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CarWash Safety 101

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Mike Benmosche designed and implemented the first New York State Car Wash Association Insurance Program. He serves as treasurer of the New York State Car Wash Association and is the National Car Wash Program Specialist of McNeil and Company. He can be reached at mbenmosche@mcneilandcompany.com.
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Carwash safety leads to higher profits

August 14, 2012
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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!