Potential Car wash owner questions

[K.Erickson]

I've read a lot of threads but somethings I can't find so that is why I'm posting.

I'm looking at building one of 2 types of car washes.
A) 3-4 bay SS with a IBA ( the property for this location is 650K) this location has 54,000 car go past everyday based on 2009 data

B) a 10 bay SS with a singe IBA. The SS is an enclosed ticket entry were patrons pay once they leave.

The question I have:
-For developing a buisness plan where or how do I come up with an est. capture rate based off traffic flow?

- Water recycling. I saw a car wash system on "How it Works" The car wash system displayed took all waste water from the process, screened out the oil, grime,soaps, then passed the water back into a tank to wash the next cars. It said it only loses 10% of water it takes to clean a car. Is this what every car wash manufacture use if I buy their machine? ie if I buy Ryko, Washworld, PDQ

In this regards I was hoping so say have tanks holding say 5000gal of water I pay once from my city and for every car I wash I lose only 5 gal to evaporation and whatever sticks to a car as it leaves.

There is a building in that has 12 SS and you take a ticket and pay once you leave so you can either take your time or move fast to pay more or less. It doesn't have an IBA. Now there is a old run down 4 bay SS that looks to be closed within 2km of this one I just mention. This site I don't have the number on traffic flow or cost to by land. Its not on the main drag like I mentioned the empty land for 650 k is. I'm thinking of maybe building one of the 2 types I listed if the price is cheaper for land than the other site.

Current IBA prices around my city is $7,$9, $12 that is with purchase of gas, $2 more if not.

Any info would be great, thanks.

 

[K.Erickson]

Sorry, I did more searching and I found what some people posted what rates they used for capturing so I'm going to us that as my basis.

I also found a company on the net that has a treatment for removing oil. My goal between using this system to clean up my water and recycle it and adding rain capture, I want to use next to nothing from the city in terms of water.

In regard to my other post, does anyone else here have that type of place where people pay for time used on the way out? Do you think it is better at potential income than say open SS?

 

[K.Erickson]

Well after doing more reading on this site I'm starting to get some concerns. Not only with opening a car wash but any business. Here is the situation I and a partner are considering doing a fruit smoothie business or the car wash.

I spoke to a franchisee of the smoothie shop, its 250k to get a location 13% franchise fee each month(10 yr agreement). Of course depending on location yearly gross is $400k with a 20% profit incl. paying yourself a modest wage of $15/hr. So each year is a potential 80k profit.

Now just yesterday I went to wash my car at the local conveyor wash and left as I was the 8th car in line. I went to the SS location that has 12 bays all under one roof with one entrance/exit. This location you don't use coins at each stall but rather take a ticket on entance an pay on exit. 3mins cost me $6. Today I drove past there and saw 6 cars lined up waiting to get in.

Its days like this that make me think running a car wash would be a better choice. Can you current owners shed some light on this? I'm not asking you to tell me your profitis but if you had a choice btwn 80k/yr and what your car wash makes what would you pick? My wash if I go thru is going to be 6 SS 1 IBA.

 

[pitzerwm]

IMO the fruit smoothie business is too expensive. The entry cost to do it yourself, is a lot less for you are anyone. A few blenders and a location. 13% is highway robbery. There are no businesses that are a slam dunk. Even sex and drugs have their issues.

Keep doing your research, especially now, mistakes are fatal.

 

[JMMUSTANG]

Go back to those washes you are so excited about on a cloudy or rainy day and see if you get so excited then.
This is not an easy business.

 

[Waxman]

Do you have any idea how many cars you'd need to wash with a $1M+ carwash project?

For 650k I'd guess that the land must have a higher and better use than a carwash.

A busy day at a competing carwash is not evidence that the market needs another wash.

Your questions have you pegged as someone who has done very little research and due diligence into this business idea.

Research for another year and post again if you are still serious. In that time, get a job working at a wash to see what it is really like.

 

[Indiana Wash]

My best suggestion for you is to go work at the type of business you are considering buying. $400k in smoothies. Really? $1100-$1400 a day. If you are talking about investing $1m then taking a month and investing your time would be cheap enough.

 

[K.Erickson]

Yes, the land I looked at is on a corner lot 210 w by 100 deep. Its on a major road in the city, and no car wash inside of 5km radius. I could lease it from the guy he has a sign up not willing to build a building.

I would like to think about working at a car wash but minimum wage is $10/hr I just couldn't do that just based on what I pay a month in my mortage.

Besides sitting at a car wash all day and counting cars what other ways do I find out facts about building one?

 

[Indiana Wash]

I would like to think about working at a car wash but minimum wage is $10/hr I just couldn't do that just based on what I pay a month in my mortage.

Besides sitting at a car wash all day and counting cars what other ways do I find out facts about building one?

