Want to start a car wash business? You’re in luck because you have come to the right place. Starting a car wash business from the ground up can be a daunting task due to the insufficient information and resources available online. However, if you follow this extensive step-by-step guide, I am sure you will be a successful owner of a car wash business in no time. Just make sure you follow these 9 steps, so you can increase your odds of success. Without further ado, let’s jump straight to the point.
1. Familiarize yourself with the car wash business
We all like to drive in beautiful cars, don’t we? I remember my dad saying – the cars we drive say a lot about us. However, due to our busy lives, it is not possible to look after our cars and maintain plus clean them regularly. This creates a great opportunity for anyone who has skills and resources to provide excellent car washing services.
Car Wash Business Overview
The Car Wash business has a huge global market. And the good news is, the demand for car washing services is growing year after year globally. To put things into perspective, the global car wash services market size was valued at USD 27.8 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 3.8% from 2021 to 2028. Therefore, rest assured, if you want to start a car wash business, now is a perfect time.
Understand the costs to start a Car Wash business
In order to start a Car Wash business, you will need anywhere from $40,000 to $2.5 million. If you want to start a mobile car wash business, you can just buy a truck and washing equipment. It will cost you around $40,000.
However, if you want to operate it through a dedicated location with large equipment and real estate, it will cost you a bare minimum of $2.5 million. Moreover, if you want to buy a popular car wash franchise, you will require a franchise fee of around $50,000 plus a total net worth of around $2 million with at least $700,000 of liquid cash.
Breaking down the costs to start a car wash business
As I already told you that you’d need around $2.5 million to start a car wash business from the ground up. I will try to break down all the costs for you but you will need to keep in mind that these costs are highly volatile and vary from one car wash build to another.
1. Real Estate and Land ($1,250,000)
The land costs will vary widely depending on the location, geographical area, quality and grading of a site, and the size of the lot. Expect to spend anywhere from $1,250,000 to $1,300,000 on real estate and land expenses.
2. Consultancies and Third Party ($250,000)
This is not always necessary and will depend on your personal circumstances. Business consulting can bring quality and tangible value during the build process for a car wash business. You can expect to pay anywhere from $250,000 to $300,000 on consulting and third-party fees.
3. Financing and Debt Service Cost ($75,000)
Be ready to pay anywhere from $75,000 to up to $100,000 on the financing service costs. This cost will depend on many things like cash equity percent down, type of financing, etc.
4. Site and Landscaping ($100,000)
Site and landscaping costs include Paving, Leveling, Asphalt, Greenery, and other general landscaping. Prepare to spend $100,000 to $150,000 for this category of costs.
5. Tunnel and Support Equipment ($500,000)
Primary tunnels and support equipment cost includes Blowers, Tire Shires, Hydraulics, conveyors, Pumping Stations, Arches, and Boilers. Prepare to spend anywhere from $500,000 to $600,000 for this equipment. You can cut some costs here and there like you can go for chain conveyors car wash systems instead of belt conveyors. Even though belt conveyors have clear benefits over the tried and tested chain conveyor car wash systems, those benefits do come at a significantly higher price.
6. Water Treatment Systems ($50,000)
In order to build water reclaim system and water filtration system, you should expect to spend anywhere from $50,000 to $75,000.
7. Electronic components ($150,000)
Electronic components like Pay stations, Tunnel Controllers, Relay stations, etc. will set you back by $150,000 to $200,000.
8. Vacuum Systems($80,000)
The vacuum systems include motors, drops, hoses, accessories, plumbing, and other related cement works. You will need around $80,000 to cover these costs.
9. HVAC and plumbing ($40,000)
It will cost you around $40,000 to purchase or install a furnace, heaters, and other miscellaneous electrical and plumbing components.
10. Planning and Permits ($75,000)
You should look forward to spending anywhere from $75,000 to $100,000 for engineering, architecture, site planning, and obtaining other local and national permits from the government.
11. Signage and Marketing ($50,000)
You should keep aside a budget of at least $50,000 for main signage, menu and price board, branding and logo design, web design services, SEO services, and launching digital marketing campaigns.
Consider Franchising a Car wash business
Let’s be honest here. Even if you have the finances in place, starting a car wash business from the ground up is not an easy task. You will need resources, training, and consulting along the way. And that’s exactly how purchasing a car wash franchise can help you. Purchasing a franchise of a popular car wash allows you to utilize a proven model and recognizable brand name. If you’re interested in going through this route, here are some of the best car wash franchises to consider owning.
1. Mr. Clean Car Wash
Mr. clean car wash is one of the most popular names when it comes to the washing business. Their initial franchise fee starts from $35,000 and the full investment needed is estimated to be around $3 million.
2. Tommy’s Express Car Wash
Tommy’s Express is a household name for car wash businesses. They have been operating in this business line for more than 50 years. Their initial Franchise fee starts from $50,000 and full investment is estimated to be around $2 million.
3. Fleet Clean USA
Fleet Clean, unlike others, offers mobile truck and fleet vehicle washing services. They are predominately run on a B2B model, which means the majority of their customers are businesses and not individuals. Their franchise fee starts from $35,000 and the total investment needed is around $200,000.
4. Superior Wash
Superior Wash also offers mobile car wash services with more than a whopping 80,000 vehicles washed each week throughout the country. Their franchise fee starts from $15,000 and the total investment requirement is around $20,000.
5. Cactus Car Wash
Cactus car wash operates multiple franchises throughout Georgia and North Carolina area and is rapidly expanding. Their franchise fee starts from $45,000 and a total investment of $2.5 million is required.
2. Plan your Car Wash business
Planning is critical for the success of any business. The same applies to the Car Wash business too. Let’s get into some of the key steps you will need to understand while planning your car wash business.
Choose the right business model
In order to start a successful Car Wash business, you will need a solid business model, at a minimum. Don’t just get into the Car Wash business because it sounds fancy and businesses are making millions in this sector.
