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How To Start A Car Wash

How To Start A Car Wash

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How To Start A Car Wash

How To Start A Car Wash

Starting a car wash can be a profitable venture, especially if you live in an area where people value their vehicles and are willing to spend money on keeping them clean. Unlike many businesses that require inventory management and supervision during operational hours, car washes function a little bit differently, making them an appealing business venture for many entrepreneurs.

So, how do you go from zero to owning a fully operational car wash? Here’s the lowdown, packed with details to get you on the fast track to becoming a successful car wash owner.

Business Overview

Car washes provide drivers with vehicle washing services that are both necessary and convenient. Regularly washing vehicles helps protect their paint and reduce the harmful effects of road salt during the winter. For drivers who live in apartments or other settings without the ability to wash their cars at home themselves, car washes are a must. Drivers who live in settings where they have access to a hose and can wash their vehicles in their driveway may still use car washes because of their convenience.

There are four main types of car wash businesses.

  • Automated conveyor car washes require a more significant upfront investment but wash much higher volumes of cars daily.
  • Self-serve stalls allow customers to wash their own cars with wands and hoses for a per-minute fee. While self-serve facilities have lower startup costs, they wash fewer cars per day.
  • Full-service car washes exist where attendants are present to hand wash the vehicles.
  • A mobile car wash business brings the car wash to the owner.

Industry Overview

The car wash industry is a popular business because of the sheer number of people who own cars and the resilience it has shown through economic ups and downs. According to the International Carwash Association, in 2022, the professional car wash industry had an annual revenue of approximately $13.4 billion in the U.S. alone. And guess what? Roughly 8 million vehicles get cleaned at car washes every day. With increasing vehicle ownership and less time for DIY cleaning, the demand for car wash services isn’t likely going to go away any time soon.

Several trends are shaping the car wash industry.

First, there’s a growing preference for express exterior car washes. These are faster and cheaper than traditional full-service washes.

Second, environmental concerns are leading to the rise of waterless car washes, which use eco-friendly products to clean cars without water. Car washes use a significant amount of water, and when paired with increased regulations and increased awareness of the importance of eco-friendly practices, there’s a demand for eco-friendly and water-saving car washes throughout the country.

Last, the use of technology is increasing in the industry, with many car washes now using apps to allow customers to schedule services, make payments, and earn loyalty rewards.

Target Market

The target market for a car wash business is typically diverse, as it includes anyone who owns a vehicle and values cleanliness but may not have the time or desire to wash their car themselves. However, there are specific segments within this broad target market that can be particularly valuable.

One such segment includes individuals who are willing and able to perform minor repairs and maintenance on automobiles but prefer professional help when it comes to cleaning. This group values a clean car but may lack the tools or expertise to achieve the results they want.

Another important demographic to consider is millennials. Studies show that this group is increasingly becoming a significant part of the car wash customer base. They value convenience and are more likely to pay for professional car wash services than older generations.

Mobile car wash services often target consumers who prioritize convenience above all else. These customers may be willing to pay a premium for the ability to have their car washed without having to leave their home or office.

Last, individuals living in apartments, townhouses, and condominiums form a portion of the car wash target market. These residents may not have access to the space or resources necessary to wash their own cars and, therefore, rely on professional car wash services.

Overall, identifying your car wash’s target market involves understanding who your current customers are, which groups spend the most, and what common characteristics they share. This information can guide your marketing strategies and help you attract and retain customers.

Checklist To Start A Car Wash

Starting a car wash isn’t just about knowing how to operate the equipment or mix the right cleaning solutions. It’s about understanding the business landscape, staying ahead of trends, and meeting customer expectations. Here are some of the common steps to get started.

Step 1: Assess the Market

Let’s face it: no matter how passionate you are about starting a car wash, you can’t build a business on enthusiasm alone. Before you commit your hard-earned cash and precious time, you need to figure out if there’s enough demand for another car wash in your desired location.

While it’s not a guarantee of success, good market research is like a compass—it might not predict the future, but it’ll point you in the right direction.

To gauge the demand for your car wash business, you could start by analyzing local demographics. Look at the number of car owners in your target area, their income levels, and their car washing habits. The Census Bureau has free research that can give you an idea about the number of vehicle owners in a particular area. High car ownership could mean high demand.

Another approach is to conduct social media polls to get a quick, informal check on what people want. Run a poll asking if people in your community would be interested in a new car wash and what services they’d like. This direct feedback can provide valuable insights into your potential market.

Competitor analysis is another crucial part of market research. Drive around the area and check out your potential competitors. Are they bustling with activity or quiet? Also, see what services they offer and at what prices. The more specialized your services, the less direct competition you’ll face.

