julian
decided to upgrade his existing bodyshop management system
to a Windows-based system that would provide easier access
to a wider range of financial and performance data and chose
AudaManager, the real time bodyshop management system from
Audatex.
However, the discovery led to more than just the implementation
of a new computer system. On advice from AudaManager consultant
John Driscoll, Julian decided to put his business through
a complete health check with PSC; a company with an excellent
track record for providing value added consultancy services.
'Despite some good financial planning, my business was no
longer proceeding at the pace I wanted. The time had come
to admit that the reasons for this and the way forward may
be outside of my expertise, which is first and foremost repairing
cars,' explained Julian.
'Obviously, the rules have changed significantly in the past
few years and the fat in the deal had been trimmed right down.
I knew that if I was to be able to continue to offer my customers
the sort of service they want and meet my growth targets,
I needed to re-think my business strategy, and quickly.'
During the discussions it was proposed that Motorvation implement
a complete solution involving the introduction of a series
of process changes that would work hand-in-hand with AudaManager.
This approach would provide measurable increases in efficiency
and productivity. Essentially, AudaManager's role would be
to assist Allen in managing and monitoring the business even
more closely than before. This would be carried out against
a series of key performance indicators upon which the company's
future success would be based.
'The most beneficial part of the process was having a fresh
pair of eyes on my business,' said Julian. 'I was looking
at meaningful data that surprised me and was presented by
people who were not influenced by emotion or history, just
the facts. How could I ignore it?'
Since then, major changes have taken place. All repair work
is now controlled on the basis of the number of hours available,
rather than the number of vehicles that the bodyshop can handle.
The reception staff and workshop manager have real time visibility
of work in progress using AudaManager and are able to schedule
jobs to meet the clearly defined targets As well as ensuring
efficient workflow, this strategy has helped reduce courtesy
car costs and also ensures reliable customer service.
Motorvation's workshop loading practices now centre around
preset completion dates and daily invoice targets. AudaManager's
barcode-driven Time Recording Input Module (TRIM) is used
by operatives to record the exact time spent on every job.
As a result, workshop capacity is allocated and planned more
effectively than ever before.
'I was hoping that my salvation
would come by way of a major rise in the labour rate
and then everything would be okay'
The introduction of a hugely successful performance
related pay scheme has meant that work is effectively
being pulled through the workshop, rather than pushed,
as productive's pro-actively look for their next job.
In fact they now view every barcode scan as being more
money in the bank for jobs that they now 'own'. This
has increased the right first time philosophy, boosted
morale and drastically reduced the number of come-backs.
AudaManager carries a detailed breakdown of every component
of the damage repair estimate, which helps staff to identify
any additional work needed that was not covered by the original
estimate. 'Not only does this have a direct impact on their
bonus, it also positively affects the company's bottom line
and removes any nasty surprises at the end of the job,' said
Julian.
AudaManager interfaces directly to Motorvation's Sage
accounting software, enabling the decision to invoice
daily to be undertaken without additional pressure on
the team. This move is making a positive impact on cash
flow and generating additional interest on cash reserves.
The system's extensive reporting facilities also provide
Julian with much more current information on which to
base business decisions.
All of these changes have made a dramatic impact on
the productivity and profitability of the Motorvation
operation. The company was already successful, but Julian
is overwhelmed by the results that have been achieved
in such as short time.
'We now have capacity for an additional week's work
every month. Equivalent to an extra 50 jobs ,without
having to extend our resources in any way,' said Julian.
I got my investment in PSC back in the first month and
at this rate I will have paid for the whole programme,
including AudaManager, in just three or four months.'
Interestingly, it was July, traditionally a quiet month
for bodyshop's, that amazed Julian. 'I made more profit
in a single month than I had ever made in any other
month over the past 10 years,' he said. 'Unfortunately,
in August I have to confess that I took my eye off the
ball and the figures fell away. Other factors such as
holidays did not help. However, I quickly learned from
that experience, put the business back on track, and
it won't happen again.'
As with many bodyshop's of their size, Motorvation were
doing many things right, hence their success to date.
But as they grew, their processes had become increasingly
labour intensive and time-consuming and Julian was personally
running out of hours in the day.
'The business climate has undoubtedly got
tougher, so you have to find ways of increasing efficiency
and optimising the return on your resources.
'I am in the business of buying and selling time and
AudaManager was simply the best tool to control and
maximise every opportunity. The system has given me
the time and the information I needed to run the business
more effectively than before, freeing me up to explore
other opportunities. In fact all my attention just now
is focused on finding additional work provision to fill
the increased capacity we've now created.'
Julian intends to use the many reports available from
the AudaManager system to demonstrate to potential work
providers the professionalism of his business and the
controls that are in place to ensure high quality, cost
effective and efficient repairs. He is also planning
an aggressive local marketing campaign to attract additional
retail work.
The Motorvation story is typical of many businesses
that have grown as 'owner drivers'. It would be easy,
in a case study, to pick a bodyshop that was in dire
straits because any new measures are bound to have a
positive effect. However, what is interesting is that
Julian Allen's business was profitable and there are
many that would have been satisfied with that. 'The
whole point of the exercise was to implement a programme
of sustainable business improvement and not a quick
fix,' said Julian. 'If I am honest, I will say that
there were two basic flaws in the way that I was managing
my business.
'Firstly, I was too close to the problem to see it clearly
and a little scared of stepping back. It was the fresh
pair of eyes and decent data on my business that cured
that one.
'Secondly, and I suspect that this applies to a large
number of bodyshop's, I was hoping that my salvation
would come by way of a major rise in the labour rate
and then everything would be okay. Instead, I've taken
control of the situation and, using AudaManager, improved
our financial position by in- creasing the efficiency
of the business.'
'I've had dealings with firms of consultants but this
is the first time that I have known strategic business
planning to be combined with an IT system to produce
results. The combination and potential payback is awe-
some and I would not hesitate in recommending it to
anyone,' said Julian.
|
 |
