There’s a car wash in possibly every nook and cranny of any city. There’s the car wash you’d find at gas stations and then there are individually owned car washes. You can also own one for yourself. Here’s how to start a car wash for passive income:
- Look for the Perfect Car Wash Site
- Take Competition Into Account
- Complete the Paperwork and Legal Processes
- Do Your Research
- Take Operational Decisions
- Allocate the Investment
- Market Your New Car Wash Business
So, can setting up car washes become passive streams? Your answer is yes. They can. There are multiple ways you can set up your car wash business. If factors like location and maintaining it can be taken care of, the business can prove to be very profitable.
If you want to set up your own car wash business then keep reading as I give a level breakdown of the entire business setup.
What Is an Automatic Car Wash Business?
An automatic car wash is a business where vehicles are washed by automated processes. This type allows customers to choose from a menu of wash options like tire cleaning, spray waxing, and getting their cars cleaned.
By automating the car washing process, you can run your business more efficiently and make more money. And, since most people don’t like getting their cars washed by hand, an automatic car wash will quickly become one of your best customers.
Touchless car washes, and drivers pull their cars into the bay and allow the machines to do their work. The sensors around the bay sense that a car is in position and begin cleaning. Where you come in, is the entire set-up.
From allocating the machines to the land, your job is to get the business up and running to give you the maximum profit.
I have written a separate guide on How Much Car Wash Owners Make — Do check it out!
Starting Your Own Car Wash Business – Step By Step Guide
When you look at what experts have to say on kick-starting your own business, you’d find a few common elements. Things like location, maintenance, and work are the most repeated ones.
While this is established, you might be wondering, what comes first in all this? Do I manage the finances first? Or the location?
I’ll try to cover every minor step that you may need to do to have a running and fully functional auto car wash.
#1 Scouting For the Perfect Site
By now it should be understood that location matters. The better place you construct your car wash, the more people you’ll attract.
Even when choosing the perfect place many micro details need to be taken care of. Here are some of the key considerations that help you find the best location:
Choose a high-traffic place (here, I mean 20,000 or over traffic count) to attract many eyeballs.
- Go for a place that is easy to locate and not somewhere isolated.
- It’s good to go to a place that’s near a shopping district, this way you have a chance of attracting more customers.
- See the area, if it is near an apartment complex, then there are definitely more chances of having a good number of customers.
#2 Take Competition Into Account
You’re not going to be the only one that plans on opening a car wash. Nor will you be the first to do so. There will always be those before and after you.
So, for such a densely packed stream taking note of your competition is of utmost importance.
Try to get a gist of the local car wash areas. How many customers they get, the equipment they use, and how much they spend on marketing.
Make these minor comparisons like if they’d be able to come at par with your wash or will they be able to renovate it to look better than yours.
Why It’s Important
All of this shows a business’s capability and profitability. Oftentimes, local car washes can easily surpass you and since they’ve been in the gig for so long, they can afford discounts and customer loyalty. All this is harmful to your newly budding business.
Therefore, if there’s a car wash right next to where you plan on making yours, this is something you should take notice of. But as far as single-stall car washes come you won’t have to worry much.
» Read my blog post: Can You Lose All Your Invested Money? How To Avoid It
#3 Complete the Paperwork and Legal Processes
After the first 2 steps are done, let’s move on to the more serious steps. Once you’ve got your location set, start taking the first step towards your legalization process.
Find out your local rules and regulations regarding business licenses and request an application. Next, find out information on your utility storage codes, tax rates, and other requirements.
Since each city has different ways it’s best to know this beforehand so that during processing, you’ll have a smooth and easy transaction.
Getting Your Approvals
Now that the legalization process is done, the next obstacle is planning a meeting with your town planner. The point is to show them a blueprint of what you plan on doing.
This would make the town planner aware and you can also gain their approval – or at most a list of problems that you could look into. This way, when it all practically happens the process is as smooth as butter.
Once you’ve gotten your approval, you can then go on to present your plan to the town council and have it voted off. If you’ve effectively done your planning, the blueprint is as exquisite as it.
#4 Do Your Research
It’s a pretty easy thing. Unless this is your 10th car wash, then you should do your research before all the hustle. The downfall of so many passive streams and businesses, in general, is that people don’t do their research.
Lack of knowledge over the things you plan on making an income from can prove to be quite detrimental. Not only would you not be prepared for what’s to come but managing will also become difficult.
To get familiar with the routine, get to know about the maintenance, equipment repair, staffing policies, and the work.
Planning For Your Business
Your car wash endeavor should include all the possible ups and downs the potential business could go through. It should consist of both short and long-term plans and repercussions.
This way, you’d get a detailed overview and can avoid any silly mistakes. The more thorough and detailed your plan is; the better it’ll look for your bank and any third-party investor.
For this, you should include both costs and the expected revenue you’d expect in one-year returns. With a stable and fully visualized plan chances of your stream flopping are low.