The first thing you will need to decide is how will your car wash business operate. I mean are you planning to start a mobile car wash business or an immobile cash wash business in a specific location. You will also need to be sure of whether you want to go for a franchise route or want to start a car wash business from the ground up.
Once you decide the way you’ll operate your car wash business the next step is to ask yourself – what will be the USP (Unique Selling Proposition) of your car wash service? What are the creative ways, you’ll lure customers to your business? What is your strategy to retain your existing customers?
There are hundreds of car wash businesses in every corner of a town and hundreds are popping up every single month. The sad news is around 7 out of 10 car wash businesses fail miserably. I am not trying to scare you, I’m just stating facts. Therefore, to make sure your Car Wash business does not fail, you will need to make sure you have a solid business model in place.
Also, bear in mind, you should be ready to clock in at least 60-100 hours of work per week on your new car wash business, especially at the beginning where you will need to figure out a lot of new things and you’ll most likely be alone in this adventure.
Choose the right location
Prior to starting a car wash business, you will need to choose the locations you’ll want to operate your car wash business from. It doesn’t sound like a big of a deal, but trust me the county, the city, the neighborhood, etc. all of these could make or break your car wash business.
The key question to ask yourself is – Do you know which location your car wash business will operate from? Will you be operating completely mobile or through a brick-and-mortar establishment?
If you want to start a mobile car wash business, you’ll still need to focus on the areas your mobile car wash business will offer its services to.
Either way, bear in mind, the location you’ll serve will have a massive impact on the licenses and permits you’ll need as well as the growth potential of your car wash business. Furthermore, you’ll need to have an in-depth knowledge of location criteria to consider (including population, competition, street types, car counts, and more).
The rule of thumb is providing the service in the area with high employment rates and a high volume of traffic. If people are busy at work, they will be more than happy paying a car wash business to maintain and clean their cars.
Choose a business name
Whether you want to start a car wash business or a landscaping business, you want to choose a name that resonates with your values and beliefs.
Bear in mind, you need to ensure the legal business name complies with state naming rules in the states where you’ll be operating your car wash business – otherwise, a state might not accept the documents filed to form or qualify the company.
Prior to choosing a business name, it is also wise to discuss branding and its impact on your business. The key question here is – will your legal business name also be your brand name or your brand name will be separate from your legal name?
I will be honest with you, it is better to use your legal business name as your brand name while starting. Why? You may ask. The reason is that it makes things a lot easy, is really straightforward and is also significantly cheaper.
However, if you run an informal business (Sole proprietorship, Limited Liability Partnership, or General Partnership), some states require you to use your surname as your business’s legal name.
Would you be okay using your surname as your legal car wash business name? If YES, you can move on to the next step. Else, stay with me.
If you don’t want to use your surname as your legal car wash business name, then you must file a Fictitious Business Name Statement with the county where the head office of your business is located.
So, let’s revise the concept once more. The legal business name is the name that is indicated on your formation documents. On the other hand, a brand name is a name that you’ll use to market your car wash business. Now, there are three different branding scenarios.
- Business Legal Name and Branding Name are the Same
Just register your legal business name when you file your formation documents.
- Business Legal Name is different from its Brand Name
You must file a DBA – a.k.a doing business as – a.k.a Fictitious Business Name Statement with the county where your business head office is located.
- If your business has a legal name but several brand Names
You must file multiple DBA’s. To put things in perspective a legal name “The CocaCola Company” has multiple brand names like Fanta, Sprite, Powerade, etc.
Shopify’s Business Name Generator is super useful while brainstorming brandable names for your car wash business.
Once you decide the name of your car wash business, you need to perform three final checks.
- First, check your state’s business name database to see if your desired business name is available.
- Second, do a domain name search to check if your business name is available as yourbusinessname.com. If it is available go ahead and register the domain before anyone else gets it. Bluehost offers free domain names if you buy a 12-month hosting plan for them. You’ll need a hosting package to build a website for your car wash business anyways, so basically you are getting a domain name for free. You can use the tool below to see if the domain name is available.
- And lastly, do a federal search on the US Trademark Electronic Search System and make sure nobody has already trademarked your name.
If your business name is available you can choose to trademark it, but honestly – if you are operating a mobile car wash business, don’t bother about it right now. It is a lengthy process and will cost you around $600. I would rather spend the money and time on the marketing channels.
Write a car wash business plan
Prior to starting a successful car wash business, you will need an actionable business plan. A well-written car wash business plan should explain the business’s core objectives and how it plans to achieve them. One of the other purposes of a business plan is that it makes your car wash business look professional and appealing to prospective lenders.
All in all, a well-written actionable business plan is a crucial document for your car wash business. Without it, you’d be running around like a headless chicken.
A compelling business plan has many sections, some of the must-includes are:
- Executive Summary
- Business Description
- Market Analysis
- Competitor Analysis
- Services to Offer
- Competitive Pricing Strategy
- Marketing Strategy
- Fundings
- Financial Projections
You can use business plan software like BizPlan and Enloop to compose a professional-looking business plan. Don’t get lazy and pay someone 15 bucks to write a business plan for your car wash business. You will need professional high-quality work.
Find your business partners
Once you plan your car wash business and write an actionable business plan, it is the right time to find your business partners(if you need one). Your car wash business will gain tremendous value by inviting other people into the venture. And by value, it could mean money, skills, knowledge, experience, connections, you name it.
Also, a thing to keep in mind – investors and lenders are more likely to trust a car wash run by multiple founders and are thus likely to fund them more easily.
3. Register your Car Wash business
You will need to register your Car Wash business in order to operate it as a legal entity.
Choose a business structure
Prior to starting your car wash business, you will need to understand the different business structures available to register your business. Most of the states in the US offer these three types of business structures for a car wash business.
1. Corporation
The biggest advantage of registering your car wash business as a corporation is the separation of your business affairs from your personal life. As a legal entity existing separately from its owners, a corporation limit’s its owners from personal liability.
