How To Start A Car Wash Business
If you’re into cars, you may be considering getting into the car washing business. You could look into a car wash franchise or start your own car wash business. There are three phases to any start-up idea including a self-service car wash.
The planning phase ensures you are prepared. The execution phase is when you put your plan into action, and the repeatable & expansion stage is when you repeat the execution phase and look to expand the side hustle if warranted.
You’re reading this for a reason. You want to know how to start a car wash side hustle—no more wasting time. Let’s dive in!
Phase I: Planning Your Car Wash Business
What is the purpose of this side hustle? Do you want to make some extra money for a few weeks? Will this be your full-time job? Do you have a dream to start a successful car wash empire? Are you trying to be mobile or have a fixed location?
Examine your goals and align on the purpose of this effort. It’s not hard, but it’s not easy either. Washing cars is outside in the elements and can be tiresome. However, once you hone in on your goal, it’s time to start diving into the details to ensure this becomes a success.
Do Your Research
Have you ever cleaned cars before? Do you know how to wash the exterior and interior of a car properly? If not, go online and learn. There are YouTube videos, articles, and even friends out there that know what they’re doing. Learn at the beginning, not the end.
Also, research the type of car washing service you’ll offer. For example, are you going to have an automatic car wash machine and offer a full-service car wash? Automatic car washes save time, help you attend to customers faster, and creates a touchless car wash experience. Note that market research is essential, even for small businesses.
Do the Math
This is the part of the planning phase that everyone hates but is, BY FAR, the most important to nail. Financial projections are essential for having a successful new business. The goals of this section are to figure out:
- Up Front Costs
- Ongoing Expenses
- Cost of Each Car Wash
- Pricing and Margins
- Expected Range of Revenues and Profits
Up Front Costs
You must know the costs involved before starting a business. What amount of money do you need at a minimum to start the side hustle? Determine if you’ll use your personal or get small business financing. This helps you streamline your start-up costs.
Write a list of all the possible expenses. LLC (Limited Liability Corporation) and legal documentation, sponges, rags, buckets, towels, car soap, a hose with a spray nozzle, etc. Now estimate the cost of each of these items that you need to get started and add them up. This is the total upfront cost of starting this business.
Tip – Buy in bulk. Price per ounce or rags drops when you buy in bulk. It’s worth it.
Tip – Estimate on the high end. If your up-front costs end up higher than you thought, that’s bad. If they end up lower in the end, that’s good.
Rags, buckets, and sponges are all reusable and not part of ongoing business expenses. Car wash businesses wash and use them again. Think of the items that are not reusable. These are ongoing expenses and should be included in your car wash business plan.
Consider things like car soap, wax, tire oil, and all the equipment you need for a successful business. List these down and once again estimate the costs and add them up.
Tip – Try and estimate how much you’ll use per day.
Tip – It’s ok to buy more than you think you’ll use. You NEVER want to run dry on car soap. The worst thing that happens is you use the extra soap for the next day.
Cost of Each Car Wash
Once you have your ongoing expenses, take that number and divide it by the number of cars you can wash with those goods. This is the cost of each car wash or how much you must pay in expenses to wash a car.
For example, car soap is $10, wax is $20, and tire oil is $10. Your ongoing expenses add up to $40. You estimate that you can wash ten cars with this amount of materials. $40 / 10 cars = $4 per car. This means that it costs you $4 every time you wash a car.
Pricing and Margins
Once you know what it will cost you to wash a car, you need to figure out what you will charge! You can either work off of donations and hope people like you and the job you’re doing, or you can set a flat fee. Most side hustle washes begin at around $8 – $10 and can go up to over $50 if that includes interior washes, vacuuming, shampooing carpets, etc.
When creating a pricing structure, you want to make sure 1. It’s fair to the customer, and 2. It creates margins that you’re happy with. Undercharging won’t make you any money or attract customers. Overcharging won’t bring you many customers and might chase away existing customers. The combination of these will help drive your pricing model.