Wow really? You can't invest a month of wages into a project but you can invest $1,000,000. You must make more a month than anyone else on here.

 

[madscientist]

sitting at a car wash all day and counting cars

Where do I apply for this job?

There is a lot more involved than counting cars. If you work at a wash you may just find that:

1. Not every day is a sunny Saturday
2. There is a lot more work involved than you can see as an observer from the street
3. $650,000 for land for a SS/IBA is most likely starting out on the wrong foot.

 

[copperglobe]

Where do I apply for this job?

There is a lot more involved than counting cars. If you work at a wash you may just find that:

1. Not every day is a sunny Saturday
2. There is a lot more work involved than you can see as an observer from the street
3. $650,000 for land for a SS/IBA is most likely starting out on the wrong foot.

agree
agree
agree

Before I got into the car wash business 23 years ago I worked at a SS/IBA car wash for three months for free. Didn't get paid. I wanted to know what the business was like. I worked 7 days a week for those three months. I fixed pumps, emptied garbage, ran wire, dug out pits, got yelled at by irate customers, did the deposits, paid the bills, troubleshooted the automatic, spread ice melt, shoveled snow. I ran the place. It was after that experience that I determined to build my first wash. However, I paid less than 500k for the land, building and equipment.

Within 50 miles of my original wash there are 12 car washes for sale or in foreclosure. All those owners paid too much for what they would get on their return. Do the math. It takes a lot of quarters to equal a million dollars of investment.

 

[Indiana Wash]

Judging by the OP's responses, he is seeking validation not advice.

 

[Hoser06]

Ok, as a fellow canuck and a new owner/operator of two years, I feel compelled to chime in.
Seriously? You and your partner are willing to invest 1 million but not willing or able to invest the time at a wash learning the business? Not smart. Who is going to repair and run your wash?
I spent a year in due diligence after I made the decision to enter the business. I spent that time talking to other operators not located in the same city as me. Talking to equipment suppliers and distributors and building a sound business plan.
It sounds like you and your partner will invest your own capital vs a loan? This isn't always a good thing since our Canadian banks and credit unions are very risk adversed and will only invest if you have done all the homework. Lenders here give non going concern start-up car washes a risk profile slightly better then that of the dreaded restaurant. And thats for good reason. Banks force you to have realistic proformas, business plans and stress test all your assumptions. You might want to work with one that has experience financing car washes.

Car counts? If you're serious, you do everything you can to gain an accurate averaged traffic capture rate. This includes visiting your competitors over several days and times -not just the sunny days, as you have already heard from other members. (Those sunny days pay for a lot of wet ones) Going to the city of Winnipeg for traffic count statistics at or near your proposed site. Also see if there are any plans in the pipe that might affect your site. You don't want to open your doors only to learn that the city has plans to divert traffic around you for lane widening, signalization or water main work. Just a thought.

Water reclaim/recycling is a good idea in theory. In practice, with an IBA, especially a touch-less wash -good luck getting clean cars. Water quality & chemistry are critical to its effectiveness. Long Winnipeg winters will keep you very busy with finding the right chemical balance even without water reclaim in the mix. Does your city mandate it?

Also, a 5km buffer is nothing if you have an experienced competitor down the street or, god for bid, an express exterior.

Finally, the frustration you are hearing from some of the forum community is based on their experience with countless new investors that come here for advice but haven't really done the legwork yet or are unwilling and just looking for validation.

Learn form them and take what they say serious. It might save your bacon in the end. Go to the upcoming Car Wash show in Vegas, talk to other owner/operators, and equipment suppliers.

Good luck with your venture!

 

[keniniowa]

Purchased a non-car wash related business 1/1. Worked for the former owner for three months prior unpaid(he bought me lunch ).

I've told people that and they're like no way they'd do it. The way I look at it was it was the cheapest training I'd ever get. Anything I screwed up in that three months came out of the previous owner's pocket not mine. When I took over it was as seamless a transition as I could possibly imagine. That right there was worth three months' wages. Anyone that can't see that, I wonder if they're cut out for business ownership.

FWIW, when I bought my wash I got zero training from the previous owner, literally we walked through the control room once and he pointed at things. Spent the first six months getting my a$$ handed to me by it on an almost daily basis. You've got learn from past mistakes, your own and others.

 

[2Biz]

FWIW, when I bought my wash I got zero training from the previous owner, literally we walked through the control room once and he pointed at things. Spent the first six months getting my a$$ handed to me by it on an almost daily basis. You've got learn from past mistakes, your own and others.

Same here! We've owned our wash for a year now. I can honestly say I'm starting to get a good nights sleep like I used to. The original poster needs to take the "Senior" owner/operators advice. Wished I would have come here first before buying into this.

