Southwest Car Wash Association - 2nd Quarter 2017 - ADVANTAGE by Southwest Car Wash Association ADVANTAGE

ADVANTAGE

Publication of the Southwest Car Wash Association

Second Quarter 2017

2017 Wade Welch

1st Place Team

2nd Place Team

3rd Place Team

Golf Classic

Highlights

Salt Lake City Car Wash Tour August 8th Featuring: Wiggy Wash, Sparkle Express & Mister Car Wash & More! Register Today! www.swcarwash.org

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Car Wash Development Since 1984 Ground-up and remodels Car Wash Equipment Sales, Service, Installation and Parts Installation and Service on All Manufacturers Consulting CAD Drawings and Design Services Training (Operational and Maintenance) Site Selection and Evaluation Sell, Supply and Service Chemicals Chemical Evaluations and Cost Controls Marketing and Market Research Ongoing Preventative Maintenance Texas and Surrounding States 24 Hour Service, 7 Days a Week Large Inventory of Parts, Supplies and Chemicals Fleet GPS Monitored for Fast, Efficient Response Times

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ADVANTAGE

PRESIDENT’S MESSAGE

LETTERS TO THE EDITOR

As this issue of the ADVANTAGE goes to press, we have just completed our annual trifecta – the SCWA Exhibitor Council Meeting; the Annual SCWA Wade Welch Memorial Golf Classic and the SCWA Board Leadership Planning Session. Participating in these events I was again reminded what a DeWayne Hall wonderful family atmosphere SCWA President we have in SCWA. As our events grow in numbers – our family grows larger but also seems to become closer. Watching the great camaraderie in the meetings and also on the golf course was fun and rewarding. One of the key goals of SCWA has been and continues to be building a culture of family, an attitude of “we are all in this industry together and we all have each other ’s back”. This is exemplified in many of our programs but probably one in particular, the SCWA Mentors Council. This is a group of seasoned car wash operators who are available to help other members with questions, concerns, problems or in some cases just reassurance. The SCWA Board met on the final day in a strategic planning session to evaluate current programs and examine new opportunities for our members. The Board members enthusiastically reaffirmed SCWA is a member driven organization and our key goal is to keep our focus on meeting our members' needs. The Board worked on innovating and improving our member programs while being careful to retain the family culture that is so important. As a result, be watching this next year for announcements on new programs designed for our car wash managers and the women in the car wash industry. 2017 also brings expanded opportunities for SCWA members through the On the Road Again Car Wash Tours. August 8 – SALT LAKE CITY. We will be in Salt Lake City to see the Wiggy Wash, the largest car wash in North America, Sparkle Express with the famous wax & polish tunnel, Mister Car Wash, plus other outstanding car wash operations. October 24 – BATON ROUGE. We will see Benny’s Car Wash operations plus the new Geaux Clean Car Wash. It will truly be an exciting year for SCWA as we continue to build a strong culture of family and an increased menu of programs and benefits for our members. Be sure to mark your calendars and register for the Salt Lake City and Baton Rouge Car Wash Tours. Thank you for your support and please encourage your car wash friends to become a part of the SCWA family.

Dear Chuck and Jane and the Board, I just wanted to drop you a note to express my appreciation and deep gratitude for honoring me with the Lifetime Achievement Award this past February at the 2017 SCWA Convention. Wow, I was just truly blown away by so many of my peers that sought me out to express such kind sentiments towards me and my family. Being there in the thick of it all brought back many good memories. I was totally impressed by the video interview your son Chris captured. He made me look good, and for that I am truly grateful! I value the time we have had working together and appreciate the friendship we share. Again, thank you so much. Jim Coleman Dear Mr. Space, I thank the Southwest Car Wash Association for the recognition of John Jurkens contributions to the car washing industry. The SCWA Lifetime Achievement Award is an outstanding tribute to John, an honor that makes our family very proud. The gentleman you sent to Albuquerque to video the participants in the film was professional and did a super job. He moved between narration and photos to tell a concise story of John's life. Well done. With thankfulness, Alice Jurkens

THE HOW OF CARWASHING PODCAST The carwash industry was introduced to a new free resource this past February: “The How of Carwashing” podcast. This podcast is an on-demand audio show dedicated to helping investors, owners, operators and managers improve and grow their carwash business. “The How of Carwashing” series provides practical advice, tips and techniques and is available for free through iTunes (Apple Podcasts), Stitcher (for Android phones) and online at the www.TheHowOfCarwashing.com. David Begin and Henry Lopez are the hosts of “The How of Carwashing” podcast, sharing an entertaining mix of car wash business topic discussions, and interviews with other successful carwash owners, suppliers, and industry experts. Co-host David Begin is the Managing Partner of Wild Blue Car Wash, a highly successful exterior-express wash with two locations in Colorado. Ryan Cook, Managing Director of Business Development at Diamond Shine Inc., was recently featured on “The How of Carwashing” podcast. Ryan has over 19 years of experience in the carwash industry, and visits approximately 200 wash locations each year to support his clients. Ryan recently shared some highlights from that in-depth interview. 3

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ADVANTAGE Q: Please introduce the 5 Factors of Cleaning… Cook: The goal for all carwash operators is a clean, dry, and shiny vehicle. To achieve this requires the right balance of these five factors: Mechanical Action, Water Quality, Temperature, Time, and Chemistry. It takes a fine balance of all of these variables to achieve the goal and provide the best product possible for our customers. It also requires on-going monitoring and adjustments since all of these factors change over time, and the slightest variance can result in a significant impact. Q: Let’s explore each of the factors in a bit more detail. Please introduce the Mechanical Action factor and what we need to consider on this topic… Cook: Some type of mechanical action is a basic and necessary component of an effective automated washing system. This may include the effect of friction from anything that physically touches the vehicle, or it may also include the physical action of water sprayed onto the surface of a vehicle. The point is that something has to touch the car and create some level of friction, whether that is a brush, water or both. The more dependent you are on mechanical action, the less dependence there will be on the other factors and vice versa. If you have brushes and cloth that touch the car, then other factors like chemistry are partially offset. The factors are all inter-dependent. Q: Tell us more about the role of Water in the cleaning process… Cook: When we consider water, it’s the quality of that water that’s likely the most important factor. I find that water quality, or the lack thereof, is a common source of problems. Water quality affects the efficiency of the chemicals. There are a couple of water factors in particular that are critical to the process: water hardness and the total dissolved solids in the water. Water hardness will affect things like the thickness of your foam. With soap foam, you are typically trying to strike a balance between appearance and effectiveness – too thick or foaming is not as effective as a cleaning agent, while too thin or watery is not as visually appealing to the customer. As for total dissolved solids, one of the more noticeable impacts is the dreaded water spotting. In my experience, most wash sites would benefit from an investment in water softener system. Q: Please explain the role of Temperature in the cleaning process… Cook: With this factor, we need to consider the temperature of the car, the water, and the bay. Cold water retards the effectiveness of chemicals, for example. As with other factors, there is a tradeoff; If most of your cleaning is accomplished by friction, then you need less heat. Of course, temperatures will fluctuate significantly, requiring on-going monitoring and adjustments to the combination of the 5 factors.

Q: What about the role of time? Cook: The longer the car spends in the tunnel, the better the results. You can slow down the track speed to get a cleaner vehicle, but this reduces your throughput. There are other ways to compensate for the speed of the conveyer, of course, including building longer tunnels and additional equipment. This is where a strong relationship with a chemical and equipment service provider proves beneficial. They should play an instrumental role in helping you design your tunnel and equipment package, and then provide on-going support and guidance on how to calibrate your operation to produce the best product possible. Q: And the final component is Chemistry… Cook: Yes, water and friction alone are typically not enough to get the job done. Chemistry is my favorite factor for obvious reasons. This is a broad topic, including pH balance and the sequence of application. Helping you consider and adjust all of these factors is one of the benefits having a good working relationship with your chemical service provider. The idea is to strike an ideal balance between the amount of chemicals used with how and when they are applied. A common mistake is to focus on the chemical factor alone, instead of taking a holistic view and approach with all 5 factors of the cleaning process.

