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Ideas for branching out and making money with... - Laundromats - Detailing - Pet Washes - Quick Lube

B AN G THEORIES ALSO INSIDE Another Amazing SS Super

Woman, Making Educated Business Decisions, Getting Ahead of Drought Legislation, and of course, more dumb criminals!!!


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CONTENTS Letters to the Editor ...................... 4

Carr’s Corner LETTER FROM THE EDITOR

Interview with Dave Dugoff ...... 8 Innovations.....................................19 Association News.........................20 Tricks of the Trade ......................30 Decisions, Decisions .................36 Industry Dirt..................................50 Extra! Extra! ...................................53 Interview with Gloria Winterhalt .........................56 Big Bang Theories .......................62 Darwin at the Carwash..............84

VOL. 43, NO. 2, SPRING 2016

Publisher Jackson Vahaly Editor Kate Carr Design Katy Barret-Alley Editor Emeritus Jarret J. Jakubowski Editor Emeritus Joseph J. Campbell Editor Posthumous Julia E. Campbell

To lobby or not to lobby, that is the question. The Puget Sound Car Wash Association recently hosted Western Carwash Association Executive Director Kristy Babb to their March meeting to ask her one important question: Should we be lobbying? It’s the question heard round the industry this year, as operators in several states square off with legislators on topics like taxation, environmental regulations and employment practices. As Babb pointed out in her presentation, “If you aren’t at the table, you’re on the menu.” This summarizes the importance of lobbying by our regional and national associations quite well. The WCA, of course, has been politically active for a while now, and especially in California where they have recently faced government interference on two matters integral to a carwash’s success: Water and labor. “I also love reminding people that what happens in California doesn’t always stay in California, that is why the WCA has year-round legislative monitoring in all 12 of our member states,” Babb added. And what good comes from these efforts? Well, the WCA (working with a coalition of business entities) has been successful in stopping several attempts at increasing the minimum wage in California, Babb pointed out. The WCA also works with legislators and the labor community to reduce the negative impacts of several requirements for California’s Car Wash Registration law. “This year, thanks to tireless work by the WCA Legislative Committee members and Political Solutions, Governor Brown has suggested increasing the number of enforcement officers for the carwash industry,” Babb stated in her presentation. “We hope that this increased focus on

enforcement will help to shut down illegal operators and help level the playing field for legally operating carwashes.” Political Solutions is the lobbying firm the WCA hired to augment their voice and reach in Sacramento. At the start of each legislative session, Political Solutions reads all of the introduced bills (about 3,000) and flags those issues which would impact the carwash industry, Babb explained. After input from the WCA Legislative Committee, Political Solutions advocates either for or against bills on which WCA has decided to position. Issues range from general business topics, such as minimum wage, to carwash specific issues related to enforcement and registration. Political Solutions has also created a matrix which matches WCA members to their legislative representatives. WIth this list, Political Solutions is able to encourage WCA members to reach out to their respective legislators on issues of high importance. I hear from a lot of our readers at trade shows who are facing regulatory or taxation challenges in their states. They ask me, “What can be done?” Well, I think Babb would tell you: Quite a lot if you work together and within the system. I encourage those of you facing such struggles to reach out to your regional associations and the International Carwash Association to get the ball rolling -- and don’t forget to keep SSCWN in the loop. We love to report on your hard work and successes.

Happy washing!

Kate

Self Serve Carwash News is published 4 times per year and is independently owned by Jackson Vahaly. Web address is www.sscwn.com. All inquiries should be directed to:

Self Serve Car Wash News 110 Childs Ln., Franklin, TN 37067 jacksonv@sscwn.com Copyright 2014. 2 Dollar Enterprises/SSCWN. All Rights Reserved

THE 24/7 OPERATOR ROUNDTABLE • SPRING 2016 •

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LETTERS Hello Kate,

I have just spent most of the day reading back issues of SSCWN from the time you took over as editor. I must tell you I was very pleasantly surprised. First I was glad to see that you were not reluctant to express your thoughts on the state of ICA and give in depth coverage of what goes on at the shows positively or negatively. I must say that in all of the years I have been reading car wash magazines (cover to cover) I have not seen or read opinions expressed the way you have. Most of the magazines are afraid of offending an advertiser. Obviously you are not. I particularly enjoyed your coverage of the 2014 ICA show in Chicago and comments from the vendors meeting that was held. Unfortunately I did not attend that show. Just prior to reading that issue I came across Paul Fazio’s letter to SSCWN regarding events that occurred at the show as well other information regarding ICA and the transition it has gone through. I had been out of the industry for awhile and had lost track of some of the associations movements. These past issues of SSCWN brought me back up to speed.

Reader Input & Feedback

The second thing I noticed was the content. Your use of color pictures really grabbed my attention as well as the articles. In the past when I would get issues of SSCWN I would mostly skim through the newspaper. Now I found the articles to be intriguing and definitely worth reading. The publication really held my interest. Not so in the past. I will be exhibiting with my new company Auto Glanz Solutions in Nashville. Certainly would hope to catch up with you there. Best of luck to SSCWN and keep up the great writing. Regards, Stuart Levy President, Auto Glanz Solutions www.autoglanzsolutions.com

Stuart,

Thanks for taking the time to pass along such kind sentiments; they are very much appreciated! Of course, since you flatter me and our publication by praising our “tell it like it is” style of journalism (hear! hear!) -- I must continue in that spirit.

Kate,

I have to absolutely disagree with your comments in regards to the SSCWN of the “past.” It is entirely because of the integrity of the editors who built this publication that I have had the courage to report so...well, as one advertiser described it to me recently, “bluntly.” Our mission is merely to continue the work began by Joe and Julia Campbell and faithfully carried out by J.J. Jakubowski over the decades. Without that foundation, there wouldn’t be the SSCWN you hold in your hands today. I find myself referencing my huge stack of archived magazines (thanks, JJJ!) daily, and you’ll find at least one archived piece in each issue we put out these days (see p. 36 for an excellent example). I consider myself a huge success if the “new” SSCWN is even half as good as the “old.” So thank you again for the praise, and I’ll continue to do my best to keep building on the revolutionary publication they created. With gratitude, Kate

Jim, Your letter has convinced me we need a new category for the Darwin Awards for customers who show laudable stupidity in their quest to get a car wash. What do you think, readers? It needs it’s own catchy name... It also reminds me of a friend who faithfully filled her tires with winter air from the time we were 16 until we were 22 and a new boyfriend finally told her the truth. Interestingly enough -- her married name is now Moran. So maybe “Moran’s Morons” for our new section? I don’t know... just spit ballin’ here. For more Darwin antics, turn to page 84. Cheers, Kate

The Darwin awards always amaze me. I have been meaning to send this one in for some time and here is another issue to remind me. The award nominees are not always criminals, sometimes they are customers. We have all heard this: I put a dollar in your vacuum and it does not work The picture says it all. The date on the pic is not correct. This guy lives 4 blocks from the carwash, long term resident. I have been dispensing and accepting gold dollar coins since 2000. Thought you would get a laugh out of this one.

Jim Moran

Alanson Car Wash

Hi Kate,

I just finished reading “Your Resolutions for the New Year” in the Winter 2016 issue. This is JUST the advice I’ve been looking for!! Although I consider myself a success at running my car wash, I often wonder if I’m on-track and what more I can be doing. This article gave me kudos for what I’m already doing (website, facebook account, gratitude, updated business plan, always looking for ways to improve my carwash, being involved, attending WCA conventions and regional meetings, customer appreciation, being frugal, supporter of Grace for Vets, voting), it gave me some fresh ideas and encouragement to do more. So after reading your article, I enthusiastically invited my boyfriend out for breakfast so we could discuss your article in depth, brainstorm,

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and make a plan! Maybe it was the caffeine in the coffee, my love of your article, or the excitement of a delicious breakfast, but it was a productive meeting! I came away with six items. As I’m sitting here now to document our 2016 resolutions, I thought you might appreciate how I plan to incorporate some of your suggestions at my carwash. You are my witness, and this will hold me more accountable... • Resolve to get involved - Although I already have a charity carwash plan in place, the insurance I have with WCA Insurance (Oregon Mutual) requires that the charity organization have their own liability insurance for the charity event. I have been told that this may cost as much as $500 - $1000/per day. I am calling WCA this week to find out if I can pay this for

the charity organization. Requiring an organization to pay for their own event liability insurance has been prevented me, thus far, from holding a charity carwash. • Resolve to reach out - I will research and contact local real estate agents and ‘welcome wagon’ service, about distributing free $1 wash tokens to new home buyers. • Resolve to be frugal - I will contact a competing garbage service, and get an updated estimate for a 4-yard dumpster. The contract with my local company expires in June 2016. I will contact Kleen-Rite about their dry soap flakes and see if their product matches the quality and chemical alkalinity of my current soap flakes. • Resolve to give back - I will start earlier to prepare {continued }


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LETTERS for the Grace for Vets event in November. I will contact my local town newspaper to advertise my participation in this event, and solicit more involvement from the community. This week, our city is holding a veteran’s “Stand Down” event for homeless veterans, and I’m providing $100 in McDonald’s gift cards. • Resolve to be heard - At first my boyfriend suggested adding a Christmas tree on the car wash roof, but as we discussed the effort it would take to haul it onto the roof, dragging it up a 16’ ladder, we FORTUNATELY changed our minds. We don’t need any ladder accidents! We also thought it might offend or alienate some customers. Then we discussed the “look” we were going for - adding colorful festive holiday cheer! LED Christmas lights are an easy way to add this. I will research if we have electrical outlets already on our roof. I know how much I appreciate festive holiday lights around my town, when the days are short and the nights are dark. Last month, we swapped out metal halide and fluorescent lights for LED lights and at night, the car wash just POPS with a clean, bright light. My electrical bill is already down 50%! And adding LED holiday lights in the winter would be SO MUCH fun!! A few years ago, I came across this quote, “If I’m having FUN, then I’m doing it right!”. This became my mantra in running my carwash, and helped guide me in making business decisions. That has been my secret to success! And, I must be doing something right, as sales are up 25%. Your article was a great reminder of this, and will help me make it an even BETTER - FUNNER year! THANK YOU! Warmest regards,

Kimberly Berg

Citrus Heights Car Wash

Kim, Huzzah! I think if anyone can actually carry out the nearly-impossible, Sisyphus-like task of completing a New Year’s Resolution it has got to be YOU. Thanks for writing in and you may now consider your plan properly witnessed. Perhaps I’ll get it notarized tomorrow -- right after I finish my busy day of living out my New Year’s Resolutions for working out, drinking enough water, eating healthy, reading some non-fiction, organizing my closets, and being more present with my children… Cheers, Kate

Reader Input & Feedback

Dear Kate: I sent a note to the Carwash Association Of Pennsylvania suggesting a speaker on energy cost at our next meeting. I would also suggest the SSCWN consider an article providing information from an independent source on the cost of energy, both electricity and natural gas, over the next 1-2 years. I have received numerous calls over the last three months trying to get me to lock into a electric rate contract. Some claim electricity in Pennsylvania is going up, others claim it will go down. Some want contracts with cancellation fees based on the price of electricity when you cancel and reselling your existing contract. I don’t understand this type of cancellation fee and who do I believe on the direction of electricity cost? Thanks,

Joe Wolfinger Solar Shine Carwash

cents/kWh in 2015 and is expected to average 12.6 cents/kWh and 12.9 cents/kWh in 2016 and 2017, respectively. All this information doesn’t necessarily explain *why* energy rates have been rising for the past six years, especially since demand has not been rising at that pace, and the price of every energy commodity included in the energy index of the Consumer Price Index -- except electricity -- declined in the double digits. So, I’ll keep hunting down some answers, and in the meantime, please check out the immense amount of data on the EIA site. Oh -- and if you’re interested in tips on becoming more energy efficient (as Mr. Solar Panels himself just might be), the Small Business Association has some generic -- but probably pretty effective -- ideas on their website, https://www.sba.gov/managing-business/running-business/energy-efficiency. Cheers, Kate

Joe, This is a fantastic topic, but one that requires more time than I had to get a full length article in the magazine. (And I couldn’t find anyone with knowledge about those cancellation fees, but I would love to track down an answer for you.) While that remains a priority for this coming year, I thought it might be helpful to share with you some of the information I gleaned while researching and hunting down potential resources for this piece: I point you first and foremost to the U.S. Energy Information Administration at www.eia.gov. EIA posts a monthly review of electricity costs and usage throughout the country, including the charts below, which include data from January 2016 and were published as this issue was going to press. By the time you receive this issue, the EIA should have some updated information and statistics. According to the EIA, growth in residential electricity prices was its highest in six years last year, but is expected to start slowing down. The average retail price per kilowatthour is 12.01, while the commercial average is 9.98. (Pennsylvania is at 13.87 and 9.43, respectively.) EIA forecasts the U.S. average retail price of electricity to the residential sector in April will be 12.6 cents per kilowatthour (kWh). The U.S. residential electricity price averaged 12.7 • SPRING 2016 •

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Don’t Be Put Out to Dry! EDITOR’S NOTE: This interview has been transcribed from its original form as a podcast, directed and hosted by Perry Powell for Wash Ideas. You can find the original version under the “Ideas and Issues” section at www.washideas.com.

Perry Powell’s 2014 interview with Dave Dugoff on WashIdeas.com provides a plethora of ideas for getting ahead of legislators and municipalities on drought and water regulations. Perry Powell: Well, good morning and welcome to another edition to Wash Ideas. I’m here with an old friend, David Dugoff, who is the owner of College Park Car Wash in College Park, Maryland. David, welcome to the show. David Dugoff: Thank you. PP: I think I first met you at a show when you were president of the Mid-Atlantic Car Wash Association, where I had come to present. Or at least, that’s where we really got to know each other. DD: I think that’s right. It was at one of the major trade shows. PP: You’ve done quite a bit of service with the associations, though, haven’t you? DD: I have. I’ve been president a number of times and cycling in different roles on and off the board since about 2000. PP: I’ve known you probably a dozen of those 15 years, then. When did you first come into the industry? DD: Well, that goes back to the days of black and white television. PP: You’re not that old. DD: Well, I started that young. My father started putting these white refrigerator boxes in the service bays of gas stations that we had in the mid-1960s. I was a kid -- this was even before I could drive -- but on Saturdays, I was supposed to tend to those machines; clean up the bays and tend to the equipment, as well as wait on customers; pump gas and wipe windshields. But that was how the full service gas stations worked those days; gas was a lot less than a buck a gallon in those days. It really goes back a long ways. So we had four self serve car washes among our 10 gas stations that my father built. And as my father was building and remodeling, we would put in two bays of self serve -- or in some cases four bays -- and then I tore down that station down in 1990 and built another four-bay self serve when we remodeled the entire gas station. It was a raze and rebuild. And that was really an eye-opening experience. When we re-opened that site in 1990, we were losing about $5,000 a month selling gas and diesel because the margins were so bad, and we were making $5,000 a month on this little car wash. And we had never done anything like that before. It was kind of just like having a big vending machine -- car washing had been good income, but it had never been anything significant. But when we opened that site, it opened our eyes. When we were doing that, my father said, “Don’t get that cheap equipment we’ve been getting for years. Go to a show, learn what’s out there, and get the best that you can find. We know this is a good site, let’s put the best we can find in there.” So that’s what we did. We put in good equipment -- in those days, that meant add-

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ing foam brush. It had been around for a while, but it was really new for us. And the carwash did so well -- I mean, we had lines around the property and it was a big property. And we’re thinking, “Wait, we just spent a fortune re-building the gas station and we’re losing money. And then we’ve got this nice little compact car wash that’s fairly simple, and it’s doing great! People love it. What’s wrong with this picture? So we started asking, “Who needs the gas?” And gas was an environmental disaster back then -it still is, I guess -- and we spent a lot of money -- I won’t say how much, but hundreds and hundreds of thousands of dollars cleaning up gas station sites -- and for what? And here we had this nice little simple car wash that was going gangbusters. So we started looking at other sites that we had remodel and rebuild and come into compliance with the underground storage laws from the mid-80s. We looked at College Park, and because of the very high traffic flow on Route 1 in College Park, it really had become a poor gas station site. Lines just kept kind of dwindling and dwindling. It was on a downhill tilt. And he and I kind of looked at it, and said, let’s just put as many bays on here that we can fit. We can lay it out nice and build a nice looking building, with a nice structure. Make it look solid and inviting. And not put any gas there. This was really revolutionary for us -- we had been selling gas since 1929. My grandfather had started it. So this was a major paradigm shift. And we also reached the point of saying being in the gas industry is not really as much fun as it used to be. We would generally make money, but we never knew why. We couldn’t control it. Nothing we did was really helpful. We were just buffeted by the markets and the margins -- sometimes we had a margin, sometimes we didn’t. And we said, “I don’t want to do this forever.” He was ready to start taking it easy, and I just didn’t want to do that for the rest of my life. I was in my 40s then, I guess. So we put the gas stations up for sale. It took five years to consummate the sale; to find a buyer who would give us the price we were looking for -- because we had no debt and we were in no hurry. But that was the decision we made. And during that time, I continued to remodel the gas stations and I initiated the planning stages for what would become College Park Car Wash. And that was two years of fighting a zoning battle to build a car wash where we already had one. We had a gas station and a two-bay carwash that we built in 1968 and they fought us on that. They being the city. They were very obnoxious. And it was painful. I can’t tell you how many public hearings it was -- but they did not want a carwash there. They did not want it. But we did. And we persevered. So, then when we sold the gas station business, we

wrapped up the affairs of the oil company and then went right into construction of the carwash that next Spring. We opened in February of ‘97. So that’s how I got to be a single site operator. And that’s really what I wanted. I had spent my whole life running around ten gas stations trying to keep my hands under the sieve to keep the sand from leaking out -- which you can’t do. It’s just an impossible task. I envy the guys who are able to do that; who are able to run multiple locations of any type of business at a high level. I just couldn’t do it. But I thought if I could run one site and devote all my efforts to running one site at a high level, then I bet I could make a decent living at that. And I did. And having my attention focused, I think, makes a lot of difference. It’s what I do every day. That’s where I go to work. That’s my main gig. PP: You mentioned the foaming brush -- in an interview with Tom Brister I asked him what he thought the most significant advancement in carwashing had been in his lifetime. And he said the foaming brush. DD: Oh, yeah. I think so. PP: And he told a story about the foaming brushes -sort of comparing it to the volcano and lava arches that we have today. He said, you’d go to the first show and there was maybe three there, and then you’d go to the next show and there’s 50 people selling foaming brushes. But until then, all you were selling was soap and water -- you weren’t selling time. And that really made a significant difference. Somewhere in all of this, you found time to become an attorney. I read somewhere that you’re a “recovering attorney.” So I guess my question is, is there a 12 step program for that? (Laughter.) DD: For the recovery part? I don’t know. Haha. My father tricked me into going to law school. I had utterly no interest. I won’t tell that story, but suffice it to say, he tricked me. I went to George Washington Law School at night while I was still running the gas stations and eventually I did pass the bar and I practiced outside for a year and then came back into the business. That just made a lot more sense for me. So i have done things at a lawyer, but it’s not what I do every day. I don’t think I was particularly good at it, necessarily. I think the education has tremendous value for being able to analyze issues and problems and to think about things not only from one’s own perspective -- but from the other guy’s perspective. I think you can make a much more effective argument if you understand that the other guy’s point of view has some value to you also. I mean, at least to him it does. There’s a lot of ranting and raving going on these days, particularly in Washington politics, where I think there’s a lack of ability to give credence to the fact that the other guy’s position has value, that it might be logical. That it’s not just there to be an irritant. And I think that the training from law school has been

{continued }


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Don’t Be Put Out to Dry! very valuable. PP: It seems that a lot of people today have sort of a scorched earth policy. That it’s winner take all or nothing. DD: Yeah, and it’s so stupid. In my opinion. It never works out that way. PP: You know, you’re in Maryland and I remember doing a variance in Maryland where literally I was in front of the board for three and a half hours -- it was the most grueling time I’ve ever been through -- and I countered on each sign, there were 13 signs going up on the carwash property and they wanted to sort of eliminate a whole bunch of them. At the end of the deal, we had effectively gotten them to agree that we needed all 13 signs. But one of the board members looked at me and said, “You have to give me something.” So we took lights, and we took lights out of two of the signs so they were non-illuminated. The owner felt like we had won the war -- and I did, too. But I think if you feel like you have to win on every point, then you won’t be winning any wars.

need to be in business, but that everyone needs to be in business or to live and to have water to brush your teeth. We can be very shortsighted -- you know, “I don’t want to pay those taxes!” -- well, okay, you don’t have to, but someday the bill is going to come due. And that’s exactly what they saw in Charlottesville. PP: Now you served on both Maryland and Virginia’s Governor’s Drought Commissions.

PP: Well maybe come to Texas then. (Laughter) DD: Really?

PP: What was the most eye-opening thing that you learned in that exercise?

PP: I think it could work. We have Code Enforcement that drives through our neighborhood from time to time.

DD: The most interesting thing is that when you’re talking with regulators, when the crisis is not upon you, they can be very reasonable and understanding -- and they “get it.” And when you wait until you’re in a crisis, then they have knee-jerk reactions just like everybody else. And they’re under political pressure, you know, the sort of, “How could you let those water wasting carwashes stay open when we have to take two-minute showers?!”

DD: Well, that’s interesting. I heard a story from an operator in Maryland -- a great operator -- and across the street from him is a fast food restaurant. And the fast food restaurant hosts a charity wash every weekend. And the effluent from the charity wash is going out the driveway, into the street, down the storm drain, directly into the river. And he’s sort of at his wit’s end. He’s tried to talk to the owner to explain this isn’t good for the environment. He can’t really get anywhere. I thought what he should do is invite the Boy Scouts to set up a grill at his car wash and sell some hamburgers and hot dogs for $1 as a charity event to compete with the guy across the street selling hot dogs and hamburgers -- but there was a restriction in his lease that he couldn’t do that. Otherwise, what’s good for the goose should be good for the gander. And there was a Code Enforcement officer that paid him a visit not too long ago and he said, “You know, Officer, you’ve got to be kidding. Do you know what I do for the Chesapeake Bay Foundation and the Wash the Bay fundraiser?” He’s involved in a number of programs -ICA WaterSavers and the charity events he does during the year. And the guy across the street is shooting effluent down the storm drain. And the Code Enforcement Officer says, “Yeah, but that’s for the Boys Scout.” And he’s asking okay, well, if I wash for the Boy Scouts can I send all my water down the storm drain too? And the Code Enforcement Officer wa sa little flustered by that, and I think, left, but …

PP: It’s panic.

PP: So, you’ve been very instrumental in your area -not only have you been a very successful operator and been very involved with the Association and supporting it with your efforts -- but you’ve also done a lot of work in the water area in terms of drought restrictions and conservation, as well.

DD: Yes, panic. THey feel that they’re in that panic. And it’s very hard for them -- they’re under the political pressure from the governor for solutions. They have to have public relations solutions to show that they’re dealing with this problem. And they don’t really care who they hurt when they’re throwing their weight around. But when it’s calm, you can talk to them. And you can explain what you do and what you can’t do. And one of the interesting things that we talked about with the regulators was that during the drought we encouraged operators to reduce their tip sizes on their nozzles and in the arches -- use a little less water. And we found that we could do that and we could still get a clean water and we could use a little less water, but then when the drought is over, there’s no reason to go back to using a bigger tip. So when you have another event two years or five years later, you can’t ratchet it down below that. I mean, you can make the hamburger a little smaller -- but you can’t take it off the bun and still call it a hamburger.