Sure, it might not be a guarantee, but this kind of research will give you invaluable insights. You’ll know what you’re getting into and can make a more informed decision. Plus, it can help you tailor your car wash to meet the actual needs of your future customers, setting you up for potential success from the get-go.

Step 2: Write a Business Plan

After gauging market interest, it’s time to craft a business plan. Think of this plan as your GPS, guiding you through the complexities of starting a car wash. Beyond organizing your thoughts, a business plan is essential for securing loans and understanding the nitty-gritty of your venture. In a field as competitive as the car wash industry, you’ll need more than just a decent location and some quality soap – you’ll need a solid plan that dives into specifics.

For a business plan that is going after funding, there are a few sections that I recommend focusing on. These include:

  1. Market analysis: Sure, you’ve determined there’s some interest in your business, but you need to show lenders why you’re confident your car wash will outperform others. Are you offering unique services, or is your location underserved by competitors? Maybe you plan to capitalize on eco-friendly trends that others are ignoring. Use the data gathered from your market research to support your claims.
  2. Management team: The people steering the ship matter – a lot. The owners and key team members’ skills, experience, and passion can significantly influence whether the business is funded.
  3. Location: This isn’t just about geography; it’s about strategy. Your location section should spell out why the place you’ve chosen is the right one for your car wash. Are you near a shopping mall, meaning folks can get their cars washed while they shop? Or perhaps you’re near several office complexes offering a quick wash for professionals during lunch breaks. The idea here is to prove that your location doesn’t just work; it works wonders for your specific business model.
  4. Financial projections: No lender is going to give you money based on a hunch. They want numbers—numbers that add up. In this section, provide projections for income, operating expenses, and profitability. Given the specific costs involved in a car wash, like water usage, cleaning supplies, and labor, your financial model needs to be both detailed and convincing.

Before you present the plan to any lender or investor, have someone, perhaps another business owner or an accountant, take a second look to ensure everything checks out. It’s good to have another set of eyes to catch potential red flags that could give lenders pause.

Related: How to write a business plan

Step 3: Source Funding

Alright, you’ve done your market research and polished your business plan. The next hurdle? Funding your car wash, and let’s be real, is where many good ideas either take flight or hit a brick wall.

Personal savings: Personal savings are the first source of funding to tap into for new businesses. However, for most people, personal savings won’t cover everything. If you find yourself in this situation, you will need to look elsewhere for the remaining funds.

Getting the funding for your car wash is no small feat, but it’s far from impossible. Here’s an overview of the common funding sources.

Traditional lenders: Banks are generally the go-to when personal funds aren’t enough to finance a business. Banks typically expect you to bring at least 15% of your own money to the table. They’ll also look at your credit score and whether you’ve got collateral, like a house or another property, to secure the loan. If a bank feels lending to you is a bit too dicey, they might still go for it with a Small Business Administration (SBA) loan guarantee as a safety net.

Friends and family: Borrowing from friends and family is another possibility. Put all agreements in writing to avoid misunderstandings down the line. The last thing you want is for a money matter to ruin your Aunt Sally’s Thanksgiving dinner.

Microloans: If you’re not needing a ton of money, or maybe you’re having trouble securing a traditional loan, consider microloans. Organizations that provide these smaller loans sometimes offer business training on top of the funds, helping you not just start, but succeed.

Local investors: Getting investors interested in a car wash can be a bit of a challenge. Most are on the lookout for high-growth and scalable businesses. However, local people who have an interest in this type of business and possess higher net worth can sometimes be an option. If you can make a compelling case for how your car wash fills a gap in the market, you might catch their eye.

Related: Finding the money to start a business

Step 4: Register the Business

You’ve got your business plan, you know there’s a market, and you’ve even secured some funding. Great work! Now it’s time to get your car wash business legally up and running. This is where your business goes from an idea to an entity that exists in the real world, with all the responsibilities that come along with it.

Every state is different, but here’s an overview of what you need to think about when registering your car wash business.

Choosing a business structure: First up, decide on your business structure. You’ve got four main options: Sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each comes with its own pros and cons:

  1. Sole proprietorship: This is the simplest and least expensive business structure to set up, making it a popular choice for small businesses. You have full control but are also personally liable for any debts or legal issues.
  2. Partnership: This is an option if two or more people will own the business. Like a sole proprietorship, it’s relatively easy to set up, but both parties are personally liable for any debts or legal issues.
  3. Corporation: Corporations offer strong liability protection, as they are considered separate legal entities from their owners. However, they are more complex and costly to set up and maintain.
  4. Limited Liability Company (LLC): An LLC combines the liability protection of a corporation with the tax benefits and simplicity of a partnership or sole proprietorship. This makes it a popular choice for many small businesses, including car washes.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular LLC formation services include:

IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Related: Tips and ideas for naming a car wash

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Here’s where things get a bit specific for car wash businesses. You’ll need to adhere to Environmental Protection Agency (EPA) regulations regarding water recycling and wastewater disposal. Some states and municipalities also require permits for water usage and drainage, so look into all of these details ahead of time before you start building.

