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Friday, March 5, 2021

Starting a Car Wash Business – Profitable Business Plan Overview

The Car Wash industry in the United States is quite dynamic. It has a market size of $10.3 billion as of 2020 which was reduced by $3 billion in comparison to 2019. The reason mainly is because of Covid-19 pandemic and subsequent lockdown in the country.

Nevertheless, the car wash and car detailing business offers a lot of opportunities to young entrepreneurs willing to invest in this business. Close to 17.02 million units of automobiles were sold in the United States in 2019. The figure fell in 2020 due to pandemic but has somehow recovered in later 2020.

The United States Census Bureau states that Americans spend close to 5.8 billion dollars every year on car wash. Most of the car wash business is owned by small businesses which is close to 90%. There are also big chains of car wash businesses but with good strategy you can outrun them.

Lastly, the industry is growing at 3% rate and having 60, 000 car wash companies all over the USA. 

Some Important Facts about Car Wash Business

  • Car wash business over the years has changed a lot. It is no more the traditional way of washing cars.
  • Car wash business has in the past decade employed technology to deal with the cleaning stuff. This has become more smooth, easy and effective in comparison to old methods.
  • New laws and regulations have been framed by state governments to deal with ecological challenges like wastewater treatment, reuse of waste water and proper disposal of the same.
  • Customers expect much more than just car wash. Polishing of cars and small improvements can be add-ons in swift time. 
  • Timed cleaning is the keyword here where customers don’t have time to wait for a long duration. Your service should be smooth and efficient without any time waste.

Starting with the Business

Research and analysis of the market helps you in knowing the details of the business in-depth. It would be advisable to you to work in the industry for sometime to gain knowledge about the business from inside. 

Experience will help you chalk out paths for yourself. Theoretical knowledge isn’t bad but sometimes it doesn’t work when you are into complex issues. Good experience and mentorship do work. 

About the Car Wash Business

There are different methods employed for car wash. They are:

Full-Service Car Washes: It involves cleaning of both exterior and interior car facility. The interior is cleaned using vacuum by the staff at the car wash station. Close to 9000 car washes are full-service car wash.

Exterior Conveyor Car Wash: You don’t need to move out of your car. Just sit inside and the conveyor will pull your car towards the bay to wash it. There are close to 10500 such car washs.

Self-Serve Car Wash: Here, you have to wash your car using a wand by yourself. Many of them are automatic where you put the coin and use the service. There are 36000 such car washes in the USA.

In-Bay Car Wash Automatic Car Wash: Similar to the conveyor car wash. Here, the car will be pulled to the bay and will be cleaned from outside while you remain seated inside. Requires less space to operate. 58000 car washes are of this kind. 

Price Range for Car Washes

Car wash price range differs for different types of car wash. A general full-service car wash ranges from $15-18 per wash. For self-serve car wash, the rate is cheaper while for and the same is for automatic car wash. 

General price range is closer to 6-15 dollars. A profit of $4-6 is expected per wash. This can be less or more depending upon the expense involved. Automatic conveyor and belts systems can be costly which reduces profit margin.

Extra Add-on Services

Almost all of the full service providers make it a point to render extra add-on services. It adds up your profitability. Some services may not cost you much but you can get maximum profit margin from the same. In the end they will prove to be a great source of return for you.

Some of them are:

  • Scratch Removal
  • Car Waxing
  • Clay bar treatment
  • Headlight restoration
  • Shampoo carpets
  • Leather conditioning
  • Engine cleaning 
  • Pet hair removal 
  • Mold removal, etc. 

You can render the services you find feasible to get more returns.

Requirements of Tools, Equipment and Infrastructure

You need to have some infra in order to start your car wash service. There must be some space to accommodate a few vehicles at a time. Some parking space, space to keep equipment and tools, entry side and exit route along with storage and others. 

Land is required where you will build your car wash bay. A small car wash bay may require less space but in order to ensure profitability, you need to have a medium size carwash with a minimum space of 7000 sq. feet. 

Once you get the space, you need to erect your infra on the land. The entry-exit route along with a parking area for cars in waiting. The conveyor belt, the bay area, washing space, place where you will put your tools and machines. 

Office space and staff area needs to be accommodated for client related dealings. Some space should also be kept for those who need add-on services. For this you can have a separate garage.

Tools and Equipment

Necessary tools for car wash include:

  • The Washing system includes conveyor tunnel, washing wand, etc.
  • Microfiber Towels,
  • Water system
  • Payment processing system
  • Brushes
  • Vacuums
  • Blowers
  • Dryers
  • Waxes
  • Chemical and detergents including foam
  • Pressure washer
  • Portable generator
  • Buffers, polishers and sponges
  • Buckets, pain correction, etc. 

Cost for the same will depend upon brand and quality. It generally costs close to 10-20 thousand dollars to get all equipment for one bay. It may cost more for full-service car wash.

Staff

Some of the services that require interior cleaning will need individual staff to clean the interiors. Even for automated ones, you need at least 4 staff to manage the affairs. For full-service cleanings, you need close to 15 staff. 

If you have worked previously at some wash center, you can use your network to hire new staff. Else, you can advertise or contact them on a personal basis.

Location of your Business

Go for a location outside the city hassle unless you find it for cheap. Most car washing centers can be located outside the city or on the outskirts. You should research and find a place that doesn’t have many car wash locations. 

A one or two centers won’t impact much unless they are very impressive but a series of such wash centers will definitely make your business suffer. Therefore, go for a newly settled township or place that doesn’t have many centers.

Secondly, it is also affordable to own or rent a big sized land in the outskirts in comparison to mid cities. Manage a balance between the two between cost of land and feasibility of business.

Legal Formalities and License

You will have to register yourself as a business with tax registration for both your firm and yourself as an individual. For a small car wash center, this is not necessary since it is not professional work.

Car washing business is instead regulated by environmental laws along with the Chamber of Commerce and Industry. The treatment of water generated as waste and its reuse requires some permit.

Your center must be equipped with a water treatment plant along with a water recycle and reuse plant. This needs to be ascertained before you are granted permission to run your business. 

The Environment Protection Act deals with such concerns of water wastage, polluted water, sewage and water treatment. Theoretically, you cannot open a car wash in your home.

Finances

Getting a land, constructing infrastructure, getting all machines and equipment, employing staff, expense on daily management and marketing will definitely cost you in thousand dollars. 

The rate might fluctuate from place to place but more or less you will have to spend a lot. Therefore, it is important to make a tight and comprehensive business plan regarding business expenditure.

Managing finance is also an important aspect. Expenditure beyond your bank balance requires investment and loans. You can take loans from financial institutions or can invite your friends or investors to invest. All of them require a thorough business plan. 

A general estimation puts up the overall cost of starting a car wash center in 50000 to 200000 dollars. It can go up based on various factors. It would be advisable to loan the amount you need.

Marketing and Business Growth

Finally, you need to market your business in order to get new clients. Best way is to put up hoardings and billboards near roadside or new gas stations. You can also paste stickers and logos of your business on the car of your customers.

Business cards can also be distributed to people near your locality. This type of business requires visibility. Your car wash center needs to be visible to your customers. Once you get regular customers, start investing in them by offering customer cards with discounts and special offers. Make them feel they are respected and appreciated for being at your center.

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