5 Things to Watch Out for When Starting a Car Wash Business

As an individual who is aspiring to become a business owner, it’s really exciting to look at your local market and find different opportunities that have gone untapped. If you’re entrepreneurial, chances are you’ve already seen a few opportunities that you could take advantage.

One potential business type that some entrepreneurial minded individuals find as an opportunity in their area is to start up a car wash business. Through investments, personal cash reserves, car wash equipment financing, and more, any future business owner can take a car wash from concept to reality.

But before you dive into an agreement for car wash equipment financing or start signing contracts for the construction of your business, watch out for the following as you consider starting your car wash business.

1. The Types of Car Wash Services

It might be tempting to look at a car wash as being fairly straight forward. People just bring their cars in to get them washed and that’s it, right?

As you start to doing more research about the industry of car washing, you’ll start to notice that there are different kinds of car washing types and services that you can provide. Which one makes the most sense in your market or for the demographic you want to target? 

Exterior Conveyor Car Wash

A common type of car wash types is the “exterior conveyor car wash,” where the customer stays in their vehicle as they pull into the car wash location. From there, the vehicle is pulled through the car wash system on an automated conveyor belt as the exterior is cleaned.

Self-Serve Car Wash

Another common type of car wash is the “self-serve car wash,” which allows you as a business owner to stay more hands-off (when it comes to having staff on-hand at certain hours) compared to other car wash types. Rather than using conveyor belts and staff to clean the vehicle, automobile owners will instead park their vehicle and wash the vehicle themselves.

When utilizing car wash equipment finance, most of it will be put into car wash machines that are coin-operated and the vaccuums. 

In-Bay Automatic Car Wash

With the exception of the self-serve car wash, the “in-bay automatic car wash” requires much less space than other common types of car wash setups. This makes it a popular addition to pre-existing businesses like a gas station or small convenience store.

As the customer chooses the type of wash they want, their vehicle will be pulled into the car wash bay and the owner will sit in their automobile as the exterior of the vehicle is cleaned for them. Car wash equipment finance options are a great way to invest in multiple different equipment options without buying large pieces of equipment outright. That way, you can choose to keep financing the ones you get the most profit from.

Full-Service Car Wash

The “full-service car wash” is one of the more comprehensive services offered. Typically, car washes that offer this form of car washing will include both exterior and interior vehicle cleaning. Compared to other forms of car washing, full-service car washing will usually mean that the employees of your car wash company will do the cleaning themselves.

This also means that you won’t have to purchase as expensive equipment in some cases, which makes that you can choose a smaller car wash equipment finance plan to fit your needs.

2. Start Up Costs vs. On Going Costs

The type of car wash you choose will directly impact the amount of funding you’ll need to get started as well as the ongoing operational costs of your business. If operation costs do get out of hand you can always consider a working capital loan for your carwash business.

For example, if you choose a car wash type that is more “hands-on,” requiring more employees and less automatic equipment, then you’ll have lower startup costs (e.g., from your car wash equipment finance option) but higher ongoing operational costs to pay employees.

On the other hand, if you choose a car wash that is significantly more automated, then you’ll pay much higher startup costs but comparably lower monthly operational costs. You’ll need to find a larger car wash equipment finance plan that will cover all of the automatic car wash equipment you’ll need to open your business’ doors.

However, by selecting an automated car wash format, you’ll need to calculate the replacement costs of all of your equipment. You can expect to need to replace most automated systems within about 10 years (or less, depending on how well maintained it is). Although keep in mind you can continue to use car wash equipment finance for both current and future car wash equipment.

3. Acquiring Land for Your Car Wash

In addition to what you’ll need car wash equipment finance for, you’ll have to take into account where you’re going to put your business. Do you have land already? If you do, does it have a type of structure that will suit your car wash needs? Can or should you utilize multiple car wash equipment finance opportunities, or should you stick to just one or two pieces of equipment?

Most likely, you’ll either have to start from scratch by purchasing the land and building on it or you’ll have to purchase land and tear down any existing infrastructure before starting your own.

As you’re searching for a plot of land for your business, consider the following:

● Is the location highly trafficked and easily accessible?

● Will the land be large enough for you to get started?

● Are you considering multiple types of car wash? You’ll want to factor that into your business growth plans.

● Will there be enough space for a “line of vehicles” in addition to all of the structures in place for your car wash?

You could use an SBA Loan to purchase the land and building for your car wash business. Than use car wash equipment financing for all the car wash equipment.

4. Paperwork and Legal Factors

Before you dive right into the setup and buying process of your car wash or finding the ideal car wash equipment finance solutions, make sure you take the time to research what all is needed for your car wash business to exist in the city.

Each city is going to have different requirements for you to be established as a business within their city limits. Make sure you take the time verify that your business it’s legitimately zoned for being established as a car wash. Be prepared to have to apply and pay for permits, business license, business insurance, business tax, and meet other legal requirements set by the city or state.

5. Other Factors to Consider

When it comes to starting any business, there’s a lot that goes into getting established and making sure you’ll be successful. Before you fully commit to starting your car wash and seeking out the best car wash equipment finance solutions, make sure you investigate the following:

● Branding

● Site Work

● Construction

● How you’ll get funding (e.g., through car wash equipment financing and/or investors)

● Number of employees (more required for full-service car washes)

● Marketing (signage, posters, radio, social media, etc.)

● Loyalty and incentive programs

 ● Tax benefits (When you structure your car wash equipment financing on an equipment finance agreement or on a $1 buy out lease agreement you get section 179 tax benefits.  The deduction limit for 2018 Section 179 increases to $1,000,000.00. You can also structure your car wash equipment lease as a FMV buy out and write off 100% of your payments over the term of the lease off your taxable income.)

Final Thoughts on 5 Things to Watch Out For When Starting  A Car Wash Business

The process starts with deciding on choosing a name for the company and the entity that it will take form in. Once this has been done, finding the best location with the most traffic, securing the best car wash equipment vendor, and hiring the best employees to help run the company. 

Getting started is oftentimes one of the hardest things to do as a car wash business owner. But even after you’ve gotten all the car wash equipment financing approvals needed, a steady traffic of customers, and are otherwise doing well, you need to stay future focused. Possibly expand, add on a convenience store or gas station or another location. 

Ready to Apply online for car wash equipment financing? Feel free to call Trust Capital and speak with a car wash equipment finance specialist that can take your application over the phone at 866-458-4777.