Ahead of this year’s Mobile Tech Expo, at which I will be making a presentation on “Compliance” on behalf of the International Detailing Association, I decided to submit this article as an introduction to the topic. I encourage all readers to attend the expo, which will be held from January 15-17, 2015 at the Caribe Royale in Orlando, Florida. More information is available at www.mobiletechexpo.com.
Part of the cost of providing superior service is the act of complying with applicable laws and regulations. This can be seen as a nuisance or a matter of pride in “keeping all your ducks in a row.” Now, I don’t claim to be a business attorney or even an expert in compliance, but let’s discuss at least some of the compliance issues that automotive detailing business owners face.
LICENSE TO OPERATE
Most municipalities require that businesses operating within their boundaries have a current business license or permit. For most cities, this is simply a way to collect a fee (read: tax). But some cities take it seriously and will levy fines on businesses caught collecting revenue without a permit. Obtaining a business license is usually pretty simple. It’s just a matter of going down to city hall and finding the office that handles this formality. You may even be able to take care of it all online. In some areas, the jurisdiction is larger than your city, and you have to go to the county level, but the idea is the same. In larger metropolitan areas, like Los Angeles, a mobile detailer might operate in several cities within a few miles of his or her base location. Most municipalities allow you to conduct business for a certain number of days per year without a license. (The most common number I’ve seen in the San Diego County area is six.) In some cases, several adjacent cities might offer a one-stop business license that covers you in all of those neighboring cities. In most cases, however, you will have to have a business license for each city within which you expect to service customers. As mentioned, obtaining a business license should be a relatively simple procedure. City governments generally make it easy for you to give them money. And there is another benefit to possessing a business license other than “operating above board.” When you are licensed, your business is perceived by your customers as having a more legitimate nature. Your business license should be considered part of the image that you market to your customers.
According to the Clean Water Act of 1973, water running into natural watercourses and bodies like streams, rivers, lakes, and the ocean, must be free of contamination. This means no dirt, no debris, and no chemicals. In short, anything other than natural precipitation is forbidden from entering the storm drain system. It seems like a fairly clear regulation but the problem is that enforcement of the regulation is left up to local municipalities. Thus, there were many years of non-action. With increasing awareness of the harmful impacts of contaminated run-off, more and more local governments are beginning to enforce the Clean Water Act by requiring businesses to reclaim water that is a by-product of conducting business. This is true for car washes, detail shops, and, especially, for mobile detailers. The days when we can wash cars in the street willy-nilly are fast disappearing. It is becoming increasingly necessary for all detailing operations to reclaim wash water and dispose of it appropriately. For the fixed operation, this may mean a containment system and a treatment system before letting the water go into the city sewer system. For the mobile operator, this means a containment system, a storage system (for the dirty water), and a place to legally dump the water. Some mobile operators are avoiding the issue altogether by adopting a waterless washing method using one of the many waterless systems available on the market today.
WORKER’S COMPENSATION INSURANCE
In every state in the Union, it is required that if you have employees, you must have worker’s compensation insurance, the purpose of which is to ensure that the employee is covered in the event of a work-related accident. Specific regulations like amount of coverage per employee and threshold number of hours worked per week can vary widely from state to state. Suffice it to say, if you are paying employees (see the definition of “employee” below), it is likely that you need worker’s comp insurance. Take the time to talk with a worker’s comp attorney or your business insurance agent about your specific situation.
EMPLOYEES VERSUS SUBCONTRACTORS
Speaking of employees, a growing business usually requires duplication of human resources. In some situations, excess work can be farmed out to other business owners in exchange for some kind of finder’s fee, percentage, or wholesale rate. In most situations, however, it is necessary to hire employees to help you with the workload. Some operators try to skirt the issues involved with employees by calling them “subcontractors.” It seems like a pretty simple solution to a complex problem. Yet, categorizing employees as contractors can have serious implications, like the stiff penalties levied by the Internal Revenue Service for such infractions. Moreover, should your “contractor” be injured while under your employ, you are in for a wild ride of fines, penalties, and medical payments. You can check with the IRS, your CPA, or your tax attorney for specifics, but there is a simple way to tell if a subcontractor is an employee. If you require your “subcontractor” to show up at a certain time, use your tools, and do it your way, it is likely that you actually have an “employee.” A subcontractor, on the other hand, is provided only the name and contact information of the customer and then handles everything from scheduling the work to performing the work with his/her own equipment.
The Occupational Safety and Health Administration mission “is to assure the safety and health of America’s workers by setting and enforcing standards; providing training, outreach, and education; establishing partnerships; and encouraging continual improvement in workplace safety and health.” This comes from their official website at www.osha.gov. The site has a ton of information about business owner’s compliance with national standards of workers’ safety. Your state likely also has it’s own OSHA office, with it’s own set of regulations that are in support of or supplement the federal program. There are a number of issues of which an employer must be aware regarding workplace safety. Included in these are the business owner’s responsibility for having Material Safety Data Sheets (MSDS) for every chemical on-site, and the availability of these to employees. Additionally, it is the employer’s responsibility to train employees on the safe use of all chemicals and equipment on the premises, and to have regular safety meetings for updates and refreshers.
OTHER COMPLIANCE ISSUES
Your local fire marshal will probably have a few words to say about how your shop is set up, especially if you have any flammable or hazardous chemicals. As detailers, some of our favorite solvent cleaners (e.g., bug and tar remover) are flammable and require, by law, special handling and storage. Additionally, the local chapter of the Environmental Protection Agency, the Air Quality Management District, and local agencies will likely have some regulations to which you must adhere. The bottom line with compliance is to get educated about issues of compliance. It may take a period of weeks or months to become fully compliant, but it is important to start the process.
COMPLIANCE AS A MARKETING TOOL?
The best way to show your commitment to customer service is to provide the best results possible with every completed job. You can also show your commitment to excellence by running your business in compliance with local, state, and federal regulations. In fact, doing so can become a part of your marketing campaign. Certainly, if you paid several thousand dollars for a formal detail-training program, you would proudly display your certificate of completion. Additionally, you would be smart to include the word “certification” on every piece of promotional material that you have, including business cards, brochures, and signage. By the same token, you can use the word “licensed” to indicate that you have the necessary local business licensure. This distinguishes you from the local hack who does not care about running an upstanding business. Another example of using your compliance efforts in your marketing is to proudly announce that you run a “green” or environmentally friendly business through your efforts to reclaim wastewater. In general, when your business is in compliance, you can hold your head up and speak proudly to your potential customers about your commitment to service excellence as well as your commitment to higher business standards. Additionally, these efforts justify a higher cost to the customer, because he or she is dealing with a stand-up business. Ultimately, the customer benefits by having your business in the community.
Every professional detailer should be concerned with compliance with local, state, and federal regulations regarding the running of a small business. With a bit of research, you can determine which regulations affect you directly and you can address them as needed. Make sure your customers know that you care about running a stand-up business, and don’t be afraid to charge prices that take into account your direct costs of compliance, as well as the value to the customer of dealing with a stand-up company.
Prentice St. Clair is president of Detail in Progress, a San Diego-based automotive reconditioning consulting firm. To contact him, e-mail Prentice@DetailinProgress.com or call (619) 701-1100.