Book
Excerpt
Chapter 1
You’ve probably never stopped to think about where
your local car wash fits into the grand scheme of the car wash industry.
The only thing you know is that when your car gets dirty you need to
wash it, and the closest place to get that done is probably where you
go.
Maybe you’ve spent some time considering opening a
car wash business of your own while waiting in line for a wash on a
bright and sunny Saturday morning. You’ve probably seen a dozen or more
cars in queue, with each owner paying between $5 and $10 for a wash that
they may not even be totally satisfied with. If you’re like many
entrepreneurs, you may have started doing some quick math in your
head—projecting what the car wash owner is probably making in one month,
then one year. Maybe you even thought “Boy, this place is a cash cow!”
Finally it’s your turn. As you watch your car move
through the tunnel, you see how automated the process is, how quickly it
gets done, how little actual work seems to be required. “How hard could
this possibly be? Anyone can make money running a car wash!” you might
have thought.
Most car wash owners can share a wink and a smile
at the naiveté of the average neophyte. Many people think a car wash is
a great business opportunity because they see it as a business that
doesn’t require a great deal of hands-on work, but that still produces a
great return on your investment. The reality is a bit more complicated
than that. It’s not exactly a mystery, but ask any car wash owner, and
he will tell you the same thing—“It’s not as easy as it looks.”
What A Car Wash Is And Isn’t
When most people think of a car wash, they tend to
think of an exterior-conveyor wash. These are the washes that put cars
on a motorized track and drag them through a tunnel where they are
rinsed, soaped up, washed, rinsed again and possibly waxed. The cars
then emerge clean (and perhaps even relatively dry) at the other end.
But this is only one type of car wash. Other types of washes include:
Full-service: This is basically a combination of
the exterior conveyor with an inside cleaning added in.
In-bay automatic (also called a rollover): This
type of car wash is an automatic wash consisting of a machine that
literally “rolls over” a stationary car parked in a washing bay.
Self-service: Most self-service car washes are
coin-operated brush-and-hose combinations that the driver uses to
dispense soap, wash the car and rinse it off.
We’ll discuss in more detail what’s involved with
each of these types of washes in a minute. But for now, let’s stick with
the mental picture of the exterior-conveyor car wash as we learn more
about the ins and outs of this business. The best place to start is by
examining a few common misconceptions most people have about what a
typical car wash business involves.
Myth #1: This Business Is A
Cash Cow
Sure, if you drive by your local car wash on a
sunny Saturday morning, you’ll see cars waiting in line for a wash. But
drive by that same car wash on a rainy Thursday afternoon, and you’ll be
lucky if you see one or two cars waiting. You might even see that the
shop is closed for the day. Variables such as the time of the week, as
well as the weather affect how profitable car wash businesses can be.
And sometimes, people are content to let their cars stay dirty for “one
more day.”
Myth #2: This Is A Hands-Off
Business
As an outsider, all you see are cars being dragged
along a conveyor as a bunch of gizmos and do-dads spray, buff, rinse,
wax and even dry them. You might not ever see a human being doing any
work at all. In truth though, this is not a business that you can put on
autopilot. For one thing, those gizmos and do-dads can and will break
down. And, depending on the type of equipment you buy, they might break
down much more than you think.
Cars do emerge from those washing tunnels not
clean enough to satisfy some customers or with a scratch that you didn’t
cause but that the customer blames you for anyway. Employees sometimes
will not treat customers the way they should be treated, especially if
you haven’t trained them well. Shipments of supplies will be late, and
someone (usually you) will have to be there to deal with it. After all,
it’s pretty much impossible to wash a car with no soap. The bottom line
is that you’ll be spending a lot of time at your car wash—at least until
you learn the business well enough to be able to hire a professional
manager who can take over when you’re not there.
Myth #3: You Won’t Have
Employees To Worry About
This might actually be true for certain types of
car washes (most likely self-service and, to a lesser extent, in-bay
automatic washes), but for a full-service or exterior-conveyor wash,
you’re going to have to hire employees and inherit the headaches and
responsibilities that go along with them. In fact, aside from the
initial investment in equipment and commercial space, employees will
probably be one of the biggest costs you incur while running your
business.
Myth #4: You’re In Total
Control
Well, you are your own boss, that’s for sure. But
until someone figures out how to control factors like the weather,
you’re still going to have to answer to a higher authority. No matter
how much time you put into your business, there are still going to be
things that go wrong—things you just can’t control.
Even if you’re a mechanical whiz, some of your
equipment is going to break down. And if it happens at a peak washing
time, like that glorious sunny Saturday morning we keep talking about,
you’re going to watch a lot of potential profit go down the drain. You
will have to suffer through days or maybe even weeks at a time
(depending on where your business is located) when the weather is so bad
that the furthest thing on anyone’s mind is getting a car wash. And
unfortunately, the bank won’t care about the lousy weather when your
loan payment comes due.
