How To Start a Car Wash Business in 2024
EA
Summary:
Owning a car wash business can be financially and personally rewarding. There are several types of car washes to choose from, ranging from self-service to full-service. Car wash business owners need to set up a solid business foundation and choose a great location; then, they can start operating a profitable car washing business that benefits them and their community.
There are almost the same number of cars in the U.S. as there are people. And when these cars get dirty, they need a place to get cleaned. The car wash industry is full of opportunities for entrepreneurs trying to start a profitable local business. Keep reading to learn everything you need to know about starting a successful car wash business.
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Is the car wash industry right for you?
Owning a car washing business isn’t for everyone, but it could be perfect for you. It requires an investment of time, money, and energy, but a car wash business can provide time, freedom, and satisfaction that you can’t get from working for someone else.
Before starting any business, you should ask yourself, “Why?” What impact do you want to have on your community? What kind of lifestyle do you want? And how can starting a car wash business help you achieve those ends?
Qualities of successful car wash business owners
Many entrepreneurs get started in the car washing business because they want to take advantage of the many benefits it can bring to both the business owner and their community.
Here are some qualities that successful car wash business owners share:
- They enjoy being active throughout the workday.
- They want to work close to home.
- They want to be their own boss.
- They’re good problem solvers.
- They are skilled at managing employees and partnerships.
- They have an interest in cars.
A day in the life of a car wash business owner
When you’re a car wash owner, every day is different. Car wash owners often split their time between being on their feet, checking on operations, and being in the office, working on administrative tasks. They get to have their hand in every part of the business.
An average day in the life of a car wash owner might look something like this:
- Start the day by making calls to distributors, reviewing sales, and taking inventory of materials.
- Watch over the operations of the business as customers start to roll in. You check in on how the car wash is operating at least once a day to make sure everything is going smoothly. If the business is self-serve, you might not need to be on-site all day.
- Hold meetings with employees and suppliers. You brief staff and train new employees on safety practices and the operations of the business, and you’re there to help them handle any challenges.
- Srategize about how to best network and connect with the community. You create, implement, and monitor marketing efforts. You brainstorm new ideas for how to improve the business.
- Answer emails and phone calls and attend meetings. You complete any remaining administrative and accounting tasks, then you make sure everything is properly closed up at the end of the business day.
How much does it cost to start a car wash business?
Before you start a business, you should have a clear idea of what it will cost you. Initial investments include the costs involved with building the business, but bon’t forget that once the business is up and running, you should expect ongoing operating costs. Let’s break the numbers down.
Startup costs for a car wash business
The main startup costs of a car washing business include land, construction, and equipment. All three of these elements can vary greatly depending on the type of car wash you intend to open and its location. Other factors, such as construction market volatility and supply chain logistics, impact costs. For these reasons, it is hard to predict the exact cost of starting a car wash business.
The Car Wash Advisory estimates the following ranges of costs involved with starting a car wash from scratch. Note the costs with high variability when you are estimating what the overall cost might be for your business. Some research into your local market can help you narrow your cost estimate down to a more precise number.
| Cost Component | Variability | Low | Average Costs | High |
|---|---|---|---|---|
| Building & Fixed Site Improvements | Average | $1,000,000 | $1,250,000 | $1,500,000 |
| Water Treatment | Average | $50,000 | $150,000 | $250,000 |
| Primary Tunnel & Support Equipment | Average | $500,000 | $650,000 | $800,000 |
| Primary Electronic Components | Average | $150,000 | $275,000 | $400,000 |
| Site & Landscaping | Average | $100,000 | $200,000 | $300,000 |
| Vacuum System | Average | $80,000 | $180,000 | $280,000 |
| HVAC & Plumbing | Average | $40,000 | $80,000 | $120,000 |
| Signage & Marketing | Average | $50,000 | $150,000 | $250,000 |
| Planning & Permitting | Average | $75,000 | $175,000 | $275,000 |
| Consulting and Other Third Parties | High | $0 | $250,000 | $500,000 |
| Real Estate and Land Costs | High | $500,000 | $1,250,000 | $2,000,000 |
| Financing and Debt Service Costs | High | $97,605 | $176,802 | $255,999 |
| GRAND TOTAL | $2,642,605 | $4,786,802 | $6,930,998 |
Despite the high costs of building a car wash business from scratch, if you decide to purchase an existing car wash business, you can expect to pay much more.
Recurring costs of a car wash business
After your initial investment, you’ll need to account for the costs associated with running the business. Typical ongoing costs of running a car wash business include the following:
- Salaries and commissions: Some types of car washes don’t require employees to operate them full-time. You may be able to run the business all yourself and save on this cost. However, if you have any hired help, you’ll have to include their wages in your monthly costs.
- Rental or mortgage payments: Whether you are renting or purchasing your lot, you will have monthly payments to account for.
- Marketing: Marketing is so important for your business. For a yearly gross revenue of $1 million, experts recommend a marketing budget of $70,000 to $80,000 per year for car wash businesses.
- Maintenance and operations: These are all the costs associated with keeping your business up and running. They include supplies, utility bills, maintenance services, equipment repairs, insurance costs, and any other basic business expenses.
