Do you want to start a car wash business from home? If YES, here is a complete guide to starting a car wash business with NO money and no experience.
Okay, so we have provided you an in-depth sample car wash business plan template. We also took it further by analyzing and drafting a sample car wash marketing plan backed up by actionable guerrilla marketing ideas for car wash businesses. In this article, we will be considering all the requirements for starting a car wash business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start a Car Wash Business?
- Starting a Car Wash Business – A Complete Guide
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Discuss with an Agent to Know the Best Insurance Policies for You
- 9. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 10. Get the Necessary Professional Certification
- 11. Get the Necessary Legal Documents You Need to Operate
- 12. Raise the Needed Startup Capital
- 13. Choose a Suitable Location for your Business
- 14. Hire Employees for your Technical and Manpower Needs
- 15. Write a Marketing Plan Packed with ideas & Strategies
- 16. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Why Start a Car Wash Business?
If you are considering a business which you can start on a simple budget but which will earn you a good return for your investment and which will need no professional skills or certification, then starting a car wash might just be the business for you. In addition, the car wash business is one that is recession proof as people will have to give their cars a wash no matter the state of the economy.
However, there are certain factors that you would need to consider before starting your car wash business, such as the kind of cars you intend to be washing, the particular kind of service (self-service, hand wash, mobile, automatic or a combination) you would be offering, your equipment and labour costs amidst all other factors.
As with any other business, the first thing you would need to do is to conduct a feasibility survey in the area where you will operating your car wash business, in order to determine how viable the business would be in that area depending on competition, demographics and several other factors.
To get an accurate unbiased report, you might need to hire a reputable business consultant to help you carry out this task. This will allow you to enter into the industry with realistic expectations. The article below will help shed more light about starting a car wash business in the united states of America.
Starting a Car Wash Business – A Complete Guide
1. Understand the Industry
According to IBISWorld, there are no companies with a dominant market share in the car wash business industry. The car wash business industry is one that generates revenue of $10 billion annually in the United States of America. The industry for the period of 2011 to 2016 grew at a rate of 3.1 percent. There are more than 60,000 car wash businesses in the United States of America employing more than 208,000 people.
The stability in the industry for the period of 2011 and 2016 can be attributed to the improving economy which has seen consumers having more per capita disposable income to spend on discretionary services. The periods of 2016 to 2021 will see operators in this industry continue to benefit from rising per capita disposable income that will be of great benefit to the industry, even as more people are expected to own cars in the coming years.
The car wash industry is one that has a moderate level of capital investment which varies depending on the type of operation. Those operations that require more labor such as self-service and in-bay car washes have lower capital intensity when compared to conveyor and auto detailing car washes. However, capital is expected to increase as car washing companies have started investing in express conveyor car washes so as to attend to more customers in less time.
Globally according to the International Carwash Association, there are more than 150,000 retail car wash locations with Germany having the highest number of commercial car washes. The car wash industry in the United States of America has about 15,000 establishments which comprise of companies that are in a single location and companies that are in multiple locations which bring in an annual revenue of $8 billion. Services in this industry include self and full service car wash facilities, bus washes, truck washes as well as vehicle detailing services.
According to statistics from the Trading Economics, the total sale of vehicle between the periods of 1993 to 2015 was at an average of more than $15 million. Sale of vehicles during the recession tanked to $9 million as at 2009. This is because car sales are an indicator of how the car wash industry is likely to fare and so the recent growth in car sales to $17.16 million in 2006, shows that customers have more money to spend and will definitely be able to pay to have their vehicles washed.
Globally, the car wash industry is expected to reach close to $27 billion by 2021 which will be driven by a steady growth in more people buying cars globally. However, there are technological advancements which has helped commercial car washes wash cars better than those who do it by themselves. Also, the popularity of car washes is driven by more people being aware of their environment where car washes are now properly utilizing water as well as properly disposing of solid and water waste.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of a car wash vary from those who own non commercial vehicles to those who own commercial vehicles, as such everyone who owns and drives a car or any form of vehicle will at some point in time require a kind of professional washing.
This therefore means that the demographic composition of those who require the services of a car wash cannot be defined or narrowed to a group of people as this includes household customers, government customers and business customers.
3. Decide Which Niche to Concentrate On
The car wash business is one where businesses have to stand out in order to get a fair share of the target market. In order to do so, businesses usually choose one or two niche areas to concentrate on in order to offer the best services to their customers.
