‘And the Dollars Will Take Care of Themselves ...’
January, 2010I have been talking with owners and operators across the country, and here are some tidbits I picked up:
An operator received the bid to run a major large garage in a Midwestern city. They immediately moved their manager from another garage in that city to the new one. So far, so good. However, who are they getting to replace the manager at the other garage? My experience is that the new manager will not be up to the level of the old one. This is a problem in our industry.
There are only so many good people. We have a tendency not to bring good people along so that when we have critical openings, they can fill the space.
We put the best we have at the new location to ensure we do a good job there, to the detriment of other locations. Then a competitor spots the old location with a manager that’s not quite up to it, does a “free” audit, and that location turns over and the process begins all over again.
Here are a couple of “little” issues that came up this month.
A cashier made an error in entering a credit card payment. For a $15.90 collection, they entered $1,590. The customer noticed it when he got home and called. The night manager then reversed the payment. So far, so good. Right? Well, not really. The location is charged 3% for each transaction. So the $1,590 reversal cost $95.40 (3% in each direction.) If the manager had followed the written procedure and issued a check to the customer, he would have saved half the fee, or nearly $50. All this to collect $15.90.
One garage discovered that some of the vehicles that parked there had tax exempt certificates. That means those vehicles didn’t have to pay the city parking tax. It’s nearly 20%, so that meant about $50 was due to be returned to a dozen cars. It’s $600, but most costly was the audit procedure that had to be done to make it happen. Not only did the exemption certificates need to be verified, but they had to be checked against the actual autos, since they were attached to the cars, not the drivers. Had the procedure been followed properly when the parking permits were issued, this costly procedure would have been moot.
I learned that when one garage converted from pay-on-exit to pay-on-foot (machines), the actual gross revenue increased 2%. No increase in parkers, just in revenue. Why? Because money was no longer being handled by staff, and no manual tickets were being processed since there was no way to do it. In this garage, that amounted to $2,500 a month right on the bottom line.
How about the case where a parker decided that he was too old to park where he was supposed to – inside a “nest” on the third floor – and left his car for 10 days on the bottom floor next to the exit. When he came to get his car, he drove through the “nest,” thinking he would recycle his card. Of course, the system caught him at the exit gate. The night manager simply opened the gate and reset his card. After all, he was a senior citizen with a limp. In reality, that senior was healthy as a horse and ran marathons. He cheated the parking operation out of $150.
One revenue control supplier has come up with a solution to some of these problems. It’s a software program that requires the manager to enter what corrective action he took for every exception transaction. That report is then included with the daily report.
In one case, I found that when the system went in, there were more than 100 exceptions every day (anti-pass-back violations, manual transactions at a cashier, canceled transactions, override of the gate, manual gate opens, etc.).
After a month of the requirement to fill in the report, the manager had reduced the exception number to fewer than five a day. Simply paying attention can correct most of the problems.
The problem, I think, is that in large garages that collect millions of dollars annually, no one really pays attention to the “pennies.” The owner sees large deposits in their account each month, and the operator feels that close supervision isn’t warranted because the numbers are consistent with the garage activity.
But if there are “little” issues like those above, who is to say there aren’t large underlying problems? Take care of the pennies, and the dollars will take care of themselves.
And off this subject: Two major garages opened up down the street from a facility I audit. They are draining away business from my garage. They had installed pay-on-foot equipment in those garages and quite successfully. My owner was concerned that his patrons couldn’t run POF equipment. Obviously, he was wrong because the same people were parking in the new garages that used to park in his.
I am recommending we install that equipment in this garage. It will mean we can transfer 15 employees, saving their salaries. We might not be able to have quite the traffic we did before, but we can make up the bottom line through the use of modern technology.