Potential New Owner

[Suds2Riches]

Good work Waxman! Seriously good work.

I rather keep this thread going in benefit that some people can take good points, ideas, opinions etc. and apply them so again I thank you.

You seem to be successful and accomplished in what you have done with your wash. I respect that wisdom and that's why I joined this community. I simply felt that the best way for me to get "real life" opinions is to speak with as many owner/operators as possible, and this forum allows you that...I thought. I don't assume any business is easy and simply a sleeping cash cow.

I'm a field engineer in industrial construction, ie. power plants, water treatment plants, Bridges, etc. and as you stated I have little knowledge of the car wash industry. My hope is to learn enough, from forums, direct owner contacts, trade shows, books, online articles.....you get the point.

ALL I ASK OF EVERYONE, PLEASE DON'T INSULT ME TO PROVE YOU'RE EXPERTISE.

That said, how demanding can I really be of the seller to see "everything". If I were the seller I would make it clear as day to what I'm selling; at least I hope that I would.

Plenty of people out there have gone through this so let me hear your advise or recommendations. I don't want to settle for, "that's just the way a car wash is..."

-S2R

 

[Waxman]

So will you quit your full time job and just run the wash or hire a manager?

I still think this deal is not one I would make, based on the info you have provided.

I think the best advice you will get is to hire a consultant after you review 3 years tax returns and decide if the deal is worth pursuing.

If the present owner cannot or will not provide them, you should move on and not waste any more of your time.

The bank will not lend based on 'blue sky'; they want numbers. If you don't need bank financing, kudos. But choose something easier than a carwash to put your money.

If you aren't willing to work at a wash for awhile ( 6 mos. minimum) to learn the business I would strongly caution you against this deal. Yes I still make mistakes, but I also do not have a million bucks hanging out there in debt.

 

[JMMUSTANG]

This weekend go across the street and spend time watching the wash.
Count the cars and type of cars entering the wash. Suvs, vans, pickups usually pay more at a full service wash.
Look at the wash and see what is right and wrong with the wash that in a customer eyes that you notice.
Also get traffic counts as close to the front of the location as you can.
Is there an opportunity to offer Express Wash or Flex Wash?

 

[Washmee]

Second if you are looking at running this as a full serv I believe that the labor cost would be more in the vicinity of $130-160,000 per year.

More like double that amount for labor at a Full Service. $200-250k.

 

[Suds2Riches]

I'm looking for this to become my full time job.

JMM, my idea is to convert the wash from a full service business model into an express wash with self vacs. From the research I've done watching other local washes it seems to me that much of their business is happening during their early bird and night owl time slots. Most washes here only offer exterior during those times.

I feel that a major portion of the washes labor costs can be reduced and judging by the heavier volume times it may bring in higher gross numbers by going express. This was partially one of my initial questions. Currently the wash runs as full service.

 

[bighead]

Let us all imagine:
Imagine that you just got taken by an unethical distributor/old owner and you now own a $1.3M car wash that isn’t worth $800k. What are you going to do? Most people try like the dickens for a couple of years to grow sales to make it worth that $1.3M. After a couple of years they burn out and realize it isn’t worth all that effort.

Then the owner puts it up for sale. They ask the $1.3M for it because they don’t want to lose money. They know its not worth it, but if some guy has more money than sense and wants to pay then they are off the hook. If not, then the owner offers to carry the contract with a decent down payment. If the original owner sells with a 20% down 3 different times he’ll make 60% of his money back over that period, then all of a sudden the numbers will pencil to operate his car wash.

The new guys who are interested in putting that 20% down, try to crunch the numbers, try to grab their slice of the American dream, and they come on this forum and say “hey guys, I’m new here, I’m trying to do _____” “these are the stats:__________” Tell me its going to work for me. And most of the time they are met with harsh tones, because most of the time it won’t pencil. When most places are selling $3 car washes, and most markets are overdeveloped, then most current owners are cynical because they see these news guys come and go a lot.