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ADVANTAGE Q. Other thoughts and advice? Cook: Creating a great show for your customers is important. I recommend that you regularly check your end product. Stand at the end of the tunnel and watch the cars, and inspect the tunnel to ensure everything is working. That’s the first thing I do when I visit a wash, and it usually helps me identify the source of any problems. For the complete interview with Ryan Cook, please visit www. TheHowOfCarwashing.com to listen to podcast episode 4.

SCWA MEMBER HIGHLIGHT Frequently SCWA members are featured in National Publications. The following article is from Auto Laundry News – March 2017, and highlights Brad Mann, Wash Factory Car Wash.

Gentle and Quiet - Raising the Customer Experience

Brent Scott had a thriving landscape business in Las Vegas; he sold it and moved to Dallas and became intrigued with the professional car wash business. As he did his research, he discovered that the location was the single most important factor in achieving suc-

cess. The second thing he realized was that he had no experience. He did, however, admire the operations of Wash Factory Car Wash in Denton, TX. So he sought out the owner, Brad Mann, and collaborated with him to build a team to help him enter into the professional car wash business. But all along, his research reflected a “do-it-like-everybody-else-does-it” mentality, which he refused to accept. He wanted the motoring public to have a safer, less intimidating, enjoyable experience. Along with Mann, Scott worked with Pro-Tech Service Company L.L.C. The team traveled all over the United States to help Scott and Mann achieve Scott’s goal. Once the team was exposed to the Belanger SpinLite line, they knew they had found the equipment that matched their business philosophies. Scott named his car wash Crossroads Car Wash after the Denton County, TX town in which it is located. The construction and equipment installation was meticulously executed, on time, within budget, and of the highest quality. The car wash opened the weekend before Thanksgiving 2016, and offered the lowest priced car wash package for free or its value deducted from any other package. Scott was pleasantly surprised and quite overwhelmed by the motoring Continued on pg. 11

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2017 SCWA WADE WELCH MEMORIAL GOLF CLASSIC The 2017 edition of the SCWA Wade Welch Memorial Golf Classic hosted 110 golfers on a “picture perfect golf day” at the La Cantera Palmer Golf Club in San Antonio. The event is played annually in memory of long time SCWA member and avid golfer Wade Welch. The Classic kicked off on Tuesday evening with a Golf Reception at the Eilan Hotel & Spa. The First Place team this year was the Arbor Car Wash team led by Megan Swenson.

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public’s praise and acceptance of the soft, gentle, and quiet wash and the entertainment his facility and its equipment provides. Customer Comments • Unbelievable car wash experience! • This will be the only car wash I go to. • This is the first time my baby was not scared of the car wash. • This was the quietest, gentlest, non-intimidating car wash experience I’ve ever had. • This was completely and totally entertaining. And by the colors of the lights, I knew I got what I paid for. • This is actually the only car wash where I can continue my phone conversation while I go through the wash.

LABOR LAW The New Administration's Effects on Immigration and the Overtime Rule

With a new president in office, employers are curious about the effect this new administration will have on them. Employers, in general, have many things to look forward to with the new administration. Some of the more business-friendly aspects of the incoming administration are the repeal of Obamacare provisions placing obligations on employers, the appointment of conservative members to the National Labor Relations Board and its General Counsel, as well as potential limitations to joint employer liability. Two areas where car-care business owners and operators can expect changes are immigration and the overtime rule.

IMMIGRATION

The vast majority of the eight to 12 million undocumented immigrants in the Unites States are employed in the service and agricultural industries. Although there are no known issues regarding undocumented employees in the car-care business, as service providers, it would not be surprising to learn that they may have undocumented employees on staff. Statistically speaking, car-care business owners and operators are more likely to have to deal with the issue of an undocumented employee. Mandatory E-Verify? An item on the new administration’s list is requiring all employers, big or small, private or public, to utilize e-verify. Under the Immigration Reform and Control Act (IRCA) employers are required to verify the identity and employment eligibility of all employees hired in the United States

after November 6, 1986. Employers face civil and criminal penalties for knowingly hiring or continuing to employ people without employment authorization. IRCA designates the Form I-9 as the means of documenting this verification process. E-verify is an Internetbased system that allows employers to determine the employment eligibility of new hires. E-verify compares information from an employee’s Form I-9 to federal databases to confirm employment eligibility. Remember, Forms I-9 are not the same as e-verify. Unlike Forms I-9, e-verify is not mandatory; it requires employees to provide their social security number, and it requires a photo on identity documents. This information is then compared to the records available to the U.S. Department of Homeland Security and Social Security Administration. A great feature of e-verify is that it gives employers almost instantaneous results on whether an employee is eligible to work in the United States. Many employers have opted to use e-verify because they only have to use e-verify to confirm employment eligibility for new hires. Employers are not required to run existing employees’ information through e-verify. In essence, all employees hired before the employer starts using e-verify are “grandfathered” in.

Additionally, the new administration has said it will increase the efforts to enforce immigration regulations. The new administration has suggested it will make the use of e-verify mandatory. If this were to happen, there is a question as to whether employers will be required to run all of their employees (current and new) through e-verify. One thing that is certain, the enforcement of mandatory e-verify creates a higher risk of penalties for employers who may be employing a person who is unauthorized to work. Increased Enforcement Additionally, the new administration has said it will increase the efforts to enforce immigration regulations. Part of the plan is to triple the number of agents in the Immigration and Customs Enforcement agency (ICE) and automatic deportation of criminal aliens. Some of ICE’s enforcement efforts consist of conducting raids at certain business locations. Although the most recent raids are said to be focused on criminal aliens, ICE is known to focus its resources in industries known to have a large percentage of their workforce composed of illegal immigrants. Again, most undocumented immigrants work in the agricultural and service industries. With the increase of ICE agents and enforcement measures, businesses in the service industry can expect to be the target of raids and undocumented immigrant round ups. 11

ADVANTAGE

2017

ADVANTAGE

UPDATE ON NEW OVERTIME RULES

In 2015, the Department of Labor (DOL) issued a proposed rule to modify the Fair Labor Standards Act (FLSA) rules on current minimum wage for white-collar, salaried employees. White-collar, salaried employees are exempt from the FLSAâ&#x20AC;&#x2122;s minimum wage and overtime pay protection. Employees are exempt if they are employed in an executive, administrative, or professional capacity as defined by DOL regulations. The new overtime rule would require employers to pay certain exempt employees at least $913 per week or $47,476 annually. The rule also provided that employers would be required to pay highly compensated employees a base salary of $134,004. Another aspect of the proposed rule was that these increases were subject to an automatic periodic adjustment. DOL estimated that over four million employees would be affected by the change. The rule was intended to go into effect on December 1, 2016. Of course, this set off a mass panic among many employers. Twenty-one states filed suit against the Department of Labor seeking declaratory relief and an injunction that would block the revisions to FLSA. In the case, Nevada v. U.S. Dept. of Labor, a Texas federal court blocked the proposed overtime rule. No. 4:16-cv-00731, 2016 WL 6879615 (E.D. Tex. Nov. 22, 2016). Although the new rule was blocked, employers can expect the new administration to make a change to the overtime rule, but not nearly as drastic as the one proposed under

the former administration. The current minimum wage salary for exempt employees is $455 per week or $23,600 annually. The purpose of the new rule is to update the current minimum wage salaries for exempt employees to reflect the effects of inflation and ensure that the intended overtime protections are fully implemented. For now, employers must continue to abide by the prior rules still in force. Jacob M. Monty is a SCWA member and the managing partner of the Houston-based law firm, Monty & Ramirez LLP. Monty is board certified in labor and employment law by the Texas Board of Legal Specialization. He regularly advises employers on a wide array of labor and employment issues. Monty & Ramirez LLP is an employment, labor, and business immigration law firm.

