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Planning for the future: Tips on financial, risk mitigation & new hire planning

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Business Practices
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An Auto Body Association of Texas (ABAT) webinar held on Wednesday covered several things for business owners and employees to keep in mind going into the new year — new hire recruitment, risk assessment, business and personal insurance coverage, and financial planning.

Amid the ongoing technician shortage across all automotive repair sectors, employee recruitment and retention are stressful, but necessary, efforts for collision repair centers.

Diane Benting, founder and president of, shared how her website is one route employers and job seekers can take to find what they’re looking for.

She said the site is visited often by job seekers across the country including Texas, Florida, California, and New York. Benting launched the site in April as a job board for the collision industry where employers can post job openings and job seekers can post résumés. Benting said the site can be used by repair facilities, insurance companies, distributors, manufacturers, and others.

Searching for and posting résumés is free on the site.

To post a job, employers fill out a form on the website, which includes the pay price range, then add it to their cart and click “post job now”

“You actually have to be actively seeking out people, which is why I have the search résumé option,” Benting said. “Don’t just call the first person that you see. You need to call and set up multiple interviews with people because a lot of times, people now, they don’t show up for interviews. Or you think they’re going to work out and they sound perfect and then two weeks later, they don’t so you need to have a backup in mind.”

David Willett, chief underwriting officer with SPARK Underwriters, shared his thoughts and advice on risk management and business insurance coverage related to vehicles equipped with advanced driver assistance systems (ADAS), electric vehicles (EVs), and autonomous vehicles (AVs).

Oftentimes, ADAS comes with cybersecurity measures like, for example, if a shop sublets ADAS calibrations, Willett said. In that case, be sure the vendor is covered with insurance that would also protect your shop if their work is done incorrectly.

Standard operating procedures (SOPs) are also important in managing risk, he said.

“The answer a lot of times is not [to] purchase insurance,” Willett said. “It’s get smarter about how you touch it [the vehicle] and how you work with it and how do you control your risk? Trading dollars with an insurance carrier is not always the best answer. In fact, it seldom is.”

Willett added that shop owners should be mindful of carriers’ knowledge of safe and proper repairs following OEM repair procedures, including ADAS calibrations.

As for EVs, the main thing to remember about them is to carry pollution cleanup coverage, which Willett recommends going above the typical $25,000-$50,000 that carriers offer. Based on some of the products and vehicles currently on the market, he suggests $150,000-$200,000 as well as carrying short-term pollution liability insurance of at least $1 million.

Willett also noted that while fire risk can be higher for EVs, it’s still a risk to consider with internal combustion engine (ICE) vehicles, say if a battery with electrical issues is left connected and unattended overnight inside a shop.

AVs, though not on the mass consumer market yet, will eventually make it to collision repair shops and when they do, accident liability may come into question, Willett cautioned.

“If you’re out on a test drive… who’s driving the car? And in terms of having an accident, who’s going to pay the claim? I think you would want to make sure that you have a carrier taking care of you that has this risk covered for you,” he said. “They’re going to take it and they’ll subrogate back against whoever’s responsible for it, but you don’t want to get it tied up to where your customer who brought the car to you to begin with can’t be made whole on it as quickly as possible.

On the financial planning end of the business operations spectrum, ABAT welcomed Rachel James, Torque Financial Group founder, to the discussion.  Part of the information she provided was also broken down to be useful on a personal level for all employees.

The first step in financial planning for business owners, she said, is to look ahead to the next year before the last minute. Top things to consider include, will it be a growth year in which more employees will be hired? Will you expand or buy a new location? Maybe you’ll think about selling.

“Part of planning is really just taking a moment to think about what do you want the future to even look like if you had a choice? …giving yourself some think time and putting it into your calendar,” James said.

For employees, some future items to consider are when will you buy your first home? If you own a home, are you thinking about home improvements?

James split financial planning and security into five categories: saving, spending, growing your money, protecting your money, and charitable donations. Saving, she said, is typically the most difficult.

“Part of the success of financial planning for the business, for your personal finances, or anything in between — whether that’s $5 a month into a savings account or a dollar a month or a penny or whatever it is you can afford — [it takes] creating a habit so that you’re slowly easing into this idea of creating savings,” James said. “The sooner you start, the more impact you’ll make on your future.”

