Publication of the Southwest Car Wash Association
Fourth Quarter 2018
2019 CONVENTION & EXPO FEBRUARY 24â€“26, 2019 PRELIMINARY SCHEDULE INSIDE Re g istration & P ro g ram - www.swcar was h .org
WELCOME to the 2019 Convention & Car Wash EXPO More than 40 Colorado car wash owners and suppliers edition of the ADVANTAGE. recently gathered at Cinzetti's Italian Restaurant in Denver Our theme – Better Together for dinner and the annual SCWA Colorado member meeting. - is a true reflection of SCWA. In SCWA Executive Director, Chuck Space, highlighted all fact this concept is the foundation the activities and program planned for the 2019 SCWA and driving force for SCWA. I Convention & Car Wash EXPO —February 24–26, 2019. learned a long time ago in my car He announced Dana Perino, FOX News host and former wash business that I can profit Press Secretary to President Bush will be the keynote and learn from the experiences Tyler Furney speaker. The SCWA event continues to grow and attract of others. When I combine my SCWA President attendees from all areas of the country. To emphasize the ideas and solutions and questions growth, Space said the first registration for the event this together with other successful car washers – everyone year was from Dubai. wins and becomes a better operator. Space also announced the SCWA August 2019 Car The pace of the past year in the car wash industry has Wash Tour will be in Denver. been moving fast and in many new directions. The challenge The meeting program focused on the legislative and to keep up is ever increasing. When we are open to working regulatory issues facing car wash operators in Colorado. together and enjoying all the resources of SCWA – we can take our business to the next level. This is the focus of 2019 EXPERIENCE SCWA. SCWA continues to deliver – • World Class EXPO showcasing over 300 booths of the latest in equipment, products and services. • Targeted – premier educations sessions impacting all levels of your business. Forget where you are going…HOW will you get there!? • Keynote speakers that will inspire you for years to come. I have interviewed more than 12,000 people with a • Industry innovations; business solutions in friendly median age of 25 and one thing remains constant; everyForget where you are going…HOW will you get there!? open discussions. one dreams of some grand, life achievement, but few people • Unparalleled hospitality including the famous map out their actions to achieve those dreams. In my SCWA EXPERIENCE. I have interviewed more than 12,000topeople median many inquisitive moments unearthwith whya people doage not of 25 an As small business owners we know you are busy – so take action to achieve theirofdreams, I am stunned by the thing remains constant; everyone dreams some grand, life achievement, bu taking time from your business is a challenge. However types of replies I get: the live meetings like EXPERIENCE SCWApeople might be justout their “It’s map actions totoachieve thosefailing”…”I’m dreams. In my inquisitive scary think about not many sure how what you need to uncover new ways to grow your business. to dodo that”…”My (relative) taught how to”…”I to unearth why people not take action to never achieve theirmedreams, I am stunne So often car wash operators from other areas and regions can’t afford a formal education”… of replies I get: For all of these reasons (and more!), the Car Wash can become valuable resources for developingtypes best practices. Together we can help each other uncover new ideas and Industry is primed to solve how more people can achieve discover inspiration when get to know each other. From “It’s scarytheir to think about notcontributors sure how to that”…”My ( dreams andfailing”…”I’m become greater todo society. the opening CEO Forum to the FIRST CAR WASH SHOW industry is incredibly complex andatakes some of the neverThis taught me how to”…”I can’t afford formal education”… OF THE YEAR to the Quick Talks and Idea Exchanges we most sophisticated people to run it. There is a gross under can all become Better Together. I promise you the return appreciation of what it takes to be successful in this industry all of these reasons (and more!), the Car Wash Industry is primed t on your investment will be compounded many timesFor over. and an equally gross under appreciation of the education One of my “not to miss” sessions will be the more keynote how people it can dreams and become greater contributors canachieve provide their for people to become successful by. This is speaker, Dana Perino. Dana is the well known host of not a statement of pride, but one of serious intent. We are part This industry is incredibly complex and takes some of the most sophisticated p Daily Briefing on the FOX News network and is also the of an industry that can revolutionize how people contribute former Press Secretary to President George W. runBush. it. There is a gross appreciation of what it takes to be successful in more under successfully to their communities. I encourage you to come experience the power of the So…what is LWF anyway? industry and an equally gross under appreciation of the education it can provid car wash community at the SCWA Convention & EXPO, LWF is a program based on influential actions that to become successful by. This is not aThe statement pride, but February 24-26, 2019 and we will trulypeople be BETTER result in positive outcomes. Car WashofIndustry is aone of s TOGETHER. of several other industries, chock-full of people intent. We are part compilation of an industry that can revolutionize how people contribute Wishing everyone Happy a Successful 2019. that are driven and skilled in many facets. successfully to their communities. 3
SCWA Colorado Members Meeting
So…what is LWF anyway?
ADVANTAGE When a skill is taught to a person, that skill is not left at work; it leaves with the person. That person will apply that skill at work, but more impressively; ANYWHERE they go! They take the skill home, to their family, to the grocery store clerk, to the kid playing pick-up basketball, to the bank teller, to the educator and so many more! Think about what this industry has taught you. Think about what you must understand to be successful in this industry. Now, sit back and think about what type of impact we can deliver to make a more positive impact on ENTIRE communities…it’s nearly endless! We are constantly engaged in an environment involving a multitude of people, other businesses, development projects, government affairs, chemistry, endless trades, management, leadership, training, testing, solving, and do it all with an incredibly important asset to just about anybody (vehicles)! We are a couple months away from the 2019 SCWA EXPO in Arlington, TX and the deadline for LWF Nominations is 1/15/19. I know that you have witnessed an act of LWF and perhaps even use it as a story to others. Take the time to nominate that person at the SCWA website (www.swcarwash.org) and help to be part of what takes our industry to another level. I look forward to seeing you in Arlington! Justin Salisbury Regional Operations Manager Breeze Thru Car Wash
MARKETING Interior Signage - Inform, Entertain, Brand, and Generate Sales
A large part of improving the on-location marketing for your car wash is the exterior signs, lights, and menus — the ones that draw customers’ attention from the street and get them to come get their car washed. One area that can easily be forgotten when it comes to marketing and signage is the car wash interior. Adding signs, arches, or fixtures to the inside of a car wash has several benefits that will continue to increase the return on your investment, get customers excited about entering your car wash, and turn your new customers into returning ones. Interior car wash signs come in the form of specialty arches, colorful tunnel fixtures, and customized signs, among many other items. Here are the four main reasons you should consider adding interior signs to your car wash.
INFORM THE CUSTOMER
Signs and menus outside of the car wash inform the customer of all of the available packages, offers, and pricing details. Interior signs are similar in that they tell the customer what they are getting, as it’s happening, and
what’s coming up. Customers like to know that they are getting all of the items in the car wash package they purchased, so it’s nice for them to be able to see a sign light up that says, “Soap” or “Finishing Wax” as they are rolling through the wash. Interior signs also include specialty arches — maybe the arch has a product name on it such as, “Citrus Clear Coat” or “Spot Free Rinse,” so customers know when they roll under the arch, they are getting that specific product applied to their vehicle. Similar arches also have colorful lights that really highlight the product as it’s being applied to the vehicle, which is entertaining (more on that, later). There are also tunnel fixtures with product names on them that light up, or even a digital countdown timer to let customers know how much longer they’ll be in the car wash. The sky’s the limit when it comes to creative interior fixtures. These signs come in many different forms, and while they may be a large upfront investment, they’ll be a great long-term marketing fixture. The chances are you won’t have to change them unless you decided to make major changes to the car wash. Interior signage can inform customers what phase of the car wash they’re in, but perhaps it can also tell them what they’re not getting (i.e., what they need to buy for their next car wash). For example, say someone buys a basic wash package and as they are going through the car wash, they see signs for a tire scrub, or windshield bug remover — things they
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ADVANTAGE might need. They’ll keep that in mind the next time they pull up to purchase a wash package. Interior signs can inform the customer just like exterior signs do. These additional signs will continue to educate the customer, but will also create a memorable experience for them.
CREATE AN EXPERIENCE
It’s easy to forget that getting a car wash is an experience for everyone involved. Car washes are practical, fun, and, if you’re always running errands with kids in the car, a car wash with unique lights, visuals, and even sounds can make it an experience worth attending time and time again. Especially lately, customers have a certain expectation when they pay for a car wash. They expect to see lighting and signs, colorful products, and depending on the price points of your car wash, you want to exceed their expectations. Adding interior signs to your car wash is a big part of the unique experience you’re offering your customers — these can be specialty arches or vertical fixtures. Not only will these signs inform your customer (as mentioned above), but they can create a memorable experience for them, too. Does your car wash have a specific theme? Maybe you’ve got a rock n’ roll vibe or a Las Vegas casino look going; interior signs can really add to your theme and improve the overall experience. Colorful lights around signs and on arches not only look cool, but they also light
up the product, which gives customers assurance that they’re getting what they paid for. Of course, a clean vehicle is the overall goal of a car wash, but the experience will also leave a lasting memory for your customer. That is what’s going to keep them coming back, but they’ve got to remember where they’re going — which brings us to branding.