OPERATIONS LED Lighting - Maximizing ROI of Upgrades

In the quest to improve profitability, car wash operators continue to look for new ways to attract more business, cut costs, and reduce crime. LED lighting has proven to achieve all these objectives simultaneously with a typical ROI of more than 50 percent. Car washes using traditional metal halides or fluorescent fixtures spend $3,000 to $11,000 annually on lighting, which equates to 30 percent to 50 percent

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ADVANTAGE CHART 1 - STANDALONE, IN-BAY AUTOMATIC CAR WASH

of their total electrical bill. Seventy percent to 90 percent of that cost can be eliminated with LED upgrades. Many operators have made at least a partial upgrade to LED lighting to take advantage of these benefits. Wash bays and wash tunnels are generally the initial focus and account for 30 percent to 47 percent of the total lighting power usage of an average car wash. Do not forget about the other 53 percent to 70 percent of lighting power usage found in perimeter lighting, wall packs, signage, and equipment/other rooms. So, which areas should be upgraded first? Why? And how should an operator choose the right fixture for their needs? Prioritization of spend varies by the objective to be achieved. Bays and tunnels certainly are the largest areas of expense, but may not yield the highest ROI or the most improvement in safety or marketing benefits. Each area will be reviewed below with considerations and insights into each area to allow you to prioritize your upgrades based on your objectives. Typical areas of lighting for car washes include perimeter lights (pole lights), wall packs, vacuum bays, and signage to fully maximize the benefits of LED lighting. Expenditure on each area varies by car wash type (in-bay automatic, self-serve, or tunnels). Consider the following charts for an average car wash operatorâ&#x20AC;&#x2122;s lighting cost by function, for an in-bay automatic, self-serve, and tunnel car wash:

An average single, in-bay automatic car wash spends $2,800 in power per year. That could be reduced to $496 per year with LED upgrades with the top areas of priority being the wash bays and pole lights. To fully take advantage of these savings, other areas should be upgraded as well including wall packs and signage, which typically account for around 27 percent of the power used for lighting.

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ADVANTAGE CHART 2 - SELF-SERVE CAR WASH

cost of the light fixture (product cost plus installation costs). Generally, higher wattage fixtures provide a greater ROI. Figure A, outlines typical ROIs of LED upgrades by functional area using a blended average fixture cost. However, ROI on power savings is not the only consideration. Safety and the customer experience must also be considered. Each will be dissected below:

WASH BAYS AND TUNNELS

An average four-bay self-serve car wash with an equipment room, vacuum stands, signage, wall packs, and pole lights spends $4,800 in power per year. That could be reduced to $916 per year with LED upgrades with the top areas of priority being the wash and vacuum bays. Perimeter lighting, wall packs, and signage combined account for around 32 percent of the power used for lighting and can be upgraded to achieve the 80 percent power savings. CHART 3 â&#x20AC;&#x201C; TUNNELS

An average 100â&#x20AC;&#x2122; tunnel spends $11,400 in power per year. That could be reduced to $2,500 per year with LED upgrades with the top area of priority being the tunnel. Yet, vacuum bays, perimeter lighting, wall packs, and signage combined account for around 47 percent of the power used. The wash tunnel is still the largest user of lighting power, by the smallest percentage vs. the other car wash types. Each area can yield a different ROI. The ROI is based on the power savings vs. the existing lights divided by the total

Typically, the largest areas of lighting expenses are in wash bays and tunnels. After all, this is where the customers spend most of their time and can have the largest improvement on the customer experience. Thirty percent to 47 percent of total lighting power usage is used in these areas. When the experience is important, wash bays and tunnels are the places to start when upgrading to LEDs. Typically, this is the second largest ROI behind pole-light upgrades.

WALL PACKS

Wall packs light up vending and changer areas and provide security and lot driveway lighting. They are vital for a cleaner, more inviting look, and are the primary tool used to discourage vandalism on and theft from your building. Wall pack lighting typically accounts for 7 percent to 17 percent of total lighting expenditures, or $500 a year to light a self-serve or an in-bay automatic and $1,600 a year for tunnels. If theft and vandalism are a concern, wall pack upgrades should be a top priority.

ADVANTAGE

POLE LIGHTING/VACUUM BAY LIGHTING

Perimeter lighting is increasingly being used as a strategic differentiator to entice night traffic and provide a cleaner looking car wash that can improve traffic flow. Vacuum-bay lighting is also now being used as signage to draw attention to the car wash with uniquely shaped and interesting canopy designs.

SIGNAGE

Pole lights and vacuum area lighting invite customers to your property and can keep them there longer, spending more money. Traditionally, pole lights were used partially for security and typically provide the minimum light needed by city ordinance to enable foot traffic on the property at night. Pole lights and vacuum-bay lighting is 30 percent to 38 percent of lighting costs. This equates to $1,700 annually for a self-serve car wash and in-bay automatic and $3,400 for a tunnel. Pole lights will offer the best ROI from power savings and, if that is the primary goal, pole lights should be the initial investment.

Power costs for box signs and menu signage is 7 percent to 13 percent of power costs. While this is a relatively small amount of cost, the loss of marketing when these lights fail is critical to the customer experience and driving new/repeat business. Plus, most box signs are difficult to service resulting in longer downtime periods between bulb/ballast changes. New, custom-made LED upgrade kits are available to turn any single-sided or double-sided box sign into highly efficient, highly reliable LED power signs.

SELECTING THE RIGHT LED

Once the areas to upgrade are prioritized, an LED fixture selection process is required. Generally, LED upgrades are accomplished in one of two ways: upgrade kits and replacement fixtures. If your existing fixtureâ&#x20AC;&#x2122;s housing is in good condition and the lens is in good shape, save on product and installation costs by using a LED upgrade kit. Pricing for upgrade kits is generally 30 percent less per lumen Continued on pg. 23

ADVANTAGE

ADVANTAGE Continued from pg. 19

than new fixtures. Also, upgrade kits typically save 30 minutes per fixture on install. However, long-term savings from upgrade kits vary based on the type of kit purchased. There are generally two types of upgrade kits. Single direction upgrade kits for wall packs, pole lights, and canopy lights and omni-directional upgrade kits called ”corncob” lights, made for high-bay metal halide replacements and post-top pole lights. LED lighting has proven to attract business, cut costs, and reduce crime with a typical ROI of over 50 percent. Use the corncob lights for their intended purposes only. By using corncob lights in wall packs, down facing pole

lights, or canopy lights, you’ll lose over 52 percent of the efficiency gains from LED lighting as the light will need to be reflected back towards the space being illuminated. Do use the corncob style lights for decorative post top fixtures. For pole and area lighting, generally, brighter is better. Studies have shown that a properly lit location can reduce criminal activity by 30 percent and promote more traffic. However, the added lighting must be done properly to avoid glare. A light pointed at a 45-degree angle can aggravate customers and neighbors and create blinding light. Look for lighting that is “dark skies” compliant and provides illumination without providing glare and hindering people driving or walking by. LED lighting penetration into the car wash community is rapid and innovative. When done properly, car wash operators can maximize their ROI and improve their customer experience. Be sure to take advantage of the benefits of LED lighting across all areas of a car wash including bays and tunnels, equipment rooms, signage, and wall packs. Michael Call is Vice President, Sales and Marketing at Mile High LED Systems. You can visit the company on the web at www.milehighledsystems.com.