These licenses and permits can vary from state to state and even from county to county. For instance, California requires all businesses that offer car washing and polishing in the state to register with the California Department of Industrial Relations.

Depending on your location, there will also likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, and Employer Identification Number (EIN).

Related: What licenses do car washes need?

Step 5: Acquire & Set Up the Location

You’ve secured the funding, and your business is officially registered – congratulations! Now comes the pivotal moment of transforming your plans into a physical, operational car wash. Whether you’re considering buying an existing business or starting from scratch, the location you choose will play a critical role in your venture’s success.

First things first, your chosen location should align with the target market you’ve identified in your business plan. Areas with high vehicular traffic are generally better for car wash businesses. Many state Department of Transportation websites or local economic development offices offer traffic count data, often for free.

And another tip: before you make any moves, double-check that the property is zoned for a car wash. Zoning laws vary by city and state, and not every commercial property will be permitted for use as a car wash. A local city planning department can verify this information. You don’t want to get caught up in red tape that could stall or torpedo your plans.

Step 6: Hire Staff

Many car washes operate with just the owner, but you may be thinking of bringing some extra hands on deck. Common types of employees you might hire include car wash attendants, detailers, managers, and customer service representatives.

Before you start hiring, you’ll need to obtain an Employer Identification Number (EIN) from the IRS. This unique number identifies your business for tax purposes.

You’ll also need to verify the employment eligibility of each new hire. In the US, this typically involves completing an I-9 form for each employee, which verifies their identity and authorization to work in the country.

As an employer, you’ll also be required to report each new hire to your state’s new hire reporting program. Keep in mind that every state has different requirements for reporting new hires, so you’ll need to familiarize yourself with the specific requirements in your state.

Understanding labor laws is another important aspect of preparing for hiring. These laws cover a wide range of topics, including minimum wage, overtime pay, record keeping, and more. Make sure you understand both federal and state labor laws before you start hiring.

Budgeting for payroll taxes is another essential part of the hiring process. These taxes are a percentage of each employee’s pay paid by the employer. As a general rule, it’s a good idea to budget around 15% on top of salaries to cover these taxes.

Related: Hiring your first employee

Step 7: Create a Marketing Plan

As you get ready to unleash your car wash on the world, marketing is the fuel that will drive customers your way. Here are some popular ways to market a car wash.

Social media platforms provide an excellent platform to engage with customers, promote your services, and build brand awareness. Regular posts showcasing your services, customer testimonials, or special offers can help attract attention. Running social media contests is another effective way to engage customers and promote your business.

Claiming your business on relevant online business directories is also essential. These platforms, including Google Business Profile, Yelp, and Yellow Pages, increase your visibility and make it easier for potential customers to find you. It’s important to regularly update your listings with accurate information and respond to reviews to enhance your online reputation.

Engaging with the local community can be a powerful marketing strategy. This could involve sponsoring charity washes, holding fundraisers, or joining the local Chamber of Commerce. These activities not only raise your business profile but also demonstrate your commitment to the local community.

Creating a loyalty program encourages repeat business by rewarding customers for their continued patronage. This could involve offering discounts or free services after a certain number of visits.

Related: Low-cost ideas to market a new business

Step 8: Prepare to Open!

As you edge closer to launching your car wash, there are likely a few final pieces that need to fall into place. Your needs may vary based on your specific situation, but these are some of the key tasks you won’t want to overlook.

Business insurance: You’ll need different types of insurance, such as property, liability, and worker’s compensation, to cover your bases. In the car wash industry, you may also consider specialized options like garage keepers insurance.

Related: What types of insurance does a car wash need?

Bookkeeping: Establishing a solid bookkeeping system is essential for tracking income and expenses, preparing tax returns, and making informed business decisions. You might choose to manage this yourself using software like Wave Accounting (FREE) or Quickbooks, or hire a professional bookkeeper or accountant.

Business bank account: Opening a business bank account is important for keeping your personal and business finances separate, which simplifies bookkeeping and makes tax preparation easier.

Point of sale software: Investing in industry-specific management or point of sale software can streamline operations and improve customer service. Examples include DRB Systems, which offers a range of car wash management tools, Washify, which provides POS and marketing solutions, and EverWash, a membership management platform.