However, while large car wash businesses might be able to offer more niches, smaller car wash businesses however, have to offer one or two niches. Some of the niche areas that you can decide to major in the car wash business industry are;
- Self-service bays
- Detailing services
- Conveyor car washes
- Hand washing
- In-bay automatic car washes
The Level of Competition in the Industry
The level of competition in the car wash industry is highly dependent on the location of the business as this is a business that demands physical presence in order to attend to customers as well as compete with other similar businesses in the industry.
Customers do not want to have to drive a long way out before they can get to your car wash business, so this means that your business has to be strategically placed, for instance close to supermarkets or malls, so that customers can have their car washed while they shop or attend to any other business.
To be able to compete in this industry, small scale car washing businesses who are not able to be in many locations offer personalized plus additional services to their customers.
4. Know Your Major Competitors in the Industry
Every industry has brands that are well known due to the several traits they possess which may include; excellent customer relationship, marketing and promotional activities, quality of service or pricing et al. The car wash industry is the same and therefore has brands that are quite popular amongst all stakeholders in the industry.
Below are some of the well-known brands in the car wash business industry in the United States of America;
- Mister Car Wash
- Autobell Car Wash
- Wash Depot
- Goo Goo Express Wash Inc
- Blue Beacon International
- Boomerang Car Wash
- Quick Quack Car Wash
Technological advancement on products and equipment has made a huge impact on the car wash industry over the past decade. This has been a great improvement for the industry and has seen businesses getting quick return on investments.
The internet has caused a revolution in the ways car wash businesses attract and retain customers as customers can now go online to check the review of other customers before deciding to visit the car wash. A negative customer review is likely to cause a business to lose new as well as existing customers. This has made car washes to be very careful in the way they handle their customers so that a positive review will create more customers for the business.
Household customers account for about 76 percent of those who used the services in the car wash industry. These household customers are usually between the ages of 16 and above and own a car and a valid driver’s license. Those with high income represent those that have the highest demand for car washing services.
Employment of workers into the car wash industry is likely to increase by 19 percent between 2010 and 2021. However, this number will not remain stable especially as more car washes are favoring automatic conveyors to full service car washes, an action which is likely to cause a decline in the employment of workers.
5. Decide Whether to Buy a Franchise or Start from Scratch
Starting your business from scratch or buying a franchise is one important option that you would need to consider when starting your own car wash business as each option comes with its pros and cons. Starting your car wash business from scratch also has two options as you can either to buy or lease a venue and build your car wash business from scratch or you can buy an existing car wash business and decide to rebrand it and use for your business.
Starting a business from scratch can be very demanding as you will need to be proactive with your services, promotions and prices. It also involves a lot of paperwork but it allows you to be in charge of your business, which means you can change ineffective strategies whenever you deem fit.
Buying a franchise might look like a better option for an entrepreneur who doesn’t care for paperwork and having to make advertising and promotional decisions for his car wash business as all this will be handled by the company which you bought your franchise from. However, before buying a franchise, you will need to ensure that you properly study the business from which you intend to buy a franchise from in order to work with a business that will allow you to become a success.
6. Know the Possible Threats and Challenges You Will Face
Challenges and threats are part and parcel of running any business and the car wash business is no different. Therefore the challenges and threats that you are likely to face when starting your car wash business are; intense competition, a non-conspicuous location which will lead to low customer patronage, an economic downturn which will make many people to prefer to wash their cars instead or not washing it as regularly as they should.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for this type of business
Deciding what legal entity to use for your car wash business is very important as this will decide how big your car wash business can grow in future. There are majorly four kinds of legal entities available for a car washing business in the United States of America and they are; sole proprietorship, partnership, Corporation and Limited Liability Company (LLC). Each legal entity has its pros and cons and you will need the help of an attorney or accountant experienced about your kind of business to help you decide which legal entity would best suit your business.
The sole proprietorship kind of legal entity is one that is not only simple to start up but inexpensive as well especially for entrepreneurs that are starting off on a low budget. Here the owner operates his business fully and is personally liable for any debts that the business might incur during the course of its operation. This kind of legal structure is however very risky especially if you have a lot of personal assets or will be employing a lot of people to work in your car wash business.
The partnership kind of legal entity is also one that is not as expensive to start-up as the major thing required is a drawn agreement between the individuals starting the business. The profits and loss in this kind of legal structure are equally shared amongst the partners and each partner is personally liable to any debts that the business might incur during the course of its operations. Taxes in this kind of structure are personally paid by the partners, which is a huge advantage.
The Corporation (Inc. or Ltd) kind of legal entity is one that is of two kinds; the S Corp and the C Corporation. A corporation is a legal entity that is regarded as separate from the owners. It is a more complex kind of legal entity especially when compared to a sole proprietorship or partnership.
