How To Start A Car Wash Business | The Complete Guide For Beginners

Before, you start a car washing business; you need to set up your plans on the type you want to start. Do you know there are five (5) levels in this business? In this article, you will be given detailed information about it.

Level One

The first is the hand car wash, which is the simplest way to wash a car because everything is done by hand. An example is when you see high school students offering car washes on a busy street in order to raise money for school programs.

Level Two

The second is self-serve car wash. This is a coin-operated car wash that requires the vehicle owner to do the washing. This system works on a timer basis and the vehicle owner gets to choose if they want to apply soap, scrub with a brush, or rinse with high-pressure water. Additional service is also available to pay for a timed use of a high–powered vacuum system to clean the interior of the car.

Level Three

Car detailing is the third level. With this method, you are washing the cars by hand and you are bringing them back to pristine condition as if they are brand new. It may take you many hours to prepare a single car in this way. The results are fantastic. The car is perfectly clean. The hand wax you apply is brilliant.

When the occupants enter the car it smells like it is brand new. Maybe it is a “new car” smell or a fresh aroma that the client selected that is their favorite. In any case, this car is seriously prepared and everything is perfect. There is no dust and no odor. The windows gleam with a shine that is better than when the car first left the factory. The tires and the dashboard all sparkle as well.

Level Four

The fourth level is automatic washing. This is a computer-managed system that processes each car one-by-one and puts them through an automatic pressure washing. It is somewhat abrasive and can damage parts of the vehicles, especially if they are older. There is a lot of scrubbing by brushes and high-pressure water spray that intends to remove all the dirt and grime that vehicles collect.

Level Five

Lastly, touchless washing is the fifth level and combines the best of the high-pressure water systems, but does not let any mechanical things come into direct contact with the car. The finishing work is done by human beings and done with a gentle nature and by hand.

How To Start A Car Wash Business

1. Plan Your Business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What Are The Startup And Ongoing Costs?

• Who is your target market?
• How long it will take you to break even?
• What will you name your business?
• Luckily we have done a lot of this research for you.
• What are the costs involved in opening a car wash?

The costs involved in starting this business depend on the level you want to operate.

Level One – Hand Car Washing

Anyone who can afford a few hundred dollars can start at this level. You will need:

• A water supply (monthly cost is $20+)
• Buckets – $10 each
• Soap – $20
• Sponges – $10
• Window Squeegees – $10 each
• Chamois – $10 each
• Industrial Wet/Dry Vacuum – $100
• Promotional Flyers – $50
• Signage – $75
• Shade Cover – $150

Level Two – Self-Service Car Wash

This type of operation requires a significant investment of up to $200,000 or more depending on the location. You will need:

• Self-Service Car Wash Equipment – $50,000
• Car Wash Shed Building – $100,000
• Lease Payment and Deposits – Allow $5 per square foot. For example, a 1,000 square feet facility would typically require $5,000 per month rent and a $10,000 security deposit.
• Signage – $2,500

Level Three – Car Detailing

Some automatic car washes and touchless car washes offer car detailing as an enhanced service. However, it is also possible to operate a car detailing business independently and do all the work by hand. The startup investment for an independent car detailing business is similar to a hand-washing business, except because you will offer more services you will need additional supplies and perhaps helpers. You will need:

• A water supply (monthly cost is $20+)
• Buckets – $10 each
• Soap – $20
• Car Wax – $25
• Water Repellant – $35
• Armor All – $50 (used for the treatment of tires and other surfaces)
• Window Cleaner – $25
• Leather Restorer – $30
• Air Freshener – $20
• Chrome Polish -$25
• WD-40- $50
• Sponges – $10
• Window Squeegees – $10 each
• Chamois – $10 each
• Industrial Wet/Dry Vacuum – $100
• Pressure-Wash Cleaning Equipment – $500 (used to clean the engines and undercarriages)
• Promotional Flyers – $50
• Signage – $75
• Shade Cover – $150

Level Four – Automatic Car Wash

This type of operation requires a significant investment of up to $500,000. It is a much bigger facility than a self-service car wash. You will need:

• Automatic Car Washing Equipment – $250,000
• Car Wash Building Construction – $200,000
• Lease Payment and Deposits – Allow $5 per square foot. For example, a 5,000 square feet facility would typically require $25,000 per month rent and a $50,000 security deposit.
• Signage – $5,000

