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Multi-profit Centers

Wag the dog

October 11, 2010
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Why does a dog wag its tail? Because a dog is smarter than its tail. If the tail was smarter, the tail would wag the dog.”

Last year, I was looking for something to increase my bottom line. I planned on putting my carwash on the market in 2007 and I wanted to increase the selling price.

There are several factors that determine the selling price of a business and one of them is a multiple of the income generated by the business.

As a rule of thumb, I’ve always used:

Good selling price = Gross sales x 5

Good buying price = Gross sales x 4 or 4.5

Carwash net profit should be in the 50 percent range. Therefore:

Selling price = Net profit x 10

Buying price = Net profit x 8 or 9

I am going to be the seller of my wash and will be looking for a multiple of five times gross. All I would have to do to increase the selling price of the wash by $100,000 is increase the gross sales by $20,000. Simple, huh?

Except for the last couple of years, we have increased our sales about 10 percent each year. Two years ago, we got a competitor about a mile away which affected our sales. The next year, we had major road construction right in front of us. Finally, it looks like we are back to the 10 percent yearly increase, so I’m counting on that to help the selling price.

Because this is our retirement nest egg and I’m a typical businessman, more is better. So what could I invest in that would increase the sale price by $100,000, but cost much less?

An investment of $10,000 — if it would produce gross sales of $20,000 a year and increase the sale price by $100,000 —would be a return on investment of 90 percent. Having a 90 percent return on investment is certainly a no-brainer, even for me.

Similarly, a $20,000 investment should return $80,000, or 40 percent.

Adding the dog wash
I had seen dog washes advertised for about 10 years, but did not even consider one for our wash until I went through the thought processes above. The more I thought about it, the more it made sense for my business.

We had 12 bays and although we were lined up some days, the lines never really lasted a long time because one of the 12 bays would open up quickly. I felt that we could change one bay into a dog wash without affecting the total carwash sales. That was very important, as it would do no good to build a dog wash if carwash sales went down.

Another consideration was that our 12th bay was a little hard to back out of due to proximity to a power pole. By closing off bay 12 for the dog wash, it solved the problem and the dog wash customers had plenty of room beside the power pole to park.

Do your research
In our city, there was a “Laundro-Mutt” on the other side of town. I had never been there, so we decided to check it out as part of our pet wash research. I introduced myself to the owner/operator and explained what we were thinking of doing. He was helpful, but politeness kept me from asking him about gross sales.

His operation had two bathtubs, waist high, and required the customer to supply everything he needed, except water. This was nothing like what I envisioned ours to be like. Visiting the pet wash did not help me too much other than proving self-serve dog washing was viable, since the business had been intact for a few years.

I had no idea how the new type of dog wash worked, what was needed, how much it cost, or an estimate of gross sales. Hell, I didn’t know anything about dog washes, so for almost two months I researched all of the above questions.

Gathering information about how it worked, what was needed, and the cost was easy: I talked to the manufactures and developed a spreadsheet to compare information. I read all the articles I could find on dog washes and learned more about the how, what and cost, but found that information on gross sales was hard to come by.

The manufactures gave me some info on what they had heard, but it was all vague and hard to trust as the numbers ranged from $450 to $1,500 per month.

The 2007 Self-Serve Survey in Professional Carwashing & Detailing had the monthly revenue spread out evenly from $25 to $1,000.

I called around looking for operating dog washes that were fairly close to Casper, WY. As it turned out, there wasn’t any fairly close to Casper, WY, so we took a road trip to Colorado.

We visited two dog washes in two days in two different cities. The first dog wash was inside a pet store. It had eight tubs in one big room and was lined up on the weekends. I did not talk to the owner (absent) but the employee was very helpful when I introduced myself. To figure their gross income, I calculated: the charge per tub (on display in the store) x the estimated washes per hour x business hours = envy.

The second pet wash was at a carwash. It was a well laid out wash with two dog wash tubs in two separate rooms just to the side of the carwash bays. The owners were very helpful and friendly; unfortunately they had only been open for two weeks and could not help us on the sales end.

As a result of the trip, I returned convinced that there was a market for the self-serve dog wash. The two cities we had visited were much larger with a big population base to draw from but in comparison, we have over 70,000 people in our county, surely enough to support another dog wash.

Cost to build a dog wash
As I added up everything we were going to need, I quickly realized the $10,000 estimate would be low, unfortunately the figure I had conveyed to my wife. I’ll never learn to keep my mouth shut.

We installed an exhaust fan that turns on whenever the dog wash timers are on, and stays on for five minutes after the timers are off in order to expel the “wet dog smell.” When the timers are on, we have a flood light shining on the tub that stays on for two minutes after the timers turn off.

We have a programmable time clock that turns on the lights at 5:45 a.m. and electrically unlocks the door at 6 a.m. The lights stay on all day and turn off 15 minutes after the door locks at 9 p.m. The door lock is wired so after 9 p.m. when the door locks people can leave the building but can’t come back in. I hope they don’t leave the dog and go outside for a cigarette.

There are three or four dog wash equipment manufactures out there and we looked at all we could find. We chose GinSan (full discloser — they let me represent them in Wyoming) and decided to go ahead with two tubs instead of one, which didn’t help my budget any.

My thinking on the two tubs was that I didn’t want people waiting. So far, it’s paid off a few times, but not as often as I’d have liked. We laid out the bay and two tubs so we can add two more later. We should be so lucky.

The tubs have a cabinet attached to the back that houses all of the equipment for each tub. The soaps are contained in one gallon containers inside the cabinet along with the water lines, solenoids and injectors.

If I had it to do over again, I would build a small equipment room in the bay and have the support equipment in the room and just the tubs in the dog wash bay.

We give the customer their choice of five different shampoos, rinse, vacuum dry and blow dryer. We also have a stainless steel table for towel drying.

There is some controversy about heating the blow dryer. Some people say that it dries out the dog’s skin too much. We found out though that without heat the blow dryer will not dry the hair and that is what you’re trying to do.

Our expenses would be a little over $20,000 (without the extra tub), which my wife calls a 100 percent over run. I prefer to think of it as a budget adjustment and the extra tub as a wise business decision.

It is important to note we did most of the work ourselves, so that figure would be much higher if we’d hired it all out. I’m an electrician, which helps a lot.

We opened the dog wash about the 18th of February. After 4.5 months (June 30), the total income was $4,988.10 or about $1,108 per month. That would translate to about $13,300 a year. Because it takes time to build any business, I think $20,000 in a year is a reasonable goal. In six months left in this year, I think we’ll hit $15,000 to $16,000.

That’s my story and I’m sticking to it.

Dennis Ryan has been in the carwash business since 1988 and the construction business for 40 years. At one time he owned and operated five self-service carwashes. Currently he owns and operates American Pride Carwash in Casper/Evansville, WY. He can be contacted at:

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