National Clothesline

Last month I wrote about sales being down or flat. Today the discussion is about an increase of your sales, and how that can impact your company. You might ask yourself, how can growth hurt? How can an increase in the amount of garments and dollars create problems?

Valid questions; however there are issues that arise when your business increases and you are not prepared for it.

You are the fat smiling Cheshire Cat. Do you know why sales are up? Do you even care about the reason or reasons? You are making more money than you have ever made and life is good. You have nothing to worry about, or are you missing something you should be worrying about?

Why are your sales growing? What has given them a boost? Have you made changes in your operations or marketing? How is your production being affected? Will your current drycleaning equipment handle the volume? Can you maintain your quality standards even though your employees are working overtime to get the extra work out?

How about storage? Is your counter staff crushing the garments when they load the conveyors? Are your customers kept waiting at the counter? Do you need more staffing or better efficiency?

Yes, the money is sweet, but will you be able to maintain your current customer base and continue growing?

Where are the new customers coming from?

It is important to start with the why and where of increasing sales in order to learn the reason or reasons for the sales growth. The first step is a customer survey taken at the time a new customer walks in the door. This survey is made by the CSR when a customer information card is filled out. I am assuming you are astute enough to have a computer system and input every new customer’s data. Because you are reading this article I think the chances are excellent that you are.

Think about all the ways a customer finds you. Is it new signs, or a Yellow Pages ad? How about your web site or coupons on a postcard or in a marriage mailer? Can it be the offer on postcards to new move-ins, or TV, radio, customer referral or all of the above?

If there are other reasons for the customer to walk in, be certain to include those on the customer information card survey.

Information gathering takes time at the counter but the payoff is well worth the effort. The effectiveness of a marketing campaign, the building of new homes in your area, referrals, and other reasons for that new customer to walk in the door are important to know.

If you spend x number of dollars for a marketing program in Area A and you are getting a good return from that area, you can move on to Area B and do the same.

Is the new spotter you hired doing a great job? The spotter’s work could be reflected by the increasing referral numbers.

Maybe it was something as simple as painting your building which subsequently causes your store and signage to stand out? Then what happens is a new customer comes in and tells you “I didn’t know you were located here” even though the store has been at the same address for 10 years.

The knowledge of where new customers come from is the foundation of future growth. You can quote me on that.

Your business growth is more than likely totally unplanned and that is not unusual. New customers are coming in and the counter staff can’t handle them efficiently.

Hiring more counter staff and maintaining your current hours of operation or expanding your hours and days of operation to handle the increasing number of new customers are two different solutions.

If you have a limited number of counters you might decide to expand the hours of operation. Expansion of days and hours, theoretically, should smooth customer flow. What a surprise! More new customers are gained because you have increased the convenience for the consumer to visit you.

You can’t keep marking at the counter, the sales staff is too busy, and thus you need to set up a separate marking department.

Not a bad idea because now you won’t have to train all those new counter sales people how to price and tag clothing. The income has gone up; however, you will need to put some money back into the business to increase productivity.

Space availability is one of the problem areas in the growth process. You cannot stretch your walls but you can increase the hours of operation. If you add a separate marking department, the drycleaning machine may not be able to handle the increased number of garments.

No problem, you can hire a second cleaner to work into the evening hours, or you can purchase a second or larger drycleaning machine.

The old machine is perc and the new one will be an alternative process so you can claim to be a “green cleaner.” Now more new customers are coming in because you are environmentally friendly.

There is another option that so many drycleaners fear: raising prices. If you don’t want to raise your prices, what do you do?

Your finishers are all working eight-plus hours per day. Can you go to a second shift or half-shift plus weekend production? Will your part-time cleaner and finishers be as good or efficient as your full-time staff? Do you want to have the potential issue of a boiler breakdown at 7 p.m. with three finishers and a drycleaner waiting for steam? How about a phone call on Sunday: “The drycleaning machine is broke. What should I do?”

After envisioning these potential problems, are you certain you want growth?

How about looking for a new or larger location? This brings us to a decision making process that is called strategic planning.

Unfortunately, most cleaners don’t plan for growth and when it happens they are not prepared.

We take a step back in time. You are measuring the number of new customers who walk in the door.

Your business growth graph indicates a trend line of increasing sales. A projection is then made for future sales. You know that with three finishing stations and one 50-lb. cleaning machine you are limited to the number of pieces you can turn out in your current operating scheme.

Here is the strategic decision making process at the most crucial time in your company history.

Do you start looking for a larger location to move to? Can you rent space next door? Perhaps you should dry up your plant, keep a tailoring department and find a location for a larger drycleaning and shirt laundry production facility?

Finally, do you want to stay small and limit your growth to the capacity of your current location?

Your age, your family, and your personal goals all play a part in the ultimate solution you reach during the strategic planning process. Are you willing to stretch yourself financially by refinancing your home to get the capital needed for expansion? Do you have a son or daughter graduating from college who might want to come into the business and help with expansion? There are so many variables that there is not a simple answer.

To help avoid this kind of situation, every year you create a strategic one-year plan, and a two-year or three-year plan. You set goals for your company and yourself. You decide how you want to reach those goals. The solutions to reaching the goals are part of your strategic plan. Upon completion of your plans you will have a road map to your goals.

As Jack Welch said, “Business is a game and winning that game is a total blast!”

Next month, as a tribute to my friend Rex Carrigan, I will discuss diversifying your business with routes. Topics of discussion will include a route business plan, policies and procedures, and more. You might say the topic will cover everything you want to know about routes but are afraid to ask.