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Business Operations

Revenues up, costs down

October 11, 2010
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Keeping revenue up and costs down is the ultimate million dollar question. Is there a secret formula? Is it magic? Is it just luck? How is it some businesses stick around for decades while others can’t even make it to the five-month mark? Think about it, for every McDonald’s that pops up, a Krispy Kreme is going down. And carwashes are no different.

It’s not just about reducing expenses either. Steve Robinson, marketing director of Mark VII Equipment Inc, said operators need to also identify the ways they can improve their bottom line. “Focusing only on reducing costs can lead you to make decisions that are penny wise and pound foolish,” he explained.

Consider retrofitting before replacement
It’s happening with cars and homes and should be happening at carwashes, too. Everything is being enhanced, expanded and retrofitted, instead of being replaced. It’s a nice way of saving money, down time and the environment to boot. To put it bluntly: Don’t buy new unless you have to.

Ryan Carlson, director of marketing for WashCard Systems, said he firmly believes there is a very strong retrofit market for existing equipment. “There is less waste and there is the opportunity to take advantage of working equipment,” he suggested. “If you have a piece of equipment that has some life left in it, but you need more features, retrofit it, and do not replace it.”

Enhancements, such as adding a credit card feature to an entry station, instead of replacing an entire station is wise, according to Carlson. You might also consider new self-serve services, like an in-bay dryer or foam application, to boost revenues through increased time in the bay.

However, there may come a time when the equipment is simply not worth saving. Robinson said that if equipment is over five years old, it might be time to invest in overdue equipment upgrades. Seasoned carwash operators, according to Robinson, know that the older the equipment, the more it costs to maintain and the less effective it is at delivering a clean car to the customer.

“It's easy to rationalize that you’re saving money by delaying an equipment upgrade, but new equipment is more reliable, costs less to operate and maintain, reduces energy consumption, delivers better quality results, and offers new features that can increase your average revenue per customer.”

Consider how you use your labor
There is probably nothing more irritating for a business owner than watching an employee sit around on the clock. But just because the weather is preventing a high-volume day doesn’t mean you can’t task your employees with jobs around the site. As Carlson likes to put it, “Turn your rainy days into pay days.”

A suggestion from Robinson is to pick a slow month to perform an audit on your entire operation and ask yourself what you would do different if you were starting over again. Be sure to look at how the employees are being used. This can be as magnanimous as switching from a four bay self-serve to a 2/2 with automatics or a less complex overhaul that simply involves investing in new equipment that automates tasks that are currently done manually.

Carlson breaks it down even more and suggests finding ways to use employees beyond the meet and greet and bay cleanings. “I don’t think it has to do with having too much staff, I think they are not utilizing the staff that they have. I don’t believe that enough businesses have put in the right bullet points into the employees job descriptions.”

Employees should also be used as the faces of the business and should help with the marketing of the carwash and promotional events, Carlson added. “For a rainy day,” he suggested, “what if it said in their job description they could help with a mailing list or help create an e-mail blast, or stuff envelopes with a mailer? There should always be a Plan B, rather than let an employee sit outside of a bay when the weather is bad.”

Out with the old-fashioned way
According to Carlson, anywhere software can be implemented is a smart thing. “People who are doing their books and accounting by hand are crazy. It leads to madness,” he said, noting that most operators already have a computer. He suggested picking up a copy of the program QuickBooks or, make it even more simple and set up an accounting form using Excel. “Why do the math when something that never messes up will do it for you?” he asked.

Reviewing new technologies is worth the time, according to Robinson who suggested considering new business models and practices. This is not the time to go with the tried and true because business ships are sinking and there needs to be some quick, inventive and new ways of thinking. Robinson also said to look at your competitors for new ideas.

Robinson said he has observed that companies that weather business downturns the best are the ones that balance their cost cutting with an increased focus on sales and marketing. “It's a lot more fun being the guy that figures out to increase his car counts when all the competitors can do is bemoan how theirs are dropping.”

He suggested trying new marketing tactics such as:

  • Refreshing signage;
  • Implementing a loyalty card; and/or
  • Creating a fleet program.

“There are tons of great ideas published regularly in the trade press. And keep that old adage in mind: When the going gets tough...the tough get going.”

Save energy and save money
Going green is nice and all for the environment, but it also saves energy and money. Wasting energy is a lose-lose situation and controlling the amount of energy used is win-win.

Robinson pointed out that energy savings can be achieved in smaller increments, such as replacing your lighting system, adding a reclaim system, or installing solar panels. He suggested operators move in small steps and choose just one of those initiatives each year to incrementally reduce costs and make their business greener.

Other small steps that can help save money:

  • Keep the lights off when they’re not being used;
  • Turn off the television in a waiting area if no one is in there;
  • Fix leaky toilets; and
  • Use scrap paper as much as possible.

Carlson said that some may consider it as being environmentally-friendly, while others look at it as being economical. Not only will those little acts save money, but they might draw in the Earth-minded customers who don’t like the energy-wasters down the street.

“At the end of the day,” Carlson said, “we call it being green, while others call it being thrifty. So, reducing the amount of resources used in our business is nothing new, we’re just changing the way we market it.” He said that a carwash needs to adapt to what the customers are looking for, even if being eco-friendly seems like a big undertaking.

“There are too many carwash owners who rely on ‘well that’s the way it’s always been done,’ and that’s a poor way of thinking about it because unfortunately their customers have changed and those who haven’t are no longer with us.”

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