Level Five – Touchless Washing

This is the highest level of car washing that uses automated equipment with lots of hands-on workers. Luxury vehicle owners are especially attracted to this type of car wash because nothing except human hands and soft clothes touches the car. These facilities can easily cost up to $1 million or more to start and many find it easier to buy an existing one rather than create a new one. You will need:

• Touchless Car Washing Equipment – $250,000
• Car Wash Building Construction – $500,000
• Lease Payment and Deposits – Allow $5 per square foot. For example, a 15,000 square feet facility would typically require $45,000 per month rent and a $90,000 security deposit.
• Signage – $25,000

If you are going to open a commercial car wash you will need to make a significant investment in the equipment needed to operate the car wash. The best places to have a commercial car wash are on very heavily used streets with lots of auto traffic passing by. This means the rent will be a very substantial expense.

Car washes need to have plenty of space for the cars to pass through the washing system and for them to be parked while they are being dried by hand to make each car ready. Typical car wash lots are at least 5,000 to 10,000 square feet and rent for a minimum of $10,000 to $50,000 per month. To be really successful operating a commercial car wash, you will need to do at least 100 cars per day at an average profit of $10 each per car.

What Are The Ongoing Expenses For A Car Wash?

Water is really expensive, especially in places like California where the water is in short supply. Reclaiming water is important. This requires capturing the water and pumping it through a filtration system to clean it before it is used again.

Automatic car washes use a lot of electricity as well. Labor is paid at the minimum wage because the workers also get tips.

Level One – Hand Car Washing

The expenses depend on the number of cars you wash per month.

To wash about 50 cars your monthly expenses will be:

• Water – $20+
• Soap – $15
• Replace worn out sponges/equipment – $25 to $50
• Flyers – $50

Level Two – Self-Service Car Wash

Your expenses will be water, supplies, electricity, rent, and the cost of maintenance of the equipment. This averages in total to be about $5,000 to $7,000 per month.

Level Three – Car Detailing

If you work independently your expenses will be similar to hand washing of about $135 per month, except you need to allow for additional supplies of $150 per month. You may have to pay a commission and/or a fee to have an association with another business.

Level Four and Five – Automatic and Touchless Car Wash

Your monthly expenses for this type of operation will include the following:

• Rent – $10,000 to $25,000 per month
• Labor- $5,000 to $12,000 per month
• Water – $2,000 to $3,000 per month (depending on the part of USA)
• Supplies – $2,500 per month
• Electricity – $3,000 to $5,000 per month

Who Is The Target Market?

The best customers are the ones that return weekly to get a car wash. Many car wash companies give a free wash after a certain number of washes to get customers to come back again and again.

How Does A Car Wash Make Money?

Each car wash has a basic charge and there are typically additional things that can be requested by clients, such as using auto freshener or wax that are sold for an additional charge. Detailing is the most expensive because of all the additional services provided.

How Much Can You Charge Customers?

The average price for a simple hand car wash is $5 to $7. For self-service systems, the charge is usually $1 to $2 for a 15-minute use of the washing equipment. Vacuum charges are about the same. The average customer might spend $2 to $4.

For automatic car wash systems, the average charge is $10. Most customers like to add some extras and can pay as much as $15 for a wash with the extras of interior cleaning, freshener, tire treatment, and the application of car wax.

Touchless wash is about $20 per car and with some extras added on the charge can go up to about $30 per car. Car detailing is the most expensive and the customers pay about $50 to $150 per car.

How Much Profit Can A Car Wash Make?

Level One – Hand Car Washing

• About $7 per car

Level Two – Self-Service Car Wash

• About $3 per car

Level Three – Car Detailing

• About $50 to $75 per car

Level Four – Automatic Car Wash

• About $10 to $15 per car

Level Five – Touchless Car Wash

• About $12 to $18 per car

An automatic car wash operating at 100 cars per day at the average price of $10 per car will make $1,000 in gross profits per day. Labor will cost about $60 per hour so for an eight-hour shift that is $480 plus $120 more for employment taxes paid by the employer.

Electricity will be about $200 per day and water about $75 per day and supplies about $25 per day. Insurance will cost $2,000 to $3,000 per month. Taking these expenses into consideration gross profits per day would be about $220 per day.

The owner of a modestly successful commercial car was would make around $6,600 per month in profits after paying all the expenses. In really busy areas, it is possible to make up to ten times this amount.

How Can You Make Your Business More Profitable?

Level One – Hand Car Washing

• Also, advance from simple hand-washing to offer car detailing as well.

