Should You Open a Car Wash? Benefits of Being in the Car Wash Business
Should You Open a Car Wash?
Benefits of Being in the Car Wash Business
Have you ever considered investing in a car wash? Maybe you’re one of those people who values a good car cleaning and thinks of owning a car wash as a way to make a living while helping people protect and extend the life of their cars. But how much does it cost to run a car wash, and how much money can you make?
We can give you an overview of the advantages of owning a car wash, to provide you with the background knowledge you need before opening your own facility. The first thing you probably want to know is whether you can make money.
Is a Car Wash a Profitable Business?
Before deciding to invest a portion of your savings or get a loan to start your own car wash business, you’re on the right track if you’re asking these questions:
- What are the reasons to own a car wash?
- How much money can I make from a car wash?
- How much does it cost to run a car wash?
- What do you need for a car wash?
- What are the pros and cons of starting a car wash business?
- Is this business for me?
You’ll need to ask yourself some questions about your commitment to owning a business and answer them honestly. You’ll also need to do a bit of research about the car wash market to see how many people would continue to purchase your services over time in the location where you would operate the facility. This is called estimating the market size.
Start-Up Costs and Pricing for Your Car Wash
You’ll need to research the expenses to start up and maintain operations. You can collect expense information by talking with people who own car washes in a market similar to yours. Fees could include costs related to:
- Land purchase or lease
- The tunnel build
- Water and sewerage infrastructure
- Parking lot paving
- Business licensing
- Soaps and other chemicals
- Employee wages
- Equipment maintenance
You’ll also need to research general pricing for car wash services near you, which can be as easy as patronizing a number of washes to take notes on their service and pricing menus. The car wash owners or operators may be open to answering questions about which services are most popular.
Estimating the Cost of Your First Car Wash
These three activities — sizing the market, evaluating the start-up and operating expenses, and compiling service pricing information — give you information to help determine:
- What do I need for a car wash? And how much does it cost to run a car wash — over a day, week, month, year, three to five years?
- How much money can I make from my car wash services — in a day, week, month, year, three to five years?
- Could a car wash be a profitable business for me?
“The Start Your Own Business Bible” estimates potential earnings for a car wash start-up at $75,000 to $250,000. The average salary of hand car wash owners in the U.S. was $30,000 in 2013. Owner salaries come from the profits their businesses earn. While that’s low compared to other occupations, it does represent a profit.
One valuable local resource you will want to visit is your local Small Business Administration. SBA centers offer reliable sources of information about a variety of industries, as well as consultants, many of whom have successfully run their own profitable small businesses in the past. They are also knowledgeable about financing options, including at the local level, should your car wash business need a loan.
What Are the Reasons to Own Your Own Car Wash?
If you are looking for a low-risk business with long-term potential, a car wash fits the bill.
A report from the Small Business Administration shows car washes outperform both franchised business and general small business by a wide margin. The report indicates SBA loan failure rate for the car wash industry was significantly lower than both franchises and general small business. From 2001 to 2010, SBA loans to general small business failed at a rate 22.4 percent greater than loans to the car wash industry. SBA loans to franchises failed at a rate of 42.2 percent more than car wash loans.
There are roughly 15,000 single-location or units of multi-location car washes with combined annual revenue of about $8 billion. This includes full- and self-service car wash facilities, vehicle detailing services, and truck and bus washes.
Because new car sales help drive demand for car washing services, car sales growth is a good indicator of the prospects for starting a profitable car wash business near you. New vehicle sales could hit 16.7 million in 2018, down very slightly from 2017.
You will want to look at the count of local registrations for motor vehicles to estimate your market size. Across the U.S., motor vehicle registrations are expected to increase 1.3 percent annually through 2018, according to the SBA.
This data above indicate one reason to own a car wash could be favorable prospects for customers, depending on the selection of a business location with a high volume of car drivers. If you’re seriously thinking about getting into the car wash industry, get to know what you embark on. Ask the right questions. Get truthful answers from people who know the business and who will help you decide if owning a car wash business is a fit for you.
Know what the investment requires of you, so you can make an objective, accurate assessment of your means, skills and readiness to commit. Should you find that you have them, you’ll be positioned for your next steps.
Benefits of Being in the Car Wash Business
People in varied aspects of the car wash business mention two main benefits a car wash owner enjoys more than other kinds of business:
- A car wash is a cash business.
- Payment is immediate.
Added benefits include:
- Efficiencies resulting from equipment and product technology developments: In the last decade, developments have helped to reduce energy and water waste, contribute to overall reduced costs in operation, satisfy more customer needs and send more money to the bottom line.
- Advances in on-site marketing: With automatic pay stations and unlimited monthly passes for a fixed price, the result is growing car counts through washes that have these features.
- Customers seeking more convenient, less-expensive services for car washing: As tunnel design and payment systems technology have improved, the operator can more easily meet this need.
- Markets for services are very localized or regional: Customers don’t shop around for car wash services in another town, county or state, so advertising is affordable.
- Low-cost marketing through local networks and social media: Owners can accomplish quite a bit through word-of-mouth in local communities, complementing affordable web pages, local merchant web alliances and social media.
