When buying, opening, growing, and building a car wash business, the balancing act known as risk versus reward is an ever-present part of the workday. It’s the norm for business owners to take calculated risks to further their business growth and meet their financial commitments, but at what cost?
How much are you willing to risk to reap the rewards that you desire? I remember, as a full-service car wash owner, I often struggled with decisions that required weighing risk against reward. Now, as a member of a team of insurance professionals, I would like to share some thoughts regarding several issues that you may contemplate when making such decisions. Here’s a fun one to start off with involving your detail department.
The customer comes in for express detail services — a hand wax and an interior super clean. While explaining the service to him, the customer tells you that he is very picky. This should be taken as a warning sign. Being a new person on the job, you tell the customer that you are willing to provide the service for $80 knowing that you can complete the job in an hour and a half.
The customer comes in and nitpicks every little spot outside and inside the vehicle whether or not it was part of the service that he paid for. So as not to wreck your day, you redo most of the vehicle to appease the customer. This now ends up costing you money and losing worker productivity.
The customer comes in, looks at his vehicle, and leaves as a happy camper.
You may now have a customer for life, or one that you would rather not do business with.
The customer requests that you wash her brand new Bentley Coupe, which has spinning rims and an attached luggage rack. Keep in mind that each rim is valued at $2,000 and the custom-made rack is worth $1,200.
Your drive-on person has a mishap while driving the vehicle onto the conveyor, bending one of the spinning rims by bumping the protected conveyor rail. As the vehicle continues down the tunnel, a cloth curtain gets caught on the rack, tears it from the vehicle, and scratches the trunk of the vehicle. I don’t even want to mention what happened to the vehicle behind this one.
You wash the vehicle and the customer leaves with a shiny car that includes sparkling rims and well-dressed tires.
Your car wash has always had a plan in place for vehicles that are not the norm. Your procedure allows individuals to be at certain tunnel lookout points with emergency tunnel shut off switches just in case of an incident. Or, you have decided to not accept vehicles with spinning rims and roof racks, thus eliminating the risk. On the other hand, instead of losing the revenue, you offer a hand wash for vehicles of this type. Of course, your customers need to be aware that you have to charge more for the hand wash while using additional staff for cleaning these vehicles. Determining what vehicles are beyond the norm is in itself a challenge. Recently, a full-service car wash operator washed a Ferrari in his tunnel. His damage claim was $4,000 — for a $30 wash. I can almost feel their pain — both the car wash owner’s and vehicle owner’s.
A disabled individual in a specially equipped van requests that you wash his vehicle. This vehicle is the same as a standard vehicle with the exception of the hand-operated accelerator and brakes.
Your drive-on person asks the customer to exit the vehicle and then drives the vehicle to the car wash conveyor. While the drive-on person is very careful and safely drives the vehicle to the staging area of the conveyor, he neglects to turn off the ignition. As he steps out of the vehicle, his t-shirt gets caught on the hand controls, shifting the vehicle into drive, striking the car in front of it, which then jumps the track, slamming into the state-of-the-art car wash equipment that you almost paid off. The estimated damage is $11,675. All this heartache for a $25 full-service wash — on a sunny Saturday morning at 10:45 a.m.
You just received $25 in revenues and now have a loyal customer.
Knowing a fellow car wash owner who actually suffered this mishap, you decide to establish some safeguards. Understanding that disabled persons know their vehicles better than your staff, you direct the customers to drive their vehicles onto the conveyor, allowing them to go through the tunnel in their own vehicles. In addition, you also provide additional space in the tunnel by not loading a vehicle directly in front or behind the disabled person’s vehicle. Additionally, you have staff members explain to the driver the dos and don’ts while moving through the tunnel. You also post other staff at key areas in the tunnel with the emergency tunnel shut off switches at their sides. For those disabled vans that will not fit in your tunnel, you have designated a specific day for customers with this type of vehicle to call for a hand wash appointment. Once again, the customers are to be made aware that a hand wash will cost more than the typical tunnel car wash, since there is more labor involved in washing their vehicles.
You have decided to let staff write checks, deposit funds, and make change orders. There could be several reasons for making such a decision: You may have several car washes; perhaps you’re busy with other business ventures; or maybe you’re operating as an absentee owner. Regardless of the reason, a decision of this nature allows individuals to have a hand on your wallet. While utilizing your car wash management system you notice that there has been an extraordinary number of receipt reversals giving refunds to the customer.
For all the years that you have owned the car wash you have never had to deal with employee theft. Until now. Over the past several months you have been dealing with many family issues that have been taking a huge amount of your time. Upon your return you have noticed over a thousand dollars in receipt reversal. Additionally, your cashier has purchased a new vehicle. Because you trust your long-term manager like a brother, you let him do your bank deposits while you were tending to family matters. While reviewing your bank statements and canceled checks you notice several large checks written to a specific vendor. After contacting the owner (vendor) you learn that he doesn’t process his account receivables or bank deposits, his manager does. I am sure by this time you’ve gotten the point.
While tending to family matters, your trusted staff handles your business beautifully without incident. They perform so well, you decided to pay them a bonus. Life goes on…
When it comes to your business’s cash and coins, you can’t have too many safeguards in place. For example, you never allow any business check to be sent without your viewing, approval, and/or signature. When you bought your car wash management system, you as the owner took the time to learn the system and all of the reporting features. You get that gut feeling when something doesn’t seem right. By learning your car wash management system, you have the ability to cross reference all transactions, receipts, etc. Additionally, when you set up the security within the car wash management system, you only allow certain individuals to access specific areas in the management system. Thus, actions such as receipt reversals are to be approved and completed only by the car wash management staff and owners.
IN A NUTSHELL
As an owner or manager, you can’t be in all places at all times. Although you may have all the procedures and safeguards in the world, “stuff justhappens.” Fortunately, you can call on your insurance professional to provide the important car wash insurance coverage your business deserves. The scenarios outlined above are not intended to give you answers on how to handle a given situation, but to stimulate the thought process and encourage discussion. Ultimately, it boils down to a few questions: Am I willing to wash this vehicle? Do I allow my staff members to handle my hard-earned money? What is truly the risk and what is the reward? And is it worth it?
Sam Furno is president of the Western Car Wash Insurance Agency, a division of Wells Fargo Insurance Services USA, Inc. You can contact Sam via e-mail at Sam.Furno@wellsfargo.com