How to Start a Car Wash Business
Apr 08, 2024
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Remember wondering how to start a car wash business when you were growing up? Whether it was with a club in high school, your group of friends, or even yourself, it was the first time you ever made some real dough. The work was simple, and you didn’t even have to go to a real job yet. Plus, it was basically like your own water park. Beats that childish lemonade stand any day.
Just because you’re an adult now doesn’t mean you can’t make a profit by washing cars. In fact, you can use what you’ve learned over the years to build your own car washing business. As long as you choose the right location, invest in some stellar marketing and provide unmatched service, you’ll be engaged in a fun and rewarding business like the old days.
The carwash business is as old as the car itself, and even if it seems simple, there’s a great deal to know before jumping in and getting your feet wet. Much of what we’ll explore here holds true to any business, but there are also some industry-specific items to look out for.
Is owning a car wash profitable? Absolutely! The car wash services market was worth $15.21 billion in 2022. Experts predict it will grow at a compound annual growth rate of 5.7% from 2023 to 2030.
If you run it properly, it can set you up for retirement and increase your wealth. Discover the essentials of this venture and learn practical car wash business ideas.
Research the Business
It’s time to get up to speed on the business because starting a car wash without any knowledge of car washes would be unwise. Look at some of the technologies used in car washes and today’s trends.
Some noticeable trends include the following:
- People tend to use car washes when the economy and car sales are doing well.
- Environmentally friendly products are making their way into the car wash market.
- Certain growing demographics around your area might want cars washed.
You should definitely go out to area car washes and decide what type of wash you want to start—self-service, automatic or waterless. Don’t be afraid to talk to the owners and employees to see things from their perspective.
Scope Out the Competition
When you’re making small talk, remember that these guys are your future competition. It’s time to collect data on their washes. How many customers do they get? How do they market their business? What will your wash have that theirs won’t?
One more thing factors into how well a car wash does:
Find a Spot and Make a Business Plan
With your game plan in mind, you’ll need a base of operations. Unless you plan to be mobile, that means finding a spot with suitable traffic patterns. Look for areas where traffic moves slowly and drivers can spot your advertising from a distance.
Consider the start up costs for a car wash and the ongoing expenses your business will incur. These will vary depending on your wash’s setup. For example, if you run an automatic wash that requires pressurized hot water, you’ll need to purchase water pumps, boilers and a fan drying system. Hand washes will have costs associated with more employees.
You can get some ideas of what works where by observing the competition in your area. Draw up a plan that includes an estimate of your monthly and yearly costs to know the capital needed to open your business.
Do Some Paperwork
Secure the required licenses and permits from their corresponding federal and state agencies to get started. Visit your local government’s relevant office to know how to get started. Every area has its own rules, so it’s crucial to understand all the information you receive.
You’ll also need the following tax requirements:
- Federal tax identification number
- Sales tax license
- Income tax withholding
- Unemployment insurance tax
Create a Business Plan
We all know that throwing money at problems doesn’t improve them. Treat your car wash similarly—draw out a detailed business plan. Every solid business plan template includes these sections:
- Executive Summary
- Mission, Goals, and Objectives
- Background Information
- Organizational Matters
- Market Plan
- Market Analysis
- Market Potential
- Marketing Strategies
Find a Way to Finance
How much does it cost to start a car wash? Starting up a car wash requires an initial capital of six to seven figures because it generally involves acquiring land and improving it. Understanding how to start a car wash business at home or on wheels can minimize your initial expenses.
Bootstrapping your way to profitability makes an inspiring story. However, unless your pockets are deep enough to finance your business, you’ll need others to help fund your venture.
Applying for bank financing, taking out a Small Business Association loan or finding angel investors are the primary ways to get funding. Whichever route you take, prove you’re in stellar financial standing to demonstrate your reliability and creditworthiness. Most lenders and investors expect you to use your money to cover some of the initial expenses to have skin in the game.
What if you have few resources? Any entrepreneurs wondering how to start a car wash business with no money consider crowdfunding and grants.
Crowdfunding is when you solicit donations from the public, allowing charitable individuals to contribute however much they want to help you reach your funding goal when they believe in your vision. Donations generally imply free money, but not in this case. Your donors are actually investors who may expect 100% of their money plus interest or a cut from your future profits. Misunderstanding this can get you in legal trouble down the road and negatively impact your car wash brand.
