You ever go to
the doctor and he says you're OK but "We need to do a little tweaking
on those ancillary items"? You know the ones . . . liver, kidneys,
prostrate, heart, lungs? I can assure you if your doc said that to you,
you would probably be pretty shaky! Well let's put this scenario in the
language of your car wash. Sure there are items we buy that are sold as
"ancillary", but the truth is those items are a necessity. If
not you wouldn't buy them, right?
Ancillary items
are critical to your operation because they are necessary to operate efficiently,
economically and profitably. If not necessary, they become a luxury! To
classify a list of these items, they would probably fall into the following
categories.
-
Items
that Manage Revenues:
Cash registers, customer interface items, computers, and counters
-
Items
that Manage Operations:
Security and surveillance cameras, monitoring equipment for chemicals
and water, software and training systems
-
Revenue
Generators (those not required for the wash process):
Items such as vacuums, vending machines, signage, other services (detailing,
windshield repair, food items)
-
Environmental:
Water treatment, reclamation, energy efficient lighting, insulated
doors, and heating systems.
What happens
to all of us, when we go to build a car wash, is we become so overwhelmed
with the intensity of the project we overlook the importance of what we
refer to as the minor players. Let's take a look at how and when these
minor players/ ancillary items come into play.
Assuming we are
building a ground-up car wash, your first exposure to ancillary items
occurs on your first visit to the city engineer and planning offices.
After announcing
that you are thinking of building a car wash you will be bombarded by
a number of questions. Many of these questions will become requirements
before you can obtain approval and build your car wash. Remember when
it comes to car washes, every city department plays a role, has an agenda
and a wish list. As a result it is not hard to understand that some questions
are "fishing trips", some will become a requirement, others
are "I can't believe that they fell for that one" and finally
there will be very legitimate items you will want to incorporate in order
to obtain your approvals. Bottom line, some of those items we thought
of as ancillary become a necessity. A helpful hint: Any time you go before
a governing body, have your car wash representative in tow. Their input
will be incredibly helpful and save you a lot of heartache going forward.
Most communities
are very aware of commercial car washes and the impact they have on the
city and on city services. As a result, most will look for some sort of
commercial quid quo pro. One way that a community deals with the stress
and strain on their budgets and services is to impose "impact fees".
These fees can be daunting to say the least. Recently I have heard of
fees in excess of $250,000 to connect into the water and sanitary system.
After the initial
shock, you ask "There must be a way to minimize this?" Fortunately
there are a number of companies specializing in water recycling or reclamation
systems. Generally, depending upon the complexity and size, these systems
are commercially available in the $25-60,000 price ranges. The use of
one of these should cut your impact fee by 2/3, lower your water and sewer
costs, allow you to operate in times of drought, and you will be looked
upon within the community as a "green" neighbor. There are a
number of good systems out there that specialize in car wash; generally
you can find more information through the internet or through your car
wash provider. For information, a couple of good websites to try are the
International Carwash Association (CarCareCentral.com) and Auto Care Forum
(autocareforum.com).
Whether you are
building a "ground-up" or operating or purchasing an existing
wash, most ancillary items play a role. The example of the water recycling
is way easier if we are a ground-up, but let's assume we are facing an
existing situation where water and sewer are going through the roof or
drought conditions prevail. Would the addition of water recycling be worthwhile?
The answer is very site specific, but if you are in an area where the
investment will pay for itself in three to five years the answer is probably
yes. Most other ancillary opportunities are in a similar boat. If they
enhance your business and pay for themselves in less than five years,
go for it!
As mentioned
above, there are a number of revenue generators that are not part of the
wash process but are integral to the overall success formula of your business.
Depending upon the type of car wash you build, the ancillary items will
vary. In most cases you can always add coin or credit activated vacuum
cleaners. These simple devices are the unsung heroes of car wash sites.
They always report to work, pay for themselves in less than a year and
are available to your customers 24/7. What wondrous machines they are!
Other ancillary
revenue generators not requiring labor are vending machines, signage,
and displayed merchandise. These items use your commercial space to generate
additional profits. If your car wash is attended, there are numerous other
services that will help drive business and enhance your customer's experience.
In the food category there are "food carts", espresso, and vended
products. In the non-food category, we have items like dent-less body
and windshield repair, express detailing, gasoline, quick lube, and countless
other related services. Bottom line, ancillary revenue services are great
as long as they add profit without complicating and/or compromising margins.
There have evolved
a number of new twists in the car wash offering. The latest, and certainly
one attracting a lot of attention, is the "express exterior"
concept. Here the customer enters the property and drives into an area
where there are a number of automatic tellers. Once the customers enter
either "cash" or "credit" they proceed to the wash.
Generally these "express exterior" washes are tunnels (with
conveyor). The customer enters the tunnel (there may or may not be an
attendant) and is pulled through a series of wash, rinse and drying arches.
Once the wash is completed, the customer can proceed to a free vacuum
area or exit the site. Express exteriors have really benefited from technology.
In their case, without the availability of computer cash management and
control systems, they wouldn't have become as attractive a business offering.
In addition, the development of new vacuum technology, secure vending,
remote diagnostics, security, and off site management oversight has really
been a benefit and, in fact, a necessity.
We have singled
out only the "express exterior" wash, but the fact is that every
wash type can benefit from, and in many cases needs, these ancillary products.
Take as an example the in-bay or rollover car wash. There are so many
of these units in the marketplace that ancillary products can provide
a competitive advantage. If you were to survey motorists who use this
type of wash one area for improvement in wash quality is wheels/tires
and a better job of getting rid of bugs. Voila, now there are ancillary
products that attack this area, "HubScrub" and "BugBuster".
They do meet our criteria of adding value while improving the bottom line.
Are they a necessity? You bet!
As we look further
into the ancillary category we realize that every operator most look at
their business always asking the question "What can I do better tomorrow
than I am doing today?" If this is your philosophy then you will
always be exploring the ancillary avenue for ways to improve. As a rule
of thumb I would only add ancillary items if they meet these general criteria:
1. Is the additional
item one that can be depreciated and capitalized?
2. Does the product add value for my customers?
3. By adding this product does it enable me to manage my business more
effectively?
4. Will the product pay for itself in less than five years?
5. Do I gain a competitive advantage by incorporating this item?
6. Will the addition of this item help insure my future business?
I am sure that
you can add lots to my list. Bottom line, there is so much to learn in
the ancillary field that you'll need to dedicate some time, choose the
right provider, ask for assistance and don't leave ancillaries until last!
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