Newbie to the forum, coming up on a decade in business, looking toward next phase

UpTownRussellUpTownRussell Apopka FL Posts: 2subscriber Member
Hello all!

I just stumbled upon this forum community today while trying to find a forum to educate myself and help take our business to the next level.

Here's where I'm coming from in a nutshell, feel free to offer up any experience that may help:

I started a mobile auto detailing company in 2007 with little more than an $8000 loan from my grandfather, some creativity, and a lot of work.

The first detailing 'rig' was a 5x8 enclosed trailer I pulled with a used Nissan Xterra I already owned. I slathered it in branded graphics from the start. On board was a water tank, pressure washer, generator, vacuum, and various products and tools for auto detailing. I didn't have any sort of blueprint for how to set it up, but I just got to work figuring out how I could wash cars disconnected from any on-site utilities. I didn't have much experience in the field aside from detailing my own car and a short stint working at a car wash when I was 15. I ran the numbers to the best of my ability and realized there was definitely profit to be made, much more than in other service businesses such as landscaping.

I searched around online for competition, and most guys in my area simply didn't have a web presence or branded identity. The competition was easy, market was nearly infinite, overhead low, and so I jumped in with both feet.

In the 10 years since starting, I wore out that first Xterra, bought and wore out another Xterra, sold it and the trailer and moved the equipment into a Colorado pickup truck. Then when I thoroughly wore that truck out I bought a 2014 base Silverado to put all my equipment in that now has 56k miles and I hope to get another 200k miles out of it.

My awesome fiance (getting married in July!) then invested her own money into starting our second detailing truck in 2015 seeing me working sunrise to sunset nearly 7 days a week. She, too, started with a small enclosed trailer pulled by an SUV she already owned. I was overflowing with customers so I passed off a few corporate accounts to her and we began to market her number rather than mine. My schedule has remained full with regulars and referrals from those regulars who all have my number. After 10 months at it she had built up her own strong client base and killed her SUV, selling it and her trailer to buy a 2015 Sierra nearly identical to my Silverado.

I've had substantial year over year growth from the very start. Our schedules are the most satisfying and our customers the happiest when we can book appointments 3-5 days in advance. Most people are OK planning that far ahead and we fill our schedules easily. However, for about the last 3+ months we have been filling our schedules 10+ days in advance. This often leaves our sporadic regulars disappointed when they call with a few days notice only to be turned down. Many of our regulars are on set schedules, so we pre-book their time. Others are very predictable so we hold some time for them and confirm as it gets closer. However, we have quite a few customers who use us once every month or two, tip well, and refer us business. They are the ones that have filled in the gaps over the years and helped us grow and the ones that it sucks to tell that we can't get to them for another week or more. Business is business and they understand, but still... I don't mind telling a new caller that we are booked, but it's not fun to turn down a loyal regular.

My fiance fields her own calls, confirms appointments, manages her calendar, and alleviates any complaints from her customers. I do the same with my customers. That way, neither of us have to be concerned about the other's schedule other than the times we send customers one way or the other to try to fit them in sooner. Every once in awhile we will meet up during the workweek to tackle larger accounts quickly, but mainly work separately.

On paper, we could potentially make more money by hiring a helper to come along with one or both of us to turn out the work quicker. However, only the actual work goes faster, not the driving. We try to book appointments as close as possible, but we usually each have 2-4 stops in a day with 20-50 minutes of driving in between. Having an hourly employee to have to pay while we aren't making money cuts into the extra profit and adds to the urgency of scheduling. Additionally, our schedules with 5 children (two mine, three hers) in school, unpredictable Florida weather, and other variables make it run much smoother with each of us working solo. When somebody reschedules last minute we can decide to call someone who wanted an appointment or just take some time off. With an employee in the truck, it would be much harder to be understanding of last minute reschedules! Our customers also often comment on how they appreciate a single owner-operator spending hours on their vehicle as opposed to throwing as much 'man power' on it as possible to crank it out in record time. They can go down to the local car wash for the 6-guy slam dunk detail if they wanted that. They like knowing that our business reputation rides on our backs and they trust us with garage codes, hidden car keys, and other things you simply wouldn't pass off to minimum wage car wash employees.