#5 Take Operational Decisions
Do you want your business to be a corporation? Or an LLC? Or maybe even a franchise? All these are things you’ve to set and finalize before the final set out.
With franchises, they offer support at residual costs. Solo offers you complete independence and the power to make your own decisions but at the cost of backup and any Monetary support.
So how much involvement are you looking for? If you want to have it all to yourself or share it amongst partners, you have to make a decision.
» I have also written this post, about: Passive Income vs. Active Income » (An Easy Guide)
#6 Allocate the Investment
Now, this is by far the most complicated step. Signing deals and gaining the town council’s approval might not be as difficult as rounding up your investment.
The cost of a car wash includes the lot, equipment, and building construction. The cost of installing automatic units is estimated to be around $42,000 per unit.
You can either choose a third-party investor for this or just get a bank loan. Set aside an amount for marketing and a percentage for all the last-minute adjustments.
Ideally, you should have a solid plan and have it all calculated to the penny so you’re not running around to grab a few extra bucks during the end.
According to my research, a typical location with one Automatic In-Bay Car Wash and three Self-Serve bays will cost around $700,000 to build, with equipment prices ranging from $400,000 to $450,000.
Building and construction, piping, wiring, installation, soaps, softeners, and other costs are all included in these figures. Basically everything you’ll need to start trading on the first day.
#7 Market Your New Car Wash Business
You’ve finally set up your company, and constructed the car wash in the same location you chose after what feels like a million drives around town. What’s next? The marketing and generating traffic to your wash of course.
Customers can’t possibly expect to choose you over their trusted car wash. They’ve developed a sense of understanding and familiarity which would make them turn a blind eye to anything and everything other than their trusted wash.
This is why you should let the community know of your presence by planning a great grand opening and even after, distributing flyers and posters is a must-do. By doing all this, you’ll encourage people to try out your services.
On average you should have at least $1 per car or $15,000 for the initial marketing. This can then be cranked down to $0.10 per car when your business can stand on its feet.
Is An Automatic Car Wash Passive?
A car wash income is partially passive. Even if most of the business’s processes are automated and delegated to the employees, you would still have to take care of the employees’ recruitment, equipment maintenance, etc.
Compared to a whole bunch of other income streams, a car wash is pretty passive. In the end, you will need to take care of the equipment and any extra maintenance and employee costs.
Aside from that, you can expect to make money sitting on your couch.
» This could also be something for you: 15 Examples of Businesses That Run Themselves & Make Money
7 Challenges People Face When Starting a Car Wash Business
Many aspects determine a business’s success, ranging from costs to scalability. All these factors may seem hard to manage but are actually what makes your business all the better than the rest.
Oftentimes, a coin-operated or machine-operated car wash is well passive depending on the location. If it’s a busy area, you’ll expect more people to come to you and hence, you’ll earn more.
Car wash technology is always improving, bringing new efficiencies and ways to increase throughput.
The car wash point-of-sale (POS) system (integrated marketing tool for car wash owners) in particular provides data that can be used to optimize your operations and boost earnings.
Then there’s expansion, which is a form of growth. When a car wash owner realizes that their first location is profitable, they are eager to expand. Many wind up with multiple locations, allowing them to establish a strong regional car wash brand.
Starting an automatic car wash can be quite expensive. A lot of people even need third-party investors to cover all the costs. However, a successful car wash should recoup these costs and make it so that the profit overpowers the costs.
There are many ways to manage the startup costs like applying for Small Business Administration (SBA) loans or using your credit cards, asking your friends/family to finance your business, or applying for a bank loan.
After determining the scale of your business, you can apply for a viable loan or seek funding in a way that suits you best.
The thing with car washes is that they’re not seasonal in a lot of areas. This is mostly because people use their cars all the time or only have one to use. Similarly, cooler places will be less likely to want car wash services because of the extreme cold.
It is better to opt for a tropical state for starting a car wash business because then it will stay relevant and keep the income steady.
Since this is a business that requires heavy investment, it also reciprocates a big risk factor. Since the business doesn’t require you to hire a manager or anyone to take care of stuff, it’s low-risk staff-wise.
However, being all tech-savvy does have its downsides and you will have to repair the machinery when it breaks down.
Aside from this, every business has its own risk at some point. What matters is that you’re careful at every step of the way.
However, your insurance can cover some major damages, so it is my advice to you to always have insurance.
Return On Investment
A successful car wash, one that has a lot of cars coming up, will make you good money. As is obvious by now, location and numerous other factors do come into play. Generally, however, you can easily cover up your initial investment within the first few months.
Some highly upscale car washes make around $900,000 per year easily. While a car wash has a relatively high return on investment (ROI) one can’t deny that the investment costs are enough to scare even the biggest of people.
» Read my post: $5,000 Per Month? – Starting a Bread Route to Make Money
Remember, a saturated market is always hard to make good money from.
Unconventional and outlandish niches like an automatic car wash may seem wild but hold the greatest growth rate and by looking at these figures, I’m sure you can agree.