By Roy Chappell / Published February 2014
All professions have trade associations that provide different types of benefits and/or training and services for their membership. What people get from an association, in most cases, is the same amount of work they put into it to help it grow. For those companies involved in supplying, manufacturing, and distributing pressure washers and many of the cleaning accessories, the association to be a member of is the Cleaning Equipment Trade Association (CETA).
Perhaps before you commit your dollars to any trade association, you find yourself asking, “How will membership in this association benefit my company?” CETA membership pays off in many different ways. In 30-plus years of business, I have belonged to many different local, national, and international associations. The one thing I noticed quickly was the people that became the most involved in an association had the larger and most profitable businesses in the community. Why is this the case, but more importantly, what do these businesses know that I should know as a business owner?
The answer to these questions is found in benchmarking or planning for profit, which is one of the member programs offered through CETA. Every one of us started our business with the hope of being profitable, so we can have an above average income and provide our families with a few of the “better” things in life. We get so involved in the day-to-day operations, that somewhere along the line we don’t have time to plan for future growth and above all profit.
As we grow our companies, we forget to keep working on increasing our bottom line. Growth should be secondary to profit. Profit should be our driving force. As an example, look at the major companies on the S&P 500, which make 15–23 percent profit after taxes. Contrast this with the average CETA Distributor who benchmarked in 2007 and showed a pre-tax profit margin of 3.6 percent. By continuing to use the information in benchmarking, that same group of distributors had increased their profits pre-tax to 4.5 percent in 2011. Knowing this I must ask, why, as a group, do we settle for such a small percentage of profit? For example, a company has $5,000,000 in sales at 4.5 percent for a profit of $225,000. However, $5,000,000 in sales at 18 percent provides a profit of $900,000. How can you move your company from 4.5–18 percent profit when most everyone in our industry thinks 4.5 percent is good? The additional $675,000 profit should be the driving force of your business!
With profit, we can add new products to attract new customers, pay all invoices with two percent 10 net 30, utilize the discount to add more profit, use the extra capital to expand on the existing building or build a new building in a better location, build a larger showroom with display models and units in stock ready for same-day delivery, as well as improve training for service techs and sales people in order to attract the larger companies.”
Here is an example of a new product Chappell Supply and Equipment markets to our customer base. This new item was able to be introduced to our customers because of increased profits. Air Star Safety Products is a soft lighting system that is becoming more popular because the light output can light a small space or a football field without the blinding glare you get from a direct light. This is increasing in popularity in road construction because it doesn’t blind the oncoming traffic. Some examples of other markets or users would be mining, bridge building, aircraft, asphalt and paving, natural disaster relief, and segments of the oil and gas industry. This equipment is much different than light towers, with very bright direct lighting. It is an attractive new item because of the price point in relation to the cost of the light towers. This is a great sales and/or rental item with great profit. Check them out at www.airstarsafety.com.
Growing your profit is not a small job. Only through benchmarking, like the big companies do, will you find the “average.” At that point, you can take a long look at where you stand. If expenses are above average, what must you cut, and how much do you cut them in order to become part of the average for your industry? In sales, you want to excel and be above average. Ask the tough questions, and be honest! Where do you stand in regards to sales per employee, gross profit per employee, personnel productivity ratio, sales per customer, and sales per service vehicle? By working on these items you can increase sales by 10–15 percent in turn, increasing your profits at years’ end. As you can see, CETA’s benchmarking program is just one way CETA membership pays off.
An additional benefit of CETA membership is the ability of members to share information with each other. If you were ever part of a study group in college, you know this is a great way to learn because everyone shares their knowledge and helps others in the group achieve their best. This same principle applies to membership in CETA. For example, by being a CETA member, you gain advanced notice of regulatory changes, some as much as two years, which allows time for educating staff or making appropriate changes without disrupting the normal business flow.
Another example of CETA members being committed to one another’s good has been the formation of a CETA study group on bio systems, which focuses on what has worked, what worked fifty percent of the time, and what didn’t work at all. The participants are using different applications throughout the U.S. Robert Bixby, the group’s brain child, Clearblue Environmental, Watsonville, CA; Dennis Black, McHenry Pressure Cleaning Systems, Fredrick, MD; John and Brenda Purswell, Alklean Industries, Pasadena, TX; and myself, have a two-hour conference call every quarter. During this time, we each take turns showing an installation of a bio system by using a slideshow presentation. Then, we discuss how we were able to overcome the issue. We share information on the changes made to the equipment, the type of installation, and business type.
This group came about through meeting at CETA and selling the same equipment. All of this information is shared to learn and grow within the same industry. Everyone shares what they have learned throughout the year from the many bio systems they have installed. This type of collaboration between four, very successful CETA distributors has made each person more knowledgeable of the bio systems we sell, different types of industries that can use these systems, and changes we can perform in the field to make them work better on different waste streams.
Yet another benefit of being a CETA member has been demonstrated earlier this year, when CETA officers, on behalf of their membership, attended a tradeshow with approximately 1400 companies attending. Forty percent of those in attendance (560 companies), owned at least one pressure washer, some with cold waterunits, and others with large, trailer-mounted units. On average, these 560 companies have two units a piece at an average value of $3,000. That would put the value of these companies’ pressure washers at $3,360,000. The leads for these companies were mailed to CETA Distributor members only! The consensus was these companies are buying from the big box stores, with the same stories that we hear all of the time…”units don’t last”, “we can’t get them serviced”, “they don’t sell parts”, etc. They were quite happy to find CETA as an exhibitor, a new avenue for them to source their washing equipment needs.
And speaking of attending tradeshows, when did you last attend CETA’s PowerClean? Why do you think the company that manufactures the equipment you sell attends Power-Clean? The educational benefits alone, not to mention the networking, are vital. CETA has pointed out in our educational class that a pressure washer producing 3200 psi or more must use an R2 hose with a 24-in. hose guard to protect the user. This is an OSHA requirement. That unit also is required to have at least a 48-in. wand, another OSHA requirement. These OSHA requirements are a great sales tool, as big companies do not want to take the risk of being found in non-compliance. There is much to benefit your company by being a CETA member. Take advantage of all the benefits mentioned in this article and more by making plans to attend The Annual CETA Convention November 4–7, 2014, in Orlando, FL. CETA looks forward to seeing you there!
Roy Chappell is Owner of Chappell Supply and Equipment in Oklahoma City, OK, and a long-time member of CETA. For more information on CETA, visit www.ceta.org.