See the table below for some estimates of what these items might cost you every month:
| Cost Component | Variability | Minimum Costs (per month) | Average Costs (per month) | Maximum Costs (per month) |
|---|---|---|---|---|
| Salaries and Commissions | High | $0 | $11,000 | $22,000 |
| Rental or Mortgage Payments | High | $10,000 | $30,000 | $50,000 |
| Marketing | Average | $1,000 | $3,500 | $6,000 |
| Maintenance and Operations | Average | $2,500 | $5,000 | $7,500 |
| GRAND TOTAL | $13,500 | $49,500 | $85,500 |
Remember that these ranges are estimates. Every car wash business requires a different amount of capital based on its location and operations. Speak with your accountant and other local experts for help with financial planning specific to your situation.
How much do car wash business owners make?
As a new business owner, you’ll want to understand the potential return on your investment. Factors that will influence your income include location, climate, type of car wash, marketing, and quality of service. Regardless, most car washes can reach a profit margin of 10–20%.
On average, car wash owners can make $40,000 to $690,000 per year. The lower end reflects the income of a small self-service car wash, while the higher end reflects a bigger luxury car wash.
Pros and cons of starting a car wash business
Like with any business, there are advantages and disadvantages to running a car wash. Here are a few risks and rewards to consider before you open a car wash business.
Pros of starting a car wash
- Demand: There’s virtually unlimited demand for car washes. With 290 million vehicles and counting in the U.S., drivers are always going to need their cars washed.
- Profitable: A car wash has huge potential to be a profitable business for its owner.
- Freedom: When you own a car wash, you have the benefit of being your own boss.
Cons of starting a car wash
- Seasonal: Car wash business often depends on the weather. Drivers will be less inclined to get their cars washed during the rainy seasons.
- Expensive maintenance: Repairs of car wash equipment can be costly.
How to start a car wash business
Ready to join the ranks of small business owners? Here’s everything you need to know about how to start a car wash business!
How to start a car wash business
- Choose your car wash type.
- Set up your business.
- Select a great location.
- Build your car wash.
- Market your car wash business.
- Provide quality service!
Choose your car wash type
The first step to starting a car washing business is to determine which type of car wash you want to open. Consider whether you want to start your business from scratch, purchase an existing car wash for sale, or buy into a car wash franchise.
To keep this guide simple, we’ll only cover the build-from-scratch model. Just note that if you purchase an existing business, you will likely avoid some of the capital expenditures and marketing costs that come with starting a brand-new car wash business.
Conduct a market analysis in your area to determine your competition and what your community needs. Consider how much capital you want to invest in the business, which can help you determine the type of car wash you can afford.
Here are the different car wash types ordered from least to most expensive:
- Hand car washing: Car wash employees manually wash and dry the car inside a bay.
- Self-service car wash: Car owners drive their car into a bay equipped with all the necessary tools and products to wash their own car. Customers then wash and dry their own cars without the help of employees.
- In-bay touchless car wash: A touchless car wash uses a combination of chemicals and high-pressure jets to clean cars. This type of car wash is also known as frictionless or brushless. At no point does an external solid element like a brush or cloth touch the vehicle. Because of this, touchless car washes have a low risk of damaging vehicles.
- In-bay automatic car wash: Customers drive their vehicle into a bay, where it stays stationary. The washing process is machine-operated: machinery moves around the car, spraying it with washing chemicals and scrubbing it with brushes and other washing tools.
- Tunnel automatic car wash: Tunnel automatic car washes are similar to in-bay automatic car washes. The only difference is that instead of being stationary, the car moves along tracks controlled by the automatic car wash system. Machinery can still move around the car while it goes through the tunnel.
- Full-service car wash: A full-service car wash usually uses a combination of all the above processes. Workers move vehicles through a bay or tunnel where they wash the car, sometimes with assistance from machinery. Full-service car washes offer interior and exterior detailing at multiple levels – but it’s worth mentioning that car detailing can be a nice business model if you want something less capital-intensive.
Set up your business
Once you’ve decided on your type of car wash, you are ready to set up your car wash business.
Write a business plan
A business plan will help you organize the structure and operations of your entire business. It may even be required to register and license your business or secure funding.
There are many resources and templates online to help you build a strong business plan. Here is a general outline you can start with to build your car wash business plan:
- Executive summary
- Company description
- Organization and management
- Market analysis
- Financial plan
- Marketing strategy
Register your business
Here is where you decide on a great name for your business and choose your business structure. First, pick a name that is attention-grabbing, concise, and representative of your business’s services. Then decide on how you will structure your business. Talk to a business consultant or attorney for advice on which business structure will get you the best balance of legal protections and benefits.
The following are a few common business structures for car washes:
- Sole proprietorship
- General partnership
- Limited liability company (LLC)
- Corporation
Next, you’re ready to register your business with your state or local government. Some business structures must register with the Secretary of State or the business agency where they plan to operate. You can register online or by mail.
Finally, you must obtain a state and federal tax identification number for your business. Register with the IRS to receive your business’s employee identification number (EIN). Then you can apply for your state tax ID.
