Educating Myself on the Industry - Should I get involved?

[Vortec6000]

Greetings, I'm new here and have zero experience in the car wash industry. I would like advice/opinions to help steer me in the right direction, meaning whether or not I should try to get involved or not.

My wife and I have a 2-year-old, currently both work W2 jobs and do well enough financially, but looking for other ways to diversify investments. Paper assets are boring (although we invest in those as well).

Car washes just seem like an interesting venture.

My strengths, whether or not applicable to the industry

• Somewhat mechanically inclined - Wrench on automobiles, although less so than when I was younger. I know which end of the wrench to use to hammer things
• Basic home repairs
• Soldering skills
• Basic electrical circuit troubleshooting
• Radio System implementation and troubleshooting
• Communications tower and related system construction
• IP Networking, Computer Stuff
• Algebra, Trigonometry, Geometry, Calculus (very rusty), and so-so at basic arithmetic, high school physics
• Analytical
• Willing and able to learn new things
• Beermaking experience

Weaknesses, whether or not applicable to the industry

• No business experience or knowledge aside from what I've picked up from reading books and spending 15 years in the oil & gas industry
  • Looking for books to read about Sales and marketing
• No supervisory experience other than providing technical oversight to contract labor at my day job
• No car wash industry experience
• Analysis Paralysis
• Patient
• I'm usually pretty nice to people
• I don't hit the gym very often
• I'm terrible at decorating/color coordination
• Probably much more but hard to think of right now.

My goals/hopes for potential car wash ventures

• Don't intend to dump the day job any time soon
  • don't need the income from car wash(es) to live on currently -- intend to reinvest most of it, either in additional locations, improving existing locations, or maybe using to buy real estate or other cash-flow generating assets.
  • I understand it will be very hands on to begin with, I hope to find person(s) to work for me ultimately to run day-to-day and only have to visit once or twice a week once things are running smoothly
  • Once things are running smoothly, would like to be able to occasionally (once or twice a year) take family vacations which would prevent me from visiting car washes for a couple of solid weeks-- again hoping to find labor to keep up with the day-to-day cleaning, maintenance, coin handling, etc
  • I don't mind paying a worker well as long as they are doing a great job and I have reasonable cash flow after to still re-invest
• If the day job dumps me, I hope to be able to use car washes as a means to earn income to live on and rely less on the personal emergency fund.
• Generate enough cash flow to eventually quit the day job if I wanted
• Generate enough cash flow to give back to the community more
• Generate enough cash flow to reinvest in existing washes or acquire more locations (by acquire I mean buy, lease, or build--whatever makes sense

The YouTube Kool-Aid I've drank so far:

• Chris Atkins - Leasing shut down washes or terribly operating ones from the land owner and renovating (I know some people are against getting a car wash without owning/mortgageing the real estate -- I'd like to learn more about how lease agreements are structured in case I sign a 20 year lease and then I end up doing a terrible job myself and making no money, or have a major family crisis, have to move far far away, or for whatever other reason I need to escape and terminate the lease early)
  
  This one is probably what caught my eye the most and made me think "I could probably do this" and seems like a fund industry to learn
  
  
• Brandon Schlichter

So far, aside from trying to educate myself on the industry, all I've really done is eyeball existing wash locations where I live or in places I frequently visit and throw a pin on Google Earth with a few notes describing the location.


And commence crushing of my dreams..........NOW!

 

[Vortec6000]

To Forum admins: I made the same post yesterday but not sure if I deleted it or what, it seems to have vanished into thin air. Luckily I"ve had this happen before and usually copy long-winded threads into MS Word in case this happens.

 

[MEP001]

Most of the self-serve car wash repairs are easy. Automatics are a lot harder to diagnose and repair. You'll want to find a distributor with a tech who can teach you things, or just sign a service cotract and let them deal with repairs and maintenance.

