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Business Operations

How to grow more profits

October 25, 2011
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Bill Gates, current chairman of Microsoft and one of the world's richest people, parallels the secret to his success with that of his competitors' failures. "They did not think about software in this broad way," he said in a BBC interview. "They did not think about tools or efficiency. They would therefore do one product, but would not renew it to get it to the next generation."

Now, his aforementioned statement can easily be applied to any sort of business structure: You have to be open minded. You have to think of your products and their efficiency. And, you have to think of your future customers. In other words, if you want to grow your profits and success, you have to expand your service offerings.

As we all know, the past few years have allowed for many businesses to save up and hold on to money. The storm is clearing a bit and perhaps some of you are ready to try some new things and make more money. Or, as Dan Murphy, co-founder of The Growth Catch, told USA Today, "Small businesses have been playing on the defensive side so much — they've conserved cash, cut costs and trimmed staff for two to three years. But now there is renewed optimism. They're starting to see some hope. They think, 'I've gotten through the storm. It's time (to invest again).'"

Where to start

Expanding can be a big or small project. It can involve construction or it can just involve adding on some new vending machines. If you have an idea of what it is you think you might want to do, the first thing you need to do is talk to others in the industry. Turn to them, lean on them and learn from their mistakes and successes.

"This is important and you have to do this first," according to Bobby Willis who has been in the carwash industry for 16 years and currently owns Cool Wave Carwashes in Virginia and the carwash consulting firm Wash Consultants LLC. Whether you're adding on vending machines, an entirely new profit center, like a pet wash, or expanding a tunnel, you need to talk to someone who has already done it. "The worst way to expand your business is to just wing it. I am always amazed at how certain business owners will try to expand their business without proper planning and research. Those ventures almost always end in failure."

And, because you might not want to turn to your competitor down the street, you can find others through:

  • The regional carwash association in your area;
  • Tradeshows and expos;
  • Message boards; and
  • The International Carwash Association.
Willis said you might want to be willing to drive a bit out of town to meet with a peer face-to-face so that they can show you what they did to expand their business. Also, Willis said, "Another good place to start is to talk to equipment suppliers and chemical reps around the country and ask what other operators are having success with."

Consider your budget and timeframe

Once you have consulted with someone else about your plans, you need to have a reasonable and modest budget put in place. You have to also consider the fact that you can go over your budget, too. This is not the time to get too overconfident with your expenditures and you definitely don't want spend money on something you don't need. Consider the return on investment, the needs of your customers, the demands, and the traffic flow of your site. As for when to expand, Willis said if you need to add on to an existing building, construction needs to commence when the weather permits, and "if you are adding new goods and services at your location, there is no better time than the present."

If you're adding on a pet wash, you are going to have a lot more variables to consider then if you're adding on an ice vending machine.

According Trent Walter, general manager of National Pride Car Wash Systems, if someone wants to add on a pet wash, you won't need a lot of space, but you'll have to consider: Customer traffic patterns, the layout and area to make sure there is a safe area for people to walk and wait with their pets, and the needed amount of electricity and water. Then, you will also have to have a hot water heater; room heating/cooling unit (HVAC); tub packages; security cameras; signage and advertising. "You have to be a risk-taker if you're a business owner, but something like this will pay off as the pet industry is strong and isn't going anywhere."

If you're looking to go a little lower maintenance, and are considering adding on some vending machines, you still have to think about: Restocking, maintenance, crime, and security cameras. You will also have to make sure you or an employee consistently remove the money from the machines and keep them well-lit.

Budget ranges

According to Willis, the easiest way to expand a business is to find additional profit centers or services which complement your existing business. "You market the products or services heavily to your existing customer base and attract new customers with your product offering," he said.

A few of the options he considered per budget range include:

  • $500 – 10,000: Additional services on the menu; tire gloss; a new high-pressure arch; vending machines.
  • $10,000 – 30,000: An express wash; mat cleaning machines; fragrance machines; an RFID system; a carpet shampooer; an additional activation unit.
  • $30,000 – 50,000: An entirely new additional profit center (pet wash, quick lube, c-store, express detail shop, or coffee shop).

If you're going to expand in a way that construction is involved, (such as with a new profit center building) there are a lot more steps to consider. According to Willis, you need to:

  • Have a survey completed of the property.
  • Have a phase 1 environmental assessment completed.
  • Have a structural engineer evaluate the property.
  • Evaluate and choose an equipment supplier.
  • Hire a licensed architect to design any modifications to the structure.
  • Hire a licensed general contractor to complete the construction.
  • Create a financial plan
  • Make sure your neighbors are aware to avoid any holdups they can cause if they're perturbed the with construction.
  • Make sure all permits have been applied for and no permit has been overlooked.
  • Be aware of long lead times.
  • Prepare for unforeseen conditions and on-site delays.
  • Do not make major design changes once construction has started.

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