However, a key thing to keep in mind, while registering your car wash business as a corporation is that both the corporation and the shareholders pay taxes. This means double taxation on all the business income.
You can raise money for your corporation by selling the shares and the corporation will continue operating even after the death of the owners.
Don’t go the solo DIY route here, it’s too risky if you plan to go public or invite shareholders at some point. Consult a business lawyer before forming a corporation for your car wash business.
2. Limited Liability Company
LLC, as the name suggests, provides some form of personal liability protection to its owners. LLC also gets taxed differently. Keep in mind, an LLC can be managed by one or more managers.
In this business structure, an LLC is treated as the same tax-paying entity as its members. All business tax obligations pass through the member’s tax returns. Keep in mind, business profits are also subjected to self-employment taxes.
LegalZoom offers one of the best services when it comes to forming an LLC. Their pricing starts from just $79 + filing fees. And these costs are often tax-deductible.
3. Sole Proprietorship
A sole proprietorship is one of the easiest and most straightforward business structures you can choose for your car wash business.
As a sole proprietor, you have full control of your business. You will receive all the profits of the business directly and are liable for any taxes or liabilities of the business.
As we already discussed, in the case of LLC – if you choose to name your business differently than your name(example: Sarah Peters Car Wash), you must file a Fictitious Business Name Statement with the county where the head office of your car wash business is located.
Operating a car wash business as a sole proprietor doesn’t require any formation fillings with the state. However, keep in mind, you may need to do some other state filing, depending on the scale and nature of your business operation. I would highly recommend going with the Sole proprietorship model if you want to start a mobile car wash business.
Register for an EIN
Fortunately, registering for Employee Identification Number(EIN) is simple and straightforward through the IRS website.
EIN is a 9-digit number that the government provides to every business in order to identify them as a tax-paying entity. You’ll need an EIN while filing taxes, hiring employees, or opening a business bank account.
You can apply for an EIN by telephone, mail, or fax but applying online is completely free and you will get your EIN immediately.
Register your Car Wash business
Unless your car wash business is a sole proprietorship or a general partnership, you must file formation documents with the secretary of the state department.
Each car wash business structure has its own requirements:
Forming an LLC
In order to file the Articles of Organization for a car wash business, submit your formation documents to the Secretary of State online or by mail along with the filing fee(depends on the state and ranges from $80-$150). Bear in mind, you can also file in person for an additional fee, as they are processed more quickly than the mailed documents.
Forming a Corporation
First, you will need to decide if you want to go for a C-corporation or S-corporation. Then, go ahead and file the Articles of Organizations for a Car Wash business by submitting your formation documents to the Secretary of the state along with the filing fee.
Obtain Necessary permits and licenses
Your car wash business may need to obtain permits and licenses in order to comply with federal and state regulations. Each state and city has different rules, so make sure you take the time to understand everything and keep your car wash business in line. Furthermore, make sure to understand the local sanitary sewers (for your wastewater), utility prices, water usage limits, and other regulations.
At the federal level, use the US Small Business Administration to figure out the kind of permits and licenses you may need. At the State level, use the state’s online portals or websites to figure the details out.
Obtain local permits
Contact the county or city officials in the location where you intend to operate your car wash business and just ask them if you need any local permits and licenses before starting your activities.
The requirements largely depend on the location and the scale of your business. Some of the most common licenses and permits include:
- Alarm Permits
- Building Permits
- Signage Permits
- Business License/Tax Permits
- Health Permits
- Occupational Permits
- Zoning Permits
Register for Taxes
All businesses whether small or large must register for taxes and owning a car wash business is no different.
Pay business entity Income Tax
One thing to always keep in mind while starting a car wash business is that you may be liable for tax even before or as soon as you start making money through a car wash business. Some states have higher business taxes while some have lower. For example, in Texas, business taxes are extremely low and there is no personal income tax.
Generally, all corporations both foreign and domestic must pay corporate profit tax. The tax is due on the 15th day of the third or fourth month, after the end of the corporation’s taxable year.
On the other hand, unincorporated businesses can choose to pay the taxes either as an individual or as a corporation.
Pay Income Tax
If you operate your mobile car wash business as a sole proprietor – you as the business owner are liable to pay the income tax and file the individual income tax return. You can do this by filing the IRS 1040 form.
If you run the car wash business as an LLC or a Corporation, check out your state’s income tax department for more information.
In order to file accurate and speedy personal and business tax returns, you can use tax preparation online tools. Some of the most popular ones are listed below:
- H&R Block
- TurboTax
- FreeTaxUSA
- TaxAct
Register for small business payroll taxes
Once your car wash business starts making money and hires employees, your company must pay employment taxes and other benefits.
You can pay state payroll taxes by registering with EDD (Employment Development Department). And in order to register with EDD, you’ll need :
- An EIN
- A Legal Business Name
- A DBA
- A Secretary of State(SOS) file number
Business owners will receive an SOS file number after they file the Articles of Incorporation with the Secretary of State when they are forming their corporation.
Set up federal tax payments
Your car wash business must pay federal taxes. Therefore, you must register with the Electronic Federal Tax Payment System (EFTPS). You should complete the registration process as soon as you start your car wash business.
Generally speaking, EFTPS is an online portal that lets you pay all your federal business taxes. The IRS has some great resources to help you understand all the business tax you might owe.
These business taxes would include :
- Income Tax
- Excise Tax
- Payroll Tax
- Self-Employment Tax
Setup State tax payments
Your State’s Tax Board will provide businesses and individuals with different ways to pay their taxes. Some of the most popular ones are:
- WebPay
- In-Person
Online with credit cards through ACI payments.
4. Get funding for your Car Wash business
If you have enough startup capital to start a car wash business you can skip this section. However, if you have time I would highly recommend skimming through this section because while scaling your car wash business, you will need a way to finance the growth.
There are plenty of incentives, grants, loans, and equity investments available for car wash businesses. You just need to look in the right direction. You need to know how to seek funding strategically and methodically.
