Advice is typically worth the money you pay for it

by Philip Toppino

If you are thinking about opening a new business, this article shares with you suggestions and tells of specific things to avoid and if followed could save you over $500,000 in renovation expenses and/or new construction cost overruns. Unbiased and educated advice is truly worth what you pay for it, and take it from someone who should have saved over $850,000 but, learned the hard way.

When a friend gives you good advice it is a great gift, however I feel to receive proper advice, tailored to your situation you need to pay an educated and credentialed advisor. We are going to talk about the need for experienced third party advice and its value because nothing in this world is free. Then we are going to show you a real life example of the process from beginning to end and where an advisor fits into the overall picture.

I’ve found the car wash industry to be one of the most diverse groups of owner/operators from the “hands on” family run locations, to the big conglomerate multi-chain mega washes. Being so diverse, it’s the opposite when it comes to asking for advice or seeking council in the car wash industry because a majority of owners have a “do it yourself” mentality. You would think that like in any occupation, there are advisors in your industry whom you can interview and hire to help you through the process but after looking far and wide, it seems to be the wild, wild west unless you are looking to open a franchise. I strongly recommend doing an extensive background check and asking for references before you take advice from any advisor on a multimillion dollar project. Take that advice now from someone, who unlike Ronald Regan “trusted but didn’t verify.”  A franchise or business opportunity makes it worth an owner’s valuable time now having a vested interest in your success. However, choose your future partner wisely and make sure the technical support as well as the infrastructure is there.

The Process

My uncle gave me the idea, back in 2003, to open a full-service car wash in my small growing town, since one didn’t exist for 10 miles in any direction as the crow flies. No competition and in a small growing town, what else could an owner ask for?  Now I needed to create a business plan, look for land and assemble a team of advisors to help bring this idea to fruition. I put together two attorneys, an engineer, an architect, a sign company, a general contractor, a car wash equipment salesman and a veteran car wash operator. Each one of these members played an integral part of the overall process and most of the experience was positive, however, we are going to focus on the things you want to avoid since this article is meant to educate and not tell a warm and fuzzy story. Also, while most of the entire development was positive (85 percent) the negative part (15 percent) ended up costing almost seven figures. Looking back, the one missing piece of the puzzle was someone like me. Not an employee or contractor who has designed, built, operated, or sold equipment to a car wash site but an owner who has had actual “skin” in the game and been married to a project financially from beginning to end. I use the term married because it’s truly a “till death do you part” process. There are no points for second place and when things get tough, you can’t just quit.

Labor Advice

A site could not run without an operator, but an operator is an operator and all operators are expendable. They run the wash, manage labor and keep equipment running, but you ultimately need to be advised by someone who has written the checks, not one who submits to have someone else write them. Anything less and you are now cutting corners in the most important aspect of the process and really gambling, as I would rather go to Vegas for better odds. The reason is someone who has written the checks has gone through the entire process and can facilitate the communication between team members and knows what to ask, what to look out for, and most importantly when to say no. You make your money on the deals you turn down, not the ones you take. There were times along the way in the early stages of our first project where the plug should have been pulled on a contractor or advisor to avoid future cost overruns down the road, but no lead advisor existed as the word of reason and I, being the owner, was in the vacuum. Since all the advisors involved got paid to move forward, that’s what they recommended and in the end we ran $850,000 over budget mainly due to the architect and general contractor.

Banks

After attending the ICA Convention my first year in 2003, I left with the contacts from three lending institutions but didn’t bother to approach them until I had a business plan, completed drawings and a land parcel under contract in order to save time and that was a mistake. I was told that start up car washes and car washes in general were not on the radar for a conventional loan and would need to turn towards the Small Business Administration (SBA). While attending the car wash convention, the lending institutions I spoke with didn’t direct me to a local branch in Florida but left me to assume they were going to handle my loan application from the west coast. That was a mistake, doing business with someone so far away (three time zones) because as we all know most long distance relationships don’t work out. When everything is going well, the world is great but if something really important comes up, sometimes you need that face-to-face meeting that an e-mail, conference call or video-conference simply can’t provide. Today’s lending world has changed from 2003, with lax lending practices never to happen again, so I won’t go into details but what you should take away is 99 percent of most bank contacts are a waste of time. No matter the position, unless you are a senior underwriter locked away in some castle tower, surrounded by a moat of lava, and guarded by a dragon, a banker’s job description has been reduced to a glorified “bird dog” responsible for hand holding and running around to stir up new business. They have zero decision-making ability to even refund an overdraft fee, can’t give a straight answer and are a large time drain. Spend as little time with them as possible because the days of goodwill and building a relationship are over. Within six months after meeting them, you will likely find them transferred, fired from cutbacks, or promoted; in any case leaving you with the next glorified hand holder.

Look Carefully

Where I’m headed is that when someone you know gives you advice either personally or professionally, I would suggest looking carefully at what advice they are giving you and why. When it comes down to human nature, if the advice is something they are directly involved with or they have some stake in your outcome, you can be assured that there is some ulterior motive for them to suggest or recommend one action over another.

In summary I would like to share with you a quote I keep on my desk and look at daily.

“It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money— that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot—it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, if you do that you will have enough to pay for something better.” – John Ruskin.

Consider all options. At the end of the day an advisor should offer advice without insisting their way or the highway. After they have listened to what it is you envision they should offer insights, their ideas and experiences with the feeling that the advice is another point of view. Trust your advisor listened to you in order to provide good judgment about what would be right for you. Credentialed advisors in the car wash industry are few and far between. Look for one, spend a little money upfront and you will be glad you did. Do not contact us to attempt free information; we were “born at night but not last night.”  Those of us who really know what we are doing have typically learned from the school of hard knocks and you can’t learn that in any other school.

Philip Toppino is the owner of Elite Car Wash and Elite Lube in Clermont, Fla. He offers consulting services for the professional car wash market and specializes in real estate development. You can reach him at ptoppino@gmail.com. Visit his web sites at www.toppino.com or www.elitecarwash.com for more information.