Cleaning & Restoration Breaking News

Firms Pushing Fuel Costs Onto Consumers

ASHBURN, Va. – (Leesburg Today) August 18, 2008 -- The majority of Rainbow International President Cindy Ballinger's business relies on gasoline.

From their homes, most of her staff, six technicians, drive more than an hour to the Rainbow International office, a flex site off of Loudoun County Parkway in Ashburn before they check-in, pick up a truck, drive to the job site, and then let the truck run for about one hour. The carpet-cleaning machine mounted inside the truck does the majority of the work.

Trucks run about five hours on average per day.

"It not only costs us to get to the job, it costs us to do the job also," Ballinger said.

Earlier this year, Ballinger didn't pay much attention to the rise in gasoline costs until she saw a decline in revenues.

"My gas bill got a little bit bigger, and a little bit bigger," Ballinger recalled. "All of a sudden our revenues started going down because we follow the real estate market. But my gas bill kept going up and up."

Rainbow International, a franchisee network, provides carpet-cleaning services to residential, commercial and insurance customers throughout the country. Rainbow also has a niche in fire, water and smoke damage restoration solutions. Ballinger, along with her husband, Frank, own a franchise in Ashburn, and serve Loudoun and Fairfax counties. The duo started the franchise 20 years ago in California and moved to Ashburn in 2006.

With 80 percent of their business either from property management companies and apartments, they saw the rise and fall of the residential market just like many others during the past 24 months.

Let's put it this way, Ballinger can't just sit behind a desk and crunch numbers anymore. She now needs to focus more on the basics: cold calls, Chamber of Commerce events and advertising, are among some of the methods she has incorporated to take on more of a marketing role and get the Rainbow name out there in the community.

"I'd say our sales are down about 5 percent for the year," she said. "My fuel bill is up 12 percent. Where I would pay $2,500 per month for the fleet, I'm paying $3,800 now."

She must admit, however, her employees were the ones who truly brought the gasoline issue to her attention. After a day's work they'd say, "I'm so sorry but I filled up my tank today and it was $105. I've never seen anything so high," Ballinger recalled.

Ballinger uses fleet cards, which allow her to run reports to itemizing each truck fills up and showing the average miles per gallon.

"Just that huge chunk each month, it just hurts to pay my bill," Ballinger said.

Because of the transient nature of the area, the carpet cleaning business is quite competitive, Ballinger said. In April, however, the Ballingers decided they needed to raise prices by about 5 percent, which still hasn't offset the increased gas expense.

"We were really leery about raising our prices because there's so much competition now in that arena," she said. "The price is really what gets us in there [wins the work]."

To Ballinger's surprise, when she discussed the need to raise prices with existing clients, many properties didn't even "flinch."

"It has all been about customer service and the relationship we've built with the companies," Ballinger said. "They understand about the cost of gas and it's worked so far, so good. I guess it's just a problem everyone is having."

Ballinger needed to raise prices more than 5 percent for one client in Springfield, because it currently serves as the only property in that area.

However, they didn't lose the client. "The manager called me up and said, 'this is kind of steep.' And I explained where we were coming from. I guess everybody is really understanding that's what's going on."

Costs are also expected to rise on the water restoration side of the business. When a pipe bursts and a house floods, Rainbow International goes in and dries that house out with humidifiers and fans. It also will take out the carpet and dry walls but will not do the reconstruction work. The Ballingers found that the pads underneath the carpet are actually a petroleum-based product, which means the cost of that has gone up.

"We're caught between," Ballinger said. "You don't want to keep raising prices. To combat that, is by increasing volume. To market it to apartment communities in the same area you can get to the same place with the same fuel cost. That's where we are right now, we're trying to find more business."

As far as other ways to cut down on costs, technicians fill up in cheaper areas, such as Manassas. They have also found that by putting nitrogen in the tires, they are able to get an extra 2 to 3 miles to the gallon.

"The worst part is that huge chunk every month, to spend $4,000 on fuel. Mentally, that just scares me," she said.

But Ballinger remains optimistic.

"Of course we do pass that cost onto the customer," she said. "You have to lay that cash out before you get paid. It's a scary time. It's been kind of good for us. We were so comfortable before. Now we're forced to get out there. It's forced us to open our eyes and we're kind of starting back from basics all over again."

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