Bear in mind, no matter the funding route you take, you will need to have(at a minimum) the following documents:
- A business plan
- Projected Financial Statements
- Tax returns of both the business owner and the business itself(when available)
- An explanatory document on how the money will be used
- A description of key services offered by your car wash business
Obtain funding from States agencies
You can start a car wash business with fundings from state agencies if you knock on the right door. Your business may be able to get approved for loans, incentives, and grants through statewide programs.
To access the funding from state agencies you need to do the following tasks.
- Check out your State’s Business Portal
- Learn more about your State’s Business Assistance Programs
- Find out the financial incentives your state offers to small businesses. This may be in form of tax credits or financing
Obtain funding from SBA Backed Lenders
If you have little to no investment to start a car wash business, you can apply for an SBA loan. The US Small Business Administration (SBA) works with lenders to provide loans to small businesses around the country.
Keep in mind, the agency doesn’t lend money directly to business owners. Rather, it drafts guidelines for loans made by its lending partners, community development organizations, and micro-lending agencies.
Let’s get familiar with three of the most popular SBA loans.
- 7(a) Loans: This type of loan guarantees a portion of the total amount, cap interest rates, and limit fees.
- 504 Loans: These types of loans provide long-term, fixed-rate financing to purchase assets for your business.
- Micro-Loans: These are the loans that provide $50,000 or less to help small businesses start up and grow.
SBA-guaranteed loans feature a plethora of benefits. These loans generally have rates and fees that are comparable to that of non-guaranteed loans. Furthermore, SBA-backed loans come with continued support to help you start and run your car wash business. Moreover, some SBA loans feature lower down payments, flexible overhead requirements, and no collateral.
Now that you understand the whole SBA lending process, it’s time to know some of the most popular SBA-backed lenders in the USA:
- US Bank
- Wells Fargo
- United Midwest Savings Bank
- Live Oak
- MidFirst Bank
Borrow from Banks
If you can’t get financing through state-level agencies or SBA-backed loans, your next option is trying for traditional small business loans through banks. If you perform your due diligence and know exactly how the lenders assess your car wash business, you might be able to get approved for a conventional loan with a better term and a higher loan amount.
So what do you need to prepare a solid business loan application for your Car Wash business? Well, there are no guarantees but in order to increase the odds of approval you need to understand the following terms better:
1. Learn how lenders assess you
Prior to applying for a car wash business loan, you need to understand how lenders assess your loan application. Few factors play a key role in getting your loan approved.
- Credit Score
- Credit History
- Collateral
- Loyalty
- Industry
- Cash Flow
- Time in Business
2. Decide on the type of financing(long-term or short-term)
If you want to start a car wash business, you can get financing from various sources. Some provide financing for the short term while some have longer terms. Decide whether you want a :
- SBA-backed Loan
- Traditional Bank Loan
- Micro-Loan
- Non-Bank Online Loan
- Business credit card
- Line of credit
3. Pick proper lender
Another vital aspect for increasing the odds of getting loan approval for your car wash business is choosing a proper lender. Every lender will have its own set of pros and cons.
a. Direct Lenders
Banks, Investors, credit unions, and online lenders fall under this category. When you are dealing with direct lenders, you don’t need to go through any third-party intermediary to make your loan application.
b. Lending Marketplaces
Online platforms like Fundera, LendingTree, and Lendio fall under this category. While dealing with the lending marketplace, you are matched with your lenders based on your qualification, credit history, and financial needs.
Application processing is significantly quick in the lending marketplace compared to more traditional lending scenarios.
c. P2P Loans
It stands for ‘Peer to Peer’ Loans and this type of lending is really similar to crowdfunding with the only difference being, your loan application is reviewed and presented to several lenders and investors.
This type of lending is a great option if traditional lenders have turned down your car wash business loan application. Some of the well known P2P lending companies include:
- Prosper
- Funding Circle
- Lending Club
- Peerform
4. Figure out the chances of approval
You need to perform your due diligence on your preferred lenders to assess the chances of approval. One thing for certain, if you have a less than stellar credit score (personal credit score less than 650), you probably wouldn’t find success through banks.
An online bank may be more likely to say yes, but it will have a higher interest rate. It could be or couldn’t be a good decision based on what you’re borrowing for.
All in all, try to understand the odds of approval before applying for one.
5. Gather adequate paperwork
In order to get the loans approved for your car wash business, you’ll need to gather quite a stack of paperwork. Therefore, the earlier you start gathering the better. Here are some of the common documents lenders would want to see before approving your car wash business loan application.
- A business plan that includes financial projections and marketing strategies.
- Business bank account statements for the last three to six months.
- Business and Personal Credit scores.
- Tax return documents for both your personal and business tax accounts.
- Any legal contracts like franchise, incorporation, or leasing.
- Any application license and registrations for Car Wash business.
- Other financial documents like account receivable or unpaid invoices.
6. Fill out the application
Once you’ve gathered all the paperwork and done your due diligence, the next step is filling out the application for the loan. You can file it online, in-person, through email, or regular mail depending on your lender. After the filing is done, just relax and spend some time with friends and family. Loan applications can take anywhere from 24 hours to a few months to get approved – depending on the lender and the type of loan you choose.
Borrow from alternative lenders
By alternative lender, I mean any lender that doesn’t fall under the category ‘traditional lender’. If lending occurs outside of a conventional banking and financial institution, experts name the transaction as ‘alternative lending’.
Some of the most famous alternative loan types are:
- Lines of credit
- Short-term Loans
- Microloans
- Merchant Cash Advance
- Bridge Loans
Apply for Small Business Grants
If you want to start a car wash business with little to no money, you may be eligible to apply for business grants. Hundreds of grants are available for starting and expanding a business every year. Make sure to regularly check US Grants and your state’s grant watch platforms to identify the perfect grant for your car wash business.
To increase your odds of grants approval :
- Search for grants related to your sector.
