Past Issue

Expansion - Are You Ready for it?

By Bobby Willis

03/01/14

Are you a successful single-site car wash operator who is ready to expand? Have you been thinking, “It can’t be that difficult, I know what I am doing?” Guess what — it is not that simple, but with careful planning you can make it happen.

Opening my second car wash was very much like having my second child. I remember thinking, “I’ve got this car wash thing all figured out. This is going to be a piece of cake.” Boy, was I wrong. Fortunately I had put a well-thought-out action plan in place and was able to manage my way around the most common pitfalls. As with my children, I loved the second one so much I kept on expanding.

If you are ready to take that big leap and expand to another location, remember it will take dedication, discipline, and execution of a well-written business plan. For me, I like to refer to my car wash locations as additional children. When they are born they have certain needs, and when they grow their needs change. Like my children, I want them to be successful and I understand that each location is different. You have to be able to multi-task to run multiple locations just as you do when you have additional children.

 

CRAFT AND EXECUTE A BUSINESS PLAN

Hopefully you had a well-written business plan in place before you opened your first car wash location. Did you follow your plan? Did everything go as planned?

When you take the next step and decide to open another location you need to write a business plan. It is important to have a well-thought-out plan in place when things get hectic and it seems like the wheels are about to fall off of the bus. You can revise your old plan, but I recommend you write a new plan to give your business a fresh start. Use your existing plan as a guide and reuse items that helped you successfully navigate the troubled waters of the business world.

 

CREATE AND FOLLOW ACTION PLANS

Systematic processes are necessary when you are operating multiple car wash locations. What are the actions or systematic steps that make your locations successful? Do you have daily, weekly, or monthly task lists? If not, I suggest you develop them to help keep you and your staff on track.

In addition to task lists, I use action item lists. I prepare action item lists if I see multiple items that need to be addressed at a location. On the action item list I describe the problem and assign the task of resolving the problem to a manager or employee. I set a date when the items should be corrected or changed. We both sign off on the task when it has been completed.

 

CREATE AND FOLLOW A FINANCIAL PLAN

It is important to establish and follow a solid financial plan. A second location can put a strain on your finances if you don’t follow a financial plan. I review numbers daily from my locations. I know the daily operational expenses at each location and make adjustments quickly if I see anything out of the ordinary.

I suggest preparing an annual budget for your business. If you have never prepared a budget, take your existing monthly expenses and historical revenue numbers and make financial projections of what you anticipate on a monthly basis. This is a model of how you plan to keep the bills paid.

You should also plan to prepare and review a set of financials on a regular basis. The financial statements should include:

• A balance sheet

• An income statement

• A cash-flow statement

The financial statements should be reviewed often. I recommend reviewing your financial statements once a month. Compare your revenues and expenses to your annual budget and identify any variances. Reliable financials can help identify problems. They report the true financial health of your company. You can use them to help determine if you can keep expanding your business or if you need to increase your cash reserves.

I also recommend you create cash-flow statements for your company. I am conservative and like to project my cash flow requirements for the next six months. It is important to have plenty of cash in reserves to help you get through tough times. Most banks recommend businesses maintain a cash reserve to cover three months of operating expenses.

 

CREATE A CRISIS PLAN

Your crisis plan should address how to handle various crisis situations. I’m not talking about “a zombie apocalypse;” I am talking about real-life situations. Often times, decisions made under stress turn out to be the wrong decisions. Create a series of steps you or your employees must follow in the event of a crisis. Here are a few examples of decisions you may have to make:

1. If you have equipment at different locations break down at the same time, which one gets fixed first?

2. If a large storm is heading your way, which location do you prepare first?

3. If you just experienced a big snow, which lot is cleared first?

I have found it is best to set different priority levels for various problems. I base my priority levels on economic impact.

 

KEEP QUALITY CONSISTENT

It is important to maintain wash quality and overall site appearance when you are operating multiple locations. It is easy to lose focus on these items in the everyday hustle and bustle of life. This is why I like to stress the use of daily task lists. Although mundane, these lists will help keep you on track.

When you feel the business is running smoothly, perform a SWOT analysis on your own and on your competitors’ locations. SWOT is an acronym for strengths, weaknesses, opportunities, and threats. I have a simple form I complete, which helps me see how my sites grade compared to the competition overall. Make any necessary adjustments to your action plan to help keep ahead of the competition.

 

BUILD A BRAND

Branding plays a major part in the success of any customer-oriented business. It is important to build a brand for your car washes. Is the name of your car wash memorable? What do your customers think of you? What makes you stand out in the crowd?

When building your brand, be known for something special. Use the SWOT analysis findings to help you create a niche market within your trade area. This will help increase brand awareness.

There are four major aspects of branding:

1. Quality — Set the highest standards in your market.

2. Publicity — When consumers hear your name, you want them to say: “That’s the place where I wash my car!”

3. Words — Own the words “Car Wash” in your market.

4. Credentials — The crucial ingredient to the success of any brand is its claim to authenticity.

 

CREATE A MARKETING PLAN

Just because you build it doesn’t mean they will come. The car wash business is no different than any other business when it comes to marketing. You have to develop a plan to promote your car washes. There are a number of online companies that can help you create a marketing plan for your business.

With the proper plans in place, a multi-site operation can become a reality. It will not be easy, but nothing worth having ever is. Go make it happen. Wash on!

 

Bobby Willis has been in the car wash industry for 19 years. He currently owns Cool Wave Car Washes in Virginia. Bobby often consults with manufacturers, site owners, and new investors about the car wash industry. He frequently speaks at regional and national trade shows on car wash marketing and site evaluation. He can be reached at bwillis@coolwavecarwash.com.



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