However, in a corporation, it is required that a stock certificate be issued, annual meetings be held with the minutes of the meetings being recorded and that directors be elected. However, while the C Corporation has double taxation, the S Corp is taxed like that of a partnership structure.
The Limited Liability Company (LLC) kind of legal entity is one that is usually favored by most businesses in the United States of America due to the fact that it has the best features of a corporation, partnership and sole proprietorship. However, you should note that each states has its own set of LLC statues, therefore it will be necessary for you to visit the state regulatory bodies or an attorney to know how these statutes are likely to affect your car wash business.
8. Discuss with an Agent to Know the Best Insurance Policies for You
Having insurance cover is very important for businesses and even individuals in the United States of America. An insurance coverage will help protect you the entrepreneur from having to deal with any liabilities that might occur whilst running your business from your own pocket, this means that should any damage occur to your customer’s car during the course of washing, your insurance cover will be very useful.
Knowing which insurance policy is best for your car wash business is very important, so you would need to approach an insurance agent or broker who would help you decide what policies will be more suitable for your business and how much to factor into your budget.
Some of the basic insurance policies that you would therefore need to purchase in order to successfully start your car washing business in the United States of America are;
- General Insurance
- Health Insurance
- Liability Insurance
- Auto Insurance
- Workers’ compensation Insurance
- Payment Protection Insurance
- Business Owner Policy Group Insurance
- Property Insurance
- Employment Practices Liability Insurance
9. Protect your Intellectual Property With Trademark, Copyrights, Patents
The car wash business is a service oriented business and as such if you intend starting this kind of business, you do not need to bother about applying for an intellectual property protection for your business. However, if in the course of running your business you come upon a new solution perfect for washing cars that will help other car washers be more efficient, you can approach an attorney to help you file an IPP with the USPTO.
It is to be however noted that those who apply for IPP in this industry usually do so for their company logo, slogan, jingles or any outstanding property they hold.
10. Get the Necessary Professional Certification
The car wash business is a service oriented business that dwells more on the skills of those in the business and therefore does not require any sort of professional certification before one can start or attract customers to the business. While it may be a bonus to have good knowledge of different cars and how they work, it is not even necessary because all customers want is to have their cars cleaned well.
There are however associations that one can join which might boost the reputation of the car wash business such as the International Car Wash Association but again, customers do not care about all these.
11. Get the Necessary Legal Documents You Need to Operate
It is very necessary that you have legal documentations in place before starting your car wash business in the United States of America. If you are serious about starting this car wash business, you must conduct a thorough research by going to the regulated authorities and knowing what documents will be required from you so as to allow you run your business successfully.
Therefore some of the basic legal documents that you are expected to have in place in order to legally run your own car wash business in the United States of America include;
- Certificate of Incorporation
- Business License
- Federal Tax Identification Number
- Sales Tax License
- Income Tax Withholding
- Unemployment Insurance Tax
- Business Plan
- Operating Agreement
- Insurance Policy
- Employer Identification Number (EIN)
- Internal Revenue Service
- Zoning Variances
- Sales Tax Registration Certificate
- Environmental and Safety Inspection
12. Raise the Needed Startup Capital
While it might look like the car wash business is a simple one, if you however do not have the necessary finance to start this business, it will remain just a business concept that will never materialize. This is where your business plan comes into play as this will help you convince investors on how serious you are with your car wash business and therefore allow them invest in the business.
Therefore some of the financing options that you can explore when sourcing for start-up capital for your car wash business are;
- Raising money from personal savings and sale of personal stocks
- Getting a loan from Small Business Association (SBA)
- Sourcing for soft loan from family members and friends
- Raising money from private investors
- Applying for loan from the bank
13. Choose a Suitable Location for your Business
Deciding where to locate your car wash business is very important as this could be the difference between your business becoming a success or a failure. You should consider citing your business in places with high traffic, a shopping center and residential area; and these places must be visible and accessible and should allow for the growth or expansion of your car wash business.
One thing to note before choosing a location for your business is that you must first check with the zoning locations of the city which you intend operating your business from as there are certain places where it is not permitted to run a car wash business.
Also, checking with your city’s zoning regulatory authorities will allow you determine if you would need a special permit that will allow you run your car wash business legally before either buying or leasing the venue which you intend to use. It is therefore essential that you work with a real estate agent, lawyer, accountant or a city planner so as to get the best deal as regards a location.
The venue that you choose for your car wash business should be one that is able to accommodate the vacuum and drying areas, the pump room, the bays as well as the administrative offices. You should remember that you will not, for most of the time, be washing only one car and so the space should be able to accommodate more than one car and also cars that are waiting in line to be washed.