Now For The Good News
By now, you’re probably having one of two reactions. You’re
either: a) sorry that you bought this book because what you’ve just
learned is sapping your enthusiasm for opening a business that you
thought would be a breeze, or, b) you’re thankful that you bought this
book because you think it may have saved you from wasting your money
opening a business that you thought would be a breeze.
But before you start looking elsewhere for that great
business opportunity, consider this: Many people have made a lot of
money washing cars. It’s a service that is always in demand and that
most consumers are certainly willing to pay for.
The point in telling you about the pitfalls first
is to make you think clearly and critically about just what it is you’re
getting into when you open a car wash. Yes, there is the opportunity to
make lots of money and have fun doing it—but only if you put in the work
required to make your business a success. The rest of this book will
deal with how to do just that. Let’s get started by examining the
origins of the industry, where it is right now, and where it might be
headed in the near future.
Past, Present And Future
“Just when I thought I understood the game, they
changed the rules!” said Ben Alford of the International Carwash
Association, in his State-of-the-Industry Address at the Car Care World
Expo 2000. Imagine sitting around a room and listening to a bunch of car
wash vets waxing poetic about the good old days of the industry. If you
eavesdropped on their conversation, you might hear them talking about
the days when customers would come in for a full-service wash and think
nothing of waiting an hour or more for the job to be completed. Or maybe
they might talk about not having to compete with the latest dotcom
start-up or fast-food chain for motivated employees. But whatever the
specific topic of conversation, chances are it would center around one
thing—how the industry has changed, and how they’ve had to adapt in
order to build and grow their businesses.
Consolidation
One of the biggest changes occurring in the
industry today is consolidation. Some companies apparently saw the same
thing you did the last time you got your car washed, thought just as you
did (“How hard could it be?”), and embarked on a car wash buying spree.
One of the biggest consolidators is Mace, the same folks who make the
pepper spray and the only one of the big consolidators that’s a publicly
traded company. So what happened to Mace when it started buying all
these car washes? It’s stock tumbled. According to Steve Gaudreau of
Power Inc.’s Car Wash Institute, a training and consulting firm in
Salem, Massachusetts, this was due in large part to the fact that the
company simply underestimated the complexities of running a car wash.
They found out the hard way just how hard it can be.
The Changing Attitudes Of Customers
People today have less and less time to spend on
errands like getting their car washed. One of the main challenges of
today’s car wash owner isn’t just providing customers with clean
cars—it’s providing customers with clean cars in as short a time as
possible. Another challenge is providing the best quality of wash
possible. Customers today are better educated about their options and
demand more value for their money.
The Blurring Of Your Core
Business
It used to be that only oil companies offered a car
wash with a fill-up. And then, more often than not, the wash would be
free. Today, however, many car washes combine the services of a gas
station and car wash, or they strike deals with neighboring filling
stations for car wash discounts.
In the past, a customer would be lucky to get a
free cup of coffee while waiting for his car to be washed. Today, the
average car wash customer is likely to find a wide array of snack foods
at his disposal in the car wash “gift shop.” One owner even sells
greeting cards and pocketbooks alongside the more traditional air
fresheners and key chains in his gift shop.
What this points to is a trend toward offering
customers multiple services all in one place—a one-stop shopping
experience. This only makes sense, since the average customer is more
pressed for time than ever before. The more you can combine the services
they need, the more likely customers will be to pick your car wash over
another. According to a recent survey published in Auto Laundry News,
almost half (46 percent) of car wash owners say that having a gas
station nearby that offers a free wash with a gas purchase has hurt
their business. While that’s significant, the fact that the free wash
doesn’t take even more business away may be due to the fact that washing
cars is a side business for these gas stations, and they tend not to do
as good a job as a dedicated car wash. So while you may choose to offer
multiple services to your customers to enhance your business, don’t
forget that your primary business is offering a quality car wash.
The Future
Let’s face it, if the experts 50 years ago were
right, we’d all be flying around in rocket cars by now. While no one can
predict the future with accuracy, what we can say is that current trends
certainly favor car wash owners. People are buying more expensive
vehicles, and they’re keeping them longer and want to maintain them in
good condition. And while we may see some dramatic design changes in
cars over the coming years—it may soon be the case that we “charge” our
cars at home rather than filling them up at the gas station—the business
of the car wash owner doesn’t seem at risk. No matter what happens, it
is likely that as long as there are cars, there will always be a need
for car washes.
With that said, you’re about to enter an industry
that is in flux. Some say that the time has never been better for
newcomers. Others caution that until the industry “shakes out,”
committing the time and money required to make a new car wash successful
is a risky proposition. Every entrepreneurial endeavor involves risk,
and you will have to research your local market diligently and assess
your chances for success.
Your Entrepreneurial Spirit
You will also need to evaluate whether a car wash
is the right type of business for you. Will you enjoy the tasks that
come along with it—fixing machinery, keeping supplies on hand, meeting
and dealing with customers, resolving conflicts and crises? Take the
self-quiz on page 6 to find out how well-suited you are to working in
the car wash industry.