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DD: I think there is; we have to seize that special time to explain a lot of stuff and it’s something that we do try to do. But you have to realize: You’re never going to get a municipality to send out a police force to write out tickets for someone who’s washing in the driveway. It’s just not going to happen.

DD: Yes.

DD: Exactly.

DD: We have. MCA has been very active. At first we were the victim -- we were sort of shot int he back when we had a drought in 2000. The governor closed the carwashes precipitously and then relented and opened them again -- if we closed on Tuesdays. So we survived that, but it created the need for the MCA to be active politically and to make ourselves known. I don’t think we’re big contributors politically, necessarily, but our faces are known in Annapolis among the lawmakers that make these decisions. We had quite a time. And then two years later there was a very bad drought in Virginia, and one particular county -- it includes Charlottesville, the home of Jefferson -- and they shut down all the carwashes on one day’s notice and it was a total surprise to those guys. I think it was 13 car washes. A number of them got through that summer by going out and hauling in water on trucks and just leaving the trailer on the property and feeding in the water that way. They just wanted to be able to pay their employees and their mortgages. So, we bought time on the radio and we went through everything and the water authority -- it finally dawned on them, after a month or so -- that: A.) We don’t use much water to start with, B.) Closing us down wasn’t having any positive effect on the drought and C.) All they were doing was hurting legitimate businesses that had a right to be in business. But they couldn’t do anything because they had painted themselves into a corner, so to speak. So as soon as it rained in September, the first rain, they reopened the car washes. And we haven’t had much trouble there since. Charlottesville is a really good example of very poor long term planning. The reservoirs were built in the 1960s for the population that was there and predicted to be there -- but the population grew exponentially faster than anyone expected and there was no water capacity. So you have any kind of dip in rainfall and their reservoir is dry. They’ve been dredging out the reservoir over the last year or so and working on it -- which they had not done; had not spent any money in 40 years! So it’s people not taking care of the infrastructure that not just we

sweep a new class of customers into our facilities?

PP: And the presumption there is that everybody went back to their prior usage before the drought restrictions. DD: Yes, but I didn’t. And I found, “Oh, these work fine.” And I’m still using the economy nozzle set that my supplier worked out for my in-bay automatics. And I have to ask for it specially. “Oh, we have to look that up.” (Laughter) PP: And so it looks like maybe you found some cost savings in the middle of the drought. DD: Well, maybe. I mean, it’s not very significant. But, a little. PP: You wrote an article for Professional Carwashing & Detailing back in 2010 and I’m going to post a link to that article for any listeners who want to read that -- it was very interesting. There were a couple points that you raised in that article that I found interesting. The first: The issue of driveway washing. And I’m just curious, having read that and sort of triggered this thought in my head -- is there an opportunity to use a situation like this through media or what not, to talk directly to the consumer and talk about the usage differential between what happens in the driveway and what happens in a professional carwash at a time when homeowners are aware that they’re going to be in trouble, when they’re restricted already, isn’t there an opportunity to jump in there and use the current environmental conditions to

PP: I don’t know if you know Vic Odermat, but we interviewed him a while back. He’s in the Seattle area with Brown Bear Car Washes, and he had a really large problem with this very early in his career and he formed a group and they actually were very successful in getting restrictions passed over the storm drain issue. They hit it two prong: Education -- they went in the schools and continue to do that -- and then legislation. I think carwashers, I think sometimes we are just not paying attention to things until they are on our plate. DD: Yes, that’s true. The Brown Bear Study is a terrific piece of work. I take it everywhere I go, to various groups. And we explain to them that effluent will kill fish and this is not good. There’s a very interesting political situation that’s evolved in the last five years starting with the EPA imposing effluent restrictions on the storm sewer. So every municipality that runs a wastewater treatment plant has to decrease the amount of phosphorous nitrogen that comes out as an end product of that plant and they also have to reduce the nitrogenous phosphorus that’s coming out of the storm sewer. That, in and of itself, has created a tremendous awareness. In Maryland we’re spending billions of dollars -- and we’re a small state with 23 countries, maybe 30 or so wastewater treatment plants -- and we’re updating all of these facilities to the tune of billions of dollars. And that’s being passed on in your water bill to consumers.

{continued }


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11


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12 • SPRING 2016 •


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13


Don’t Be Put Out to Dry! That’s an enormous amount of money, so there is an attention being paid now to water quality in the storm sewer as a dollar issue for the municipality that there was not. Now, it’s been in the Clean Water Act since the mid-80s. It’s just never been enforced. And now it’s being enforced and the money is being spent; plants are being updated. I think that creates an opportunity. We need to talk to them where we live -- in your state and your local water boards. PP: You brought up in that article a few other things that were really interesting to me. At one point you quote a statistic that carwashes use “one-half of one percent of a municipal’s’ water demand” and that at another point you said that carwashers have to distinguish themselves -- or have the burden of -- and I’m putting words in your mouth now -- but they have the burden of proving themselves to be an essential service. You make the point -- you didn’t use the word -- but you made the point that that is a subjective thing that you think is essential. For instance, restaurants which use ten times the amount of water as a carwash, are considered essential because people are putting food in their mouth and that’s essential. How have you been able in your experience to deal with that term “essential services” and sweep carwashes under that bar? DD: Well, not terribly successfully actually. We make that point that a white linen restaurant -- if you think about it, for just a moment. There are only two or three essential services for a community: Grocery store, pharmacy, and fuel. Then after that, what can you get along without if it were closed for a few days? You don’t have

METAL HALIDE

to go to a fine dining restaurant. THat’s not essential to you. You can get food at a grocery store and cook it. And yet, when the mayor of the town owns the white linen restaurant (and we had that happen in Fredericksburg, Maryland, at the time of the drought) -- she thinks that is essential and the car wash is not. Trying to get legislators to realize that distinction is just not true. It may be efficient at the time so that they can label a bunch of businesses and say, “We’re going to close down non-essential businesses.” But it’s not true. Now, McDonald’s and the fast food restaurants employ a lot of people. Well, full serve carwashes also employ a lot of people. And when you close down carwash, people lose their income. There are the same effects. The guy who owns the McDonald’s has a mortgage to pay. And the guy who owns the carwash also has a mortgage to pay. And utilities. And so on, and all these bills that just don’t stop because there’s a drought on. So creating that awareness, we say it -- but I’ve never been able to get a legislator to say it back to me. There’s a nodding acknowledgement, but I have not had success in selling that. Doesn’t mean that we don’t say it --- and it’s certainly part of the things that we say. I still think there’s a legal argument to be made that under the Equal Protection Clause that carwashes need to be treated the same as any other business and at a time of scarcity a municipality may have to restrict and close things, and if they treat all businesses the same, well then, okay. To me, that’s fair. What’s unfair is to single out one or two industries -- landscaping, golf courses, whatever -- and car washes because they’re *perceived* as water

(1200 Watts)

VS.

wasters and only closing them, or closing them first. I think the pitch we have made is: Treat us like any other commercial business. Any other commercial customer of the water authority. PP: And certainly we’ve had these experiences in parts of Texas this year, and the reactions and the arguments from the politicians always seem to be the same. One of the things you mentioned in the article that was actually borne out in a case in Texas, was that unifying together as a group was more important. You used the example of a bottling plant that employed the same number of people and they wanted to protect the jobs as the 17 carwashes in the area and how important it is that you be seen as a block of employers in that area and not just a standalone guy who’s trying to save his own skin. DD: Yes, that’s right. PP: As you began to unify with other operators -- you talk about the need for a spokesman and the need to be rational. Well, carwash operators who are fighting to pay the mortgage seem to be...well, less rational. How did you find it was working with people who were perceptively competitors and getting a common objective going? DD: Well, when they’re really threatened they can do it. I didn’t find it was that we were competitors that was the problem, but there were definitely some operators who could perceive the greater good of working together, and then some operators who would not under any circumstances -- they’d rather die than get a glass of water from the guy across the street. I mean, that’s the truth of human nature, I guess.

{continued }

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Don’t Be Put Out to Dry! But if you get enough of the operators who are upstanding citizens and are known to politicians -- I remember, we went into a meeting in Fredericksburg with four operators; good operators, good citizens. And outside, before we went in, they said, “We have to protect ourselves. We have to do this, we have to do that.” And they immediately folded. They were immediately ready to give the mayor anything that she wanted. They were ready to comply. We can do anything you want. I said, “That’s fine. But on behalf of the Association and the total membership, I’m not going to agree to that. This isn’t fair, this isn’t fair, this isn’t fair and this isn’t fair. And you really shouldn’t do this. This isn’t going to be effective in helping your drought situation, first of all.” And then I laid out all of the points that we had already made again. So she looked at me and said, “Who are you and what are you doing here?” She was not happy to have me in the room. But then she had a staff person -- not sure if he was an adviser or a utility staff person or whatever -- but he looked at her and said, “He’s right.” And she was angry, “What do you mean?” But the points I made were true: We don’t use a lot of water. We never have. So they did not close the carwashes in the city of Fredericksburg. They were on the verge of it, and if those guys had gone in without someone from the outside -- someone who was not accountable to that mayor -- it would have been a different story. They would have been closed. PP: I find the same thing in dealing with signs because the local sign guy who’s standing before a board has to ultimately come back to that same authority time and time again to earn a living in that particular city. So, you know,

when I come in -- I’m coming in with the attitude that I might never be there again. You’re able to say things that the guys who are beholden to that body might not be able to say. You’re right about that. Switching gears: If you could give a piece of advice to a guy who is not facing any sort of perceivable water restriction at the moment about how he should or can be prepared for what may come by surprise at any time and he suddenly finds himself in this situation -- how can he prepare up front? What sort of advice would you give him? DD: One thing he can do is invite the mayor or the city council members over and show them your reclaim system, show them your spot free system, show them how small these tips are -- and tell them, this only uses three gallons a minute at high pressure, but most of the time we’re using low pressure functions that are in pints per minute or quarters per minute. And show them that what might look like a lot of water, isn’t really. You can convey that much more effectively when there’s no panic. I show them my second reclaim system. Self serve equipment -- that’s a mature industry. They know what they’re doing. But reclaim; that’s constantly evolving. I’m actually on my third reclaim system. You can show what you’re doing -- make yourself known as a good corporate citizen in their community. If you don’t live in that particular jurisdiction -- as I don’t in College Park -- and you’re not a voter, well then, they don’t need you. They don’t care. Most members of the town council -- especially in smaller areas -- are not in business, have never been in business, and don’t understand what it’s’ like to

be in business. They may have political aspiration sand they may be smart -- but their goals are very different than ours and their world view is very different than ours. So, have them over when it’s not intense. Educate them then. The mayor of College Park is a young fella in his 30’s. He’s an environmental activist. Very smart. Very, very smart. And i had him over to walk around. He wouldn’t wash his car -- and it really needed it -- but he doesn’t care about that. I showed him the reclaim system and I explained how I use it efficiently and effectively at the car wash. Now, it hasn’t gotten me anything other than we’re on a first name basis now. But I think if they had a problem with me, they’d give me a phone call. PP: Yes, that kind of thing might just keep your name off the table if the time comes. I think there’s a critical moment that you and everybody I’ve talked to that you and everybody I’ve talked to who’s been through this has gone through -- this one critical moment where, as you described, they have a knee jerk reaction and say, “Car wash. Cut ‘em off.” But if you can sort of plant all of the seedsup front that you’re not a water waster, than you might be winning the war. Well, this has been very interesting -- and we haven’t even taken this conversation as far as it can go -- but maybe we can count on you to come back and continue it? DD: Yes, yes. Sure. Of course. PP: Well, Dave, thank you so much for being here and for what you’ve done for the industry.

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18 • SPRING 2016 •


INNOVATIONS

BRIGHT NEW IDEAS, PRODUCTS & SERVICES FOR SELF SERVE CARWASHES

From GinSan: GS-407 Large LED Display Timer Ideal replacement for the wall mounted GS-31 display timer for more in-bay visibility. • Input Power: 24v • Large scrolling 2” x 9” LED Screen. • Premium product inputs. (adjusts time when service is selected). • Programmable greeting. • Total Revenue accumulation report (displayed on timer). • Four separate revenue inputs reports (displayed on timer).

• Timer Cycle: 0-99 minutes. • Pulse Accumulation Maximum: 255 • Quick Restart Time. • Start Up Delay. • Event Cycles. • Free Wash Cycles. • Bonus Time Features. • Language: English, German, Spanish, French. • 2 year warranty.

From Schaedler Yesco: 71W LED Spaulding Wallpack • Rugged cast aluminum construction. • Flat glass is tempered, impact resistant and allows no up-light. • 12.4w LED unit produces 802 lumens • Five standard polyester powder finishes, protects housing and provides lasting appearance. • CSA certified to UL1598 for use in wet locations.

From American Changer: AC8000 Paystation w/ CoinCo Validator Need to replace your old entry unit? Does your machine have boards that can’t be replaced? American Changer’s AC8000 with CoinCo Validator and optionalCryptoPay upgrade* is the most economical 24 hour car wash entry system for an automatic car wash! Are you considering upgrading or adding a credit card system to an aging Hamilton ACW3 or 4? Keep in mind that the main electronic control boards in those units may not be able to be repaired or replaced if they malfunction! AC8000 PaystationReplacing a Hamilton ACW 3 or 4 that is securely “bricked in” can result in some expensive masonry work! The American Changer Paystation fits easily inside of the Hamilton shell which eliminates removing the old cabinet! The Credit Card processing (Crypto-Pay Optional) and Token/Code marketing system are included in the Paystation! An optional “beauty ring” finishes the installation! The mounting and electrical access openings inside the American Changer are in the same relative position which also simplifies the job!

From KIC Team: Credit Card Reader Cleaner

From Simoniz: All Season Tire Shine 5 Gallon Simoniz introduces the first of its kind to the Car Wash Industry: ALL SEASON TIRE SHINE, a safe non-solvent, Water Based – Anti Freeze Dressing. This innovative Dressing provides the best of both worlds. For the Consumer. A non-greasy, excellent High Shine dressing with that Natural-Like New Clean Slick finish to all tires. All Season Tire Shine revitalizes tires and highlights a freshly cleaned vehicle. For the Car Wash Owner. A nonfreezing product for your SS Bays that will stay operating and produce profits throughout the winter months. It’s safe on all rubber and plastics and will not harm painted surfaces, this means no damage claims. Easily rinsed and cleaned with just water, preventing slippery or oily floors. Another First by SIMONIZ Perfect for Simoniz Self Serve Tire Shine Systems.

From Crown Equipment: Tire Shine/ Air Machine Combo • Coin-operated • For SELF SERVE/Full Serve/ Touchless/ Convenience Stores • Two (2) revenue producers. Sell “Tire Shine and “Air” • Designed to hold 5 gallon pail • Can also be used to dispense Wheel Cleaner at entrance to Touchless. • Sensortron/lighted dome standard. • Digital display optional • Holds 5 gal pail of tire shine.

Why use Cleaning Cards? • Prolong equipment life and reduce capital expenditures • Reduce maintenance fees • Reduce equipment downtime • Reduce fees from erroneous transactions • Increase customer loyalty with fast efficient transactions • SPRING 2016 •

19


Association News FROM THE PUGET SOUND CAR WASH ASSOCIATION: Friends old and new gathered for the Car Wash Solutions Conference held by the PSCWA on March 29 at the Muckleshoot Casino. Longtime members, PSCWA leadership, and our loyal vendor members enjoyed a day of information sharing and socializing. We were joined by representatives of the Western Carwash Association and International Carwash Association - Kristy Babb and Claire Moore, respectively. Operators new to our association also traveled to Auburn to partake of the conference. We got to know representatives from Bush Car Washes in the Tri-Cities, The Wash Station, LLC in Wenatchee, and GTO Carwash in Yakima. The Car Wash Solutions Conference was made possible through the support of our conference sponsors - the Western Carwash Association, Diamond Shine, Inc., McNeil & Co., Northwest Wash Systems, LLC, Zep Vehicle Care, and DRB Systems, as well as Lustra Professional Car Care Products and Charter Industrial Supply LLC. But,

20 • SPRING 2016 •

all of our vendor members turned out. There were many displays of products and services on hand, and a lot of networking got done during the conference. Roundtables topics were wide-ranging and covered useful information. Low cost, and yet effective, a motion-activated audio system was described by security expert, Mike Canaan of Trident Investigative Service, Inc. Brooke Anderson of Bank of America and Rich Hays of DRB Systems fielded operators’ questions about the choice between increased liability and purchasing equipment with greater security for credit card transaction. Tips for recruiting the right employees from People Values President, Grant Robinson included offering existing employees an incentive to refer potential employees and approaching school coaches and teachers, versus guidance counselors, for referrals, since they’re in a better position to know their students. Glenn Potter of Inland Insurance discussed managing claims, Tammie Hetrick of Retail Association Services made a presentation regarding Workers Comp, and Heath Pomerantz of Diamond Shine led lively self-serve roundtable discussions.

After an excellent buffet of barbecue served by the Casino staff, Kristy Babb talked about the government affairs efforts of the Western Carwash Association and how such techniques might be used to influence legislation in Washington State. The question was asked- Would PSCWA members support becoming involved with government affairs? Perhaps revisiting the possibility of working towards elimination of the sales tax on self- serve car wash revenues? The PSCWA leadership made a commitment to discuss this and make a proposal to the membership about influencing issues, beginning with the 2017 legislative session. The conference ended with drawings for some great door prizes- gift certificates, a basket with a couple of bottles of excellent wine, and a much sought after drill, all provided by our conference sponsors. The grand prize was provided by the International Carwash Association for an all-access pass for their convention in Nashville on May 9-11. It was claimed by Bryant Souriyavongxay of The Wave Carwash, LLC. Thanks to everyone that worked on and attend{continued }


• SPRING 2016 •

21


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Association News ed the 2016 Car Wash Solutions Conference!

FROM THE AUSTRALIAN CAR WASH ASSOCIATION PRESIDENT DARREN BROWN: We have had our share of both drought and rain this summer, bushfire in the West Coast World Heritage Area where we would normally expect rain and torrential downpours on our Sunny East Coast. Yes, I am writing of Tasmania, but it seems these occurrences were mirrored on the Big Island also. The season has turned down here in Hobart, 8 degrees this morning with a distinct chill in the air and we live in hope that the rain will come -- for without good rains in the highlands it could be lights out this winter. IF you haven’t heard our news, the Basslink undersea power cable has failed and our power generating dams are at dangerously low levels. What has all this got to do with the carwash industry? Everything. When we are faced with extreme conditions, such as drought or (in Tasmania’s case) overzealous public servants trading a precious resource for profit (the powers that be ran the turbines flat out before Prime Minister Tony Abbott repealed the carbon tax -- selling this power to the national grid {continued }

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Association News for an inflated return) the carwash industry is at the mercy of the public servants who make the decisions that affect our businesses and lives. This is why we need education, understanding and advocacy at every level of Government. Without these efforts, decisions will be made with little thought of consequences to the carwash owner. In addition to the myriad of individual benefits that come with membership, this (in my opinion) is why we need a respected, well-resourced organization to represent our industry. We can only achieve this through strong membership. I look forward to catching up with as many of you as I can in Melbourne at the ACWA Event in August.

FROM THE SWCA: 2016 was a record breaking year for the SCWA Convention & Car Wash EXPO. A record number of car wash owners and vendors recently gathered at the Arlington Convention Center for the annual Southwest Car Wash Association event - the First Big Car Wash Show of the Year. BETTER - STRONGER - TOGETHER, the 2016 edition of Southwest Car Wash Association Convention & EXPO, included three strong days highlighting premier education - industry innovations – business solutions – operational strategy

and unparalleled hospitality. The event included more than 60,000 square feet, in two EXPO areas, displaying car wash “state of the art”. “The EXPO, the networking and the wonderful energy with all the successful car wash operators is really a great way to start the year,” according to Ian Heritch, Mr. Sparkle Car Wash, San Antonio, Texas. The Convention was highlighted by the Captain Richard Phillips’ keynote address. Phillips recounted his experiences of being held captive by Somali pirates and how he realized we all have great inner strengths during times of stress. Good lessons for all business owners. The popular CEO Forum featured nationally recognized Billy Riggs who highlighted how car wash owners can be more competitive by creating unique customer experiences. In-Coming SCWA President, David Swenson, owner of the Arbor Car Washes in Austin, Texas said, “As we brought the car wash, lube and detailing community together from around the Southwest, the SCWA 2016 Convention & EXPO focused on how we can be “better – stronger – together” in 2016. This was the biggest and best SCWA Convention & EXPO – drawing the largest attendance ever. We will continue to build on the successes and continue to raise the bar even higher. As a member-driv{continued }

RADNELAC

2016 Association Calendar of Events Submissions can be made to Editor Kate Carr at katec@sscwn.com

MAY 9-11

The Car Wash Show 2016, International Carwash Association Nashville, TN

www.carwashshow.com

JUNE 14-16 UNITI expo

Stuttgart, Germany

JULY 12-13 WCA Road Show Boise, Iowa

www.wcwa.org

AUGUST 9

ACWA Table Top Show Bulleen, Victoria, Australia

www.acwa.net.au

SEPTEMBER 13-17 Automechanika Frankfurt, Germany

SEPTEMBER 19-21

Northeast Regional Carwash Convention Atlantic City, NJ

www.nrccshow.com

NOVEMBER 16 Learn More, Earn More by Kleen-Rite Corp. Columbia, PA

26 • SPRING 2016 •


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Association News en organization, SCWA wants to be on the leading edge of what is happening in the car wash industry and to provide our members with the most relevant information and resources available. “I am really excited to be a part of this dynamic organization.” Swenson was elected 2016-2017 SCWA President during convention proceedings and joined more than 1600 car wash owners and exhibitors attending the SCWA 2016 Convention & EXPO. The Annual Awards presentations honored the 2016 SCWA Car Wash of the Year, Cypress Station Car Wash & Lube, Houston, Texas. Cypress Station is owned by Ahmed Jafferally. The Southwest Car Wash Association includes

28 • SPRING 2016 •

more than 1300 members and over 6000 locations throughout the Southwest committed to supporting car wash owners and promoting the professionalism of the car wash industry. For more information and pictures of the 2016 Convention & EXPO visit www.swcarwash.org.

FROM THE WCA: Over 100 people flocked to San Diego for WCA’s San Diego Roadshow, Education Series, and CarWash College presented by Sonny’s. Attendees of CarWash College came from across the state and even outside of it for the two day manage-

ment seminar. Our education series consisted of an engaging keynote from a Yelp executive, and a greatly informative presentation from CEO of the International Carwash Association, Eric Wulf. The Roadshow took guests across the San Diego region for a tour of local car washes, and a lunch at a fish house on the harbor. Thank you to all of our attendees, tour stops, and sponsors for making this event possible. Save the date for our next Roadshow in Boise, July 12-13!


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TRICKS TRADE OF THE

Presenting some of the best discussions of the self serve industry’s headaches and solutions from ACF. You can find more discussions like these on AutoCareForum.com.

Hand held Dryers

of power as close as possible whenever significant changes are made.

