It will cost from $100,000 to multi-million dollars to buy a car wash business; however, the precise amount will often be determined by a wide range of factors that include things like location, past business success, features, functions, and size.
Depending on the scale and its structure, you might just be acquiring the property and facility, or you might be buying the whole business operation complete with workers and existing branding. However, note that each type of sale will have its setbacks.
Although a good number of car wash businesses are started from scratch, note that it is possible to instead purchase an existing one.
Going through the business ownership route has proven to be a viable alternative as well as the easiest way to own a car wash business.
Buying a car wash makes it possible to inherit most of the equipment you will need to run the business, especially with automated car washes.
Factors That Determine the Cost of Buying a Car Wash Business
There are numerous types of car washes and the exact amount you pay will vary depending on the arrangement and type of car wash.
For instance, self-service washes are the cheapest car wash business to purchase. In-bay automatic and full-service washes necessitate higher investment. Things that differentiate these car washes include;
Equipment Requirements: Different types of car washes will demand different equipment. Note that full-service car washes will need more equipment when compared to a self-service car wash, and this entails higher costs.
Operational Expenses: Self-service car washes won’t have exorbitant utility and supply costs especially when put in comparison with full-service facilities.
Customer Expectations: Full-service car washes are known to necessitate a wide range of amenities to ensure that clients will feel comfortable coming to the facility.
Labor Costs: Full-service car washes will most definitely demand more hands to help in running the business, and this entails higher labor expenses. Self-service washes possess lower labor costs because customers do the work themselves.
Owner Involvement: Owner involvement in self-service washes might not be as frequent as other types of car wash businesses, and this can make them more convenient to manage and more cost-effective.
Environmental Regulations: Full-service car washes always have to contend with more stringent environmental regulations.
Prior to making any purchase decisions, it is important to carefully evaluate how much the business makes in a given year.
Full-service car washes in the United States are known to make up to $900,000 per year, in-bay automatics around $100,000 to $500,000, meanwhile self-service washes from $50,000 to $100,000. Other revenue-related data you will want to consider include;
Market Share: Car washes that have a substantial share of the market will cost more because they have an edge over others in the industry. These businesses will make more income and demand a higher price when they are looking to be sold.
Customer Base: A solid customer base will mean more revenue for the car wash business and this will further increase its valuation. To get a good insight into revenue details, multiply the amount of customers by the average order value (AOV). For instance, if 150 customers spend $20 daily on a self-service wash, monthly revenue would be above $90k.
Profitability: A car wash that makes more money will be worth more. Note that very lucrative car washes in the United States tend to have EBITDA (earnings before interests, taxes, depreciation, and amortization) margins around 20-25% and net profit margins from 10-20%.
Growth Potential: Also note that you will be expected to pay more for a car wash business that demonstrates viable and solid growth prospects.
Additional Revenue Streams: It will cost more to buy a car wash that offers additional services such as detailing or oil changes. You will be expected to pay more for a car wash that boasts of diversified revenue streams.
Keep in mind that car wash businesses in locations with high traffic will cost more, especially since they tend to attract more customers and offer greater earning potential. Location-related factors that will increase the valuation of a car wash business include;
- Property Costs: Just as was noted above, you might just be acquiring the property and facility when you buy a car wash business, and affluent locations will have higher land and property values, and this will further affect the valuation of the car wash.
- Marketing Potential: Viable locations are known to provide businesses with better opportunities for effective marketing, potentially drawing in the right clients. Howbeit, note that heightened visibility will indeed come with a higher price tag.
- Demographics and Market: Also note that a car wash business in a location with the right demographics that guarantees a strong and substantial demand for car wash services will cost more to purchase.
- Competition: This is another factor that will impact how much you spend to purchase the business because fewer competitors might be cheaper but can also mean less potential for a successful business.
There are numerous ways size alone can impact a car wash’s valuation, and put mildly, a bigger car wash will cost more than a smaller car wash. Nevertheless, here are vital size-related factors to keep in mind;
- Equipment and Maintenance: Bigger car washes will most definitely necessitate more equipment and upkeep, boosting general expenses.
- Utilities and Operational Costs: The size of the car wash will also determine the amount of water, electricity, and cleaning supplies needed to function efficiently.
- Property and Taxes: In addition, bigger car washes will take up bigger spaces, and this entails higher property costs and taxes.
- Staffing Needs: Bigger car wash businesses will also require additional staff, and this will further increase labor expenses.
- Insurance: Bigger facilities will indeed demand more extensive insurance coverage, and this will lead to higher premiums.
You need to understand that a well-maintained facility will mean more purchasing capital especially when compared to one that needs repairs. The better the condition, the more you will have to pay. Below are details to take note of:
- Repair and Renovation Costs: Car washes that will require extensive repairs and renovations will cost less when compared to ones that don’t need any additional investments to fix issues.
- Customer Appeal: Car washes that have remained in premium condition will most definitely attract more customers, and this could be a higher purchase price.
- Regulatory Compliance: Also keep in mind that car wash in poor condition will require more updates to conform with local regulations, and this will further increase its general cost.
- Equipment Lifespan: Also note that it will cost more to purchase a well-maintained car wash that has top-class equipment, especially since it lessens replacement costs.