Professional Carwashing & Detailing

Carwash safety leads to higher profits

August 14, 2012

You may not be aware that carwashes with low incident rates earn higher profits. It is a myth that your insurance will pay for all of the costs associated with a claim. This is known as the 'Iceberg Effect' ― those hidden/indirect costs. The following is an illustration of a simple claim:

      Incident - Employee Injury equals direct costs totalling $1,500

      Using the formula developed by the National Council on Safety for calculating indirect costs on claims under $3,000:

Direct Costs x 4.5 =  Indirect/Hidden Costs

$1,500   x   4.5  =   $6,750

Then of course we add the hidden costs to our direct costs for a total claim of $8,250.

Here is how that affects your bottom line. Assuming our wash has $300,000 sales with a $75,000 profit equating to a profit margin of 25 percent, you would need to generate $33,000 in Net Sales (Gross Sales less overhead/operating costs) to completely cover the total costs of the $1,500 claim.

Just think how many cars you have to wash in a given month to simply cover this 'Iceberg Effect'.

So what are indirect costs?  This is just a small sampling of them:
 

  • Lost time spent by supervisors investigating the accident
  • Lost time by supervisors completing paperwork
  • Lost time by clerical staff completing and following up on paperwork
  • Damage to tools and equipment that will need to be replaced or purchased new
  • Cost of training a new employee replacement
  • Loss of production and productivity
  • Loss of business due to damaged public image
  • Loss of efficiency due to break-up of crew
  • Failure to promptly service your customers
  • Lost time by other employees discussing the accident
  • Loss of productivity due to employee moral

As you read this remember that your competitor may already be aware of this.

A safe wash protects people and profits!