Believe or not, a car wash business is so much more than simply washing a car – there's the supplies, the location, the marketing, the employees, the licenses, the water supply limit, the technology and the taxes. Why are there always so many taxes? The truth is that the hobby you picked up to raise cash for a school fundraiser could be a pretty decent way to make a living. You just have to know where to start.
Just like any other business, there are many business models a car wash owner can adopt. Depending on the type of car wash, an owner's car wash responsibilities can include everything from ordering supplies and meeting with the city council to detailing a car's interior or putting up a Facebook ad. They might travel to customers' homes or pop in for weekly maintenance of self-service machines. A car wash description is always different, but never strays too far from a certain industry standard.
How to Start a Car Wash Business
Starting your own car wash business requires a lot of planning before you even purchase your first industrial-sized bottle of soap. These steps can help you organize your thoughts, land the proper funding and craft the kind of business that works for you. Everyone wants to be their own boss, but it takes a few steps to get there, as follows:
Pick the Type of Car Wash You Want to Run
If you want to start a car wash business, you have to first think about the type of car wash you want to own. They generally fall into two categories: self-service or full-service. Some car wash businesses go directly to the customer for detailing or launch various "pop-up" sites, while others rent or own a lot with car wash machines and staff. The right answer depends on the amount of involvement you want to have and the amount of investment you're willing to put in upfront. Self-service car washes have minimal startup costs, but full-service car washes allow you to charge more and generate a larger return.
Scout Your Location
The success of a car wash is way more dependent on location than you might think. Launching a car wash in a rural area with hardly any traffic probably won't be as lucrative as a car wash business on the side of a major highway. A more affluent neighborhood may work best for a premium, full-service car wash, where a more average-earnings suburb may find the most return with a self-service car wash business. When you're scouting out the location, make sure to consider population, competition, traffic and street type (is it a back road, highway or residential block?).
Scope Out the Competition
Why does the world need your car wash business? Because you're better than the competition; but the only way to beat the competition is to pick them apart and figure out how they work. Check out car washes in the area, and make sure your business can stand up to the challenge. If you're competing with multi-million dollar franchises, you may want to rethink your tiny, self-service stall. If they can consistently afford to slash prices, you probably want to make sure your business can either operate with minimal costs or offer a more personalized service worth the higher price tag. Ideally, the location you choose won't have much competition.
Create a Business Plan
Now that you know the what and where of your business, it's time to plan your launch. A business plan is like a road map to success. This detailed outline should name your long- and short-term goals with a plan on how to get there. This includes funding, upfront and operational costs, a long-term revenue plan and marketing strategies. How much money do you expect to make the first year? What about five years down the line? How is your business different than the competition? If you've never written a business plan before, it's totally OK to seek outside advice. Remember: a business plan is how you attract investors or secure a bank loan, which you probably need to get your business off the ground.
Get the Permits
To start servicing customers, you'll need approval from the city, county or both. The license needed and local department to contact varies from city-to-city. For example, in New York City, you'll need to contact the Department of Consumer Affairs for a car wash license. Self-service car washes in New York don't need a car wash license, but full-service car washes do. You also need a car wash certification (which you can download from the Department of Consumer Affairs website), various business insurances, a tax identification number and a $150,000 surety bond. Since every city is different, you'll have to do your research. Car washes use a lot of water and deal with a hefty amount of wastewater compared to other businesses, which means there are environmental requirements, too. Some cities have water usage limits, especially in times of drought. For example, in New York City, 75 percent of the water used to wash cars commercially must be recirculated water or well water. You will probably have to meet with a city planner and get your plans approved at a city council meeting.
Get Your Financing
Automatic car washes tend to make more money than hand car washes, but they require a much steeper investment. It can cost upwards of $700,000 for the necessary technology and staff to launch a full-service car wash with automatic bays or a tunnel. However, you can launch a hand car wash with some elbow grease and less than $100,000. If you're going for a full-service stunner, you're probably going to need to find investors or get a business loan. Pitch your idea to the bank or potential investors using your business plan.