SOLIDIFY YOUR BRAND
Using internal car wash signage and fixtures allows you to solidify your brand. Surprisingly, many businesses’ problems — even in the car wash industry — can be solved with better signage. Think about it: outdoor signs help customers find you, nametags introduce employees without saying a word, and internal signs help customers remember who they are doing business with. The signage you place inside your car wash can add another layer to your branding. Consistency is important in branding and marketing, so making sure your internal signs reflect your brand’s colors, logo, and voice is important. Paying attention to even the smallest of details will show customers you take this business seriously, and show them that you’ve created a seamless brand experience. Consider big brands in other industries, such as CocaCola. You can probably picture their iconic logo at just the mention of the name. If you go to their website, it’s going
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ADVANTAGE to have the same font, colors, and logo that you’ve seen on soda cans, two-liters, and merchandise. If you went to the headquarters, it’s likely to be decked out in those same elements because Coca-Cola is a cohesive brand. They never want you to question their product, so they make all of the details consistent. If you have a car wash with glass walls, all of the benefits from internal signage will double given that customers can see everything from the outside.
GET BUSINESS RESULTS
On average car wash operators see a return on their initial investment within six months, and increase the revenue (from the previous owner w/o marketing) by 50 percent. They increase their car count by 120 percent. According to the owner of Sgt. Clean’s Car Wash, Brian Krusz, customers love one of his wash’s interior fixtures: “the drying chamber,” which is a series of arches that blow air onto the vehicle, and is also augmented with red LED lights. “It’s all about that experience, so we constantly hear about the fantastic experience from the car wash that they’re getting,” Krusz says. “As well the light fixtures help build the confidence in the customer that they’re getting what they paid for, all the way from triple-foam down to our military monsoon as well as our Sgt. Clean hot wax.” Lighting and signage can help operators like Krusz whether they’re taking over an old location or building new from the ground up.
Don’t forget all of the benefits your business will see by either adding or improving internal signage. These can come in many different forms including specialty arches, colorful LED fixtures, and customized signs. These internal signs can be used to inform your customer of everything they paid for, and they can also show them the services they should buy during their next trip. Internal signage also improves the customer experience and makes the trip entertaining for other people in the vehicle. Finally, internal signage is also another opportunity to solidify your brand and make the entire car wash experience cohesive. Bobby Jones is vice president of Warren, MI-based TSS Inc.
MANAGEMENT Conflict Resolution -The Foundation of a Successful Team
When faced with a problem, it often helps to grab someone and talk it out. This is a great collaborative strategy to problem solving. Everyone has a different personality, and everyone sees the world in a different light. What happens, though, when the problem you have is with another person? A common answer is, “I just need to vent, to get this off my chest.” The drawback with handling
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ADVANTAGE your problem with another person is that it now becomes gossip. Gossiping is a cancer in any business or social environment. It builds walls and divides teams. A major issue in many workplaces is conflict resolution. Every business has conflict, but not every business handles it the same way. That is why it’s a topic that should be discussed clearly with your team. Workplaces are full of diverse personalities who communicate in unique ways. These differences in personalities are what make conflict resolution an uncomfortable and touchy subject. The first step to successfully deal with conflict is to bring both parties together and have a meeting of the minds. The parties involved in the conflict need to sit down and talk it out. Prior to this meeting the ground rules need to be explained. For successful conflict resolution, there are four.
RULE #1: LISTEN
Each side must listen fully to the other side before responding. Often when one party is explaining something that is bothering them the second party will feel defensive and want to jump in and explain why they did XYZ to justify their actions. There is nothing more frustrating than someone interrupting you, especially when trying to resolve a problem. The first person needs to listens to everything the other person has to say, and then the second person will have their opportunity to explain their side. This process is repeated until both sides have sufficiently made their case.
RULE #2: IDENTIFY THE REAL ISSUE
Identify the issues clearly, professionally, and concisely. Unless the issue is identified, a resolution cannot be found. Consider this scenario, for example: This morning Betty came into work and she threw her purse on her desk and snapped at Sally when Sally said good morning. The reason why Betty snapped at Sally when Sally said good morning could be that Betty got a frustrating text from her child saying he’d forgotten his homework. This has nothing to do with Sally, yet the frustration was taken out on her, and this caused some tension between the two of them the rest of the day. In some cases this kind of tension can simmer and slowly build up to a boil, making it extremely important to have open communication with your co-workers. You may not always know what is going on in another person’s life, so try not to jump to conclusions.
RULE #3: STICK TO “I”
When both parties meet to discuss their issues, they are allowed to use only “I” statements: “I felt ignored at the meeting this morning when I was trying to explain the details about that black BMW.” Framing an issue you have with another person with an “I” statement helps to bring their defenses down so that a resolution can be found for the conflict. “You” statements tend to put people on the defensive because they feel like their integrity is under attack:
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ADVANTAGE “YOU always put the equipment back in the wrong place.” “YOU never take out the trash.” When someone starts to get on the defensive they stop hearing everything that is being said. They are focusing on how to defend their integrity. “I” statements diffuse anger and assault: “It ticks me off when I can’t find the equipment I need.” “I feel demotivated when the schedule is ripped out of my hands.” “I get upset when a harsh tone is used when asking for a favor.” When you bring the problem back to how it makes you feel it will bring guards down and a conversation can begin.
RULE #4: NO PERSONAL ATTACKS
The final and most important rule is that there are to be no personal attacks, name-calling, or finger pointing. These are a sure fire way to get the other person on the defensive, and there is just no need for petty attacks in a work environment. When voices are raised, control of the conversation is lost. This prevents both parties from being able to continue the conversation with a level head. As soon as voices are raised each side needs to pause — maybe even step aside for a few moments — to regain their composure so that a civil conversation may continue.
Having conflict in the workplace is okay; in fact, it actually can be healthy. However, preventing conflict from
turning into heated confrontation is crucial to avoid division in a business. If a resolution cannot be found with the two parties sitting down and talking it out, then it is time to bring in a mediator. Often this will be the site manager. Whoever it is, they need to remain as neutral as Switzerland. The mediator cannot and should not pick sides, and the same ground rules apply. Everyone wants to work in a happy, peaceful environment, so it’s important to talk it out. Chris Ciardello is a practice management consultant with Global Team Solutions. Chris has a distinctive knack for understanding the needs of work environments and assisting companies in building productive, cohesive teams. He holds a BA degree in marketing from the University of Texas, San Antonio.
OPERATIONS Increasing Wash Efficiencies - Look at Your Business with Fresh Eyes to Improve Profit
Socrates said, “Life not examined is not worth living.” When it comes to business, my mentor, Jay Abraham says, “Business not examined and re-examined constantly is not worth owning.” I may add to that, continuous improving and innovating is not only mandatory, it is very profitable!
ADVANTAGE In previous articles, I shared the four ways to increase profit: • Increase the number of first time customers • Increase the dollar amount per transaction • Increase the frequency of visits • Control operational expenses I have written extensively about the first three profit levers. This article is about how to control operational expenses.
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Controlling expenses does not mean buy the cheapest chemicals to save money. Studies have shown that cheaper products normally cost a lot more in the long run. A drum of chemicals may be half price but the cost per application may be three times higher. Chemicals are as important as equipment. Equipment, without high quality chemicals, cannot do the job on its own. Car washes are in business to consistently produce a clean car in the least amount of time and at the lowest cost (labor, chemicals, etc.) possible. Some operators base their decision on what chemical to purchase on the price of a drum instead of the cost per car, and this is a mistake. Other operators overspend on structure when building a new car wash, but when it comes to equipment and chemicals they try to save money. It’s like a professional racecar driver who is paid top money for an endorsement but wants to save money by using aftermarket parts with lower performance and using 87-octane gasoline instead of racing gas. High-quality chemicals could save dollars on labor cost. Without the proper chemicals, employees at the finish area will have to spend extra time to re-clean the body, windows, and wheels. Using low-grade chemicals increases labor costs and increases customer complaints about wash quality and wash time. There are many good chemical suppliers. Do your research and remember that prices may be negotiable if they want to earn your business.
must identify their business’ bottlenecks, which severely limit the number of cars that can be washed per hour and delay the time it takes to wash and clean a vehicle. Using a stopwatch to time every part of the wash process starting with the customer’s wait in line, getting a wash ticket, pulling up to the vacuum, vacuuming the vehicle, queue time, prep time, wash-process time in the tunnel, idle time before someone starts working on it, vehicle cleaning time, and total time it takes for the customer to get in and out of the car wash. The operator’s goal is to eliminate any bottlenecks that are holding back and delaying the wash process. The goal is to cut every process time in half and cut the time on other processes to zero. The question is: What process can you cut down to zero or close to zero? The answer is at least five processes: prepping the vehicle before the wash, wheel cleaning, tire dressing, drying exterior windows, and drying the body. What processes can you cut in half? Vacuuming, finish area, express detail, and full detail.
