Re-opening a closed wash adding express detail

[DiamondAuto]

The population in my area is close to 100,000. I'm interested in opening a car wash and express detail shop in conjunction with opening an auto painting/cosmetic repair shop. My expertise is in the auto body repair industry. I have owned a small shop and managed the body shop for a Chrysler dealership.

I purchased a 20,000 sq ft building to open a paint and body shop. Its on a state highway in the middle of used car row with a 27,000 traffic count. Location was a prime consideration but the warehouse building and parking lot need work. I purchased most of my equipment used and paid cash. My payment to the bank is under $2,000 per month with taxes.

My research shows that a paint shop may not be very profitable in an area as small as mine. Performing other cosmetic repairs will help. I have investigated operating a car wash and detail shop, which would allow me to offer a full range of cosmetic and protection services.

I have $75,000 left to spend but need some of that for operating capital. I found a closed car wash for rent at under $5,000 per month. Its in the middle of our Golden Mile. Over half of the new car dealerships, 15 fast food chains and restaurants, 3 strip malls and several shopping centers are on this this strip. Being in the middle of all this with a 29,000 traffic count seems like a great opportunity.

The car wash was closed a year ago when the former owner defaulted. Gross sales for the previous 5 years averaged $250,000, which seems a bit low for an 11 bay wash with the best location in town. It was built 25 years ago but still looks good. The equipment has been cannibalized of some parts for the former owners other wash and I don't yet know what it will cost me to fix. At 25 years could it be considered too old to repair and time to replace? I'm on a budget and don't want to go to the bank.

This wash should do well especially by doing what other wash owners won't. I would keep the 3 rollovers, remove all of the self-serve equipment, and convert 6 of the 8 self-serve to detail bays. There are no car wash/express detail shops in town. I would convert the other 2 bays into a showroom. I could also enclose and convert the 10 bay vacuum canopy into additional detail and quick lube bays.

This wash would become the sales location for my auto paint/cosmetic repair shop, which would save me on remodeling costs for that facility. Our body and paint repair customers would get estimates and drop off at the car wash and we would shuttle their cars to the paint shop/warehouse 5 min away. My rent at the car wash for a year is what I might spend remodeling my warehouse and I would gain the additional source of income plus THE TOP LOCATION in town.

Am I on the right path? Are the 15.5 X 24.5 bays large enough for detail bays? I have always had great sales success with my body shop customers and believe I can do as well with additional services. I read that the rollovers should each gross $4,000 per month and the 6 bay detail shop another $30,000. Cash flow might be about 25%. Deduct rent and I have $70,000 plus a showroom for my paint shop. Remodeling the car wash would require 6 new garage doors, shop heaters, and the new showroom but this would be considerably less than remodeling my paint shop/warehouse. I would need to purchase detail equipment and repair the wash equipment. Am I anywhere close in my assesment? I need more info for my SCORE advisors and business plan. I would appreciate any comments.

 

[DiamondAuto]

Opening a closed wash and adding express detailing

The population in my area is close to 100,000. I'm interested in opening a car wash and express detail shop in conjunction with opening an auto painting/cosmetic repair shop. My expertise is in the auto body repair industry. I have owned a small shop and managed the body shop for a Chrysler dealership.

I purchased a 20,000 sq ft building to open a paint and body shop. Its on a state highway in the middle of used car row with a 27,000 traffic count. Location was a prime consideration but the warehouse building and parking lot need work. I purchased most of my equipment used and paid cash. My payment to the bank is under $2,000 per month with taxes.

My research shows that a paint shop may not be very profitable in an area as small as mine. Performing other cosmetic repairs will help. I have investigated operating a car wash and detail shop, which would allow me to offer a full range of cosmetic and protection services.

I have $75,000 left to spend but need some of that for operating capital. I found a closed car wash for rent at under $5,000 per month. Its in the middle of our Golden Mile. Over half of the new car dealerships, 15 fast food chains and restaurants, 3 strip malls and several shopping centers are on this this strip. Being in the middle of all this with a 29,000 traffic count seems like a great opportunity.

The car wash was closed a year ago when the former owner defaulted. Gross sales for the previous 5 years averaged $250,000, which seems a bit low for an 11 bay wash with the best location in town. It was built 25 years ago but still looks good. The equipment has been cannibalized of some parts for the former owners other wash and I don't yet know what it will cost me to fix. At 25 years could it be considered too old to repair and time to replace? I'm on a budget and don't want to go to the bank.

This wash should do well especially by doing what other wash owners won't. I would keep the 3 rollovers, remove all of the self-serve equipment, and convert 6 of the 8 self-serve to detail bays. There are no car wash/express detail shops in town. I would convert the other 2 bays into a showroom. I could also enclose and convert the 10 bay vacuum canopy into additional detail and quick lube bays.