For starters, how energetic are you? If you’re
someone who falls asleep in front of the TV every night at 8 o’clock,
you may not be able to put in the time and energy needed to make your
business a success. If, on the other hand, you’re a dynamo—someone who
enjoys expending energy and isn’t happy unless you’re on the go—you’ll
have a better chance of being an entrepreneurial success.
How risk-tolerant are you? Starting any business
involves a certain amount of risk-tolerance. You won’t be getting a
steady paycheck anymore, and it’s likely that your income will vary
widely from week to week and month to month. This isn’t only true when
you’re starting a business—it will probably continue for months or even
years. You’re going to have your slow months, and you’re going to have
your hot months. How well can you weather the ebb and flow? If you can
absorb the hits you’re going to take when money is slow to come in,
you’re going to be able to stick around and enjoy it when business picks
back up. In short, you shouldn’t be someone who wants to throw in the
towel at the first sign of trouble.
How self-motivated are you? Are you someone who
stops trying to improve something when you feel that it’s “good enough”?
To be sure, there’s something to be said for leaving well enough alone.
But unless you’re constantly striving to take steps to make your
business even better, you run the risk of having your business become
stale. No one would want the economy as a whole to just remain where it
is right now and not grow, and it’s the same thing with your car wash.
If you make $100,000 in your first year, are you the kind of person
who’s going to push yourself to make $125,000 the next? Do you need
someone to give you the motivation to do that, or can you find the
motivation within yourself? After all, if you aren’t concerned about
growing your business, who will be?
The Car Wash That’s Right For
You
As mentioned earlier, there are really four
distinct types of car washes that you might choose to operate. Gaudreau,
of Power Inc.’s Car Wash Institute, says that trying to offer general
advice on starting and successfully running a car wash business is a bit
like trying to tell someone how to start and run a successful
restaurant. You can’t really answer the question until you decide what
type of restaurant (or, in this case, car wash) you’re aiming for.
If you haven’t done so already, now is the time to
think about what type of car wash you want to own. Some of the factors
to consider in making your decision include:
The amount of capital you have at your disposal
The amount of time you want to spend running the
business
The amount of money you’re hoping to make
In general, the type of car wash that’s going to
require the biggest investment from you, both in terms of time and
money, is a full-service wash. That’s also the type that tends to
generate the most revenue. But unless you have $1 million or more to
invest upfront, it’s probably not the best choice. Moving down the line,
an exterior-conveyor car wash is the next highest in terms of start-up
costs, followed by an in-bay automatic car wash, and finally, a
self-service car wash.
Each type of car wash has its advantages in terms
of time and capital investment vs. profit potential. If your goal is
simply to make extra money to supplement another income, consider
sticking to a car wash with a few self-service bays—at least initially.
If this new business is intended to be your life’s pursuit and your
primary income, you’re probably going to need a full-service or
exterior-conveyor car wash to make that happen. Another factor affecting
how much start-up capital you’ll need is whether you want to lease or
buy an existing business, or start fresh by building a brand-new
facility of your own. Take a look at the chart on page 8 to compare some
of the tradeoffs involved in selecting what type of car wash to open.
How Much Can You Really Make?
You wouldn’t be getting into this business if you
didn’t think there was the opportunity to turn a healthy profit. But how
much can you really expect to make? Because we’re not discussing a
one-size-fits-all business when we talk about a car wash, how much you
can make is dependent on a number of factors. Ask yourself the following
questions to get a handle on what you can expect:
What type of car wash will you operate
(exterior-conveyor, full-service, in-bay automatic or self-service)? In
general, the more services you provide, the more money you’re going to
make. A full-service car wash, which frequently “up-sells” customers,
has a higher profit potential than a self-service car wash.
How much business will your location support? If
your full-service car wash is in an area filled with high-income
professionals driving European sports cars, it’s probably going to do
better than if it’s located in a low-income neighborhood or an
economically depressed town. Different areas will demand different types
of car washes. While an affluent neighborhood may have a greater market
for full-service car washes, a moderate- to low-income area might have
greater market demand for in-bay automatic or self-service car washes.
In short, you must match your services with the demands of the
neighborhood in which you’ll do business.
Beyond these basics, there are the factors that
determine the success of any business—how successful you are at
marketing and selling your services, keeping costs under control, hiring
quality employees, and so on. With that said, here are some general
guidelines for the profit potential of the four types of car washes
we’ve mentioned:
Full-service car wash: $400,000 to $750,000 per
year
Exterior-conveyor car wash: $100,000 to $375,000
per year
In-bay automatic car wash (a “3 and 1”
combination of self-service and in-bay automatic wash bays, discussed in
Chapter 4): $50,000 to $100,000 per year
Self-service car wash (assuming a four-bay,
self-service facility): $40,000 to $80,000 per year
Now that you know the basics of the car wash
industry, it’s time to move on to the nitty-gritty of running and
building your business. In Chapter 2, we’ll delve into the foundation of
starting your car wash business—carefully researching your market.