Earl Weiss: Sound off please. Experience with installing Hand Held dryers. The good, Bad and Ugly. MFGRS Features. ROI Maintenance Other plusses / minuses. Chaz: I was on the fence on the air dryers. What sold me was the 30 day money back offer from Ginsan. This installed one unit with an “hour” meter so I could see firsthand the usage. A reverse vac, that I don’t have to clean out and makes great profit! I offer C/C with come not up but also see cash customers buying more time. As long as the meter is running I don’t care how long someone stays the in the bay. CarWashBoy: All Good, No Ugly.. If you don’t have them, that is why you need them.. Ours are used constantly.. Attic mounted..Wall mounts work well also, but are noisier. Doug BBE: We added them about 2 years ago. Attic mount. They are very low maintenance. I have replaced 2 nozzles I believe. But one nozzle a year isn’t bad for how much they get used. Definitely would be the next thing I would add if a wash already had cc acceptance in the bays. cfcw: Just bought a new car that I am babying and suddenly realized blowers would be great. Any specific brand recommendations? DiamondWash: I just used a Air Shammee at one location and a J.E Adam Turbo Towel at another location I like the gun on the Turbo towel versus the plastic gun on the air shammee Robert2181: I have 5 bays. Looking to upgrade. Only take coins. Do you upgrade to cc, blowers and/or bill changers? I would have to also put in new (flush mount)bay panels. Thanks Earl Weiss: Demographics will affect relative success of certain things. FWIW instead of committing to do the entire place and spend $ without knowing the return I first added bill acceptors to half the bays (Some people experience vandalism which make this a no go) . The return /experience justified me doing the other half. Same with CC acceptors and dualers. If I do the hand held dryers I may try a couple of bays then do the rest. CarWashBoy: Hi.. Just my opinion.. I would step it up and go Credit/Debit and Bills in bays.. NO COINS.. trash your quarter changer for a Bill Breaker.. and the same with the Vacuums, Bills and Cards, NO COINS you gotta spend it, to make it.. I have done what I just mentioned and it works.. I just remodeled a 6 Bay and 8 Vac Wash, with EVERYTHING Top of the Line..Air Dryers etc, and it did 188,000 last year after remodel.. this year heading for 230,000+.. I know that is not great revenue, but it’s working so far, and simple to manage....I thought about adding a AutoMatic, but I have had

30 • SPRING 2016 •

MEP001: I’d recommend that as well. I remember someone who was about to pull the plug on an IBA install because the city wanted him to install a new 400 amp panel (at a cost of over $10,000) since the auto and the dryers would have overloaded the old one. When I pointed out to the city engineer that both would not ever be on together he said it was okay as it was. them in the past, and they can be a Pain in the you know what.. Just my 3 cents. Happy washing, Doug. slash007: I put in six air Shammy’s a couple of years ago and it was the best addition I made. People love them and they get use often. Once I added count up credit card a few months later, usage went up much further. People are way more inclined to dry the car when they don’t have to add more $ first. rph9168: I have seen people spend 15 minutes in a bay drying a large SUV. It has taken a while for these to catch on but I think they have become a good addition for a self service wash. If you are unsure I would do what Earl suggests - put them in a couple of bays to see how it goes for you. mel(NC): Doug, what percentage increase in sales did you see after the remodel verses before? What do you attribute the 26% increase this year to? Earl Weiss: So Far , Turbo Towel , Air Shamee and Gin San reports. No feedback on Blasto Dry? Do you guys set up a separate breaker panel, one breaker for each unit for these dryers? BBE: Not sure how this pans out if you have the 110v, but we have the 208v air shammees, and we use the same breaker for each air shammee as the hp pump for that bay. Since there is no chance of both being on at the same time. I believe this is what most do. mjwalsh: Earl ... not sure on how your existing in bay electrical is & whether this could apply to your setup ... but when we updated from our vintage 1987 less power required 3 smaller motor Specialty-Doyle Blo Drys we realized that amperage was going to be an issue and tried to keep the havoc to our existing electrical panels & new aluminum conduit & new boxes to the bays to a minimum. What saved us was that we tapped into some of our existing 110VAC in the bays that was no longer needed because of the new low voltage G&G 24VDC LED Lighting. In our case we used Square D (2 in the space of 1) breakers but still had to run one additional aluminum box with only one short run additional aluminum conduit out to & within our closest bay. We were advised that we could also use a time delay relays but we went with the double breakers to replace the existing single breakers & a bit more wiring instead. Time delay relay would make sure both of the higher amp single phase motors don’t start at the same moment causing a code violation ... unless 10 gauge wire is run with 30 amp breakers etc. As many of us know from experience, a good electrical person will balance or tweak the loads in the panels to match the utility drop’s legs

mjwalsh: It might be just me ... but I see at least a minor trade off with sharing breakers in terms of being able to replace wiring &/or a motor or whatever not as quick & knowing that the breaker could be needed to be used by another piece of equipment. There are other disconnect for safety ... workarounds; but it seems like it is something for Earl & his maintenance staff to consider. MEP001: When you use the same breaker for the bay pump and the dryer, you’d have to shut the bay down to service either one. No rocket science there, just institute a basic safety protocol. mjwalsh: At an unattended self service bay ... it seems like the fact that anything in the hand held blow dry circuit that causes the breaker to trip ... would cause all of the other options to automatically & mercilessly be down on the busiest day imaginable ... something for Earl & others to consider. I have memories of times where the Blo Dry breaker tripped but we found out later of the problem which had a lesser consequence ... because at least the rest of the options did not automatically shut down the bay during a busy day. We also we find that during certain types of weather the blo dry is much less likely to be chosen by the customer which is relevant to the bay &/or hi pressure at minimum that would be automatically also not be available on a blo dry breaker trip. Slash007: I share the breaker with my SS pump as well. MEP001: Then supply each blower motor with a 10A fuse. I’ve never had a vac fused that way trip the breaker. I think you’re worrying too much over a problem that’s easily made not a problem. Earl Weiss: If the motors are rated at 13.5 amps is a 10 amp fuse enough? mjwalsh: 15 amp fuse assuming you followed the shared breaker approach & also assuming an original 20 amp breaker circuit. A good electrician &/or electrical engineer might suggest a better approach with a 2 in the space of 1 breaker which could mean the extra fuses not needed as much. MEP 001: Probably not, I was going by what I use in vacs which run about 8.5 amps per motor. I forgot most of the dryers use motors at higher amps. Regardless, you get the point - fuse the motors separately at a much lower load and don’t worry about them tripping the breaker. Robert2181: OK. which dryer over all does everybody favor? {continued }


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• SPRING 2016 • RoadAhead_FINAL_PRINT_REV.indd 1

2/15/16 7:36 PM


TRICKS TRADE OF THE

What to do: Damage caused by taped wand trigger... coincarwash.ca: The gun in my self serve bay was taped with the trigger in the pulled position and when customer inserted money it flew out of holder and damaged the customers car....what should I do....he is saying its my fault, however he did not have gun in his hand prior to inserting money. I have not responded to his message yet....opinions please.

I.B. Washincars: I don’t think it is your fault, but it’s not his either. I don’t see where you have any choice but to pay for the damage. If you figure out who taped the trigger, you could pursue them. Long story short, your wash damaged his car Earl Weiss: Legal liability is based upon whether a party was negligent - “Negligence. Conduct that falls below the standards of behavior established by law for the protection of others against unreasonable risk of harm. A person has acted negligently if he or she has departed from the conduct expected of a reasonably prudent person acting under similar circumstances.” If I were the judge i would rule. It is not reasonable to expect a car wash owner to inspect all equipment after each use to see if someone misused it which might damage someone else’s property. The sole proximate cause of the damage was the user who taped the gun. - NOT LIABLE. Sadly I am not the judge. Perhaps you have cameras that might reveal the culprit? robert roman: I’m not a judge, but I have been involved in enough legal matters to suggest paying for the damage and moving on. Gun with tapped trigger is not how the device was designed to be stored in holster or operated nor is taping trigger closed an industry best practice. So, store owner would be responsible regardless if taping was caused by prior customer or attendant (employee) for that matter. Analogy is ice. Owner has responsibility to ensure ice is not slip and fall risk for customers and employees. PaulLovesJamie: My gut agrees with IB, my head agrees with Earl. btw, nicely worded Earl. Earl Weiss: Analogy Fails. Ice is foreseeable and normal condition not caused by negligent / reckless act of third party. Even slippery conditions may not render wash owner liable due to exceptions which vary vis a vis, Open and obvious risk, Natural accumulation, Assumption of risk etc. I have had a person not put car in neutral and bump another car in tunnel. Sometimes when they exit offender drives off. Bumped car tries to get me to fix their damage. I give them license # of offending vehicle if it can be seen on video. (In one case cops went a got offender). Sometimes driver that got bumped believes I am responsible because it happened on my property. I asked them if they thought the grocery store was responsible if someone bumped them in the parking lot. (I now ask if the city is responsible if someone bumps them on the street) One person said “Yes” I told them to go to whoever gave them their legal education and ask for their money back because they were taught wrong. Once had a lawyer send me a letter (amazing how little many lawyers know of how a car wash conveyor operates) with all sorts of

BS theories as to why I was liable. I invited him to file suit and I would request that fees be awarded to me for bad faith filing. (I also guessed he must have had some relationship with the customer because his office was quite some distance - different county from where the wash and customer were located. rph9168: I have to agree. I would not pay. Sometimes it seems convenient to just pay the bill but I think that people want to take advantage of an operator for their own negligence. I would say the vast majority of customers have the wand in their hand before attempting to use it. I also wonder if their is a video to see who taped the wand. Could be the customer did it themself. In any case I would not pay for someone else’s negligence. MEP001: If you have any wording on the signage that says “Hold wand in hand before inserting coins” or the like, you’ve fulfilled your obligation as far as diligence. I’d have to agree that paying for the damage in good faith might be the best course for a happy customer, but what if he did it? What if he spreads the word that you’re an easy mark for a damage claim? I’ve had that happen with refunds years ago when I was an attendant and was instructed to give them money back no questions asked. In a month it went from one every few weeks to 5 or 6 a day, and almost all of them were BS. RPH -- Maybe in your neck of the woods, but I’ve watched them here and they don’t. Maybe one in 50 does, and it’s stated to do so on the menu sign. In fact it’s only on the sign as a remnant of triggerless guns. I was just about to have some custom ones made and thought about leaving that part off, but now I think I’ll leave it on for exactly this reason. rph9168: I had the same thought about the guy may be the same one that did the taping but without a video that would be hard to prove. Just about all the customers in our area hold the wand before engaging it and in many other areas of the country I have been to do as well. Most bay signs I have seen or designed always included that information. Never will understand why someone would turn on a high pressure wand without holding it in their hand but it takes all kinds. I can somewhat understand it with a foam brush because there is very little pressure but not a wand. Guess common sense is in short supply in your area. ghetto wash: I’m on Earl’s side also. My attendant has a daily check list that he goes down and signs each day. On that list is “wipe down meter boxes and guns” With this daily inspection documented, I think I’d be in the clear if this happened to me. mjwalsh: Like others have said, it would be helpful to have video footage. The struggle ... especially

with our closed doors during the winter is to keep the lens so it has a clear path without surface water droplets and/or some fogginess created from temperature differences in the air. We are tempted to resurrect the windshield wipers somehow on our original Panasonic camera housings & maybe come up with a remote way of wiping the glass on the housings. For camera footage to identify the exact person &/or license plate, including the actual act of possibly an extremely quick taping process seems like easier said than done. Maybe some other operators have found a better way for their bays that need to have their doors closed because of too cold of weather. MEP001: Tape a dollar coin over the camera lens, that will keep the fog off them I.B. Washincars: Now MEP, behave. Mike has definitely gotten better about not wedging his dollar coin crusade in every unrelated conversation. I’m sure it’s tough for him. I gotta admit, I got a pretty good chuckle out of it though. mjwalsh: Just to add to the water droplet affecting for a not a clear enough image (from the in bay camera) for those of us where the overhead doors are a must: Maybe a sensor could automatically trigger the small windshield wiper along with full remote capability. It sure would be nice to hold the rascals who would tape our trigger guns ... with properly placed liability ... & without a clear enough image ... the odds are not in our favor. Waxman: how much damage was caused? $250? $500? $1000? I’d start there. All car washes should have a good working relationship with a body shop or two. HCW: Pay for it and move on. Invest in a surveillance cameras system and you’ll be in good shape. Just yesterday I payed for a mirror that broke in the IBA. pgrzes: I have watched this thread for a while and my thought was,? How high is your pressure set on your guns?? I run at about 1100 and the gun won’t fly out and hit anything. They will slide across the floor but not enough power to cause any damage aside from soaking people. Anyhow I just put a new 1080p hd Lorex system in with 1 camera at each end of every bay. I can get tags and all events in every bay always. Randy: A few years ago we got some defective guns that would stay full on after the trigger was pulled. They would fly out of the gun holder at 1200 psi. We had a couple of complaints of flying guns {continued } • SPRING 2016 •

33


TRICKS TRADE OF THE

Hand held Dryers {continued } CarWashBoy: Hi Mel. Sorry for the delayed response.. The increase this year is based on Satisfied customers from last visit. Higher % of satisfied customers. They see we have Full Time Attendant, CC, Bill Acceptors, Air Dryers, Powerful Vacs, Great LED lighting and so on and a consistent operation and CLEAN. LOL.We use the same breaker that we use for the Hi-Pressure pump motor. When Air Dryer is running, pump motor is not... no need to add additional breakers.. Hope that helps. Oh... J.E. Adams has a HOT AIR dryer available... sounds interesting. I like. I’m going to order one to try.. then I can advertise Hot Air Dryer. soonermajic: Dude, if you have 6 SS bays, & are pushing $250k, that is freakin unreal !!! WTh would dare say that quarter of a million dollars is not “GREAT REVENUE”?!!! sparkey: I started with blasto dry and converted a bay to air shammee. I get more compliments from the air shammee. It has more air volume (3 motors, verses 2 with blasto dry). The air shammee is also better for motor cycles because they can direct the air better where they want it. The blasto dry is better for floor mats because you can knife the water

off. Most people don’t use the blasto dry very long after they try it. You have to get the angle and everything right to dry the car very well. CarWashBoy: Thanks.. we just provide EVERYTHING the customer wants.. Modern Premises, LED Lighting, Music, Shinny Powerful Vacs, Full Time Attendant, Air Dryers and so on.. We Charge what the product and service is worth.. If our competition is lower price, so what? the customer wants quality and so much more.. IT’S NOT JUST PRICE.

What to do... {continued } hitting cars. We’d give them a handful of tokens and call it good. Naturally the supplier denied that there was a problem with the guns. mjwalsh: I still say that even with our cameras at the end of bay ... in areas where overhead doors are must ... water droplets could be a problem showing the finer detail of a rascal quickly taping the wand trigger. rph9168: Since you have no camera to see what happened I wonder if the gun was really in the holster when this happened. Did you try to see if the gun can come out of the holster as the customer claims?

Hydrospray

34 • SPRING 2016 •

I.B. Washincars: Yeah, I bought about a dozen GIANT guns a few years ago. What a dangerous POS. Luckily, most of them were junk straight out of the box and I got them swapped out before anyone/ anything got hurt. MEP001: Someone I know got part of a bad batch of Adams guns, and Adams actually paid for damage to a car because it stuck wide open. CarWashBoy: Pay for it. and move on.. Simple.. Earl Weiss: Yep, next thing you know your lines will be longer than they have ever been. Except that they won’t be people wanting to use your place, just people wanting you to pay numb nuts claims. rph9168: It may be more convenient in the short term to pay out nuisance claims but as Earl suggests in the long run you will just multiply claims like this in the future. If your wash is responsible for the damage then you should settle but in cases where customer negligence is the cause then the responsibility is theirs. Don’t be a sucker for false or questionable claims Stuart: I have had some claims we were not negligent but we did offer to pay half of the bill. They had to get the repairs done first and bring us the bill or we have also sent our half directly to the body shop.


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35


Editor’s Note: This article originally appeared in the Spring 2006 issue of SSCWN and has been an oft-requested one. We’re looking forward to your feedback: Does Paul’s formula still work out 10 years later?

FROM THE ARCHIVES:

Decisions, Decisions

PAUL’S NOTE FROM 2016: I’m sure that enquiring minds want to know – 10 years later, do I use actually Net Present Value calculations? I’m not a professional financial analyst, and I don’t want to be one. But yes, I have incorporated some basic financial thinking into my view of business, and yes I use several financial analysis tools regularly. Specifically on the use of the Net Present Value calculation: NPV is primarily a ranking tool, so the simplest place to implement it is on my “Project List.” I’m sure most of you have a similar list of projects. Mine happens to be in a spreadsheet, and I use NPV to rank all projects by profitability. The spreadsheet itself if rather simple, only a dozen columns or so: Project, Cost, income/savings, notes, category, etc. And yes, 2-year and 5-year NPV. From a theoretical perspective, the highest NPV value is the project I should be working on, and it sorts right to the top of my spreadsheet. So, yes the NPV calculation has become part of my everyday vocabulary.

(NOTE: Although my spreadsheet is simple, the devil is in the details. The supporting data for calculating cost & income can be as simple or as complex as each project demands.) (NOTE: The calculation for NPV is built into excel, you can add it as a formula to any cell.) As far as the article itself goes, would I make any changes? Well, although I could do a lot of rewriting I think the basic message was and is solid. In a nutshell, one can make decisions based on experience and common sense, but calculations and thoughtful analysis usually produce better decisions. I still stand behind that statement. And all of us – myself included – could raise our professional game a notch by learning and making use of some very standard analysis tools like NPV.

STRESS. Does making a decision to spend $15,000 to $20,000 on equipment for your car wash cause you stress? How about $200,000 to have an IBA installed? Do you worry about whether or not you are making a good decision? About whether you will make more profit, or waste money that you can’t afford to lose? How do you go about making such decisions? One of our responsibilities as car wash executives (if you own a car wash, you are an executive, whether you like it or not) is to make good investment decisions. Please notice that I did not say “to make decisions,” I said “to make good decisions.” It is the executive’s responsibility to ensure that the business makes a profit, because without profit the business ceases to exist. Good decisions are necessary to maximize profit. No offense intended, but I think that the vast majority of us do not approach these decisions properly. I believe that many of us operate on “business savvy” and simple ROI calculations to make these decisions. Unfortunately I think we are also influenced a bit too much by sales people, marketing, our peers, and emotion. Many of our decisions may have resulted in making money ... but does that mean they were good decisions? As expenses increase, competition increases, and margins go down, making the best decision is becoming even more critical to staying in business. Think about this – if your $1 million dollar car wash had a 10% profit margin, how comfortable would you be with your ability to make good investment decisions? Would you put your entire income on the line? A lien on your house? I wouldn’t. I fear that many (if not most) of us do not have the knowledge and experience in decision making to succeed when the going gets tough. Please don’t misunderstand me – by no means

36 • SPRING 2016 •

am I saying that any of you are lousy decision makers, that your success is based on luck! No! One of the reasons I love this industry is because of the admiration & respect I hold for so many of you. All I’m trying to say is that I don’t believe we’ve approached decision making professionally. We (myself included) can do better! This might sound boring at first – don’t give up on me! Go get a cup of coffee & invest 30 minutes of your time reading & thinking. I am certain that you will count it as time very well spent. DECISION EXAMPLE – SHOULD I BUY A DEBIT CARD SYSTEM? Here is a real life problem I am dealing with. As part of an effort to increase revenues, I’d like to be able to have a local organization sell carwashes for me. I would do this as a fund-raiser because I like the organization and their goals, so I would donate a percentage of the sales to them. With my knowledge of my market, I think this would be one of the best ways for me to increase profits, while doing some good in the community at the same time. It’s a classic win-win scenario. Since my wash is self service, I would have to either provide the organization with tokens or debit cards to sell. Instinct tells me that the tokens probably wouldn’t sell nearly as well as gift cards would; I think I should buy a debit card system. I’ve heard that a lot of other washes have installed one and are doing well, and the sales people sure do sound convincing ... So here’s the decision I’m faced with: Should I buy a debit card system? Then there is a follow-up question that I need answered: If I do buy a debit card system, how do I determine what percentage of the sales I should donate to the fund-raising organization? As business owners, all of us face questions such as this on a regular basis. Should I buy this car-

wash? Should I add an IBA? Should I buy this new equipment? I decided that I needed to check in with the pro’s to find out how they would approach making this type of decision. So I contacted an expert financial analyst and asked for help. What I learned is that there is an entire field of study (financial analysis) and careers devoted to making this type of business investment decision, and over time the pros have become rather good at it. I’m just beginning to scratch the surface of this field, but so far I’ve learned that there are a few things that I can do to dramatically improve my decision making abilities: • do some clear thinking • understand a few fundamental financial analysis concepts • use of some basic spreadsheet functions. SETTING EXPECTATIONS Let me make one thing perfectly clear – I am NOT going to give you a magic bullet that predicts the future. That is not possible. If you spend the time to read this article, what I can give you is three things: 1) Awareness that there may be a significant gap in a very important part of your business knowledge. 2) A basic understanding of a simple financial analysis technique that will enable you to make much more informed decisions, which should result in higher profits. 3) I sincerely hope that reading this gives you the desire to become a more informed business owner and executive, and leads you to greater success and profitability. What I am NOT going to do is give you a long boring classroom lecture in accounting. I am also not going to list all the excruciating details that need to be considered, or any arcane mathemat{continued }


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www.CarolinaPrideDirect.com 1-800-421-5119 • SPRING 2016 •

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Decisions, Decisions

ical formulas for figuring some of this stuff out. Many people devote their entire career to making business decisions – financial analysts, executives, CPAs, etc. There is no way I can provide a comprehensive education in a magazine article, this will be an introduction. For the purpose of this article, I will be making some simplifying assumptions in my analysis, so that the key points don’t get obscured by the details. I’ll identify these assumptions where necessary. I think it is also worthwhile to point out that you might disagree with the actual numbers that I come up with for some of my forecasts. That’s fine, I expect that you will. The steps and the calculations should be the same, but the results and conclusions may be different for each of us. DECISION MAKING – CLEAR THINKING BEGINS WITH A DEFINITION. Lets begin some of that “clear thinking” by understanding one thing right away: stating my decision dilemma as “Should I buy a debit card system” is not an accurate way to state the question. Since there are always alternatives that can be considered, a decision is a choice between alternatives. In this case, I could buy a debit card system. Or I could not buy a debit card system – buy nothing. Or I could buy a credit card system. Or a vending machine. Or a 5 year CD at the bank. Or ... anything else. Making a decision is really a matter or choosing the alternative that I think has the best likelihood of helping me attain a specific objective/goal. Yes, I snuck the word goal in there. Before choosing an alternative, I need to understand why I am making a choice to begin with, what I am trying to achieve. Because if the goal is not clear, I’m not very likely to achieve it. And if I don’t have a goal that I’m trying to achieve, then it doesn’t matter what I choose! THE DECISION MAKING PROCESS OK, let’s get down to it. Here is a list of the steps involved in making a capital investment decision: Simplifying Assumption: This is not an exhaustive list, I am just going to cover the basics needed to take us up one level in decision making ability. • Goal Identification • Identify Alternatives for attaining the goal(s) • Identify Factors affecting the success of each alternative • Forecasts and Assumptions • Financial Calculations • Evaluate results • Other considerations • Decide Now let’s add details to our outline – let’s go through my example of purchasing a debit card system. GOALS If you don’t have a goal, then it doesn’t matter what you choose to do. Without a goal, you have nothing against which to measure success or failure. My goal in this case is to raise revenues. More specifically, to increase net profit. I am considering installing a debit card system as a means to achieve this goal. Now, if I do choose to install a debit card system, there are other “secondary” goals that I can attain. Namely, to support a worthwhile community

38 • SPRING 2016 •

organization. A few other goals that could merit consideration: • image improvement • competitive advantage • increase market share • reduce expenses There are many many more potential goals, all are probably valid. Just be sure to recognize which is your primary goal, because trying to hit multiple targets at once is harder to do. And don’t lose sight of the goal. IDENTIFY ALTERNATIVES So my question is now more clearly defined as whether choosing to install a debit card system is my best alternative to increase my profits. The obvious next question is ... what are the alternatives? Simplifying Assumption: Ideally, I would list and evaluate dozens of alternatives – in fact, all of the projects that I could do. I’ll just pick a few. Capital improvements should provide a higher rate of return than simply putting your money into a CD at the bank, because improvements to your business carry a higher level of risk. So let’s consider a bank CD at 5% interest as an alternative. Credit card acceptance is a hot item these days, I’m hearing about some very significant increases in revenue due to credit card usage. I’ll consider that as my third option. Nothing. Doing nothing is always an alternative, in fact the old “mattress savings account” has always been popular. (Any of you have some cash stashed away somewhere?) A FUNDAMENTAL FINANCIAL ANALYSIS TOOL: NET PRESENT VALUE “Would you rather get paid $90 today, or $100 at the end of the year? It’s a classic question. And there is a simple answer that is easy to calculate by using “time value of money” concepts and the “Net Present Value” (NPV) formula. The “time value of money” concept simply says that $100 received today is worth more than $100 received next year, because you can put today’s $100 to work for the year – for example, you could buy a bank CD and earn 5% interest for a year. In other words, the $100 received today has a “future value” of $105 in 1 year. The reverse would also be true: $100 received in 1 year has a “present value” of $95. So in this case, the answer is take the $100 at the end of the year, because it is equivalent to receiving $95 today. The time value of money is a simple concept. The calculation is easy too, many of you probably either already knew the answer or figured it out instantly. What you probably don’t realize is that you were intuitively doing a Net Present Value calculation in your head! Net Present Value is simply a formula that will take those 3 numbers ($100, 5%, 1 year) and calculate the answer of $95. Piece of cake, right? Good. Now do this one: Would you rather receive $100 in year 1, $350 in year 2 and $217 in year 3 or $625 today. Interest rates are 4.87%. That’s a little tougher to do in your head! I had to pull out my calculator to figure out that the present value of $100 + $350 + 217 at 4.87% interest would be $600. Take the $625. I hope you can see where I am going with this ...

