Looking to get into the carwashing business? Here’s what you need to know.

The ultimate Guide to Buying a Carwash

If you’re looking to get into the business, here’s what you need to know.

If you are new to the professional carwashing business, there are some basics that you should be aware of, including the different types of wash formats available for operators and customers. When it comes to buying a carwash, there are a variety of options to choose from. We start our guide to buying a carwash by looking at these different types of carwashes with the pros and cons of each. 

Basic wash types 

Each type of carwash has its own set of advantages and disadvantages. Thus, it’s essential to familiarize yourself with the differences before making a choice of which to operate. Here is a brief synopsis of each wash type category. 

Conveyor 

Conveyor carwashes have been emerging in popularity in recent years, especially in the growing express exterior segment. Full-serve carwashes offer a full range of services, including washing, detailing and waxing. The pros include a higher potential for revenue and the ability to offer a wider range of services. Cons include higher start-up costs and the need for a skilled workforce.

In-bay automatic (IBA)

These carwashes use automated equipment to wash and dry vehicles and usually combine with an advanced point-of-sale system where customers can use a multitude of payment options. The pros include the ability to wash a relatively high volume of vehicles in a short amount of time with minimal staffing needs. Cons include the high initial cost of equipment and the need for regular maintenance.

Self-serve 

These carwashes offer self service equipment and supplies provided on-site. Many self-serves are still operated using cash and coins. Coin-operated carwashes operate on a pay-as-you-go system, with customers inserting coins to activate the equipment. Pros include low staffing needs and the ability to generate revenue 24/7. The cons include the need for regular maintenance and the potential for vandalism.

Financing and the cost of purchasing a carwash

There are many ways to finance. Regular business loans typically require 10% to 25% down.1 You can also see if other investors want in by offering a percentage of their money back or a percent of the profits in return. My personal favorite method is seller financing. Seller financing is a type of financing in which the loan is provided by the seller. You can get very creative with this option. It’s important to research and compare different options to find the one that best meets your needs.

The cost of buying a carwash can vary depending on such factors as location, size and type of business. Consider the purchase price, ongoing expenses and ROI potential when making a decision. In general, a carwash can cost anywhere from $50,000 to $3 million for a super busy site in a great location.2

As mentioned, a business loan is usually between 10% and 25% down. Some entrepreneurs may think that buying a carwash with no money down is impossible, but you can leverage other assets, such as real estate or stocks, to secure financing.

You can also find deals involving seller financing. There may be a seller who wants to exit the business and keep taking profits without working. Ask that seller for a deal in which you work for “free” while they are completely out of the business. You can give them the profits for a set number of years as equity, until the business is completely yours.

Profitability of owning a carwash

Many people ask, “How profitable is owning a carwash?” They often ask, “How much does a carwash owner make a year?” Owning a carwash can be extremely profitable. Though the level of profitability depends on factors such as location, competition, and the cost of goods and services.

With a well-crafted business plan, efficient systems and strong management, a carwash can yield a significant return on investment.

Recently, the Houston Chronicle noted that profits can range from $55,000 to $100,000 per year for a self-serve carwash to $500,000 to $900,000 for a full-serve business.3

Negotiating, buying and growing 

Negotiating the terms and conditions of a carwash purchase can be challenging, but it is a skill that gets easier with practice. It’s important to work with a lawyer and accountant to ensure that the terms of the sale are fair and legally binding. 

When buying a carwash, the process can be broken down into several steps. Identifying the right carwash that meets your budget and performing due diligence to ensure it’s a sound investment are important steps, as are negotiating the purchase price and terms. 

The steps to buying a carwash include: 

1. Research and select the type of carwash format that you wish to purchase. 

2. Establish your budget and investigate financing options. This includes calculating the costs of equipment, labor and ongoing expenses.

3. Locate carwash businesses that are for sale in your area by using online searches, local newspapers or a business broker.

4. Visit the carwash and evaluate the equipment, facilities and overall condition of the business.

5. Analyze the financials of the business, including income and expenses, to determine if it is a profitable investment.

6. Negotiate the purchase price with the seller and review and sign the purchase agreement.

7. Obtain the necessary licenses and permits required to operate the carwash.

8. Secure financing for the purchase, if needed.

9. Close the sale and take possession of the business.

10. Plan and implement any necessary changes or improvements to the carwash to improve its operations and
profitability.

11. Develop a marketing plan to promote the carwash to potential customers, which may include advertising in local newspapers and online, offering promotions and discounts, and creating a social media presence. Consider starting a company blog to increase your audience and customer loyalty.

