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Renovating an outdated carwash can be a rewarding and profitable experience if it is managed properly. Often times carwash owners take on projects without clear plans in place. More often than not project costs spiral out of control and many unforeseen problems pop up throughout the course of the project. Many pitfalls and costly mistakes can be avoided if you have a proper plan in place. Here are a few ideas to help establish your renovation plan.
1. Have a survey completed of the property.
It is very important to complete a survey of the property. Never assume anything. Just because there is a structure with nothing around it doesn’t mean that there are not multiple properties and multiple owners involved. I purchased a carwash and found out during the purchase process that a section of the back parking lot and one vacuum island was actually on a piece of property owned by the town. It was only 7 feet, so the town allowed for a simple boundary adjustment to correct the problem. If it would have been an individual, I am sure it wouldn’t have been as simple.
2. Have a phase 1 environmental assessment completed.
A phase 1 environmental assessment is necessary when purchasing any property. Most banks require a phase 1 environmental assessment if you are applying for a loan. I learned the hard way the importance of a phase 1 environmental assessment.
In 2003 I purchased a vacant lot to build a new location. I had the civil engineering firm I was working with complete a title search of the property to identify any business use that may have created issues. They went back 50 years and didn’t find any real use of the property. Big mistake.
My contractor started clearing the site and found underground fuel storage tanks from a service station which closed over 60 years before. Of course the soil was contaminated and I was responsible for the cleanup. That mistake cost me $25,000. Although not cheap, a phase 1 environmental assessment would have saved me in this situation.
3. Have a structural engineer evaluate the property.
Never assume that just because there is a structure on the property that it is up to code. Hire a structural engineer to evaluate the building you plan to renovate. They will let you know upfront what changes need to be made to the property.
I had closed on a property knowing that a retaining wall had to be replaced. I assumed that it wasn’t that big of a deal. I had received a quote for $2,500 to replace a section of the retaining wall and added the cost in my budget. One structural engineer, a concrete crew and $19,000 later I found out I had been mistaken. If I would have hired the structural engineer from the start he would have told me that the retaining wall was collapsing because the drainage pipe underneath had collapsed and was eroding away the soil.
4. Evaluate and choose an equipment supplier.
It is important to choose your equipment supplier in the initial stages of your planning. One bay does not fit all. Each manufacturer has its own requirements necessary for operation. Also, the supplier you choose may be able to give you ideas to help save money and time. The equipment supplier can also help prepare revenue projections, construction costs, equipment operating expenses, marketing plans and any information required for your bank.
5. Have a civil engineer design any site modifications.
If any site work is required to complete your renovation, you need to hire a local civil engineer. If you haven’t worked with a civil engineer before, ask for customer references. In most instances you will be required to go through the review process with the municipalities planning department. Having a civil engineer who works often in your municipality can save money and time because they know what does and doesn’t work. When you schedule the first meeting with the planning department to discuss your project, the civil engineer should be involved.
6. Hire a licensed architect to design any modifications to the structure.
It is important to hire a licensed architect to design the modifications to your building. The architect can suggest materials that will work the best for the application and give any ideas to help cut construction costs. The architect can also recommend or help you evaluate a general contractor for the job. Working with a licensed architect ensures that the modifications will hold up to the test of time, water, chemicals and many customers.
7. Hire a licensed general contractor to complete the construction.
It is important to hire a licensed general contractor and sign an ironclad contract before construction starts. I recommend getting bids from a minimum of three licensed general contractors. Ask each of the contractors for a list of references. Ask each of the references the following questions:
- Was the work completed on time?
- Was the work completed on budget?
- Were there any surprises that were not covered by their contract?
- How was the contractor to work with?
- Would you work with the contractor again?
I made the mistake of using a friend on a renovation project with an open ended contract. I had helped this friend acquire his general contracting license and he had completed several other jobs for me. The next mistake I made was receiving only one bid, from him. I didn’t have any other bids to compare his to. I submitted my budget to the bank with his cost estimate plus a 10 percent cost overrun allowance to cover anything out of the ordinary.
From day one the downhill spiral started. The contractor had estimated the project would take three months to complete. He was unorganized, and followed no schedule. He didn’t receive bids from all of the necessary sub-contractors and was trying to do a lot of the work himself. He would pull his workers off of the job and not show up for days at a time because he was trying to finish other projects so he could “focus all of his time on my project.” After nine months I had had enough. I took over the project and brought in my own sub-contractors to finish the job. The cost turned out to be 200 percent over the contractor’s original bid.
The lesson learned from this situation is friend or no friend, this was a business transaction, and there should have been an ironclad contract in place to cover me. This mistake cost me a lot of money and created a lot of unnecessary stress.
Have an attorney who is experienced in writing construction contracts draft a contract for you before you start work on a project. This step will be well worth the cost and save you many headaches down the road.
8. Create a financial plan.
Once you have received bids from your engineers, architect, equipment supplier and general contractor, you need to create a financial plan to see if the project is viable. The financial plan will let you know if you are on track to build a profitable business or a monument to yourself. It is easy to overspend and your financial plan will give you a good perspective of where you can add and subtract items.
Renovating an existing carwash can be a rewarding experience both personally and financially. If managed properly the cost of renovation can be cheaper than building a new location. With proper planning you can avoid many pitfalls that will cost you precious time and money. There are many old carwash locations that offer great potential for someone who is willing to make the effort. It isn’t easy, but nothing worth having ever is. Wash on!
Bobby Willis has been in the carwash industry for 15 years. He currently owns Cool Wave Carwashes in Virginia and Wash Consultants LLC, a carwash consulting firm. He speaks often at regional and national trade shows on carwash marketing and site selection. He can be reached at firstname.lastname@example.org.