Car Wash M&A, The Podcast, Episode 3 Overview
HOW TO SCALE YOUR BUSINESS
When it comes to scaling your business, the details matter. Creating a sustainable and replicable model that works on all levels is essential, and it’s worth the time and effort it takes to build up strong processes and procedures early so that you can effectively grow a car wash from a single location to a successful chain.
WE ARE IN THE RETAIL BUSINESS AND “RETAIL IS DETAIL”
While larger car wash platforms backed by private equity investment certainly have some advantages through bigger budgets, and economies of scale, smaller family-owned businesses like Metro Express can effectively compete by keeping laser focused on operations and the customer experience to give them an edge. From his experience, Bill shared about “The Metro Way” where they focus on People, Process, Product, and Place.
Here’s what Bill had to say about the 4 P’s of the Metro Way:
In our company, we call it the Metro Way. The Metro Way is People, Process, Product, and Place. The time that a customer spends on your site is critical, in my opinion. You want to try to turn them around as quickly as possible. We measure that from the time the front tire hits the threshold of the driveway until the back tire departs the threshold of the driveway. So, we set standards and goals for how many minutes each process should take, or how many seconds. Back in the full-service days I was always frustrated by the notion that we should try to sell the customer as much extra service items as we possibly could so that we can maximize that revenue per customer. My observation was that while we were doing that, we had these big gaps of empty space on our conveyor. And my argument was, we can never make up in extra services what we lose in throughput. If a customer is going to pay you $5 or $7 for a car wash, or $10 today, but you lose a whole space because you’re trying to talk him into spending $12, as opposed to $10. That’s a losing proposition for the owner operator. That throughput management is so critical. Not only is it critical to maximize your opportunity that day, but it’s also very important to the customer. Because that person that’s number four, five, six or seven in line is frustrated while he or she is waiting for that customer at the point of sale to make a decision about well do I want to spend an extra $2 here. I mean, to me, that was just never what we were about in our business. We were always about the processing of the customer, and to try to get them back on the street as quickly as we possibly can.
Focusing on details – the customer experience, the smoothness of processes, the quality of the product, and the cleanliness of the site – makes all the difference when it comes to consistency and customer loyalty.
IMPROVE OPERATIONS, IMPROVE YOUR VALUATION
Establishing a scalable model from the start enables you to effectively grow and maximize your valuation. As Bill says in the episode, “It’s no secret that private equity is entering the car wash business at a pretty heavy clip, and they’re bidding up car wash values. So, for every $1,000 in earnings or profitability, EBITDA, you have, that could add $12,000 to the value of that site if it’s being purchased at a 12 multiple. So, adding $100,000 in EBITDA could add one point two million dollars to the valuation. It really pays to manage your growth and your top line, and also manage your expenses.”
THE FUTURE IS BRIGHT
Despite the tumultuous climate and the rising interest rates in today’s market, the future continues to be bright for car wash owners who focus on the details of running a smooth, successful business with great processes and outstanding customer service.
Want to dive deeper into car wash M&A information? Listen to all Car Wash M&A, The Podcast episodes.