August 7, 2023

How To Start Your Own Car Wash

Whether you're a seasoned entrepreneur or a first-time small business owner, owning a car wash can be the perfect pathway to financial goals. Taking your car wash from dream to reality takes persistence, problem-solving, and following a few basic steps.

1. Decide what type of car wash business you want

Before anything else, you need to decide what type of car wash services you will offer. You can be a successful car wash owner with any car wash, but each comes with unique requirements, car wash equipment, and costs.

Full-service car wash

A full-service car wash generally provides exterior and interior cleaning and may also provide additional services like detailing, vacuuming, matt cleaning, or other specialty services like wheel polishing. Full-service car washes usually rely on in-bay automatic car washes or tunnel car washes, allowing them to serve a high number of cars per day.

Automated/automatic car wash

Automated or automatic car washes rely on in-bay automatic machines or tunnel washes where the car is pulled along a conveyer. The customer pulls into the bay or onto the belt and moves through the wash without leaving their car. This type of wash usually offers touchless technology to prevent vehicle damage and speed up the process.

Self-service car wash

Self-service car washes provide the space and car wash equipment for customers to clean their own vehicles. One or more bays are set up with high-pressure washers, detergents and cleaning fluids, and sometimes vacuums.

2. Writing your business plan

Every small business owner's path to success starts with a business plan, regardless of industry. Your business plan is the blueprint for your entire operation, including goals, vision, projected revenue, operational and startup costs, competitive analysis, marketing plans, and more. In addition to being a critical component of overall business planning, a well-created business plan will be required if you're looking for loans or investments from 3rd parties or banks.

At a minimum, your car wash business plan should cover:

Executive summary:A short overview of your proposed car wash business, your overall goals, and the steps you'll take to achieve those goals.

Company overview: An explanation of what services or products your car wash will sell, how it will differ from competitors, and why it will be an excellent choice for consumers.

Market and competitive landscape: Market research like your local competition, car wash demand in the area, and how it aligns with your business goals. You should also touch on zoning or local ordinances and laws that could impact your car wash.

Business structure: A summary of your business name, its legal structure (S Corp, C Corp, partnership, or Limited Liability Company), registered agent (if applicable), and who the principals or partners will be.

Products or services: A deeper dive into the specific products and services your car wash will offer. Will you have in-bay automatic washes? Self-serve hand washing bays, a tunnel wash? What about vacuums and vending? You'll also need to cover the startup costs and operating costs to deliver these services.   

Marketing and advertising: An overview of how you’ll reach your target demographics, reach potential customers, and encourage repeat business. You may not have all the details of a marketing plan, but you should be able to explain at a broad level how your plan to use social media, signage, TV, etc, and the costs associated with them.

Finances: Unless you plan on using personal assets to launch your car wash, this will be the most critical section of your business plan. This needs to cover how you intend to fund your new car wash, including startup and operating costs, your financial projections for expenses, revenue, and cash flow.

3. Figure out costs and funding

While you can certainly use your own personal assets to the fun of your new car wash business, most entrepreneurs rely on some outside financing option like a Small Business Administration loan (SBA loan), a business loan from their local bank, or attracting investors. Before you apply for a loan or ask for investment, you’ll need a clear picture of your startup and ongoing operational costs. Typical expenses for a car wash business are:

• The initial real estate purchase or ongoing lease
• Car wash equipment
• Business license and permit fees
• Power, water, and other utilities
• Wastewater handling
• Consumables like chemicals, detergents, and towels
• Business insurance policies like general liability, property insurance, or umbrella policies
• Taxes
• Employee wages and associated costs like workers’ compensation

Once you understand your initial and ongoing expenses, you’ll get a clear picture of what your cash flow will look like and understand your financial needs.

4. Set up your business entity

In most states, you’ll need to register your new car wash business with the Secretary of State, though in some states, new businesses register with the state Department of Revenue. How you file, and the associated costs are usually determined by the type of business structure you choose (LLC, S Corp, C Corp, or Partnership).

5. File for your EIN and open a bank account

To open a business bank account, you’ll first need an employer identification number from the IRS, also known as an EIN. Your EIN is also used as a federal tax identification number, which allows you to pay business taxes. Filing for an EIN is free and can be done on the IRS website.

6. Get ready to open

Your loan has been approved, and all your state and local government permits and marketing strategies are ready. It’s time to turn your car wash dream into a profitable business. Pick an opening date, and you’re officially a car wash owner!

Want to learn more about how to start your own car wash business? Whether you’re a gas station owner looking to expand revenue opportunities or an entrepreneur looking for your next profitable business, Mark VII can help you every step of the way. Contact us today to learn more.