When the recession hit in 2008 and Debi McConnell’s husband lost his job, she decided it was time for her to go back to work.
She had previously worked as a banker, as well as a department head at Green Tree Financial, a St. Paul, Minn.–based lender, where she gained marketing expertise, orchestrating a large-scale direct mail campaign for the company.
But rather than jump back into the corporate pool, she decided that this time she would re-enter the workforce as a small business owner. She hired a business broker to help her look for local companies that were up for sale.
In her search, she came across an ailing auto repair shop that was the right price—$265,000.
“[I] thought with my background in marketing—you put a little marketing behind this—it could actually be a gem,” she says.
With no prior experience in the industry, McConnell pulled the trigger and bought the shop in 2009. She has since used her financial and marketing expertise to grow her business, Medi-CAR Auto Repair in Rosemount, Minn., from a struggling shop into a $770,000-a-year operation.
My father is my mentor. He is 79 years old, and he just bought another company. I think he probably owns nine or 10 companies. He’ll never retire. I guess I’ve fashioned my career after him.
As a banker, I dealt with a lot of small business owners. Essentially, I evaluated the cash flow of the company, and whether it would be able to pay the principle of a loan with interest. I worked with construction companies, cosmetic companies, heating and air conditioning. I learned a lot about different industries.
It gave me a really solid foundation for when I bought my shop. Given my background, I was able to do an analysis of the financial statements. I saw a company that was just limping along. The financials were fairly dismal. From what I knew of the previous owner, I thought if he was still making some money with no background in business, I could use my marketing and finance experience to come in and really turn it around.
The first thing in the morning is looking at the numbers. I’m looking at car count and sales from the day before.
I like to see that we’re doing 15–20 cars a day; that’s on a good day. On a weekly basis, I like to see that my margins are covering my costs and expenses. I would like to see at least a 55 percent gross profit margin, meaning that 55 percent of the sale comes back to the shop after parts and labor. One benefit to not being from the industry is I have no ego and have no problem asking for assistance. I became a sponge. I received advice from other shop owners and consultants in the area. I also did research, using training materials from the AASP resource library to learn how to set prices to achieve the profit margins I wanted.
I came up with these numbers because I know the capacity of my shop. I know how many cars we can service during the day. For example, 10 cars a day is too low. My guys would be sitting around. And same thing as far as sales; I know what my fixed costs are, so I know what I need to make to cover my costs. That’s something I look at daily.
We hold a lunch meeting once a week, usually on Wednesday.
I buy lunch for the guys. It’s our chance to sit down and debrief the week. I always give a report of where we’re at with marketing, so they know what’s coming in and what’s going out.
When I took over the shop, we were at about $35,000 a month. I doubled that within two years. The previous owner did virtually no marketing and underpriced his work, resulting in low profit margins, and he made no investment in the image of his shop. Considering this, doubling revenue was fairly easy. I set prices to achieve my desired profit margin, I cleaned up the shop, and most importantly, I invested a fair amount in marketing, which has primarily driven the increase in revenue.
My first marketing challenge when I bought the shop was changing the name. The shop was formerly called SaveMore. I disliked the name, especially since I wanted to go after a higher-end clientele.
It took me awhile. It was kind of a struggle. But the medical theme really made some sense to me. It’s the long-term care—the trusted relationship between the physician and the patient. All of those things really resonated with me. So I decided on Medi-CAR Auto Repair. I also thought the name would really be a good opportunity for marketing down the road.
For example, on our website (medi-car.com), we have a section called “symptom checker.” Say your car’s symptom is a squealing brake; you can go into that section and find the potential diagnosis of a squealing brake.
Even though I started in banking, marketing is really one of my strengths. When I worked at Green Tree Financial, the department I ran was funded by a massive direct mail campaign. I really learned about consumer data and looking at all the analytics behind a direct mail campaign.
I started doing direct mailing at the shop in 2011. It’s fairly expensive. I contract a third-party company, which costs me around $5,000 a month. On the other hand, I know how to evaluate direct mail, so it makes a lot of financial sense
It’s very simplistic. The service breaks down demographics based on location. Right now I’m mailing within three miles of my shop. It also does breakdowns according to household value and household income, as well as single-family versus multiple-family homes. Based on these breakdowns, the service identifies different cells.
Periodically we pay for a penetration report, meaning they tell us what cells our current customers belong to. Then we tweak our mailing list on a bimonthly basis to more heavily target the demographic of customers that are coming into our shop.
Contracting the third-party company has been a good investment. It is my number-one generator of new clients. Right now, I average eight new clients per week. For new customers, the average repair order is over $250. This adds up to over $100,000 in revenue from new customers a year, which more than covers my costs for direct mail.
Throughout the day, I review every repair order from the previous week and do follow-up calls with customers. This helps for a couple of different reasons. I make sure all the services are being described accurately and that we are documenting everything correctly. Also, since the customer may not have seen me when they were in, doing the follow-up calls lets them know that I’m still actively involved in the business.
We close the shop at 5:30 p.m. I’m usually here until about 6:30. My employees, they stay around if they want to chat or talk about the day. They can count on me being there. If they feel like they need to share something, or they have a gripe or a grievance, that’s when they can talk about it.
You want to treat your employees really well because once you have good employees, you can’t lose them. Now I involve the whole staff in the interview process. I ultimately make the decision, but I get input from everybody. This is somebody who is going to come in as part of the team and whether they work in the back or the front, we all have to work together. More than anything, I value the guys I work with.
