How to Start a Car Wash Business? Know Steps and Investment

Review the Multiple Types of Car Washes

There are multiple types of car wash businesses with different purposes and approaches. Here is a list of those.

Self-Service

In this kind of car wash, vehicle owners clear their cars themselves. They receive cleaning equipment like cleaning liquid, high-pressure water hoses, sponges, and towels. They need to pay some money to access this facility.

Pros

• Lower investment option to start a business
• Low maintenance

Cons

• The profit margin is low
• High water usage
• Low professionalism

Automated

Here automatic equipment cleans the vehicle after it is put on the conveyor belt. Here, it includes a soft touch wash.

Pros

• Low human efforts
• Fast and less time-consuming

Cons

• High level of equipment dependency
• Equipment costs and labor costs are high

Full-service car wash

This kind of car wash service includes interior cleaning and exterior cleaning. It can be an automated or self-service car wash or their combination. Moreover, vacuum cleaning, mat cleaning and detailing are also offered.

Pros

• Ability to attract customers due to a variety of car wash services like vacuuming, interior cleaning, and waxing
• It can cater for any type of vehicle

Cons

• High labor costs due to the high number of labor involvement
• Employees providing a full-service car wash need to be well-trained

Franchise

Buying franchises is another way to start a car washing business. It is easy to initiate the car wash profession.

Pros

• Lower business risk as there is an established business
• Building a brand and attracting customers

Cons

• There are more rules and guidelines to follow
• The level of support may vary from organization to organization

How to Start a Car Wash Business? Let’s Check the Steps

Business Roadmap

It doesn’t matter what business size you want to keep. You must have solid business planning, built on market research, financial analysis, and an investment plan. These are crucial to consider before initiating a business operation.

With a high-grade business plan, it is easier for business owners to get a lucid idea of their future investments. You also get an idea of how you will differentiate your car wash business from your competitors.

Following are the key outlines of a car wash business plan.

• Overview – A brief business overview with the reasons for its success.
• Company description – Business details with competitive advantages.
• Management – What will be the company’s structure, and who will own the company?
• Market analysis – Who is the target audience, and what is the industry outlook?
• Market strategy – How will you source customers and retain customer relationships?

Get Your Car Wash Business Registered

Your business plan is ready, now it’s about business registration. Business name and business entity registration with a state and federal tax identification number are important elements of this part.

Limited Liability Corporation (LLC) is the most popular option for this activity. It simplifies establishing a business and paying taxes. The general partnership must index with the secretary of state.

Fill in a “doing business as” (DBA) name to register your business name with the state and local government. However, this condition is applicable when you choose a business name other than a personal name.

Get Licenses and Permits for Your Car Wash

The rules and approach for business licenses and permits vary as per the municipality. It’s crucial to follow these processes because ignorance of the same can lead to a complete shutdown of your business.

Regulations around waste containment and mitigation are major considerations for a successful car wash business. Many state and local governments impose strict rules to open a car wash. There is a requirement for harsh chemicals in this kind of profession. So, the car washing business should be as per the state and local authorities’ guidance.

Use Professional Invoice Tool

Invoicing makes your business billing smooth. Most business owners find it a burden to create an invoice.

Surprised to know it? The major reason is using a traditional manual process that consumes extra time and effort. So, it’s time to leave this outdated approach.

Professional invoicing software like Moon Invoice can be your true invoicing partner. It’s an all-in-one platform to generate professional invoices for your business. This platform has 66+ templates, highly customized to satisfy every need. It’s the best platform to get a car detailing invoice template. What’s even better is that you can calculate business profit using a profit margin calculator to get closer to your financial goals.

Choose Business Insurance

Have you taken life insurance or any other insurance? If yes, then don’t ignore business insurance. It helps protect your business and runs it smoothly. However, professionals often get confused when choosing the type of insurance.

General liability insurance is one of the most popular insurance types. Workers compensation insurance and commercial umbrella insurance are the two other insurance policies that you can choose for the car wash business.