SCWA CAR WASH TOUR Salt Lake City, Utah • August 8, 2017

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MAINTENANCE Taking Care of Your Water Treatment System

Surprise breakdowns can wreak havoc on your business. It is Saturday during pollen season and all of a sudden you have no spot-free rinse water. You recently noticed your RO production has been down, but you figure that your RO unit has been working “good enough” and you’ll get to it later. Later is too late. I don’t mean to be judgmental; we all do this. It is human nature. Maintaining your equipment can save you a lot of money and headaches. With this article I hope to stress the importance of maintaining your water treatment system. It will save you a lot of time, money, and frustration in the future. Let’s begin with the reclaim system. The first key to maintaining anything mechanical in nature is to be familiar with it. Read your manuals. It is not necessary for you to be a rocket scientist to learn the basics of your equipment. Learn the basic flow of your system and where the water comes from and ends up. Read and learn about your pit treatments such as ozone and biological injection. It is imperative that these systems are not only installed correctly, but function properly for optimum pit treatment. You also want to know how to change over to a different source of water if need be. Some reclaim units do this automatically when there is trouble with the system, whether prime loss or pump failure. By familiarizing yourself with the unit, you will be able to understand and follow a technician or manufacturer’s advice during a technical call. Now that you have a basic understanding of your reclaim system, you can organize a preventative maintenance schedule for your unit. Neglecting the maintenance on your reclaim system can turn small issues into costly ones. Most reclaim systems have many of the same maintenance procedures that should be followed. These are usually simple checks to ensure that the equipment is operating according to the manufacturer’s standards.

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The inlet strainer basket should be cleared of debris on a daily basis. This strainer protects the pumps on the reclaim system by catching the larger debris that the pump draws up the inlet suction line. When the basket becomes filled with debris it will not allow the volume of water needed for the system to operate correctly and stresses the pumps on the reclaim system. This could lead to seal failure in the pumps as well. This task will take less than five minutes to accomplish. After cleaning the inlet strainer basket, check the gauge array on the reclaim system. It will give you an idea if the pumps are operating at peak efficiency. This task can be

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ADVANTAGE done when the system is restarted and requires less than one minute. This is especially important if your reclaim system utilizes hydro cyclones (particle separators) as a means of removing debris from the water. If the pressure and flow are not correct with these systems, the cyclones will not work efficiently as they depend on flow and pressure to do their job. If the reclaim system has no safety features to shut the pumps off if low pressure is detected, checking the gauges is the only way to determine if the pumps have water to operate. Pumps that are run dry are a leading cause of failure.

MONTHLY OR SEMI-MONTHLY

Make sure that the reclaim reservoir is not filled with sediment. When the pits fill with debris, less water will be available for the system to operate. If neglected the tank plumbing can become filled with debris. This will leave the water no place to go but to back up in the wash. Underground tank maintenance is something that many new owners do not consider and will lead them to believe that their equipment is not working properly. If installed correctly, tanks are cleaned out two to three time per year depending on the site. Not plumbing the tanks to manufacturer specs in the beginning can lead to the tanks filling with debris quickly and very costly corrections in the future. Usually the inlet suction line will have a check valve in place to expedite priming of the pumps on the reclaim system. It is advisable to make sure they are in good working

order at least once a month. This can be done after cleaning the inlet strainer basket. Simply fill the inlet suction line with water and wait about 10 minutes. When you check the water level, it should be at the same spot as it was before. If it appears that the water level has gone down, it is a sign that the check valve has failed or there is an issue with the plumbing leading from the reclaim tanks. Checking the incoming power supply to ensure it is not sagging or spiking is also important. Equipment is made to operate at certain voltages and phases. If the incoming power is coming in above or below what is intended, it can damage pumps, PLCs, VFDs, and other parts of the system such as contactors and overloads, fuses, etc. Since most reclaim systems use smaller horsepower motors than the other wash equipment, they are more susceptible to electrical anomalies than the larger motors used in vehicle washing. Any electrical issues should be fixed by a qualified electrician. Reclaim pumps typically run off three-phase power and these voltages are lethal. Heed all electrical warnings from even low-voltage single-phase equipment. Anytime you see something out of the ordinary, question it and fix it. Many small repairs done in a timely manner can prevent a snowball effect on your system. All parts of the machine work together. If things are let go to the point that your machine is not functioning at all, it can be quite a task to troubleshoot the issue. Preventative main-

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ADVANTAGE tenance is key. Over the past 30 years, we have found that we hear much less from those who keep their machines in topnotch condition. And, if we do hear from them, troubleshooting is much easier. There are many reclaim systems with original parts that are 15 to 20 years old. By keeping your unit clean and in good working order, major repairs will be few and far between. We’ve talked about the reclaim, but several other categories are part of the water system in the car wash. These include: municipal water supply, reverse osmosis (RO) or spot-free water, and, in some cases, well water. There are subcategories of pre-treatment, pumping stations, and holdings tanks for these as well. As with the reclaim, it is imperative to understand the flow in each of these systems. Read your manuals and understand the basics. The sooner you do this, the better prepared you will be for an emergency. Most installers provide back-up water supplies for all of these systems. Know how they work and what triggers them.

WATER SUPPLY

Municipal Water Many think that their municipal water feed is of no concern when planning a wash. This couldn’t be farther from the truth, especially if you plan on using an RO system. Municipal feeds can have a wide range of pH, flocculants, and disinfectants in them and still pass the drinking water

standards. Higher pH can hinder the effectiveness of chemicals; flocculants can pass through pre-filters and prematurely foul RO membranes; and disinfectants like chloramines can require special pre-treatment in order to feed an RO. Get an extensive water quality report each year from your municipality. This way you can stay on top of any changes that may take place in your feed water. With this report in hand, you can call your equipment provider and make sure that you have the proper pre-treatment for the use of this water in your wash. Well Water It is even more crucial to test your well water upfront, and periodically. Wells can change quickly. You typically don’t have to worry about chlorine in your well, but things like iron, manganese, hydrogen sulfide, silica, and pH can be big trouble. Many make the mistake of pre-treating this water just for the RO, but use the well water in other places. Remember, what goes in is what comes out, especially if you are using a reclaim. If you pump a bunch of well water with a high pH, hydrogen sulfide, and iron to your wash, you will have orange walls, a smelly tunnel, and chemical problems. This will then go into the reclaim pits and concentrate. The reclaim system can help with treatments like ozone, but only in small doses. If these issues are dealt with upfront with the proper pre-treatment, you will not compromise your equipment or your reclaim.

ADVANTAGE

PRE-TREATMENTS

Maintaining your pre-treatment for fresh water is just as crucial as maintaining your other equipment. Once again, read your manuals on your softeners, carbon tanks, and ROs. Familiarize yourself with the basics. Softeners Softeners are used to remove hardness from the water. Make sure that your softener’s brine tank is maintained and kept full of salt. Manually regenerate your softener occasionally. Watch to make sure the brine is being drawn from the brine tank and the unit backwashes to drain properly. Make sure that the drain line is never plugged and that the water flows freely from the line. It is a good rule of thumb to replace softener resin every eight to 10 years, sooner if the softener is slightly undersized or heavily used. Carbon Tanks Carbon tanks are typically used for chlorine/chloramine removal, but they filter as well. Make sure the unit is backwashing properly and the drain line flows freely to drain with no obstructions. You should test the water from the carbon tank with a low-level chlorine strip at least every year. There should be no chlorine detected if the unit is sized and working properly. The carbon bed typically has a life of about four to six years and should be replaced at that time.

Reverse Osmosis ROs are fairly simple. Familiarize yourself with what the gauges are telling you. Mark the pressure and flow gauges on start up and utilize the information to trouble shoot. Notice that the pressures and flows should be linear when adjusting your valves. If there is a change, act right away. The longer you wait, the more susceptible you are to damaging your pump and/or membranes. RO pre-filters should be changed regularly. Most manufacturers have gauges on their units that you can use to help with this. If not, a good rule of thumb is to change your RO pre-filter every month. Pre-filters cost a lot less than pumps and membranes. There it is in a nutshell. Read your manuals, familiarize yourself with the equipment, and do preventative maintenance. Water management is a key factor in the car wash. Maintaining and familiarizing yourself with your water treatment systems will save you a lot of time, money, and frustration. Above all it will help train you and give you confidence during emergencies so you can keep washing cars while getting the results that you want. Dwight Royal is CEO, Vice President of Operations at Con-Serv Manufacturing. You can visit the company on the web at www.con-servwater.com.

