As I write this, summer solstice has passed. We are halfway through this year and swinging back towards winter. Summer is always a brutal time of year for us dry cleaners as vacations mean less people in offices and hot weather means more people in wash ‘n’ wear clothing, all of which usually mean a drop in sales to fifty percent of average weekly sales. But of course, this year many cleaners are also dealing with Covid related issues like restarting economies that were shut down, offices closed entirely with people working from home, massive reductions in piece counts chasing the few ‘Zoom meeting’ shirts and blouses that may be out there, chasing every new customer one can (just like every other cleaner is doing). Many cleaners consider themselves lucky if they are doing fifty percent of seasonal fifty percent of sales.
Seasonal downswings are one thing, pretty much every business can deal with that, but Covid has caused such dire changes to fashion and demand for our services that some cleaners are simply turning in the keys to their landlords and walking away. Some folks are walking away from an entire lifetime of effort; others who were under financed or just poorly managed are also folding their tents. There are still those optimistic cleaners who are working very, very, very hard to be ‘the last man standing’ in their markets picking up the baton from those who fail, hopefully becoming stronger going forward this Autumn as we march into an uncertain future.
The past is usually a good predictor of the future. With the Flu epidemic of 1917 it took three years for economic conditions to stabilize. Given the flare ups of Covid in some areas and massive changes in the general population’s work and shopping habits, we cleaners are going to have to adapt to the new abnormal.
Presently, every marketing, administration, management and production technique you deploy should be under extreme scrutiny. Pretty much everything you used to know about and working in your business should be questioned, analyzed, quantified, justified, and very likely, modified. Yes, everything.
How we administer our businesses has always been one of the weakest points of a dry cleaning business.
Many cleaners typically look at only two reports in their point-of-sale system:
– the incoming piece count report so they can sort of plan production (if they plan production at all)
– the cash sales report (how much money should be in the cash register)
While those two reports will put your finger on the pulse, in these abnormal times, you should be looking at more than the ‘Goesinta’ and the ‘Goezoutta.’
The more astute cleaners are digging deeper into their data and looking at customer retention. How many customers slipped inactive over the past 90 days? How many new customers did you bring in during the last month? How much has the piece count changed from your top 20 percent spending customers (the ones who bring you 80 percent of your sales). As you can see, expanding your administration beyond just day to day and looking at a bigger picture of who of your customers are doing what, gives you a better view of what is really going on in your business. Expanding your view from purely reactionary (reacting to what goes on day to day) to a more strategic and planned approach of reacting to your customer’s demand and response. As an example, observing that Top 20 percent customers have decreased their piece counts because they are working from home while you have picked up 40 new high value customers due to a competitor shutting down could/would enable you to shift your marketing strategy towards getting the piece count up from Top 20 customers while expanding your efforts of attracting new customers capturing these new free agents while your competitor is closed.
As my previous example under Administration demonstrated, Marketing can be closely linked to administration with one leading into the other and vice versa. In times of trouble, more so in times of crises, Marketing is the first line item severely cut or eliminated entirely from budgets. Obviously, as a marketer, one could assume that I have a bias towards funding marketing, but you may be surprised that I have a completely contrarian view: I strongly believe that all costs in marketing be justified and quantified. Marketing is an expense that needs to be measured, just like sales, cost of goods sold and pieces produced per operator hour.
How many new customers did marketing campaign X produce? How many pieces did marketing campaign Y bring in? How many dollars in sales did marketing campaign Z produce? Making marketing quantifiable with hard numbers and justifiable in dollars and cents provides one with the ability to maintain the real lifeblood of any business, namely customers, cash flow, revenue and income. By knowing what marketing programs are working and producing results enables one to stop spending on inefficient unproductive efforts, plus making it possible to invest more in productive marketing efforts to compound results increasing return on investments.
With sales dropping 35 to 85 percent, many cleaners have cut staff to the absolute minimum. Many cleaners have had to cut staff deeply, releasing employees who may have been with them a decade or more. For those staff who are fortunate to still have a job, those employees are now expected to cover multiple tasks, maybe even multiple departments (work counter and pressing). Now is the time to cross-train your staff into multiple positions if you haven’t already done so.
With labor, one of our biggest expenses and variable costs, every position within your plant is now likely a production position. Even your front counter staff and mark in staff are part of production and should have some form of accountability in place. Counter staff can be measured in number of customers served per hour, mark in staff can be measured in pieces marked in and tagged per hour.