Keep Your Business Finances Separate

Keep your company’s finances and your personal finances separate. Opening a fresh bank account for your business is the best practice for it. This simplifies the tracking of the cash flow and financial performance of your business. Also, it is helpful for tax payments.

Along with a bank account, you must also apply for a credit card. You can use this card to perform all your business spending. Credit cards will also help you to avail cash back and other rewards.

Select a Location for Your Car Wash

Location is another element you must consider when starting a car wash business. Here are the major points to consider.

Accessible: The car wash location should be highly accessible for your customers. Moreover, it must not be on a road that is highly congested with traffic.

Space: Always find a space that provides sufficient space to stand the car. The gate should also be spacious for a car to enter the garage.

Approachable: The car wash business should not be in an interior location. This might be hard for your customers to track and navigate your garage.

Considering Fund Needs for Small Business

Whenever you set up your car wash business, you need financial support. Whether it is renting or buying car wash equipment or a garage, you will always need monetary help. There are some financing options available to fill your capital needs.

SBA loan: It’s known as a Small Business Administration loan that offers a large amount of cash at a low-interest rate. There are multiple loan programs for this kind of loan.

SBA 7(a): It is one of the most in demand SBA loan options. These loans can give a total of up to $5 million.

SBA 504/CDC loans: These are another type of loan that enable small car wash businesses to purchase large expensive items. The maximum borrowed amount under this program is up to $5.5 million with a tenure of 10 to 20 years.

SBA microloan: This program offers a loan of up to $50,000 for small-size businesses. The period of tenure is up to 6 years.

Business Terms Loan

SBA loans are pretty difficult to get because approval of the same is not applicable every time. A business term loan is another loan option to avail capital for your business. It offers a certain amount of cash for business purposes.

Equipment Finance

SBA 504/CDC loan is helpful to purchase machines and car wash equipment. This loan option is good for small car wash businesses that have bad credit. The lender can repossess the purchased car wash equipment if the borrower is not able to make a loan payment. The borrower needs to pay the loan along with the interest rate within the set period.

Effective Marketing Strategy to Gain Customers

Marketing is crucial for achieving long-term financial success in any business. It can include traditional marketing and online marketing. You can give an advertisement in newspapers to gain people’s attention in your local city.

For online marketing, you must keep your Google Business Profile highly informative and updated. Loyalty program marketing and customer referral marketing can also fuel the car wash business.

How Much Cost a Car Wash Business Takes to Set Up?

When you think about starting a car wash business, you can’t avoid a financial and investment plan.

Car wash business expenditure depends upon the type of car wash service you want to open. Here, water and electricity are the two major expenses that are applicable everywhere. To cut down on the water bill you can reuse the used water after filtering. For electricity, you must not use an automatic car wash.

Estimate of the starting cost

• Hand car washing: $1000-5000
• Self-service car wash: $200,000 to $500,000
• Automatic car wash: $500,000
• Touchless washing: $1,000,000

Let’s look at the bifurcation of the cost as per multiple factors.

Licenses and Permits

There are different licenses and permissions required for vehicle cleaning such as detailing, washing, drying, and vacuuming. The average cost for this service is $550.

Equipment Cost

The cost of equipment typically varies according to the type of car wash service you offer. It can be between $8000 and $10,000.

Marketing

The serving area of a successful car wash business is limited to the local area so offline marketing is more dominant as compared to online marketing. The average cost of investing in posters and billboards is $2500 per month.

Supplies

The supplies cost includes sponges, dryers, and other equipment. The estimate of supplies would be $2,000 per month.

Labor

The labor cost depends upon the traffic conditions of your car wash. A car wash business with high traffic will always have a higher labor cost than that compared to low traffic. The labor cost for an automatic car wash business can be $20,000 per month.

Last Line

Hope you have gained enough information about how to start a car wash business. Like any other business, the car wash profession needs dedication, proper business planning, and a financial roadmap. Go through all the above points while opening a car wash business to achieve success. Once you establish your car wash business, it is highly crucial to maintain it to run the business on the right track.

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