(The information in this article first appeared in the March 2007 issue of Modern Car Care.)

Automotive detailing attracts many entrepreneurs because it is relatively simple and inexpensive to begin such a business. However, there is a high level of turnover in the industry because many who enter it do not understand or cannot implement principles that create a profitable operation.

In my experience both personally and in talking with operators from around the country, I have identified seven ways to increase the profitability of an automotive detailing business. Now, these seven ways fall into two general categories. The first category includes activities that might be considered more traditional and are typical for many businesses. The second category are, although not exclusive to our industry in concept, perhaps more specifically related to the type of work that we are already performing.

The goal of sharing these concepts with you is to get you to think about things that you might not have already considered. You may not agree with every one of these ideas and not all of them will apply to your particular situation. But if one idea, properly implemented, increases your profit, then I have done my job.

Traditional Methods for Increasing Profit

In this section, I include activities that are common in business in general or those ideas that can perhaps even be considered “generally accepted.” These include:

• duplicating labor
• lowering monetary expenses
• increasing operational efficiency

Duplication. One person can only do so much work in a day. If you have more customers on the waiting list or plan to bring in more customers, you will need more hands. Then it becomes necessary to duplicate yourself by “creating” more technicians or more operations. The goal is to increase the number of vehicles that can be processed in a day. If you train and motivate your employees correctly, you can increase the number of vehicles completed by your operation per day, thus increasing revenue.

You will not make as much money per vehicle as you are used to making by yourself, because you have to pay the expenses associated with employment. Nonetheless, properly trained employees will allow you to “take a piece” out of more and more detail jobs.

Of course, you will have an initial expense, in training and equipping new stations; or outfitting a complete second unit. But this expense can be thought of more as an investment, especially if your business already has the customer demand. If the volume is not quite there yet or if the volume is not consistent, you will need to increase your marketing effort, which also may entail added advertising expense.

The advantage of a well-run operation that is effectively duplicated is that you will be able to process more vehicles than you could ever do by yourself. The disadvantage is the added management duties and the efforts required to ensure consistency of results. That is, if you already have an established reputation with your current customer base, they will expect the same results from others that you send to do the work.

There are at least two ways to keep your service reputation intact. One is to proactively ensure consistency by building it into your operation through effective training of new technicians. Create written standards for each detail package. Then create standard operating procedures that are designed to achieve those standards. Then teach those procedures and continuously improve them so that your technicians almost automatically achieve consistent results.

The other way to guard your reputation is to “assign” only new customers to your new work crew. The new customers have not seen your personal work and may not know what level of excellence to expect. If your staff is properly trained (as mentioned in the last paragraph), they will still be able to “wow” new customers.

Decrease monetary expenses. My experience is that detailers generally are not investing enough into their businesses. So this is probably a non-issue. However, it never hurts to take a look at your expenses every once in a while, for example, at least every six months. If you are keeping good books, you should be able to balance your books once a month and see exactly what your expenditures are and where they are going. Some examples of wasteful spending: buying small quantities at a time instead of bulk purchase of commodity chemicals, spending too much on the wrong kind of insurance, and spending money on ineffective advertising. There are other things that you might be doing that are “costing” you more than you think. We will discuss these ideas later in the “decreasing non-monetary expenses” section.

Increase operational efficiency. Maybe it’s simply taking you too long to get the work done. Surveys of detailing operations show that the typical complete detail (excluding the engine compartment) averages about four labor hours. If your complete detail takes significantly longer than four labor hours, perhaps you need to examine your efficiency while working. Efficiency can be improved by standardizing procedures, using the appropriate chemical for the surface at hand, and by using tools and machines that reduce the time that it typically takes to do a job by hand. You will find that if you take a serious look at improving efficiency using these ideas, there will be an additional benefit of improved results (effectiveness). So, you are not only getting the job done faster but the car looks better when you are done.

So how do you find out about ways to improve efficiency? You need to plug into the industry. Read the trade magazines, go to the trade shows and conventions of our industry, go to detailing seminars put on by your supplier and other experts in the industry, purchase training videos and manuals, and maybe even attend a detailing training school. I have conducted detailing classes with experienced detailers who said they learned a lot even though the class was designed for novices.

Also, talk with other detailing professionals. I get some great ideas from chatting with others in the detailing industry. You can even learn from your competitors. Your detailing competitor does not have to be your rival. There are plenty of vehicles to work on for all of us, so we might as well work together to improve our results so that customers expect more and are willing to pay more for detailing in general.

New Ideas for our Industry

The next four ideas for increasing profits are more specific to the detailing industry. If you are serious about being successful in this venture and making a good living, you need to seriously consider one or all of these ideas, including:

• Increasing or changing your pricing structure;
• Changing your target market;
• Adding new profit centers; and
• Decreasing non-monetary expenses

Increase or change pricing structure. One of the most common problems in the detailing industry today is inappropriate pricing. Many technicians simply are not charging enough for their service; or they are providing only marginal service in order to justify keeping the prices low. To determine how your pricing compares, I suggest that you divide the price of your most popular detailing package by the average number of hours it takes to complete that job. Take away half of that dollars-per-hour figure to account for taxes and business expenses and you have a rough idea of how much money you are making per hour (i.e., net income). If, you are netting less than $25 per hour, I suggest that something needs to be changed. That means that you should be shooting for an average gross of at least $50 per hour.