THE IDEAL EMPLOYEE
The biggest expense in many car washes is labor. It can be a big drain on overall profits. Adding new equipment when possible will speed up overall performance, increase throughput, eliminate prepping and bottlenecks, increase overall quality and improve customer satisfaction. Equipment will always show up to work, never call in sick, and most of all, equipment will not take you to the labor board if you had them work overtime.
There are four major complaints customers have at a car wash: • It takes too long (full-service wash) • Car is not clean enough • Bad experience • Staff is rude or doesn’t care Controlling operational expenses can solve these problems. Systemize and automate your car wash process to produce the highest quality car wash in the fastest time possible; create a “wow” customer experience; and have a motivated staff that is happy to serve. These are all part of controlling expenses. Here are some ways to increase efficiency in a car wash.
This is the main customer complaint. What can be done to solve it? The fastest wash is hindered by the bottlenecks in the assembly line wash process. Car wash operators 15
ADVANTAGE By automating many processes and retraining staff to increase productivity and work as a team, a full-service car wash could cut the wash time by up to 50 percent — therefore save on labor and increase customer satisfaction and net profit. The goal is to offer full-service car washes in 15 to 20 minutes only. There should be no prepping time at the entrance of the conveyor. Once the car is on the conveyor it has to be queued immediately. If, when doing so, the car doesn’t come out clean then you lack the proper equipment or chemicals. Every vehicle passing the blower should have its body, wheels, and windows cleaned. Thus, it is counterproductive not to maintain, repair, or install a new piece of equipment that could serve more customers faster at a lower cost. Mistakes happen when business owners try to reduce expenses by eliminating investment in the wrong areas. Many car washes, especially on the West Coast, are still offering hand wash. With the minimum wage in California set to reach $15 per hour by 2022, for hand car washes to survive and thrive they have to cut down on labor cost and improve throughput and wash quality. They have no choice but to start adding equipment to control cost, while educating their customers that with today’s technology, equipment is safer than hand wash and it can save customers some precious time. The right equipment can help eliminate major bottlenecks, such as prepping, clean wheels, tire dressing, and cleaning windows. Adding
some equipment to cut prep time such as a CTA and wheel blaster to clean rims and tires will allow the car wash to still be considered a hand wash. You could still call it a hand wash even with the addition of tire shine and lowrise brushes to clean the bottom section of a vehicle. Think of your dishwasher at home — you don’t have to pre-wash before and you don’t have to dry after. If your employees have to re-clean wheels, bodies, and windows after the wash, then adequate equipment or chemicals are missing. If upfront cost of equipment is a concern, there are many companies that are eager to provide 100 percent financing for new equipment.
If you don’t understand people, you don’t understand business. You are asking your employees to help you achieve your dreams and goals. You are asking your staff to be loyal and to come to work every day to work hard, to exceed customers’ expectations, to make the right decisions, and do what’s bestfor the client. Why should they? To get what you want in life first help others get what they want. You can’t expect loyalty unless you give it first. Empower your staff to do what is best for the customers and business. Create a friendly environment where staff enjoy coming to work, ready to work hard, and yet have fun at the same time. Instead of catching people doing the wrong thing and punishing them, why not catch people doing the right thing and reward them? The more
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ADVANTAGE Continued from pg. 17
attention is given to the positive things, the more they will be re-enforced and become part of the norm.
Retrain employees to improve productivity using the 80-20 Pareto principle. Change the workforce focus from individual to teamwork. Why should one person clean a car while other employees are standing around not helping? Aren’t all employees paid by the hour? Aren’t all employees working for the car wash? Teamwork is more important than individual workers trying to earn extra tips. Employees will take more time on one vehicle doing extra services for customers in hopes of getting better tips. Meanwhile, other cars are waiting for the next available attendant. Who pays for that? What about that customer watching his/her car with no attendant, what are they thinking? This is how it works: If 20 percent of the employees are doing 80 percent of the work, then it should be easy for operators to identify the 20 percent star employees who should be role models and the standard which all employees should follow. It also should be easy to identify the slackers among the other 80 percent and eliminate them. Keeping those slacker employees may actually hurt the business in the long run. Team together one of your star employees with another employee. Each employee should work on one side of the vehicle, mirroring each other. This forces your slower employee to pick up the pace and finish at the same time
as your star employee. If your star employee finishes his side first, then he/she should go around to the other side to finish what is left and double check the other employee’s work. Once your star employee goes around to the other side, the slower employee should immediately go to the other side to do a quality check and call the customer. No two employees should be working on the same side at the same time. By implementing this system, you not only speed up the process, but you also have self quality control. Teaming two employees on one car cuts the process time by more then 50 percent. If one person takes 10 minutes to clean a car, two people should only take about four minutes. In business, one plus one equals three, four, or five. Your star employee will force the other employee to work harder and faster, therefore customer satisfaction will increase.
POINT OF SALE MANAGEMENT SYSTEM
I would highly recommend that you begin managing with facts instead of conjecture by using a point of sale management system (PSMS) and dashboard that shows you the pulse of your business at a glance. A dashboard shows the key performance indicators in your business. A dashboard keeps what truly matters on your radar screen. It is possible to track key performance indicators such as productivity, speed, efficiency, etc. It’s a sign of a problem when business owners base their business plan on gross income alone.
ADVANTAGE A PSMS is a great tool to learn customers’ names, provide personal service, help track purchasing habits, and provide an automatic specific coupon to customers in accordance with their buying habits. A PSMS controls prepaid cards, monthly passes, and automatic recharges. A PSMS incorporates state-of-the-art dashboards that cut through the noise and essentially gives a radar view of your business. Dashboards can also gaze into the future and show potential pitfalls in the business. Sophisticated dashboards also incorporate the concept of what-if analysis. For instance, one can simulate the business impact of increasing the sales dollar per car, simply by moving a dial on the dashboard. Fortunately, in the car wash industry there are many PSMS to choose from.
packages. Needless to say, they were unsuccessful and had to change their marketing strategy to allow free vacuums to all express customers. • Customers should be in and out of the car wash in five minutes or less (not including vacuum time). • Because you are now a flex wash, you have an advantage over your competitors — you have employees waiting at the end of the tunnel for full-service vehicles. Seize this opportunity by instructing your employees to hand dry express wash vehicles. This adds value that your competitors in the express wash business cannot compete with. Wayne Gretzky was once asked, “How can you be the best hockey player if you’re not the strongest or fastest player?” He responded, “Most players go where the puck is, I go where the puck is going.” As a business owner, to be ahead of the competition, your job is to constantly work on your business. Research and implement innovative ideas that can help increase productivity, improve speed, and boost customer satisfaction.
ADD ANOTHER SOURCE OF INCOME
With increases in minimum wage, raw material expenses, inflation, and increased competition, car washes have been forced to raise their basic car wash price. In northern California many car washes today offer basic express wash starting at $15 and full-service car wash starting at $30. Unfortunately, the basic full-service car wash is no longer affordable to many potential car wash customers and full-service car washes have therefore become a luxury service to many. Nowadays people are washing their cars less often, thus negatively affecting the car wash industry’s volume and income. Adding other sources of income is a good strategy to make up the loss. Many services could be outsourced such as bodywork, clear-coat repair, dent removal, windshield replacement, etc. Turning a full-service car wash to a flex wash by adding an express car wash service is a good approach to make up for the loss of full-service volume. As a matter of fact, car washes that do not add express lanes are indirectly inviting their customers to use their competitors’ express wash service. The following conditions are vital to a successful express wash: • Promote your express wash on a monument sign. • Equipment is mandatory. Prepping is not. Express wash should have no additional labor involved. If it is not fully automated, you will not be able to offer it at an attractive low price, and it may also interfere with your full-service wash customers. • Must have a clearly marked lane separate from the full-service lane. • Customers should be able to pay from their car and stay in their car during the wash process. • Installing a pay terminal is a must. A pay terminal also gives you the flexibility to open for extended hours without the need of a cashier to charge the full-service wash customers. It eliminates the need for a cashier on very slow days when debating whether to stay open or close, therefore saving labor cost and keeping your money safe. • Offer free access to vacuums. Some express washes I’ve seen only offered free vacuums for more expensive
AJ Rassamni has over 30 years’ experience in the car wash business. He is a speaker and consultant and the author of Increase Business 30% in 30 Days and Dirty Cars Filthy Rich. AJ is also the CEO of MyLoyaltyApps, the sole purpose of which is to create customized apps that automate the marketing strategy of a business to increase positive reviews, loyalty, number of firsttime customers, and revenue. You may contact AJ via email at info@MyLoyaltyApps.com or text (559) 284-1919. SWS FSB Ad - JP.PDF
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DETAILING What’s Your Standard? The Three Starting-Package Menu
The title of this column is a bit misleading. At first read, most will think I’m going to talk about “standards of excellence” or something lofty like that. Nah, I want to discuss a subject about the detailing industry that is close to my heart — the development and use of an appropriate detailing menu. Specifically, I would like to propose the concept of a “standard” detailing package and the huge impact this can have on your entire operation. Now, the word “standard” has several connotations, as evidenced by the 20 or so individual definitions offered in the dictionary that I use. (Yes, it’s a book on my desk — did not come from a screen.) The definition that I would like to use for the sake of this discussion is this: A standard is “an average or normal requirement, quality, or level.” By invoking this definition with a detail package title, I am referring to what would normally be included in a full-service detail package that would cover the average vehicle condition in your area and the quality requirements of most of the customers that call on your shop.
