I have a small 3 bay self serve opportunity in a small town in Ohio. The owner says he has no records of income and just spends the money as it comes in! My question is, can I back into a gross revenue number by analyzing the water bill and total gallons used in a given month? My idea is to wash an average size car and time the length of time I used the spray wand. Then run the wand and measure the gallons used in that amount of time. Call this an average wash and divide it by the total gallons used in a month. Is this crazy? What holes are in my logic? Is there a better way to do this? Other thoughts. Each bay has credit card and coins. He obviously has access to credit card revenue. Can I estimate how much coin revenue there would be? Any help is appreciated!!
First time buyer--- need help estimating gross revenue.
- Thread starter JP Ohio
- Start date
Waxman
Super Moderator
So.... he doesn't file income tax returns???
bert79
Active member
I did this when we bought our wash. I went to the city who supplied me with the records. Keep in mind that being in Ohio he likely runs a weep system that prevents freezing in the winter. Those systems use a lot of water not used for washing cars. I would use only the warmer months when you are estimating revenue using this method. Just a thought. Also, every area is different when it comes to credit card use but just for a general guideline, when I am figuring out gross revenue for a day, week or month I can take the credit card income and multiply by about 2.5 and I will have a very general idea of gross income, including vacuums and ss. We also have an one touchless IBA which may change the numbers dramatically. Credit card use varies widely depending on where you live though. Just some general guidelines to get you started.
Go sit across the street for an hour or two and count cars. Go on a weekday, go on a weekend. You’ll get a rough idea. Of course weather plays a big part too though.
The water bill idea will help but the problem is that not all water is directly used on cars. Water is also used for:
- weep in winter
- RO reject water
- leaks
- hosing down the lot or anything else
The water bill idea will help but the problem is that not all water is directly used on cars. Water is also used for:
- weep in winter
- RO reject water
- leaks
- hosing down the lot or anything else
Just tell the guy you want to see the numbers for the current month or the next month. Maybe even be there when he empties out everything. If he won’t be transparent about that then I would not trust anything he says. Walk away. It’s not like you would close on the wash tomorrow. Everything takes time
Dan kamsickas
GinSan Technician
Exactly this. I've seen far too many people get burned by buying washes without doing proper due diligence. IF you can verify some sort of numbers you also need to do a complete, deep inspection of everything on site. Depending on the age of the site you could very likely be looking at some huge capital expenditures to replace equipment. Too many times the ones who don't keep financial records also duct tape and bailing wire too many things together.
Waxman
Super Moderator
Who, in 2023, does not keep financial records? Come on! Who would think it's ok to sell a business with no income and expense records and taxreturns prepared by a professional accountant?
This is a huge red flag and I would not consider this seller as credible.
If it is a deal for 'land value' only then maybe no numbers from business activity is ok.
This is a huge red flag and I would not consider this seller as credible.
If it is a deal for 'land value' only then maybe no numbers from business activity is ok.
kentadel
Active member
I would follow the advise of asking for a month's numbers and also personally watch the site and count cars. I know of a wash or 2 with the same type of ownership. They pull and pocket money. Works while they own, and likely hurts if they sell.
Roz
Well-known member
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There is a simpler approach. Look at the county assessed value. Without cash flow info you are just buying real estate. If you think the site has potential then make an offer based on real estate value. Worst case is that you make no money and decide to sell it at your cost to a developer who turns the place into a different building or operation. That’s how I got into the car wash biz 8 years ago. Fortunately for me it has worked out such that I have purchased two additional turnaround/renovation locations and continue to look at other opportunities. I got the carwash bug and have been enjoying the ride. The advice above my reply is solid too.
Good luck.
Good luck.
OurTown
Well-known member
Does he have an asking price in mind?
traveler17
Well-known member
Better yet who would be crazy enough to buy it!
traveler17
Well-known member
Greg Pack
Wash Weenie
I'll echo what others have said. be very careful. I trusted someone's numbers who I had known a while. It took me years to recover and get the wash up to the numbers they indicated to me it was doing. I probably paid several hundred K more than I should have for the property.
sjb
Active member
Don’t let your emotions and ego cloud your judgement…
Whats the Dirt value, and or higher and better land use….
What % of his biz is CC’s, ask first, then get those records….
Ask what does he wants, and I would bet he would like to owner finance the deal to keep the cash flow coming and eliminate the headaches….
Prepare for headaches…. And then jump in, the water is fine….!!
Whats the Dirt value, and or higher and better land use….
What % of his biz is CC’s, ask first, then get those records….
Ask what does he wants, and I would bet he would like to owner finance the deal to keep the cash flow coming and eliminate the headaches….
Prepare for headaches…. And then jump in, the water is fine….!!
864real
Member
What timers does it have? What I did on one looking at, was go into the timer and reset the inventory. Then i went back and checked how much it had done. Very easy and most owners don't know they do it. The wash i was looking at had no idea i was even tracking it. The default code on the timer was still in place and i could drive up anytime i wanted to see how it was doing and then i knew 100% what it was doing in wash revenue. I couldn't do the vacs, but i based my offer on the wash and the vac money was just a bonus. Buy a remote and can easily tell.
traveler17
Well-known member
Could you clarify this? Are you saying you went on somebody’s property that’s not yours and reset their counter on the machine?
864real
Member
Yeah. Guy told me he had no idea what he was making and i wanted to buy it. I asked if i could try and track and see what i thought it was doing and he said sure. So i used the inventory on the timers vs sitting around counting cars and guessing
traveler17
Well-known member
I gotcha. I thought you just went in there resetting without permission. Good move
