Starting a detail business is far too easy for anyone waiting to enter the business. Literally anyone with a few hundred dollars can get into the business, working either out of the trunk of their vehicle or their garage at home, and calling themselves a professional detailer.
Some would say easy entry into the business is good for those wanting to start a business of their own.
However, in most of these “easy start-up” cases, the operators ignore the laws of the land. Business licenses, insurance, payroll taxes, workers compensation insurance, water containment systems, etc.
For them the laws are either “stupid,” or ignored because they can’t afford to obey them.
This is terrible for the detail industry because this low-cost entry encourages a steady flow of short-lived businesses. Average life of a start-up detail venture is less than six months. While there are not exact industry estimates, doing a direct mailing to detail shops within a six month period will result in a 20 percent return: either out of business or moved no forwarding address.
Only a very small percentage of detail businesses survive and are profitable.
You can succeed in the detail business, but before entering the business you need to understand why so many start-up detail businesses fail. If you do this it will prevent you from making the same mistakes.
Why such a high fallout rate?
To begin with, low start-up costs are deceptive as detailers struck with an “entrepreneurial seizure” (as Michael Gerber calls it in his book, “The E Myth”) think their major investment in the business is purchasing some equipment and chemicals and a little training.
If all the start-up capital is used on equipment and supplies you have nothing for the business operating expenses.
The typical detail entrepreneur either underestimates or doesn’t consider two important aspects of starting a business: building the business takes time and money.
Where does the capital come from to sustain the business and themselves until the business can?
As Gerber points out, most technicians have little business knowledge and when confronted with business problems try to solve them with technical solutions.
What will it take to be profitable?
Few, if any, detailers know what it will take for them to be profitable or break even.
How do you let potential customers know about your detail service? How much should you charge them?
The typical detailer does what other detailers are doing: charges the same prices and uses simple advertising methods such as coupons, door hangers, postcards and possibly a Yellow Pages ad. Few have a marketing plan and even know what media to use to reach the best customers for their services.
Without a financial plan for the business that includes desired salary and benefits, as well as fixed and variable expenses, you cannot determine an hourly rate for the service. Most just shoot in the dark, selling themselves into bankruptcy or out of business.
At the best they end up working hard for nothing. Without knowing their operational costs they compete by lowering prices to get more work. What this does is put you further in the hole because the volume does not lower costs of operation.
In short, without having business knowledge and planning for the business side of detailing most are unprepared for the results.
Where’s the money?
In any business, a new owner struggles for a paycheck. What too many learn too late is that starting a business is completely different than having a job where you are paid a wage and even get benefits to boot.
As a business owner you are the last one to get paid. This is something they hadn’t considered. Many detailers wait months, or even years, to be compensated from their detail business.
All too often I talk with relatively smart people who have a good paying job, with benefits, who want to own their own businesses and are attracted to detailing because of the low entry cost or because they did detailing in high school.
Surprisingly, even these people have not considered how they are going to make up for over $50,000 a year salary and benefits.
Once your savings are gone, you build up credit card debt. Detailers fail in this business because they run out of money to support themselves before the business can support itself or them, plain and simple. I cannot tell you the number of detailers I have spoken to who have given up their dream because they could not support the business or themselves before the detail business could.
What you need to know to make it
Success doesn’t come easy. Fact: more detail businesses fail than succeed. Working hard used to be a formula for success. Today you have to work “smart” with a little sweat thrown in. The detail business that succeeds does something different than everyone else. Do your homework — find out what the successful ones are doing.
Your business cannot survive if you can’t pay the bills. For that matter, how long can you survive personally without an income? You’ve got to work fast and learn what to do to have success in your detail business.
Keep mistakes to a minimum and remember you’ve got to go after customers because they won’t come to you. A profitable clientele will not spontaneously call you. You must do something to make it happen.
Get a big brother
The fastest way to learn is to connect with someone in the detail business who has a proven track record of success. This may be either a supplier, consultant or detail business owner. They can help you avoid costly mistakes.
Remember, following a successful plan is faster than you trying to come up with a new plan of your own.
1. Have a detailed business plan
You need to plan for your success. Figure out what it is going to cost you to operate the business including your salary. Then turn that into customers and determine how many you will need to meet your expenses.
Next, develop a marketing plan that tells you who your best customers are and how to get them. This converts into an advertising plan. But keep in mind things never go as expected so have a backup plan and backup funds.
2. Watch expenses
As discussed, you will need personal funds and you will have monthly bills. Watch your expenses, but don’t be penny-wise and dollar foolish. Remember, not buying the right equipment will slow your growth.
If buying equipment increases productivity and reduces labor buy it because you are paying for it without having it.
3. Be skeptical of sales personnel
Why? Because they are in the business of selling you advertising. They have got to get you to believe their media will make the customers flow in. They do not give you money-back guarantees. They do not guarantee the ad will work, you have to pay the bill.
Your advertising plan should include several sources. Focus on more than one target customer.
4. Remember: Weather will affect your business
You’ve got to know when the slow and busy times of the year are in your area due to weather.
Don’t start your business at the slow time of year that could be a costly mistake. As stated, plan income and expenses for the entire year, this is the only way to get you through the seasonal ups and downs.
If you try to survive month to month, the slow seasons will put you out of business.
5. Don’t be a follower
Many startup businesses fail so be sure when you talk with other detailers they are successful and profitable. A lot of detailers like to tell you how well “they wish” they were doing than what actually is. Don’t be mislead by “busy” what you want to see is profitable.
Detailers all want to make their business seem as impressive as possible, be skeptical of those who brag a lot.
6. Consider part-time
For many start up detail business owners, having an additional source of income can take pressure off you and the business. It might allow you to make better business decisions when not pressured by lack of income.
Your first year in the detail business requires you to learn new skills, developing operational systems for your business; including marketing, and developing a customer base. This takes time and does not always produce dollars. Few detailers understand that developing a profitable customer base is time consuming and expensive.
Building a customer base is like climbing stairs. It builds on the previous year if you have an effective plan for customer retention. But each new, in business, customers will add to those you had the year before, but this takes time and money you need to plan for.
7. Don’t forget advertising
Advertising is to bring in new customers. It is your responsibility to keep them. Once you do, you don’t necessarily have to advertise if you have a way to keep customers.
Remember it is easier to keep customers than get new ones.
You need a plan to succeed
As we know detailing is an easy business start, but not as easy to be successful long term.
If you are serious you can succeed. Don’t think that having the latest extractor or miracle paint sealant will make you successful. The key is building a profitable customer base, and doing it before you run out of money.
Beware of the costs and challenges working against your success, if you had enough time and money, you might stumble onto success, but it is unlikely. Your best chance of beating the odds is to find a successful mentor and follow their plan.
R.L. “Bud” Abraham is president of DETAIL PLUS Car Appearance Systems, Portland, OR, and a nearly 40-year member of the car-care industry.
He is also a member of the International Carwash Association (ICA) and Western Carwash Association (WCA) Board of Directors and can be contacted at email@example.com