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ADVANTAGE But how do you capture these detractors? First, let’s try a practical exercise. Take out your wallet, purse, or wherever you like to place your receipts. Examine a few of them. Do you notice a trend? Many places you’ve visited have already solicited your feedback. Some even offer a reward in the form of a contest entry. This is a smart move for two reasons: First, an angry customer may decide to leave feedback with you, cool off, and move on. Secondly, it alerts you to customer feedback and allows you to address the problem(s) before they recur. There are many vendors that offer pooled survey contests for small local businesses. Just search “survey local customers online” and you’ll find numerous services available. Some even provide the promotional signage, online forms, and manage prize fulfillment for a reasonable monthly fee.

MARKETING Control Keyboard Cowboys FOUR TIPS TO PREEMPTING NEGATIVE ONLINE REVIEWS

First, I’d like to disclose that I’m no digital marketing expert. I’m just a car wash guy who realized years ago that I need to know just enough about this stuff to keep it from tanking my business. It’s no secret that a single negative online review can be a nasty deterrent that keeps potential customers from even visiting you — possibly countering the hundreds (or thousands) of hard-earned dollars that you’ve invested towards marketing your car wash business. What’s alarming is how many car wash business operators seem to think that simply delivering a quality wash with friendly service is enough to satisfy rogue customers. Unfortunately, lukewarm or even negative online reviews can happen even when you’ve done nothing wrong. From time to time, some customers — for reasons unknown — will attempt to inflict unnecessary damage upon your business out of spite. One of my colleagues refers to these rogue customers as “keyboard cowboys,” and, when left to their own devices, they can certainly wreak havoc. Unfortunately, most car wash businesses have at least a few poor reviews regardless of their level of service. In this article, we’ll discuss a few ways to deal with existing reviews. However, it’s important to understand that prevention is the best medicine when dealing with these notorious keyboard cowboys. Here are four tips for keeping your car wash’s online reputation clean and shiny:

TIP #2: DROWN OUT THE BAD EGGS WITH GOOD REVIEWS

Think about your customer’s thought process: how much weight will they give to one poor review that’s written hastily in all caps if there are 10 good ones, each outlining their positive experience at your wash? First, make sure that you’ve claimed business ownership through services such as Google MyBusiness, Yelp for Business, Angie’s List Businesses, and Facebook. This will ensure that your business listing doesn’t get automatically generated after a customer leaves a single review, and allows you to connect with customers by posting owner responses, up-to-date information (preventing the “their hours were SWS FSB Ad - JP.PDF

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TIP #1: MAKE IT EASIER TO COMPLAIN… BUT IN THE RIGHT PLACES

Years ago, a car wash might have posted a sign stating: “If you’re unhappy, tell us; if you’re happy, tell others!” This concept isn’t dead, it just needs to evolve in order to meet the way people share information today. Ignoring online reviews can spell disaster for your business because a rogue customer’s voice goes well beyond their family and friends today: their opinion is visible to just about anybody online. If you’re thinking, “I’ve put a survey on my website, so I’m all set,” think again. Placing a survey on your website in the hopes that a disgruntled customer will stop there won’t cut it. Social media and directory companies are hungry for content and, unless you’ve sorted out how to turn these features off, will continuously request feedback. As a business owner, your job is to make it easier for angry customers to voice their opinions directly to you, allowing you to rectify or resolve their complaints before they post elsewhere. With any luck, you might even turn these customers into promoters rather than detractors. This is an increasingly difficult task — but it’s not impossible.

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ADVANTAGE wrong/they weren’t open” reviews), and more. Once you’re set up, don’t be afraid to solicit reviews — just remember not to make any offers in return. A simple sign on your free vacuum post or at a tip box stating, “We hope we earned a good review” followed by icons of the networks/sites you’re on can go a long way towards encouraging more positive reviews.

TIP #3: RESPOND TO (ALMOST) EVERY REVIEW

Now that you’ve claimed your business properties online and you’re actively monitoring reviews, it’s time to respond to customers and show everyone that you care about earning their business. Responding to positive reviews allows you to understand what motivates your customers to continue washing with you, and demonstrates that you’re willing to take the time to acknowledge your customers. It helps build a sense of community between you and your customers. I’m no marketing expert, so I won’t attempt to tell you what to say — just be brief and let them know how much you appreciate their feedback. Now for the hard part: how to manage bad reviews. If, for example, the customer is a monthly wash member, you might have their contact information handy. Reach out to the customer offline and attempt to resolve the issue. Let them know that you saw the review, but don’t attempt to get them to remove or change it. You never know — if you resolve their problem, they might update it on their own.

If you’re dealing with an anonymous or unknown customer, respond in a caring and professional manner. Offer your contact information and either a way to resolve the problem or, if no problem exists, explain any source of confusion. If you believe that the review is fake or illegitimate, don’t be afraid to flag it. An important caveat: If a review cites any legal issues (e.g., theft, damage reports, etc.), it’s best to consult an attorney before responding or attempting to remove the review. Seek professional legal advice before dealing with these customers in a public forum.

TIP #4: WHAT HAPPENS AT THE WASH STAYS AT THE WASH

Oddly enough, what prompted this article was not a negative online review. A car wash owner recently brought me a newsletter from a month-to-month legal defense service that he subscribes to. Ironically, the company sent him an e-mail with the subject line, “Victim at Car Wash Gets $780.” It wasn’t his wash: some other car wash denied a customer claim saying the damage was pre-existing, but one call from the service’s lawyer got it paid on the spot. This terrifying story highlights the fact that the tools available for a keyboard cowboy to lash out at your business are evolving at an alarming rate. Washing cars for over 30 years, Anthony Analetto serves as President of SONNY’S The CarWash Factory.

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FINANCE Selling? INCREASE THE SALE OF YOUR CAR WASH

Thinking of selling your car wash? Now is an excellent time to do so. The car wash industry is on the rise and many markets are red hot. Gross sales and net income are up as the economy has recovered and the American consumer is spending money again. Ticket prices continue to go up and there continues to be an influx of wash buyers, both new and experienced. Because of all this good news, the next few years will be a great time to sell for many owners. But the devil is in the details. Understanding how appraisal companies and banks look at and underwrite transactions will help you prepare and maximize your sale price making sure you squeeze every dime out of your wash. First and foremost, many transactions are completed with the help of financing from banks. The majority of buyers have limited amounts of cash and need financing. For example, with SBA loans most buyers come in with 10 percent to 20 percent down, and with conventional loans most come in with approximately 25 percent to 35 percent as their down payments; the rest is financed.

If you have a cash buyer, that is great. You should be able to avoid the formalities of banks, but cash buyers are rare. So for most sellers, preparing for a bank underwrite and traditional appraisal report is essential to be able to maximize the sale price. The key is to report as much net income on your tax returns as possible.

VALUE â&#x20AC;&#x201C; CLEAN UP YOUR TAX RETURNS

Calculating values is complicated, but most car wash values are normally based in large part on a multiplier of the net income (also known as EBITDA, or earnings before interest, tax, depreciation, and amortization) that is reported on the sellerâ&#x20AC;&#x2122;s last three years of tax returns. This is also called the income approach by appraisers. So the more EBITDA that is reported on the tax returns the higher the value will be. And again it is the EBITDA that is reported on tax returns, not internally prepared financial statements, that drives value. There are a couple of different cash fow multipliers out there for putting a value on a wash. Capitalization rate (aka cap rate) is one that is used by many appraisal companies (and throughout the commercial real estate industry). This ratio divides the EBITDA by a market-driven percentage. Cap rates on washes fluctuate widely throughout the country. On the East Coast or in California, we see cap rates as low as 8 percent. In less competitive markets a 15 percent cap rate is not unheard of.