A margin is simply the difference between what you charge and what it costs you to wash a car. So if we take the previous example of $4 per car and you charge the customer $10, your margin is $10 – $4 = $6! This means for every car you wash; you make a profit of $6! Now you can play with the math and get you excited about the possibilities, right?
Tip – Remember, pricing is never forever. You can always change pricing as you see fit.
Once you have the cost of each car wash, calculating the breakeven is simple. Breakeven happens when you make back the money you spent on the items from the beginning. Then, you take the up-front costs and subtract the margin per car, which gets you the number of vehicles you need to wash to break even.
For example, if you spent $120 in upfront costs and have a margin of $6 per car, you would do $120 / $6 = 20 vehicles. This means that once you wash 20 cars, you will have a profitable business!
Tip – You should never start a new car wash business without a plan to breakeven. Plan for breaking even being the worst-case scenario.
Range of Revenue and Profit for Your Car Wash Business
Now that you have the estimated up-front costs, ongoing costs, pricing model, and breakeven points, you can start evaluating what your revenue and profit could be! The formula is simple. Revenue – Expenses = Profit.
For example, say you expect to wash 40 cars, and we use all of the information we previously discussed.
Revenue = 40 cars * $10 per wash = $400.
Expenses = $120 for upfront costs + $40 per 20 cars in ongoing expenses. For 40 cars, that means, you’d spend $80 in ongoing costs so $120 + $80 = $200.
Profit = $400 – $200 = $200!
Tip – 40 cars is a lot and you’re going to need help. You may have to investigate hiring employees. The $200 is the business profit, not necessarily what goes into your pocket.
Tip – I would create a low estimate and a high estimate for the number of cars you will get and have a range of revenues and profits. This way, you can expect the worst and hope for the best!
Plan Day One From Beginning to End
Make sure to have a plan for the day. Write it down with what time you wake up and arrive at your location. Make sure you have everything you need, so you don’t forget anything. Have a time that you are ready to start accepting cars. Think about when you and your team will want a break or lunch. Go through the day step by step and make sure it makes sense, and you are good with it.
Tip – Let your team know all the details of the plan
Tip – Have a plan for if you run out of something. Who will go get more? How long will it take?
Phase II: Starting Your Car Wash Business
Legal & Incorporate as an LLC
Even small business owners need a business structure. This helps you get a Federal Tax Identification Number, pay business taxes, and obtain business licenses. So, before joining the car wash industry, go to www.Legalzoom.com and start a Limited Liability Company. It costs around $100. Just bite the bullet and do it. Trust me.
Alternatively, you can hire a business lawyer, especially if you are considering a more complex governance structure. However, before registering your car wash as a business entity, create a solid business plan. Next, get a business name and then figure out your business’s financial operations.
For instance, never mix personal assets with that of your car wash business. Have a business bank account to separate business and personal finances. Having business accounts and credit card help you build business credit with a financial institution.
Get business insurance (general liability insurance) in case you damage your customer’s vehicle by mistake. Then consider workers’ compensation insurance if you plan to have employees.
Location, Location, Location
This is where you decide if you’re mobile or wash cars at a public location like Walgreens. Both have their advantages and disadvantages.
If you’re alone, I would recommend mobile. You can wash cars by yourself, but you want to do one at a time because they take longer, which might make it hard to compete with local businesses. You can do this by walking around your neighborhood, putting some flyers on doors, or even asking your friends and family if they’d let you wash their cars. It’s a good start, and word of mouth can spread fast, plus all of the business’s money you make.
Consider offering a free car wash to attract customers. Once your business is established, you can introduce a loyalty program. Loyalty programs offer rewards, discounts, and other special incentives as a way to attract and retain customers.
If you plan to have a few people to help you, you can make a more significant dent by speaking to your local Walgreens or local store and letting you use their parking lot. The benefits of this are you can use their water for free, there is lots of traffic and cars flowing in and out, and you can wash a higher number of vehicles. Of course, the bigger the team, the more profits you’ll have to share, so make sure you can bring in many customers.
