By Hope Belli Tinney, Washington SBDC
YAKIMA, Wash. – Peek inside Auto Art and Collision Repair at closing time and it looks like the answer to a math problem: how many average-size automobiles can you fit into a 5,000-square-foot body shop?
A photo on the Facebook page (https://www.facebook.com/AutoArtandCollisionRepairLLC) shows a crazy quilt of cars parked bumper to bumper, with barely room to walk from one end of the shop to the other.
“When people used to say, ‘location, location, location,’ I never believed them,” said Irma Philp, who owns the business with her husband, Mike. Now she believes. After years of being down a side street and around the back, the business now commands a corner lot at a four-way stop. Potential customers can’t help but notice the new building at South 18th Street and East Mead Avenue.
The move cost them nearly a month of revenue, Irma said, but revenues are up 34 percent from last year.
“It’s been spectacular,” she said, and she and Mike already are making plans for a 2,000-square-foot expansion.
“We stand back sometimes and I tell (Mike), look how far we’ve gotten,” Irma said. Mike has made this happen, she said, but he responded, “We wouldn’t be where we are without both of us.”
Taxes, loans challenge young business
Mike started doing body work in high school, Irma said, and by 2004 opened his own shop. Irma worked for a competing auto body shop but was helping him out on the side – with insurance paperwork, sending out estimates or ordering parts – while they dated.
In 2007, things got serious: “He told me, ‘Quit your job and come work with me full-time or I’m going to have to hire someone,’” Irma said. “It was super scary. I told him, ‘You want me to quit the only guaranteed income we have.’”
Not only that, but the company owed nearly $30,000 in back taxes. Slowly, Irma said, they were able to pay the back taxes, get back on solid ground and start saving for the future.
But in 2009 their landlord raised the rent significantly, which heightened their motivation to find or build their own shop. Everyone they talked to said it was impossible to get money for new construction. Instead, they tried three times to get a commercial loan for an existing property – and failed.
Then Irma learned about the no-cost advising services offered by the Washington Small Business Development Center (SBDC) – a network of more than two dozen certified business advisors working in communities across the state to help small business owners start, grow or transition a business. The Washington SBDC (http://wsbdc.org/) receives support from Washington State University, the U.S. Small Business Administration (SBA) and other institutions of higher education and economic development.
Loan for land, new construction
Irma began meeting regularly with SBDC certified business advisor Linda Johnson at the Yakima SBDC office. When they talked about their inability to get a loan, Irma said, Johnson went through their financial statements with them and explained what the loan officers were looking for.
“Linda was able to tell us, ‘This is where you need to be,’” Irma said, and then help them chart a step-by-step plan to get there.
One day when Irma and Mike were expressing their frustration with existing properties—either they were in a poor location or they required extensive renovation or repair—Johnson asked if they’d ever thought about building their own shop. “Mike and I just looked at each other,” Irma said.
Then they jumped at the possibility and immediately set about finding property that would give them good visibility and fit their budget.
It took time, and additional assistance from Tom DiDomenico at Evergreen Business Capital, but in August 2013 the Philps were notified their SBA loan for land and new construction had been approved.
Busy location crowns accomplishment
The new location has made a huge difference to their bottom line, Irma said. They projected a 20 percent increase in revenue, but instead saw 34 percent. Their staff had increased from one employee to two, but now they have three and are working to hire two more.
The SBA loan for new construction catapulted their incremental progress into a huge leap, and borrowing that kind of money was scary, Irma said.
But by the time the loan came through they had been working with Johnson for a few years and were confident that, with her assistance, they could rise to the challenge.
“We are 35 years old and we never imagined this is where we would be” she said. “Sometimes we just think, ‘Wow, what an accomplishment.’”
Learn more about Auto Art and Collision Repair at http://www.mikesautoart.com/.