As increasing numbers of refuelling stations host automated machines on their premises, the car wash experience has become less intimate and thorough of late. Of course, everybody wants their vehicle to look pristine, and convenience is a crucial factor when it comes to removing all that mud and dirt that has plagued your automobile for the last few weeks.
However, modern consumers want a personalised and unique experience, and it's challenging to achieve this without a dedicated service. This is why a car wash is an excellent business idea.
Starting a Car Wash Business
Setting up this type of enterprise can be a complicated affair, but it is a worthwhile entrepreneurial pursuit because it taps into a massive – and evergreen – demand. You will need to cultivate a unique strategy to adapt to changing landscape conditions, rein in costs and compete with established competitors, but it is certainly doable.
To show you how, we have compiled a step-by-step guide on how to start a car wash business and help you gain a share of the consistent annual growth in this industry.
Step 1: Conduct Market Research
When you are in the early stages of launching a business, it is essential first to assess market conditions. In the last decade, the car wash industry has hardly noticed any decline in activity, and there are many factors for this. From more vehicles on the road to consumer demand for professional cleaning, the industry has enjoyed considerable growth, and this is anticipated to continue for several more years.
On the surface, the market might be crowded; there are more than 16,000 car wash businesses in the United States alone, for instance. However, it is important to consider that small businesses own between 80% and 90% of these car washes. In other words, this multi-billion-dollar marketplace is not dominated by big chains, as is the case in many industries.
Consumer demand is sustainable in this sector, too. As long as there are vehicles on the road – regardless of how they are powered – there will always be a need for this service, while even the growth of home car cleaning products has not affected the industry.
The only legitimate concern that your business may have is the frequency of car washes. Studies have found that most consumers only get their vehicles professionally cleaned every couple of months – or even less, in some instances. To counter this problem, you would inevitably need to employ a diverse array of promotional tactics.
As you conduct your market research, it is also essential to explore viability in your local area. If you live in an isolated rural region, for example, it's unlikely that you will see a sustainable level of demand. On the flip side, if you want to set up shop in the middle of a busy city, then you have to take overhead costs and profit margins into consideration, too.
Step 2: Conduct Company Research
Once you have gauged whether your chosen location and market has potential, you need to focus on your internal situation. Some of the critical factors to consider during this process are:
Funding
To fund operations, you will likely require a bank loan to cover property and equipment costs. Without a considerable sum of seed money, it can be hard for a car wash business to get off the ground, especially since it requires a high-cost investment in fixed assets.
How much does it cost to start a car wash business?
The overall startup costs needed can vary massively depending on your location and the existing infrastructure of your site. Many estimates are focused in the region of between $15,000 and $25,000, but the property cost can drive these figures up considerably.
Moreover, here is a statistic that you need to be aware of: the car wash industry spends approximately a dime for each dollar it spends on labour in the US. Since the average organisation has about nine employees, manual labour costs represent a significant component of your overall business expenses. This might seem intimidating at first, but it is offset by the paucity of experiencing high degrees of depreciation in your capital expenditures, suggesting that manual labour represents a major aspect of your business expenses.
Expertise
Of course, some experience of washing and valeting cars would be preferable, but business management skills are more important here. While you shouldn't be afraid to get your hands dirty, you will likely be hiring staff for the actual cleaning process.
Networking
Unlike many other young businesses, it is not necessary for a car wash entity to network. However, it is essential to market and become a presence in the community, whether you are just starting out or you have been in the area for decades.
Resources
As mentioned, the three major investments that every car wash business needs to make are capital equipment, labour and property. Of course, the ongoing cost is all the energy that your corporate venture is generating, but that is par for the course throughout the life span of your car wash.
Licensing / Legal
Every jurisdiction has its own series of rules and regulations for the private sector, but in most cases, you can anticipate spending your time and resources on applying for a standard business license, complying with local by-laws and adhering strictly to labour standards. While a human resources professional would be superfluous, it is always a good idea to have a lawyer on a retainer.
Step 3: Prepare Business Documentation
Pricing strategies, marketing campaigns and capital expenditure budgeting; there are many considerations that your venture needs to cover. Therefore, you will need to draw up a business plan to help formulate your long-term goals, your short-term objectives and your wider blueprint to achieving corporate success. From your revenue generation estimates after one year, to where you see your company in five: these are all areas that bank loan managers will want to see laid out comprehensively.
You should also include defined mission and vision statements in this document to provide a pathway of how you intend to grow your business. The former will summarise your existence (why are you here?), while the latter should define your strategy for the future (how do you want to impact the marketplace in a decade from now?)
Step 4: Brand Your Company
In any industry, a brand blitzkrieg can establish brand equity, boost customer awareness and construct a long-term customer base. This can be the difference between clients driving from one end of the city to the other, just so your team can clean their vehicle – especially if they are passing several of your competitors on the way.