We recently had our best week which almost trippled our previous best. Then someone ran into our building destroying the entrance to a bay. Took the wind right out of my sails.....

 

[robert roman]

Most people who investigate the potential to become a small business owner usually begin by establishing some objectives. Typically, one of the objectives is to generate enough sales to pay the bills, provide the owners an income and save some money for retirement.

So, the first step is to determine how much income the owner’s desire from a business.

For example, if you and partner are looking for annual income of $50,000 each, you should take the time to identify small businesses that may actually have the capacity and potential to provide this level of earnings.

The typical self-service carwash obtains sales from five wands, one in-bay, several vacuums and vending. Today, the industry average for this fictitious wash is roughly $168,000. Less operating expenses of about 45 percent, leaves you with gross net of $92,400. Less interest and principal payments on a loan and depreciation, leaves you with net profit before income taxes. Clearly, this would not provide you and partner with earnings of $50,000 each.

As for the prospects of a smoothie shop, I would be highly suspicious of the potential to gross $400,000. Today, the average revenue for a smoothie is about $3.40.

Consequently, you would need 117,647 customers annually to gross $400,000. If you were open seven days a week, this means you would need 322 customers a day.

Let’s take this a bit further.

Gross $400,000 less royalties of 13% leaves net revenue of $348,000.

The typical cost of goods for smoothies is about 24%. However, the cost of shipping, distribution, storage, fuel surcharges and minimum order fees charged by suppliers usually drives COG up to 30%.

Of course, this is on gross sales before franchise fee. So, COG of $120,000 now leaves you with $228,000 (348,000 – 120,000).

Other operating expenses (including 1.5 FTE for labor) for smoothie are usually 30% of sales or another $120,000 which leaves you with net operating income of $108,000.

Let’s assume you can build or rent a little store front at a cost of $40,000 annually or $3,333 per month. This would leave you with $80,000 or before depreciation and income taxes. Of course, you should only expect this if you can get 322 customers a day.

Hope this helps.

 

[K.Erickson]

Thanks Robert and everyone else for their input. Can I ask for those that worked for 3 months free how did you manage to pay bills etc? Do you have a spouse or family that gave you money as I did some quick math and I spend around 6000 over 3 month. So for me a single dude, too not work and then decide not to pursue this business I'm out 6k in debt.

Yes I realize 6k is not near as much as 750k+. Maybe not buying that property but instead leasing it maybe a better way to go. Property here in Winnipeg is going up constantly. 10 years ago I bought my 50x100 property for 50k, now its 200k. I have a slab home no basement 910 square feet and I'm not even it the rich part of town.
Here is some property in that area of where I originally proposed to build
http://www.icx.ca/propertyDetails.aspx?propertyId=11474520&PidKey=-419558897
http://www.icx.ca/propertyDetails.aspx?propertyId=11474409&PidKey=-198650423


Robert in regards to the smoothie shop. It's Booster Juice. I spoke to one franchisee and he said he pays himself $15/hr and that the "National" average of all locations is 400k gross and that 20% profit is usual. 6% franchisee fee 7% national advertising The base price of any smoothie there is $5 and large is $7. Times that I've been there getting my chicken wrap ($11 inc smoothie) heated up for 15mins I counted $80 and at a different location $150. True that is near the lunch time and yes I've thought about getting a job so I could really see how much they bring in. The owner I spoke too stated that he has to come close to $1000 a day in sales. This owner opened up one location for 250k and 3 years later has now opened a 2nd.

My goal is to put in the hard work for the next 10-15 years then get someone else to manage it and live off the profits. I work in the construction industry in home reno's and I work with a 70 year old drywall who has no pension or retirement (401k). I don't want to be that guy. I have held down 2-3 jobs while attending University and have only taken 2 wks holidays since 2005 through all the jobs I had. I'm not afraid of hard work.

 

[keniniowa]

Can I ask for those that worked for 3 months free how did you manage to pay bills etc?

I'm living off my rental houses and carwash. Even though I now own my new business, I'm not taking any compensation. Looking at the long-term there are much more important things than drawing a wage right now.

Here again, how do you expect to get whatever you do going without some cash reserves?

 

[packerscw]

My goal is to put in the hard work for the next 10-15 years then get someone else to manage it and live off the profits. I work in the construction industry in home reno's and I work with a 70 year old drywall who has no pension or retirement (401k). I don't want to be that guy. I have held down 2-3 jobs while attending University and have only taken 2 wks holidays since 2005 through all the jobs I had. I'm not afraid of hard work.

Car Washing will not make you enough money right now to live off of the profits, the car wash industry is not like it used to be about 20 years ago. Its not as easy as swinging every once and a while and collecting the quarters.

Just though I would give a little heads.

thanks

 

[packerscw]

The car wash business is not an easy business to get into. Its not as easy as what it sounds.