THINGS YOU MIGHT LIKE TO KNOW ABOUT YOUR BUSINESS Sample Questions That Can Be Answered By Professional Financial Analysis Techniques & Tools: • Is the price I pay for an IBA the most significant factor in future profitability? • Which equipment upgrade will bring me the most profit? • Which one of my assumptions is the movst critical to get right? • Which of my estimates is most sensitive to variation? • How is a price increase likely to affect car wash volume and profits? • If I were being paid an hourly wage for the work I do at my wash, what would my rate be? • What effect has inflation had on my revenues and profits in the past? • What effect is inflation likely to have on my revenues and profits in the future? • If I install an IBA, what is the minimum number of cars I need to wash to break even? • How many units do I have to sell to breakeven?

straight to my “should I buy a debit card system” question. I want to to run a Net Present Value calculation on the purchase of a debit card system, because the NPV calculation is the basis for answering a LOT of questions! I can predict the future! No I can’t. Neither can you. I need to make sure that you understand something very clearly: The techniques I am describing here can not predict the future. They cannot tell you exactly how much profit you will make, or how your customers will act. What these techniques can do is give you a LOT of very valuable information which will allow you to make a MUCH more informed decision. They help eliminate the by-gosh-and-by-golly guesstimating that we all tend to do. Compared to not using these techniques, this can be a silver bullet. But no, they cannot predict the future. INPUT DATA OK, I want to run some NPV calculations. What are the inputs, i.e. what information is needed? While performing the data gathering part of your analysis, keep in mind that the more thorough and accurate you are now, the more accurate your forecasts will be. Simplifying Assumption: I’m just going deal with enough issues and details to make sure that you understand the concepts, and that the conclusions are reasonable. COST TO INSTALL THE SYSTEM Obviously, we need to know how much the new system will cost. Don’t just take the sticker price, be sure to add in all installation costs. For the debit card system, I need to include: • The debit card hardware & software • Installation costs (parts & labor) • Upgraded timers • Signage and other up-front marketing costs OPERATIONAL COSTS How much will it cost me to operate the system annually? This needs a small clarification: using your “profit margin” as a ballpark figure for estimat-


Decisions, Decisions ing will not work. I am looking for the amount by which my operating costs will increase. For example, adding a debit card system will not increase my liability insurance costs or increase my school taxes, so I should not include them. Here’s a short list: • The amount of money that I donate to the fund raising organization • Variable costs of washing additional cars • State sales tax (do not include federal income tax) • Cannibalism Cannibalism?!? I figure that some percentage of the debit cards that get sold by the fund raising organization will be to customers who would have washed their cars anyway. They will buy their washes at the fundraiser instead of using my bill changers. So I’m really losing a little bit of profit here due to donating a percentage to the fund raising organization. I count that as an operational cost because it’s a cost I incur as a result of using the debit card system. Simplifying Assumption: I am going to pay cash for the equipment I buy. Borrowing money complicates the calculations a little bit, I’ll leave that detail out for today. REVENUES A biggie: how much additional revenue do I think will come in? Here is the basic set of forecasts that I made. Simplifying Assumption: I could go into a lot of detail about how I came up with my revenue forecasts, but they are really only relevant to my specific project, targeted toward my market. In other words, the details of how I came up with them are not worth much to anybody, so I’ll skip most of the details here. Also, I do expect to sell more cards in subsequent years, so the cash flows will vary from year to year. I won’t deal with that complication today either. Given what I know about the fund raising organization that I will be working with, I need to make a number of forecasts. I believe that they will sell around 500 debit cards per year. I’ll set the face value on each card to $20, and give a 20% donation ($4) for each card sold. A few other factors to consider: • How many new customers will buy cards? • How many existing customers will buy cards instead of using my bill changers? (“Cannibalism”) • How much more (or less) frequently will customers wash their cars as a result of the fund raising activities, i.e. will they wash more often? • What will the walkoff percentage be for the cards? Remember, the more serious thought you put into your forecasts, the more accurate they will be. DESIRED RATE OF RETURN Simplifying Assumption: Determining what number to put in this field can get complicated. If you are inclined to do some further reading on financial decision making, this would be a good area to research. Look for terms like cost of capital, hurdle rate, and beta. “Desired rate of return” is the rate of return (adjusted for risk) for a specific project/investment. The objective is to come up with a rate that reflects the risks involved in the project, and that corresponds to the rate investors would expect. For today, let’s just say that I expect to get a return of at least 10% on any upgrades I make at my wash.

Until and unless you gain more knowledge on the subject of “desired rate of return”, keep your values between 10 and 15%. Please trust me on this – it is not as simple as saying “I want to make 200%!” That doesn’t really help you make an informed decision. Desired Rate of Return could be described as the minimum rate of return at which I can recover all of the investments that go into a project, including the cost of borrowed money, labor, business risk, etc. As I said, this is an area that requires further study. Stick between 10 and 15% for now. TIME FRAME What period of time should I use for the analysis? This is important for two reasons. 1) Different time frames may lead you to different conclusions. 2) It puts a box around the project so that you can evaluate the project as “completely separate” from your existing business. Some possible answers: a) The life of the equipment. In the case of a debit card system that would be what, about 10 years? b) The time frame in which you expect to reap financial gain, perhaps 5 years. c) Your own personal standard for viewing the future, e.g. “I’m 70 years old, there ain’t no such thing as long term! 3 years!” One of the nice things about NPV analysis is that you can do all of them. You can simply change the input to look at the results after 3 years, then 5 years, then 10, then whatever. My own personal standard is that for mid-size investments in my wash ($5,000 to $20,000 range), I expect a payback within 1 to 3 years, but my standard for determining whether the profitability is worth the effort is 5 years. So for the purposes of this article, I’m looking at a 5 year time frame. TAX BRACKET What is your federal tax rate? Not what tax bracket are you in, but after deductions and all that stuff are taken into account, what percentage of your income actually ends up in Washington? I’ll be using 20%. This is an area where the math can get complicated, because the project may change your tax situation. INFLATION RATE Simplifying Assumption: I won’t be dealing with inflation today, because my objective today is education, not to try to answer all possible questions! When you came up with a number for operational costs, did you consider inflation? Inflation can have a huge effect on a project! I find that inflation is best factored in as a separate variable so that I can play with it and see how variations in future inflation will affect the profitability of a project. But as I said, we’ll ignore inflation for today. SALVAGE VALUE At the end of the time frame that you have chosen, the equipment that you bought still has value. What is the net financial impact of getting rid of the equipment so that you can continue to run your business without it. This usually means “how much is the equipment worth if I sell it used.” But

FROM THE ARCHIVES:

there could be expenses involved too. For example, suppose I have to cut holes in the bay walls to install the debit card acceptors. When I remove the debit card system, I will need to fill those holes, and replace the FRP on the wall so that the bay is returned to a functional condition. We need this number to help us “put a box around the project. INPUT DATA SUMMARY After all of my thinking and arithmetic, I ended up with a set of forecasts for my debit card project. The final results are shown below: PURCHASE AND INSTALLATION EXPENSES Revenues $7,500 Number of gift cards sold 500 Face value of gift card $20 Annual value of new customers $500 Increased sales to existing customers $1,000 Total new revenue: $11,500 OPERATIONAL EXPENSES Variable costs of washing 20% Donation percentage 20% State sales tax 6% Cannabilism costs 1% Total New Operational Expense $5,405 Salvage Value $100 Desired Rate of Return 10% Time Frame (years) 5 Federal Tax Rate 20% NPV CALCULATION – THE FORMULA The Net Present Value calculation itself is very simple. Since your lator or spreadsheet can do it for you I won’t do much explaining here, but for those of you who are mathematically inclined here it is:

calcu-

NPV = FV/(1+RoR)#Y Net Present Value = Future Value / (1 + Rate Of Return) Number Of Years

A very simplistic example: If I were to receive a cash flow of $10,000 in 3 years, what would that be worth today if I can expect a rate of return of 5%? PresentValue = $10,000 / ( 1 + .05)3 PresentValue = $8,638.

Warning: When you include variable revenue flows over multiple years, financing, depreciation, etc, the formulas get more complex. The actual NPV calculation remains the same, but you need to be a lot more careful about what numbers go where. NPV FOR MY DEBIT CARD SYSTEM At this point I have forecasts for how much revenue a debit card system would generate and what it would cost me to operate. It’s time to take these future cash flows and run them through the NPV calculation to see if I will really be making any money. And the answer is ... yes. The NPV for the cash flows I’ve forecast is $12,533. The simplest way to understand that figure is to think of it this way: “If I install a debit card system and all of my forecasts/ assumptions are correct, then in 5 years I will have made an amount of money equal to having invest{continued } • SPRING 2016 •

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Decisions, Decisions

ed $12,533 today at an interest rate of 10%.” I’ll explain how to interpret that figure in a moment. NPV FOR ALTERNATIVES At this point in the decision making process, I have determined that the NPV forecast for a debit card machine at my carwash is $12,533. Does that mean I am done, I have my answer? No. Remember, a decision is a choice among alternatives, not a simple yes or no. Simplifying Assumption: The calculations for each alternative are the same, only the values for each variable are different. Therefore I will skip the calculations for the alternatives, and only show the results. If you recall, the alternatives I am considering are the debit card system, a credit card system, a bank CD at 5%, or simply leaving the cash under the mattress. Table 3 lists the Net Present Value results for all 4 alternatives. NPV FOR ALL ALTERNATIVES Paul’s “Mattress Bank” Savings Account 5% Bank CD Debit Card System Credit Card System

-$3,791 -$1,515 $12,533 -$3,372

NPV INTERPRETATION These next 3 paragraphs are important, please pay attention ... Interpreting the results of the Net Present Value calculation is not difficult. In a nutshell, it tells you how investing in your project compares with your desired rate of return, and it does factor in the time value of money. If your project will produce more money than the desired rate of return you will see a positive NPV, which means you will have more money than if you invested your cash at that rate. Many people look at NPV as a go/no-go indicator -- if the NPV for a specific project is greater than zero, it means you will beat the desired rate of return. If the NPV is negative, you are losing money. Ooops, that’s not technically correct – if the net present value is less than 0, you might still be making money, your P&L might still show a profit but you are not achieving your desired rate of return! In other words, you earn dollars, but not enough to cover business risks etc. This is one of the reasons that NPV can be so valuable – it can identify projects that look like they put money in your wallet, but are really not good projects when you look at the big picture. So if NPV is greater than 0, do it. In fact, there are companies whose policy is to implement all projects which have a positive NPV. (These companies also consider the IRR and several other factors, but that’s a whole ‘nother subject.) I hope you noticed in table 3 that since I expect a 10% return on my money, my 5% CD investment comes up negative, as does shoving the cash in my mattress. I know, I know – a 5% CD is making money ... right? Well, yes ... but it is losing money relative to the rate of return that my business should be earning. This is what is known as “losing money safely.” NPV AS A RANKING TOOL However, NPV is most effectively used as a ranking tool, which means it is used not only to determine which projects should be done, but which should be

40 • SPRING 2016 •

done first. So what the NPV values in table 3 tell me is that the debit card system is a better alternative than the bank CD. But according to my forecasts, I’d be better off putting my money into a CD than buying a credit card system! (FYI, I used a rather high installation cost of $20,000 for a credit card system, and at my wash I expect it to have a very minimal impact on revenues. Reducing the cost of a credit card system to $15,000 makes the credit card system a profitable project, but just barely.) It is important to keep the “Desired Rate of Return” in mind when interpreting NPV results. Remember, this is a desired rate of return, not an actual or an expected rate of return. For example, if the level of profit I’m shooting for is 10% and I invest my money in a 5% CD, I will fall 5% short of my goal. This will give me a negative NPV. Does this negative NPV mean I am losing money? Well, it depends how you look at it. On the one hand you made 5%, so you have more money in the bank. But on the other hand you could have invested in a money market which is returning 8%. So relative to the money market alternative, yes, you lost money! Just to make sure you understand this very clearly, there are two very important assumptions built in to proper interpretation of an NPV figures: your forecasts for the discount rate & projected cash flows. Be sure to think hard about both. Remember in the “Identify Alternatives” section when I said that in an ideal world I would list and evaluate dozens of alternatives? Now that you see how to compare 2 or 3 alternatives, I hope you can see that these techniques can actually be used to rank all of the projects that could be done from most to least profitable. In an ideal world, I would run forecasts on EVERY project that could possibly be done at my wash, and use NPV to help rank them. OTHER FACTORS Simplifying Assumption: Not going to discuss wide range of possibilities, just listing the types of things to consider. The important conclusion is that NPV is just one part of the decision. Now you have the results of NPV, and you know the basics about how to interpret the results. But that does not mean you have a decision. Other factors must be added to the mix. Outside factors - These are things that are not specifically related to the project being considered. For example, perhaps you bought a new house this year and therefore can’t come up with $20,000 for a project unless the payback is less than 6 months. Soft factors - These are changes that occur as a result of your project that could result in additional income. A good example would be additional capacity, which although it will not be used in the short term, could be utilized to produce more revenue. Intangible factors – These are changes that occur as a result of your project which do not have a quantifiable/measurable impact on profitability. Examples would be customer perceptions, your reputation within the community, etc. Assumptions – What new revenues a project will generate are important. But there are some assump-

DONATING TO CHARITY “For crying out loud, it’s a charity fundraiser, you’re not supposed to make money! Don’t be a cheap SOB!” Yep, charitable contributions are a sensitive topic, a room full of people could have quite a discussion over it. (Please invite me!) So feel free to disagree with me on this, but my take is that by definition, business decisions need to be primarily focused on profit. Charitable contributions are a personal decision that have nothing to do with your business, charity (and\or fund-raising) is simply one way you can choose to use your disposable income. My point is that if my goal is to support a charity, then I just write a check or donate time. If the car wash’s goal is to increase my company’s profit, the car wash considers various projects/equipment. If I want an investment project at the carwash to achieve both goals, then I need to be careful to keep them separate in my mind. Otherwise my personal goals may endanger the viability of the business, which will endanger my personal goals.

tions underlying these projections that are important to consider as well. Namely, how will you achieve those projections? Don’t just decide that you can sell 200 gift cards, determine how you will do it. Don’t just assume you will do it. Baked-in Assumptions – You are making some assumptions without even thinking about it; these could also affect your final decision. Examples: You are probably assuming (without stating it) that your health will remain good, enabling you to continue to work as you do today. You are probably assuming the economy won’t enter a depression, and a competitor will not build across the street thrusting you into a price war. Etc, etc. Some assumptions you should think about, others you can probably leave in the background and ignore them. But they are assumptions that could affect your success. CAN I AFFORD TO DONATE TO THE FUND RAISING ORGANIZATION? Now let’s take this up a notch, and get to some of the really cool stuff. Remember 7th grade algebra, where you would solve an equation for a certain variable? Same thing here. We have a bunch of variables, and so far we have solved for the “Net Present Value” variable. Using the same data we have already gathered, we can change our equation around and solve for any variable we choose! Let me give you an example. Rather than solve for the NPV value, I would like to know that if all of my revenue and cost forecasts are correct, what is the maximum percentage I can donate and still make a profit in year 1? Stated in more mathematical terms, I want to solve for the “donation percentage” variable when the Net Present Value equals $1 and the Time Frame variable equals 1 year. I’m lazy, so I let my PC do the 7th grade algebra for me. The answer: 7%. “WHAT IF ...” I think this is starting to get really interesting. I have to tell you, I got excited when I calculated that 7% donation percentage, and I started solving for just about every variable I had. A few examples of other {continued }


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Decisions, Decisions

things I solved for: • What happens to the net present value if the cost to install the system is $2,000 higher than I expected? (In other words, a competitor’s version of the debit card system is $2,000 more...) • How many debit cards do I have to sell in year 1 to break even? • If I only sell 200 cards per year, what is my breakeven period? • What happens to my profits if I have to buy the debit cards for $3 each instead of $1 each? What if I can get them for free? • What if my cannibalism costs are twice as high as I expect? Ten times as high? • Do the answers to any of these questions cause me to change my decisions? I hope you can see the value in this. You can solve for any variable you want to. What other kinds of questions might you want to ask? Which questions might return an answer that causes you concern? Which ones do you have control over the outcome, perhaps through marketing, a structured maintenance schedule, labor, or some other solution? Which factors are influenced by varying your forecasts, and which are not? It is the answers to questions such as these which allow you to know where your risks lie, and what you need to control to ensure that your project successfully reaches your goals.

So this is really a 2 part question, more clearly stated as “how do changes in the donation percentage effect my customer’s behavior, and how does that affect profitability?” This is a little more complex, because we need to make some more forecasts. In the revenue numbers I used, I estimated that in the first year, the fund raising organization would sell 500 cards with a donation of 20%. Now, if I lower the donation to 15%, how many cards do I think will sell? How about with a 10% donation? 30%? Basically I need to try to forecast how many cards will sell at each possible level of donation. SOME DETAILS OF MY FORECAST: In making this forecast, I basically think that lowering the donation percentage will reduce the incentive to sell, and reduce the incentive to buy. And vice versa. In other words, as the donation percentage goes up from 0% to 100%, card purchases should go up. (Notice that I said card purchases, not profits. We’ll get to that in a minute.) But I dont think card sales will go up in a straight line (linearly). Here is my thought process: • At 10% I think very little effort will be put into selling, therefore few buyers. • Based on percentages donated by other fund raisers, I think 15% is the point at which an effort will

SO WHAT % SHOULD I DONATE EFFECT TO THE FUND RAISING ORGANIZATION? $45,000 This is really good, I’ve determined that I can donate 7% to the fund raising $40,000 organization and still be profitable in year $35,000 1. In fact that’s great information ... but my original question was “how do I deter$30,000 mine what percentage of the sales I should $25,000 donate to the fund-raising organization?” Minimizing my donation isnt necessarily $20,000 my goal, nor is maximizing it. I want to $15,000 know what is the optimum percentage I should donate? I’m going to define the $10,000 optimum as the point at which both my $5,000 profits and the total amount donated to the fund raising organization are maxi$0 mized. In other words, I want the win-$5,000 win case. Yes, we can answer that question. It sim-$10,000 ply requires a bit more clear thinking, and 0% some work to get it right. Clear thinking first, starting with cause and effect. If I change the fundraising parameters, I would expect that to effect my customer’s behavior, right? For example, if I lower the donation percentage to zero, I would expect that the fund raising organization would make less of an effort to sell my debit cards, and I would expect customers to be less likely to buy them. (That describes my behavior anyway; when the neighbor’s kids sell things for the soccer club or the boy scouts, I always ask how much they get. I tend to buy more if they get a higher percentage.) So conversely, as I raise the donation percentage customers are more likely to buy cards. In fact, if I raise it high enough, some customers probably will buy them and consider it a donation, i.e. walkoff will increase!

42

• SPRING 2016 •

OF

5%

stead of from my bill changers. I would expect a dramatic increase. I also think this will cause customers (new and existing) to spend more time washing, and to wash more frequently. • At 75%, I think people will begin to view the card sales as a charitable donation, and they get free carwashes. I would expect a dramatic increase at this level, coupled with a high level of cannibalism. Wash frequency and time spent should remain at about the same as the 50% level. • From 75 to 85% donation, I don’t think I’ll see any big increases in purchasing motivation. • 90% to 100%. Would I really consider this, knowing that I would be losing money? Instinct says no, logic says there’s no pain in running the calculation. OK, I think people would definately view this as a charitable contribution that gives them free carwashes. I think sales would go up somewhat significantly. Time spent washing should go way up. Walkoff should definitely be at its highest level. (The debit card isn’t where the value is in this sale, it’s all about the charitable contribution for the customer. I know this from experience with a charity organization I support.)

WHAT EFFECT ON PROFITS? Now, what effect do these numbers have on profits? Well, what I have is a series of values that I can assign to the “donation percentage” and “resulting change in revenue” variables, and I can calculate the Net Present Value variCHANGES TO DONATION PERCENTAGE able for each pair. In addition, I will be able to see the total amount donated to the fund raising organization. (Yes, NPV I’ll also have to tweak some of the other variables such as walkoff percentDonation $ age, additional visits, etc.) In this case I think a graph communicates the data better than a table of numbers. Graph 1 shows the results. The X axis shows the donation percentage, and the Y axis is dollars. There are two lines on the graph: 1) The net present value of my revenue and expense forecasts (ie what I get out of the deal). 2) The total dollar amount of donations to the fund raising organization over the same 5 year period. DONATION PERCENTAGE 10%

15%

20%

25%

30%

35%

40%

be made to sell, and customers will be motivated to buy. Probably very few new customers, minimal cannibalism. • At 20% I think I will start to attract a new customers, more existing customers will buy, and existing customers will start to buy more than 1 card. A small amount of cannibalism, but I should also be reaching new customers. • I don’t think going from 25 to 40% will make much difference in customer’s motivation to buy, I think we’ll only sell a few more cards than at 20%. But I do think it will cause customers (new and existing) to spend more time washing, and to wash more frequently. • At 50%, I think people will begin to “buy their car washes” from the fund raising organization in-

LOOKING FOR THE WIN-WIN CASE In looking at this chart, lets keep in mind what my goal is – to find the winwin case where I maximize both my profits and the amount I can donate to the fund raising organization. Lets look at the NPV line first. Below approximately a 10% donation, NPV is negative. That means I’m not meeting my goal of returning 10% on my money. Since I’m in business to make money, 10% and below is not a good choice. When the donation jumps from 15 to 20%, I see a rather sharp increase in NPV, but then it levels off until I get up to 35%. When I go above about 35%, NPV starts to drop off significantly, so that is probably not a good choice either. So based purely on the NPV line, I want to be somewhere between 15% and 35%. 25% appears to be the highest level of profit for me.