Grand opening: Plan a grand opening event to make a splash in the community. Offer promotional discounts, collaborate with local businesses, and maybe even get a local influencer to give you a shout-out.

Greg’s Tip: Choose the location very carefully – Busy street with lots of traffic is ideal. Ensure proper zoning and space for expansion.

Greg's Business Tip

Common Questions To Start A Car Wash

How much does it cost to start a car wash?

The cost to start a car wash can vary significantly based on location, size, and the services offered. However, it’s generally safe to say you’re looking at a range between $150,000 and $1,000,000 for a small to medium-sized operation.

Here are some of the costs to consider:

Location: The property purchase or long-term lease will likely be one of the largest upfront costs. The cost varies tremendously based on size, location, and existing structures on the land. Equipment such as conveyors, dryers, vacuums, water reclaim systems, and cleaning solutions average $200,000 to $500,000 for a full-service wash. Buildout costs, including permitting, utility connections, contractors, and waste treatment systems, can add $50,000 or more.

Equipment: Equipment costs are another major consideration. For a self-service car wash bay, the equipment costs for things like pressure washers, vacuums, dryers, etc., range between $8,000 and $10,000. For an automatic car wash bay, equipment costs can be significantly higher, with tunnel and support units ranging from $50,000.

Permits and licenses: You’ll need various permits and licenses to operate, such as building permits, business licenses, and environmental permits. These can set you back anywhere from $1,000 to $10,000, depending on local regulations.

Initial inventory: Soap, wax, towels, and other cleaning supplies will be needed. A starting inventory may cost around $1,000 to $2,000.

Initial marketing: A grand opening campaign might include local ads, flyers, and social media marketing. Budget at least $2,000 to $5,000 for initial marketing efforts to get the word out.

Insurance: The upfront cost for insurance like general liability and property can range from $2,000 to $4,000.

Professional services: Legal and accounting fees for setting up your business structure, contracts, and financial systems can add another $1,000 to $3,000 to your startup costs.

Miscellaneous costs: Uniforms, signage, and a point-of-sale system can also add to your initial costs, so set aside an additional $1,000 to $5,000 for these items.

While buying or leasing existing car washes lowers some start-up costs, renovations and new equipment are usually still required. Self-serve washes need around $50,000 for basics like wands, vacuums, soap vending, and minimal utilities.

Bear in mind that these are just estimations and the actual costs can vary based on many factors. It’s always a good idea to conduct a thorough market research and financial analysis before starting a car wash business.

How profitable is a car wash?

The profitability of a car wash can fluctuate due to a variety of factors like location, competition, and operating efficiency, but let’s dig into some industry norms to get a ballpark figure.

Typically, a car wash might charge around $10 for a basic wash. If you serve about 50 cars a day, that’s $500 in daily revenue, or about $15,000 per month.

Now, expenses are a significant part of this equation. Rent, utilities, labor, and supplies can vary but often total around 40-60% of revenue. For simplicity, let’s assume 50% in expenses. So, if you’re pulling in $15,000 a month, you’d be looking at expenses of around $7,500.

Here’s the math:
Revenue: 50 cars/day * $10/car * 30 days = $15,000
Expenses: $15,000 * 0.5 = $7,500
Profit: $15,000 (Revenue) – $7,500 (Expenses) = $7,500/month or $90,000/year

Keep in mind that these are ballpark figures, and your mileage may vary based on a ton of factors. But if you manage to hit numbers like these, you could be looking at a healthy profit.

What skills are needed to run a car wash?

Starting a car wash doesn’t require a business degree, but certain skills and experience can make the process easier and increase your chances of success.

Attention to detail: Monitoring the performance of equipment is a large aspect of owning a coin-operated car wash. When a car wash owner has excellent attention to detail, they are more likely to spot issues with equipment early on, which can help avoid poor quality washes and potentially catch equipment issues early on before they become expensive repairs.

Machine repair and maintenance skills: A car wash owner who can do at least some maintenance and repair of machinery can help to keep the car wash operational while cutting down on the cost of hiring a professional technician every time a machine malfunctions.

Customer service skills: While a coin-operated car wash is mostly operated by the customers themselves, responding to customer questions or complaints appropriately is an important trait for any car wash owner.

Marketing skills: Marketing a car wash takes some skill, but a small business owner who can manage at least some marketing efforts, such as establishing a loyalty program and managing social media pages, can help reduce the overall marketing costs, making a budget go further.

What is the NAICS code for a car wash?

The NAICS code for a car wash is 811192.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

International Carwash Association
Mid-Atlantic Carwash Association
Midwest Carwash Association
New England Car Wash Association
Southwest Car Wash Association
Western Carwash Association

How To Start A Car Wash

How To Start A Car Wash

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