Even if the numbers pencil, pitzerwm is right, the guy could have cooked the books, or cooked the cash flow. There was a guy on this forum a few years ago who was going to sue the previous owner because the books were cooked, and the previous owner went as far as to deposit cash from a different business, so even if all you do is show up and collect the cash with the previous owner, that is not enough. Most of the operators on here either learned the hard way or made their money on the second and third car washes they owned, not the first one.

Odds would be better for you to start your own engineering firm. Stick with what you know.

 

[Waxman]

Bighead:

Very eloquently put!!! Thank you for saying what you said the way you said it.

 

[JMMUSTANG]

I'm looking for this to become my full time job.

JMM, my idea is to convert the wash from a full service business model into an express wash with self vacs. From the research I've done watching other local washes it seems to me that much of their business is happening during their early bird and night owl time slots. Most washes here only offer exterior during those times.

I feel that a major portion of the washes labor costs can be reduced and judging by the heavier volume times it may bring in higher gross numbers by going express. This was partially one of my initial questions. Currently the wash runs as full service.

I talked to a lot of 2nd. generation full serv. owners that had changed over to e.e. before I decided to change my format from full service to express.
Almost everyone of them told me I would lose 1/3 to 1/2 the customers from the full service volume and it would take 24-36 months to start to see an improvement. They were correct.
My labor cost for the first year was around $15,000 because my son and I worked 14-16 hour days 7 days a week with no salary. It's been tough.
By the way we've been in the car wash business since 1956 and we still are learning.

 

[Suds2Riches]

This is great advise from everyone. And guys I want to be clear that I don't expect to retire from one wash or buy into an existing wash and poof make tons of cash.

Bighead: your scenario puts a lot into light. For starters I can see now why many of these operators selling their business only are very willing to finance nearly half the asking price. This always seemed odd and it to the fact that the land is not being offered in the sale.

JMMUSTANG: Why do you feel that the loss happens? Is it that consumers don't like change? With 56+ yrs experience I would love to hear your description of the daily 14-16hr grind.

In my town there are only three washes, two are full service only and the third is self serve in-bay which on the brink of being shut down due to water reclaim issues or lack there of.
Based on demographics it doesn't seem to me as overdeveloped.
Partial reason for that is the town's zoning laws have a large land requirement making it nearly impossible to find a parcel that will fit the bill. All existing washes were built nearly 35+ yrs under old zoning laws.

Thanks again guys.

 

[rph9168]

At the risk of sounding like Steve Okun or Bob Roman have you thought about a flex serve format?

 

[JMMUSTANG]

Suds the reason is change of format.
This wash had been full serv. for more than 30 years.
As far as working 14-16 hour days I doubt that there is not one person on here that hasn't done the same thing.
This is the nature of this business at times and my experience is no exception. It is a tough business especially now in these times.

 

[robert roman]

In the final analysis, where you live determines the market opportunity.

If you happen to live where the selling of washes is predominately “business only,” then you must buy a going concern or build a new wash.

When building new, forward looking developers usually pursue a niche market.

If the business is a going concern, you inherit the business model. In this case, you can choose the status quo, or like a developer, you can pursue a niche.

Apparently, you have enough reason to believe that express exterior will succeed in a market that is predominately full-service.

However, the evidence you provided in your posts is simply not enough to determine whether this is a good idea or not.

In other words, some of us believe you have the cart before the horse.

 

[mac]

I've always heard that the advice you get is worth what you pay for it, but this thread disproves that old adage. There is some excellent advice here that is basically free and it could save someone a big mi$take.

 

[smokun]

Consider A More Adaptable Alternative

I've watched this post for a while and wondered why you haven't prudently examined the Flex-Serve format. It actually fits your challenge because it provides the best of all options... with a minimum of labor while optimizing your profitability. And it fits your existing site and facility with minimum modification.