12. Build relationships with local businesses and organizations to increase their visibility and customer base.

13. Identify and target specific customer demographics, such as car enthusiasts or busy professionals.

14. Train current employees on new processes and procedures for the carwash or hire new employees as needed.

15. Develop a hiring process to find and attract qualified and motivated employees. 

16. Create an employee training program that provides new hires with the skills that they need to perform their jobs effectively.

17. Implement an employee retention strategy to keep good employees and reduce turnover, which may include offering benefits, bonuses and opportunities for advancement.

18. Continuously evaluate and monitor the performance of employees and provide feedback and coaching to help them improve.

19. Set performance goals and targets for employees and reward or recognize those who meet or exceed them.

20. Create a positive and inclusive work culture that encourages teamwork, communication and accountability.

Franchise versus independent 

When buying a carwash, you can purchase a franchise or an independently owned carwash. A franchise provides established systems, training and support. However, it also comes with franchise fees and restrictions on how you operate the business. Additionally, the franchise options in this market are extremely limited. 

On the other hand, buying an independently owned carwash gives you more flexibility and control, but also more responsibilities and a greater need for research.

Insurance 

Proper insurance coverage is crucial when buying a carwash. This may include but is not limited to: liability; property; garage keepers; and business interruption insurance. These policies will protect you and your business in the event of accidents, natural disasters and other unexpected events. Without adequate insurance, you could face financial ruin in the event of a loss.

What to look for 

When looking to buy a carwash, you should look at several factors to help ensure it’s a good investment. These include the condition of the equipment, the condition of the property and the financial performance of the business. Additionally, it’s important to look for a carwash that has a loyal customer base and is located in a high-traffic area. Look for opportunities to add value by updating technologies and adding services or products.

Diversifying the services offered at your carwash can help increase revenue as well as attract new customers. New services can range from detailing services, oil changes and even convenience store items or having an ice vending machine on-site, which helps to appeal to a wider customer base and increase your revenue streams.

When searching for a carwash to buy, there are several options available. Online marketplaces, classified ads, trade magazines and industry associations are all great places to start your search. Additionally, don’t be afraid to reach out to owners directly and introduce yourself; you never know if the owner might be looking for a potential buyer. 

It’s also important to do your research and be aware of market trends and prices to ensure you’re getting a fair deal. Here is a list of good sites where you can hunt for carwash deals:

BizBuySell.com: This is a prominent online marketplace for buying and selling businesses; it allows you to search for carwash businesses by location and industry, and you can also contact the seller directly.

BusinessBroker.net: This platform is a popular online marketplace for buying and selling businesses, you can search for carwash businesses by location and industry.

BusinessesForSale.com: This is a global marketplace for buying and selling small to medium-sized businesses. You can find carwash businesses for sale in your area.

Carwash.com: This website is dedicated to the carwash industry and features listings of carwash businesses for sale. This site contains a wealth of information about the carwash industry, making it an excellent source of leads. Use this to start your search today.

Craigslist.org: Craigslist is a local classified ads platform. You can find carwash businesses for sale in your area by searching in the business and commercial section. It can sometimes feel like the Wild West, but sometimes you find some hidden treasures.

LoopNet.com: You can find some great deals here. This website is specialized in commercial real estate listings. It also includes businesses for sale and you can search for carwash businesses by location and industry.

In summary, buying a carwash can be a profitable venture when done correctly. One of the biggest opportunities for post-acquisition growth is diversifying and adding services to attract more customers and increase revenue. Be sure to also look for a carwash that meets your needs and budget and is located in a high-traffic area. With the right preparation, buying a carwash can be a rewarding experience and profitable investment, so don’t hesitate to start your search for the perfect carwash today.  


Sources: 

1 https://www.carwashadvisory.com

2 https://www.zippia.com

3 https://smallbusiness.chron.com

Joanna Golden, a seasoned entrepreneur and avid car enthusiast, is a business owner and CEO with a 20-year career leading sales and Fortune 500 media and advertising companies. Joanna also owns a small real estate company and is a mother of three. She recently resigned from her corporate job a year ago to start her own business, The Financial Appetite, which is an online community for entrepreneurs. For more information, please visit www.thefinancialappetite.net.

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