Economic Rain

March 1, 2005

5 Min Read
Economic Rain

The elections are behind us, and the Fed is going to inch up interest rates. How much do the resulting political, social and economic gymnastics affect car washes? Very little. During the 40-plus years in which Ive been a participant in the car-wash industry, Ive witnessed countless boom times as well as moments of Where is payroll coming from? Through it all, we have beenand still arevery fortunate, as car washing is almost recession-proof.

When I first decided to make car washing my career, I spent some time pondering my choices with my Uncle Bill, who was a Princeton University trained economist and one of my early mentors. I remember asking him, Bill, you could have done anything. You had a great education and great connections, and you chose to be a car washer.

Why? Without missing a beat, he replied, You know, there are many choices in life. I figured I could be a big fish in a little pond or a little fish in a big pond. For me, the choice was simple: I chose to be a big fish in a little pond. Bill never had any regretsmaybe some anxious moments, but no regrets. His vision for our industry is still unfolding.

Like my uncle, I chose a similar path. Thinking back on my career, I believe there was another message behind Bill's words of wisdom. He clearly saw the opportunity and challenge of being his own boss as well as being a pioneer in a growing and exciting business.

The Right Model

In the long run, education can save you from making some wrong choices; but when the buck stops with you, you cant help but make some mistakes. It goes with the territory. You can study, theorize, and apply reason, statistics or just about any discipline you can imagine, and sometimes youre still going to come up scratching your head, looking for answers.

The simple truth of our very complex economic models is they are detached and based on history. Every day, we break the mold and new models are formed. But markets are made up of buyers with wants, needs and expectations. As long as emotion plays a role when dealing with the public, finding the right economic modelone that workswill be doggone near impossible. Let's face it: As citizens, we are part of the global economy, but as car washers, we live, work and prosper in a three-mile world.

Creating Scarcity

There's an old story about a man who had a very successful hot-dog stand. He paid all the bills, grew his business and was eventually able to send his son to college. Business was booming. Customers came from miles to buy the man's wares.

One day, his son came home from college and said, Dad, dont you know there's a big economic downturn? People are losing their jobs. Businesses are closing. You have to be more cautious, cut back on inventory and slow down on the marketing. The man thought, Well, my son is pretty smart. He goes to college. Id better listen. Sure enough, he cut back on supplies, was more careful in his marketing and expenses and, in general, became conservative. Not long after he made these changes, he noticed his business slowed down, eventually to the point where he wasnt meeting his financial needs. Shortly thereafter, he closed his business, fulfilling his son's prophecy.

The moral of the story is you cant stand in front of a moving snowball. You get out of the way and let it grow, or you try to stop it and break it apart. The sons economics teacher might have been right about the existence of a downturn, but what he didnt know was buyers and sellers' emotions often fuel the success of a business, not logic.

A Little Rain

As I said earlier, the car-wash business is almost recession-proof, but the effects of the national economy vary from city to city and state to state. If you are a full-service car washer in a market that has been hit by major layoffs, you may feel some impact. If you are a petroleum company that owns car washes, youll probably find wash sales will have a correlation to gasoline volume. If you are a self-serve or stand-alone automatic, you may be positively affected.

Car washing is a relatively flexible business, and its elasticity is driven by many factors, primarily weather. How you run your operation and what you do to react to market conditions is the difference between being profitable and really successful. The story of the hot-dog vendor is truebelieve strongly that you will fail, and chances are you will. If you properly plan, execute strategies and establish meaningful, realistic goals, you are headed in the right direction.

To ensure the success of your car-wash business, it is critical to match your choice of real estate, building style and equipment to the type and size of revenue stream you have available. If you are working with the right suppliers and other professionals, the only rain youll experience will be weather-driven, not economic. Good financial planning, as Uncle Bill used to say, is almost as simple as saving for a rainy day.

Fred Grauer is the vice president, distributor network, for MarkVII Equipment LLC, a carwash equipment manufacturer in Arvada, Colo. He has made a life-long career of designing, selling, building and operating car washes. He can be reached at [email protected].

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