If you don't want to or can't do everything, you need a good attendant. You can have a full-time job and a car wash and do it all yourself, but you'll have NO vacations, hardly a day off, no matter how tired you are you know you still have to go to the wash and work... it can get old. I actually just got out from under mine, but I'm wishing I'd just found a guy and paid him really well, like $2000 a month, so I'd only have to handle the money.

The basics will make you successful. The classic "location, location, location," but also access, visibility from the road, look at the lot's ability to handle a really busy day. And a car wash less than 1/4 mile from a McDonald's will do immensely better than one that's more than 2 miles from a McDonald's.

Keep it clean, check everything every day, make any repairs immediately, don't let customers lose money, give a good product. The rattiest, ugliest car wash in the world will make a substantial income if your customers are happy.

Forget Chris Atkins. He's first and foremost a YouTuber, a general car wash guy second, a good car wash operator pretty much last. In the last video I saw, he waits until a customer pulls out of a bay and goes straight in behind him to paint. He thinks he's way smarter than he is. He leaves his keys in the changer and posts it for the world to see. I sent him a message about it, warning him that someone will eventually get in and get his keys, and his reply was "It hasn't been a problem." InvestmentJoy is barely better, all his videos are "Look how much money my ____ made in a week!" He's going to get robbed someday, and possibly hurt or killed.

Also, a car wash is extra money, but not much of an investment unless you buy it. Leasing will get your foot in the door, but you really want to own it if at all possible.

 

[Vortec6000]

Thanks for the info! No doubt I would try to do a lot different from those two, not the least of which is keeping the earnings to myself instead of sharing with the world.

The tip about McDonalds is also great to know. I never would have thought that but does not surprise me at all. Is real estate equally more expensive within 1/4 mi of McD's?

There used to be a self-serve in my town which was razed and turned into a restuarant, but several years before, right next door, a tunnel type was built and is still there today, although I"ve seen rebrands once or twice in the past decade (I assume rebranding went along with change of ownership). Both of these locations were/are less than 1/4 mile from McD's.

So if I want to keep the day job (for now) I'm guessing it's best to start with a location close to home since I'll be there daily unless/until I hire someone to be there daily for me. I'm pretty sure this town only has three old self-serve locations (each with one IBA), one of which was renovated earlier this year. The other location needs renovation but the hand-written paper on the door that says "Call this number for help" has the same phone number as the newly renovated one has on its professionally made stickers. There's one more self serve (with one IBA) the next town over which was also recently renovated and the point-of-sale kiosk for the IBA looks like the other recently renovated one but haven't gone by recently to see if the phone number is the same.

The third in town was built less than 5 years ago, part of a chain I believe as they have the same branding on locations in Texas, Oklahoma, Kansas, and Nebraska. They have one frictionless IBA, one friction IBA, and 4 SS bays. I washed two cars in their SS last week and was pretty impressed but I spent a small fortune (probably mostly lack of practice). It's about 3/4 mile from McD's.

The rest of the car washes in town are attached to gas stations or are the tunnel wash I mentioned in the McD's paragraph, so if I'm going to start in my own town, I pretty much have to take over one of those or build one from scratch. Being an absolute novice, I'd probably be a fool to take over a newly renovated/built one and think I could make a good profit and/or get a good deal buying it.

Any courses/books/etc you can recommend along the lines of "Okay, you want to get started. First you need to......" would be greatly appreciated. I've been scouring the forums here and there's plenty of good info but having zero experience in this industry or running a business in general, I really don't know if I need to form a business entity first and start building the business's credit score, or pony up some of my own funds, etc.

Again thanks for all yoru wisdom, and my apologies for the long windedness. If this doesn't pan out, maybe I could write stories.

Nic

 

[MEP001]

The tip about McDonalds is also great to know. I never would have thought that but does not surprise me at all. Is real estate equally more expensive within 1/4 mi of McD's?

I don't know. The info I gave was from a survey from years ago.

Any courses/books/etc you can recommend along the lines of "Okay, you want to get started. First you need to......" would be greatly appreciated.