When you are devising your brand strategy, it is crucial to incorporate several key elements into your overall initiative:
- Devise a name that reflects the community, is memorable (many car washes opt for humorous names to stand out), and – importantly – is unique.
- Be active on social media and share photos of your handiwork ('before and after' shots are a great idea in this context), as well as any promotions and events that you are hosting.
- Own your aesthetics. A well-displayed unique company logo can give credibility to your brand and help you to stand out from the dozens of unimaginative and uninspiring "car wash" banners that are on display at your competitors.
- Never cut corners; showcase to the world how much care and attention you give every car, whether it's a 10-year-old Honda Civic or a brand-new BMW 745 iL.
Once you have an established turnover, you can also consider expanding your brand by diversifying and developing your own car maintenance products (such as waxes, air fresheners and other aftercare products). This is an area of massive growth potential that many car washes overlook.
Step 5: Cover the Legal Bits
When you offer a service, you must obtain general liability insurance to protect yourself from damage to your customers' vehicles (some providers may even offer specialist packages in this regard). Your automated conveyance technology, either fully or partially, could result in cracked glass, damaged tires, or pulled off stripping, while all sorts of inadvertent damages could incur during the cleaning process.
In addition to these common mishaps, there is a laundry list of risks associated with owning and operating a car wash, such as theft, employee injury claims or equipment breaking down over time. Ensure that you complete a thorough risk assessment in this regard.
Ultimately, commercial insurance protects your car wash from litigation.
Step 6: Attract Customers
As mentioned, you can't just rely on the convenience factor to attract the masses; you need to get out there and ensure that you're doing everything possible to get feet in the door (or, rather, cars through the buffers). It's highly recommended to develop an online presence, not just through social media, but by targeting local SEO searches, too, while offline methods such as leafleting, collaborating with other businesses in your area, and billboard advertising can also achieve results.
Indeed, there are a wide variety of ways to market your business and stand out from the crowd:
- Go Mobile: Either as a core or additional component of your business, why not offer an on-demand service? You or your attendants can travel to a client's home with the necessary equipment and do the same job they would do at your site. You can tie this service into your website or even develop an app, as well as collaborate with platform-based providers to expose your services.
- Consider Additional Revenues: Aside from supplementary cleaning products, a car wash presents countless opportunities to monetise. For instance, you can – either yourself or through collaboration with other local businesses – establish a coffee shop or cafe on the premises for customers to relax in while they wait. Think outside the box and consider the alternative ways in which you can diversify your income streams.
- Be Green: Often, more than 100 litres of water can be used for each car cleaning, which is a vast amount of waste and a major environmental concern. Differentiate yourself from rivals by exploring ways to reduce this; not only is it good for the planet, but social responsibility is a trait that many modern consumers find attractive in a company.
- Get Involved in the Community: For an independent car wash to survive, it is always a good idea to become a permanent fixture in your community. This could consist of sponsoring local events or sports teams, giving away surprise free car washes on your social media pages, or raising money for a local cause.
- Rewards: To attract clients is one thing, but to retain them, consider implementing a rewards system (such as motorists receiving one free full-service car wash for every ten visits).
- Winter: Surveys find that winter – believe it or not – is the most popular season for car washes. Look to capitalise on this by investing in winter-proof technology, offering free giveaways, or even doing something as simple as providing complimentary hot chocolate.
Case Studies
Based in Boca Raton, FL, Washé is an on-demand car washing service that enables users to order a wash for their cars through an app. Customers download the purpose-built app, create a profile and select one of four packages; then, once the order is placed, a mobile washer arrives at the customer's location with their equipment and cleans the vehicle. When the job is done, customers are sent a photo of the work, with clients able to rate and tip the washer accordingly.
It recently captured business headlines for raising a staggering $3.5m in seed funding to drive growth, with the fundraising spearheaded by Ron Zuckerman, a well-known tech entrepreneur. Clearly, even washing cars is not averse to the digitisation of Industry 4.0, with such interest from Silicon Valley suggesting that there is enormous potential in this sector.
With more than 1,000 licensed professionals and locations in a handful of US states, the company is reporting a growth rate of 125%, highlighting the many possibilities for aspiring car wash entrepreneurs.
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Is there a one-size-fits-all instruction manual for starting and operating a car wash? No. Every business model is unique, every market is different, and every entrepreneur has their own idea to test. From on-demand services to customer-centric facilities, there are many exciting ways to transform and reinvigorate this century-old industry – all of which extend beyond a bucket of soapy water, a sponge and a hose.
Like any other business concept that has been around for a long time, it is imperative to take a different approach or consider an innovative angle to find success, but there is no reason why it can't be achieved.
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