Socrates said, “Life not examined is not worth living.” When it comes to business, my mentor, Jay Abraham says, “Business not examined and re-examined constantly is not worth owning.” I may add to that, continuous improving and innovating is not only mandatory, it is very profitable!
In previous articles, I shared the four ways to increase profit:
• Increase the number of first time customers
• Increase the dollar amount per transaction
• Increase the frequency of visits
• Control operational expensesI have written extensively about the first three profit levers.
This article is about how to control operational expenses.
CHEMICALS: INVEST MORE SAVE MORE
Controlling expenses does not mean buy the cheapest chemicals to save money. Studies have shown that cheaper products normally cost a lot more in the long run. A drum of chemicals may be half price but the cost per application may be three times higher.
“Beware of little expenses.
A small leak will sink a great ship.” — Benjamin FranklinChemicals are as important as equipment. Equipment, without high quality chemicals, cannot do the job on its own. Car washes are in business to consistently produce a clean car in the least amount of time and at the lowest cost (labor, chemicals, etc.) possible. Some operators base their decision on what chemical to purchase on the price of a drum instead of the cost per car, and this is a mistake.
Other operators overspend on structure when building a new car wash, but when it comes to equipment and chemicals they try to save money. It’s like a professional racecar driver who is paid top money for an endorsement but wants to save money by using aftermarket parts with lower performance and using 87-octane gasoline instead of racing gas. High-quality chemicals could save dollars on labor cost. Without the proper chemicals, employees at the finish area will have to spend extra time to re-clean the body, windows, and wheels. Using low-grade chemicals increases labor costs and increases customer complaints about wash quality and wash time. There are many good chemical suppliers. Do your research and remember that prices may be negotiable if they want to earn your business.
There are four major complaints customers have at a car wash:
• It takes too long (full-service wash)
• Car is not clean enough
• Bad experience
• Staff is rude or doesn’t care
Controlling operational expenses can solve these problems. Systemize and automate your car wash process to produce the highest quality car wash in the fastest time possible; create a “wow” customer experience; and have a motivated staff that is happy to serve. These are all part of controlling expenses. Here are some ways to increase efficiency in a car wash.
This is the main customer complaint. What can be done to solve it? The fastest wash is hindered by the bottlenecks in the assembly line wash process. Car wash operators must identify their business’ bottlenecks, which severely limit the number of cars that can be washed per hour and delay the time it takes to wash and clean a vehicle. Using a stopwatch to time every part of the wash process starting with the customer’s wait in line, getting a wash ticket, pulling up to the vacuum, vacuuming the vehicle, queue time, prep time, wash-process time in the tunnel, idle time before someone starts working on it, vehicle cleaning time, and total time it takes for the customer to get in and out of the car wash.
The operator’s goal is to eliminate any bottlenecks that are holding back and delaying the wash process. The goal is to cut every process time in half and cut the time on other processes to zero. The question is: What process can you cut down to zero or close to zero? The answer is at least five processes: prepping the vehicle before the wash, wheel cleaning, tire dressing, drying exterior windows, and drying the body. What processes can you cut in half? Vacuuming, finish area, express detail, and full detail.
The Ideal Employee
The biggest expense in many car washes is labor. It can be a big drain on overall profits. Adding new equipment when possible will speed up overall performance, increase throughput, eliminate prepping and bottlenecks, increase overall quality and improve customer satisfaction. Equipment will always show up to work, never call in sick, and most of all, equipment will not take you to the labor board if you had them work overtime.
By automating many processes and retraining staff to increase productivity and work as a team, a full-service car wash could cut the wash time by up to 50 percent — therefore save on labor and increase customer satisfaction and net profit. The goal is to offer full-service car washes in 15 to 20 minutes only. There should be no prepping time at the entrance of the conveyor. Once the car is on the conveyor it has to be queued immediately. If, when doing so, the car doesn’t come out clean then you lack the proper equipment or chemicals. Every vehicle passing the blower should have its body, wheels, and windows cleaned.
Thus, it is counterproductive not to maintain, repair, or install a new piece of equipment that could serve more customers faster at a lower cost. Mistakes happen when business owners try to reduce expenses by eliminating investment in the wrong areas.
For profits to show a significant rise, income should increase while expenses decrease.Many car washes, especially on the West Coast, are still offering hand wash. With the minimum wage in California set to reach $15 per hour by 2022, for hand car washes to survive and thrive they have to cut down on labor cost and improve throughput and wash quality. They have no choice but to start adding equipment to control cost, while educating their customers that with today’s technology, equipment is safer than hand wash and it can save customers some precious time. The right equipment can help eliminate major bottlenecks, such as prepping, clean wheels, tire dressing, and cleaning windows. Adding some equipment to cut prep time such as a CTA and wheel blaster to clean rims and tires will allow the car wash to still be considered a hand wash. You could still call it a hand wash even with the addition of tire shine and low-rise brushes to clean the bottom section of a vehicle.
Think of your dishwasher at home — you don’t have to pre-wash before and you don’t have to dry after. If your employees have to re-clean wheels, bodies, and windows after the wash, then adequate equipment or chemicals are missing. If upfront cost of equipment is a concern, there are many companies that are eager to provide 100 percent financing for new equipment.
If you don’t understand people, you don’t understand business. You are asking your employees to help you achieve your dreams and goals. You are asking your staff to be loyal and to come to work every day to work hard, to exceed customers’ expectations, to make the right decisions, and do what’s bestfor the client. Why should they?
