Setting Up for Shop Success
Joe Adessa could see all of it.
Standing in the middle of the expansive 18,000-square-foot former warehouse, Adessa saw the two-post lifts, all 10 of them, spread across a 20-bay shop floor. He saw the top-of-the-line alignment rack to the side. Tire changers, balancers, the latest in diagnostic equipment—all of it was there when he looked.
And then there was the front of the shop; Adessa could see the 6,000-square-foot palace of a lobby with separate rooms and wall dividers, allowing business folks to get work done in peace and kids to let loose while their parents waited on their vehicles, no one stepping in each other’s vicinity let alone on each other’s toes. There were TVs in every room, three service advisor stations, a show car, and even a fountain.
Adessa could see all of it—even if none of it was there yet.
In late 2013, Adessa stood in the then empty former warehouse at 5797 Evans Ave in Denver’s affluent southeast corner, and he could envision the shop he always dreamed of opening.
“It was there, every detail I could think of,” he says.
Adessa had a plan, an aggressive three-year strategy to build a $4 million business from scratch, all of which started with him pouring his personal savings (and some financing) into the four walls that surrounded him on that warehouse floor.
“I’m not a patient person,” Adessa says with a laugh. “I knew the shop I wanted to open, and I saw the opportunity. I took it.”
It was a risk, he says, an “all-or-nothing,” $1 million deal.
And he had no choice; Denver Automotive & Diesel Center (DADC) had to succeed.
Despite having not stepped foot in a shop in nearly a decade, Adessa is no rookie to repair shop ownership. He owned a facility for eight years, located about a block-and-a-half from the current DADC site.
He built that first business on quality and value, and a client base made up of upper-middle class vehicle owners. The shop wound up successful enough for Adessa to sell it in 2004 so he could pursue his other passion full time: drag racing.
Adessa spent the next nine years focusing full-time on his NHRA racing team, J4.
“It was a blast, just traveling all over the country,” he says. “We stayed competitive for a while, but you need to have millions of dollars a year [in sponsorships] to stay up with the Schumachers and guys like John Force.”
With a wife and three kids at home, Adessa became tired of the grind that came with the financial pressures of the sport. He sold his team to his driver, and decided to get back to his original passion of fixing cars.
Adessa’s vision for his dream shop was based on a simple concept: Take everything that makes dealership service centers successful—the equipment, training, expertise, scale, vendor relationships, cash flow, etc.—and cram it into an independent shop’s customer-centric framework.
The execution, obviously, is much more complicated.
In his previous experience as a shop owner, he knew how to connect with customers on that independent level (it’s how he grew the 8,000-square-foot shop into a $1.3 million business) but never felt he had the scale to truly service a client base in the way it deserved, being an all-encompassing, one-stop facility that not only provided top notch work but an overall experience that exceeded even the highest of customer standards.
That’s what he’d do with the new shop, he says.
And then he found the building at 5797 Evans Ave.
“It was exactly what I wanted in the exact area where I used to work out of,” he says. “Being just a shell of a building, I could set it up the exact way I wanted.”
The space, roughly 18,000 total square feet, would lend itself nicely to a $4 million shop as it reached capacity, Adessa figured, based on car count and expected average ticket.
“I worked in a smaller shop and grew it; I’d already gone through that,” he says. “I wanted to skip that phase and just go big. As I said, I’m not patient. I jumped at it.”
All he had to do now was figure out how to turn an empty building into a multi-million dollar business. That’s where his plan came in.
Before signing the lease on the building, Adessa’s prep work included networking to have collision repair be a portion of the business. In fact, collision was the original “C” in DADC. Permit hassles and legal issues thwarted that plan (despite him having prearranged partnerships with insurance carriers and automakers such as Tesla).
Adessa used money left over from the sale of his racing team, as well as he and his wife Jaime’s personal savings, his 401k, and a loan through the Small Business Association, to fund the renovation of the building and other costs to get the business up and running. In all, it would total close to $1 million to open the doors.
Adessa bet his financial security on the shop’s success—and to ensure it, he focused on developing four areas of the business from the get-go.
1. Shop Setup. Diesel work was going to be one of the shop’s largest advantages, Adessa says, as it is a very underserved segment in Denver. In order to corner that market, he had to equip the shop to handle large vehicles from the fleet accounts he hoped to gain.
He had double-wide 16-foot doors cut into each side of the building. One leads into the backend of the shop, where vehicles leave the 12,000-square-foot shop floor. The other is an entrance, where customers pull into a dealership-like service entrance with a polished concrete floor and a reception desk where Adessa’s service manager, Tommy Lee, works out of. Lee’s name is printed in large letters across the base of the desk, and the clean, crisp room has space for two large trucks.
The shop floor has 10 15,000-lb. lifts and an 18,000-lb. alignment rack. It has exhaust tubes dropping into each bay from the ceiling. There’s a technician desk near the tech “wash area,” complete with restrooms.
Adessa has a glass-walled office in the corner of the shop, which also opens (through a separate door) into the 6,000-square-foot front office and lobby area (more on that later).
“Everything was done in mind with the simplest, most efficient way to move cars through,” Adessa says.
2. Staff. Adessa knew Lee from their shared history in area shops. Prior to opening DADC, Lee worked as the manager of a local dealership service center. Him coming on as Adessa’s service manager was a crucial aspect of Adessa’s start-up plan, he says.