Do your homework and educate yourself about Flex-Serve, and then apply the numbers. If you're retrofitting/upgrading a full-service to a Flex, you continue to retain 100% of the existing full-service clientele... as well as all of the potential express exterior business. And you position yourself perfectly to harvest all of the more lucrative hands-on detailing revenues available from numerous niche markets within your marketplace.

In all my years in this business, I continue to wonder why carwash operators remain intimidated by managing the labor related to detailing... when it is truly the cream of the appearance-care business. it remains the only real component that positions pricing in direct correlation to the supply/demand value equation. And with current technology, it is easier that ever to operate successfully.

Flex-Serve is the only format that enables an operator to tailor the business to meet both the demand of any particular marketplace... along with the individual operating preferences of the owner.

Do the more challenging part of your homework. Forget about the asking price... and develop your offer based on the potential of the specific site and the available marketplace demand. Also do a parallel assessment of the ground-up development at the same or similar site. Do some basic grassroots market research.

Comparing the 2 models, existing and ground-up, will provide you with some real-time insight that is currently not in your box of evaluation stuff. Too difficult? I offer it as something that you can do yourself that further minimizes a blind leap of faith.

Bottom-Line: Flex-Serve remains your best option. All others will have you sending customers to others for services that you should be offering at a single location. It provides the most robust competitive advantage... with the greatest instant adaptability to serve a changing marketplace in a fickle business operating in a volatile economy.

 

[Suds2Riches]

Steve, thank you. I've been doing my homework based on what you and others mentioned regarding going flex service.
In my market area there isn't any wash that currently offers customers flex service and that is inline with my initial thoughts.

As I research more I'll have some questions, thank you again for giving me additional food for thought.

S2R

 

[smokun]

There's More To Consider About Flex-Serve

To further bolster your appreciation of Flex-Serve, consider this:
1. The Flex-Serve operating platform is scalable. It can be sized to accommodate both existing demand as well as future growth with very little, if any, additional expense.
2. Because the Flex-Serve operating platform offers the opportunity and capability to perform ALL tasks that would be found at full-service or express exterior operations... as well as the majority of detail services provided by standalone detailing operations, you can stand toe-to-toe with any competition, both existing and new. Consequently, new competition will be very wary of entering the fray.
3. Flex-Serve is the only operating platform that is truly able to take your customers completely off-the-market from others. Essentially, a true one-stop shop!

Nevertheless, LOCATION quality, access, convenience and visibility still reign supreme in your final bottom-line decision.

 

[smokun]

One Final Clarification: Ignorance Isn't Necessarily Bliss

Flexible-Service, Flex-Service... and finally Flex-Serve are all terms I used in the past to identify the operating platform. Initially, when introduced flexible-service or flex-service to the industry, it was intended to be a generic identity. When some decided to alter some of the key points for self-serving reasons, I coined the term Flex-Serve and provided a more comprehensive explanation of the concept's features, advantages and benefits.

My goal in developing the concept was to develop the quintessential commercial carwash operating platform. It's ALL GOOD... with some twists better than others. It all has to do with bottom-line efficacy. Yes, the devil is truly in the effective implementation of all the details!

Some equipment suppliers and consultants such as Sonny's and others have modified the meaning primarily to suit their own needs, and it has worked well for most. However, in your research, be sure to evaluate all of your options... and seek all the subtle but significant differences that further distinguish my original concept and its implementation. My guiding preference has always been to NOT leave money on the table for others, for that oversight will ultimately compromise the bottom-line.

 

[parsonii]

Steve, thank you. I've been doing my homework based on what you and others mentioned regarding going flex service.
In my market area there isn't any wash that currently offers customers flex service and that is inline with my initial thoughts.

As I research more I'll have some questions, thank you again for giving me additional food for thought.

S2R

any updates on this .. did s2r buy the business or start his own engineering firm?