Help, How would you respond?

[kentadel]

I have a car wash in a town of about 3000 people in a rural area, two self service and one in bay automatic. There is one other wash in town also with one self and one auto. Received a call today from someone who offered to buy my wash,wants me to name a price, and if I refuse to sell, he says he will build a wash in town next spring. He owns a couple of washes in another town, and wants to expand, he says. I am installing a new auto next month, and have a nice brick building with a great location, and have been here for twenty years. I know there isn't enough business for three washes, and I would think he would also. I am in a position where I do not have to rely on only my wash income, but really enjoy having the wash. I do not want to sell, but also do not want to see my gross income take a big hit either. How would you answer? I think it would be a very poor business decision for him to spend a few hundred thousand to build new, and think he is trying to maybe bluff me into a sell. Need some advise here, Thanks.

 

[pitzerwm]

I have that done to me as well. First, I'd find out how much money this guy has, would he build with debt or petty cash. At least he asked for a price. I'd figure out a price that is reasonable giving you a return on your investment/time and energy. If he accepts it, take it. If he responds with a low ball price, and you figure that he will have debt, tell him That when he breaks ground you will go to $.25 for 4 minutes and when he opens you will go to Free until he is broke. That you know how much money he has and you have more or access to more.

The one time I used that and it worked. The other time, I explained how if he was right next door the most he could take would be 1/2 and that wouldn't cover his debt, and I'd be buying it at the bankruptcy sale, as mine was free and clear, and I could wait him out.

The main thing is to find out how much money he has. People with more money than you can hurt you. Crap happens, learn to deal with it.

 

[kentadel]

Thanks, I will give that a try. He also asked if he could purchase my old automatic so I am not sure if he wants to put up a quality wash or not. I got the impression that he was young and full of himself. I have been around the block a few times and my wife says to stay calm and classy, name a price and if he bites, go build in another town if I want. It still sticks in my crawl, though!

 

[Waxman]

I like having my wash and detail shop, too.

However, I know my 'walk away' figure and you should, too. Yes, it is complicated, but I think everyone in business should have a number in mind that they would happily sell for.

Something like 75% or more of all small businesses do not own the real estate they operate on. You do. I do. That has value as does your going concern.

Maybe ask an expert to help you value the property in a way that would convince a potential buyer or banker.

If the guy wants your old auto machine I have my doubts. He sounds like a Waxman.

 

[Greg Pack]

IMO, The best time to sell a wash is when "you don't really want to".

If he hits your walk away number, be ready to take it. But before you set that number, you'd better check with your accountant. You are probably largely depreciated and are probably looking at a pretty stiff tax bill if you don't do a 1031 exchange.

BTW, I would be cautious about providing this guy with numbers until you are sure he is dead serious. His true intent may be for you to divulge that info to him.

 

[Whale of a Wash]

I think a person should always be able to sell if a more than reasonable offer comes along. A guy that wants to buy your used auto- you should be nice to, not alot of used buyers. Sometimes good offers in the year you really would like to sell will never come along also, so selling is not always bad. Sometimes befriending a guy will also keep him off your turf, without out going thru a price war, or like two bucks trying to establish the pecking order.

 

[rph9168]

Take a deep breath and look at the whole situation before doing anything. If this guy has other successful washes he should be smart enough to realize he would probably be building a loser but you can't count on that. If he goes for your walkaway number I would strongly consider selling. If he tries to low ball you I would negotiate to see how much he comes up with but not sell. This might give you an indication of his intentions and financial situation.

I have seen this scenario in many areas and to be honest, I don't think there is only one answer. Selling at top dollar is always a plus. Competing against a new wash is a lot of work and can get costly but since he is dealing with new money you have a good chance of hurting him badly but remember, the new wash will still be there and the next guy will probably buy it at a good price and may be able to compete with you.

 

[kentadel]

Thanks, I am going to relax and not worry about it, what happens, happens, I quess.

 

[Jeff_L]

Every business is for sale all the time. Question is, how much are you willing to sell for? I have numbers in my head for my washes, and if someone is willing to pay that price, then they can have them.

One thing to consider, I've never done this, but it'd be interesting. Sell him the wash but keep the land and lease it to him. Not sure on the feasibility, but...might be a nice little annuity.

 

[MEP001]

Don't believe for a second that someone won't overbuild in your town just to run you out. I've seen it happen many times.

 

[bighead]

My advice is to sell for either "the price in your head" that you would want for it.

Or the cost of building a new wash.

Whichever is bigger.

 

[rph9168]

With money as tight as it is today and the amount needed to finance a site I would question the intelligence of anyone building in a market where there are good local existing washes in operation. If this guy is as sharp as it sounds he thinks he is he might just be trying to buy into the market rather than build a new wash. An established, well-operated wash can really make things difficult for a new wash operating on new money.

 

[soapy]

I was just at the WCA show and they brought in a carwash industry expert on car wash valuation. In a nut shell a SS car wash in this market should be worth 5 times turn of the average gross yearly sales.

 

[lighthousecarwash]

Interesting posts....First of all, it doesn't matter how much money he has. People with money don't have it because they are stupid. If he is a businessman then he should understand that building a 3rd wash in a town that size is going to be a slow return on investment. Buying your wash is a way better deal for him. Car washes are not cheap to build and if your going to be the new guy in a town with 2 established "hometown" washes, then your going to have to offer something that the other 2 guys don't have or can't offer. This makes his wash way more expensive than yours and will take too long to pay for it. Hence the comment that people with money are not stupid. Why would he want to sink all that money into something that is not going to pan out.