None that I'm aware of. I would say as long as you follow advice from here, you can't go wrong. Stick to the basics I mentioned above. I have turned over many washes, without raising prices, with my biggest success being one that I brought from making $1200 a month to over $13,000 a month, just by keeping it clean and working and cranking up the soaps. Check everything every day with coins.

It's not difficult to do the business side either. You'll need a license to do business, which in my opinion should be a LLC. I just write everything down on a notepad including the changer counts so I know if the payout is correct, then I track that in an Excel sheet. Or you could just deposit everything and let your bank ledger be your accounting. I do both. Keep in mind you can let the car wash buy you a vehicle and you can run all its operating costs off it and write that off. If your state doesn't require sales tax from a car wash, don't get an exemption certificate, because you WILL get audited at some point, and that rarely goes well. I just pay the sales tax on all supplies since every seller collects it now, and I don't have to worry about sales use tax.

 

[Vortec6000]

It's not difficult to do the business side either. You'll need a license to do business, which in my opinion should be a LLC. I just write everything down on a notepad including the changer counts so I know if the payout is correct, then I track that in an Excel sheet. Or you could just deposit everything and let your bank ledger be your accounting. I do both. Keep in mind you can let the car wash buy you a vehicle and you can run all its operating costs off it and write that off. If your state doesn't require sales tax from a car wash, don't get an exemption certificate, because you WILL get audited at some point, and that rarely goes well. I just pay the sales tax on all supplies since every seller collects it now, and I don't have to worry about sales use tax.

I've wondered for a long time about how sales tax applies to a car wash. I assumed items from the vending machine were subject but since the wash bays are a service it may be a gray area. Sounds like I may need to check multiple states as I live near a few state borders and could potentially see myself having some in my state and/or others.

I'm about 1/3 through a pretty good book about small business taxes--mostly what I've learned so far is good record keeping is key, not just for audit prep but also just for running a profitable business and getting all applicable tax deductions/credits. Also learned that I don't need to become a tax expert but rather need to know the basics and hire a good tax pro.

Luckily I use excel a lot for my day job so that shouldn't be difficult to use for tracking everything.



I've found one wash with a for sale (or maybe lease, or maybe both) about 45 minutes from home. It's a city I frequent and haven't noticed any vehicles there in the past several months. Historic Google street view photos suggest it was once doing well but the snap shots the last couple of years make it look vacant and neglected and probably not operating. It has eight SS bays and one IBA.

THe city in general is undergoing a lot of expansion, no McD's except one inside the Walmart so can't get the Big Mac without using your legs, but lots of other ritzy chains have been popping up overnight it seems. I don't know how to get traffic count or other important statistics but there are tons of retail and other businesses nearby and plenty of traffic from what I could see.

About 0.5 mi south on teh same road is a new (probably less than 5-6 years) wash of the same chain I had in my town. Six (6) SS bays, one (1) frictionless IBA and two (2) friciton IBA. Free vacs, nice looking building just like the one in my town and appears to be doing well.

Just under a mile the other way and a couple of turns off the main drag (no direct access from main road) looks to be a full service tunnel wash that is for sale and I don't think operating.

If I tried to get this or any other one that had either no equipment left or equipment in not easily repairable condition, would you suggest buying new equipment or good used equipment? I've seen threads on here about a few places to buy used equipment but not sure which are reputable. Seems like someone said Carwashconsignment.com was no good but I could be wrong.

Nic

 

[MEP001]

Some states will require sales tax on vending, you'll have to get a permit, and probably have to put a sticker on each machine. In Texas we have the option to collect sales tax, but we aren't required to pay it if we don't have a sales tax permit, and the state seems to be happy collecting the retail tax for purchases.

IMO deductions are key. I deduct everything I can, because the less I show as net, the less I pay in taxes. I even buy all my everyday clothes and work shoes through the car wash account.

carwashconsignment.com can be hit or miss. It mostly depends on whether someone gets back to you or not. I've never had an inquiry get answered. Members here do sometimes post equipment for sale. If the pump station is solidly built and you can get it cheap, you can save many thousands of dollars and at the same time learn how everything works.