- Read the grant’s objectives.
- Understand the funding requirements.
- Follow the eligibility requirements.
- Ensure your application is entirely truthful.
5. Get your Car Wash business insured
Your Car Wash business will need business insurance because it covers the costs associated with property damage and liability claims. For now, we are going to discuss the four major insurances your car wash business may need.
1. Obtain Workers Compensation Insurance
After you get financing for your car wash business, in order to start a successful car wash business, you’ll need to buy insurance policies. One of the important ones is Worker’s compensation insurance.
Workers Compensation Insurance, or in other words Worker’s comp, is a policy that covers an employee’s medical expenses and other losses in the event of a work-related injury. Most of the states in the US require by law to have worker’s compensation insurance in place for businesses having one or more employees.
To recap, this insurance policy offers three benefits:
- Protect your business in the event of a lawsuit
- Reduce the risk of an employee lawsuit
- Provide financial support for injured employees.
2. Get Professional Liability Insurance
Professional Liability Insurance, or in other words known as E&O (Error and Omission) coverage is suitable for businesses, like car wash business, that provides expert services.
Professional Liability Insurance covers expenses and losses coming from claims of inaccurate, negligent, or undelivered work.
If you operate any business that services, you’d definitely want to consider buying an E&O coverage policy. The lawsuits from claims of unsatisfactory work can result in ridiculously high legal fees that can put your Car Wash business at great risk.
Another great thing about Professional Liability Insurance is that the policy will cover the costs associated with these disputes, whether or not the claims can be proven.
3. Obtain Property Insurance
Property insurance is a type of insurance policy that can provide coverage for property owners or renters. Examples of property insurance include homeowners, renters, and flood insurance policies. Depending on the scale of operation and the location, you may need to consider obtaining a property insurance policy for your car wash business. These policies can provide a safety net for damages caused by fire, flooding, theft, weather, and other risks.
4. Obtain Vehicle Insurance
Depending on the scale and location of your car wash business you may need to consider purchasing commercial auto insurance. Commercial vehicle insurance covers vehicles used for business purposes. Furthermore, it also covers vehicle damage and driver injuries.
If your car wash business will use one or more vehicles, you definitely need to obtain solid commercial vehicle insurance. Commercial vehicle loan policies have higher coverage limits than personal policies, as business vehicles need more protection in case of accidents.
Bear in mind, Commercial vehicle insurance covers business vehicles for things like:
- Damage to your business vehicles
- Injury to the driver
- Injury to someone else on the business vehicle
- Damage to someone else’s property.
6. Hire Employees
If you want to start a car wash business, be aware of the employment laws in your state, so that you can run your business successfully. You will need to hire employees for your car wash business at some point. Let’s discuss the hiring procedures and how you can reduce costs by outsourcing some tasks.
Hire key personnel
You need to be strategic to fill up any position for your car wash business. If cash is tight, you should consider starting a mobile car wash business. You can also take helping hands from family members and friends while starting out.
But keep in mind, if you decide to hire someone for your car wash business, you must report them to the New Employee Registry in your state within 21 days of their date of employment. You must all report any employee who is rehired after a period of 60 consecutive days.
You can report the changes in the total employees for your car wash business online or by submitting a form via mail or fax. When reporting new hires for your car wash business you must consider the following.
- For Employers:
- Employer Payroll Tax Account Number
- Federal EIN
- Business name and address
- Contact person and phone number
- For Employees:
- First, middle, and last names.
- Social Security Number
- Home Address
- Date of commencement of employment
Consider hiring full-time vs part-time employees
Full-time employees are those who work 30-40 hours a week, while part-time employees work less than 30 hours a week. Therefore, before hiring any individual for your car wash business make sure to determine what time of employment – full-time or part-time – works for you. It may depend on your budget and the company’s operational needs.
Consider hiring seasonal vs temporary workers
When you start a car wash business, your most important goal for the first few months should be saving money from business expenses. To save money, especially at the beginning, you may want to hire seasonal or temporary workers for your car wash business. Depending on your car wash business operations, you can hire seasonal workers when you need temporary help during a particular time period like holidays. All in all, hiring seasonal workers is the way to go to keep up with high demand during the busy season.
Consider outsourcing some tasks
Outsourcing tasks will not only save you money but also time. The same valuable time which you can invest in the business itself in order to gain a competitive edge. If it makes strategic sense, consider outsourcing the following tasks:
- HR and Payroll
- Finance and Accounting
- Recruiting
- Customer Service.
Hire interns when applicable
You may hire interns for your car wash business, and if they demonstrate the potential, your business may benefit by giving them full-time status after, say, 6 months or 12 months.
The intern can provide temporary assistance during peak times. During this time period, you have an opportunity to share the skills and knowledge you and other employees have acquired.
7. Promote your Car Wash business
If you do not have a huge capital upfront, you need to understand what it takes to successfully promote the car wash business. Furthermore, you’ll need an actionable marketing strategy and communication tactics in place.
Let’s talk about some of the traditional and modern marketing strategies you can adopt to promote your car wash business.
Define your brand
The definition of your brand is the image the customers have of your car wash business. Therefore, you need to take your time and define your brand early and thoroughly before the market defines it for you. And trust me when I say this – you wouldn’t want other people defining who you should be or what the image of your car wash business should be.
The best way to define your brand is to be strategic, purposeful, and intentional. You will need to tell the story on why your car wash business exists and what problem your business helps customers solve.
Also, make sure to let your customers know why they should trust your car wash business over the competitors and what your brand’s voice is. And by a brand voice, I mean the way your business communicates with your customers. Do you want to be seen as a corporate business and talk to your customers like a Ph.D. expert or would rather communicate like friendly guys who know how to get the work done?
A business logo will go hand in hand with the brand of your company. If you have a creative aptitude, you can do it yourself. Otherwise, one of the best tools for branding and logo design is Looka. This tool gives you everything you’ll need in order to start your car wash business and look great from day one. The best part? Their Artificial intelligence(AI) technology does the heavy graphic design lifting while giving you all the creative control.