THE PROBLEM: COMPLICATED MENUS
It is a common mistake among my peers to have an overly complicated detail menu that has numerous packages.
Sometimes this takes the form of levels of service like Bronze, Silver, Gold, Platinum; or Good, Better, Best, Excelsior; or whatever. Yet, typically, if you read what’s included, each package is simply the previous one with a couple of things added. As a professional detailer, it boggles my mind what some of these packages leave out, like clay treatment, or leather cleaning and conditioning. My thought is, “Are you detailing the car or not?” If you’re detailing the car, do the full job. The real problem with this approach is that you are opening yourself up to price-shoppers and those who are automatically going for the lowest package, regardless of what the car really needs. I find that many new operators think they need a three-fold brochure with four to six packages and prices, simply because that’s what they’ve seen the competition do. If you want to be better than the competition, you need to do something different. I also often hear concern about particular vehicle conditions or customer requests that are not captured by one of the standard packages. In other words, the operator is worried about “losing” a customer. Usually, this situation involves a very small percentage of the potential customer base. We’re not trying to capture every vehicle for detailing, just most of them. Moreover, as we will see later in the article, vehicles with special needs will also be addressed in this menu scheme.
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ADVANTAGE ADVANTAGE Continued from pg. 23 MARKETING So, the solution that I suggest is this: have a very simple
detailing menu that has three starting packages:
Marketing - What • Standard Interior Detail has Changed Standard Exterior Detail in • the Last 100 Years?
• 1975, Standard Detail (i.e., both of Commission the above) In theComplete Federal Communications Now, let’s be clear that this simple menu is (FCC) issued a largely overlooked ruling thatconcept allowed meant to apply to shops that provide detailing to mostly earth-orbiting antennas — satellites — to be used for “daily drivers” and the general motoring as well broadcasting television over large areas.public, Around that as production shops like dealership detail centers. This same time, a little-known regional broadcasting network is in contrast to the shop that provides highly specialized called Home Box Office (HBO) took notice, and decided detailing services that, because of the clientele or type to use the FCC’s landmark decision to begin distributing of vehicles, requires individualized service elements for its own programming via satellite. virtually every customer. HBO’s innovative move would have a ripple effect “BUT, BUT, . . .”the landscape of marketing. that would spill BUT over onto When I make this simplification the Soon, satellite networks proliferated,suggestion and with to them, detail operator who’s asking advice thenever menu,prehe marketers’ ability to target in for ways that on were or she usually comes back with, “But, what about the guy viously possible. with the that car that has…?” or “But, if they don’t want Since time, there has beenwhat so much technological any of those?” “But, I have somewith customers are innovation that or marketers are faced choices that beyond used to my old packages?” The slightly sarcastic answer measure. It can be blinding and bewildering for anyone to these rebuttals is simply, “Well, if your current menu is charged with allocating marketing dollars on behalf working so well, why are you asking me what to do next?” of a business. And, this very issue is what has caused If you keep an open eye, you will notice the simplification marketers to go awry. This is an age of unprecedented trend popping up in other industries. Chelsea Beyer wrote communications, and yet many still struggle to connect a fantastic article (Auto Laundry News, August 2016) with one another. in which she encouraged automatic car wash owners to But this problem is not the real problem.
THE REAL PROBLEM
simplify theirproblem menus down to too onlymany three wash packages. The true is that marketers have This was news to an industry that often offers a dizzying in failed to recognize that only one thing has changed amount of options to its customers, frequently four to 10 marketing in the past 100 years: technology. That’s it. Yes, packages. Her data simplifying the menu,and as you now have socialindicate media that and tweets and followers well as featuring the top package instead of the cheapest apps and branding and re-marketing and analytics and one, dramatically increases per-vehicle revenue. focus groups and ROI and CRM and customer personas A common recommendation on reality TV shows featuring and digital and so on. It’s all certainly true. But, what has business experts coming into struggling restaurants is for enabled nearly every bit of it is technology. the owner to reduce the number of offerings on the menu So prolific is the role of technology in marketing that it and focus on making those items really well. Here in has become for some an alluring distraction. Panic and peer California, the ever-popular burger chain In-n-Out Burger pressure set in, and organizations pursue the latest and the prides itself on its super-simple menu: Double-Double, greatest technology-based marketing taking cheeseburger, hamburger, fries, and atactics list of without drinks. That’s thoughtfully consider a strategic approach. As the time to it! Compare that to your favorite fast-food burger chain legendary and strategist, Sun Tzu once put it, and the 42 philosopher choices. “Tactics without strategy is along the noise beforepath defeat.” We can take this analogy a logical to consider Marketing must ultimately get the product or service that In-n-Out may be “losing” some customers because they intonot theoffer hands of thevariety customer — a real Marketers do a larger of items. Thisperson. argument doesn’t needmuch to realize thatwhen it is way too easy to distract ourselves hold weight you drive by any In-n-Out during (via technology) away from what is centrally important most any time of the day, and the line is huge. What they in marketing: generating a asale toproduct a real that person and, have done, instead, is to offer great appeals hopefully, repeating process again and again to her to a large majority of that the population, instead of trying to capture everyone with a “full line” ofismediocre menuabout items.a or his delight. Marketing strategy not so much plan, but a system. Build your marketing (including the WHY A SIMPLIFIED MENU? sale) around a strategically based, customer-centric sysThere are a number of advantages to having a simplified tem, thenmenu. technology a true and valuable tool, detailing Amongbecomes these are: and not a distraction.
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ADVANTAGE • It’s easier for the customer to understand • It’s easier to describe and sell • It’s easier to deliver the service Let’s take these one-at-a-time. Please try to remember a time when you were presented a menu, either on the wall or in a brochure, that was very confusing with a six-bysix matrix of options; and you ended up having someone walk you through it or had to spend several minutes trying to make sense of it. It is this situation that we are trying to avoid for our customers. When you have a simple menu, your sales job is immensely easier. When someone calls me, I gather some info and then ask, “inside, outside, or both?” And it’s so easy to describe — it’s the same description every time. I don’t have to memorize the description of six or more menu items, just three. Delivery of service is also easier with a simple menu. We’re pretty much doing the same drill, day-in, day-out. This is especially important if you have a larger shop with multiple technicians. The technicians have to memorize only three basic procedures, which also makes training and monitoring a lot easier.
SIMPLE MENU DEFINED
The intention behind the simple menu is to offer a set Comp2.qxp 6/21/18 8:46 of service elements that:AM Page 1 • Are appropriate for the majority of vehicle conditions in your area. Comp2.qxp 6/21/18 8:46 AM Page 1 • Will provide significant improvement of the vehicle’s appearance.
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• Will yield results that will delight virtually all paying customers. As an example, when I started mobile detailing here in San Diego back in 1994, I found that customers were consistently happy with a standard exterior detail that included the foundational service elements of: wash, clay, dress, and wax. Super simple and super easy to provide. This is in contrast to many operators who seem to think that they have to spend time polishing the paint to make it look perfect, taking more time and having to charge more. My argument about this particular situation is, “If the customer can’t tell the difference, why do the extra work?” Now, to be sure, there are customers who request paint correction services. And there are some vehicles that need much more than a coat of wax, in which case I discuss the options with the customer. But, honestly, virtually all of my customers are thrilled with our detailing packages, and we rarely have to pick up a polisher for standard services. In other parts of the country, however, the standard exterior detail may require additional steps in order to achieve good results. For example, areas that have roads treated with snow-melting chemicals may have to add a de-contamination step to the prep wash in order to remove all of the chemical residue on the paint. In other parts of the country, acid washing is normal for every vehicle. So, these types of elements would be added to the process for the standard exterior detail. You may have noticed that I have as yet to mention anything about the engine bay. In my area, few people are
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ADVANTAGE concerned about under the hood, so my standard detailing does not include it. For a dealership, the engine bay is absolutely included in the standard detail for used car trade-ins. And in some parts of the country, an engine bay rinse will be expected by a large enough portion of your customers that you might as well make it part of the standard package.