Level Two – Self-Service Car Wash

• Open in multiple locations and create brand awareness.

Level Three – Car Detailing

• The contract for providing service to customers of high-end luxury hotels and luxury auto dealerships.

Level Four and Five – Automatic and Touchless Car Wash

• There is an excellent opportunity to sell additional items to clients who are waiting for their car wash to be finished. One terrific and very successful idea is to have a drop-off dry cleaning and laundry service associated with a car wash.
• Offering fast food is another revenue source. The typical car wash customer, using an automatic or touchless car wash, is waiting for about 15 minutes at a minimum for their car to be washed. This is an excellent time to sell them other things.
• Making deals with auto dealerships to wash cars at night is a great way to make extra money. Typically, the public is not looking for a car wash at night. However, car companies and auto rental places need to have cars washed at all times of the day and night. This is a great deal to seek for extra income if there are such dealerships and car rental places nearby.

What Will You Name Your Business?

Choosing the right name for your business is very important. That alone needs thorough planning because you need to relax your mind before you can get the right name for your business.

2. Form A Legal Entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your car wash is sued. There are many business structures to choose from including Corporations, LLCs, and DBAs.

You should also consider using a registered agent service to help protect your privacy and stay compliant.

3. Register For Taxes

You will need to register for a variety of state and federal taxes before you can open for business. In order to register for taxes, you will need to apply for an EIN. It’s really easy and free!

4. Open A Business Bank Account & Credit Card

Using dedicated business banking and credit accounts is essential for personal asset protection.

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When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open A Business Bank Account

• This separates your personal assets from your company’s assets, which is necessary for personal asset protection.
• It also makes accounting and tax filing easier.

Get A Business Credit Card

• This helps you separate personal and business expenses by putting your business’ expenses all in one place.
• It also builds your company’s credit history, which can be useful to raise money and investment later on.

5. Set Up Business Accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

6. Obtain Necessary Permits And Licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

In accordance with the Clean Water Act of 1972, car washes must obtain a wastewater permit from the NPDES. A list of state specific regulations can be found here.

• Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:

• Check with your town, city or county clerk’s office
• Get assistance from one of the local associations listed in the US Small Business Associations directory of local business resources.

Labor Safety Requirements

It is important to comply with all Occupational Safety and Health Administration requirements.

Relevant regulations include:

• Appropriate hazard identification
• Injury reports
• Proper safety precautions when operating potentially dangerous equipment

Certificate Of Occupancy

A car wash is generally run out of a physical location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws, and government regulations have been met.

If You Plan To Lease A Location:

• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a car wash business.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

If You Plan To Purchase Or Build A Location:

• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for your business’ location to ensure your car wash business will be in compliance and able to obtain a CO.

7. Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, worker’s compensation insurance may be a legal requirement in your state.

8. Define Your Brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

How To Promote & Market A Car Wash

Level One – Hand Car Washing

Your best promotion will be receiving positive word-of-mouth referrals from existing customers. Giving them a discount card to hand out to their friends and business associates is a really good idea. Distributing flyers in the local area and walking around to do a “meet and greet” with local residents and businesses is an excellent way to find new customers. Offering to collaborate with another business such as a restaurant or a parking lot is another way to create new business.

Level Two – Self-Service Car Wash

Staying open 24-hours with bright signage when located on a busy thoroughfare is the best way to attract business to this kind of operation. People are attracted to use these services by seeing them when they drive by.

Level Three – Car Detailing

For this type of business, you will be looking for customers that have luxury vehicles. One excellent way to promote your services is to create an affiliation with a five-star hotel and offer the car detailing to guests. You will make their cars look perfect overnight and ready the next day as sparkling clean.

Level Four and Five – Automatic and Touchless Car Wash

These businesses use different equipment; however, the promotional methods are the same.

How To Keep Customers Coming Back

Asking existing customers to spread the word about your services by giving them a discount coupon to give to their friends is an effective marketing method. Register the discount cards, which are numbered, to the person you give them to. If someone uses the numbered discount coupon, the registered person gets a free wash.

Loyalty programs work very well. Issuing a reward card for the number of washes and giving a free wash after a certain number of paid washes is a terrific way to keep customers loyal. Giving rewards to customers that come back for repeat business is a really good idea.

In dirty environments, such as big metropolitan cities or winter road conditions that throw destructive salt up to the undercarriage, a car wash is needed about once per week. This means that a single customer that returns once per week for a year will be a very valuable customer.

9. Establish Your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.