How to Start a Car Wash Business in 2021 – A Complete Guide

The car wash business is a really profitable business opportunity and there are some simple steps to build the business from the ground up. It is simple to learn how to start a car wash business. Some people just like to make the cars look clean and with the right kind of effort, you can build a successful business venture. The car wash market was valued at USD 35.04 billion in 2020 and is projected to reach USD 44.73 billion by 2028. The industry is growing at a CAGR of 3.1% from 2021 to 2028. The growth rate is a good enough incentive to step into the market and start your own business.

There are a series of steps to learn how to start a car wash business. Before you start the car wash business, you need to learn how much the business makes. The average profit margin for the business is 20-25% and that’s based on a variety of factors. Here’s our guide on “how to start a car wash business”.

Pros and Cons of Starting a Car Wash Business

Starting a car wash business can be attractive to those who want to start their own business. There are several advantages to starting a car wash business, but there are some disadvantages too. Before investing your money in the car wash business, you need to do some market research and figure out all the pros and cons of owning a car washing business.

Pros of a Car Wash Business:

  • Car wash businesses are always needed, not everyone has the time to wash their cars regularly. 8 out of 10 prefer to pay someone to do their chores for them. 
  • A car wash business can result in good profits, and with the right marketing strategies, you can grow your business faster than your counterparts. 
  • You can work hard and build a huge customer base that leads to increased profits. 
  • The business requires minimal initial costs. For some types of car wash such as manual car wash business, you just need the basic equipment. 
  • Marketing for a car wash business is super easy. 

Cons of a Car Wash Business:

  • Car wash business is highly seasonal. You may have to suffer through inconsistent income through the initial stages of your business. Snowy seasons bring in a lot of customers, whereas rainy seasons reduce the number of customers. 
  • One of the biggest downfalls of a car wash business is that if a part of the car breaks, it can be expensive to reimburse the customers. 
  • There can be a lot of management-related issues for the owner of the business. 
  • There is no end to the level of competition in the car wash industry. As a car wash business setup is easy, a lot of people opt for it. 
  • If your business relies completely on machines, then the machine repair costs from time to time can be expensive. 

What Tools Do You Need to Start a Car Wash Business?

To learn how to start a car wash business, you need to have a clear idea of the tools and equipment required. There are a lot of tools that you may have to invest in to get your business up and running, however, these tools depend on the type of car wash business you are starting. Here’s a breakdown of the tools required based on car wash type:

Level 1 Car Wash Business: Manual

  • A water supply
  • Buckets
  • Soap
  • Sponges
  • Window Squeegees
  • Chamois
  • Shade cover

Level 2 Car Wash Business: Self-Service

  • Self-service car wash tool
  • A shed building for cars to come and go from

Level 3 Car Wash Business: Car Detailing

  • Water supply
  • Buckets
  • Soap
  • Armor All
  • Window Cleaner
  • Leather Restorer
  • Air Freshener
  • Chrome Polish
  • Sponges
  • Industrial wet/Dry Vacuum
  • Pressure wash equipment
  • Shade Cover

Car washes need to have a lot of space available for the cars to easily come and go without causing a traffic bottleneck. Usually, the car washes are around 2,000-5,000 sq. feet. If you’re planning to start a commercial car wash business, then you’ll need a huge investment, more space, and advanced car wash business equipment.

Average Setup Costs for A Car Wash Business

It’s impossible to learn how to start a car wash business if you don’t know how much money you need to invest in it. Usually, the starting cost for a car wash business is pretty low. But based on the type of car wash business you want to start, your costs increase. Here’s a simple cost breakdown. 

