Cutting back expenses

[Kate Carr]

Hi all,

I'm looking for tried and true solutions for reducing costs at the carwash. If you have tips/tricks for cutting back expenses related to labor, maintenance, utilities, advertising, etc., I'd love to include them in the March issue of PC&D.

You can e-mail me, PM, or reply to the thread here. Thanks in advance for all of your help!!

 

[David Moore]

I don't do advertising so I can't cut back there. Utilities and chemical costs never go down. The only savings I could do is cut back the hours of my clean-up guy. I'm not to that point yet.

 

[Ben's Car Wash]

Hi all,

I'm looking for tried and true solutions for reducing costs at the carwash. If you have tips/tricks for cutting back expenses related to labor, maintenance, utilities, advertising, etc., I'd love to include them in the March issue of PC&D.

You can e-mail me, PM, or reply to the thread here. Thanks in advance for all of your help!!

Kate,

In all of my year's and all of my careers, or feilds, business alway go to labor first to cut expenses. During "good times" as business prosper an owner, feeling benilivent (sp?) usually raises incomes or pads labor. As times get tougher labor is alway the first and easiest to cut. Saying this, automation is a key at reducing labor while cash flow is good.

The last thing that the "government" want us to do now is layoff or cut wages, but this is what I see must happen first. It is what begins the "first round" of a tightened labor market during a down turn in an economy. While this initally makes it worse locally, it will preserve a business (like a hot air balloon throwing over ballist to stay aloft).

Labor in traditional Full Service wash account for up to 40%-50% of expenses. It is the largest "budgeted item" so it only makes sence to start there. Then go down from the next largest budgeted "non-fixed" item... utilities. Water saving idea, power saving suggestions, turning off blowers motor on lower selected washes, Changing Metal halide lights to fluresent, decresing timers on signs at night. Next cutting uniform cost, advertising, auto expenses, rentals, entertainment, shopping around for insurance to lower premiums 6 months before they are due.

But labor cost are by far the largest in flex and full service. EE have more fixed cost and less varibles to work with... more susceptible to market down turns IMO.

One big way to cut cost, which is not dishonest, but I don't generally suggest it, is to "float" chemical cost. That is to "switch" suppliers often on a rolling basis (I won't do this... I have been with Simoniz for 6 years). You drag out you payments into a 90 day payment "defering" expenses. Many larger business will do this to shift expenses off the books into another year to make a "fiscal year" look more attractive.

Cont.

 

[Ben's Car Wash]

Some chemical supplier will automaticly set you up on a 60-90 day pay instead of losing your business or as we do in the hospital stock supplies on "consignment" and only charge "after you use a product". For example we stock over $300,000 worth of cardiac stents on consignment in my department that we do not pay for until after they are re-ordered. With medicare billing now paying in 10-15 days we can get paid before we cut a check for a $2200 stent on a 30 day account! That gives a Hospital a 15 day float... multiple that by 15-20 per week.... that 10's of thousand of dollars even millions of dollars in a bank earning interest instead of sitting on a shelf. Car washes can do the same!


We also "negotate" contracts with suppliers. I do this with one of my reps for example with WONDER WAFFERS. If I order WONDER WAFFERS from the company directly to get $15.95 pricing, I have to order a min. of 18 ( something like that, I forget now) cans of waffers. Otherwise I pay $21.95 a can. My automagic supplier wanted to chage me $22.95 a can... I won't by from him. So I told him if he could match it for $15.95 per can, no mater how many I buy, I'd buy from him. So I now can get 1 or 20 cans for the same price every Monday (or any day because he is in my town) without shipping! So NEGOTATE for lower prices, NEGOTATE CONSIGNED STOCK, NEGOTAE TERMS OF PAYMENT IF YOU CAN GET 90 DAYS... GET IT! Also, my Automagic rep will give me a 10% discout if I pay my bill in under 15 days! So ask about that to!

Check about getting your utility deposit BACK! Or a decrease in your deposit, or a credit because you recycle water! Become "green certified" I think was a topic a few years ago by Christine Todd Whitman (was she recently in the news and in trouble for something?).


Next month my City is scheduled to run a water reclaim line about 1500 feet from my washes. I plan to hook them up. I plan on saving nearly $7,000 a year in water alone and make my wash drought proof. While making my wash "environmentaly friendly" and hopefully allow me to market it smarter in a city known as "the city of pure water".