Saving money is also made easier by tracking monthly spending, she added. Her research has found that 20% of income should go toward savings and an emergency fund first then toward retirement, keeping IRS retirement plan yearly contribution limits in mind.

One retirement plan option specific to collision repair businesses is the Society of Collision Repair Specialists (SCRS) Multiple Employer Plan (MEP).

The plan offers:

    • The ability for employees to make Roth 401K contributions;
    • Increased savings limits for both business owners and employees;
    • A wide range of employer match options, including the ability to add a vesting schedule; and
    • Automatic enrollment for employees, which provides owners with a $500 tax credit.

James suggested individuals have three to six months in savings in an emergency fund, which is dependent on fixed expenses such as a mortgage, groceries, car, et cetera. She said she’s met with more than 1,000 technicians over the last five years and “a large majority have had an issue with savings.”

“The national statistic is that more than 50% of Americans can’t cover an unexpected $400 expense without using a credit card or borrowing money… the average 401k has about $45,000 in it,” James said.

“If your technicians are at home struggling and something goes wrong — their water heater breaks or their roof starts to leak or something happens — it could be a significant stress point for your employees. I encourage you too that if there’s anything in this presentation that speaks to you, let’s make sure your technicians learn about this stuff too because if your technicians are more comfortable in their budget and they’re not living check to check, there’s less stress in their lives. But if it is really tight and there’s no room, man, does that stink. Money can be the source of all sorts of agony, stress, anxiety; all these emotions and those things do show up at work if not managed.”

While the easiest aspect of having money is probably spending, she added, a way to effectively manage it is to take the time to look at your bank statements and cash flow, in business and personal accounts.

“Observation will change results, it will change output,” James said. “It’s very hard to fix things in December. It’s so much better if you can catch things early on… if you’re creating this system in your process where you’re consistently tracking this every month, you’re going to catch it immediately.”

She suggests scheduling 30 minutes once a month, and even including a simple reward, like your favorite dessert or coffee, as motivation to look forward to it. Apps can assist with that as well — such as Mint, QuickBooks, and CCC — or schedule time with your CPA or bookkeeper once every quarter, she said.

“There’s all sorts of disruptions that could happen to your business,” James said. “What do you keep in your operating account so if you had a slow month or two, can you afford payroll? Can you afford a jobber bill, the parts bill, all those things? I think it’s a good foundation to planning regardless of your position in the industry of having dollars that are there for the future, for the what-if’s?”

When it comes to protecting money, professionally and personally, James highlighted two options — disability and life insurance coverages. Most disability plans cover 60% of income but some cover more, she noted.

When considering life insurance, think about how much income goes to your household and how many people are depending on it.

“Let’s say $100,000 a year and it’s going to be 10 years until your youngest is 15, you may want to have $1 million or more of coverage just to at least get income back into the household if you were to pass away unexpectedly, particularly if everyone’s relying on your income for their livelihood,” James said. “Sometimes people will incorporate also the debt that they have so cost of the mortgage or cost of college for children.”

In business, there’s loss of life in ownership to consider, she added. “Do you have cross policies on the owners in the organization so that in the event something happens to someone, you’re protected? …what does your organization look like and what are the risks that potentially could hit at ownership level or even in your family?”

Lastly, charitable donations can be considered but only after all expenses, emergency funds, savings, and retirement, James said.

“I like to use the analogy of if you’re on a plane, the flight attendant will usually tell you if the masks come down, put the mask on yourself first and then help the person next to you,” she said. “[The] same is true with financial planning. If you don’t take care of yourself, eventually, you’re going to be the one on the receiving end needing the charity later.”

Another financial planning aspect to consider is enrolling in a high deductible health plan (HDHP) to qualify for a health savings account (HSA), which is a triple tax-free account to put back money for qualified medical expenses, she said. Among the medical expenses HSAs can cover are co-pays, prescriptions, doctor visits, and deductibles.

HSA contribution limits are set by the IRS and depend on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual.


Featured image credit: mapo/iStock

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