Let me tell you about one more free tool. Canva is an awesome graphic designing tool, where you can design anywhere from an Instagram post to an infographic or a branded logo using a drag and drop system. Canva provides thousands of elements, images, and fonts for absolutely free of cost.
Build a website
The next step is putting your business name out there on the web for everyone to see. Websites are a crucial part of the car wash business. You need to have a professional website for your car wash business.
Make sure to utilize the power of the internet. You must customize your website and make it align with your brand. You can put pictures of your car wash projects plus testimonials and make an excellent impression on your visitors. After all, actions speak louder than words.
Don’t forget to include your mission statement on your website and let your customers know why they should hire you. Having a website creates a digital presence for your car wash business so your potential customers can search and find you on the web.
You can read my guide on how to make a basic website for your small business if you want to do it yourself. However, if you want someone else to work on the technicalities while you focus on acquiring more customers for your business, we are ready to help you. Our $499 digital package comes with a professionally designed website, custom email, 24/7 support and maintenance, SEO, and digital marketing services. You wouldn’t want to miss the deal. Contact us today before the deal runs out.
Establish social media accounts
Create a digital presence by establishing social media accounts for your car wash business. You need to be strategic on this as you wouldn’t want to waste your time showing up on all social networks, especially those that don’t align well with your target audience.
Depending on the scale of your operation, you want your car wash business to be on:
- YouTube
These days, almost all of us use social media not just to communicate with friends and families but also to browse for products and services. Putting your car wash business in front of your target audience can lead to more leads and sales. Furthermore, it can be also used as a tool to keep current customers up-to-date and lure in new customers.
Connect with local media
If you want to start a successful service-oriented business venture, you need to connect more with the neighborhood and local media. Do your due diligence and get to know your local media including radio stations, newspapers, and magazines.
Even if you want to operate on a national level, you must have a solid foundation on a local level.
All in all, try to be a go-to person for the neighborhood, it’s good for your business. If you are an introvert, I can understand this can be a big ask. You can try to delegate one of your staff to do the public relations task. This way you can reach out to the local residents – which is great for your car wash business.
Lastly, make sure you network with people continually and not just while starting out. You can even approach local journalists and feed them stories relevant to your business and sector and exploit natural PR opportunities.
Run Paid Ads
Paid Ads have the ability to target prospective customers within a certain demographic and region, which can be a brilliant tool for your car wash business. You may want to consider running paid ads through services such as Facebook Ads, Yelp, or Google AdWords. The best thing about paid ads is that – they generate results quickly which, in turn, helps to scale your business both vertically and horizontally.
Focus on SEO
Once you’ve built your car wash business website and it is live online, you still have to make sure people can find it. Search Engine Optimization(SEO) is one of the best strategies that can help you with that.
SEO is a set of rules and practices that refines your website from all the other car wash business websites on the internet. This will, in turn, help you rank higher on the Search Engine Result Page (SERP) for the relevant queries. These are some of the few key practices that you should keep in your mind while optimizing your website for search engines.
- Use relevant keywords in your posts and pages,
- Make sure you choose a better hosting platform
- Make your website mobile responsive
- Include internal and outbound links throughout your website
- Use the post name in the permalinks.
If you need any professional help to do SEO for your car wash business, please contact us. We can connect you with some of the SEO experts who are really affordable.
Distribute Flyers and Business cards
Most car wash decisions are made by the owner of the car. There’s a higher chance they’ll reach out to you if they have your info. The key is to build presence and brand identity.
- Have a good branding (logo, colors, font)
- Include details and promotions
- Contact information must be clearly visible
Business Listing and Directories
People come to sites like Yelp or YellowPages to search for the right services. Make your car wash business listed in directories sites such as Google, Yelp, Porch, Home Advisor, Houzz, Thumbtack, Angie’s List, and other directories. All you need to do is:
- Create a business profile
- Ask your customers for reviews on your business profile
- Update/showcase your projects regularly
Word of Mouth
Word of mouth marketing is simply the best form of marketing. However, this marketing strategy is not done by you, but by your customer. When you do an excellent car wash job in your neighborhood, people will acknowledge you and your customers will tell other people about how great your services were.
8. Start your Car Wash business
So you learned a lot of new things about operating a car wash business. We discussed everything from registration to financing to marketing your Car Wash business. But the real task starts now. This is the phase where you put all that knowledge into practical action.
Set up Banking
If I haven’t already mentioned, you need to get a business bank account for your car wash business. This not only makes things a lot easier but also helps to give legitimacy to your business. A business bank account helps to keep your personal assets protected against business losses and liabilities.
Remember, you will need an EIN to open a business bank account. So if you have not already applied, apply now.
Some of the best banks to open a bank account for a car wash business are:
- Chase
- BBVA
- Bank of America
- CitiBank
- HSBC
Get Business Credit Cards
Business credit cards are great if used properly. They can help you stay afloat during low liquidity moments. Business credit cards also act as a tool to build your business credit, which, in turn, helps you get all kinds of business financing such as:
- Line of Credit
- Business Term Loans
- Merchant Cash Advance
- Small Business Administration Loan
Some of the best credit cards you can consider for your car wash business are:
- Capital One Spark Cash for Business
- American Express Blue Business Cash Card
- Ink Business Cash Credit Card
- Brex Cards for Startups
Set up Accounting
Now that your car wash business is up and running, it is time to focus on setting up the accounting systems. Not having a proper accounting system in place is a nightmare for small businesses during annual tax filings and applying for business loans. In order to have a clean bookkeeping system for your car wash business, consider these 8 key steps.
1. Choose an Accounting System
I would always recommend new car wash businesses opt for a cash accounting system while starting out. It’s easier to adopt, and it makes expenditure and profit monitoring a lot easier. Later on, you can switch to the Accrual accounting system, which is recommended if your car wash business grows and needs to comply with the US Generally Accepted Accounting Principles (GAAP).