“I DON’T LIKE THAT WORD!”
Some people are bothered by the word “standard” as it somehow implies there might be something better. This assumes the connotation for the word is normal or regular. I’ve toyed with other words but standard seems to work the best. Yet, in a way, this idea of standard can also refer to the definition “used as a basis of judgment or comparison,” as this menu will make most cars look much better, delight most customers, and handle most vehicle conditions coming into the shop. Renny Doyle wisely suggested “entry level”, which is a great way to describe the package. But I’m not sure it’s a great way to label the package on a brochure. The word “basic” detail has been offered, but this sounds like the service is of lesser quality. The menu item titled “Basic Detail Package” implies to many that there is a better package. One option that could work would be to use the term “full service” instead of “standard.”
ALL THE OTHER STUFF
Of course, the standard packages do not include all of the things we could do to a car. For this, let’s go back to
the In-n-Out Burger menu example. Some of you may not know that In-n-Out has a “secret” menu of custom-built burger and fries options that’s quite extensive. For example, you can get “Protein Style,” which uses lettuce instead of a bun; or “Grilled Cheese,” which is everything but the meat. Our simplified detailing menu uses the same principle. What the customer sees is three options: Standard Interior Detail, Standard Exterior Detail, Standard Complete Detail. But there are many customer add-ons that can be added to the chosen standard detail, depending on the condition of the vehicle or the specific requirements of the customer. For example, the vehicle might have an odor problem. Hopefully your standard interior detail is thorough enough to remove normal odors. But to completely remove a non-normal odor problem will require extra steps and additional equipment or supplies; thus, this would be a custom add-on. Another example might be that the vehicle exterior has an abnormally heavy concentration of environmental fallout, like rail dust or paint overspray. This is a non-normal situation that most cars don’t have (unless your shop is downwind of a rail yard or ship yard). So, this situation is not covered in the standard detail, and is thus a custom add-on at an additional price. The beauty of having only three starting packages is that it’s easy to add on to the package based on customer
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ADVANTAGE requests or vehicle needs. You can have your own “secret menu” that lists all of the additional services that you can provide, on a vehicle-by-vehicle basis.
Keeping the menu simple has served my operation very well over the years. Moreover, those who have asked me about menu development or re-structuring have consistently enjoyed the results of simple menus. If you struggle with this part of your marketing, I suggest you give it a try. Prentice St. Clair is an International Detailing Association Recognized Trainer and Certified Detailer. As the President of Detail in Progress Inc., he has been providing training and consulting to car washes and detail shops since 1999.
SECURITY Crime Busters - Steps to Protect Your Car Wash
All too often, car wash crime hits the headlines. It seemingly is a weekly occurrence these days at both unattended and fully staffed washes. This is happening across the United States — not segmented into niche markets anymore. Just as picking the right camera or new security technology can help safeguard a wash, working
with an insurance provider can help limit a new car wash owner’s exposure to risk when it comes to crime — internal or external. When combining preventative measures, surveillance, and protection, new car washes can lower their exposure to crime. I’ve put down answers to some frequently asked questions and a few tips and tricks to help you along your journey toward protecting your investment.
EXPOSURE TO CRIME
In what different ways are car washes susceptible to crime? A simpler question would probably be to ask in what ways car washes aren’t susceptible to crime. Unfortunately loss in these types of businesses comes from all sides. There’s thievery and vandalism of course, but that only covers so many misdeeds. It includes people breaking into vaults or pay stations, people stringing changers, breaking into vacuums, and ripping off vendors or hoses or wands at the free vacuums. On the other side of things, there are people who vandalize coin-bay doors thinking they can somehow get free time at self-serve locations; others bucket-wash in your bays denying access to paying customers. What about the people who use stolen credit cards at pay stations? That’s an entirely different kind of crime, but you still pay for it in many ways. Not to mention the internal side of the equation: employee theft of money or products or giving out free washes to friends and family members.
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ADVANTAGE Attended facilities can experience as much, if not more, crime because the threat comes from multiple sides for more hours of the day. These are issues that cameras and surveillance systems can alleviate and/or completely prevent for owners. Having eyes on your business at all times 24/7 with remote access to live and recorded footage can save you a lot of money in a very short amount of time. Money you didn’t even know you were losing in some cases.
What type of security and surveillance equipment and tech should new car wash investors/owners consider? 1. If you hear nothing else, hear this: there is no onesize-fits-all camera system that will work for everyone. Expectations are different, preventative measures needed at each facility might be widely different based on location, clientele, type of wash, services offered, business hours, etc. If you have existing equipment, compatibility could be a further issue. Likewise, if you have a chain of locations all needing everything from the ground up. Make sure to work with a manufacturer that listens to what you want instead of promoting
When combining preventative measures, surveillance, and protection, new car washes can lower their exposure to crime. what they have on special this week. Definitely work with a company that can send you a custom quote for each of your facilities. Look for someone that will hold your hand through the entire process — quoting, questions, purchasing, tech support, etc. That kind of customer service is worth a lot more than people think. 2. Get good quality, IP68-rated cameras that are specially designed and tested for the car wash environment. A camera made for a day-care playground isn’t going to withstand the harsh chemicals and humidity a car wash can throw at it. Getting the right camera for every area of the wash will make your life so much easier now and in the future. If you’re like me, you want to put in a system one time and it be amazing from the first time you push on the power button. When it comes to cameras, you get what you pay for. 3. Any facility that has a tunnel/conveyor or in-bay automatic really needs to consider a vehicle condition documentation system. This is especially true for very busy locations where you or your employees can’t physically look at every vehicle in as detailed a manner as you would like. There are customers who have paid for their entire camera system with a single claim they were able to disprove using a vehicle condition documentation system. These systems look at every inch of every vehicle except the undercarriage. These systems can hold recordings for months so you’re covered for people
who claim you damaged the car right after it was washed and for the people who come back two weeks later after they’ve been to Wally World 14 times and let their little-old-lady neighbor borrow the vehicle to go get her hair done.
Having eyes on your business at all times 24/7 with remote access to live and recorded footage can save you a lot of money in a very short amount of time. Money you didn’t even know you were losing in some cases. 4. High resolution. High resolution. High resolution. You want to buy high resolution. The difference between an analog camera and an HD camera is night and day. You get four to eight times or more the resolution with HD cameras at no additional cost, and the picture quality is incredible. Most of the great camera equipment manufacturers are building several kinds of series of equipment so they can help everyone with what they need. IP, TVI, and analog are just a few of the “kinds” of systems out there these days. If you buy an existing car wash that already has a camera system, it’s really nice to be able to use the cameras and cabling that are in place and still working and just upgrade the DVR and some key cameras. Use what you have until you need to change it. If you’re starting fresh and need everything from scratch, than go with the IP system hands down. It’s higher resolution and, thankfully, there are manufacturers out there that did a lot of research and development to get IP to a place where it’s as “plug and play” as a TVI system. I’ve never heard anyone say they were sad they went with the higher-res equipment. It’s worth spending a tiny bit more for the much higher picture quality.
What site upgrades, such as lighting or landscaping, should car wash owners keep in mind as part of their risk assessment and crime deterrent strategies? At our own car washes, we came up with an acronym that helps us deal with problem areas or cash points: C.A.L.L. It stands for Cameras, Alarms, Locks, and Lighting. Some or all of these defenses will be needed at each area of your wash. A well-lit facility, with visible cameras around, with alarmed doors and placards, that also has a well-thoughtout landscaping design that eliminates hiding places, shadows, and visibility problems, is much less likely to get broken into. Not giving people places to hide, and highlighting the wash’s architectural elements can absolutely work hand in hand. Your risk goes down substantially, and it all adds up to a massive crime deterrent. Theft and employee theft normally occur because it’s easy for them to do it and get away with it. They’re 37
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ADVANTAGE looking for the opposite of working hard. So don’t make it easy for them. Put up infrared cameras that can see day and night, put them up all around so customers can feel safer because of their presence — thieves will go the opposite direction. Put the cameras up in areas where employees might be tempted to steal: equipment rooms, break rooms, kiosks, etc. Two-stage lighting that brightens when someone enters an area is both a help to customers, and a deterrent to criminals. The best scenario is to prevent something from happening as opposed to having to deal with a break in or burglary after the fact. Getting to sleep at night instead of being woken up at 3 a.m. because someone snuck around the dark areas behind your building and ultimately took a cutting torch to your equipment-room roof, is way better. I’ve lived through that nightmare. It was awful.
What new features in security and surveillance equipment are available for new, hi-tech car washes, and how can new investors take advantage of them? Do you remember the comments above about high-resolution cameras and vehicle condition documentation systems? Good! Cause I’m gonna talk about it again! Vehicle damage is a very real problem for express, flex-serve, and full-serve facilities alike. Minimizing these claims, fraudulent or perceived real, can put thousands of dollars back in your pocket.
