Do Car Washes Make Good Investments? Here’s What You Need to Know.
You don’t have to be Walter White to know that investing in a car wash can be a serious money-making proposition. One woman on TikTok claims to have cleared 100k owning one. And the business model is almost foolproof. After all, cars get covered in dirt, grease, and grime almost everywhere they go, making the list of potential customers for a car wash nearly as large as the number of auto owners in the area. Of course, as with any business, it pays to do one’s due diligence before rushing into any long-term commitment. But what should potential car wash investors know before they plunk down their cash?
Before committing to owning any car wash, investors should get a hold of information pertaining to local market conditions, such as the number of competing car washes, along with other typical business expenses such as the cost of taxes and insurance.
Still interested in investing in a car wash? Be sure to stick around as we get into the nitty-gritty of this potentially profitable business below. By asking the following three questions before making any car wash commitments, you’ll ensure that you are making a reasoned and well-thought-out business decision.
What are the conditions like for a car wash locally?
This should come as no surprise, but in a country the size of the U.S., the need and use of car washes can vary greatly. For example, northern states in the winter will see greater demand for car washes as drivers deal with snow, sleet, and the resulting road salt that crusts to their car.
In general, when choosing a location for a new car wash business, keep the following in mind:
1. Pick a good location: Car washes do well when positioned in proximity to major roads and highways that bring thousands of potential customers past their doors each day. An existing car wash nearby doesn’t have to be a dealbreaker, but ensuring it is at least across the street will mean each business can get a natural share of traffic. How many cars go past your potential location each day?
2. Compliance with local regulations: As with almost any business in the U.S., you can’t put a car wash just anywhere. Typically, businesses that will impact traffic patterns will require special permitting from the local government in order to be allowed to open. Looking into what zoning hurdles must be cleared ahead of time can save a lot of heartaches later if the site doesn’t end up being found suitable for a carwash.
3. Type of business: This choice comes down to striking out on one’s own as an independent car wash or joining up with an established car wash provider as a franchisee. There are pros and cons to each and choosing one will come down to personal preference on the importance of local control over aspects of the business such as pricing and marketing. More than half of the approximately 16,000 car washes operating in the U.S. today are independently owned small businesses.
What are typical car wash business expenses?
There are many options to choose from when building a new car wash. For example, will the business use a mechanical car washing lift that spirits cars automatically through a garage, or will it rely on good old-fashioned elbow grease with handwashing? There are benefits and detractions for both. The former is more expensive upfront yet more efficient to operate, while the latter has inexpensive startup costs but has higher long-term operation costs due to the additional manpower.
Another aspect to consider is the typical expense of car wash insurance. What is required will vary from locality to locality, but good general liability insurance can run a car wash approximately $1,000 annually. That is only just the beginning in terms of coverage options that potential owners will have. Additionally, many states will have worker’s compensation rules and other regulations that must be adhered to.
What is the primary goal for investing in a car wash?
Are you looking to invest in a car wash for the recurring revenue that one may generate? Are you looking to buy with the plan of selling later, hopefully, at a profit? While the end game might not seem like it would make a difference, it does, as buying a property speculatively should be judged by different criteria.
For example, buying a car wash with a downtown plot may cost many more times than one on the outskirts of town based on the value of the land alone. While that would normally make the downtown location a less desirable place to put a car wash (as the increased costs would eat into its profitability) if it was being bought to sell later, the value of the land would be an asset, and the day-to-day profitability of the location would be less of a concern.
Car Washes Can Be Great Investments, With Proper Forethought!
There you have it, three questions that are guaranteed to put you on the right track when considering a car wash investment. As should be clear by now, car washes can be profitable money makers and sound investment choices. But knowing the money makers from the money pits takes a certain amount of due diligence and strategic thinking. We hope that the above questions will prove useful when considering any car wash investments for yourself.
As always, we hope you’ve enjoyed reading and that you learned something new about investing in car washes along the way. Please don’t hesitate to reach out with any questions or comments you may have and we’re always happy to help if we can!
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