2. Track your income and expenses
Make sure to track all your incomings and outgoings. No matter what you use to track your income and expenses, make sure you always keep the receipt of the transactions so that you can easily reconcile things at the end of the month.
You can use either Spreadsheet, online database, or financial software to track your business transactions. It all depends on the needs and scale of your car wash business.
3. Develop a bookkeeping system
Book-keeping refers to the set of practices to record the daily transactions of your landscape business. Although book-keeping and accounting seem to be similar, they are not. Accounting is a high-level process that takes a bird’s eye view of your car wash business and tracks the progress. In simple words, accounting is a process that evaluates the information compiled by your bookkeeper and builds financial statements.
4. Set up a proper payroll system
When your car wash business is growing and is in the stage of hiring employees, you need to set up a proper payroll system to ensure that you are withholding correct taxes.
5. Determine how your Car Wash business get paid
When customers start rolling in your car wash business, you will need a proper payment system in place to accept payments.
Even if your car wash business is purely cash-based, there might be times when the customer is not carrying any cash and would want to pay via a credit or debit card. For this reason, you will need credit card payment processors. Some of these companies are listed below:
- Square
- PayPal
- Stripe
- Shopify Payments
- Intuit Merchant Services
6. Determine your tax obligations
Tax obligations for your car wash business will depend on the business structure (LLC, Partnership, Sole-Proprietorship, Corporation, etc.). Therefore, it is one of the key steps in setting up your car wash business’s accounting procedures.
7. Consider Business Accounting Software
With great accounting software, you’ll be able to monitor the account receivables and account payables of your car wash business. This will help you to have a clear understanding of your profitability and prepare you for tax season.
You don’t need to spend hundreds and thousands of dollars on your accounting software while starting a Car Wash business. Start with a small package(1-10 users) and take it from there.
As your car wash business grows, you may need to focus on more custom Enterprise Resource Planning (ERP) software. But for now, focus on simple but complete small business accounting software for your car wash business.
Some of the best small business accounting software to consider for your car wash business is:
- QuickBooks Online: All in one solution and can scale as your business grows.
- Wave: Best free small business accounting software
- Zoho Books: Complete Automation
- Xero: Great for micro-businesses.
8. Consider Hiring an Accountant
You may need to hire an accountant when starting your car wash business’s accounting processes. There are two possible routes you can go through. You can either hire a full-time bookkeeper or use the service of a certified public accountant (CPA), who will come in and set things up and then come back again, say, three or six months, to review your accounting process.
There is one more option for you which is outsourcing the whole process. There are plenty of accounting companies that just do that – processing accounting transactions for car wash businesses and taking care of their financial reporting.
Set up Computer Systems
If you don’t know your way around computers, servers, and other IT-related hardware, I would strongly recommend outsourcing this whole task.
Make sure your computer system is up-to-date and secure because you would not want anyone to exploit the vulnerabilities by inserting malware and ransomware. You could entirely move all your car wash business data to the cloud. This way you don’t need to worry about maintaining servers or other hardware.
If you are just starting a mobile car wash business or a car wash business on a small scale, you might not even need a complex computer system. For mobile or small-scale car wash businesses, Google Sheets and Google Docs, and Word will do a good enough job.
Setup Payroll and other administrative operations
You should consider using payroll outsourcing companies for your car wash business. This way you can save time and money, which you can use to grow and scale the business.
Having said that, you can still do the payroll yourself in your spare time, if you are operating on a small scale.
Some of the top payroll companies are listed below:
- Gusto
- PayUSA
- Paycor
- Intuit Quickbooks
- OnPay
That’s for the payroll services. What about administrative work? Well, you can go through two possible routes with this. You can either do it yourself or hire someone else to do it. You can either hire a virtual assistant for your car wash business or even hire a live administrative assistant. Virtual assistants will cost you a lot cheaper compared to live admins. You can hire virtual assistants from platforms like Upwork or Fiverr starting from as low as $5 per hour. But if you want to hire a live administrative assistant, you will need to pay at least $16 to $18 per hour.
It’s all about your needs and budget.
9. Scale your Car Wash Business
After you start a car wash business, you should always look for ways to scale it. While starting, you might not have enough capital to operate at a larger scale, but once the cash starts flowing, your sole focus should be on growing your car wash business.
Your car wash business is more likely to be scaled when you focus on these five pivotal criteria which experts often call Key Success Indicators or KSI.
1. Deliver Excellent Customer Service
Customer service is the cornerstone of every successful car wash business. Always remember – unhappy customers equals unhappy bank accounts. If your customers aren’t happy about your service, that dissatisfaction will soon result in poor business performance.
Always keep in mind, excellent customer service means you:
- Regularly exceed (not just meet) customers expectations.
- Value their time.
- Have a friendly attitude.
- Provide relevant knowledge and resources.
You can have the best car wash service in the town but if your customer service is unreliable, unhelpful, and unpleasant to deal with, things will spiral down for your car wash business. First, you will be losing your existing customers and second, you’ll have a hard time finding new customers.
If you are having a hard time finding new customers, your customer acquisition cost will increase. At this point, you need to pour more money into your promotional efforts and increase your marketing expenses just to get the same number of customers you used to get easily in the past.
To provide satisfactory customers service:
- Respond to Enquiries Quickly
- Train your employees to know the services inside out.
- Personalize and customize your car wash services.
- Listen to your customers proactively.
- Maintain a friendly and positive attitude.
- Solve problems creatively.
2. Focus on profitability
Your primary focus on starting a car wash business should be on the profitability of your business. Always keep in mind, follow the money.
Following the money means tracking these three key metrics of your car wash business on a monthly or weekly basis.
a. Net Profit
Net profit means the total revenue minus the business expenses. A positive number means your car wash business is profitable and a negative number means you are losing money. A net profit of zero means you are breaking even.