Some opportunistic people see car washes as an easy target to get free money and work done on their car. It’s not a nice reality but it’s unfortunately one we have to work with. Facilities with no vehicle inspection system in place will lose against a complaining customer every single time. Being able to show there was or was not damage on a vehicle prior to it entering your tunnel is all it takes to disprove a false claim and shut down the fraud or mistaken finger pointing. Now let’s talk about the other side of the equation: the customer who came to your wash, left, got his vehicle damaged, but then decided for whatever reason that it had to be the wash that did it. (cough-neighborgettingherhairdone-cough.) Some of these customers truly believe it was the wash. Even when vertical scratches show up and all your equipment does is rotate horizontally. You have to have proof that no damage was on the vehicle when it entered — wait for it — and when it left. So if you only have an inspection system at the entrance of your facility, you’re only going to be proving half the equation. Covering both ends is the only way to prevent all fraudulent claims. Your insurance carrier will be very happy with you when you put a system like this in place. A lot of them will give you rate discounts because of it — more money back in your pocket. And these higher resolution IP systems can see blatant damage and subtle scratches as well. Go team!
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DON’T BE A CRIME VICTIM
How can car washes prevent becoming victims of crime? I know it might sound goofy, but “be present.” Talk to your customers; engage them, their families, and kids. Connect with your neighboring businesses and the community as a whole. Go to town meetings, sponsor sporting events, have a “town washes for free” event once
Covering both ends is the only way to prevent all fraudulent claims. Your insurance carrier will be very happy with you when you put a system like this in place. in a while. It’s amazing what can happen when people “know” you and are invested in your business even in small ways. Having a community looking out for your business can pay off in big ways. Customers can stop incidents from happening when you’re not there. They can be witnesses to things happening even when they’re just driving by. They could call the police or even call you directly if your number is posted. “Be present” as much as possible, and it will pay off in spades. Jennifer Spears is a car wash owner and sales manager with CarWashCameras.com. She welcomes comments and questions and can be reached at (866) 301-2288 and firstname.lastname@example.org
TECHNOLOGY Cyber Breach - Create an Incident Response Playbook
“I have been investigating a large number of failed logins on your server. Due to the volume of failed attempts, it does appear that the attempts are coming from an outside source. My company recommends that you reach out to a security firm to have your network investigated for a possible breach.” He couldn’t believe what he was reading. A local cybersecurity professional was forwarded the e-mail above from his new client’s outsourced computer management company. The owner of the business was concerned, and for good reason. They had only brought him onboard as their part-time cybersecurity advisor the month before, and the vendor that manages their network had kicked this ball squarely into his court. He had to figure out what to do — fast.
STEPS TO BE TAKEN
The priorities were simple: 1. Alert his client’s executive team about the situation. 2. Determine if this is or is not a real hacking attempt. 3. If it is a real hacking attempt, determine how it is occurring.
4. Assess if the hack was successful in any way. Was any damage done? Was any data accessed? 5. If the hack was unsuccessful, terminate the hacker’s access immediately. 6. If the hack was successful, start making calls to his client’s CEO, their cybersecurity insurance carrier, a third-party company that specializes in breach remediation, and the client’s attorney. 7. Follow-up with root-cause analysis and recommend preventive measures. It took over 10 hours to determine the extent of the issue. Cybercriminals had breached a single server, and a malicious program was running on that server. It was trying various dictionary words as passwords against common “administrator” level accounts. He breathed a tiny sigh of relief to see that it had only started several hours earlier and appeared to be moving ahead at full steam, which meant that the bad guys had most likely not yet been successful at cracking an administrator-level password. The cybercriminals gained access into that server via a combination of a phishing e-mail and a bad firewall configuration. Thankfully, forensics found no evidence of further intrusion. His blood pressure began to return to a more reasonable level.
MISTAKES TO AVOID
The example above is real, and while it represents the best possible outcome of a cybersecurity incident, it was used here to make a number of points. This client didn’t have a playbook on what to do when a cybersecurity incident is suspected, so they had to make it up as they went. Doing so took extra time and might have led them to miss obvious steps. • The company did not have documents outlining how to bring operations back online if the hack had been successful, nor did they have procedures to follow if it was determined that any sensitive data had been stolen. • Their IT services vendor wasn’t well trained in how to get to the bottom of the technical issues quickly, which lengthened the incident by hours. • The client didn’t have a list of whom to call if a cybersecurity incident was suspected, which made the phone number to their cybersecurity advisor the only number they thought to use. What if he was unavailable when this took place? In a nutshell, they didn’t have their act together, and it showed. After an incident occurs, your company will be judged on the following criteria: 1. Before the incident, did your company take all actions to prevent the incident that one would expect of a prudent organization? 41
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ADVANTAGE 2. Did your company respond to the incident using procedures that one would expect of a prudent organization? 3. Are there any ways that the media could portray your actions around steps 1 and 2 to make your company appear to be culpable or incompetent? If true, expect that they will. It attracts more readers to their publication.
A robust playbook that includes the CEO, legal counsel, and all other senior leaders will do immeasurable good in your ability to respond to an incident. An incident response playbook needs several key elements to be effective. It must: • Identify who in your organization has the authority to declare a cybersecurity incident. Who can initiate the playbook?
The cybercriminals gained access into that server via a combination of a phishing e-mail and a bad firewall configuration. Thankfully, forensics found no evidence of further intrusion. • Spell out how much money that person can authorize to be spent to have an incident investigated or remediated. • Have a list of the types of scenarios that it is designed to cover. Examples include the loss of sensitive data, a ransomware attack, the loss of a critical system, natural disasters, law enforcement contacting your organization about a warrant or subpoena, and the loss of the use of one or more of your sites due to a natural disaster or because of other issues (such as a crime taking place in the building and the police barring your employees from entering the premises). • Have a call tree that includes which people or groups to call when an incident takes place. • Define the people or groups responsible for making the decision on when to bring in law enforcement. • List the people authorized to speak to the media about a cybersecurity incident, and what those who are not authorized to speak to the media should say if a reporter approaches them. • List all of your critical systems, the location of the data in those critical systems, and the location of the backups of the data for those systems. • Outline your general incident-response process. While every scenario is different, this process normally follows these steps: preparation, detection/analysis, containment, eradication, recovery, incident closure/ root-cause analysis, and preventative measures. • Be reviewed on a frequent basis. These plans get stale quickly, and need to be reviewed whenever a significant change in your organization takes place.
If the above points are reviewed as a group, an interesting trend emerges. Most of them are non-technical. The majority is operational and financial in nature. That is a critical misstep in many incident response plans. If your technology team manages your incident response plan, they are making business and financial decisions that should be made by CEOs, COOs, CFOs, and legal counsel. Above all, your incident response plan needs to be tested. Unless you have rehearsed an incident response procedure, you’re only able to guess if it will work. This is too important to be left to guesses. The takeaway messages from this article are easy to list: • Your company needs an incident response playbook. • The incident response playbook should be owned by a non-technical member of your executive team. • Your company needs to periodically test your incident response capabilities. • Your company needs to update the playbook from lessons learned as a result of tests, whenever significant changes occur to the operational or technical aspects of the company, or when merger/acquisition activity occurs. Here are some questions to explore this topic further with your company’s leaders: • How do we test our incident response playbook? • How often do we test it? • What did we learn from our last test? Bryce Austin is the CEO of TCE Strategy, an internationally recognized speaker on emerging technology and cybersecurity issues, and author of Secure Enough? For more information on Bryce Austin, please visit www.BryceAustin.com.
FINANCE Car Wash Loan - Avoiding the Roadblocks to Financing
Over the past 30 years, I have seen many deal-stopping issues pop up to prevent good people from making their dreams of building, buying, or upgrading a car wash come true. Many of these issues possibly could have been avoided. Half the battle is knowing the right questions to ask and not being afraid to ask them. As they say, knowledge is power. Below are some thoughts that may give you the knowledge needed to avoid roadblocks and help you find your way through the financing process.
In the initial stages of applying for a loan, the underwriter will review your credit report and credit score. Presenting a good credit picture will greatly enhance your ability to qualify for a loan. Your credit score is determined by the Fair Isaac Corporation (commonly known as FICO). The FICO scoring model used by TransUnion, Equifax, 43
ADVANTAGE and Experian not only looks at your payment history, but also at the percentage of available revolving credit you are utilizing. Your payment history accounts for 35 percent of your credit score. However, most people don’t know that the second most important factor in your credit score is your percentage of credit card usage. Credit card usage makes up for 30 percent of your total FICO score. Therefore, keeping high revolving credit card balances can drop your credit score by 50 to 100 points or more. Inversely, by keeping low credit card balances, you can boost your credit score by the same amount.