We make great income as it is. We could grow to a third truck if we were to go out and buy an additional truck, stock it with equipment, and hire somebody to run the truck. Since that person wouldn't have a vested interest in our business, it would be difficult to find the type of devotion and professionalism that we bring to the table. Our customers have gotten to know us. Many of my customers haven't ever met my fiance, and many of her customers haven't met me. Having an employee build relationships with customers only to move on to another job down the road is concerning. We could likely find somebody as skilled or even more so than us. But to expect them to do high quality work consistently would require being paid quite well while we, of course, pay for the vehicle, insurance, gas, products, repairs, etc. On top of that, it would be likely that we would have to field all of the calls for this third truck, manage this third calendar, and keep track of where this third detailer is and communicate that with other upcoming appointments. It isn't impossible, but to both of us, it seems like quite a lot of additional work, debt service, and liability to possibly earn an extra $10-20k per year after a year or two of solidifying a schedule of regulars and repeats. It may not even break even the first year or two depending on what type of pay would be required to retain that hard to find employee. That potential profit could vaporize if the employee quit, leaving us understaffed, damaged something expensive, or we had some other unforeseen thing happen. I know electricians, plumbers, and landscapers all scale their businesses by buying and staffing more and more trucks, but I feel like our business is a bit more of a delicate balance between skill, accountability, thinking on your feet, and customer service. Landscapers have set repeat schedules and rarely have to even talk with or meet customers after the initial visit. Plumbers/electricians/HVAC techs have standardized training/licensing/certification to ensure they know what to do. We are kind of in the middle of those. Less regular than landscapers but less 'tradesman' than true 'trades'.

This is where the dilemma lies and where I've been focusing my creative thought and where I'm hoping some of you may offer some insight or ideas.

We have used paid marketing (Facebook marketing mainly) to increase business leads when my fiance started, but haven't had to do any marketing at all in the last 6 months or more. We are bursting at the seams without a dime spent in advertising. Recently we have picked up a few regular customers who have told us that their old detailer moved or went out of business. One guy recently even informed us that out of the 5 detailers he researched and found online, the other 4 aside from us had phone numbers which were disconnected. It appears that without knowing it, we are becoming the largest and most stable mobile detailing company in town. I really hate to let that opportunity slip through the cracks just because we are 'busy'. We refer to my fiance as a 'partner' to customers, but officially I own the LLC 100% and she is a 1099 subcontractor. I'd be open to adding her to the LLC since she's literally put in every dime of investment and every drop of sweat equity into building up her customer base, but it would do nothing but make our taxes and documentation more complex, so it will stay as it is for now.

We make good income, but with 5 elementary aged children, both of us paying on our trucks (we bought heavily discounted new base model trucks at the end of the model year as the cost/year was much better than what inflated used truck prices provide) etc, we don't have the liquid capital to make any massive self-funded moves. I've never raised outside capital aside from the initial loan from my grandpa and typical vehicle financing and using credit cards for larger equipment purchases. Thus far, there hasn't been a need for any 'rounds of funding'.


A few options I have considered:

1) Structure the business to make my fiance a legitimate partner to the LLC and then seek out a third partner to bring on, requiring them to fund their own truck start up costs, field their own calls, etc. This would likely be the most simple, but doing so with a fiance I live with and talk constantly with was far easier than doing so with a stranger. I think the possibility of being screwed over would be quite high and the need for thorough contracts would be in order.

2) Quit complaining and go buy a third truck, fill it with equipment, seek out an employee, advertise for new leads, pass down a few corporate accounts to said new truck, and grow the company.

