How to Start a Car Wash Business – Car washes are in high demand: More than 2 billion take place each year in North America alone, and more than 72% of people report going to a car wash versus washing their own vehicle at home.
Starting a Car Wash Business in 7 Steps:
There are pros and cons to starting your own car wash business of course, and plenty of financial considerations you’ll have to factor in. But if the math adds up for you, starting a car wash could be a great opportunity to be your own boss (and make the town’s vehicles sparkle, too). Here’s how to get started.
1. Research the Types of Car Washes You Could Operate:
Car wash businesses come in many forms, including self-service, automatic, full-service, and franchises. Let’s take a look at each:
- Self-service: In this model, vehicle owners pay a small price to clean their cars themselves. The business simply provides access to cleaning equipment, such as high-pressure water hoses, cleaning fluid, sponges, and even towels.
- Automated: Vehicles are pulled by a conveyor belt or drive into a bay, and automatic equipment does the work. The type of clean can vary and may include soft-touch washes or touchless.
- Full-service car wash: These locations provide both exterior and interior cleaning services. The service may be automated or a combination of automated exterior cleaning and self-service interior cleaning. Add-ons such as mat cleaning, vacuum, and detailing, may also be provided.
- Franchise: Buying into a franchise is a great way to get started and provides the benefit of name-brand recognition, marketing, and operational support.
2. Draft a Solid Business Plan:
Every potential business owner should start with a business plan. A traditional business plan includes an executive summary, a company description, a market analysis, organization and management details, service and product line information, market and sales plans, location options, and financial plans.
Identify car wash startup costs:
Depending on the type and size of car wash you wish to operate, getting started can require significant upfront investment. Purchasing or leasing a lot and building a car wash from scratch can cost anywhere from $50,000 to millions of dollars.
Understand ongoing expenses:
Car washes are a high-volume business that consumes significant amounts of power, water, etc. Be sure to factor in the following ongoing expenses (which will vary by car wash model):
Water
Detergents/Chemicals
Supplies
Equipment maintenance
Utilities
Rent/Mortgage
Inventory
Employee wages
Advertising and marketing
How profitable is a car wash?
Many factors impact how profitable a car wash can be, including the type of car wash, how much you charge per vehicle, location, and recurring expenses. For example, California has more car washes than any other state and the highest number of sales. Yet, Washington, D.C. (which has fewer car washes per capita), ranks first in the average sales per car wash.
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3. Choose the location for your car wash business:
Having the right location can make or break your business. A successful location should be near a shopping center, in a high traffic, residential area, be easily and visibly accessible from the road, allow for expansions and business growth, and have enough space for cars to line up.
Your sign is visible to drivers for at least 40 seconds. Ideally, traffic should travel past at no more than 40 miles per hour (64 km/hr) so drivers have time to see your signage and make that split-second decision to have their cars washed.
Choose a venue large enough to accommodate the bays, pump rooms, vacuum and drying areas, and the office.
Check your city’s zoning regulations to be sure you are allowed to open a car wash at your chosen location. If you need a special permit, obtain it before you buy or lease your venue.
It is helpful to work with a real estate agent, city planner, lawyer, and/or an accountant to get the best deal on a location.
4. Pick a business structure:
Your choice of business structure — whether it’s a limited liability company (LLC), corporation, or partnership — will impact your daily operations, taxes, and the amount of risk you’re willing to take with your personal assets. Choose a business structure that balances legal protections and benefits.
The four most common are:
- Sole proprietorship: This means that the business is owned and run by one person with no legal distinction between the owner and the business.
- General partnership: A general partnership is the simplest type of partnership and is created automatically when two or more persons engage in a business enterprise for profit. No state filing is required.
- Limited liability company (LLC): This is one of the most popular forms of business entity for small businesses. An LLC offers limited liability protection (shielding your personal assets by protecting them from debts and liabilities associated with the company) and pass-through taxation.
- Corporation: A corporation is a separate legal entity owned by its shareholders, thereby protecting owners from personal liability for corporate debts and obligations.
5. Market your business:
Use a multifaceted approach to advertise your business that includes flyers, posters, and an online presence. The signage for your car wash should be colorful with clear messaging. Make sure that people can easily see it from the road. A popular way to get new customers is by distributing coupons or discounts for car washes. Also, develop relationships with other small businesses located near your car wash.
Social media is an important aspect of marketing these days. Set up a website and establish a presence on Twitter and Facebook. Make sure any of the paper items that you have include links to your website and social media accounts.
Use your website to share information about taking care of your car and other relevant tips.
Schedule a visit to your local radio station to discuss your new business.
Consider starting a loyalty program. This will encourage repeat customers instead of people who use the coupon one time and never return.
6. Licensing and permits for starting a car wash:
To operate your business legally, it’s important to obtain the necessary licenses and permits before you open a car wash. Each state and local jurisdiction has its own requirements, so find out what’s required in your area. Here are a few common items you’re likely to need.
General business license. Nearly every business needs a business license to operate legally in the United States.
Occupancy permit. An occupancy permit shows that the building meets zoning requirements and is safe for employees and customers.
Federal tax ID. Also known as an employer identification number (EIN), you’ll need one to pay your taxes if your business structure is anything other than a sole proprietorship. You can get an EIN for free from the IRS.
Environmental permits. Wastewater from car washes contains pollutants that can negatively impact the environment. The water must be treated and reused or disposed of properly to minimize environmental impact. To find out what type of environmental permits you need, check with your local EPA and OSHA offices to learn more.
7. Insurance for your car wash:
Insurance policies that your car wash business will need to obtain include:
Business liability insurance
Workers’ compensation insurance
Commercial umbrella insurance (optional)
Note: If you are leasing property, the lease agreement may require certain insurance limits.
Always consult a trusted insurance broker to ensure you get the right coverage.
