Past Issue

Long-Term Growth Controlling Costs and Increasing Profits

By Bud Abraham

11/01/14

Many detail businesses today are finding it difficult to maintain a reasonable profit. Costs are increasing for equipment, chemicals, and supplies, as well as environmental issues relating to collection and disposal of wastewater. Further, the future looks to bring even higher costs so a detail business owner must have a plan in place to minimize costs.

 

CHEMICALS AND SUPPLIES

Owners must track detail chemical and supply costs. Your chemical and supply vendor should be more than happy to help you develop an inventory control form. Have your vendor inventory with you weekly to determine the needed order for the next week. You should be looking for patterns of abuse and address these concerns with employees. If you are not tracking chemical and supply costs currently, doing so can drop these expenses 15 percent to 20 percent. Many chemical and supply vendors have no checks or balances and simply look at your inventory and fill the order.

It is common to have a commissioned salesperson in charge of your inventory orders. There is no control if you do not carefully review them. Include vendors in your quest to manage costs and explain your goal not to exceed 10 percent of total gross sales in your chemical and supply costs. A reasonable result will find your detail business at 35 percent gross profit on the chemicals and supplies you use on each job.

Your vendor should inventory your total chemical and supplies at least monthly with adjustments made to balances. Be aware most vendors want to keep your inventory high even though they provide no-cost delivery service. A good practice is for you to physically look and track inventory to seek proper levels. The goal is to have all needed items on hand without waiting. Some progressive detail businesses have developed spiffs when costs fall below averages to encourage control.

 

JOB COST MATERIALS

Many detail businesses do not job cost materials to the detail job. The best practice is to cost all materials used to complete a detail and then review actual gross profit.

All estimates should be adjusted to cover the actual costs incurred on the detail. It is never a good policy to be unsure of actual costs on individual detail jobs.

 

MARKETING

Marketing your detail business is vital to growing your long-term success. Placing an advertisement in the local newspaper is easy, but it ends up in the birdcage tomorrow. You need to develop relationships with local auto dealers, body shops, fleets, etc., explaining the advantages of dealing with your detail business. Schedule set times during the week to be out in the field making sales calls. Small gifts with your name on them will have prospective customers calling when they need detail services. It keeps your name in front of them when they have a need. After a short time, you will be able to call and say you have space for a quick turnaround right now if they have a need for a detailed vehicle. Place the focus on what makes your company different and unique. Auto repair shops and dealership service departments have many vehicles going through their shops every day that need detail services. You should get them to sell your detail services to their customers.

 

STAFFING

Many detail businesses are not staffed to provide quick turnaround on details. Detailers love to see many cars in the lot waiting for the privilege of being detailed. It is unfortunate that customers demand a quick turnaround. If your detail business allows a backlog greater than a day on a consistent basis, it is a sure way to lose customers. Good management understands the effort needed to feed the detail technicians and keep them busy. They also know and accept the customer is the only reason for them to be there and must focus on the customers’ needs to get the car back to them.

 

CUSTOMER SATISFACTION

As the owner, you have an interest in how satisfied your customers are after the detail. Customers should be surveyed on how your business performed during and after to determine if their needs were met. Your business should perform quality checks on all vehicles identifying concerns before the customer is contacted. Quality details must never be compromised but rather be a source of pride for the busine

Customers
demand a quick
turnaround.

One of the best practices for your detail business is to exceed the customer’s expectations. Double-check the car inside and out before the delivery. A delivery area should be set aside with velvet rope to reacquaint the customer with the completed vehicle. The customer should be given detailed information about the detail while walking around the car. Protective floor mats should be in place as they enter the car — it helps communicate the red-carpet treatment your customers deserve. Customer retention will always develop business now and in the future. Your customers will refer their neighbors and friends to your business to be smothered in extreme customer care. They will talk about your business regularly.

These steps lead the way to developing long-term detail business profits and will help develop customer retention and growth while controlling costs. Your effort will show results and place you at the top of your market.

  

Bud Abraham is a 40-plus-year veteran in the car wash and detailing industries as a manufacturer, distributor, operator, and consultant. He was a founding member of both the Professional Detailing Association and the current International Detailing Association and their first executive director. He conducts seminars on detailing at industry events and consults worldwide.



LATEST ISSUES

click me