Venus vs. Mars - Spring 2013 - What is ahead for small businesses?

Venus Says

The only word I can think of is “uncertainty.” As I write this column we have managed not to take the fall, but the big question is how do we deal with the “debt ceiling” as it fast approaches?  I see the auto industry and housing market finally turning the corner with increases in sales. Credit remains tight for those with weak credit, but rates continue to remain low for those with excellent credit. Global economics is also encouraging with reports from Europe and China exceeding expectations. There are hopes that Europe’s debt troubles have passed and our stock market has continued to climb.

That is all the good news, however, it can all change quickly. Will Washington put a screeching halt to all these positive indicators?  Unfortunately, there is a good chance that they will.

Let’s assume that they decide to put the US economy first and not their next election (a novel idea!). This could finally be a win for small business. Employment continues to grow which will help small businesses and we all know that if we can get people back to work we all benefit.

Consumers have been afraid to spend money for three to four years now, but in this time our major purchases, like our cars, have aged.

The average age of vehicles in operation in America is estimated to be at a record high of 11 years. Car sales increased in 2012 and should continue with that trend in 2013. This is especially good news for carwash operators, as new car owners take better care of their cars than an owner of an older vehicle. I believe that at the end of 2013 we will be toasting this year as the beginning of a long span of growth.

Mars Says

As I write this column I would love to say that 2013 has a prosperous business outlook in store for us. The truth of the matter is that I just don’t know. Not falling off of the fiscal cliff is certainly a good thing for small businesses. However, people are still seeing less money in their paychecks due to the end of a social security payroll tax cut that began two years ago. Although consumer-spending habits increased slightly in 2012, this tax increase may just level discretionary spending out.

In the carwash industry, we face bigger challenges such as weather, the rise in labor costs and threats of unions forcing their way into our businesses. The weather is just something that we have to keep our fingers crossed about. There is nothing we can do about it, and we just have to hope for the best. When Mother Nature cooperates we wash cars; when she does not we are all standing still. The weather forecasts used to drive me crazy, but after so many years of pulling my hair out I have none left to pull. So now I just hope for the best.

  In 2013 I believe labor costs will be our biggest challenge, at least here in New York State. The latest bill enacted by Governor Andrew Cuomo calls for a more than 20 percent increase in minimum wage from $7.25 to $8.75 per hour. For tipped employees this rate will increase from $5.50 to $7.00 per hour. In addition, the bill calls for mandatory sick pay of up to 80 hours per year. In our industry, many operations start their line workers at minimum wage. This increase of more than 20 percent will be detrimental to our profit margins. Labor is the largest expense for a full-service operator. Absorbing this cost will be more than challenging.

With consumers seeing less money in their paychecks, and still the threat of us falling off this fiscal cliff at some point, increasing our prices seems like an option that many consumers may not take to very well. 

The threat of labor unions moving into our region, specifically in New York City, is another big challenge we face. There have already been some successful unionization in the city and there will probably be more to come. The best thing we can do to prevent this from happening is to get educated on what to do if a union representative shows up on your property. Be sure you are following all labor laws and do your very best to keep your employees happy. Following these suggestions is no guarantee that unionization will bypass your wash, but it certainly puts you in a better position.