“Staying Open Around the Clock”

Kinko’s, Home Depot, Wal-Mart and 1-800-FLOWERS are among the best-known businesses in America that have created a marketing edge by staying open 24 hours a day, seven days a week. While these companies do not address needs in the traditional sense, they were able to address a growing need or create a need in the market. Who thought of ordering flowers at 2 a.m. until the service was available?

E-commerce has upped the ante. People now order everything from cosmetics to fine art to airline tickets at any time of day or night over the Internet. A bricks-and-mortar business might find that the best way to compete is by staying open around the clock — 24-7 as it’s now known — with nighttime staffers who can give customers the kind of personalized service they can’t get from the Internet.

Even if it hasn’t been done in your industry before, starting an around-the-clock operation might give your company an important edge. But is it worth the investment you might have to make in overhead, personnel, security, advertising and possibly even product or service development? It’s important to consider all factors and conduct your own cost-benefit analysis first.

In this Quick-Read you will find:

• Ways to evaluate your market for an all-night operation.
• Expenses and logistics of staying open around the clock.

SOLUTION [top]

Consider whether you could build your business around a 24-hour-a-day operation. If you are the first in your sector to stay open around the clock, you should create some expansion plans that make maximum use of the investment you’ve put into this feature and utilize the time that your night-shift employees spend on the job.

A small health club trying to compete with Bally’s and other chains found that staying open all night brought in a whole new client base of people who worked odd hours, including police officers, firefighters, emergency medical workers and casino employees. Late-night and weekend customers may be a whole new market. A 24-7 gym might expand into a catalog operation selling fitness products. The late-night receptionist doubles as an operator to take phone orders, rather than starting an onsite fitness boutique that takes up valuable square footage and would not get a lot of walk-in traffic at night.

Before you even seek new markets, consider whether your current clientele can benefit from your value-added service. Rather than spending money on a focus group, you might conduct a less-formal survey, with a questionnaire asking pointed questions about whether they would use your service at night and on weekends if it were available. This is also a good way to plant the idea.

Kinko’s is an example of a company that saw an opportunity in changing consumer habits. People who work long hours might need quick printing services at any time of day or night, as well as on weekends. And many companies with a global reach, such as software consultants, Internet service providers, even Web-site designers, have seen the value of having staff available all night to assist clients on the other side of the world.

If your clients ever have emergencies, you can offer value-added service if you keep even a skeleton staff on call around the clock. Many plumbers, heating and air-conditioning repairers, auto mechanics, locksmiths, and dentists are now familiar with this emergency system. If a customer works ten hours a day and then goes out at night, he or she might come home at midnight to find the boiler on the blink and will pay almost any price to a company that can send a service technician before morning.

To evaluate the idea more precisely, follow these steps:

1. Study how your industry is adapting to market changes. There are no trade associations or publications geared specifically to around-the-clock companies, but you can conduct your own research of your industry.
   • Compile a list of all the companies that could be your competitors, including those in e-commerce, and investigate how each makes itself convenient to customers. If others have an after-hours emergency number or pager, could you go one step better?
   • Turn to a consultant who knows your industry, by checking with trade associations or your local Small Business Development Center. Ask the consultant specific questions such as: How is the market for this industry changing? How have others adapted? Where could I most effectively advertise?
2. Estimate your overhead. Factor in the following expenses:
   • Utility costs for extra electricity, heating, etc.
   • Installation of surveillance cameras for night security.
   • Fees for a nightly security guard.
   • A shift differential in salaries for employees who work nights.
   • The cost of adding a new product or service that is related to your core business but utilizes your night and weekend hours.
   • The cost of an advertising campaign to get the word out. Call the media and get a breakdown of the costs in advance.
3. Estimate the added revenue you would have to bring in to justify the new expenses.
   • Is there a market for an around-the-clock business, or do you have to create demand?
   • Is your potential revenue from the added hours of operation at least twice the money you would add for overhead? Then it might be worth your while to take the plunge.

REAL-LIFE EXAMPLE [top]

Duane and Nancy Wolfe have kept their 21-year-old travel agency, Sundance Travel in Phoenix, Ariz., open around the clock since 1985. The company has 27 employees and revenues between $15 million and $25 million. The Wolfes went 24-7 well before there were any Internet travel agencies, and even now they don’t consider e-commerce companies their competitors, because Sundance offers a high-end service.

After starting the company in 1979, they determined that staying open all the time would give them a special advantage among their corporate clients, many of whom have to make travel plans in a hurry and appreciate special services that they can request from any part of the world. Sundance travel agents will even take messages and call a client’s family when a flight is delayed.

"We wanted our clients to get a human on the phone any time of day," says Nancy.

The deciding factor for them, however, was an opportunity to take over a parking lot at the Phoenix airport. Since the parking lot had to be open all night, they figured that they could reap maximum value by keeping a travel agent on late-night duty at the lot.

The night agents do a lot of "housekeeping work," says Nancy. They issue refunds and schedule changes. The night agents are paid a shift differential of about twice the hourly rate they would make on day shift. "We have to compensate them," explains Duane, "because they don’t get the opportunity to earn commissions that day agents do."

DO IT [top]

1. Give your clients a questionnaire, asking about related services they use at night and on weekends. Evaluate potential clients by the foot traffic in your area after hours or by investigating related lines of business that stay open late.
2. Brainstorm a list of people who would be new customers who have never come through your doors before, like the health club-turned-fitness-equipment catalog.
3. Survey what your competitors are doing and what needs they haven’t met. You might find that the best way to capture a market niche is with lower prices or another kind of value-added service, instead of staying open all the time.
4. Estimate all of your overhead expenses and weigh them against your anticipated revenue increase.
5. Find people who are willing to work odd hours or be on call late at night. College students are often good candidates.
6. Consider new lines of business that fit into your around-the-clock schedule.

RESOURCES [top]

Books

The Twenty-Four Hour Business: Maximizing Productivity Through Round-the-Clock Operations by Richard M. Coleman (AMACOM, 1995).

Practical Guide to Managing 24-Hour Operations (ShiftWork Alert, 1998). Tips to help a manager understand the special problems of shift workers and boost their productivity.

Internet Sites

Shift Issues. Shiftwork Solutions, LLC.

"Scary Truths About the Graveyard Shift," by Kate Hazelwood. Business Week Online (July 11, 2003).

Hours Worked Under the Fair Labor Standards Act. U.S. Department of Labor Fact Sheet 22, revised 2008. Call your regional branch of the Wage and Hour Division which sets guidelines about shift hours to find out whether you need to take measures to comply with the Fair Labor Standards Act .

Writer: Jan Alexander