You can make more money per hour by increasing prices, increasing efficiency, duplicating yourself (with employees), or adding high-profit services. The easiest of these is charging, but I recommend that you also add extra value for the customer instead of simply raising prices. Think about simple tasks that you can add to your existing packages that will make an increased price more palatable to your existing customers. Here are a few examples:

• add a “free” interior vacuum and window cleaning to your exterior detail package;
• add a quick swirl-removing buff (20 minutes maximum extra work) to bring out the shine of your basic exterior detail;
• include the trunk or rear SUV compartment automatically in your interior detail package; and
• include fallout removal (using clay) in your standard exterior detail package.

Another important point: As you raise prices, make sure that you spend a little extra time making sure that the job is done well—that is, provide excellent service for the higher price.

We live in a time when expenses go up automatically every year. I believe it is reasonable for detailing prices to go up annually to reflect the increased cost of doing business. Most customers will understand a $5 or $10 annual increase in prices.

Change target market. If your customers are not willing to pay more for your service, perhaps you are working in the wrong market. For retail detailing, I recommend targeting the vehicle owners who have the disposable income to pay for and the desire for automotive appearance perfection. This usually means approaching the population that is in the upper 10% of the income group in your area. These people are already accustomed to paying others, like housekeepers and landscapers, to provide service. So it will make sense to them to pay for quality vehicle care as well. Plus they typically have the money to pay for the service and the desire to receive excellent results.

If you can’t afford to spend advertising dollars to go after a quick shift in your customer base, you may have to utilize your referral network. Look at a list of your current customers and categorize them into three groups:

• “A” group: Those who are relatively wealthy, use your service often and don’t really care what the price is.
• “B” group: Those who are of modest means, use your service only occasionally, but have expressed budget concerns in the past;
• “C” group: Those who have only used your service once or are constantly looking for a lower price from you.

Now, prepare a script with which you can call your A-list clients and ask them for referrals. Start by complimenting them: “you are a great customer and I wish I had many more like you.” Then, get out a piece of paper, and ask them for the names and numbers of three to five people that they think would be interested in your level of work. Make sure that it’s okay to call those referrals and to mention that your current customer suggested that you call. It will take time, but you will start to see your customer referral base make a shift as you come into contact with more and more A-list clients.

Add new profit centers. Every professional detailer reaches a plateau at which the price for the job is as high as the market will bear and the efficiency is at its highest level. At this point, the profitability of the operation has “max’ed out.” So, to make more money, the operator must do something different, like add more shops, add more employees, or add new ways to profit from each vehicle that comes in. There are several services that can be provided that will bring in a much larger gross per-hour rate than standard detailing. A simple and low-cost way to do this is to add premium protection to your package options. For example, selling the customer on application of a polymer paint sealant instead of standard wax is fairly easy, since sealants provide better protection and last longer than waxes. Thus you can mark up the price significantly without spending any more time on the vehicle than you normally would. Another great premium protection idea is liquid repellent for the carpeting and fabric seats. This ten minute service can fetch as much as $100 per application in addition to the standard detail price!

Beyond detailing, there are a number of services that can be added with a relatively small price, like windshield repair, paintless dent removal, paint touch-up and spot blending, and interior surface repairs. Many of these services can fetch as much as three times the per hour profit that a detailer is used to getting.

Decrease non-monetary expenses: The most important non-monetary expense is time. In discussing time management with detailing consulting clients over the years, I have observed three main areas where time can be wasted: illness, lack of delegation, and unnecessary distractions.

In our profession, our bodies are our most important tool. It is wise to invest in your “equipment” by taking good care of yourself—exercising, eating right, and seeking regular body maintenance provided by health practitioners like massage therapists and chiropractors. There are two main time benefits to taking good care of yourself: (1) you are likely to have less down time due to illness or injury, and, (2) you will work faster, stronger, and more efficiently if you keep yourself in good shape.

Next, let’s take a lesson from that upper 10% of the population that I mentioned earlier: pay someone to do the jobs that take you too much time. There are professionals like bookkeepers, lawyers, accountants, and others that can perform necessary business tasks much more efficiently and effectively than you for a relatively small fee, freeing you up to make more money.

Finally, think about some of the things that distract you from your work—like broken tools, or stopping work to answer the phone, or providing warranty work to dissatisfied customers instead of getting it right the first time. If you can take an objective look at your day-to-day activities, you will probably find some things that are eating up your time, yet have simple solutions.

Summary

This has certainly not been a complete discourse on all the possible dysfunctions of an automotive reconditioning business, just some common examples. You may find other examples within your own business. My recommendation is to make a list of the issues that you know can be improved within your business, prioritize it, and then create an achievable schedule for attacking each of the items one-by-one. For example, you may want to handle one issue per month. Write some action steps for each issue and start with the first few action steps during the first week of the month. Then watch your profits grow!