ADVANTAGE

ADVANTAGE Here is an example of how value is calculated by the capitalization rate ratio: $600,000 Gross Sales $480,000 Expenses $120,000 EBITDA If the average cap rate in the market were, say, 12 percent then the value of the wash from this approach would be: $1 million value ($120,000 net income/12 percent cap rate = $1,000,000 value of the wash). So again, the more EBITDA that is shown on the seller’s tax returns the higher the sale price should be. Conversely, say a seller got greedy with Uncle Sam and only reported $80,000 of net income (not the $120,000 above), then the wash’s value would drop a lot: $666,667 value ($80,000 net income/12 percent cap rate = $666,667 value of the wash). That is a $333,333 difference in sale price based on just $40,000 of cash flow. Many sellers shoot themselves in the foot this way. It is very common.

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UNCLE SAM – INCOME TAXES

As mentioned, many sellers make this mistake. They under report to save on income taxes but instead trap themselves when they go to sell. For example, that $40,000 of additional income from the example above would probably result in an increase of income taxes of around $12,000 for the year. So the seller lost $333,333 in sale price to save $12,000 in taxes! This does not make a lot of sense. But many small business owners (not only in the car wash industry) make this mistake all the time. On the buyer side it is also a common problem. That is, they have a very difficult time finding a seller that reports all of their income. They search high and low for a wash, but cannot find one that shows enough EBITDA to justify the asking price and/or to cash flow the loan.

CASH FLOW – DEBT COVERAGE RATIO

Another major component that underwriters look at when reviewing a loan request is the debt coverage ratio (DCR). This ratio is tied to the value component just discussed above. They are connected. Here you are looking at what the cash flow will be after the borrower pays all expenses including the proposed mortgage payments. Most banks have a minimum debt coverage ratio of a 1.25, so this also impacts the total debt a property can support and thus impacts your ability to maximize your sale price. Here’s an example: $1,000,000 Sale Price $100,000 Down Payment $900,000 Loan Amount $70,404 annual mortgage payments ($5,867 per month, based on 6 percent rate and 25 year amortization schedule). Here is the actual calculation: $120,000 of net income/$70,404 annual mortgage payments = 1.7 debt coverage ratio

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ADVANTAGE With a 1.7 DCR this is a deal that would easily qualify and close based on that level of cash flow even at 90 percent financing/loan to value. But if the seller under-reported on their tax returns and for example only reported $80,000 of EBITDA then the deal would not work and the seller would have to hope that a cash buyer would come along or the seller would have to roll the dice and offer the buyer a land contract (i.e., seller financing). Here is the DCR calculation with less net income: $80,000 of net income/$70,404 annual mortgage payments = 1.14 debt coverage ratio. This loan would not get approved. There is not enough cash flow to support the loan payments, and, further, the cash flow would not support the value, so the seller would either have to lower the purchase price or the buyer would have to come up with a lot more cash.

CONCLUSION

Plan your sale a couple of years in advance. Clean up your tax returns and report all of your income to maximize your sale price as well as increase your pool of potential buyers. Don’t shoot yourself in the foot by trying to save on income taxes. Remember that the majority of buyers need financing so you will likely have to “play ball” with the banks if you want to get as much as possible from your wash. Jeff Rauth is a commercial loan officer at a bank that funds car washes nationally.

PERSPECTIVE Increase Profitability with a Focused Approach

Every operator wants to increase revenues to enhance profitability. There are several avenues an operator can take to increase revenues. Some feel that saving as much as possible on operating costs is a good way. One very successful businessman I worked for had a favorite saying: “You can’t save your way into profitability.” While operating as efficiently as possible without compromising wash performance is an important element, it is only one piece of the puzzle. Some feel increasing volume is the answer. Most marketing experts would say this is probably the most difficult and expensive way to go. Upselling involves using your existing customer base to increase revenue by improving sales efforts. While this involves a conscious effort, it also maximizes revenue with something the wash already has — existing customers.

WHERE IT BEGINS

Upselling really begins with maintaining a customer-friendly wash and good onsite marketing. Generally the overall appearance and operation can go a long way to help increase or maintain high revenues. When people go into an attractive retail setting they anticipate spending

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ADVANTAGE more than when they are in a discount merchandiser or volume outlet. They also expect a higher level of performance and quality. The entire operation must reflect quality and have the look of success. The physical appearance of the wash and equipment should enhance the wash experience. For washes expecting high revenues, this means that the site must be as attractive and well maintained as possible. The exterior and grounds of the wash should present a wellgroomed appearance. Customers should see the look of quality in every area of the wash.

AN INFORMED CUSTOMER

Creating awareness and understanding of the products and services offered at the wash are essential to the success of upselling. Caution must be taken here not to overload the customer with too much information in one area, creating physical clutter and mental confusion. The overall site goal should be to simplify the customer experience and create a cohesive presentation of services. Judicious use of signage, banners, and other marketing tools goes a long way in the education of the customer. Check with local regulations before investing in any exterior signage. The goal is to educate using as many customer-friendly techniques as possible to inform customers of the type and value the services your wash provides. Obviously, with any of the various types of washes, producing the best wash performance is the key to successful upselling, repeat sales, and satisfied customers. Educating your customers and promoting your wash offerings is essential to make your wash “user friendly.” Designing an onsite sales/marketing program is not an easy task. It requires thoughtful planning and execution. Take a good look at your current onsite marketing efforts and ask yourself these questions: • Is my wash itself an asset to my overall marketing strategy? • Does it present the image that I want? • Does it encourage my customers to use all my services and to return on a frequent basis? Answering those questions will put you well on your way to a successful upselling program. Employees must be well trained and knowledgeable about all the services your wash offers. This includes any full- or part-time employee who might have contact with the customer. In the case of self serves and in-bay automatics that mainly employ part-time employees, it is especially important that they are able to assist customers with choices they make in the wash or are able to demonstrate how to use the wash properly to get the most from their wash experience. For self-service operators whose contact with their customers is somewhat limited, upselling can be a real challenge. In addition to an attractive, well-maintained

site and equipment in good working condition, it requires offering the services your customer desires. In the early days of self service, all that was required was good cleaning chemicals and excellent high pressure. That evolved into the foam brush and tricolor polishes. Today, there is a variety of other options like hand-held dryers, tire-dressing applicators, and multi-function vacuums. The key to upselling these options is to make sure signage educates and encourages usage and ease of selection while making them easy to use properly. Offering credit card usage is a must in our society, which is becoming more and more cashless. Onsite promotions offer further opportunities for upselling. Offering bonus time can encourage sampling of extra services and create additional value for customers. Don’t forget that offering useful, popular products in your vending machines can also be an asset in upselling the self-service customer. In-bay automatic operators may use methods from both self serves and tunnel washes. While there is usually more contact with the customers, educating customers and upselling opportunities are much greater due to the variety of pay station options available on themarket today. Newer models often allow an operator to use a short, canned video or allow you to create you own. This can be invaluable to upselling by educating the customer to the value of any extra services your wash may offer or wash specials.