A quick fix to a low credit score may be as simple as paying down credit card debt. CONTAMINATED SITES
One of the first questions the prospective purchaser of a site should ask the seller concerns site contamination. If the site has a history of previous environmental contamination, proceed with caution. Former petroleum and auto repair facilities are the most common places to find environmental contamination. If there is currently any environmental remediation work in process, it may be virtually impossible to secure financing. Lenders get concerned with the limited marketability and potential remediation costs associated with sites that have environmental contamination. In addition, with a few exceptions, the Small Business Administration (SBA) will not guarantee loans for contaminated properties. Therefore, if prior environmental work has been completed, it is critical to ask the seller for a “No Further Action Letter.” This is a letter from the state environmental authority or an environmental firm confirming the environmental cleanup is complete and no additional remediation work is required.
Having a No Further Action Letter or clean environmental report can help expedite your loan closing. INEXPERIENCED LENDER
It is important to find a lender who has extensive experience in the car wash industry and who can provide the type of financing you need. The last thing you need is a “YES, until it is NO” lender. That is an inexperienced lender that initially says “yes” to everything, not truly knowing if they can help you. All too often this “yes” becomes a “maybe” as your application is reviewed. Very often this is followed by a “no” or credit denial. At this point you may have lost months of valuable time, possibly costing you hundreds of thousands of dollars in revenue. In addition, for those purchasing or constructing a new wash, going to
one of these “YES, until it is NO” lenders can potentially jeopardize your transaction.
Don’t be afraid to ask your lender about their specific experience in car wash lending. This happens when you fail to close within the timeline required by the Purchase and Sale Agreement. An experienced car wash lender should be able to quickly evaluate your project in a matter of days, not months, to let you know if you really have a viable transaction. If you have to explain the benefits of your car wash format to your lender, you may want to look elsewhere. Experience does count.
START-UP EQUIPMENT FINANCING
If you are a new operator acquiring a site or planning to build a new location, get written confirmation from your lender that the car wash equipment will be included in the loan. Due to some lenders’ perceived risk in financing equipment, all too often equipment is excluded from the finance packages. This can be costly to the operator. Most new investors are unaware that the majority of equipment leasing companies will refuse to consider financing equipment for start-ups or acquisitions. When available, financing rates for start-up equipment leases are likely to be high, borrower injection requirements may be increased, and terms greatly reduced. These factors may all negatively impact the cash flow of the business. In addition, if you’re a newer business, defined as current
Start-ups should be sure to include equipment financing needs with the loan to acquire or build your new wash. ownership operating the entity less than two years, you may want to consider a Small Business Administration (SBA) backed equipment loan. SBA loans offer lower rates and better terms for start-ups and newer businesses. However, if you have a choice, you’ll most likely save money and get even better terms by including your equipment needs in the initial loan to purchase your facility.
POOR SITE SELECTION
New investor enthusiasm for acquiring or building a new wash is often overwhelming. Sometimes it’s hard to hold back this enthusiasm to clearly analyze the facts. Many people fall in love with a site because they own it or because of lower cost. While the site may be good, there are a few basic steps that should be taken before committing to buy or build on a property. Initially, you need to determine the format of car wash to be built or developed. Start with a careful survey of existing car wash locations in your target area. How many car wash properties currently exist in 45
ADVANTAGE the selected area? Examine their wash format and pricing. Will these properties directly compete with the concept you envisioned? Will you have the flexibility to charge sufficient prices to support your debt and turn a profit? Are the area demographics and traffic count sufficient? Talk to city officials and ask questions that may help you determine if permits have been issued for any additional wash projects that may be in the planning or pre-construction phase of development. Once you have settled on a concept, outline the needed lot requirements for the build-out you envision. What is the optimum lot configuration? How will traffic flow, entering and exiting the property? Once on site, will customers be able to easily navigate the necessary turns to enter and exit the car wash building? Experienced car wash distributors and manufacturers will gladly help with preliminary evaluation of prospective sites. This evaluation includes items like demographics, zoning, size and potential wash layout, traffic characteristics, accessibility, competition, site costs, and more. With this information in hand, you will be better equipped to screen prospective locations.
Analyze the facts and rely on seasoned professionals to help with site selection. OUTDATED EQUIPMENT
Whether you currently own a wash or are buying an existing facility, outdated equipment can be just as bad as having a bad site. The symptoms of outdated equipment show up on the financial statements in the form of high repair expenditures, unacceptable labor costs, declining revenues, limited cash flow, and shrinking profits. The cure for this issue can be in the form of taking advantage of new technology. The new point-of-sale pay station technology is one example of how entrepreneurs in the car wash industry have reduced labor and shrinkage while increasing volume. Offering high-quality washes in an automated format by utilizing the latest technology in wash systems is another way to provide a consistent wash in less time to more clients at a reasonable profit margin. Using this new technology to capture customer data to leverage online and social media can also help grow your business. With the increasing cost of labor, it is essential to consider the condition of the equipment. Communicating to your lender how the replacement of outdated equipment will impact your sales, expenses, and profits can be critical in obtaining financing.
Don’t hesitate to factor in the cost of replacement of outdated equipment when you’re buying a wash.
LEASED LAND CONSTRUCTION
With the increasing cost of real estate, many operators are looking to build on leased land. While leased land construction is possible, it is difficult. The reason for this is the increased risk to both the lender and borrower. This is due to the fact that both the borrower and lender now need to be concerned with the financial strength of the landowner. If the landowner defaults on the land loan,
Be prepared for long negotiations when financing construction on leased land. both the lender and borrower can be put in a compromised position. To help reduce this risk, a prudent lender will negotiate specific assumption and default agreements with both the landowner and the mortgage holder. This negotiation process will most likely increase the time it takes to obtain financing and the cost to the borrower.
The cost of building a wash or buying equipment is more than just the base cost. In equipment purchases, don’t forget to factor in the cost of installation, freight, electrical, plumbing, site costs, permits, and sales tax. For new construction, beyond the base cost of land, building, and equipment, one needs to consider expenditures for architecture, engineering, utility connection and tap fees, impact fees, closing costs, third-party reports, interest during construction, and contingency funds for unforeseen construction costs along with post-construction funds for working capital and inventory during the start-up phase. When applying for financing, a borrower should include all of these items in the loan request. A good lender should acknowledge and approve your entire project costs. Remember, if it’s not in the loan, it’s coming out of your pocket.
A good loan includes all project costs. Don’t settle for less. CONCLUSION
In conclusion, having the knowledge you need to avoid the roadblocks in a project will help you reach the goal of project completion and your new beginning. Don’t be afraid to ask uncomfortable questions. Dig a little deeper. Be informed. You’ll be happier in the end. Michael Ford is the managing director at Coast Commercial Credit, which specializes in small business and car wash financing. You can contact him at MikeF@CoastCC.com, (800) 400-0365 or www.CoastCC.com. 47
SELF SERVE PERSPECTIVE The Math of Memberships
Whether it is Amazon's popular Prime membership which now includes more than 100 million members, Blue Apron, the Dollar Shave Club, or that shiny new tunnel car wash down the street, they all rely on the appeal of monthly memberships. Memberships designed with the consumer in mind are convenient and very appealing for customers. Everyone loves to get a great deal and those deals boost their loyalty to particular brands, services and businesses.
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Memberships designed with the consumer in mind are convenient and very appealing for customers. Everyone loves to get a great deal and those deals boost their loyalty to particular brands, services and businesses. However, there are a couple of things that hold selfserve owners back from offering monthly membership programs. One is they might not know of a way to effectively administer and manage a membership program. Owners may wonder how they would sell memberships, manage the collecting of fees, etc. They also wonder how the member would start the wash once they memberships was purchased. These issues are challenging, but perhaps the biggest reason that owners sit on the sidelines of the booming membership economy is that they fear that a membership gives away far too much of a discount and that it will erode their margins. But, this isn't true. So, why do they feel this way? When you do the math, it will show that an answer can benefit greatly from regular car wash “members.” Here is one example of how many self serve owner think they will lose money: Bob sells washes for $10 each and if a member washes twice a week that is 8 times per month. Now, if Bob sells that person a membership for $29, he has sold the washes for $3.63 each. Bob think he cannot afford to do that as he will be losing money! Bob has calculated his costs and it costs him $3.95 every car wash. Bob believes he has to get more than that or he will lose money. There are several things wrong with this seemingly logical calculation. What membership business — including that shiny new tunnel down the street — know is that the value of a customer increases by 200%–400% when you convert that customer into a member. How? Because it translates into increased revenue for your primarily fixed cost business and that translates into more profit. Let's take a simple car wash industry example: There are lots of places to wash a car in most towns. Your customers are likely washing a couple of times a month during part of the year and they are skipping long periods of time during other parts of the year and stopping at other facilities from 48
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ADVANTAGE time to time to wash their car as well. This person may end up averaging 1.25 washes per month when you factor in their full year habits. At $10 per wash that's $150 of annual revenue for a solid customer. If you can convert that customer to a $29 membership you're now earning $348 per year from this same customer. Let's also look at the cost equation. In our example that owner who calculated $3.95 for every car washed has simply divided their total cost of doing business by the number of cars washed last year. The problem with this calculation is that most of his costs are fixed costs. Fixed costs are the things that aren't going to change whether you wash 1 car or 100 cars on a given day. Either way you have your original capital investment in land, building and equipment. The property tax bill is fixed. Loan payment costs are fixed. Much of the labor coast is fixed. The phone bill and internet bills are fixed. Even some of the water, sewer, and gas bills are fixed to provide freeze protection in the winter, etc. If you truly calculate the variable costs (soap, water, equipment maintenance) you are looking at a true variable cost of pennies per wash to provide that member a service that they feel is very valuable and are happy to pay a reasonable monthly fee to utilize. This customer will most likely wash their car more frequently, but it won't be as drastic as you probably fear and the customer will be a more loyal, more satisfied customer who now feels a strong connection to your business as a member. Surprisingly, all of the membership activity at a wash is also likely to draw in additional customers even if they aren't all members. When passers-by see that your wash is always busy they are much more likely to stop in to see what they are missing.