Regarding small-business grants, various government agencies provide a financial leg up to aspiring entrepreneurs to create more jobs, spur economic activity and generate higher tax revenues. Some write checks specifically for disadvantaged microentrepreneurs. Many private organizations have similar programs, too.
Buy Equipment
Your equipment needs will vary depending on the type of car wash you have. Here’s some equipment that most car washes have:
- Washing system—a pressure washer, compressors, pumps and conveyor
- Cleaning solutions, wax, protectants and presoaks
- Water system—water heaters, boilers
- Vacuums
- Towels
Get Adequate Insurance
The car wash business is an extension of the automotive industry. This venture exposes workers and customers to various hazards that may cause bodily injury and property damage.
Choosing the right insurance policy for your business is necessary to protect your best interests. You must have policies to:
- Safeguard your enterprise from conceivable liabilities.
- Pay for your staff’s medical bills and wages in case of a work-related accident.
- Cover the costs of repairing or replacing your assets in the event of a natural disaster, fire, theft or vandalism.
- Avoid financial loss when temporarily stopping operations due to unforeseen events or incidents.
Having extra protection is helpful when you face an expensive lawsuit. An umbrella insurance policy supplements your general liability coverage and extends its limits.
Furthermore, consider cyber threats when insuring your car wash. Hackers can compromise your system, steal your sensitive data and defraud you.
The worst cyber attack of them all is ransomware. In 2023, the FBI received over 2,800 complaints from victims who reportedly lost nearly $60 million — 74% higher than in 2022.
Paying for a cyber liability insurance premium can impact your cash flow. Still, it’s worth the cost if you consider the alternative, which is a massive loss that can drive your business to bankruptcy or insolvency.
Market Your Car Wash and Start Hiring
Once your car wash is ready, it’s time to market your business in any way possible. Here are a few ways to get started:
- Make a website and keep it updated.
- Establish a social media presence on Facebook and Twitter.
- Create flyers and post them around town.
- Make sure your car wash has a big, clear, eye-catching sign.
- Host or sponsor local events.
- Do charitable work—like offering free car washes for a cause.
- Produce helpful resources for public consumption—such as a podcast and a YouTube channel churning out content about your field.
Sustainability is an enduring marketing trend. Presenting yourself as an eco-friendly car wash business can appeal to customers wanting to be part of solutions to environmental issues. Some of the sustainable practices you can observe include:
- Using water mindfully.
- Tracking electricity and water consumption.
- Using organic, harmless products.
- Minimizing waste.
- Going paperless.
- Supporting circularity—like procuring used goods or maintaining equipment routinely.
- Segregating and recycling trash on site.
- Using renewable energy
- Spearheading green initiatives that positively impact the local communities you serve—such as river and ocean cleanup drives and tree-planting activities.
Moreover, put a premium on testimonials. Favorable online reviews can help you build credibility and trustworthiness in the eyes of potential customers on Google and social networking platforms.
Consider collaborating with an influencer to get your name out there and highlight your car wash’s notable features. Using influencer marketing to sponsor content is more palatable to consumers than traditional intrusive advertisements.
Ultimately, word-of-mouth is the best form of marketing. Hire the right people to deliver quality work and provide excellent customer service. Meeting or exceeding people’s expectations translates into repeat business to get a steady revenue stream and referrals to increase your customer base.
Evaluate and Reinvest
The trick to staying successful and keeping your business churning is to observe what’s working and what’s not. Remember that most businesses will make the vast majority of their revenue from a small number of services. Configure your wash to feed business to those services, then add smaller offerings to collect extra revenue.
Look at the statistics of your business and find places to save money. Transform into a more affordable brand of microfiber towels and save $100 monthly in material costs, or reinvest time during slow hours into training new staff.
Those little things add up, and, pretty soon, you’ll move the cars through like a pro.
From here on out, it’s a matter of keeping your car wash running. Never get too comfortable—constantly think of creative car wash business ideas to stay ahead of the competition—but be sure to have fun and enjoy your new business!
Originally posted 4/7/2016 – Updated 4/8/2024