On the other hand, I once had a car wash owner tell me that when he built in a small town, that he put every bell and whistle that he could at those washes. His thinking was that if someone else got the bright idea that they could build a wash in that little town, it was going to cost them a ton of money to put in all those features and try to compete. Maybe it's time you give your wash a face lift, or install some new equipment so that if he wants to come build a wash next to you it won't make financial sense anymore.


Hope that all makes sense...


Lighthouse.

 

[kentadel]

That might be a great idea, and is what I am sort of doing by putting in a new automatic, adding credit / debit card, new vacs. Maybe I should add triple foam and hand dryers in the self service, and credit card readers for them also. What do you think of those add ons? Anyone recommend one over another? I took a drive around town after leaving the wash tonight, and took a hard look at possible locations for a new wash. There is not a location in town that comes close to mine, so maybe adding the bells and whistles will detour him. I really think he wants my wash, and I think I will remind him that I will have all these items in use for several months before he gets his built, adding to my advantage as an established business.

 

[Red Baron]

That might be a great idea, and is what I am sort of doing by putting in a new automatic, adding credit / debit card, new vacs. Maybe I should add triple foam and hand dryers in the self service, and credit card readers for them also. What do you think of those add ons? Anyone recommend one over another? I took a drive around town after leaving the wash tonight, and took a hard look at possible locations for a new wash. There is not a location in town that comes close to mine, so maybe adding the bells and whistles will detour him. I really think he wants my wash, and I think I will remind him that I will have all these items in use for several months before he gets his built, adding to my advantage as an established business.

My Wash Gear cc equipment in the SS bays has been underused, mostly due to the displays being nearly impossible to read and the confusion created when the customer sees a $25 charge on their card and I have to explain how it works. I'd guess that for every 1 that calls to complain, 3-5 just get mad and don't do it again. Would not do that option again if I had that $8,000 back.

The dollar bill acceptors in the SS bays have been a hit. About the only problem I've had with them is when the cassette gets full of $1s and $5s and shuts itself down coz there's no more room.

 

[lighthousecarwash]

I added the Etoway Valley credit card system to my self serve bays with bill acceptors. They have been a hit at my wash. Credit card usage just keeps getting better and better. The bill acceptors was also a great idea. I get less wear and tear on my changers and don't chase as many quarters around anymore. I added air shammee's in 2 of my 6 self serve bays and since the first of July, they have returned around $700. I caluculated that to a ROI of around 10 to 12 months. I looked into the triple foam guns but there were other washes in town with them and everytime I drove by them, I never seen anyone actually using them. I'm the first one in town with the air shamee's and I make sure everyone knows it.

The good thing about the Etowah Valley system is you can offer things like lottery, bonus bucks, discount days, etc. On Wednesdays my meters switch to half price from 3-6 PM. In a small town like that you could really draw them in with some new features and advertising. It also shows the other guy that you will be a serious competitor if he wants to go to war!

Lighthouse.

 

[Red Baron]

I added the Etoway Valley credit card system to my self serve bays with bill acceptors. They have been a hit at my wash. Credit card usage just keeps getting better and better. The bill acceptors was also a great idea. I get less wear and tear on my changers and don't chase as many quarters around anymore. I added air shammee's in 2 of my 6 self serve bays and since the first of July, they have returned around $700. I caluculated that to a ROI of around 10 to 12 months. I looked into the triple foam guns but there were other washes in town with them and everytime I drove by them, I never seen anyone actually using them. I'm the first one in town with the air shamee's and I make sure everyone knows it.

The good thing about the Etowah Valley system is you can offer things like lottery, bonus bucks, discount days, etc. On Wednesdays my meters switch to half price from 3-6 PM. In a small town like that you could really draw them in with some new features and advertising. It also shows the other guy that you will be a serious competitor if he wants to go to war!

Lighthouse.

A couple of thoughts. Dollar bill acceptors in the bay forces the customer to pay in $1.00 increments...

I promoted the heck out of my triple foam to get customers to see that using it gives them a noticeably glossier shine. I'd see them rinsing off the foamy brush soap, I'd stick 8 more quarters in and say: Hey, try this triple foam on us, it will give you much more shine if you rinse it off with the wax. Then customers would see it, and decide to try it. It's a fgood money-maker now.

 

[MEP001]

We've also had great success with the in-bay credit card acceptance. It's so good now that cash income and changer use is falling noticeably. We went with Hamilton's D.A.N. which I've used to replace the Dixmor displays.

 

[Jeff_L]

My Wash Gear cc equipment in the SS bays has been underused, mostly due to the displays being nearly impossible to read and the confusion created when the customer sees a $25 charge on their card and I have to explain how it works. I'd guess that for every 1 that calls to complain, 3-5 just get mad and don't do it again. Would not do that option again if I had that $8,000 back...

Interesting, I've had the opposite experience. Credit card use has stabilized at one of my washes, it's been in place for 5 years now, and i would have a mutiny on my hands if I didn't keep them up and running. I finally finished out my other wash with credit card acceptance a year ago, and am enjoying watching their usage rise. I wonder why you haven't seen good results?

One logical question I would expect to be asked is, "How much of your cash business turned into CC business?", my answer would be, I'm not really sure. I would advise looking to put in cc acceptance as your first upgrade.