14. Hire Employees for your Technical and Manpower Needs
The car wash business is one that requires finance, equipment as well as human resources in order to be successful and so to start this business, you will need to ensure that you have the necessary finance that will enable you acquire the best equipment. If you are starting up your car wash business on a strained budget however, you might buy some of your equipment as fairly used but you would need to make sure they are in good condition.
A car wash business is a consumer centric business and therefore you should get capable hands that understand the business and are not only punctual but skilled and possess excellent communication skills.
The equipment that you will need to run a standard car wash business depends on the kind of services you intend to offer to your clients. Some of the equipment are; pressure washers, conveyor, mobile wash systems, self-service equipment, cleaning solutions, spot free rinses, wax, presoaks, protectants, blowers, dryers, vacuums, towels, brushes, compressors, pumps, water filtration, water heater, boilers and extractor.
The employees that you will need to successfully run your car wash business are; chief executive officer (owner), admin and human resources manager, supervisor, accountant, business development and marketing executive, front desk officer, car washers, cleaner and security guard.
From the above analysis, you will need at least 10 key staff in order to run an effective, standard and successful car wash business.
The Service Delivery Process of the Business
The service delivery for a car wash depends on the kind of service you are offering your customers. If you intend to hand wash the cars, you will have less costs than those that are using automatic machines to wash the cars. Hand car washing is a labor intensive business; however, customers usually don’t mind paying a premium price to have their cars hand washed as this usually involves washing the interior and exterior of the car.
Automated car washing relies on the use of equipment which typically has to be replaced every ten years. However, when using an automated car wash, the wait time for cars is usually short as the machines work faster than the human hand. Costs are also relatively cheap for an automated car wash.
There are other services which can be offered at the car wash and these are detailing services such as sealant, wax and carpet shampooing that can be done in order to help maintain or improve upon the appearance of a car. Offering this additional service will be very convenient for your customers as they will be able to wash and detail their cars at once.
15. Write a Marketing Plan Packed with ideas & Strategies
- Marketing ideas and strategies
Marketing one’s business is very essential as not only does it help generate revenue for a business, it also enables the business to increase awareness for its brand thereby attracting more customers to it. Before you can decide what kind of marketing strategies would be effective for your business, you will need to conduct a thorough market survey that will allow you know your target market, understand them and know what it is they expect from your car wash business.
If you are just starting this business, you might need to check out how your competitors are conducting their own marketing. Knowing what your competitors are doing and improving on what they are doing will definitely make you stand out and allow you get a huge share of the overall market.
If you are going to be employing marketing executives, you will definitely need to empower them to develop effective marketing strategies for the organization. Your marketing executives should also be able to engage in direct marketing in order to generate more revenue for your car wash business.
Below therefore are the platforms that you can utilize in order to market your car wash business;
- Ensure that you introduce your car wash business to auto sale businesses, small businesses, government agencies as well as other stakeholders in the industry by sending out your brochures with information about your services, rates and contact information attached
- Placing adverts for your car wash business in local newspapers and auto magazines as well as on radio and television stations
- Ensuring that your business is listed in yellow pages as well as online directories
- Engage in direct marketing in order to generate revenue for your car wash business
- Leverage on the internet as well as social media platforms such as Facebook, Twitter, Google Plus, YouTube and Instagram to market your car wash services
- Ensure that you distribute handbills and paste fliers in strategic locations
16. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
The purpose of every business apart from revenue generation is to ensure that the image of their brand is being positively communicated to the target market and that there are strategies in place to ensure this.
The internet has made it very easy and cheap for brands to be able to boost their awareness, as a business can use its social platforms to boost traffic to its website or to enable the website to be optimized to search engines, advertise on other popular platforms such as blogs and forums as well without spending too much and yet reaching a wider target than they would have offline.
However, there are other publicity measures that can be taken offline as well such as distributing handbills and business cards as well as pasting fliers in strategic places. Other measures are in joining local and national associations for networking purposes and attending auto events as well.
Below therefore, are some of the platforms that you can leverage on in order to boost the awareness of your brand and also create a corporate identity for your business;
- Leveraging on social media platforms such as Facebook, Twitter, Instagram, Google Plus, YouTube and Snapchat to promote your car wash business
- Distribute handbills and business cards and also paste fliers in strategic locations
- Encourage your loyal customers to help spread the word about your car wash business
- Place adverts for your business in local newspapers, auto magazines as well as on radio and television stations
- Promote your business by participating in local events in the community which you are operating from
- Join local and national associations in order to promote and create awareness about your car wash business.