When passers-by see that your wash is always busy they are much more likely to stop in to see what they are missing. Now, what about that original problem of how to manage the memberships? With the convenience of remote management apps and software programs, you can tailor membership programs that include any combination of automatic, tunnel, self-serve by, vacuums, and dog washes, etc. There is no limit to how many memberships you can offer each one can compromise any number of different services each with their own limits and restrictions. Your customer can not only purchase the membership through the app but they can also start your self-serve bay, your automatic wash, vacuums, etc., right from their smart phone. Today's technology can also collect the membership fees from the customer every month. It seems like a win-win and now is the time to join the membership boom that is sweeping the nation in multiple industries including the car wash industry. Jim Lanman is co-owner of Touch4Wash.
DID YOU KNOW Higher administrative fees for cell phones are being charged by AT&T and Sprint in a bid to raise hundreds of millions dollars without appearing to increase the cost of cell service itself. AT&T recently raised its monthly fee to $1.99, up from 76 cents last year. That could bring in an extra $970 million per year. Sprint raised its fee to $2.50 from $1.99 to bring in nearly $200 million. Verizon says its administrative fee remains at $1.23/month. T-Mobile's base rates include service fees and taxes. Common food additives can damage your gastrointestinal tract in ways that may lead to irritable bowel syndrome. Common emulsifiers polysorbate 80 (P80) and carboxymethylcellulose (CMC), which improve texture in many processed foods, disrupt the bacteria living in our guts. Such compounds are found in most processed foods under different names, and the best way to avoid them is by eating primarily fresh whole and unprocessed foods. Short daily bursts in excercise reduce the risks for premature mortality. People who had above average daily amounts of moderate-to-vigorous exercise had lower mortality rates than those who exercised less—whether the exercise was done at least 10 minutes at a time or for any duration including in short, sporadic amounts. What was needed for prevention was a total of more than 40 minutes a day of moderate-to-vigorous exercise. Reduce the loss of commuting benefits under the new tax law: The Tax Cuts and Jobs Act eliminates companies' right to deduct transportation costs from their taxes, so many firms will no longer offer the benefits unless they
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DIRECTORS John Agnew Fort Collins, CO (970) 485-0287
Pat Kirwan Wixom, MI (866) 362-6377
David Swenson Austin, TX (512) 346-8050
Ronnie Corbin Plano, TX (479) 651-7239
Evan Lorentzatos Stafford, TX (281) 561-0469
Mel Ulrich Weatherford, TX (940) 456-1082
Ryan Darby Lubbock, TX (806) 535-7275
Bobby Story Durant, OK (580) 775-1855
Clay Wilson Houston, TX (806) 687-2024
Executive Director: Chuck Space • 4600 Spicewood Springs Rd., Ste. 103 • Austin, Texas, 78759 • (512) 343-9023
www.swcarwash.org THE ADVANTAGE is the official publication of the Southwest Car Wash Association. It is published four times each calendar year by SCWA, 4600 Spicewood Springs Rd., #103, Austin, Texas 78759. The officers, directors and members of the Southwest Car Wash Association, as well as The Advantage editors, in accepting advertising for this publication, make no independent investigation concerning the services or products advertised and neither endorse nor recommend or make any claims as to the accuracy and therefore assume no liability thereof. The opinions expressed in the articles are not necessarily the opinions of SCWA and its publisher and therefore makes no warranties and assumes no responsibility for accuracy or completeness of the information herein. (512) 343-9023.
ADVANTAGE do so as part of an employee's taxable wages instead of as tax-free fringe benefits. Some companies may offer a salary-reduction arrangement that lets you put aside up to $260/month (the limit under the law) to pay for mass transit and/or another $260 per month for parking (in pretax dollars). Also, companies that want to hire you still may pay your moving expenses—but now must treat the added expense as part of your taxable salary at the new job. Ask if the firm will “gross up” moving expenses to cover the additional tax you will owe on them—some firms will. Don't warm your engine before driving. That made sense when engines used carburetors but not with today's fuel-injected engines. Modern engines warm up quickly. Letting them idle when cold can allow gasoline to mix with the oil, increasing engine wear. Simply start the car… be sure the windows are clear of snow, ice and fog… and drive. Loopholes in rules about 529 college savings accounts: The beneficiary of a tax-advantaged 529 account can be switched without penalty to any direct relative of the original beneficiary. Switching beneficiaries helps avoid the IRS rule that allows account holders to change fund choices only twice per calendar year. Parent-owned 529s may reduce a child's financial-aid package by up to 5.64% of the value of the account when applying for financial aid, but 529s owned by grandparents do no count at all until withdrawals to pay for college start. Then the money is considered income to the student. Some states, but not all, allow 529 funds to be used for K–12 education—for instance, for private high school. But other states tax the gains portions of withdrawals for K–12 use, although those gains are not federally taxed. Rules can be quite complex—consult your financial advisor. Imporant reminders for flu season: Give other people plenty of space during flu season—people can spread the virus simply by exhaling onto you. Use antibacterial wipes frequently and on just about everything, including door handles, handrails, buttons on a phone and copy machine, and anything else that other people may have touched. Avoid touching your eyes, nose and mouth—all are lined with mucous membranes through which the flu virus can get into your body. Set up a humidifier, and use it regularly—the flu virus appears to thrive in dry air. But clean the humidifier regularly, or it can become a breeding area for bacteria. Employer health coverage costs will rise 5%, on average, in 2019? Premiums and out-of-pocket costs for family coverage will average $14,800 next year, with employers picking up 70% of the expense. It will be the sixth consecutive year that healthcare costs have risen by at least 5%. Clutter is tied to procrastination? People who have a lot of things that create a disorderly living space are more likely to procrastinate. About 20% of people are chronic procrastinators. Many can be helped by cognitive behaviorial therapy. 50
WELCOME NEW MEMBERS The SCWA members listed below have joined SCWA since our last issue. We Appreciate your Support! Ali Abusafi
Squeaky Clean South Austin TX
Sonny’s Enterprises Tamarac FL
Airlift Doors, Inc. Maple Lake MN
KC Chemicals, Inc. Travelers Rest SC
Zip Cable Tray Systems Pointe-Claire Canada-QC
Beacon Mobile San Diego CA
Gibson Olpp Van Brook Cinti OH
San Antonio TX
EverWash Philadelphia PA
Brightworks Car Wash Fort Worth TX
Sonny’s Enterprises Tamarac FL
Waterway Gas & Wash Kansas City MO
Neil Simon Company Tomball TX
Chapman Brothers RainWash Sapulpa OK
Shaws Gulf Stillwater OK
Howco/N-1 Buying Group Charlotte NC
Wash & Go Car Wash Duncanville TX
Goss Capital, LLC Greenville TX
Lilly Brush Co., LLC Denver CO
Castle Hills Auto Spa Carrollton TX
Jeong Hun Kim
Trinity Shine Car Wash Bedford TX
Tommy’s Express Car Wash Holland MI
WashU Car Wash Naperville IL
AP Formulators South Houston TX
Duramax Building Products Montebello CA
ADVANTAGE Industry Experience
in g r Sin u t c a c f e1 u n
r s o a f e C Y l ean 5 6
Your SINGLE SOURCE for chemicals CONVEYORS * IN-BAYS * SELF-SERVES 2969 Reward Lane, Dallas, TX 75220 scotchplaid.com * 214-358-2575 51
SOUTHWEST CAR WASH ASSOCIATION 4600 Spicewood Springs Road Suite 103 Austin, Texas 78759
PRESORTED STANDARD U.S. POSTAGE
AUSTIN, TX PERMIT NO. 1142