Tuesday, February 1, 2011

A Collision with Goverment Regulation

When you buy a franchise you expect to take a risk. Few people assume the greatest risk to their small business investment will be created by government legislation.


But that’s the case for entrepreneur Jack Biddle and his Collision on Wheels of Greater Pittsburgh franchise, a small business that makes cosmetic repairs to cars at customer locations instead of at a body shop.
Not that the business model doesn’t make sense; the problem is the franchise opened just as the bottom dropped out of the new car business, a segment of the industry responsible for 90% of the franchise’s revenue. To make matters worse, Gary explains, “The Cash for Clunkers program is killing us because the cars that are defined as clunkers are typically cars that would have been repaired and sold… and that repair is something we could have participated in and generated revenue from.”

While it might sound odd that brand-new cars need cosmetic repairs, very few arrive on a dealer’s lot in pristine condition. “New cars get small dings, acid rain on the ships… very few arrive without needing some sort of repair,” Gary says. “So we do a number of new cars. We also do a lot of the cars dealers buy at auction – typically low mileage vehicles with less than 15,000 miles. We rejuvenate them so they can be sold as ‘almost new’ cars.”

“We have the skills, but we choose not to do structural repairs,” Gary continues. “We are cosmetic repair specialists; in a way we’re like plastic surgeons for automobiles.”
 
Read the entire story at Guidant Financial's website.

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