45%

50%

{continued }


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FROM THE ARCHIVES:

Decisions, Decisions

Now let’s take a look at the amount of cash that gets donated to the fund raising organization. In a nutshell, as I raise the percentage, the dollars they get goes up. That’s obvious, you didn’t need me to tell you that. But look more closely – notice how it goes up sharply when the donation goes from 15% to 20%, then the rate of increase slows down again. This indicates to me that somewhere between 15 and 20% may be a “sweet spot.” There are big jumps at 50% donation and above as well. What I find most interesting is where the 2 lines cross – at 15% and again at 25%. This indicates to me that this is where I should be looking. Why? Again, look at my goal – to maximize the benefit to both parties. Sure, I could be heroically generous and donate 50% I mean, just look how much more the fund raisers would get! But stop and remember the goals. If I’m not making more money, I can’t donate more money ... this needs to be mutually beneficial. If my goal is simply to donate money, then I’ll write a check. No need to take on a lot of extra work and risk. ANY SKEPTICS? Right about now, some of you skeptics out there should be saying “Oh come on, that chart isn’t accurate, you guesstimated all the data!” Yes, you would be right – actually half right. I did guesstimate some of the data ... but the chart might be accurate, you certainly don’t know that it isn’t. So skeptics, I ask you this. If I were to perform a study in which I actually ran this fund raiser, and varied ONLY the donation percentage, then at the end of the year we could determine what the correct and accurate values were for that year. Right? My point here is that there is a correct set of data, we just don’t know exactly what it is yet. So yes, I admit that I don’t know exactly how accurate my chart is. At the moment I’ve put some thought into it, and it is as accurate as I can get. Let me explain some of the things I’ve done to improve it’s accuracy, because as we all know, “Garbage In, Garbage Out.” WHAT CAN I DO TO IMPROVE ITS ACCURACY? I can get exact price quotes on equipment and installation. These will not be estimates, they will be exact figures. I can research precise salvage value figures for the equipment I am evaluating. I can extrapolate from my own historical data to make some of my “estimates” extremely accurate. For example, I have 10 years of excruciatingly detailed data on the costs involved in operating a self service car wash. I don’t have to forecast my variable expenses, I can get an exact figure, down to the pen-

46 • SPRING 2016 •

ny if I want to. Same thing for taxes. Same thing for inflation rates. Etc. I can talk with somebody who has already done this project, and ask what actually happened. The downside of this approach is that I’m not likely to find somebody who has done exactly what I want to do, in a market that is similar to mine. But I can probably find some data that will help. As I mentioned, I can run the fund raiser for 1 year at the percentage that I believe will work best, and to gather as much data from that process as I can. THOSE will be one set of real numbers which will allow me to adjust all of my forecasts. I can then re-run my analysis, and adjust the donation percentage for the following year in order to more accurately predict and control subsequent outcomes. In other words, quite a few of the numbers that go into the calculations are not forecasts! There is really only one number for my project that is truly difficult to forecast: the number of debit cards that will be sold. But since the organization I will be working with already sells a number of other products (including gift cards!) and has many years of experience with their “sales force,” I am fairly sure they can give me a good estimate of how many cards they think they will sell. So I’m confident that I can come close. Important note: I am not trying to impress you here with how accurate I think my estimates are. I am trying to emphasize that if you put some thought and effort into this you can get very accurate estimates. And the more accurate your estimates are, the closer this really gets to a true prediction! Your numbers will probably be very different! This is important – your numbers, charts and graphs will probably look different than mine. Your market, customers, and competition are all different. Please keep in mind that the exact numbers that I’m showing you are not nearly as valuable as the techniques. PERSPECTIVE! I suspect that you might be thinking “Come on, all this work over an investment that’s only a few thousand dollars, this is small potatoes! Wow, he is WAY over-analyzing this!” True enough ... if this is the only decision I ever make. Let me ask you this. When you teach a youngster how to pitch a baseball or shoot a foul shot, do you tell him to “just chuck it up there, heck, it’s only one pitch / foul shot.” Or do you teach proper technique, and have him practice the proper technique in order to establish lifelong habits? Me, I’m more inclined to practice with the small potatoes so that when I’ve reached the level of success to consider a “big potatoes” project, I already have knowledge and experience to do it right. Make a mistake with a small project and my feelings are hurt but I learn. Making a mistake with a big one can cost me the farm. So yes, all this work over a small project. DECIDE! So now that you have a little more knowledge –

maybe just enough to be dangerous – what would you do? Take into consideration the hard/financial numbers, soft factors, assumptions and intangibles, and decide. As the CEO of your car wash, it’s your job. Decide. A FEW THINGS TO THINK ABOUT I’d like to leave you with a few other things that are worth thinking about – topics that will help you in your quest to become a better CEO, to become more profitable by making better decisions. ANALYZING PAST INVESTMENTS I have a suggestion for a homework assignment. Pull out your ROI and payback estimates for an investment you made a few years ago. Then go into your accounting files and pull out the actual data. Run the actual historical data – what your revenues and expenses really were – through a NPV analysis, and see how the actual performance of your investment compares with what your estimates were. Would you make the same decisions? For the same reasons? ARE YOU WORKING FOR FREE? I should think that by the title of this paragraph you already know what my opinion is – your labor is not free, and if you are counting it that way then you are fooling yourself. No, wait, let me say that a different way ... if your labor is free, then get yourself down here to my place, you’re hired. When analyzing an investment, you need to include the “going rate” of labor expenses for any work that is to be done. Because if you are going to do the work yourself, that is basically the rate that you are paying yourself for that labor, whether you include it in your calculations or not. Keeping labor rates out of your calculations only serves to inflate the apparent profitability in the results. Be careful – I am not saying you should not do any work yourself. (Come on guys, you know I am a do-it-yourselfer.) What I am saying is that the CEO of your wash earns $100,000/year, and the cleanup guy earns $20,000. Sure, if you do both jobs your company can save a few bucks on the labor; so your take-home pay is now maybe $115,000. But that is only because you worked 2 jobs – CEO and Cleaner-Upper. The Cleanup guy’s salary is still an expense to the company, the only difference is whose pocket it went into. Clear thinking. The cleaning job still got done, and you got paid $3 per hour to do it. “PAYBACK PERIOD” – USE CAUTION. In the past, I’ve always calculated a “break even period” on any business investment I considered. I’ve always thought of it as a valuable tool, a good rule of thumb measure I could do in my head. Bad news: I wasn’t able to factor in the time value of money, taxes, inflation, etc in my head. So my estimates were always on the rosy side, to put it politely. The break-even period is a good tool – but factor in the time value of money when you use it.


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Happenings In & Around Self Serve Carwashing

INDUSTRY DIRT Mark VII Equipment Inc., the North American subsidiary of WashTec AG of Germany, the world’s largest manufacturer of vehicle cleaning systems, today announced that Rob Raskell has joined the company as Director of Distribution. Raskell has 18 years of experience in the carwash industry, including operations management of retail carwash chains, sales for a carwash distributor, and distribution sales for a “top tier” carwash chemicals manufacturer, according to a press release from the company. He will be based in the Spokane, Washington area. “I want to welcome Rob to the Mark VII team,” said Ryan Beaty, Mark VII’s EVP Sales. “His deep experience on both the supplier and operator sides of the carwash industry will make him a great resource for helping Mark VII distributors grow their businesses.”

SONNY’S CarWash College is now offering classes aimed at managing multiple car wash sites. The new Multi-Site class offers training to better understand the latest in car wash technology, manage employees at remote locations and remain in firm control of daily operations and procedures at several locations. The first class was conducted in March and other courses will be offered throughout the year. SONNY’S The CarWash Factory is the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world.

Autobell® Car Wash’s Charity Car Wash Program raised $634,398 in 2015 for charities, schools, and other nonprofits in North and South Carolina, Virginia, and Georgia. The Charlotte-based company’s program began in 1998 and has assisted non-

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profits in raising over $7.6 million to date. Through the program, Autobell provides 501(c) (3) groups with full-service car wash tickets custom-printed with the organization’s name; the tickets are sold by the nonprofit at full price and honored at all Autobell locations. Fundraisers keep 50% of the proceeds from all ticket sales. “Nonprofits continue to find this program a simple and effective way to reach their fundraising goals,” stated Autobell President and CEO Chuck Howard. “It eliminates the need for organizers to plan and execute a parking lot car wash or other large-scale fundraiser, worry about rain dates, or incur any upfront cost.

Jordan Allen, a Delta Sonic employee and Hilton High School student in Rochester, NY, has been selected as this year’s Larry Harrell Scholarship recipient by the International Carwash Association. Allen will receive a $1,000 scholarship to be used toward her continued education. She was selected to receive the scholarship due to her high school academic performance, school honors, community involvement and strong essay on the importance of hard work and kindness. Allen plans to attend either St. John Fisher College or University of Tampa in the Fall where she will pursue a Pre-Med major. The Larry Harrell Scholarship, created in honor of car wash operator Larry Harrell by his peers, has been recognizing young adults working in the car wash industry since 2000.

Mister Car Wash, the fastest growing car wash company in the U.S., entered Mississippi with its April 13th acquisition of seven Venture Car Washes. Venture opened its first car wash in Ridgeland in 2003, adding stores in Brandon, Clinton, Meridian, Flowood and two in Jackson by 2013. This acquisition represents the com-

pany’s 20th state and 29th market. “From day one of working with the Venture team it was clear we share a similar vision to offer the best customer experience and career opportunities,” said Casey Lindsay, Director of Acquisitions for Mister Car Wash. “We are proud to bring the Mister Car Wash experience to central Mississippi, marking another key milestone as we continue to expand our operations across the United States.” The Tucson, Arizona-based company now employs close to 7,000 car care professionals with 172 car washes and 32 lube centers in 20 states.

You know what they say: Mo’ workers, mo’ problems. Or at least thats the case for full service carwashes in New York and California which have made headlines in the last few months for their treatment of employees. We start with SLS Car Wash in Bushwick, NY, where about 40 workers have voted in a 35-5 decision to join the Retail, Wholesale and Department Store Union. They are the 11th carwash to join the union and, to date, the largest carwash to unionize in the nation. “Before we organized a union we worked under a lot of stress,” SLS worker Cheik Umat Balde said in a release. “The managers will always yell at us to work faster. Sometimes they will call us stupid. We had to deal with unknown chemicals with no protections.” A manager at SLS declined comment.

Problems abound for other full-service carwashes in the city. At C&P Car Wash in the Bronx, several groups and carwash worker sympathizers are calling for an investigation into the death of carwash worker William (El Toro) Gomez to see if there are any links between his job and his death. The Car Wash Campaign, which has been fighting for workers’ rights and improvements {continued }


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EXTRA! EXTRA!

Interesting operator news and tidbits from around the industry water cooler.

Read all about it ... Oh, happy day! San Diego mayor Kevin L. Faulconer officially proclaimed April 21, 2016, as Soapy Joe’s Car Wash Day in recognition of the wash’s efforts to be environmentally friendly. The proclamation was celebrated in connection with Earth Day, annually observed the next day. “Sustainability has always been a top priority for us,” said Lorens Attisha, CEO of Soapy Joe’s Car Wash. The family owned and operated car wash business has eight locations throughout San Diego County offering express car wash services and oil changes According to a press release about the proclamation, the company focuses its efforts on one of the area’s most important natural resources – water. “We use a state-of-the-art water recycling system that reclaims 20 gallons of the 30 used per wash,” says Attisha. “That 30 gallons is only about one-fifth of the 140 gallons used when washing vehicles at home.” Soapy Joe’s cleaning products are biodegradable and pH balanced to a neutral state during the washing process. The dirt and grime rinsed from cars is processed by facilities that convert it to beneficial materials, such as potting soil or fertilizer. To celebrate the mayoral honor, Soapy Joe’s gave free top-of-the-line car washes at all eight locations that day via an online coupon available at SoapyJoesCarWash.com.

INDUSTRY DIRT

in health and job safety conditions at car washes, as well as the New York Communities for Change, have organized a vigil for Gomez and are suggesting his death may have been caused by working with “unlabeled chemicals.” Chio Valerio, deputy labor director at New York Communities for Change, noted there isn’t any proven direct connection but car wash workers have long complained about health ailments they believe are tied to constantly inhaling the unidentified chemicals. “We are trying to find out what’s happening,” Valerio said. The owner of the carwash, Frank Roman, released a statement in response to the planned vigil. “I am saddened by the death by one of my valued employees,” Roman in statement. “And my heartfelt condolences go out to his family and friends. I assure my workers and the community that my employees are trained, my establishment is safe, run in compliance with all applicable laws and regula-

And now your competition is coming from the App Store. Washé, “the app that cleans your car,” has officially launched in South Florida. The mobile application connects car owners with mobile carwashes via their smartphones. Users can download the Washé app free on the App Store and Google Play, set up a user profile for payment and location services, and then tap to order a car wash. Tiered pricing packages are offered to allow customers to personalize their service requests. According to a press release from the company, the app is the first of its kind in South Florida and already has close to 3,000 users during beta testing earlier this year. The company has its own network of “highly-skilled and experienced car wash workers that we’ve hand selected.” There’s no need to give directions to the washer — the Washé app uses GPS location services and keeps the consumer updated through every step of the process. When the job is complete, customers receive a picture of their clean car and secure payment happens automatically. The company plans to expand to Miami within the next few months. A short guide to free PR: Follow the example of David Chess, manager of Scrubbin’ Bubbles in Wallingford, CT, and make yourself available for an interview with the local television station. WTNH’s story was about “how

tions, and that all the cleaning solutions used in my establishment are OSHA certified,” he said. But he slammed the planned vigil. “It is a disgrace and wholly insensitive to the deceased family,” he said, arguing the union was trying to “politicize the death.” “This is their desperate attempt to use the death of a person to leverage the industry and me. It is disgusting, plain and simple,” he said.

Moving onto full service carwash woes in California, a Yorba Linda, CA, wash must pay $68,656 in back wages and damages to 16 workers, federal officials said Tuesday. Riverbend Hand Car Wash on La Palma Avenue made its employees arrive at a certain hour in the morning but refused to pay them for their time until a manager called them to clean cars, according to a U.S. Labor Department investigation. Majd Aboul Hosn, co-owner of the business, said his workers were paid a legal wage but that some chose to arrive before their scheduled shifts because of transportation constraints. He denied

to save money at the car wash” after an earlier story on the channel pointed out the necessity of washing your vehicle often during the wintertime to avoid damage from road salts. Chess says there are lots of ways to avoid paying full price. “We have a punch card you get 10 punches, you get a free wash, we have coupons all over, at Big Y, on the back on receipts, they come in the mail,” he said. And sometimes it just pays to be a loyal customer. “You know if they’ve been here a while we’ll give them the better wash or a free vacuum,” Chess added. If the local news station isn’t exactly knocking down your door, consider putting together a short press release announcing a new budget-friendly wash package or pointing out the importance of washing your vehicle during different seasonal issues -- like pollen or lovebugs. {continued }

failing to pay overtime but said he agreed to the labor department settlement because he lacked documentation. Aboul Hosn said he bought the car wash two years ago with a foreign partner, and they retained its manager. “It had been running this way for 22 years,” he said. “The on-site manager was not familiar with the labor laws.” He added, “Most guys in this industry are bad guys. But we treat our workers better than any other car wash owner. We paid $10 an hour before it was the minimum wage. We paid them when they got sick. “What happened to us was not fair.” The carwash industry has been the subject of some high profile investigations by the California Division of Labor Standards Enforcement, which has issued more than 1,400 citations between 2009 and 2014 and claims the industry has some of the highest level of workplace violations in the state. In Los Angeles, some 40 car washes have unionized in the past four years under the Clean Car Wash Campaign, funded by the AFL-CIO and the United Steelworkers. • SPRING 2016 •

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EXTRA! EXTRA! Or take a page from Autobell in Hendersonville, NC, which gave the local TV station there a breakdown of how its water reclaim system works along with the wash process to eliminate risk from corrosive road salts. The company was also able to emphasize their commitment to being environmentally friendly in the story: After explaining that the wash only uses reclaimed water during the wash process and not during the final rinse, and that soaps and chemicals use render the salty water harmless, the company added “[that] they’re proud to be water recyclers and doing their part to preserve that limited resource. Finally, consider imitating OTTO Car Wash in Muskogee, OK, which announced its new equipment and business renovations to the public via a story in the Muskogee Phoenix. The story may have been short and sweet -- a mere 40 words -but the full-size photo taken by newspaper staff was worth the other thousand. Carwashes of the nation, hold onto your hats! We mean that quite literally after Speedy Pete’s Car Wash lost its roof during an intense storm in Alexandria, Louisiana. “I looked up and saw the roof start to detach a little bit. And a second or two later it was way up

Wash would be back in operation after a month or two, but there was no word yet from Pizza Hut.

in the sky, it was maybe 100 meters high,” Will Shepard, a witness, told KALB News. The roof was carried off to a nearby Pizza Hut, where people eating inside “had to run for cover as high winds carried the debris, wreaking havoc to everything in its path.” The building, as well as multiple vehicles in the parking lot, suffered significant damage, and two employees at the Pizza Hut suffered minor injuries, as well. “I never saw anything like this, I mean there’s some crazy weather here. But you know nothing like that,” said Shepard. The local news station reported that Pete’s Car

Speaking of disasters at the carwash, here’s a collection of three mishaps which should make you glad you operate a self serve rather than a conveyor wash: A 2012 Jeep Grand Cherokee (surprise, surprise) took off as a carwash worker tried to drive it out of the Landis Wash and Lube in Lititz, PA. “[It] “could have been a lot worse,” Lititz police Sgt. Kerry Nye said in a story on Lancaster Online. “He said he just hopped in it like normal, put it in drive and it just took off on him,” Nye said. “He was really scared to death after it happened.” The Jeep crashed into a utility pole, causing damage to the front end and surprising onlookers, but didn’t cause any other damage or injuries. The local report quoted a May 2015 Philadelphia Inquirer article which pointed out numerous incidents of runaway Cherokees at carwashes since the early 2000s. “The International Car Wash Association once advised its members to handle Jeep Grand Cherokees with extreme caution,” the report added. A woman going through a carwash in Taranaki, New Zealand, was caught “dangling in mid-air”

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EXTRA! EXTRA! when the wash’s brushes got stuck on a bike rack she had installed to the back of the vehicle. “All she could do was honk her horn in panic as she felt the car lift up,” according to the Taranaki Daily News. The article continued by sharing the woman’s Facebook post, which she wrote after the incident to let other car owners know about the risks of having accessories on their vehicle. She posted: “What’s on my mind, you ask? Well just like to put a warning out there. Don’t leave your bike rack on the back of your car when going through the car wash. The big drum’s chamois strips got tangled up in the rack so badly it lifted up the back of the car. Sat on the horn, I did, to raise the alarm. Fortunately it came loose. Owner was very kind. ‘You’d have to say it was a pretty stupid thing to do,’ says he. One good thing. Must have a good ticker. It had a workout I can tell you.” An employee was hurt at Ernie’s Car Wash in West Boylston, MA, after he was struck and dragged by a customer’s car which jumped the track and then struck another vehicle inside the tunnel. A report by the area CBS station said the worker was taken to a local hospital, although there were no details on the extent of his injuries. Well it wouldn’t be the Extra! Extra! section if we didn’t end with a frus-

trating story of frustrating government stupidity. In this case, the operators of a carwash nearly constructed in San Luis Obispo, CA, would like to use groundwater, but city leaders are hemming and hawing over the idea of signing away their water rights as they transfer ownership of an on-site well that they haven’t used in 20 years. Hamish Marshall, vice president of property owner Westpac Investments, said he expects the new car wash to open around Feb. 20 at 1460 Calle Joaquin, near the intersection of Los Osos Valley Road. A grand opening would follow around the first week of March. “It doesn’t keep us from opening; it just costs us more money,” vice president of property owner Westpac Investments Hamish Marshall said in a story from The Tribune. “It’s simply that city water is very expensive. It’s potable water — to be using potable water on cars when we have the ability to use nonpotable water on cars seems a little silly.” According to the report: [City] staff hasn’t found a record of an agreement allowing the city to install the well on that property, City Attorney Christine Dietrick said earlier this week. The city has no ownership interest in the well or property, according to a Jan. 21 letter from attorney

Roy E. Ogden of Ogden & Fricks, which is representing the property owners, and Quiky intends to start using the well water with or without the city’s cooperation. Board members of local nonprofit Central Coast Grown have raised concerns that groundwater pumping could jeopardize the water table in that area and note the well was forced to shut down more than 20 years ago because of groundwater contamination. The San Luis Obispo Planning Commission approved a use permit for the Calle Joaquin car wash in November 2014, the same year that Westpac bought the property, Marshall said. The site has previously been occupied by Denny’s and Zaki’s Waffle House. Westpac also owns the Quiky Car Wash, which uses potable water, on Broad Street. The water is recirculated, said Marshall, estimating that about 80 percent is recycled and used a second time. The amount of water that the car wash would use, however, is a fraction of the amount the city pulled out of the ground 26 years ago. City staff said the estimated water use is about 63,568 gallons per month, or about the same amount as 11 single-family homes in San Luis Obispo, based on the average amount of water used by five comparable car washes in the city.

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Gloria from the North How this SS Superwoman gets things done in the mud, muck, dust, and freezing cold of her native Canada. by Kate Carr ment, and then having a caseload of all kinds of other issues from addiction to intellectual disabilities to all those kinds of things, I think all of those experiences bring amazing strengths so that we’re creating not just a carwash, but a real experience.

I was so pleased to finally get a chance to chat with Gloria Winterhalt, co-owner of Splish Splash Auto Wash in North Battleford, Saskatchewan, Canada. Gloria had been suggested to me as a “Super Woman” for our “Super Women in Self Serve Carwashing” cover story, but that interview didn’t happen in time for last issue’s cover. As luck would have it, delaying the interview worked in our favor, because it allowed Gloria and I to cover a wide range of topics that were a little outside the bounds of our “Super Women” interviews....