Employees must be well trained and knowledgeable about all the services your wash offers. WASH PACKAGES

With limited customer contact, packaging services is also key to upselling automatic customers. It is important, in either an automatic or tunnel, to sell to the needs of your customers. How your packages are presented and listed is critical. Like their tunnel counterparts, not much time or space should be devoted to the basic package. People entering the wash have already decided to buy a wash. The challenge is to encourage them to purchase the wash that best meets their needs at a cost that is reasonable to them. Bundling the most desirable services in easily understood terms can aid them in their decision. Some may disagree with me, but most experts would say the majority of customers are there for the value of the wash they chose, not cost savings. For that reason I favor using terms that make the customer want to choose a package that meets their needs, not one that saves them money. Keeping this in mind, a term like “best value” would be more desirable than “you save” to encourage customers to try a package. 45

ADVANTAGE

Interlocking fastening system for quick and easy installation

Durable, smooth surface for minimal maintenance

Heavy duty slotted fastener leg to accommodate expansion and contraction

1-r----Rebar

(If required}

-�•_.....,..,,---- Electrical/Data Distribution Raceway L---4'+--- Insulation

Concealed fasteners for a clean finish

PrO\liding a minimum effe<trYe R•value of 22 for the wall assembly

CARWASHWALLS.COM JIM DILLARD 281.381.1870 I jimdtexas@aol.com

18707 Big Cypress Drive Spring.Texas 77388 46

ADVANTAGE Bundling services in a package requires a good working knowledge of your customer base. All too often operators are tempted to offer their most profitable services rather than those that customers prefer. Successful packaging of services offered involves designing the packages around those services your customer base requests the most, not the most profitable for the operator. Although the number of services in each package is important, the services offered will usually be the determining factor on how well the package is received by your customers. It is important that the names of the packages reflect their value and that those names clearly define which package is better or best. Simple terms such as “good, better, or best” or “silver, gold, or platinum” do the best job of educating customers. Also using words like clean, shine, and protect in service descriptions educates customers in a clear, simple, and easy-to-understand manner.

THROUGHPUT

Another key to upselling in an automatic or express-exterior wash is facilitating smooth processing through pay stations. If possible, at busy times, it is highly desirable to have an employee assist customers at the pay stations. This may not only assist upselling but also lead to smoother throughput. Customers tend to become impatient if they have to wait in a long line for a wash, which encourages them to select one of the cheaper options to make their visit as short as possible. Some may even think the larger the package the slower the service. Any time you can have an employee at the pay stations, it can be very helpful to upsell your customers. It is essential that these employees present themselves well in terms of appearance and manner, in addition to being knowledgeable about all the services and contents of the packages to assist those customers who may have questions or need help using the pay station.

SERVICE ADVISORS

The key to any successful upselling in a traditional full-service or flex-service wash is to have well-trained, well-mannered, and well-groomed service advisors. Having each one of them attend a formal training session followed by observation of their work is essential. They must have a thorough knowledge of what each service does and how it is performed as well as how to use a menu and the features and benefits of each package offered. The temptation here is to hire a “good talker” rather than a good communicator who observes the vehicle for possible needs and listens to what the customer tells them. Any good service advisor should be highly motivated by a good incentive program. The program must be well defined and based on goals that are realistic and achievable. Most well-conceived plans involve incentives based on increased rather than maintained sales levels. When trying to upsell, don’t forget the value of a la carte sales. While usually only a small part of overall sales revenue, adding an extra service to a sale helps maintain a good sales average. To accomplish

this, it is important that a la carte items be realistically priced and clearly defined. They can be effective upselling tools for a service writer to encourage a customer not willing to purchase a package who may want an individual service instead of a package. Adding a clear-coat protectant or tire dressing to a basic wash helps maintain the sales average while still meeting the individual customer’s needs. Regardless of your wash format, upselling is an effective way to increase revenues by getting the most from your customer base. It requires a concentrated effort on your part to create the best atmosphere to encourage customers to use all the services your wash has to offer. Make sure that sales and marketing efforts are coordinated to optimize your sales efforts by sending a consistent message to your customers. While it may be tempting to focus on selling the most profitable extra services, basing your upselling efforts on meeting customer needs will produce the best results. When customers value their wash experience your upselling efforts will be rewarded every time they use your wash. Ron Holub has been involved in the car wash industry for 35 years working for several national car wash chemical companies, owning a car wash and detail supply company, and serving as a general manager for a national car wash chain.

LEGISLATIVE UPDATE As you probably know, last month, the House passed an Affordable Care Act repeal and replace bill (the American Health Care Act or AHCA). A few key amendments were made to the bill at the last minute in order to assemble the votes necessary to pass the bill. These amendments included changes to the way that the AHCA would treat pre-existing conditions. To help shed some light on this complex issue, we wanted to share with you the below piece by Alson Martin, who is a health law expert and the Vice President of Health Care for the Small Business Council of America.

THE AMERICAN HEALTH CARE ACT: PRE-EXISTING CONDITIONS, STATE WAIVERS & HIGH RISK POOLS

Twenty five percent (25%) of adult non-elderly persons in US have a pre-existing health condition. Under the Affordable Care Act ("ACA" or "Obamacare"), insurers had to charge people the same age the same amount, regardless of their health status. The AHCA, as passed by the House, would change that, allowing states to apply for waivers to allow insurance companies to charge sicker people (those with pre-existing conditions) insured through the individual market more if those people had a gap in their insurance coverage of more than 63 days, subject to whatever protections they could obtain by their state's high risk pool. 47

ADVANTAGE

CV-A

Features

■ Fragramatics 1600 hr Turbo Motor ■ Poly or aluminum dome ■ Computer controlled timer ■ UV protected graphics ■ Filters – Four-bag system uses high performance,

synthetic filtration media with 15 sq. ft. filtration area. Two easy-access service doors on rear ■ 2” dia. vac hose – high-flex, vinyl, crushable, 15 ft. long. Includes cuff and polyethylene hand tool ■ ¼” x 25’ Wire braid or coil hose with inline gauge

Specifications

■ 1.25 HP ‘Big Dog’ high output compressor ■ Brushed Stainless Steel Tank and Main Cabinet ■ Coin acceptor – mechanical ■ Electrical - 120 V ac, 25 amps ■ Mounting - One internal and two external lugs with security collars. Uses 3/8” bolts for secure installation.

■ Tank Dimensions - 18.5”dia. x 42”h ■ Unit Weight - Net 145 lbs. Ship weight 185 lbs. ■ Ships in carton/pallet: 67”h x 32”w x 31”d Options

■ Multi-coin acceptor ■ Lighted dome ■ Debris catcher ■ Dome colors: red, orange, yellow, green, blue, white ■ Hose colors: red, orange, yellow, green, blue, white, gray, black

fragramatics.com 48

3021 Midland Drive • Pine Bluff AR 71603 800-643-1574 • sales@fragramatics.com

ADVANTAGE

PERSONS WITH INDIVIDUAL HEALTH INSURANCE.

A person with a pre-existing condition getting individual health insurance (not employer provided insurance) would not be affected by the AHCA unless he or she had a lapse in health coverage for longer than 63 days. Then, the degree to which he or she is affected will depend on whether he or she is the resident of a state that has gotten a waiver. If the individual in question resides in a state that has not gotten a waiver, then for a period of one year, an insurance company can charge the individual 30% more for his or her premium. If the individual in question resides in a state that has gotten a waiver, then for a period of one year, that person would face insurance rates that could be based on his or her individual condition after health status underwriting, subject to whatever high risk pool protections are available in that state. States with waivers can opt out of Obamacare's list of 10 essential health benefits, meaning certain types of drugs or procedures could be excluded from coverage, in effect making coverage of pre-existing conditions, such as pregnancy or mental health benefits, very expensive for those with more than a 63 day gap in coverage. The AHCA's inclusion of high-risk pools demonstrates that the GOP is providing states with the option of removing Obamacare's protections for people with preexisting conditions because it is only once those protections are gone that high-risk pools become necessary.

PERSONS WITH EMPLOYER COVERAGE.

