Help: Key things to know when purchasing an existing Self Serve?

[2Biz]

For the buyer, is there a rule of thumb comparison of gross income v/s selling price? IE: If a CW is listed at 100K, what would be a decent gross income this wash should produce? I'm assuming the percentage would be different between a SS and a tunnel?

 

[Tpoppa]

For the buyer, is there a rule of thumb comparison of gross income v/s selling price? IE: If a CW is listed at 100K, what would be a decent gross income this wash should produce? I'm assuming the percentage would be different between a SS and a tunnel?

For a SS, I have heard selling price should be 3-4 times gross or 6-8 times net. Obviously, propety value, sales trends, needed repairs, etc. would be taken into consideration.

I'm sure there are different opinions.

 

[robert roman]

Because of factors affecting the economy and financial and real estate markets, the old rules of thumb no longer apply.

I could regurgitate the new wisdom but you can read about it for yourself in the May 2012 issue of Professional Carwashing and Detailing magazine.

As for self-service, my research shows about 40 percent of such locations in the U.S. potentially have a higher and better use as a carwash site, specifically, flex-service or express exterior.

For example, consider a small chain of express washes that started in Memphis.

Initially, this firm built prototypical express washes each costing about $2.5 million using conventional funding. Each store has average sales of $600,000.

Today, this firm is growing and is funded with venture capital. Instead of building new at $2.5 million, the company renovates distressed self-service property as express at $1.5 to $1.7 million a pop and each of these stores is averaging $600,000.

In other words, a small-scale carwash has less cost and risks and can be more profitable than building big.

 

[Pro-Techt]

I don't understand why someone would want to take on an enterprise that requires 24/7/365 attention for a couple of thousand $$ a year profit.....

You tell me, but I'm not sure "attention" is a fitting word for operating a SS is it? That would mean you'd have to be on location which isn't the case. Besides normal failures & breakdowns, can't this be a something that just gets "visited and serviced regularly"?

Where else can one have the freedom of owning a business, make your own hours, not answer to anyone and collect a decent return on your investment all while enjoying what you love doing.....cleaning cars?

Correct me if I'm wrong, but is a capitol investment of $50-100K(initial down payment) into a SS with maybe a $10-$20K annual return a bad investment? (Again, all while enjoying what you love doing)

Left a message with the Sales Agent yesterday and waiting for a return call to discuss this SS he has listed. I'll be sure to use alot of people's advice if and when I review the financials. SS's seem to be slim pickings in the Metro Detroit area right now. Might have to consider additional resources for more locations. If anyone knows of a potential locations feel free to PM me.

 

[Waxman]

What we are saying is that the SS carwash business is alot of work. From the outside it looks like you drop by every so often, pick up some money and leave.

In reality it is largely janitorial work coupled with mechanical, plumbing, wiring, landscaping, building maintenance, customer service, marketing, inventory management and purchasing, accounting, bookkeeping, planning and strategy.

You mentioned you love cleaning cars, but that is not what you'll be doing at the wash. You'll be too busy doing all the other things I listed.

I am not trying to be a wet blanket and I love my work, but your ideas have too much pixie dust and rainbows and need a few more rainy days mixed in to temper them and get closer to reality.

 

[Pro-Techt]

Sorry if I implied that owning/operating a SS meant that I'd be washing cars. It's not & I'm pretty aware of what is involved in the operations of a SS. I helped manage a 13 bay wash for several years prior to owning a multi-million dollar detailing business for over a decade. What I mean is I love cars and love facilitating the funtion of car care to the public. I think that's a great trait to have if you're going to go into this business. Is that clearer?

 

[Jimmy Buffett]

I cannot see how a car wash that is doing any business could survive without an hour or 2 of attention every sunny day. In my experience even if the wash doesn't need attending, the customers do. Maybe that's just me though.

 

[Pro-Techt]

I cannot see how a car wash that is doing any business could survive without an hour or 2 of attention every sunny day. In my experience even if the wash doesn't need attending, the customers do. Maybe that's just me though.

I agree Jimmy. And from what I posted in this thread prior in bold:

Owner also claims to spend approximately 2 hours per day, 2 days per week maintaining this business, which I feel is pretty low and can be considered somewhat of a red flag.

is somewhat of an indicator as to why (partly) this location isn't bringing in more revenue.

 

[pitzerwm]

Here is my 2 cents. If that wash didn't sell for $1M the first time, I doubt that I would touch it. All over the country you can find $1M washes selling for a lot less. They were never worth $1M. With the banks today, if you really get a bargain, you will be lucky.

IMO if you can't get a steal, with the regulations and economy, I wouldn't be spending my money.

You need to make sure that no matter what it has done or is doing, I would want to be able to still make the payments if the revenue dropped another 25%.

 

[Greg Pack]

FTR, I concur with what Bill said. It's priced too high based on revenue numbers. Sometime they can be improved, but I don't pay someone else for upside potential. If the previous owner wants more he should have busted his ass and made something out of the business.

As a long time member of this forum I recall several people that have come and gone in the business. Their biggest mistakes were usually paying too much, and relying on the seller to be truthful about revenue and expenses.

Would I pay more if it had a high property value? Maybe, if the property is indeed desirable and can be readily sold for the asking price of the business. If the area is full of shuttered businesses, it has very little value IMO. BTW, check the annual property & personal property tax bill. In some areas that could eat up a third of your stated gross, or even more.