These are just a few suggestions that I have. We are all in this togther and the suppliers know that they need to move chemical too! Now is the time to be creative and hit them up for some flexability and "wiggleroom". But don't forget about loyality...it goes a long way!

 

[pitzerwm]

Usually, a company will cut advertising first, which leads to less business, then they need to cut labor.

 

[Mel(NC)]

Here are a couple of ideas:

Have lighting on two ciircuits. Have one circuit with the majority of lights on a timer that shuts off during the overnight hours when there are no customers. This saved me about $70/month at my 4 bay SS.

Turn off water heaters during the summer months. Most of the Summer is in the upper 90's where I live and people are generally trying to stay cool so I don't think the hot water is missed. This saves me about $180/month.

 

[Bud]

Kate, in the case of SS and IBAs with no employees, it is difficult to cut expenses. Some suggestions are: keep a good eye on the chemicals, make sure you are not overusing & paying too much, use smaller tips in wands and in IBAs if possible to save water & chemicals, keep the weep as low as possible, shut boilers down in slow times such as a lot of rain/snow, use electric tank heaters on days they will keep up, close altogether if it appears there will be little or no one washing (very, very cold weather), install timers instead of photo cells and keep close watch on the settings, if you are paying an electric co for their lights see if you can do w/o some of them, have some lights go out early where security is not an issue (such as a street sign, some vac islands) I realize there is not a whole lot of savings in the above except the natural gas with the boilers but things do add up and if you have multiple washes, it adds up quicker.

 

[Earl Weiss]

One simple solution is to get catalogs from all the suppliers you can. Sonny's, Kleen Rite, Wind Trax, Car Wash superstore, Kim Supply, etc. Compare prices on parts and particularly on cleaning solutions.

Be prepared to test some solutions by buying 5 gallons at a time checking dilution ratios and effectiveness as well as compatibility with other solutions. . I now use some solutions that cost about 1/3 of what I was paying and in other cases I was not able to find a less expensive alternative.

 

[bigleo48]

Kate,

I agree with almost everything that has been suggested so far and I do most of them. One thing that is not directly mentioned is the "DIY" stuff. I try to do everything, including mowing the lawn, snow plowing, repairs and upkeep. I do all my own signage and promotion paraphernalia. I am always monitoring these forums for ideas on how to increase sales or decrease costs.

I also micro manage utilities and other consumables. I will adjust floor heat based on forecast, lights based on time of year, etc.

I have a somewhat recent site and made it the most energy efficient I could. I have staged lighting and tankless water heaters, timers, 600V 3-phase service, etc.

On rainy summer days, I smile when I think that my site sits there and draws almost nothing!

But most importantly, my tweeking is always invisible to the customer.

Big Leo

 

[soapy]

One of the biggest expenses in a carwash is the electrical service. It is usually billed based on two factors. The total amount of electricity used and the peak demand at any given time. The higher the peak demand determines the rate at which the amount used is billed. If you can keep the peak demand down at any given time you can lower your electrical bill. One way of doing this is by adding VFD drives to gradually start large motors so they don't have such a huge demand at start ups. Another way is to stagger motors so they don't start at the same time. I have seen dryers that are not staggered that try to start 3 motors at one time. If they are staggered to start at different times the peak demand is reduced resulting in lower electrical bills.

 

[Keith Baker]

Well said Big Leo

I also try to do as much as I can myself. It seems like there is always an air leak, water leak, or some broken piece of machinery to deal with. Hiring someone else to repair things really cuts into the bottom line.

The other thing I did was pay my debt down as fast as I could.

I run as lean as I can to by adjusting floor heat settings, keeping the weep costs down and adjusting the light timers monthly. All of these are loads on your business that don't increase sales by spending more money in these areas.

My expenses keep going up, and sales haven't kept up with them, but I feel like I'm holding my own. I don't think I would be if I had a large payroll and mortgage payment to make.

Keith

 

[Kate Carr]

These are terrific ideas and insights! Keep 'em coming.

(Can't imagine how editors did their jobs before Auto Care Forum??)

 

[soapy]

If you have a RO unit you should be reclaiming the water that is bypassed. Usually for every 1 gallon of RO water you send 3 to 4 down the drain. You do not need a fancy reclaim system to do this. Just a large holding tank so you can feed the water back into your carwash system. It works great for most HP functions. This will save you on both water and sewer bills. It worked out to around a $500 savings per location for me per month.