Starting a carwash is an excellent business venture. Most people take pride in their vehicles and keep them clean, but some prefer to take them to a professional carwash instead of doing the work themselves.
Owning a carwash has advantages, whether you’re a gearhead or simply looking for a business opportunity. There are some challenges, though. Here’s what you need to know about starting a carwash.
Creating a business plan
The first thing an entrepreneur needs to do is develop a business plan. This blueprint is integral because you must show lenders, investors and other interested parties how you plan to run your carwash. What’s your vision for the business in the next five or 10 years? What has industry research shown? These are the questions you’ll ask yourself as a future carwash owner.
A business plan has multiple components, but you should pay close attention to these aspects:
- Executive summary: The first part of your business plan should include the executive summary.1 Here, you’ll highlight your carwash’s mission statement and all the services you plan to offer. If the business is brand new, include a part about why you’re starting it and what motivated you to enter the venture.
- Markets and marketing: Other crucial parts lenders want to see are your research on the market and marketing. Who is your primary demographic? You’ll want to isolate key groups to improve your product selection and use the best marketing tactics. They will tie into your plan and your strategies to increase sales.
- Financial outlook: You’ll need to show lenders financial projections for your carwash. A steady revenue stream will keep your business thriving past any early struggles. Be prepared to show them financial statements and cash flow projections.
You’ll need to get a business license for legal purposes. All 50 states have different rules for obtaining one, and individual cities and counties will also have regulations for getting a permit. Check with your jurisdictions to ensure your carwash complies with the law. You don’t want to risk a visit from the local authorities, leading to a shutdown.
Consider which business licenses you’ll need because you may have to have multiple, depending on the municipality. For example, California requires all businesses washing and polishing cars to register with the Department of Industrial Relations for a specific license.2
Balancing business and personal life
Starting a new business can occupy much of your time. You may already be thinking a decade down the line and creating new carwash franchises. However, it’s essential to remember to balance business and your personal life healthily. Many entrepreneurs start with high motivation but quickly burn out. Managing your time wisely and setting boundaries between your home and work lives are vital.3
The pandemic has caused many to emphasize mental health. No matter what type of business you own, you should prioritize time for yourself to maintain your motivation. Start by organizing your time. Create a schedule that works for you and allows you to create a work-life balance, even if it means splitting your workday into blocks.
In times of doubt, take advantage of your network. Reach out to friends, family and business community members for their expertise and encouragement. Others have likely encountered similar experiences, so remember that you’re not alone.
Determining carwash size
A critical part of your business plan is determining the size of your carwash. Today’s facilities differ significantly and offer various services, so you’ll need to know how big your operation will be. Establishing what kind of carwash you have will determine your needed supplies. The types you may see include:
- Handwashing: This operation will require the least amount of capital to start. A handwash business requires buckets, soap, sponges, vacuums, water and a few tools. You’ll only need a few hundred dollars to acquire these supplies.
- Detailing: Adding a detailing service gives your carwash an edge. The initial investment will be similar to handwashing, but you’ll need additional products for waxing, polishing, restoring leather and more.4
- Automatic: An automatic carwash is a hands-off operation because clients will serve themselves in designated terminals. However, the investment will be much more significant because you’ll need to construct the building and acquire the automated carwashing equipment.
Knowing your clientele
You’ll need to center your carwash’s mission on your customers. What services do they want to see? What are the psychographics and demographics of your targeted audience? These questions play into the market research necessary for your business plan.
You’ll need to understand your clients and their needs when designing your operations. For example, will your carwash be in a coastal area? If so, you’ll likely see demand for anti-rust services like waxing due to the high moisture content in the air. Rust prevention services would make more sense in a humid state like Florida than in a dryer state out west.
Another aspect to consider is what kind of cars your customers drive. You may open a carwash in a community where most people bring in a classic car for service. These owners are passionate and want you to take excellent care of their vintage vehicles.
Financing a carwash
Once you’ve developed your carwash’s outline, you’re ready to get the ball rolling. The primary roadblock for many entrepreneurs at this point is financing. The average business owner may have difficulty putting up the money for their new carwash, but there are ways to get help.
The most accessible way to finance a carwash is to apply for a loan with the Small Business Administration (SBA).5 SBA loans are helpful because the government can give you a large sum of money with low interest rates. Plus, the SBA allows for flexibility when paying back the loans.
The SBA offers other types of loans if you don’t qualify for the previous one. For example, you can apply for an SBA 504 loan, which you may know as a Certified Development Companies (CDC) loan. The SBA designs these loans to help you pay for expensive items in your carwash. You can borrow up to $5 million, which would be more than enough to start an automatic or touchless carwash facility.
Successfully starting a carwash
Carwashes are in high demand in the U.S. Data shows Americans have over 275 million registered motor vehicles, so there are plenty of opportunities nationwide for entrepreneurs to find customers.6
Starting a carwash is a terrific business venture, but there are challenges. You’ll need a business plan, licenses and insurance before even considering what kind of cleaners to buy. Take the right steps needed for success and everything else should fall into place.
Oscar Collins is the founder and editor-in-chief of Modded, where he writes about cars, car trends and auto news. Follow him on Twitter @TModded for frequent updates on his work.