Build Your Car Wash
Once the permits are squared away, and you've secured funding, it's time to build your car wash. So, how do you do it? There are four major types of car washes that use a variety of technology:
- Do It Yourself: In this type of self-service car wash, a vehicle owner will wash their car using tools you provide like a coin-operated hose or soap dispenser.
- Tunnel: Cars are placed on a belt that moves them through the car wash. You can either wash only the exterior or have a full-service option where staff details the inside of the car.
- Private Driveway: This type of full-service car wash model is on-demand. Think of it as the Uber of car washes. Instead of your customer coming to you, you go to them and detail their car on their property.
- Automatic In-Bay: Customers drive into a bay and park, then a machine automatically washes the car.
These car wash descriptions only scratch the surface. You can choose to offer house calls and a full-service location. You may want to opt for a staff that does interior detailing, even though most of your machines are in-bay automatic. There's no one right answer. Just make sure to have a solid menu for customers to choose from.
Market Your Business
Once your car wash is ready to go, and your staff is secured (if you have any), it's time to start marketing. Social media is among the most powerful marketing tools. Set up a Facebook and Instagram page. Make sure to create a page on Yelp, TripAdvisor and other online business aggregators, and then encourage your very first customers to leave reviews. For a car wash, Yelp may be more important than an actual website because consumers are filtering where to go by what's geographically closest to them. Though social media is powerful, you shouldn't forget traditional advertising methods, as well. Offer up a coupon to first-time customers in your local newspaper. Take out a short ad on a local radio station or opt for a local TV advertisement.
What Type of Business is a Car Wash?
There's no one right type of business for a car wash. Some may be franchises, and others are not. So, what's the difference? The vision. A franchise takes a company's logo, name and business model but operates on a third-party basis. For example, if you go to Starbucks to get a cup of coffee, that's a franchise. Each Starbucks has an independent owner, but the same company policy, menu and guidelines. This type of business typically involves a larger investment, but less planning. You don't need to create a business model because it's already laid out for you. If other franchises are successful, you're pretty likely to follow suit.
On the other hand, launching your own car wash is more of a risk, but it gives you full creativity. Create your own image, your own menu and your own services without having to follow any rules from corporate.
Regardless of whether or not your business is a franchise, you still have to decide how to structure your business. Most small business owners opt for an LLC rather than a C-corp. This avoids double taxation because C-corps are taxed on a corporate and individual level. LLCs generally have fewer reporting requirements and are easier to manage.
What Industry Does Car Wash Fall Under?
Owning a car wash means you're part of the car wash and auto detailing industry, which includes approximately 160,000 other professional car wash locations across North America and Europe. This industry cleans, washes and waxes vehicles like passenger cars, trucks, vans, trailers and even busses. Unlike in Europe, where large petroleum companies own most car washes, the majority of car washes in North America are independently owned by entrepreneurs like you.
According to the International Carwash Association, over two billion cars are washed in North America every year. This translates to $15 billion in retail sales. Each day, car washes across the country rake in $41 million washing an estimated 5.5 million vehicles. The industry is only expected to grow. The number of Americans most-frequently washing their car at professional car washes rose by 25 percent since 1994.
How Much Does a Car Wash Owner Make a Year?
Car washes aren't a get-rich-quick scheme, but you do get what you put in. While self-service and automatic car washes can be a great side gig that requires a small investment of your time, you can make more money if you have a larger number of self-service stalls. On average, self-service car wash operators make around $50,000 a year, which increases with the number of stalls and car washes.
According to the Bureau of Labor Statistics, people who work at car washes make a median income of around $25,770 per year. This drastically increases to an average of $100,000 a year with $30,000-to-$40,000 of pre-tax profit if your car wash business is mobile (you go to people's homes and detail their cars in their driveways). Many car wash entrepreneurs own more than one car wash, which, in turn, can double their yearly income.