Tip – Make sure you speak to the manager to form a relationship to allow you to wash cars there. They will normally let you as it can also be a draw to bring in customers while they get their cars washed.
Gather Your Workforce
If you decide to go with the non-mobile route, you’ll need some extra hands. You can’t wash three cars by yourself in 15 minutes, especially when the hand car washing technique. Start with friends who you think wouldn’t mind making extra money and helping you out. If not, go on craigslist. You’ll find a ton of people looking for additional work.
Tip – Make sure to be transparent on your goals, how much they’ll make and the hours you expect them to work. Also make sure they know how to wash cars.
Marketing (Signage), Social Media, and Deals
As a car wash business owner, marketing depends on whether you’re mobile, but the concepts are similar. Develop a marketing strategy on how you will let people know about your business. If it’s a door-to-door, you can knock on doors or post on your Facebook page.
If it’s at Walgreens, you may want to invest in a big sign or two to put out by the streets to inform people. Of course, you should still post on your social media pages and have your friends share them.
Tip – Think about how you would be convinced to get your car washed. Why should someone let you wash their car for them? Being transparent about your side hustle can also go a long way with customers. People like to help other people out who work hard. Be honest!
Upsell Items (fresheners, wax, vacuum, coupon to come back, etc.)
A lot of car wash business entities can increase their revenues by upselling. Some are uncomfortable selling more than a basic carwash but think of it as trying to give the customer a more satisfactory experience. For example, buy a bunch of air fresheners and sell them for $1.00 more than you bought them for. Ask if they’d like wax as well for $5.00. Give them a free polish if they come back to entice them for more business on another day. Get creative!
Upselling can be fun and increase your profits by a significant amount. Learn to talk about these things comfortably, and don’t be offended if they say no. Then, you still have the primary wash.
Phase III: Repeat and Expand Your Car Wash Business
Repeat to Find Consistency
After the day of washing cars, make sure to take 15 minutes and think about:
- What went right?
- What went wrong?
- Did you use more or less car soap than you thought?
- How do you attract more people next time around?
- Did you have fun?
- Did you make the money you thought?
It’s important to reflect on the day and ensure it’s everything you thought it would be and how you feel about the future. Do you want to do it again? Was it worth it? You worked hard! Make sure it was worth the time and effort to do it again.
Expand Your Car Wash Business
You did it! You created your side hustle and are profitable. You enjoy running your own business and want to make it bigger! What are the options? How do you do it?
Mobile expansion – If you enjoy being mobile and washing cars in driveways, why not hire someone to do the same on your behalf? You can hire someone, provide them with all the materials and take a portion of their profits. They make less money per wash, but they don’t have to worry about upfront costs, purchases, creating an LLC, or anything.
More Locations – If you enjoy working at a local store and having more of a team feel, why not do another location. You can’t be in two places at once, but if you build the right group of people, you can provide them with all the logistics, materials, and plans and let them go. You can pay them per car and make sure you make a small profit off their work. As long as they break even, there’s minimal risk!
Tip – By paying per car instead of per hour, there is much lower risk and you’ll have better control of your margins. If you pay by the hour and no cars get washed, you’ll still have to pay your employees. Paying by car will also entice them to market and get as many cars as they can.
Owning car wash machinery – Maybe you like to wash cars but want that automated experience. Maybe you want to start automated car washes around your city. Costs can be very high and range upwards to $50,000 for an automatic conveyer bay. While the up-front fees are high, they can also bring in hefty profits over time.
Tip – You can purchase a used conveyer bay or used equipment
Tip – You can finance bays through manufacturers. They sometimes even help guide you through purchasing land, construction, marketing, etc.!
Final Thoughts: Starting a Car Wash Business
Starting a car wash business can be a lot of work but is relatively easy to get going with minimal costs. If anything, it’ll help you realize what it takes to start a business. Want to learn more about starting a business? You may enjoy our article on the six best books on starting a business. So get going with your car wash business, enjoy the sun, and wash away!