Pressing production is absolutely critical as is controlling and containing those costs. One of the best inventions and systems I’ve seen is a Piece Counter that you install on your press line to set, monitor, and enforce a consistent workflow form your pressers. These devices make it super easy to monitor each presser’s production with built in artificial intelligence that make it extremely difficult for pressers to cheat the system. You can set realistic and reasonable (and profitable) pressing production standards within each unit, by garment type, and the system counts pieces and displays production so pressers can see if they are meeting production targets or not and regular their work speed accordingly. Of course, you need to balance production speed with quality because going too fast can cause drops in quality, but overall, what is measured is what you can control with benefits of proper profitable quality production can pay huge rewards.
Managing is where you make or break your operation. You may have even eliminated an entire level of management between you and your staff, which would mean an entire revamping of managing and reporting between you and your staff without a level of management and administration between you and your staff. You may want to consider some form of automation in reporting and overseeing of staff to replace an intermediate level of managers entirely.
Back when I had my dry cleaning business, I hired Michael Gerber of the E-myth book fame. While working through the process of blueprinting my business and developing systems that would enable me to work ON my business rather than IN my business, he recommended creating an administration and management system that would entail monitoring, administering and enable me to manage all facets of my business (marketing, administration, management and production). At the time, it was a huge ask because point-of-sale software was still in its infancy, and other technological advances that have come along since then simply did not exist. But, today, MUCH has changed.
About three years ago, and friend of mine who is an efficiency consultant approached me for feed-back on a spreadsheet he had developed during his down time in his hotel room on evenings while he was on the road working with his clients. He emailed me a file that within minutes of opening showed me EXACTLY what Michael Gerber had been pushing me to develop or discover. This spreadsheet is enormous, and very all encompassing. You input expenses such as rent, utilities, supplies, etc. You input your prices for every garment you service. You input your labor for each employee in each department (including management and your time). Every day you input incoming garment report and sales. It’s a lot of set up, and I mean a lot, but it is so worth it (and frankly, it’s more information that even you knew you should have – it’s also a fantastic learning tool). Once you have input information, the benefits start to kick in.
With the push of a button, you can create staff schedules based upon staff actual pressing capacity and production numbers from your incoming piece counts. You can look at your piece counters reporting real time numbers from production floor and gauge if your production is ahead, on schedule, or behind.
Push some more buttons, and you can play ‘what if’ with real numbers drawn from your plant operations. What if games such as: what if I increased the cost of my shirts by 25 cents each? What if I increased my prices by ten percent across the board and incoming piece counts fell by ten percent, how would that effect my labor hours, cost of production, and my profits? What would happen to my cost per piece (assuming you even know that all important number right now) if I increased production efficiency by five percent?
This software spreadsheet is simply amazing. It can generate your actual cost per item for every category. How much does it really cost you to produce a finished shirt? How much does it cost you to produce a finished pair of pants, all costs in, from mark in on the counter to cleaned, pressed, inspected, bagged and out the door. This software can certainly change things, giving you an almost unfair advantage because now you KNOW, REALLY KNOW, what your costs are, what your production is really producing, how your business is performing, if your business is profitable or not. If you keep on top of inputting data into this spreadsheet system, you have a complete system that will automatically report on your entire operation like a dashboard in your car.
With this software you can literally see the effects of stepping on the gas or applying brakes. You can make decisions and plans on real data, accurately. When opportunities arise such as buying up a competitor (or taking over his closed location) you can accurately predict how acting or not acting affects your costs and profitability. When an opportunity of taking on a new route, buying a route, or developing a new route, you can see if your cost per piece justifies taking on the new route, or setting profitable prices to your route drivers, so you can quickly see if a fifty-fifty split with freelance drivers and resellers is worth it or not, profitable or not.
This software can effectively replace entire levels of management, saving you a lot of money. It can flatten the administration of your organization and make your business hyper efficient. The information and use of this software are one of the most exciting tools I’ve seen since the invention and adaptation of point-of-sale systems. Yes, I am that convinced.
Still, going forward in these very uncertain times, it’s very difficult to predict what the new normal is going to be, if in fact normalcy is ever going to be achieved again in this industry. The only certainty I can see is using all the information available to us to develop new ways of coping to current market conditions and charting new paths to adapt to the new abnormal.