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The right kind of business growth

The right kind of business growth
Hauraki Panel and Paint may be simply panelbeaters to most, but they're a lot more than that thanks to implementing a smart business growth strategy.

Hauraki Panel and Paint may be simply panelbeaters to most, but they're a lot more than that thanks to implementing a smart business growth strategy.Alan Le Noel knew he needed to look for a smarter way to differentiate the service at his panel and paint shops

The dusty, noisy environs of old have been replaced by high-technology machinery, bright colours and clean, sparkling floors. The business even sends out regular text messages to clients with an update on how their vehicle is progressing.

Alan Le Noel is surgeon general of this new style operation that, in itself, has had its own form of reconstructive surgery. In a period of acute economic downturn, he has not only radically expanded the operation, rebranded the experience and applied a number of system innovations; he has also developed a mission statement that he plans to prominently display. This was developed in consultation with his staff, who downed tools to lend their thoughts to the process.

Traditionalists might say he has lost the plot but Le Noel believes this is a classic case where brains can be successfully integrated into what is generally seen as a brawn industry.

“Ours is a grudge purchase, and people are traumatised after an accident. We figured that if we took a personal approach, and brought this into our brand, it would work to our advantage.”

Le Noel started 23 years ago as an apprentice body worker. He moved up the ranks to become manager of a large city shop. He found he was worrying about every facet of the operation—with the exception of having to come up with the wages—so figured he may as well stress about his own venture.

In 2004 he purchased Howarth Panel and Paint. It was a long-established business in the Auckland suburb of Birkenhead and he thought it would be the full extent of his empire. But he found that he liked a challenge, so in June 2006 he bought another shop in Mt Wellington.

That might have been it had he not changed accountants and, in the process, his whole approach.

“I realised that our industry is often price-based—sometimes at the expense of quality—so I knew we needed to look for smarter ways to differentiate the service. When I talked to Bellingham Wallace about, this they agreed and that set me on a totally new path of thinking and doing. This included, mid-recession, expanding the business through more acquisition.”

He admits that buying a business in a recession seemed a massive risk but it was a calculated one, and he had implicit faith in the advice he was given. So much so that he, in fact bought two businesses; one in Manurewa in February 2009 and one in central Auckland in October this year.

“The idea of a geographical spread was not initially part of the plan but it has transpired that way. Flexibility is now part of our model and in this business we can feed into any of the four locations depending on volume and demand.”

The reconstruction didn’t stop there. Again at the suggestion of accounting firm Bellingham Wallace, and in order to achieve seamless coordination between the various entities, Le Noel put in place various quality-assurance and operational-efficiency programmes. Computer systems link all the branches and 90 percent of the staff has achieved the highest Bronze Level status in the US-developed I-CAR technical skills standard.

Le Noel spends a large part of his time studying national and international trends within the collision repair industry. He does this to keep abreast of the latest repair methodology and equipment and also to ensure he and his team understand new car technology and materials.

The most radical overhaul, however, has been in Le Noel’s attitude to people.

“I’m essentially a doer and originally expected everyone to be like me. Managing staff and growing a business forced me to change the way I behaved and looked at the world. I now put an emphasis on respect—within our team and especially for our suppliers and customers. I listen, share ideas and I enjoy seeing the effect my change of attitude had.”

Again, with Bellingham Wallace’s guidance via its subsidiary Sustainable Advantage, Le Noel was encouraged to develop a common mission, goals and other elements to define the business. This was to ensure everyone was working to a common purpose. With the recent acquisitions, this was seen as critical.

“Initially I thought the process was a bit airy-fairy until, one day, after numerous sessions talking to the team, customers and others, taking notes, and then spreading the pile of notes on a board table … the epiphany took place.

“Essentially we arrived at the point of iterating: We help take the stress out of motor vehicle accidents by delivering the right repair solution to your unique situation. It all became customer-focused and solution-based rather than just repairing dings and dents.”

Bellingham Wallace business improvement director Aaron Wallace says Le Noel’s approach to growing his business in depressed times has put the venture in good health.

“Growth in tough times should be built around quality service and having a plausible unique selling point. Rather than hunkering down and battling on, think about developing strong relationships with referrers/customers/suppliers, creating efficiencies in the manufacturing process by investing in training and new technologies, and being smart about how to deliver your product and service.”

He also cautions about understanding the correct symptoms of business growth.

“Good growth comes from getting perpetual clients or returning clients. Bad growth stems from discounting, attracting bad payers, growth in a product that detracts from the main high-margin ones, or where major capital expenditure is required but return on investment is poor. Growth also comes from outside-the-box thinking to create new opportunities, have belief in them, and then take action.”

Wallace observes that stagnant or retracting businesses often have business leaders who are slaves to the business exercycle.

“These are the kind that spin their wheels, go nowhere and see a reflection in the mirror of a tiring, unfit business with no real idea on how to get off it. More importantly they’re too scared to ask for help, and when they do, they look for the cheapest option.”

He cautions there’s not necessarily a silver bullet that’s going to fix everything, so expectations should be real.

“It takes hard work to create your own fortune and this doesn’t happen by luck. Don’t expect to pay an advisor $5,000 then expect a half-million-dollar profit. The cure may come from improving a hundred things by one percent, not one thing by a hundred percent.”

Life beyond the numbers
There’s more to fiscal well being than just the bottom line. Get a business checkup and make sure it includes: 

Strategic planning, including financial modelling. Flesh out new ideas, tactics and how to compete in a changing market through achieving organic growth
Governance
Assistance with M&A activity
Acquiring funding to help with R&D for future efficiencies
Assisting with knowledge around the power/impact of discounting and knowing true breakeven