by Chasidy Rae Sisk
From ADAS calibrations to artificial intelligence, from technical skills to evaluating financial health, running an auto body business requires knowledge on a vast variety of topics, and it can be challenging for collision repairers to learn everything they need to know.
That’s why associations like ABAT exist: to help strengthen its membership. And true to form, ABAT made sure to “Finish Strong in 2023” with a webinar series which ended last month. The third and final installment featured three industry experts: Rachel James (Torque Financial), David Willett (Spark Underwriters) and Diane Benting (BodyShopJobs.com).
In “Financial Planning for the Whole Shop: Technician to Owner,” James began by acknowledging that it’s typically considered “taboo” to talk about personal finances which is why so many people are uneducated on the matter. She advised, “When it comes to financial planning, the real first step is just thinking about what your future is. As a business owner, look ahead to 2024. Maybe it’s going to be your growth year where you buy a new location, expand the shop or hire more employees. Or maybe you’re planning to sell or retire. The idea is similar for a painter, prepper or technician – are you looking to buy a new home or add an addition? What do you want your future to look like? Thinking about it can help you manifest it and actually achieve your goals.”
She explored the five main things that people do with their money that need to be considered when thinking about financial security: save, spend, grow, protect and give. The hardest one is saving, and James explained that the goal is to save enough money to cover life’s goals and surprises and help you afford a comfortable life. She recommended saving 20 percent of one’s income, allocating it first toward an emergency fund and then into a retirement account.
Having an emergency savings account in case something goes wrong is a key component to financial security. For businesses, it’s important to have extra cash flow in an operating account that ensures funds are available to afford payroll and all the bills if the business endures several slow months. The general guideline is to keep the equivalent of six months worth of living expenses in an easily accessible account.
Savings is an area that the majority of technicians have an issue with, according to James, who shared a national statistic indicating 50 percent of Americans could not cover an unexpected $400 expense without using a credit card or borrowing the money. “This is something body shop owners should be aware of. If your techs are struggling at home and something goes wrong, like their water heater breaks, this is a significant stress point for them. Money can be the source of all sorts of negative emotions that show up at work if they aren’t managed, so make sure your techs are learning to protect their financial security too.”
Spending is more fun, but it’s easy for spending to eat up cash flow, so James recommended that everyone track their spending to pay attention to where their money goes each month. “The easiest way to change your finances is to observe your finances,” she noted, suggesting that everyone add 30 minutes to their calendar to review their bank statements and/or P&L every month. “A lot of shop owners don’t fully understand their profit and loss statement, but the more you observe it, the more trends will jump out at you if there’s a significant change. If you consistently track it every month, you’ll immediately catch it if something isn’t quite right.”
Growth includes investing money in ways that match one’s goals, timelines and tolerance for risk. “It’s important to understand your risk tolerance. Younger people can be more aggressive, but older folks will want to be more protective of their retirement funds,” James coached as she enumerated the benefits of starting to save earlier in life.
People want to protect their most valuable financial assets because they’ve worked hard for them, and that’s where the benefit of income protection comes into play, often in the form of disability or life insurance. It may behoove shops with multiple owners to invest in policies to protect the other party in case something happens to one of them, she said.
Lastly, when it comes to giving, James noted that it’s often easier to give to others than to take care of oneself, and although she encouraged people to donate to charities that matter to them when the funds are available, she stressed, “If you don’t take care of yourself, you’ll be the one who needs charity later, so it’s important to take care of your financial security first and then donate to the causes that mean the most to you. The more disciplined you are at saving, the better off you’ll be in the future.”
Financial planning is a form of protection against a certain risk, but that’s not the only risk protection that was discussed during ABAT’s webinar.
Emphasizing the impact technology has on the collision repair industry, Willett emphasized the need for each shop to evaluate how to manage the associated risk with their insurer, though he noted, “A lot of times, it isn’t about purchasing insurance but getting smarter about how you control your risk.”
When it comes to ADAS, he stressed the need for shops performing calibrations to establish a separate entity, while those outsourcing calibrations should ensure they have coverage to protect them from liability. He encouraged shops to learn more about electric vehicles (EVs) rather than being afraid of them, and he recommended shops repairing EVs should increase their pollution policies. Although autonomous vehicles aren’t very common right now, Willett pointed out that some cities have already allowed them, and these vehicles will eventually make it into shops, so it’s important to evaluate that risk as well.
As shops continue to struggle to find qualified help, Benting offered a solution: bodyshopjobs.com, a nationwide job board where industry professionals can post or search for a position. She offered a 50 percent discount off a job posting for members with the coupon code “ABAT.”
Want more? Check out the January 2024 issue of Texas Automotive!