Definitely look at ingress/egress. If the wash you mentioned that looks abandoned now but used to be busy, see if there was something changed, like a turn-in from across the road was closed. There's a car wash here that was built, then the city put in a divider which decimated the car wash's business because people can't even do a U-turn legally to get to it, then they can only get out going south and there's no place to U-turn to head north on the road it's on.

 

[Vortec6000]

Feel free to look from other angles, the location is 36.286211N, 95.848790W

These two images are June 2011 and Aug 2012. Somewhere in that timeframe the left turn lane on the North/South road changed some, but the traffic signal still allows ingress and egress from vehicles in any direction. Also there is no median on the N/S road, so southbound traffic can still enter at the south end if they missed the other entrance, and people exiting the wash can turn right to easily go South, or go back to the light to go North or East.

ON the historic street view there are indeed vehicles there past 2012, but the snapshots of course are only a small moment in time.
THere is one shot dated Dec 2021 in which there are 7 or 8 poly carts (city-owned rollable trash bins that the refuse truck picks up and dumps into the truck) there, as though somebody requested a bunch to do significant cleanup. but did not want to splurge for a 20/30 yard roll-away.

In APril 2017 you can see the new wash being constructed 0.5 mi south. Probably the same day, the one I'm questioning has vehicles in the bays, and a work truck parked next to the IBA and looks like two people watching the IBA do its thing.


It does appear that there are vacuums on both the East and West side of the wash. Not sure if that's normal or not, I guess it could confuse people on which way traffic should flow.



Assuming the last operator is still the owner, I guess I could ask what happened and hope for an honest answer. Or talk to the owners of the WeedBucks next door or other adjacent businesses like the used car place and see what they know.

 

[MEP001]

The only issues I see is that the area looks pretty affluent, which means people who might be less likely to wash their own cars. The automatic bay would be your key to profit. I might offer a free vacuum token with a wash purchase and let the regular self serve customers pay. It also looks very neglected, given the door that's faded and rusted through, several vacuums with no hoses, one bay coned off, another full of trash, every bay dry. It will take some time and work for sure. Definitely check traffic counts. If you have an issue with people parking in your bays to walk next door, put up towing signs and enforce them.

 

[CheetahExpress]

I don't think McDonald's is a requirement for a location, although being close to any type of popular fast food place is definitely an advantage. We're in a small town with a Pizza Hut 2 lots from us; a popular Mexican Restaurant across the street; and a state-famous BBQ place about a 1/4 mile away. We have 2 IBA bays -- a brush and a touchless, and wash over 21,000 cars a year, so yes, any type of popular eatery is always an advantage to your location, as well as any large grocery or big-box stores like WalMart, etc.

 

[MEP001]

I don't think McDonald's is a requirement for a location

It's not a requirement, but the survey I remember was based on the research McDonald's does before they build a location. It's based on traffic count, among other things, not about what's nearby to eat.

 

[CheetahExpress]

Certainly interesting. But McDonalds doesn't really care about what's nearby to eat, because they're the center of attention; but it's definitely good for a proposed car wash to know what sort of commercial establishments and restaurants are near their location.

 

[Waxman]

if you want to learn the business get a p/ t job at a car wash to see if you even like it. nothing better than otj training.

if you are not willing to do that, you should invest elsewhere. apartment buildings maybe?

 

[Vortec6000]

see if you even like it. nothing better than otj training.

Good idea. If you were in my shoes, would you disclose that you are considering investing in your own and want to get your feet wet to see if you like it (essentially tell them "I might be your future competition")? Or just keep that to yourself?

 

[Axxlrod]

IMO, of all the strengths you listed, the beer-making will be of the most value.

Good luck!

 

[Waxman]

just say you want To work at a car wash to learn more about the business. Who knows… You may wind up being able to buy the one you get a job at. Stranger things have happened.