To begin, I would like to share some information regarding my background as well as why I believe those who are in carwashing are in one of the best industries there is today, and moving forward.
I have been writing articles for convenience store trade magazines for the past nine years, and I appreciate the opportunity to write for Professional Carwashing & Detailing. But, what sets me apart from other individuals who also write articles for trade magazines is that I have owned and operated many businesses. As a result, I write from experience.
To date, I have owned 36 different businesses, including a c-store, motel, manufacturing company, television station, radio station, real estate brokerage companies, a real estate development company, building strip centers, 32 restaurants and 150-plus retail stores located in 27 states and Canada. Additionally, I have taken one company public on the stock market.
I have had as few as one employee and as many as 700 employees, and I have been involved in the sale of more than 500 businesses.
I am sharing all this with you to let you know that I have probably screwed up more things in business than you can imagine — which is what I call “expensive experience.” My goals are to ensure you don’t make the same mistakes I have made and to guide you down the road of profits while saving you time and money.
Over the past 16 years, I have been a business broker helping owners either get involved in a new venture or get out of one; and, with my experience of owning so many different businesses, I have been successful in helping a lot of people, which is something I enjoy.
Because I can relate to the many issues a business owner faces on a daily basis, such as employee challenges, government regulations, cash flow, vendors and bankers, just to name a few, I have had the opportunity to review a lot of profit and loss statements. I know how to follow the money, and I understand the tax benefits of owning a business.
I believe everyone should own a business. I also think you are situated to make more money now than ever before based on where we are in today’s economy.
One lucrative business to own at the moment is a professional carwash. In fact, I was recently talking with a friend who is in the carwash business and owns some self-serve and automatic carwashes, which are all updated and well-kept. The carwashes are not in major cities; instead, they are in small towns within a 100-mile radius of where he lives.
He has minimal employees, which translates into fewer problems and less government regulation, cash flow seven days a week and the business makes money for him while he sleeps. His carwashes are very profitable.
So, why do I think carwashes have a bright future? Because the U.S. retail industry is in turmoil.
Retail is down
The 2015 holiday season for in-store sales was a disaster for many of the largest retailers. Nordstrom Inc., Macy’s Inc., Sears Holding Corp. and Kmart, and even Wal-Mart Stores Inc. experienced down sales last year.
Amazon.com Inc. now accounts for roughly 50 percent of all online retail sales growth in the U.S. and 24 percent of total retail sales growth, according to Macquarie Research. For every $1 of e-commerce growth, Amazon will take 51 cents.1 So, if you had any thoughts about getting into the retail business, think again — unless you want Amazon for your partner.
Growing auto sales
How about the auto industry? In 2015 automakers sold 17.5 million cars and light trucks in the U.S., which is a 5.7 percent increase over 2014, setting a record year with automakers projecting a continuation of the robust demand for higher-margin pickup trucks and sport-utility vehicles into 2016 due to cheaper gas prices.
The average length of vehicle ownership has reached 6.5 years, which is over two years longer than the average in 2006. Likewise, the number of cars over 12 years old continues to grow and is expected to increase 15 percent by 2020.2
People are buying more vehicles and keeping their cars longer. Sounds like a perfect storm to me. Why? Simply put, Americans love their automobiles.
The convenience factor
What about the c-store industry? Well, the U.S. c-store count increased to 154,195 sites as of Dec. 31, 2015 — a 0.9 percent increase (1,401 stores) from the previous year. C-stores account for 34.2 percent of all outlets in the U.S., which is significantly higher than the nation’s total of other retail channels, including supermarkets and supercenters (51,055 stores), drug stores (41,969 stores) and dollar stores (27,378 stores).
Overall, 80.7 percent of c-stores (124,374) sell motor fuels. The convenience retailing industry continues to be dominated by single-store operators, which account for 63.1 percent of all c-stores (97,359 stores total) and 74.3 percent of store growth in 2015. Over the last three decades, the c-store industry has doubled in size.3 The future of the c-store industry also looks bright because of the increase in disposable income from consumers saving at the gas pump and due to increased visits to c-stores.
Moreover, it’s good to remember why they are called c-stores. Because most consumers go to c-stores for the convenience over the prices, this allows these businesses to have higher gross profit margins than normal retail stores.
Owning a professional carwashing business has many parallels with owning a c-store. Besides owning a business that offers convenience, the carwashing industry is also experiencing solid growth, as discussed earlier in this article.
Overall statistics show approximately 113,000 carwashes are located in the U.S., which primarily consist of conveyors, self-serves and in-bay automatics. Analysts predict a 2.7 percent growth for the carwash industry over the next 10 years based on economic conditions of the consumer and areas of growth potential.4
Bringing it all together
As mentioned, the retail business is constantly evolving, bringing a vast range of new services for consumers, such as Groupon, Uber, Airbnb and Amazon. Each one is competing for consumers’ wallets, and each one is trying to disrupt the marketplace.
Then, we have the c-store industry, which is growing in spite of the push to end the tobacco market, which was the backbone of the c-store business for decades; and more people are on the roads today than ever before, which is also a key contributor of growth in this market. In fact, at the end of the 1950s approximately 58 million cars were sold, and this time period was considered a boom era for the sale of automobiles. Today, over 255 million cars and trucks are on the roads.
Similarly, the U.S. population was 181 million in 1960; and, at the end of 2015, the population in the U.S. was 323 million.
So, what does this tell us? It tells us opportunities for carwashes, c-stores and auto-related services are on the rise. More people equals more cars, which equates to additional opportunities.
So the retail industry has taken a hit while c-stores are growing. C-stores and carwashes have become destination locations. Why not take your industry expertise and partner with a c-store that doesn’t have a carwash?
Many opportunities are available to apply your knowledge. There are more people and more vehicles on the road today than ever before. All you have to do is connect the dots to see that the carwashing market and the c-store industry are solid business investments.
Terry Monroe is an author of two books and numerous articles. He serves as an advisor, consultant, speaker, a professional intermediary and a market maker for privately held companies, as well as assists in market valuations and has been involved in the sale of more than 500 businesses. In his 30-plus years of service, he has owned and operated more than 36 different businesses. To learn more about his “Expensive Experience,” he can be contacted at www.TerryMonroe.com.
- Fierce Retail; December 24, 2015.
- WSJ; January 5, 2016.
- National Association of Convenience Stores; January 28, 2016.
- Statistic Brain Research; Professional Carwashing and Detailing; January 1, 2014.