  • Water supply ($20+ per month)
  • Buckets ($10 each, you’ll need a couple of buckets)
  • Soap ($20, 2-3 bottles initially)
  • Sponges ($10, 1 dozen sponges)
  • Chamois cloth ($10 each)
  • Car wax ($25)
  • Water repellent ($35)
  • Shade cover ($150)
  • Self-service car wash equipment ($50,000)
  • Car wash shed building ($100,000)
  • Automatic car wash equipment ($250,000)
  • Lease payment ($25,000 per month rent)
  • Licenses and Legal documents ($500)

The costs can be minimal to devastatingly high based on the type of car wash you want to start. If you’re just entering the market, we suggest that you start with a hand car wash business. The biggest expense in the hand car wash business is the rent of your business location. Overall, a car wash business can cost $7,000- $500,000. 

How to Prepare for Launching a Car Wash Business?

Now that you know how to start a car wash business, car wash business requirements, and car wash business set up costs. You’ll need to know about all the necessary steps you have to take before launching your business. 

Market Research

Entrepreneurs know the importance of market and competitor research. Almost no business can survive if they don’t know the inside and outsides of the industry. Let’s say you start charging hundreds of dollars for each car you wish, you won’t retain customers. With the right market research, you can determine where you want to set up your business. You can build a strong pricing structure. You can follow your competitors to build a marketing strategy for your business. Market and competitor research is the first step you need to do while preparing for launching your business. 

Business Name & Logo

Your brand is how you showcase your brand to customers, potential customers, and your competitors. A strong brand presence will help your business shine in the sea of car wash businesses. To convert your business into a brand, you’ll need to pick a business name and have a catchy logo. 

Your business name should provide the customers with a clear image of what you have to offer, it should also be catchy, easy to remember, and unique. Copying the style or copying a whole brand name won’t sit well among your customers. A logo usually works to boost the image of your brand. You can get the help of a professional for the logo, or if you want to try your hand in the art of logo designing, there are several free online logo design tools you can rely on. 

Finding a Target Market

To make sure your business succeeds and earns your desired level of profits, you’ll need to find your target markets and build a clientele. Many car wash companies give a free wash after 5-10 washes to get customers to visit your business over and over again. Here are some of the common target markets you should look forward to:

  • New car owners are most likely to use hand car washing services. New car owners make sure that they get their car washed and get their car detailed as much as they can.
  • Older luxury car owners are another target market you can tap into. Owners of high-end luxury cars want to keep their cars up to date. These owners usually bring their cars to keep them up to date. 
  • Sports car owners, these people are from a younger generation and middle-aged men. Maintaining their car from outside and inside is really important for them. These drivers will have occasional detailing of their cars. 
  • Local businesses are another target market for your car wash business. Small and local businesses have a fleet of cars and small vans that they want to keep clean. 

You will need to promote your business in such a way that you can become a leader in the particular target market. 

Acquiring a Skill Set

Learning how to start a car wash business also requires you to learn some trades that are common in the industry. With the right kind of skill set, you can provide your business a much-needed boost and you can avoid feeling like a newcomer. There are a lot of skills in car washing itself. If you’re also planning to provide car detailing services along with car washing, then you and your team will need to have a thorough knowledge of cars. 

Some other skills that will help you save both time and money in maintaining your business are:

  • Learning how to do taxes
  • Human resource management
  • Taxes and accounting

Instead of hiring an additional team for these tasks, you can learn them yourself and give your business a boost. You can also invest the money you’ll be saving on salaries on tools and equipment that make your business operations more efficient. If you want, you can also work at a car wash business before starting your own for gaining knowledge. 

How to Source Raw Materials & Tools?

A business is as good as the tools it uses, if you cheap out on the tools, the machine will break down and cause more expenses. As a business, you should have a particular place or vendor that you rely on for tools and equipment. Most of the tools needed to run a car wash business like soap, buckets, sponges, and squeegees are easily available on any of the Walmart, Target, or any of the superstore. 

For tools that lean towards automation and other expensive tools, you can either go to “alibaba.com” or find the best car wash equipment manufacturers and suppliers. A simple Google search will provide you with a plethora of options. However, choosing a big online vendor like Alibaba has its benefits. You’ll be able to choose between thousands of vendors, pick your ideal starting price. Also, the return policy is simple and hassle-proof if the products aren’t up to the mark. 