Change the way you look at things, and things will change.To get what you want in life first help others get what they want. You can’t expect loyalty unless you give it first. Empower your staff to do what is best for the customers and business. Create a friendly environment where staff enjoy coming to work, ready to work hard, and yet have fun at the same time. Instead of catching people doing the wrong thing and punishing them, why not catch people doing the right thing and reward them? The more attention is given to the positive things, the more they will be re-enforced and become part of the norm.
Retrain employees to improve productivity using the 80-20 Pareto principle. Change the workforce focus from individual to teamwork. Why should one person clean a car while other employees are standing around not helping? Aren’t all employees paid by the hour? Aren’t all employees working for the car wash? Teamwork is more important than individual workers trying to earn extra tips. Employees will take more time on one vehicle doing extra services for customers in hopes of getting better tips. Meanwhile, other cars are waiting for the next available attendant. Who pays for that? What about that customer watching his/her car with no attendant, what are they thinking?
This is how it works: If 20 percent of the employees are doing 80 percent of the work, then it should be easy for operators to identify the 20 percent star employees who should be role models and the standard which all employees should follow. It also should be easy to identify the slackers among the other 80 percent and eliminate them. Keeping those slacker employees may actually hurt the business in the long run.
Team together one of your star employees with another employee. Each employee should work on one side of the vehicle, mirroring each other. This forces your slower employee to pick up the pace and finish at the same time as your star employee. If your star employee finishes his side first, then he/she should go around to the other side to finish what is left and double check the other employee’s work. Once your star employee goes around to the other side, the slower employee should immediately go to the other side to do a quality check and call the customer. No two employees should be working on the same side at the same time. By implementing this system, you not only speed up the process, but you also have self quality control. Teaming two employees on one car cuts the process time by more then 50 percent. If one person takes 10 minutes to clean a car, two people should only take about four minutes. In business, one plus one equals three, four, or five. Your star employee will force the other employee to work harder and faster, therefore customer satisfaction will increase.
Point of Sale Management System
I would highly recommend that you begin managing with facts instead of conjecture by using a point of sale management system (PSMS) and dashboard that shows you the pulse of your business at a glance. A dashboard shows the key performance indicators in your business. A dashboard keeps what truly matters on your radar screen. It is possible to track key performance indicators such as productivity, speed, efficiency, etc. It’s a sign of a problem when business owners base their business plan on gross income alone.
Profit is determined not by income alone, but by income and expenses combined.A PSMS is a great tool to learn customers’ names, provide personal service, help track purchasing habits, and provide an automatic specific coupon to customers in accordance with their buying habits. A PSMS controls prepaid cards, monthly passes, and automatic recharges. A PSMS incorporates state-of-the-art dashboards that cut through the noise and essentially gives a radar view of your business. Dashboards can also gaze into the future and show potential pitfalls in the business. Sophisticated dashboards also incorporate the concept of what-if analysis. For instance, one can simulate the business impact of increasing the sales dollar per car, simply by moving a dial on the dashboard. Fortunately, in the car wash industry there are many PSMS to choose from.
Add Another Source of Income
With increases in minimum wage, raw material expenses, inflation, and increased competition, car washes have been forced to raise their basic car wash price. In northern California many car washes today offer basic express wash starting at $15 and full-service car wash starting at $30. Unfortunately, the basic full-service car wash is no longer affordable to many potential car wash customers and full-service car washes have therefore become a luxury service to many. Nowadays people are washing their cars less often, thus negatively affecting the car wash industry’s volume and income. Adding other sources of income is a good strategy to make up the loss. Many services could be outsourced such as bodywork, clear-coat repair, dent removal, windshield replacement, etc.
Turning a full-service car wash to a flex wash by adding an express car wash service is a good approach to make up for the loss of full-service volume. As a matter of fact, car washes that do not add express lanes are indirectly inviting their customers to use their competitors’ express wash service.
The following conditions are vital to a successful express wash:
• Promote your express wash on a monument sign.
• Equipment is mandatory. Prepping is not. Express wash should have no additional labor involved. If it is not fully automated, you will not be able to offer it at an attractive low price, and it may also interfere with your full-service wash customers.
• Must have a clearly marked lane separate from the full-service lane.
• Customers should be able to pay from their car and stay in their car during the wash process.
• Installing a pay terminal is a must. A pay terminal also gives you the flexibility to open for extended hours without the need of a cashier to charge the full-service wash customers. It eliminates the need for a cashier on very slow days when debating whether to stay open or close, therefore saving labor cost and keeping your money safe.
• Offer free access to vacuums. Some express washes I’ve seen only offered free vacuums for more expensive packages. Needless to say, they were unsuccessful and had to change their marketing strategy to allow free vacuums to all express customers.
• Customers should be in and out of the car wash in five minutes or less (not including vacuum time).
• Because you are now a flex wash, you have an advantage over your competitors — you have employees waiting at the end of the tunnel for full-service vehicles. Seize this opportunity by instructing your employees to hand dry express wash vehicles. This adds value that your competitors in the express wash business cannot compete with.
Wayne Gretzky was once asked, “How can you be the best hockey player if you’re not the strongest or fastest player?” He responded, “Most players go where the puck is, I go where the puck is going.” As a business owner, to be ahead of the competition, your job is to constantly work on your business. Research and implement innovative ideas that can help increase productivity, improve speed, and boost customer satisfaction.
AJ Rassamni has over 30 years’ experience in the car wash business. He is a speaker and consultant and the author of Increase Business 30% in 30 Days and Dirty Cars Filthy Rich. AJ is also the CEO of MyLoyaltyApps, the sole purpose of which is to create customized apps that automate the marketing strategy of a business to increase positive reviews, loyalty, number of first-time customers, and revenue. You may contact AJ via email at info@MyLoyaltyApps.com or text (559) 284-1919.