National Clothesline

t was ten years ago that I became involved with this industry through a regional trade association. They asked me to develop a cost group (their word, not mine) program for “small” drycleaners.

The original concept was to give small cleaners an opportunity to meet and share ideas. The effort was a failure because it required them to meet regularly and to travel to the meetings after a long day in their plant.

But I did meet many larger cleaners who were interested in the program that I had developed and several asked me to work with them. They were large enough to have the management structure that allowed them to get away quarterly for a couple of days for meetings.

Over time, this has grown into the Biz Builder Management Groups that I organize and facilitate today. I have never called these groups “cost” groups — Biz Builder is focused on all aspects of business management.

Over the years I have continued to meet hundreds of small cleaners who are eager to learn how to improve the operating and financial performance of their business. I have spent a long time thinking about their needs and the best educational forum by which to reach them.

As a result, I have developed a comprehensive management seminar for the owners of small drycleaning businesses.

Background

Ten years of working with hundreds of cleaners has given me an opportunity to collect and analyze financial and statistical data from a wide variety of businesses, including;

• Stand alone package plants without ancillary activities such as drop stores or routes.

• Multiple plants with drop stores and routes.

• Plants doing restoration work, wedding gown cleaning/preservation or drapery cleaning.

It is astonishing that no matter what their structure, all cleaners can achieve a very high rate of return on sales. It is not unusual for the owners’ earnings (salary and profits) to range from 18 to 28 percent of sales. Even more amazing is that this financial performance is consistent in all regions of the country.

Some owners are in areas where they can charge more than $18 for a two-piece suit and others are in areas where the highest price is $7.90 for a two-piece suit.

So why is it that those who can charge more than $9 per drycleaned piece can be generating the same total dollar volume and the same return on sales (owners’ salary and profits) as an owner who is charging less than $4 per drycleaned piece?

The answer to that question can be found in the statistical data.

As I have said many times, the drycleaning business is all about one piece at a time. Therefore, the cleaners who charge less because the market they are located in will not support higher prices must become more efficient in the way they process each piece. Also, the wages in these markets are generally lower.

Higher priced cleaners must spend more money per garment on packaging and on the labor to do the packaging. Also, the cleaners located in the upscale markets generally have to pay higher wages.

My firm has collected a large amount of financial data from income statements and tax returns. We have also amassed a great deal of statistical information from measuring and establishing production standards for every operation in a drycleaning plant.

This information is the basis for the new management seminar we have developed for owners of smaller drycleaning businesses. What follows is a preview.

Finance

We begin with a review of the financial performance of a typical drycleaner. This review includes a detailed segment on “management accounting” for owners who are not accountants. Everyone learns how to read their income statement and their balance sheet — both vital skills for successful decision-making.

Production standards

Once there is a clear understanding of the relationship between sales dollars and expenses (as in, where did my depreciation dollars go?) we cover production standards. Production standards refer to the number of pieces that can and should be processed at every operation. There are standards for every operation in a drycleaning business.

When talking about production standards there are several issues that must be addressed, including:

• The quality of the work.

• Workflow management or scheduling.

• How to increase productivity.

• What effect increased productivity has on the bottom line.

• Designing and installing incentive programs.

On the subject of production standards, the most important thing for everyone to remember is that the standards must be realistic, achievable and produce excellent quality.

Personnel management

The financial and statistical areas of this industry are mechanical in nature whereas good management is more of an art form. The drycleaning business is a people business. It is employee intense and customer intense.

To successfully manage people you must develop good communication skills. This requires knowing what you expect from your people and when you expect it. More importantly, and more difficult, is conveying this information to your employees. To ensure that tasks are completed in an accurate and timely manner you need to schedule the tasks that must be performed.

Functional organization

Another subject we cover in our seminar is Functional Organization. As your company grows it must be organized around the functional needs of the business — not the personal needs of your people. When people know exactly what they are responsible for accomplishing in a business environment, they can also be held accountable.

We review a sample of Company Rules and Regulations. All companies should develop a set of Rules and Regulations. Once the rules and regulations are spelled out, your job becomes much easier. You will have a set of guidelines to administer consistently with each employee. More than 80 percent of your employees want to make a positive contribution to the overall well-being of your company.

Our goal at Biz Builder Services is to develop educational seminars that will teach owners the essential management skills they need to succeed. These skills are:

• Decision-making based on pertinent financial information.

• Increasing productivity by establishing standards and installing incentives.

• Delegating tasks and responsibilities to others.

I’ll be conducting the first of these management seminars in the fall. Watch for my ads and check my website for dates and locations. I look forward to meeting you.

“Making a wrong decision is understandable. Refusing to search continually for learning is not.” — Philip (Bayard) Crosby

In the game of business the more you know the better you can play the game.

Alan Robson is a private consultant dealing with the specialized needs of the drycleaning industry. Contact him by telephone at (941) 408-8819 or send e-mail to him at: alan@bizbuilderonline.com or visit the Biz Builder web site: www.bizbuilderonline.com.