For those individuals with a pre-existing condition who are covered through an employer plan, there is less risk. Most employers will want good plans to attract and retain good employees. However, the AHCA allows employers to pick any state to "match" in terms of benefits, including one that waived the essential health benefits requirements. In that way, people who get insurance through work might once again be exposed to high outof-pocket costs or limits on what their insurance companies will pay. For example, if a company in Ohio decided to match Delaware, and Delaware had a waiver and did not required prescription-drug coverage, the Ohio company could provide no such coverage or impose a limit on prescription-drug coverage for its employees. The other concern is the 63-day lapse when a new employer's plan has a longer waiting period requirement for plan entry. For example, suppose an employee quits Old Employer to take a better position with New Employer. Old Employer only has 15 employees (now 14 employees) and thus isn't required to offer COBRA coverage. New Employer has a standard 90-day waiting period for entry into its plan. Unless the employee is able

to purchase individual coverage for the gap period (and hopefully doesn't live in a county for which there are no insurers on the public Exchange/Marketplace), the employee will have a gap in coverage that is greater than 63 days. Depending upon the state where New Employer is located, it is possible that, because of the gap, the employee would be subject to pre-existing condition health status underwriting and New Employer and employee paying substantially higher rates for one year.

HIGH RISK POOL INDIVIDUAL HEALTH COVERAGE IN STATES WITH WAIVERS.

Those states seeking waivers would collectively receive $138 billion from the federal government over 10 years to help defray costs for sick people by creating high-risk pools. The more states that seek a waiver, the less each of those states would receive, since the dollars available are fixed in amount. In states with a waiver, health insurance would be cheaper for people who are relatively healthy, while sicker people would be in their own subsidized risk pool if they had a gap in coverage over 63 days. Removing sicker people from the individual market and waivers from covering all 10 essential health benefits would allow policies with skimpier options and not covering the sickest people, thus resulting in lower premiums.

The other concern is the 63-day lapse when a new employer's plan has a longer waiting period requirement for plan entry. Studies from the Center for American Progress and Avalere Health suggest the funds provided for these high-risk pools under the AHCA would only be enough to cover a small percentage of people with preexisting conditions. States would be able to design their high-risk pools in different ways and it is likely that they would not offer the same protections that Obamacare does for those with pre-existing conditions, experts say. This high risk pool funding likely wouldn't go far, especially if many states apply for waivers. Further, the money is only guaranteed for five years. States could use their chunk of the $138 billion in various ways, such as to set up a risk pool. Alternatively, they could just use it to subsidize insurance in other ways, like by paying insurers to offset the cost of sick patients, which could benefit healthy insureds as well. Prior to the ACA, states with high risk pools only covered a small fraction of those who were potentially eligible, the Kaiser Family Foundation found. The high risk pools' strict rules and high costs dampened enrollment by those who were sick and needed coverage. Andrew W. Gurman, president of the American Medical 49

ADVANTAGE

Airline seat-back screens are on the way out? The screens will gradually be replaced by content streamed to passengers' own electronic devices, using improved wireless service. Vitamin D may reduce respiratory infections? Taking vitamin-D supplements was linked to a 12% reduction in colds, bronchitis and pneumonia. But the finding was an association based on analyzing data; it did not establish cause and effect.

The deadliest driving days are the 100 days from Memorial Day until the start of school? During that period, about 1,000 people in the US die in crashes with vehicles driven by teenagers ages 16 to 19, a 16% higher death rate per day than at other times of year. Hearing loss is becoming less common despite the aging US population and widespread use of headphones and earbuds? Nearly 16% of Americans had hearing loss between 1999 and 2004...compared with 14.1% in 2011-2012. Happiness increases with age? Even though aging is tied to declines in physical health and cognition, older people report more satisfaction, happiness and well-being than younger ones, on average...and less anxiety, stress and depression. A bumblebee is endangered? The US population of the rusty patched bumblebee has declined 87% since the late 1990's. Once common on the East Coast and in the Midwest, it's now found only in small, scattered colonies in 13 states. It is the first bumblebee on the endagered species list. Beer makes happiness easier to recognize? Study participants were given either alcoholic beer or nonalcoholic beer. The regular beer drinkers were better able than the nonalcoholic beer drinkers to recognize faces that express happiness. And regular beer drinkers expressed more desire to spend time with other people than nonalcoholic beer drinkers.

BOARD OF DIRECTORS

WELCOME NEW MEMBERS

Association, has stated: "The history of high-risk pools demonstrates that Americans with pre-existing conditions will be stuck in second-class health care coverage -if they are able to obtain coverage at all." Their condition might not be covered for a several month waiting period and may have a lifetime dollar limit. Whether the AHCA elements described above will ever become law remains to be seen. Some Republican Senators, including Maine's Susan Collins, have already raised concerns that the funding for the risk pools is inadequate. As the protections for pre-existing conditions is one of the most popular parts of Obamacare, many of the more moderate Senators may also be concerned about the political ramifications of such a bill. We anticipate seeing many of these provisions modified significantly by the Senate. Whether the Senate and the House are able to finally reach agreement and pass the same healthcare bill in both chambers remains unclear.

DID YOU KNOW

President: DeWayne Hall Oklahoma City, OK (405) 414-1489

President-Elect: Tyler Furney Harker Heights, TX (254) 258-6786

Vice President: Andrew Zamora Lubbock, TX (806) 543-2775

Treasurer: Don Witt Dallas, TX (214) 358-2575

Past President: Davie Swenson Austin, TX (512) 346-8050

Vendor Vice President: Bob Kopko Uniontown, OH (800) 336-6338

Ryan Darby Lubbock, TX (806) 535-7275 Robert Duncan Artesia, NM (575) 308-9248 Ian Heritch San Antonio, TX (210) 421-1295

Edward Arshouk The Car Wash Zone Mansfield TX

William G. Barbee, V

DIRECTORS John Agnew Fort Collins, CO (970) 485-0287 Jeff Blansit Dallas, TX (214) 912-1729 Ronni Corbin Plano, TX (479) 651-7239

The SCWA members listed below have joined SCWA since our last issue. We Appreciate your Support!

Pat Kirwan Wixom, MI (866) 362-6377 Evan Lorentzatos Stafford, TX (281) 561-0469 Clay Wilson Lubbock, TX (806) 687-2024

Executive Director: Chuck Space (Jane) 4600 Spicewood Springs Rd., Ste. 103 Austin, Texas, 78759 â&#x20AC;˘ (512) 343-9023

Mr. Tidy Epxress Carwash Thayer MO

Clay Bolin

Bolinbros BCA, LLC McKinney TX

Steve Chang

Coppell Car Wash Coppell TX

Hamilton Chon DFW Auto Care Fort Worth TX

Phil Jeong

www.swcarwash.org

Killam Development Laredo TX

THE ADVANTAGE is the official publication of the Southwest Car Wash Association. It is published four times each calendar year by SCWA, 4600 Spicewood Springs Rd., #103, Austin, Texas 78759. The officers, directors and members of the Southwest Car Wash Association, as well as The Advantage editors, in accepting advertising for this publication, make no independent investigation concerning the services or products advertised and neither endorse nor recommend or make any claims as to the accuracy and therefore assume no liability thereof. The opinions expressed in the articles are not necessarily the opinions of SCWA and its publisher and therefore makes no warranties and assumes no responsibility for accuracy or completeness of the information herein. (512) 343-9023.

Britney Johnson

Splash and Dash Montgomery TX

Jeanette Lavin

The Kar Wash, LLC Waller TX

Richard Leach

Elect Energy, Inc. Plano TX

Paul Peacock

Peacock Industrial Supply Orem UT

Paul Rula

Marigot Capital, LLC Dallas TX

Gary M. Sherman

Evolution Dog Wash Co. Carbondale CO

Sandra Walkley

Polo Car Wash, LLC Grand Prairie TX

SOUTHWEST CAR WASH ASSOCIATION 4600 Spicewood Springs Road Suite 103 Austin, Texas 78759

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PAID

AUSTIN, TX PERMIT NO. 1142