3) Seek out an investor with experience in franchising existing businesses. Figure out a structure to where my fiance and I still own, manage, and keep all of the income from our two trucks (we've got mouths to feed, we can't really take a cut in pay!). Form a 'parent entity' LLC or other structure that would then split equity with this new investor. The investor wouldn't have any cars to detail but would instead fund and organize the legal end of franchise disclosure documents, help us establish operating manuals, and pursue marketing franchises for sale. This partner would then share in the income and equity from growing the franchisor business as opposed to directly from our two trucks and manual labor. Although royalties wouldn't be huge on each franchise, they would be much easier to manage with much less risk than company owned expansion.

Number three is the one that I think would work out best long term but also the one that I'm the least clear on how to pursue. Finding solid numbers on what it would cost to establish legal-to-offer franchises in our industry is difficult. Our business is far more simple than a McDonalds or 7eleven. It doesn't require a large staff, real estate, or many suppliers. It is more the training on how to do the work, how to present yourself, how to book a calendar, how to handle challenges etc. I could handle marketing for incoming leads, establishing best practices, maintenance routines, etc. I used to think nobody would buy a detailing franchise when they could just start a company themselves for cheaper, but I now have seen countless detailers come and go in 10 years due to inability to run a business properly and have come across some of the most ridiculous franchises for sale that people actually buy. Maybe it's not so crazy after all.

If you've read this far, you're bound to have some insight to share! Thoughts?

Comments

  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 978administrator Site Admin
    edited May 2017
    Hello, @UpTownRussell. Welcome to the community! 

    That was quite the post. It seems as if you are dominating the market in your area, so that is good news. 

    I don't have any experience in the car detailing field, but you seem to have an interesting dilemma. In terms of franchising, I know they're out there, and seem to be more prevalent in the tinting vertical. 

    If franchising is the route you want to go, I would recommend checking out websites like FranchiseHelp, DetailXperts or iFranchiseGroup, just to review and get more information on what it might entail. There are plenty of other websites related to franchise information as well. 

    In terms of other options for funding, have you looked into crowdsourcing at all? Here is a good article from StartupNation on the matter: https://goo.gl/yb1fsM

    Also, here is another insightful article on eight alternative funding options.

    Let me know if any of this helps! 

    Best, 
    Ryan O'Bleness
    Community Manager
    StartupNation, LLC
  • UpTownRussellUpTownRussell Apopka FL Posts: 2subscriber Member
    @"Ryan O'Bleness" Thanks for the info! I'll look into those suggested sources for more info on franchising. In theory it sounds like it would be a good route, but I'm not completely sure that I should go that route before a bit more company owned growth. Either way I want to explore all options, so I appreciate the sources!

    I've looked into DetailXperts a bit. They are in the same realm but are based on a steam cleaning low-water system of some sort. Any time I'm approached by somebody trying to get us to convert from our traditional water tanks and commercial pressure washers to some form of 'low water' wash system, it takes all of three minutes to lose interest. It takes a lot of product and chemical and replacement of delicate parts to try to replace the simplicity and effectiveness of water! Haha.

    I've also found "SpeedyK's" online who seems to offer franchises, but they won't call it that and instead call it a 'biz opt'. From my understanding, it is quite difficult to skirt around Franchising laws and for good reason. They are fairly localized in another state so it may be acceptable there.

    As for the crowdfunding: I haven't really ever considered that route. When I think of crowdfunding, what comes to mind are typically products that 'crowdfunders' are sort of pre-ordering with their 'investment'. I haven't researched it much as I thought it wouldn't apply, but what would be in it for the people putting money in? I guess I could offer some T-shirts or something, but as a localized service business I didn't think I'd fall into that category very well.

    I'll do some reading on the links you provided, thanks!

    Russell
  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 978administrator Site Admin
    edited May 2017
    @UpTownRussell, that is correct with crowdfunding, you are generally supposed to give your "investors" something in return. T-shirts, or even a free detailing service to local investors who donate a decent amount of money, would be ideas. 

    Of course, crowdfunding may not be the way to go, especially if you do decide to go the franchising route, but I just wanted to make sure you knew about alternative funding options. 

    Of course there is always the standard small business loan you could apply for as well. 
    Ryan O'Bleness
    Community Manager
    StartupNation, LLC
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