Accounting software can track these numbers so make sure you keep your eye on the net profit or loss of your business regularly.
b. Operating Expense
Operating expense, as the name suggests, includes all the expenses that are required to operate your car wash business. Some of the most common operating expenses are:
- Accounting and Legal Fees
- Software License Fee
- Insurance
- Advertising and Marketing
- Rent
- Salaries
- Utilities
- Vehicle Expenses and Property Taxes
- Maintenance and Repairs
- Travel
If your car wash business revenue increases but the net profit is decreasing, the main reason could be operating expenses. Bear in mind, you will have revenue growth in order to outpace expense growth, so you can invest the net profit back into the car wash and keep growing from your bottom line.
Make sure you monitor your operating expenses regularly and do not let them outpace your revenue growth.
c. Profit per Customer
One of the first steps in starting a car wash business is to understand that no customers are the same. All customers aren’t equal and you should keep that in mind.
Not saying you should disregard small customers and prioritize big customers but you have to learn to find a balance. You need to provide more time to customers who, say, contribute 15% of your monthly revenue vs compared to the customers who only contribute 1.5%.
Let’s use simple math to understand it even better. You will need 10 customers with a 1.5% revenue contribution to match a single customer who contributes 15%.
Therefore, you need to follow simple tactics. Pamper your most profitable customers while simultaneously taking great care of your less profitable customers. You never know if today’s small customer can be your biggest customer tomorrow.
To identify your profit per customer you can use a simple formula: Revenue per customer minus expenses per customer. Remember to add the cost per acquisition, if applicable, to your expenses per customer.
3. Keep your business finances in order
In order to start a successful car wash business, you need to monitor your business finances from day one. Make sure you don’t get into situations where you can’t pay your vendors on deadlines or can’t cover payroll for the next few months.
A lot of car wash business owners mistake business cash flows for business profitability. High revenue does not always translate to high revenue. If your car wash business is finding a high number of customers, but if the customers aren’t paying on time, you’ll soon find out a lot of sales on your books, but no cash to match that revenue.
Revenue is one thing but cash flow is another. For starting a successful car wash business a healthy cash flow is a must. When it comes to your car wash business accounting, focus on these four key accounting elements.
a. Expenses
Expenses mean the money going out to cover everything from services sold and includes the payroll and taxes.
b. Revenue
Revenue is simply money collected from customers for car wash services.
c. Cash Inflows
It means cash coming into your car wash business. It includes everything from the money you invest yourself to business loans, grants, and customer payments.
d. Cash Outflows
This means cash going out of your car wash business. This includes money you withdraw from the business, loan remittance, and vendor payments.
4. Keep an eye on your competition
Car wash is a competitive industry. To start a car wash business and stay in this game you will need to constantly:
- Analyze what competitors are doing.
- Try to provide a better service than your competitors.
- Innovate in terms of car wash services delivered.
I am not implying you should constantly focus on your competitors, but it is a good idea to gauge what’s going on with their business from time to time in order to be in sync with trends in the car wash industry.
In order to do a proper competitive analysis of your rivals, you can do the following tasks:
Ask your Customers
While starting your car wash business, it is always a good idea to ask your customers which car wash services they used before and what made them switch. Furthermore, you can also gauge their expectations in terms of the quality of service.
You would want to understand what made the customer think the previous car wash business wasn’t good enough and use that information to propose a car wash service that suits your new customers.
Gathering this kind of intelligence from customers is key to your car wash business success. Additionally, it is the cheapest and easiest way to conduct market research directly from the consumers of the service.
Research who your competitors are
Your car wash business can not perform a competitive analysis until you identify who your competitors are. Try to find out who provides the same services your car wash business does. If your business is a part of a trade group like the local chamber of commerce, you can request a copy of the members and pinpoint who is fighting to get a piece of the pie in the car wash industry.
To know who your rivals are, you can perform the following tasks.
- Scan Search engines like Bing and Google
- Attend local business events
- Participate in networking events
- Read industry magazines and blogs
The idea here is to know who you are facing, what services are they offering, and how are they running their car wash business, so you can improve your own car wash operations.
I don’t know if I already mentioned it, but you also need to set up your Google My Business account, so your car wash business can appear in local search results.
Monitor your competitor’s social media pages
One of the best ways to perform competitor analysis is by monitoring your competing car wash’s social media pages. You need to keep an eye out on what your rivals are posting on social media and what are the customer’s opinions on them. That way, you will not only gauge the positive things your competing car washes are doing but also avoid the mistakes your rivals are making. The key social media channels you need to monitor are:
- YouTube
Check your rival’s job postings
The current ambitions and success clearly are visible in the way a car wash hires its employees. You must regularly check the job posting from your competitors and understand what positions are they hiring. You also need to gauge the job description and requirements and compare those with current roles in your own car wash business.
Tracking your competitor’s job posting can help you understand how they are expanding their car wash operations and the area in which they are directing their business into. Performing this due diligence will help you answer these key questions:
- Is your car wash business missing out on something?
- Are your competitors seeing profit-making opportunities in a certain section of the car wash business that you are not seeing?
- What really is going on behind the curtains?
Ask your new hires
Newly hired employees who previously worked for one of your competitors can provide relevant information about the competitor’s internal operations.
But you need to make sure, the employee hasn’t signed the Non-Disclosure Agreement with their former employer. If there is an NDA in place, wait for the NDA to expire, which takes anywhere from two to five years, before asking the employee about the competitor’s business model.
One thing you can be sure of is that your new hire will subconsciously incorporate best practices learned from previous car wash businesses. Rest assured, your business will benefit from new hires whether it is in-depth information about your competitor or just general information on the services offered.
5. Serve multiple locations with growth potential
If you want to scale your car wash business, you will need to grow it in terms of the area covered too. This means you need to provide your services to multiple locations as your business grows. Here are three tips to consider when choosing a new location for your car wash business.
- Visibility of your business.
- Proximity to your customers and vendors.
- Proximity to your competitors.