SSCWN: Tell us a little about yourself. How did you get into the business? Gloria Winterhalt: As a family, we’ve been in the carwash industry for about 20 years -- it was just a very small business, though. One bay. We’re coming up on our fourth anniversary of being open on this huge scale, though. For me? I’ve only been in it for about three and a half years. It’s been an incredibly new experience for me. I have a passion for economic development / tourism and a back ground in social work. SSCWN: How interesting! GW: Yes, so coming into a manual job is ...very, very different for me. I’ve worked with youth and with people who have various disabilities or addiction and other challenges and now I’m getting them as staff. SSCWN: Do you think that experience gives you an advantage? GW: Well, I don’t know. My husband sometimes has to tell me to quit working. It’s like my old job keeps interfering. But on the other hand, I think it’s helped us to truly develop what my brother’s had for a vision for the wash. I was just supposed to be a small part of it -- I’m on the retirement end of life. But now I’m totally out of retirement. Working even longer hours because we went into a new venture, but that’s fine. My grandkids get a little disappointed that Grandma’s at the carwash, but we’ve created ways to include them -- I’ve got a 12-inch squeegee for them. And that’s part of -- I think for me, coming from a different background than the rest of my family, having all these years of experience, that I’ve always had a strong connection with tourism and economic develop-

56 • SPRING 2016 •

SSCWN: Tell me a little bit about the carwash: How many bays, the type of equipment you have and what not. GW: We have seven large self serve bays for automobiles and motorcycles and then we have 100foot two station RV or Super Bay Wash so we can take in semis. Our vision around our 100 foot bay was -- we have semi washes all around us -- but we’re missing something for the contractors who have a truck and a cargo trailer -- where do they get to wash? And where does the truck and a fifth wheel who doesn’t want to go to a truck wash and deal with crude oil and muck and cow droppings? Those kind of things. That was to offer another place where the population never had anything like that to wash their trucks and trailers. Now we still have that all -- we still have the cow droppings and the muck -- but we keep it clean. We still ended up getting all of them anyway. They like to come here. We’re very, very clean. We clean up as fast as we can after each customer. SSCWN: Are you double doored or enclosed? GW: We’re barn style. SSCWN: I love those barn style washes. We don’t really have any of them down here in the States. GW: It’s interesting. Even when we go to the shows in the States and we’re talking to other carwash operators -- even across Canada, actually -we can go to the West, to Edmonton, and some of their carwashes don’t have doors. We can go all the way to Toronto and they don’t have doors. But we’re stuck in the middle in Saskatchewan and we probably have the most severe, contrasting weather twelve months of the year. Everything from rain, snow, extreme cold -- like 40 or 50 below -- to extreme hot and dry in the summer. We get it all. Trying to maintain a wash in that presents many challenges. Salt to bugs to extreme cold to vehicle’s freezing up. Right now, we’re in the mud season. We are dealing with vehicles coming in where we have to clean the tips sometimes every day or every other day. And then mud changes as the ground thaws -- and what type of mud comes in. In the summer they put calcium down on the roads to help keep the dust down because we become so dry. Customers asking how to get that film off the vehicles, and it gets slimy. In Saskatchewan, we deal with many, many extremes. SSCWN: What a double edged sword: It probably keeps you very busy, huh?

GW: It does. We’re in an extreme climate and it makes our job’s a bit more physical. Our mission is that every customer who comes in and gets a clean bay. So, to keep that up, we’re basically using shovels and scrapers non-stop. When we are lined up for long periods a day you are exhausted SSCWN: What kind of staff does that take? GW: We have three full-time staff on all day, from 7 a.m. until 5 or 6 or 7 p.m. And then most days, from 7 until 10:15 p.m., around when we close, we probably another two to three, depending on again, the season and what’s happening at the wash. We’re not just a car wash; we have other services that we offer here, so that increases the dynamics of the interaction for our staff and for the consumer. We already offer spot-free, so that gives us the opportunity to sell water. People can bring in their five-gallon jugs that they put in their water coolers and they can refill those here. We have a three-bay water refill station for customers. We can do 300 jugs a day, so 150 people which might be there just for that. THen we have a dog wash, so we have a two station dog wash -- we have to have it indoors, because of the weather -- so you’re cleaning that, too. And we have a retail end, and also a year ago, we added U-Haul, as a subsidy of Splish Splash. So, there’s a full-time staff that just deals with U-Haul. The most important part of our business is probably the charity component, and that’s my job. We have a venue for our charities to be able to come and raise amazing funds. Our WashCard System is setup so that these charities can make money. SSCWN: How is your program structured? GW: We’ve done them many different ways. For example, we have charities that sell our loyalty cards. We sell the cards to the charity for $10 a card, they sell them for $20, and we load them with $25. At the very end of all of it, the consumer is the one who really gets an amazing deal and our charities raise an amazing amount of money. That works towards both our charity and our marketing goals. SSCWN: What kind of groups are you partnering with? GW: Oh, everything from gymnastics and hockey to Christian motorcycle clubs to student missionaries who are raising money for trips to Peru or Costa Rica. We’ve had local churches and animal rescue groups. Right now, we just finished a live “on location” fundraiser to raise money for a rescue group that has a puppy that had legs amputated and they were dealing with high medical and equipment costs. SSCWN: How long have you been doing the charity partnerships?


Gloria Winterhalt GW: Since we opened. It was part of our vision when we started the carwash. We have other businesses and we wanted to have something that would be community focused and be built on community contribution. We are so very involved in the community and charity is a big part of that. We spent a whole year as a sponsor and raising money for a local day program that caters to adults with intellectual disabilities that wanted to construct a new building. That was close to $3 million. We’re part of our community; that’s our mission. We’re not just a car wash. We’re part of the community. Without the community, we don’t have a business. SSCWN: Tell me about the demographics and competition in your area. GW: Well, we have about 18,000 people here. We’re not very big, but we have a trading area of about 40,000. So, you know, about a 100-mile radius that we draw from. We have many different demographics; there are a lot of immigrants in the community and 14 reserves around us. We’re not a manufacturing community at all; we’re farming based. We’re in the middle of the prairies. Oil crashed here about a year ago, so now there is a lot of oil development. We’re changing a little bit. But we have everything to low-income to high-income; quite a variety of people. SSCWN: To that end -- the high income -- I noticed you have a “we wash it for you” program? GW: Yes, we have a we wash it for you service, as well as full service detailing. So, we can do a quick wash and vacuum while you’re here on site, or we can do the full interior and your windows, and the dash, and the cupholders, and all that -- we do that right up to as close to showroom quality as we can get it. We have a full time detailer here. SSCWN: Do you know what kind of split is there, percentage wise how many customers choose WIFM versus the self serve? GW: I don’t know the exact numbers. It’s a big part of our business, but it’s also seasonal. Our demographics probably affect it, too. We don’t have quite as many high-end customers, but we do have a lot of seniors who use that service. Or customers who have had surgery or have a bad back or they’re coming in dress clothes for a business meeting and don’t want to show up in a filthy vehicle. We reach out to all kinds of consumers and meet a need for them. We start at a base point and customize everything that comes through the door. We may have somebody coming in that’s got mud caked on their wheels and they’re wobbling on the highway and they’re not dressed to be dealing with mud, so we go in there and we scrub their wheels. We can adjust our pricing according to what service we’re giving. Our detailing is amazing, and we have that option, too. We don’t do our full service detailing at this location because we’re too busy. We have another location with two bays and our detailers are at work there.

And then we have outside vacuums available all year round. So it can speed up the consumer in the bay, they want to clean up the garbage and vacuum and they can do that outside and free up the bay for someone who wants to wash. We’re always considering: How can we help the consumer get what they need? It’s not about how we want it go -- but how can we help them get the services they want and get them through the wash? SSCWN: You do a lot with your loyalty card program, don’t you?

INTERVIEW

GW: Yes, actually every New Year’s we want all our registered cardholders to know that we appreciate their business, so we say thank you by loading up those cards with $5 on New Year’s as a way to say “Thank you for your business this past year, we look forward to your business in the coming year.” SSCWN: That seems like a fantastic way to promote the loyalty cards and the online registration program -- and I noticed the comments on Facebook were very pleasantly surprised and appreciative by the gesture.

GW: Yes, and we’ll even have comments two or GW: Yes, our WashCard is a starter from day one. three months after New Year’s who will come in We go against the norm, for sure. We don’t like to and again say, “Thank you very much! That was awebe the same as everyone else. So, instead of giving some.” I think when you do it unexpectedly, that just the usual 10 percent discount, we give you an exmakes the customer feel even more appreciated. tra 10 percent value. So, if you load that WashCard We’re doing a promo right now for some firewith $20, we’ll add another fighters who are in our community -- about 300 $2 onto it. We have a lot of consumers using our of them -- for a convention. And so we’re offering loyalty cards who are loading $50, $60 and even them a 25 percent discount while they’re here as $100, $200, $300 on their cards, so that loyalty a way to support the service they do around the percentage can really add up. You could be getting an extra $30 on that card. And since our WashCard is really becoming When I was researching Splish Splash for this article, I came across this “Letter a sort of multipurpose to the Editor,” printed in local newspaper The Battlefords News-Optimist this card within our busipast November after the carwash participated in Grace for Vets (as you all know, ness since we have so my most favorite carwash cause). I thought it was worth sharing again and many different sergiving Gloria another thumbs up. vices. I mean, you can “A large bouquet to Splish Splash Car Wash on the occasion of their free car wash for use it as a gift card. As veterans. My wife and I drove into the building, not knowing what to expect. A friendly a thank you for the guy employee motioned us into a stall. I got out of the car and asked, “How do I get started that cuts your grass or to wash my vehicle?” He politely told me, “Go to the office, sit down and have a coffee, as a stocking stuffer or as I’m going to do your car. Gloria will escort you in and get your coffee.” whatever. You can use As we were walking to the office, Gloria glanced at my wife and informed us, “I know it for car washing or for you both, you used to coach us with the Legion Track and Field at the Civic Centre, up detailing. We have a lot and down the steps we’d run for an hour.” of businesses that use She remembered Jill and Eddie Martin, Valerie Carbert, Rick and Rueben Mayes. “You it as their petty cash drove to track meets in Saskatoon and other places that we attended.” when they’re coming That was many years ago, what a small world. Once again a big thank you to Splish in to fill their water Splash Car Wash staff for honouring veterans. bottles. And we have Tony and Susan Francescone” consumers that use it just to wash their dog. You can register your card online, and every provinces. They’re here from all over, Manitoba, time you use that card at our business you are enAlberta, Saskatchewan. Hopefully they can have tered into all these different promos we have. So, a clean vehicle while they’re here. We’ve also had you could win $25 on your card, you could win a lot of fire trucks come through to get washed a detailing or an iPad. Also, if you lose your card before the convention, too. -- well, we’re in a crunch for dollars now, so if you We have an emergency services discount, so if lose a card with $20 on it, that could become very they’re using their WashCard, they’ll have an adimportant. So, if you’ve registered your card and ditional discount as a way to say thank you -- and its lost then we can cancel the whole card and put that extends to their personal vehicles, too. Bethat money onto a new one for you. We have a lot cause we really appreciate what they’re doing and of people who come in and say they’ve lost their how much they’re giving up in their personal lives card, but they haven’t registered it. That’s tough to serve us and our community. because we can’t help them then. We also love to participate in Grace for Vets. We SSCWN: I noticed some comments on your Facework with the Legions here. Again, it’s part of that book page that suggested you surprised your cusmission to be a part of the community. tomers by putting extra cash on their loyalty cards this New Year’s.

{continued } • SPRING 2016 •

57


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• SPRING 2016 •

59


INTERVIEW

Gloria Winterhalt

SSCWN: Turning the conversation back a bit, I wanted to take a minute to recognize how well the carwash is doing with Facebook and its social media interactions. You’re posting often, you’re keeping customers notified of all the different promotions going on and including photos. And I’ve noticed you have a lot of customers who interact with the page, too. Do you have someone responsible for the Facebook page or is that another one of your duties?

This carwash was supposed to be for the next generation, but they’re not quite ready to go there yet. They’re all off playing and building their own careers, and that’s great, too. Actually, about half of our kids have got their own businesses now, too. My son just opened a convenience store and my nephew has got a website building business. They’ve all branched off, but that entrepreneurship is still there. So where all that goes -- and where the carwash goes -- we have no idea.

GW: My niece, actually, you know -- it’s a younger generation and they can certainly do that much faster than me. She takes care of our Facebook and the postings. So if there’s a charity event or a unique event going on, we try to remember to snap a picture and send it to her and have her post it. You do need to have somebody who is going to do that medium of marketing and be focused on it. She does a very good job with it. We coordinate a lot of those efforts -- from our newspaper ads, and radio spots, and the Facebook -- so that we’re using multiple tools and they’re all sort of mirroring each other.

SSCWN: So speaking of all those brothers -you’re also in a male dominated industry now. What has that experience been like?

SSCWN: Speaking of your niece, you mentioned this is a family wash. Who all is involved?

Check out Splish Splash’s Facebook page (facebook.com/ splishsplashautoandpetwash) for an example of how to really maximize social media for the self serve business.

GW: Well, it’s had it’s challenges. Most sales reps or even the customer will walk right on by you and find the male staff. It doesn’t matter where you go, it’s a male dominated world. Sometimes I have to push it -- that I’m the boss. I’m at a moment where we have a mostly male staff -- I’ve had lots of girls work at the carwash, but at this time, it’s mostly males. And then I’m working with male brothers and my husband. So, there are challenges. But my background has given me some experience there -- you know, I’ve worked with troubled youth and what not. And we’re at the low end of the pay scale here, so of

Facebook Pros!

Not only that, Splish Splash has done so well with building a strong Facebook presence that their customers are now doing the promoting for them.

GW: It’s five of us siblings that own the carwash. We’ve all worked here, but myself and my brother, David, are the ones running it. I’m the one that’s here full-time. We have a few other businesses. We’ve had nieces and nephews and my own kids who have all worked here at some point in time between their jobs or finding jobs. There’s always employment here. My husband works here, too. He manages the U-Haul business for us. And then there’s a brother who owns a septic truck and comes and pumps all our pits. So, we try to emphasize that we are a family business. We grew up in a family business; our dad has always been an entrepreneur. We had a taxi company for almost 40 years. And our mom has always run these various home-based businesses. So we were brought up in a household with strong entrepreneurship experiences. My brothers worked more in the cab company, whereas I switched off and did a few other things -- but it’s always been a part of my life. We’ve always had businesses together. We’ve had rental property and what not, and we’ve always tried to connect somehow.

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course we’re finding those challenges. SSCWN: Speaking of that background in social work -- a lot of self serve operators talk about the difficulty of finding, hiring and managing good staff and attendants for the wash. What sort of methods are you using to deal with those hurdles? GW: I think the most important thing to stress is that we’re a team. We may be writing your checks, but there isn’t any job at this building that I haven’t done or that I don’t do. I clean the bathrooms right along with staff on the weekends. I shovel out pits right along with staff that shovel out pits. So no matter what level they are, even if they’re young students, I think it’s about respect. It’s about being part of the team. I can’t do this without staff. I mean -- we did for the first two years. I did it by myself. It’s not fun. We also encourage our students to put school first. School is your first job. We work around exams. And we also work with our school’s functionally integrated program to create a safe environ-

ment for students with a learning disability or a physical disability so that they can get some work experience and the social experience of working, too. And all of our staff are involved with that -it’s about building respect on both sides. We’ve created a real bond there. We also work with an employment program that focuses on helping people who might have difficulty getting a job for whatever reason -- addiction, disabilities. We help create and build those first skills; like making eye contact or saying “good morning” to a customer. Building that self confidence up so that they can move on. That’s part of the process. One thing we stress to our staff is that their next job might come from here -- you know, a future employer might walk into have their car washed. Or their next girlfriend or boyfriend. Or their future mother-in-law. You could meet them here, so we encourage them to take pride in who they are, what they do, and to build a good work ethic and respect on both sides. SSCWN: That’s an interesting spin on it -- that they might meet a future girlfriend at the wash or that they’re future mother-in-law might drive into the bay. To that end, what have you done to make the carwash more female-friendly? GW: I think it’s the basics: Lights outside, having an attendant on staff at all times, hiring female staff. We have curtains to divide the bays in the barn style wash, so they’re clear at the top so you can see through them so that a female will know she’s visible. We want all of our customers to feel safe when they’re here. Another thing we do, is we encourage our staff to step in and educate the customer. To observe them and if they see someone who is moving around like they’re a little unsure, then offer some help and show them around the bay and how to use the different services. Don’t hesitate to go up and say, “Good day, is there anything I can help you with today? Can I show you how the equipment works?” We’re always encouraging them to have an interaction with their customer. The worst thing as a customer is to struggle with a wand or a vacuum hose that’s all tangled up. I mean, I’m only 5 foot and our vacuum hoses are up high. So that’s another thing our staff is looking out for and watching for a little old lady or somebody in dress clothes or whoever might be fighting with a vacuum hose. (My interview with Gloria continued on after this phone chat and into another one, so please stay tuned for the rest of our conversation in the Summer 2016 issue!)


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• SPRING 2016 •

61


G N BHA S E I R EO T

! a g n i z Baake more money M

y f i s r e v i d u o y n e h w your services.

e h t e k a m a n n a w u Yo tta big bucks? You go have big ideas. Over the years, we’ve noticed that self serve operators that invest their time in branching out beyond their core business and branding their car wash with complimentary profit centers have been able to attract more customers and build bigger profits than the average 4/1 SS/IBA. The saying goes: Activity breeds activity. A busy wash attracts more

BiG BANG THEORY

#1

Pet Washes AT A GLANCE

Cost to get started: $$ Expected monthly revenues: $800-$1,000 Industry resources and Associations

Pet washes are an excellent opportunity for washes that have one-too-many bays or a small footprint to maximize the available space and attract a new type of customer. They work well in rural, urban and suburban environments -- but particularly in rural areas where there aren’t many options for pet grooming and care.

Mike Dickey,

Richie’s Car Wash, Erlanger, KY Tell me how you got started with the pet wash. We bought an existing car wash that had been run down. We bought it at a Sheriff’s sale, actually. The owner had invested a lot of money in it over the

62 • SPRING 2016 •

customers, and the busiest washes have a little something for everyone. To that end, SSCWN has researched a few of the more popular and successful multi-profit center ideas for self serve carwashes. Read on for your next “Big Bang Theory…”

years, but I think he got into financial problems in the last five or six years, and he had let it go to nothing. So we bought it and we renovated the whole thing; new equipment in the self serve bays and everything. I had been seeing some of the dog wash stuff in the magazines and the shows as something new that other people were doing. So we decided to take one of the self service bays and put in two dog wash units in that bay. My feeling was that we could do something different that nobody else had here. Do you have much competition there? There’s really no other carwashes in the area that have pet washes. But -- what I have seen is that now some of the pet supply places, they’re having pet washes at those businesses. But I don’t think they have private rooms like we do. So describe your set-up for me. So, we had to pour a whole new floor in the bay and put in new drains for each pet wash stall, so that if people got water on the floor it would go to that drainage. So we made a little hallway and two doors going into two private rooms. We have a window on the outer wall so they don’t feel trapped in there or anything like that. And the doors going into

the rooms have windows on them also. We wanted to give it an open feeling -- we didn’t want them to think they were stuck in some little room in the back. We wanted women to feel comfortable with it. How long did the project take? That particular project took a while since we had to put the new floor in and then we had to put new concrete walls up, windows, doors, a dropped ceiling. We did it first class. You could have done it a lot cheaper and probably faster, but we wanted to make it nice. {continued }


• SPRING 2016 •

63


BIG BANG THEORIES FOR THE SELF SERVE OPERATOR How much was the final price tag? I think we spent roughly $40,000 or so. That includes two pet wash units from All Paws, and I felt like their units were really top-of-the-line. Just the way they’re made and how it looks -- I think we could have bought a cheaper, stainless steel looking thing, but it might not have had the sophistication of the All Paws unit. When did you open? We opened in October 2014. What’s the ROI been like? We’re still building that business. You know, winter time is usually the busiest time for the carwash -you know, January, February, March, because of the snow and salt. But what we’re seeing is that it’s’ totally opposite for the dog wash stuff. When the warmer weather hits you’re busier with the dog wash stuff than with the car wash. I don’t think people like bringing them in during the winter -wet dog in the cold weather. But it’s been much busier in the spring, summer and fall. Anything you know now that you wish you’d known before you started or that you wish you’d done differently? Not really. I think everything has turned out pretty much just as how I wanted it to. We totally re-did the whole car wash, we spent probably a quarter million dollars renovating the car wash. We put all new black top in, we painted the building, we put in new self serve equipment. There’s two separate buildings: a building out front with two in-bay automatic machines out there, and then in the back we have the self service unit. We took all the plumbing out, all the electrical out and totally re-did those self-service bays. It was a big ordeal. As far as the daily upkeep -- are you finding that to be more of a hassle or easier than you imagined it to be before starting? It’s about what I thought it would be. As far as a self service car wash, we have two locations. And so at both of those locations -- and definitely on the weekends -- we usually have someone there all day long. We’re fairly busy; so they’re making sure customers are happy and doing the cleaning -- so as far as taking care of the pet washes, it’s just another part of the daily routine. We check it just like the self service bays, every morning and then you make sure everything’s good and try to clean up any messes that are in there, dumping the garbage cans, taking care of the vacuums, it’s just another daily task during the week. We’re probably handling it twice a day checking things out. How long have you been washing cars? 15 years. Have you been using the All Paws website/ marketing tools? We used some of their logo stuff. And in the beginning we did some advertising the first year -- we did the radio stations pretty big. We had a live broadcast that we did down here. Our commercial that we

64 • SPRING 2016 •

were running had a line about bringing your furry friends in also.

Keith Caldwell,

Vice President, All Paws Pet Wash, pet wash manufacturer What’s going on with the pet care industry in 2016? Well, from a business standpoint, we have seen more growth this year in the first four or five months of the year than we did for almost all of last year. I think it stems from growth in the carwash industry and in the pet industry. The pet industry has grown to an anticipated $63 billion in gross revenues for all of the different markets (estimated for 2016, source: www. americanpetproducts.org); the grooming industry in particular represents about $5.5 billion of that number (source: www.americanpetproducts.org). One of the biggest trends we’ve seen in the carwash world is growth from the markets where pet washes have opened. I mean, it’s kind of like you have to open one so that people can see that it’s worth investing into and then other carwashes will jump on board. I’ll put one in a town and then all of a sudden I’ll have ten more leads around that site. And the domino effect continues from there. Carwashes have been around for the last hundred years or so, and so the consumer is very familiar with them. Pretty much every little town in the country or around the world has some sort of carwash -- it doesn’t matter if it’s tunnel or if it’s self-serve or an automatic; a car wash is a car wash is a carwash to the consumer. And so pet washes are starting to pop up and now everyone’s starting to get on board. We have hundreds of sites around the country now, and I hope that soon I’ll be able to say thousands. The growth has been incredible. So what sort of equipment will you be displaying at Car Wash Show? We’ll have three different models at the show. We’ll have a modular unit which is a self-contained unit that sits outside the car wash. So if you have room outside one of your bays or your tunnel or even in the middle of your parking lot, you can put this up. It sits by itself. You run utilities to it; it comes pre-assembled in one piece, and it’s heated and air conditioned and ready to be hooked up to utilities and ready to go. Then we have a model that’s equipment designed to go inside a structure. So, if you’re building a new car wash or if you’re renovating a bay, this would work for those instances. It comes pre-assembled from the factory, ready to be hooked up to utilities that are inside your pre-existing building. The third unit is specifically for a self-serve bay at a self-serve car wash; it’s our flip tub model. It’s installed inside one of the walls of the self-serve car wash so that it can be used without taking up your bay the whole time. You don’t have to convert the whole bay, now you can put the flip tub model in the bay -- it’s only 12 inches out when the table is up. When the customer wants to use it, they flip it down.