- Software for managing: The business has benefited more recently from good software management tools for controlling cash and scheduling staff.
Pros of Starting a Car Wash Business
There are advantages and disadvantages of owning a car wash business. While you need to put thought into your own personal pros for starting a car wash business, here are a few general advantages to owning one:
- Done right, your business can be a source of long-term income and stability, and one of the best investments you make.
- Hard work is personally rewarding, and owning your own business lets you see those rewards directly.
- Like any small business, owning and operating a car wash offers a way for a person to be their own boss.
- Availability of capital for startup and lending — SBA loans are one of the most available financing options for car wash owners.
- Compared to other kinds of businesses you could start, the inventory for a car wash is minimal and does not sit for long periods to expire.
Cons of Starting a Car Wash Business
Just as you must consider your personal pros, you need to think about your own personal cons against starting a car wash. Below is a general list of disadvantages:
- For most start-up and small businesses, you can expect to work long hours.
- Competition may arise from industry consolidation, more car washes and the possible entry of convenience stores to the market.
- Uncertainty in the economy will always be a factor for any business, and you will need to think about your risk tolerance level.
- Measures to comply with local and state regulations take time to fulfill.
Is a Car Wash Business the Right Fit for You?
Steve Gaudreau, president of consulting firm Brinks Results LLC, told Professional Carwashing & Detailing Magazine that a car wash business operator’s success rests on two factors:
- The customer’s experience ends with a clean, dry car in a short amount of time.
- The owner hires and trains effective managers who focus on that experience for the customer.
Gaudreau said the basics require ensuring chemicals do their job, doing regular quality assurance checks and performing preventative maintenance to keep equipment in good order. Heeding such insight and tips from people within the industry offers reliable guidance for how to make a car wash business profitable.
Do You Have the Skills to Own a Car Wash?
Being an effective business owner requires certain strengths. Inventory your personal and business skills, knowledge, abilities and weaknesses:
- Are you a hands-on entrepreneur who doesn’t mind long hours and hard physical work?
- Can you manage your wash tunnel maintenance schedule — your biggest asset — with discipline? This includes daily, weekly, monthly, yearly and seasonal routines.
- Do you understand what makes good signage and how to market and advertise locally?
- Can you manage the operations of a company, from people to equipment to finances?
- Can you manage and work daily with staff, suppliers and related businesses?
- Do you feel confident to handle customer service, both dissatisfied customers as well as satisfied?
What Type of Car Wash Should I Open?
Once you decide on whether you possess the traits to succeed, it’s time to think about the specific type of car wash that fits your needs. Talk to owners of each type. Research and visit different kinds to understand the differences. There are four:
- Self-service without automatic: The least-expensive initial investment to build, easier to operate, few employees, and need daily visits and cleaning.
- Self-service with automatic: Necessitate a low initial investment, are easy to run, have few employees, and need daily visits and cleaning.
- Full-service car washes: Initial investment is higher due to the number of services provided, more employees and management issues.
- Conveyor washes: These need a larger site, cost more to build, run and maintain, and entail more employee and management issues.
You may also want to consider ownership versus franchise. A franchise would generally do the site selection, might have an existing location, might build the wash if not already created, would advertise under the brand and sometimes operate the car wash. You would pay the franchise for the services provided as well as a franchising fee for the use of its brand.
What Do You Need for a Car Wash Business?
Now that we have told you everything you should know about starting a car wash business, the next step is to write a business plan. The SBA has templates, available for download from its website, which guide you through a process of documenting the information needed.
What Level Of Financial Investment Do You Need for Your Car Wash?
Find as much information as possible about how much you need to invest and have your business plan before investing any funds. Down payments for a business loan run at least 20% to 30%, require good personal financial resources, and a clean credit record. Previous successful experience running a business is also helpful.
Your financing request should include a budget for land, building, equipment, contingencies — i.e., unexpected events that affect financial health, professional image/brand or market share — and working capital. Have a personal reserve to meet personal obligations for one year, or budget this into your business financing agreement.
What Kind of Employees and Suppliers Will Make Good Team Members?
Look for qualities in your team members such as:
- Trustworthy judgment
You may need to consult with a general contractor, accountant and/or lawyer as you go along, in addition to talking to a banker to secure your loan. You also will need to line up a distributor of soap, towels and other supplies for the car wash industry. Finally, connect with SBA, SCORE and local business alliances, including Chamber of Commerce, which can assist you with marketing, offer an opportunity for network and otherwise strengthen your business.
What Is the First Step in Opening a Car Wash?
Now that you’ve taken the time to consider the most important aspects of owning a car wash business, contact New Horizons Car Wash. You can reach out to us on our website or toll-free by phone at 800-537-8231.
We’re here to help you make decisions about your new car wash build-out based on the type of services you want to offer in your community. We’ll guide you through the process to provide a quote you can use in your business plan that best matches your investment resources. We have worked with many first-time car wash owners, and we can connect you with successful owners who can tell you what they did and how.
New Horizons has experienced representatives who know the car wash industry and, once you’re ready, can help you get you started.