You’re now one step closer to operating your car wash!
Get business licenses and permits
Licensing is a crucial step for car wash businesses. You’ll need multiple business licenses and permits to build and operate your business. These are usually dependent on your location; every state and local jurisdiction will require different licenses. Check with yours to see what’s required of your car wash business to avoid being shut down due to improper licensing and permitting.
Car washes also need to comply with waste containment and mitigation laws to protect the environment. Legal permitting and licensing help to regulate wastewater and grit-trap waste disposal, vehicle air emissions, and fuel tank storage.
Purchase a business insurance plan
Car wash businesses come with a lot of risks. Accidents, property damage, and injury aren’t unheard of in this industry. Comprehensive small business insurance will protect you and your business in the case of a mishap.
At the least, your insurance should include general liability insurance, workers’ compensation insurance, and commercial umbrella insurance. Talk to your local insurance agent or business lawyer to find the best insurance coverage for your car wash business.
Set up a business bank account
It’s best to keep your business and personal finances separate from the start. Use your EIN to open a business bank account and credit card. Manage all your car wash finances with this business account and use your business credit card to build business credit.
Consider your financing options
It’s time to decide how you are going to finance your car wash business. If you don’t have enough capital of your own, you’ll have to take another route. Finding investors is a great way to raise funds to open your business. Remember, a strong business plan can help you secure investors.
Another financing option is to get a small business loan. If you’re not sure where to start, check out SuperMoney’s guide to the best small business loans for all types of credit. And don’t worry; even if you have bad credit, it may still be possible for you to get a startup business loan.
Select a great location
Location is everything in business. Thoroughly research your local market by driving around, assessing traffic patterns, analyzing competitors, looking for good opportunities, and scouting out open land. Establish criteria for a location that strikes a perfect balance of population, competition, and car traffic. A commercial real estate agent can help you find plots of land for sale that meet your criteria.
You can buy or rent land for your car wash business. Keep in mind that your location will dictate what permits and licenses are required. Once you find a location and decide whether you want to buy or rent it, start making offers until one is accepted!
Pro Tip
As of 2022, California has the most car washes out of any state in the U.S. If you want to start a car wash business in California, check out this guide.
Build your car wash
Finally, it’s time to build your car wash! You’ll likely need to form a team of professionals to help you construct your car wash, which could take several months. Talk to your local city or county building and planning office to determine what permits are required to build your car wash. Once the car wash is complete, you can open for business!
Market your car wash business
Marketing is one of the main contributing factors to the success of a car wash business. A good marketing strategy will generate more sales in less time.
Use social media, radio, TV, and newspaper campaigns to build brand awareness. Generate leads with a great website. Grow your online presence by asking customers to leave reviews on sites like Yelp, Facebook, and Google. Partner with other businesses in the community to spread the word about your car wash. The more connected people feel to your business, the more likely they’ll think of you the next time they need to have their car washed.
Pro Tip
Consider hosting a grand opening with promotional discounts to start building a customer base. It’s a great way to engage with new customers and encourage them to come back!
Provide quality service
Some say that the best form of marketing is high-quality service. If you treat your customers well, they’ll be more likely to return and to recommend your business to others. Continue investing in your business, keeping it in excellent condition, and connecting with your customers. If you do, you can look forward to many years of business success!
FAQ
How profitable is a car wash?
Car washes perform at a 10–20% profit margin on average. Owners can make anything from $40,000 to $690,000 per year, depending on the location, size, and type of car wash.
How much does it cost to start a car wash?
It all depends on the type of car wash you plan to open. If you own the land and you are willing to do the work, it may only take a few thousand dollars to get started. However, opening a modern car wash will typically cost anywhere from $2 million to $7 million when you include the land, construction, and payroll costs.
Is a car wash a good investment?
A car wash can be a good investment if you know how to optimize its location, construction, and operations.
How do I start my own car wash business plan?
A business plan is an important part of starting a car wash business. The general structure of a business plan includes an executive summary, company description, organization and management details, market analysis, financial plan, and marketing strategy.
What equipment does a car wash need?
The equipment needed depends on what type of car wash services are offered. General equipment may include pressure washers, vacuum cleaners, water tanks, ladders, hoses, buckets, cleaning tools, automatic car wash machinery, and tunnel tracks.
How much does it cost to invest in a car wash?
It can cost $2 to $7 million to invest in a modern car wash. However, you can also start a business for a few thousand dollars if you have access to land and are willing to work with a shoestring budget. Costs vary greatly depending on the location, type of car wash, and economic conditions.
Key Takeaways
- Drivers can always use more car washes in the U.S. The types of car washes include hand car washing, self-service car wash, touchless car wash, automatic car wash, and full-service car wash.
- The costs to build a car wash can amount to up to $7 million of initial investment and $85,000 in monthly costs. Most car washes achieve a 10–20% profit margin.
- There are challenges to starting a car wash business, but the rewards of being your own boss and running a local business can be worth the risks.
- If you want to start a car wash, first register, license, and insure the business. Choose an optimal location, then start building your car wash. A good marketing strategy is also a crucial part of the success of a car wash business.
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