The table becomes a big enough area where they can put the animal up and wash them in the tub. This is a good option for carwashes that still have a semi-productive or profitable bay. This way you can keep some of the bay revenues as a car wash and also get pet wash customers. The flip tub does need a heavier marketing push -- and definitely customer education so that they know the pet wash is there and available to them. Because the unit is so small and compact, it’s sometimes lost in translation. It needs to be a bit more than just some signage in the bay. Is the flip tub as profitable as a complete conversion? How would the operator determine which option works best for his or her location? I think as long as you do the advertising correctly then a flip tub can be just as profitable as a fully devoted bay. Now, if the bay wasn’t performing that well to begin with, then it may not even be the best place to put a pet wash in anyways. If a self-serve bay is really underperforming you have to consider if it’s the car wash -- if it’s the location, if it’s the market area. What’s nice about these units is that they’re all modular. So, if your car wash or pet wash is under performing, you can actually take the pet wash out and put it into a new location. What do successful pet wash sites have in common? I think an understanding of how to market, brand and advertise the pet wash. A lot of our savvy operators know that the best advertising is usually free advertising, so they go to the human societies and partner up with them. For example, they might participate in some of the marketing programs we offer, like the token program we have. So these tokens aren’t really a selling tool at the carwash, but they give the user a free wash. So they go to the humane societies, adoption facilities, or even police departments with K-9 units, and give out some tokens for free use of the wash. Once they use them, they’re hooked. The humane society can give that token out to someone who adopts a new pet, and then their next stop is the pet wash. Our pet washes are fully customizable -- the colors, the logos. It doesn’t have to be an All Paws Pet Wash; it could be Kate’s Pet Wash or whatever you {continued }


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BIG BANG THEORIES FOR THE SELF SERVE OPERATOR choose. We have a design team here that works with the car wash owner to come up with that vision that fits their existing wash before the manufacturing of the pet wash unit even begins. Also, we operate FindAPetWash.com. That website locates all the pet washes throughout North America. You can click on the site that’s nearest you and it will tell you about the location, what kind of unit it is, tell you the pricing, the hours, and it can tell you about the existing business it’s attached to. So, if it was a carwash, you could have a few lines about the carwash -- how many bays, what kind of automatic wash it might have or whatever. Are there any industry norms as far as average monthly revenues for the pet wash? As far as converting a bay, it’s going to be a little bit less than if you had a single, modular building outside the wash. It also depends on how well they market and advertise the wash. Customers have found success when utilizing our free website program, FindAPetWash.com and making use of our marketing materials and suggestions. How do weather patterns affect these pet washes? Are there any regions of the United States that are more successful than others due to climate? Choosing a pet wash design that fits your specific climate is the most important thing when pondering weather patterns. For instance, our ADA 13 units are available with heating and cooling systems. This option makes them available for year round usage. These types of units are particularly useful in areas of the countries where inclement weather is likely for many months of the year. However, our APW units are a great option for most areas of the country. Pre-fabricated awnings are an add-on option for operators to place their units outdoors, next to the outside of the building. It allows them to keep the self-serve bay open and have a pet wash without taking up too much space on the lot. This type of unit can be winterized and used solely as a seasonal application. Are there any demographics or market area minimums that are needed to support a pet wash? Some communities have information regarding pet owner statistics available specific to their communities. It is safe to say that with the $62.75 billion (source: www.americanpetproducts.org) estimated to be spent this year in the pet industry, that every community has its’ fair share of pets. Compared to self-serve equipment maintenance and repairs, how technically savvy does a pet wash operator need to be? More recently we have adapted all of our pet wash units to include circuitry boards. This type of system allows for comprehensive diagnostic checks with the ease of a button. Pet wash maintenance tends to align itself well with pre-established car wash maintenance checklists. Assuming that operating systems are maintained and clear of clogs, pet washes tend to wear well.

#2

BiG BANG THEORY

Coin Laundries AT A GLANCE

Cost to get started: $$$ Approximate number of laundromats in the United States: 29,500 Expected monthly revenues: $1,250-$10,000 Industry resources and Associations: Coin Laundry Association, www.coinlaundry.org; Planet Laundry Magazine, www.planetlaundry.com

Perhaps the most common business pairing, laundromats and car washes go together like peanut butter and jelly. This investment is typically best achieved at the very beginning of the investment and new construction process, although acquisition opportunities exist and for some carwashes with extra large lots, there may be the ability to construct an add-on building. Operationally, laundromats are most similar to self serve businesses that are minimally attended and rely on the operators mechanical experience for repairs and maintenance.

The Coin Laundry Association (CLA) has generously provided this information for self serve carwash owners interested in opportunities in the coin laundry industry.

SSCWN thanks the CLA for sharing such thoroughly researched and well written ideas! The term coin laundry is defined as commercial-grade, self-service laundry equipment placed into service in a retail space. Coin laundries generally occupy the retail space on long-term leases (10-25 years) and generate steady cash flow over the life of the lease. Coin laundries are unique small businesses in that they have no inventory or receivables. Coin laundries can range in market value from $50,000 to more than $1 million, and can generate cash flow between $15,000 and $300,000 per year. Business hours typically run from 6 a.m. to 10 p.m. and the stores usually occupy 1,000 to 5,000 square feet of retail space, with the 2014 average being 2,170 square feet. New coin laundries are valued based on actual construction and equipment costs, while existing coin laundries are valued based primarily on net revenues. Coin laundries are also referred to as coin-op laundries, coin-operated laundries, self-service laundries or laundromats. Industry Coin laundries are one part of the self-service laundry business; the industry is actually comprised of two distinct segments. The first is coin-op laundries, and the second is represented by coin-operated machines located in apartment housing. This apartment segment of the business is referred to as the multi-housing laundry business or the route laundry business. Background The coin laundry industry is approximately 70 years

old and is primarily composed of individual owner/ operators. No significant franchises are in operation at this time. Currently, there are about 35,000 coin laundries in the United States, generating nearly $5 billion in gross revenue annually. Clean clothes, like food and shelter, are considered a necessity of life and coin laundries provide a basic health service for millions of Americans. While coinops are found in virtually all neighborhoods across the country, stores seem to perform exceptionally well in predominantly renter-occupied, densely populated areas. These areas are increasing in number with each year throughout the country. The intense population growth, coupled with the expansion of rental housing, has increased the customer base for coin laundries. Business Cycle Coin laundries thrive in periods of both growth and recession. During periods of recession, when home ownership decreases, the self-service laundry market expands as more people are unable to afford to repair, replace or purchase new washers and dryers, or as they move to apartment housing with inadequate or nonexistent laundry facilities. The market size grows proportionately to the increase in population. The public will always need this basic health service – people always need to wash clothes! Trends Industry growth is based on the demographics of population density, population mix and population income. The more concentrated the population, the greater the need for quality coin laundry facilities. National and regional demographics indicate renters, the primary users of coin laundries, are the fastest-growing segment in the nation. As of the 2010 U.S. Census, 34.5 percent of the nation’s 116 million households were renter occupied. The number of coin laundry stores built over the past 70 years has grown steadily as the population has increased and shifted to more concentrated areas. The end result has been a mature, stabilized industry with predictable rates of turnover and values of existing coin laundries, development of new turn-key facilities, and equipment expansion and replacement. Market Value Coin laundries normally sell for a multiple of their net earnings. The multiple may vary between three and five times the net cash flow for most transactions, depending on several valuation factors. The following primary factors establish market value: • The net earnings before debt service, after adjustments for depreciation and any other nonstandard items including owner salary or payroll costs in services • The terms and conditions of the real estate interest (lease), particularly length; frequency and amount of increases; expense provisions; and overall ratio of rent to gross income • The age, condition and utilization of the equipment, and leasehold improvements; the physical • SPRING 2016 •

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BIG BANG THEORIES FOR THE SELF SERVE OPERATOR

attributes of the real property in which the coin laundry is located, particularly entrances/exits, street visibility and parking • Existing conditions, including vend price structure in the local marketplace • The demographic profile in the general area or region • Replacement cost and land usage issues This resale market standard assumes an owner/ operator scenario, with no allocation for outside management fees. Marketing time for store sales averages 60 to 90 days, depending on price, financing terms and the quality and quantity of stores available at the time of sale. Coin laundry listings are generally offered by business brokers who charge a sales commission of 8 percent to 10 percent. Many coin laundry distributors also act as brokers. The accepted standard of useful life for commercial coin laundry equipment is as follows: • Topload Washers (12 lbs. to 14 lbs.): 5-8 years • Frontload Washers (18 lbs. to 50 lbs.): 10-15 years • Dryers (30 lbs. to 60 lbs.): 10-15 years • Heating Systems: 10-15 years • Coin Changers: 10-15 years This schedule will vary upon usage, sales volume and maintenance. Useful life may differ for accounting or tax purposes. Operations and Performance Coin laundry operations consist of four basic areas: • Janitorial • Maintenance • Collections • Employee management Bookkeeping, administration and banking are typically off-site management areas. A standard profit and loss statement for a coin laundry typically includes the following line items: • Income, consisting of wash and dry • Other income, which would include vending, drycleaning and/or wash-dry-fold service Expenses Each category will have a percentage that varies from store to store and region to region. Interest charges, depreciation and other nonstandard items, such as owner salary, generally appear on tax returns, but are excluded from the standard profit and loss statement for purposes of valuation and determination of cash flow. Typical Categories • Accounting

68 • SPRING 2016 •

• Advertising • Insurance • Legal Costs • Licenses • Maintenance (Includes Parts and Labor) • Payroll (Usually Limited to On-Site Work–i.e., Janitorial or Employees) • Personal Property Tax • Rent • Common Area Maintenance (CAM) Charges (Also Known as Net Charges Including: Real Estate Taxes, Maintenance, Insurance and Other Charges) • Utilities (Gas, Water, Electric and Sewer) • Vending Expenses • Miscellaneous Costs (Including: Wholesale Drycleaning Costs, Fluff-n-Fold Supplies and Labor) Sales volume, and/or individual store performance varies, based on a number of factors. These factors may include demographics; overall services offered; design and general condition; equipment selection, condition and vend prices; hours of operation; exposure of the building; parking; and competition. National surveys, conducted by the Coin Laundry Association, indicate a wide range of performance for individual stores and types of equipment. The industry terminology for individual equipment performance is cycles per day, or turns per day (TPD). These designations refer to the number of times per day, on average, each machine is used. While this statistic varies widely, based on many factors including those indicated above, the range for washing machines is generally from three TPD to as high as eight TPD or more. The primary factors affecting TPD include: population demographics, such as density and percentage of renters; capacity and quantity of the washers; the vend prices charged; prevailing market vend prices, and the quality and quantity if competition. Dryer income can vary greatly due to: total wash poundage generated; overall vend prices of both washers and dryers; heating efficiency of dryers; total number of dryers in relation to washers; and dryer size and capacity. Dryer income is usually expressed as a percentage of overall income. Generally, dryer income varies between forty and sixty percent of total washer income. Income and expense percentages may vary significantly for stores offering additional services such as drycleaning and Wash-Dry-Fold. Summary Today’s coin laundry industry is a strong and vibrant one. Even more appealing is the fact that this de-

pendable public service industry continues to grow and thrive. The demographic trends toward an even greater apartment dwelling segment of the population predict continued prosperity. The Coin Laundry Association (CLA) used statistics, surveys and other sources to provide the information contained in this overview of the coin laundry industry. While the information has been given to CLA by business owners and other sources that appear reliable, CLA in no way, expressed or implied, guarantees the accuracy or validity of the information provided herein. Prospective parties interested in the industry are advised to consult the appropriate professionals and experts before making any major decisions. The Coin Laundry Association, the only national trade association for the coin laundry industry, is the best place to begin your journey into the business. CLA offers a number of educational, promotional and cost-saving programs for coin laundry operators. For the New Investor: Store Planning and Layout Selecting a location is one of the most important aspects of going into business. Many distributors and laundry brokers can assist with this step. However, it is good to know the basics of what to look for in a location, such as: • Utilities. A location should have the capability to provide all the necessary utilities … water, sewer, gas and electricity. Be aware that there may be initial water and sewer hook-up fees, which are also called impact fees. They could cost several thousands of dollars for an entire store and should be carefully evaluated. • Visibility. Another consideration when selecting the location is a good, well-lighted building that is not too far from the street … preferably at or above road grade level. Good visibility from the outside through large windows is an important customer safety factor as well. • Accessibility. Avoid a location that is in a highly congested area where it may be difficult to get into and out of the parking lot. Anything that is a vision hindrance, such as shrubbery or another building that blocks the view of the store, should be avoided. Also, neighboring businesses that may not be compatible should be avoided. • Free Standing or Cluster. Decide whether the store should be free standing or in a cluster (such as in a shopping center). There are advantages and disadvantages to both. Free-standing buildings offer more choice in layout, but strip center laundries have the advantage of late-night activity and ample parking.. There are a lot of benefits for a potential store owner in a strip center … primarily a long-term lease, which is the security most landlords are seeking. Designing for Success Before breaking ground for a new store, signing a lease or gutting an old store “for extensive remodeling,” thoroughly analyze the interior area. Analyze it as to its business potential for the maximum number of pieces of equipment that can fit into the building and still provide the number of turns per day per unit needed to provide the desired return on investment.


HYDROSPRAY

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SONNY’S

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SONNY’S

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BIG BANG THEORIES FOR THE SELF SERVE OPERATOR Any store must be designed for maximum profit per square foot of floor space. Once established, set about providing those customer convenience benefits that complement the layout and equipment configuration. Consider the following: 1. Doors. This first principle has to do with getting people into the store … the entryway. If customer convenience is paramount, consider installing automatic doors. Customers who are carrying bundles of dirty laundry into the store will appreciate automatic sliding doors. Other operators who have installed automatic doors report that they receive more compliments for this convenience than for anything else. 2. Immediate Observation Area. Inside each entryway, allow approximately an eight foot by eight foot (square) of space before a customer encounters the first piece of equipment. This “breathing space” provides customers with the opportunity to become oriented upon entering the store. It also gives them a chance to stop, look and decide which direction they are going to take without bumping into someone else who is trying to do the same thing. It also allows them an opportunity to pause to greet or say goodbye to friends on the way in or out of the store without blocking the door itself. 3. Aisle Ways. Ensure that there are no aisles in the store that are narrower than five-and-a-half feet. Be equally cautious not to make aisles too wide because that will be a waste of valuable floor space. In observing patrons, one can almost see aggravation levels rise if two approaching customers who are pushing carts in opposite directions are unable to pass by each other unhindered. Designing fiveand-a half-foot aisles should avoid those unpleasant head-on collisions. 4. Workflow. Try to establish a smooth workflow. This is probably the most important guideline of all — smooth workflow from washers to dryers to folding tables. One good way to accomplish this is by using multiple washer islands installed perpendicular to the dryer line. According to surveys taken over the years, 50 percent of customers would rather push dry clothes in a cart the shortest distances; 20 percent would prefer to cart wet clothes the shortest distance and 30 percent don’t care one way or the other. If these percentages hold true for a particular location, it would appear that folding tables should be located closer to the dryers than to the washers. In planning for table space, a good rule-of-thumb would be about 15 square feet of table per three dryers. 5. Large Capacity Washers. Locate large capacity machines as close to the front of the store as possible. In fact, try to position these big machines very close to the doors. 6. Finishing Touches. Finishing touches can be defined as those little things that provide a store with the personality, uniqueness and atmosphere all its own. One little touch is to use a lighting consultant. Most local electric companies employ an individual with this type of expertise. They engineer the building lighting for proper human com-

72 • SPRING 2016 •

fort levels in relation to the task that is to be performed. This is important because too little or too much light in the wrong place can become very discomforting to customers. Subconsciously they will appreciate the fact that they have the proper type and amount of lighting. The lighting will also have a big effect on how clean their clothes appear when they are washed and dried in the store. Also, if space is available, try to provide a specific area that can comfortably accommodate soap products and snack-type vending equipment (e.g., candy, coffee, soda, popcorn machines). Vending machines are a profitable as well as a desirable convenience that customers seek. Remember to provide the customers with plenty of laundry carts. About half of the carts should have hanging racks on them. The number of carts will depend on customer usage, but a minimum of one per four to five washers would be advisable. When decorating, don’t be afraid to use bright colors, specific themes or even wild décor. Generally, customers will like it and the creative decorating will provide the laundry with its own personal identity. Once established in the customer’s mind, this store image or identity can be used to advantage in advertising and promotional endeavors. Additional Tips • If possible, for safety, design the laundry allowing unobstructed visibility from the front to the back. • Install a ceramic or other type of slip resistant tile floor that will help minimize slips and falls and will look better and last longer. • Work with an expert to help design the store — find a CLA distributor member. Who Should Design the Space? • Is the person knowledgeable and dedicated to the industry? A fully knowledgeable design person will be an expert on local or national trends in laundry design. • Is this person a proven winner? Has he or she worked successfully with design concepts before? • Is the person forthright and does he or she have a good reputation? When selecting someone to help with space management, be sure that person will be direct about what is needed. Make sure the information is valid and that he/she is not saying something just to sell more equipment. Selecting the Equipment Provide the maximum number of machines to provide the number of turns per day needed for the desired return on investment. Once the equipment layout is determined, analyze how to provide convenience for the customer, which complements the equipment layout. Designing for maximum space utilization involves the size requirements and mix of the equipment. From this data, determine the number of toploaders, frontloaders, large capacity washers, dryers, extractors, bill and coin changers, soap and bag machines, carts, folding tables, water heaters and storage tanks needed. These are the significant items that

will occupy the space in the store. Where they go will depend upon the design of the store itself. Of course, the space design will depend upon the design of the building … the walls, window locations, door locations, bathroom plumbing, existing plumbing, gas and electrical, height of ceilings and room shapes and sizes.

Essential Equipment and Chemicals for Start-Ups (suggestions provided by the International Detailing Association, a leading industry association for professional detailing operators, suppliers and consultants to the industry IDA)

Equipment • • • • • •

Pressure Washer Hot Water Extractor Dry vapor Steamer Rotary Polisher D/A Polishers of various sizes Wet/Dry Cacuum Cleaners

Chemicals • • • • • • • • •

APC Car Wash Soap Wheel Cleaner Tire Dressing Polishes & Compounds for paint correction Waxes, Sealants & Coatings for paint protection Leather cleaner and conditioner Glass cleaner Interior cleaner

Training Resources List www.rightlook.com/ www.1car-detailing-training.com/index.php www.thetotalpros.com/ www.dealergoodies.com/page298.html www.detailingbliss.com/forum/detailers-domain/33089-dual-action-paint-correction-classes-detailers.htm www.chemicalguys.com/category_s/176.htm www.autodetailtraining.com/training-programs-available/ www.jetstreamproducts.com/aircraftdetailingcourse.html www.detailingsuccess.com/ www.carproducts.biz/buffing_school_2.html www.autogeek.net/detailing-boot-camp.html https://aspdn-02.onstreammedia.com/palmbeachmotoring/ www.detailking.com/auto-reconditioning.html www.showcardetailing.com/ www.meguiarsonline.com/forums/showthread. php?51768-Detailing-Class-Information http://esotericdetail.com/training/ http://m.detailplus.com/ www.recontechsinc.com/training.html


BIG BANG THEORIES FOR THE SELF SERVE OPERATOR The Finishing Touches Now that the parts of the puzzle are complete, try to put them all together. The number of items desired, the actual placement of those items and the spacing between them will comprise the utilization of space. Development, innovation and changes in equipment can provide for new approaches to store design and space relationships. Here are some recent advances in store layout: • The size of laundries has for years been referred to in amount of square feet or number of washers and dryers, but another common size measurement is the number of pounds the store is capable of washing per day or per hour. Of course, large capacity washers allow more volume to be washed in less space. Likewise, stacked dryers provide more revenue in less space. • The greatest bottlenecks in stores occur near the dryers. Most stores have enough washers. Because drying takes longer than washing, a bottleneck (or backup), is often created by the dryers. If adding washers, especially large capacity washers, consider expanding the dryer capacity of the store as well. • As the flow in aisles is important for customer convenience, so is the overall workflow that is created by the store’s layout. Be sure there is a good flow from washers to dryers to folding tables. Newer folding tables take advantage of space utilization techniques by providing shelves, which can increase folding capacity by 30–40 percent. Each store will have different layout and design requirements that are based on equipment mix, the services provided and the customer makeup. The actual size and shape of the store should be determined only after all the data has been collected that helps determine the pounds of wash the market demands. Fully analyze the situation before going to the drawing board. When ready, make full use of the space by employing the techniques discussed. Given the choice of a free market, cleaner, safer and better-maintained stores, a good layout and design can make the all-important difference between a customer choosing and using the store over a competitor’s store. The Importance of a Distributor Choosing a distributor is one of the most important decisions a laundry owner will make. Over the years, the distributor has evolved into an integral part of the success not only of the manufacturer (by selling equipment) but also of the store owner (by selling knowledge, support, financing, service, design, demographics, marketing and equipment). Laundry equipment is not a product that can be taken out of a box, plugged in and used. The equipment needs to be taken off a truck (some products weigh thousands of pounds), rigged into the store, set in place, bolted down and hooked up correctly. To do this properly, requires a professional. Most equipment failures and problems stem from an improper installation. Machines improperly installed typically have premature bearing failures, vibration problems and drain problems. The money saved by buying direct is typically surpassed by costs in repairs and per-

haps premature replacement. Before purchasing a product, here are a few services the distributor should provide: 1. Examine the store’s specific needs and recommend the right products to achieve the owner’s goals. 2. Check on new construction regularly to ensure that all stages of the build-out go as planned. 3. Check installation parameters. Will the equipment fit through the door? Is the right flooring in place to support the equipment? Does the store have the right utilities? Does the equipment fit into the space properly? 4. Check delivery times from the manufacturer. 5. Recommend the right manufacturer for the store’s needs. 6. Answer all questions about the products being purchased, including why a specific product is recommended and how it compares with the competition. Another reason to consult a professional is to gain information from his/her experiences. This experience with products makes the distributor’s professional opinion a valuable component of the decision-making process. Most people have made a purchase they later regretted. Another professional’s opinion can help mitigate that feeling of buyer’s remorse. Once the order is placed with the distributor, the work really begins. Here are some of the distributor’s responsibilities: 1. Ordering the proper equipment with the right voltage and specifications from the manufacturer. 2. Coordinating the sale with a finance company, if financing is desired. 3. Tracking the order with the manufacturer. 4. Accepting the product either at the warehouse or at the job site; meeting the truck and taking the product off the truck; rigging it into the store and setting it in place. 5. If contracted, bringing the proper utilities to the machine; bolting it down, if necessary, and checking the start-up. 6. Training owners on proper use of the product and any preventative maintenance procedures they might have to perform; providing a maintenance schedule. 7. Providing service when needed, including warranty service as negotiated when the product was purchased. 8. Providing warranty parts through the manufacturer. What to Look for in a Distributor When selecting a new supplier, use prudence, especially if the store owner is new to the business. Check references with the Better Business Bureau, banks, credit bureaus or Dunn & Bradstreet. Distributors who are members of the Coin Laundry Association (CLA) are among the most reputable and best qualified to provide assistance. When selecting a distributor, look for the following qualities found in many credible businesses (inside the industry and out), which can help make the decisions that will benefit the most. The distributor should be able to demonstrate the following criteria:

• Offers honesty, integrity and credibility in addition to prompt and professional service • Attends industry activities and absorbs as much information as possible • Seeks ways to deliver high-quality service to customers, including the utilization of excellent and experienced installation crews • Offers reasonable financial assistance programs • Helps make decisions that are good for the business • Treats owner’s investment as if it were his/her own • Provides regular service training programs on equipment • Does not speak negatively about competitors or their products • Maintains an ample supply of parts with rapid delivery • Furnishes floor plans, equipment costs, pro formas and holds in-person meetings with construction people as part of the full service • Has superior knowledge of the industry and the products they represent • Possesses demographic knowledge and interpretive capabilities. Local distributors are a valuable link to the industry. They attend local and national trade shows to learn more about the industry. They network with other distributors and pass along the information to their customers. They participate in trade associations like the Coin Laundry Association to continue their education and to give back to the industry. The relationship with the distributor should be a working partnership for the future. Choosing the right distributor can impact the store’s financial future; determine how much that investment is worth. No matter what the purchase, price is only one part of value. Research distributors to find the one who illustrates the “value” in what he/she offers. Not all distributors are of the same quality. Interview them all in the trading area to find one who fits the descriptions above — and it becomes evident that price is not everything. Developing a relationship with the local distributor should result in a long-term collaboration that will enable the store to be even more successful. Financing There are many options out there for veterans and newcomers to the industry. Financing for a brand-new laundry is considered by banks as venture capital, which is a market in which they are not typically involved. Being regulated by the government, most banks are precluded from using bank funds for start-up businesses‚ unless they have 100 percent collateral outside of that business. For owners who are building an additional store, such as a second or third laundry, this loan would no longer be considered a start-up. It would often be referred to as an expansion and banks have more leeway in this case. To facilitate the sale of laundries for their customers, many manufacturers offer inhouse finance programs. Just as automobile dealers do, the manufacturers of laundry equipment pro{continued } • SPRING 2016 •