Setting Your Price Structure

One major step in deciding your business’s success or failure is the price point you choose for providing your services. For instance, if you have 5 competing car washes in the area, and your prices are higher than everyone else, you won’t get any customers. At the same time, if your prices are lower than your competitor’s, you won’t be able to make enough profits to keep your business afloat. 

Finding the right price point is tough, tougher than people think. One of the best ways to decide the prices is by scouting the local car wash businesses. You can also go online for some research. Carefully analyze the cost incurred by your business in washing/detailing each car. Figure out your ideal price margin and that’s the price you should set for your services. 

Do You Need Office or Space?

Well, one of the biggest needs of a car wash business regardless of the type is a huge space. Usually, a car wash business requires 2000 sq feet to 10,000 sq feet depending on the type of car wash business you want to open. To keep customer records, records of expenses, employee data, and so on, you’ll need an office. 

The place you rent to set up your car wash business needs to have a solo office space for improving your working operations. Your total space is the biggest expense you’ll face, so it’s a good thing to figure out your finances before diving headfirst into the operations. 

Arranging Finances for A Car Wash Business

 Learning how to start a car wash business? Understand the costs that you’ll have to bear initially and operational costs for at least 3-6 months to keep the business running. Even if you decide to open a manual car wash business, you’ll have a big expense in terms of rent. Arranging finances is probably the hardest thing about learning how to start car wash business. 

You can reach out to your family and friends for arranging interest-free funds. You can pay back to them when your business starts generating enough profits. Another way is to reach out to a bank and apply for a loan. If you’ve got a good credit history and if you have all the necessary documents, getting your loan approved won’t be tough.

Do You Need to Hire Employees?

A car wash business relies heavily on employees. To generate profits and keep your business afloat, you’ll need to wash at least 50 cars a day. If you also offer car detailing alongside washing, there’s no way you can achieve all that in a single day by yourself. 

Your team will need to include washers and those who will work on the car detailing. While hiring employees, make sure you have enough funds reserved as you’ll be paying their salaries from pocket initially. You’ll also need to apply for employment insurance, health insurance, and employee benefits. This is where your human resources management skill comes handy. 

Challenges You Could Face While Starting A Car Wash Business

While the car wash industry is highly profitable, it does contain a lot of barriers. You’ll need to bypass these barriers to make sure your business generates the profits you desire.

The industry is extremely vast, so it’ll take some time for you to establish yourself among the giants of the industry. The business is pretty seasonal, so you may face a downtime of customers during some seasons of the year. Promoting your business can also be a challenge if you don’t know the right channels. 

Fortunately for you, all the challenges have a solution and it’s pretty simple. “Buckle up and work hard”, as long as you have a solid business plan in place and you follow every single step, you’ll be able to build a business that you’re proud of.  

Finale: How to Start a Car Wash Business?

This concludes our guide on how to start a car wash business. There are a lot of elements that you’ll need to follow up on, and as long as you do, you’ll be able to build a successful business operation. 

The car wash business also relies on a lot of manual labor, so you need to be in a good condition. Market research, financial arrangement, using the right tools are some key factors that you need to keep in mind at all times. With enough time, resources and effort, you may even be able to scale your business operations to a fully touchless car wash business or have branches at multiple locations. 

Faqs

  1. Is car wash a profitable business venture?

The Car wash industry has been growing at a steady 3.1% CAGR. So it’s safe to say that the car wash business is highly profitable. However, there are a lot of external factors such as location, business model, target market, services offered and demand in your area that decide how much profit you can earn. 

  1. How often should the car be washed?

To maintain your car well and keep it safe, cars should be washed once every 2 weeks. That’s where car washes come in, even if you don’t have the time to wash your car, they can do it for you quickly and ensure your car stays in optimum condition. 

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