“Tommy’s connections and loyalty from customers around here is incredible,” Adessa says. “Him coming here was guaranteeing us probably 200 customers off the bat.”
And it helped in recruiting the rest of the staff. Finding good help is always the biggest complaint among shop owners, Adessa says, yet he aimed to open with three master-level techs.
“I wanted the best,” he says. “So, I started with Tommy and just asking him, ‘If you could hire one person [in this area] who would it be?’ And that’s who we went and got.”
Adessa worked hard recruiting for three months before the shop would open. He met the candidates for lunch or dinner, and gave his pitch of a shop that would operate in a modern, efficient way with the latest in technology and a focus on a team atmosphere. He also offered to add $5 per hour to whatever they were previously making, as well as healthcare and a 401K program.
He landed three techs with diverse, experienced backgrounds.
3. Marketing. It started with the name, DADC, an homage to where Adessa went to trade school—Denver Auto Diesel School, which is now a Lincoln College of Technology campus. The school’s name used to be on regular radio and TV commercials, and Adessa says he felt the similarity would spark instant recognition for his shop.
“The idea was to have people think those initials registered for some reason, so the business sounded familiar,” he says.
He then used the address—5797—for branding purposes. The shop’s website url is 5797auto.com, as well as its email addresses. And the phone number is 303.757.5797. The idea was to make it as easy to remember as possible, he says. Also, both the address-affiliation tactic and the name help with search engine optimization.
Having been in the area before, Adessa worked to regain his old customers. He started a direct mail campaign to the ZIP codes of his former clients, with information about the news shop and his return to the area.
He also went door-to-door to regain old fleet accounts, and initiated a full social media campaign (they have a respectable 300-plus likes on Facebook). He did Groupon offers and used Amazonlocal to get in front of customers.
And just after opening in May, the shop hosted a classic car show that brought 600 people to the shop and raised money for a local charity.
“We wanted to come at it from all angles,” Adessa says of his marketing strategy. “Overall, my goal was to personally bring in one new customer each day.”
Just get them in once, Adessa says. That’s all they had to do. The company’s service would do the rest.
4. Customer Service. The lobby of DADC is large with a polished concrete floor. In one corner there’s an area segmented off by leather couches. There are TVs at every glance. There’s a work-station-like counter with power plug-ins. The shop is equipped with WiFi—which helps in the lobby’s separate “serenity room,” as Adessa calls it, a smaller offshoot room where customers can find privacy to get work done. There’s also a children’s room with chalkboard walls, toys, books and carpet. Free coffee, bottled water and snacks are also available.
There’s a large check-in counter, and a garage-door-style, floor-to-ceiling window that looks out onto the floor. The shop has a shuttle it uses to pick up and drop off customers, as well.
“I have kids, I know what it’s like for someone to be in a shop, waiting with their family,” he says. “We want to make it as comfortable and private as possible. We don’t want people on top of each other or anything like that. All of that thinking went into this.”
Bob Spitz of Management Success! weighs in on whether size really matters for a successful auto service center.
There’s an old joke: How much is a bay worth? Well, a bay is worthless if you don’t have a technician who can perform in it.
Square footage is meaningless if you don’t have the technicians to perform.
There are two schools of thought on shops size: some people like mega shops—your giant auto centers and truck centers. Some people like smaller, more compact shops. Practicality-wise, I’ve seen more success in smaller shops. The majority of the most successful shops I’ve seen are seven bays and three technicians.
That set-up works for a few reasons. It gives each tech two bays—one for a vehicle awaiting parts; the other for the one they’re working on—and it leaves the shop a quick-service or inspection bay. It also is far simpler to manage personnel and maintain efficiency in a smaller shop. That seven-bay, three-tech model—you’re looking at a million-dollar shop right there if you’re really humming.
I always say that, if you own a shop, you are in the business of managing people, not fixing cars. It takes a tremendous amount of personnel skill to manage a large 10-bay or 12-bay shop. Most people can’t do it. You’re almost getting into a dealership model at that point.
What I’ve seen work the best is building that smaller shop and really focusing on efficiency, and then, if you’re looking to expand and grow, look at multiple locations.
The shop opened in mid-May. The first two weeks were slow, Adessa says, but once more and more residents in the area realized the shop was open, business picked up quickly.
With three techs, DADC topped $100,000 in sales in June, its first full month in operation. It maintained that pace through the summer, and Adessa expects a 10 percent increase per month through the winter.
“It’s pretty much right on with the projections we had,” he says. “Now, it’s just building up that customer base and earning that trust.”
The shop’s Groupon campaign has been popular with more than 150 purchased in the first three months, he says, and DADC has earned a 100 percent satisfaction rate through its review service.
DADC also picked up fleet accounts, including a large plumbing service and two ambulance companies.
Next up for the shop: Add staff as sales volume grows.
“We want to pace it correctly, and make sure we’re staying busy,” he says. “Keep up the marketing, and grow this [organically] the rest of the way.”
Now as Adessa looks out at his shop, he sees a healthy, growing business, one poised to make large leaps in 2015.
“We have this shop I dreamed of opening,” he says, “and now we can grow into it and reach those goals.
“I am [satisfied]. I always want more of course. Patience isn’t one of my strong suits, but this wasn’t done [in haste]. We had a plan, we accounted for everything, and now it’s just keeping it going.”