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BIG BANG THEORIES FOR THE SELF SERVE OPERATOR vide financing as a means to sell equipment. Having control of their own funds allows this “captive” finance company to look beyond the start-up nature of the financing and be able to finance qualified individuals for the right location. There are also several independent finance companies that specialize in the laundry business and can provide financing for start-up businesses. Financing for a new laundry can be in the form of traditional financing or equipment leasing. As there is a substantial amount of equipment in a laundry, it lends itself to leasing companies that can get around the nature of a start-up business by using the equipment as collateral. However, be wary of traditional leasing similar to leasing a car when a large amount of money is due at the end of the lease to purchase the car; or in some cases it is left open for the leasing company to determine the amount. This is too risky. Consider a “finance lease” where the purchase option at the end of the lease is minimal or “one dollar” and it is in writing upfront. Although it does not always seem to be, financing for start-up laundries (or any other business) is typically more expensive than traditional bank financing. As secondary sources of money, leasing companies and captive finance companies purchase their money from banks and other sources and turn around and lend it to consumers at a higher rate. Because of the risky nature of start-up businesses, they also have to build in a “reserve” for possible bad debts. The monthly payment is the key factor in the cash flow of any business. In the laundry business it is paramount. A good location can be successful or fail over two items, rent (or mortgage) and the note payment. The vend price charged is pretty much determined by the local market conditions (or what the market will bear) and the expenses of a laundry are mostly fixed; the only variables become the rent and the note. When examining a new laundry location, always put the equipment mix at the real vend prices and the actual expenses and rent into a spreadsheet including the note payment. Then there is the entire subject of fixed-rate financing vs. floating. As in home mortgages, floating rates are always lower upfront, but can rise with prime rate fluctuations. Most accountants will arrange for borrowing short term at floating, but long term at fixed; however, this is your choice. Fixed-rate financing is a guaranteed monthly payment for the entire length of the loan, and with this type of financing there can be no surprises no matter what happens to the economy. Most lenders prefer floating as it protects them, not the consumer. Banks typically borrow their money floating, so they charge more for fixed as they do not want to take a gamble. Ask any lender what their floating and fixed rates are; the fixed will always be higher. Assuming that the location qualifies with the lender, the owner will need to provide information and be willing to invest money of his or her own. Typically the bank or lending institution would like to see an investment of 20 to 30 percent of the entire project. The project will include equipment,

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• SPRING 2016 •

installation and leasehold improvements. Plus, the owner should additional funds for start-up costs such as utility deposits, initial advertising campaigns and a reserve, which will carry the owner until the break-even point is reached. That means the bank or lending institution is investing up to 80 percent of the cost of the business and has more money invested than the owner does. To process an application, the lending source will usually need the following items: • Credit application signed to authorize a credit investigation • Bank verification forms as proof of funds to be invested • Personal financial statement • Last two years personal tax returns • Details of anything that might show up on the credit report • Location analysis including a demographic study • Cash flow forecast or pro forma • Signed sales agreement • Any business financial statements for full or part ownership The bank will need all of the above, plus other information that is required by their bank policy. Then they will need some time to verify the information and go to their credit committee. Typically this could take five to seven business days, but varies from lender to lender. What usually takes the most time is to get back the bank verification forms from the bank. To speed up the process, take the forms into the bank and wait while the loan officer fills them out. For financing of replacement business, the process is much easier and faster. More lenders will finance expansions or replacement equipment at lower rates. Some do not understand the nature of a cash-based business‚ and will require a business financial statement and proof of cash flow that will be adequate to repay the loan. Shopping for financing is the same as shopping for a distributor. The owner must feel comfortable enough with the lender so that they will enjoy a

long-term relationship. Over the course of five to seven years many things can happen. Will the lender be a good partner or “fit” for the business? Does the lender understand the long-term goals and can the lender grow with the business? Does the lender understand the business and can it be an asset to the future plans? Prospective owners should interview

the lender as the lender interviews them. All of the above information was provided by the Coin Laundry Association. Many thanks to the CLA for providing it to SSCWN!

#3

BiG BANG THEORY

Quick Lube AT A GLANCE

Cost to get started: $$$$ Expected monthly revenues: $50,000 Estimated number of quick oil change stations in the United States: 10,000

Quick lubes are the polar opposite of the previously covered laundromats: They’re management intensive, require lots of employee juggling, and need a very “hands on” approach. Of interest to many self serve operators may be the franchise opportunity that is heavily present in the quick lube industry. The quick lube presents high potential revenues but requires the most work and investment.

Bryan White, Executive Director, AOCA

Tell me a little bit about your annual expo, iFlex, which is going on in Nashville, May 9-11. This year we’re co-locating the iFlex show with the ICA’s show. Really, the impetus for that was that they’re so complimentary to one another; there are a lot of car wash owners who have quick lubes and vice versa. A lot of crossover membership. So it made sense for us from an attendee standpoint and also an exhibitor one to co-locate these events. It’s a lot of the same vendors and operators. Even operators who are not in carwash -- or even carwashers who aren’t into quick lube -- well, they may want to get into that at some point in time because they’re so complimentary. So it made sense to have them all together.

What’s the size of the AOCA’s involvement there? Altogether, the whole show this year will have its numbers combined. So, the Western Carwash Association, the International Carwash Association and now also the AOCA. We’re anticipating 6,500 at{continued }


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BIG BANG THEORIES FOR THE SELF SERVE OPERATOR tendees, and about 370+ exhibitors. The quick lube side of that is probably about a third. So how does the quick lube industry look in 2016? How did it handle the ups and downs of the last ten years? Obviously, a lot of the quick lubes struggled during the recession. During many of those years, a lot of the quick lubes had to change their business model. They had to diversify and offer a lot of add-on services. It was a little departure from the “quick” side of quick lube. But at the end of the day, you had to do some of the ancillary services -- the margins were higher. The oil change itself might get them in the door, but during the recession they had to go to a more full service model. The downside was that for some customers, the value wasn’t there. Or at least the value they had come to expect and that they were looking for. Many of those same operators who wonder why the customer car counts are down are probably not realizing how many customers were after that “quick” oil change service. But I would say that the operators who remained true to the fast oil change service, well, they’ve probably grown in volumes and profits since 2007 and at a pretty steady pace, I think. At the end of the day, customers are still willing to pay for convenience. It gives them back the time they need in their busy day. So, for stores who kept their focus on a fast service and maintaining their car counts, well, their revenues have been up over the years. I would say that the net physical store growth has slowed a bit over the past couple years. Part of that is due to consolidation; many of the large owner/operators became consolidators. Those owners that remain successful are now buying up their one-time competitors and updating the business model. Did more customers start doing their own oil changes? Obviously, some people started doing oil changes at home, although I don’t have any raw data on that. But most of it was probably the extended drain intervals. These oils are advancing, and now you don’t necessarily have to come in every 3,000 miles. A lot of customers are going 5,000 or even 6,000 miles. Those extended drain intervals have really affected the marketplace. The technology gets better and now they’re bringing their cars in less often, which obviously affects the car counts. There are new stores being built in the marketplace, of course, but there are just so many acquisition opportunities out there so the growth dynamic has changed a little bit. That may change in the next couple years -- it came from that 2008 period when business got tough and the operators that fought their way through it and came up to the top by maintaining their car counts were able to acquire those smaller shops that couldn’t make it. So now we’re in that consolidation period, but at some point and time, that will cycle through and we’ll be in a new growth pattern. It just ebbs and flows and goes up and down with time. So what sets those operators apart --

80 • SPRING 2016 •

the ones who are able to fight through a recession? I would say the big thing for a successful quick lube really comes down to customer service. You make your money out of high ticket averages, controlling expenses and providing a high level customer service that attracts loyal customers. Quick lubes don’t necessarily have the attraction rate of a car wash. The typical quick lube capture -- I think the stat is like .12 percent of highway traffic. An oil change is more of a planned purchase, while a carwash is typically an impulse. So enhancing that customer value and working the marketing plan, too, are crucial to their success. Has the quick lube industry embraced social media over the last few years? We’re starting to; it’s maybe a little slow as compared to other industries. But they realize the importance of it now and most of them are doing something. The AOCA actually just partnered with a company: Piston Marketing. They’re a strategic partner of ours now, and they provide marketing and consulting services -- like social media management, search engine optimization, couponing -- anything marketing related. And if you’re an AOCA member you’ll get a discount on any of their services. We as an association have recognized the importance of social media and we’re trying to give our members tools and discounts to help them improve their businesses. What are some of the bare minimums for location building, equipment, staff, etc.? I would actually refer to National Oil & Lube News magazine. They run a survey every year that’s pretty helpful, the Fast Lube Operator Survey. (Chart below.) (Editor’s Note: The responses for the 2015 Fast Lube Operator Survey account for 3,282 facilities and include fast lubes operating in all 50 states.) Basically, what they’re finding is that locations in high traffic trade areas where other business is be-

ing done, then the land and building for a quick lube ranges from $850,000 to $1.3 million. Equipment, on average, is $81,493. Average revenue is $694,189. About how many quick lubes are there in the United States? There’s probably a little bit less than 10,000 locations. We have 500 AOCA members, and they represent 3,500 locations. So obviously a lot of these operators own multiple locations. Tell me a little bit about the franchising vs. independent ownership opportunities in the industry and the advantages and disadvantages presented there. That’s quite different from what we know in the carwash industry. The franchise model probably includes some of the largest owner/operators in the industry. As with many industries, not just quick lubes, but there are business people who prefer to be independent and develop and operate their own businesses -- and then there is that other group that chooses to averse their risk by choosing a franchise model that’s been a proven success. With a lot of the franchises, the operating model and the brand are already implemented. If you’re a new operator and you tap into a franchise model, then you could potentially grow your business further and faster because you have those resources. But at the end of the day, there’s success on either path. A lot of it will actually just come down to how much experience the business person has -that technical oil change is also critical, but it’s not the only knowledge necessary. The principal understanding of consumer interaction and customer service, of developing and managing a team, and the elements of marketing -- I mean, if you’re operating a franchise or if you’re an independent, those are the skills that matter. Do you know about how many locations are {continued }


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BIG BANG THEORIES FOR THE SELF SERVE OPERATOR

franchised? Well, National Oil Lube News does a survey every year of the largest fast lube chains out there and based on their numbers, I think we could estimate that there’s about 2,900 or 3,000 franchised locations. A lot of these franchisors -- like the Valvolines and the Oil Changes -- they might have 600 or so franchised sites, but they might also have 300 independently owned stores. Some of these models are a little mixed; they might not be an actual franchise, but they’re branded that way. So what are some of the advantages of an AOCA membership? How has the Association grown over the last few years? We’re dedicated to providing members with business tools, resources, and education to help them run their businesses. From an Association standpoint, our membership has remained pretty steady. We are getting new members - but because of that consolidation that we talked about, it’s leveled out. We operate on that company membership dynamic. I think another advantage we provide is the opportunity to network with operators, whether at iFlex or just through the Association, who have been through the same challenges. That’s important. We also provide technical updates, training sessions, technician training online -- a lot of different educational resources. We also have a large foothold in government affairs. We have a policy advisor on retainer who works on everything from federal, state, and even local level to look out for the best interest of our operator members. How involved are you with politics? We’re not to the point where we have a Political Action Committee, but we’re pretty involved. We’re not soliciting funds from the membership for this -- we simply take a portion of the fund from our membership revenue each year, a pretty large portion actually, and it goes strictly to government affairs activities. It might be legislation that affects employment -- anything that would negatively affect the quick lube operator, we would fight on the behalf of. We basically without having a PAC, we don’t have a lobbyist on staff -- we just have an advisor. But there’s very common issues across the board, so we might enter into different coalitions -- say with the Car Care Council or something like that and try to pull our resources together with other Associations

so that we have a bigger voice. But our Advisor keeps her eye on these things that are going on in the industry and making recommendations as far as how we should allocate our dollars and our resources.

#4

BiG BANG THEORY

Detailing AT A GLANCE

Cost to get started: $ Expected monthly revenues: $5,000-$15,000 Industry resources and Associations: International Detailing Association, www.the-ida.com, Auto Detailing News, www.autodetailingnews.com, Editor Debra Gorgos debrag@autodetailingnews.com

The easiest profit center to add onto an existing self serve business is detailing, which requires minimal equipment and additional space. Detailing does require a dedicated employee presence and management, but if managed correctly offers the opportunity for a high profit margin.

Dave Meusky,

House of Wax Touchfree Car Wash and Detail Shop, Orange, MA Tell me how you got started with the pet wash. We bought an existing car wash that had been run down. We bought it at a Sheriff’s sale, actually. The owner had investe In your experience, what are some of the synergies between self serve carwashing and detailing? These are the synergies: They directly compliment each other. The car wash is the first step in the exterior detailing process. The self service bay is where the process begins. A great self service wash is where a great detail takes shape. Self serve customers also often need detail services so there is some crossing over of customers between the two businesses. How much space would the self serve operator need to create a detailing service? Any suggestions for those who might consider renovating an underperforming SS bay? You need ample space for 2 cars at a time plus tools,

equipment and supplies. You need room for a washer and dryer and shelves for your towels. My detail shop is 40’ x 30’ with room for 4 cars at once. What sort of profit/volumes can self serve operators expect when they add detailing services? It depends how you market and perform and how you are staffed. During peak seasons for detailing, we can perform 4 full service details per day. On slower days we detail one car or two. Are there any unique marketing or advertising needs for a detailing business as opposed to those the self serve operator might be familiar with? What about social media? Social media is okay, but my favorites are the restaurant placemats and local newspaper ads. I just bought some custom printed t-shirts with our name on them so I guess we’ll see how that works! Considering operator personality, what sort of owner types do well with detailing? What are some common traits that successful detailers share? Industry leaders like Bud Abraham, Ron Holum and Robert Roman will tell you that detailing is all about the numbers and they are right. Things like cost of goods sold must be continually analyzed because as costs go up, a detailer must adjust pricing to stay healthy and to thrive in the marketplace. The detail manager is a people person who is an expert at understanding and meeting a customer’s needs and expectations. A detail manager must possess expertise at closing the sale. A good detail shop delivers more than its promise to the customer and handles complaints properly and in a way that wows the customer and strengthens the relationship with that customer. A detail manager is friendly and kind but also firm ( with employees as needed and customers as needed). What makes the detail operation successful? Size? Location? Volume? Pricing? Quality of workmanship is really the key. That and a price point that is affordable for the customer, yet reflects the hard work and expertise that goes into every detail job.

• SPRING 2016 •

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Darwin Carwash at the

Yo, Darwins! If you’re going to commit an armed robbery at a carwash, we’d suggest doing it outside of Texas. Otherwise, you’re liable to find yourself staring down the barrel of a gun… That’s exactly what happened when a Dallas car wash owner shot an armed man who was trying to rob one of his customers. According to The Dallas Morning News: Around 5:30 a.m., the owner of a car wash in the 1600 block of South Belt Line Road saw three men point guns at a customer and demand money. The owner, who has not been publicly identified, went outside with a gun to confront the men, police said. When the men turned toward the owner, he fired at them, and they fled in a silver vehicle. Around 7 a.m., a man went to Methodist Charlton Medical Center with a gunshot wound. Police said the man told detectives that he was involved in the robbery at the car wash. The man will be charged later today, police said. This poor woman was absolutely shocked when she came face to face with...well, a face at Super Car Wash in Livingston,MT,two years ago,and now she’s seeking compensation from the parties she believes are responsible. According to news reports, the face was left on the carwash floor after a truck driver hit and killed an elderly man on a rural road and another vehicle “unwittingly” ran over the body some time after the accident. The second vehicle later went to the carwash where the owner, Wyran Young, unknowingly washed off the face, and Kimberly Kreig was the customer who eventually discovered -- and immediately reported -- the face. Kreig is now suing the truck driver’s employer for her medical expenses, lost income, negligence and emotional distress. According to Kreig, after reporting her discovery, police “treated (her) as a criminal suspect” by having her car impounded, demanding a blood sample and holding her for several hours. Young maintained she thought she had hit a pile of clothing and not a dead body - and all charges against her were dropped. The truck driver was given a six-year suspended sentence for knowingly being involved in an accident of a deceased person or another person in October 2014.

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This story is pretty frightening for anyone driving a car with a built-in GPS system...and maybe a good argument for choosing a clean, safe, and secure self serve carwash where you won’t have to hand over the keys. A woman in Melbourne, Australia, described how thieves stole her vehicle from a drop-andshop car wash and used her vehicle’s GPS to find her home and attempt a break-in there. The woman’s account of the story on Facebook has already been shared 3,000 times. “I went to pick up my car about an hour-anda-half after I’d dropped it off and the gentleman there said, ‘oh, it’s already been picked up’,” she told 774 ABC Melbourne. “I thought it was a joke for the first 30 seconds.” She said the car wash attendant told her that the man who collected the vehicle knew Ms Kozbanis’s name and mobile phone number. “I said, ‘no-one even knew I was coming to drop my car off here, not even my husband, you’ve just given my car away — now what?’,” she said. “He just didn’t really seem to know what to do about it.” According to the report, Kozbani believes the thieves used her car’s GPS to locate her home and went immediately there and used the remote garage opener to access a back door which they started “banging” on. Kozbani’s two daughters, aged 11 and 14, were inside and alone. They hid upstairs. “My daughter was trying to call me to tell me that they were banging down the door, but I was on the phone with the police,” Kozbani told the news station. The girls were able to get ahold of Kozbani’s husband who called local authorities. He arrived at the house shortly before police and the thieves had left by then. Kozbanis said the police have told her they would probably return to try again at a later date. Identifying paperwork for her business was also in the car. “Obviously we’ve had our locks changed, but there’s always that worry,” she said. The Chadstone car wash where the theft occurred is one of more than 60 operated by Star Car Wash nationwide. Star Car Wash chief financial officer Kevin Gordon said the incident was the first of its kind for the business. {continued }

Canadian Darwins are a different breed, that’s for sure. I’ll bet these goofballs are really, really sorry after they were caught cleaning a stolen truck at a Hamilton, Canada, car wash. According to The Hamilton Spectator, “Police nabbed a trio of alleged truck thieves after they pulled into a south Mountain car wash to gussy up the stolen ride. Officers blocked the GMC pickup as the driver was exiting the car wash bay at the Upper Gage Avenue and Stone Church Road East gas station just after 6 p.m. Tuesday. Two female passengers in the truck were arrested. But the male driver tried to get back into the truck and struggled with officers, who managed to control him, police said. Police have charged three people in connection with the alleged truck robbery.”


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Darwin Carwash at the

He said the business’s head office had only been made aware of the theft this week when Kozbanis posted on its Facebook page. “We are now doing everything we need to do as a company to resolve this satisfactorily.” Darwins of the world -- or maybe just the ones in Florida -- please consider your clothing choices before embarking on a crime spree. A tank top with #TURNT on it? Really? Has the pajama bandit taught us nothing?! Employees at Rising Tide Car Wash confronted a thief after they noticed he was going through their cars, according to a report by WPLG Local 10 News. The victims were able to get some of their belongings back from the thief, including cash and a wallet, before the suspect fled the scene. Surveillance videos captured the thief inside a nearby convenience store before the burglary, and leaving the car of one of the victims and placing the stolen items into his pockets. Detectives describe the thief as a stocky-framed man in his 20s with short, brown hair, brown goatee and a large tattoo on his left arm. The thief was last seen wearing a black tank top with a green design of the phrase “#TURNT” on the front, baggy black shorts and a black baseball-style cap. The only word for this story: Ugh. And because it is so rich in detail, here it is in full from Aimee Green of The Oregonian: The Oregon Court of Appeals has upheld a $439,000 jury award to a bicyclist who rode onto the wet pavement of a Northeast Portland car wash, then slid and broke his hip. The appeals court on Wednesday ruled that despite the Washman car wash’s arguments, the cyclist wasn’t trespassing and the business had a duty to keep its pavement safe. John R. Currier was injured near the car wash exit, which was covered in water and soapy drippings, on Aug. 6, 2011. It was mid-afternoon, and Currier was in the bike lane when a car pulling out of the car wash stopped and blocked the bike lane and the sidewalk -- prompting Currier to ride up behind the car onto Washman’s property, which is located along Northeast Martin Luther King Jr. Boulevard and Weidler Street in the Lloyd District. Currier said he recognized that the concrete pavement was damp but proceeded because he’d safely pedaled across damp pavement before and didn’t think it’d be dangerous, according to the appeals court summary of the case. He said he chose not to veer in front of the exiting car because traf-

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One cries because one is sad. I cry because others are stupid, and that makes me sad. fic was heavy and he didn’t want to get hit. “(Washman) admitted to knowing that the area of the car wash property where plaintiff fell “was the most slippery portion of the car wash,” the appeals court summary states. “There were no posted signs that warned others about the slippery surface. Defendant also knew that traffic on Northeast Weidler Street was often so heavy that customers leaving the car wash property had difficulty turning onto the street, and would stop on the sidewalk and the bicycle lane.” Washman also was aware that walkers and cyclists would cross onto its property to get around car-wash customers who blocked the bike lane and sidewalk, the summary states. The appeals court found that Currier’s attorney, Derek Ashton, also presented evidence during trial showing that it was “community custom” for cyclists and walkers to cross the parking lots and driveways of businesses -- and to assume they were allowed to do so. Currier fractured not only his left hip, but sustained a deep cut to one of his elbows. Both injuries required surgery. Washman’s attorney argued that Multnomah County Circuit Judge Christopher Marshall should have dismissed the case in summer 2013 before it could go to jury because Currier hadn’t presented evidence that would lead a jury to determine Currier had a right to be on Washman’s property. The judge refused. After five days of trial, jurors found that Washman was 70 percent at fault and Currier was 30 percent. The jury concluded that Dorothy N. Williams, who was driving the car that blocked the bike lane and sidewalk, didn’t do anything wrong. Jurors determined that Currier racked up about $52,000 in medical costs, and would likely incur another $75,000 in expenses. The jury also determined his pain and suffering was worth another $500,000. He was awarded 70 percent of the total, which came to about $439,000.

To be caught on the surveillance camera of one business, fine ... but two? These lovely Darwinettes were captured by surveillance cameras at an Oklahoma City car wash as they approached a customer washing his car, and then shortly after they showed up at a local Walmart and used the stolen credit cards. According to the report by KOCO, the victim was “washing his car when he noticed a maroon Buick park near the vacuums. The victim said the two women approached him; one woman came up behind him and held something to his back, while the other went through his pockets. At some point during this incident, a male who was with the two females, walked up and was part of the robbery. Police are hoping someone in the community can identify the two women shown in the photos, who managed to pocket $300, as well as the man’s credit cards and identification.


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