This wash would become the sales location for my auto paint/cosmetic repair shop, which would save me on remodeling costs for that facility. Our body and paint repair customers would get estimates and drop off at the car wash and we would shuttle their cars to the paint shop/warehouse 5 min away. My rent at the car wash for a year is what I might spend remodeling my warehouse and I would gain the additional source of income plus THE TOP LOCATION in town.

Am I on the right path? Are the 15.5 X 24.5 bays large enough for detail bays? I have always had great sales success with my body shop customers and believe I can do as well with additional services. I read that the rollovers should each gross $4,000 per month and the 6 bay detail shop another $30,000. Cash flow might be about 25%. Deduct rent and I have $70,000 plus a showroom for my paint shop. Remodeling the car wash would require 6 new garage doors, shop heaters, and the new showroom but this would be considerably less than remodeling my paint shop/warehouse. I would need to purchase detail equipment and repair the wash equipment. Am I anywhere close in my assesment? I need more info for my SCORE advisors and business plan. I would appreciate any comments.

 

[robert roman]

Providing you with adequate answers to all of your questions would require far more space than is allowed in this venue.

Moreover, your situation is more complicated than most start-ups because you are planning to open two businesses concurrently.

However, the problems are the same. How much market is there? Is there unmet demand and, if so, how much?. Is the location(s) economically desirable and suitable for the intended use? Will the anticipated income support the estimated cost of the project? Does the return make sense for the risk taken?

All of these questions and more can be answered by conducting a feasibility study.

The purpose of a feasibility study is to validate the business concept by the core dimensions of market, technical, business model, management, economic and financial and exit strategy viability.

Once a feasibility study is completed and demonstrates that the project would be commercially viable, you will have most of the information that is required for a business plan.

I surprised that the folks at SCORE haven't recommended this approach to you to help answer your questions.

 

[mjc3333]

DiamondAuto

Robert is dead on right, you need a feasibility report before you can throw out figures from publications ($4000 per month $30,000 per month etc.).

I assume when you say you would keep the 3 rollovers, you are referring to In Bay Automatic washes. If so, the equipment alone would be anywhere from $130,000 to over $200,000 PER bay considering the fact that the previous owner cannibalized the equipment. This would not include any updating or repairs to the existing bays to make the equipment fit and function correctly. Right off the bat, you are looking at $400,000 to $600,000 investment to utilize the rollover bays just for equipment only. $4000 is a good ballpark number, BUT remember, that number does NOT multiply by a factor of 3 just because you have 3 automatics. Each one would produce a percentage of what the first one produces. You might be in the $6000 to $10,000 per month gross figure for all three (you can only wash so many cars per hour in an in bay automatic). Not much is left over to pay down the debt service.

Also the car wash equipment does NOT take care of itself. There are many pitfalls behind jumping into the car wash business.

As far as the $30,000 per month in detailing, seems awfully high to me. It would depend on the demographics of the area, and the price you could charge. Bodywork does not parallel detailing in dollars per time spent. It is very difficult to get the same going shop rate for both jobs. Also, bodywork is usually always something of a necessity, while detailing is a luxury.

Just my thoughts

 

[rph9168]

This sounds like much more than a "fixer upper". $75,000 won't scratch the surface to do what you want from your limited description. Getting the three IBA's will probably cost more than that alone depending on how much the previous owner left. A local distributor I know recently rebuilt an 8-bay self service wash for $60,000 and that was without any IBA and using quite a bit of the equipment that was there. I assume a bank owns it right now. Even if it is owned by a private party as it exists all it really is a piece of property especially if the wash was cannibalized and has been closed for so long. While it might look okay, a 25 year old building probably does not conform to code which you will have to do if you intend to renovate it. I have seen times when it was more practical to knock it down and rebuild rather than remodel but that depends on a lot of issues.

Renting it if you intend to rehab the site doesn't really make sense. The first thing you need to do is to find out what it would cost to purchase the site. Banks or private parties do not usually like to rent businesses unless they have no other option. If this wash has been closed for over a year, they obviously either have had no takers or want more than it is worth. If you are still interested after checking on purchasing the wash you need to find a reliable local distributor and a contractor to get estimates on repair and renovation of the building.

If you still want to proceed you need to put together a comprehensive business plan including in addition to the items already discussed all the other elements such as a feasibility study, revenue projections, etc to search for financing the project.

From what you described, if you are reluctant to get financing, I think it will basically be impossible for you to put this together.

 

[DiamondAuto]

Hi Robert, Thanks for your reply. I am just getting a start on this project and wanted to get some basic advise from experts before spending too much time or money. This property just became available a few weeks ago. If everybody tells me it will take $500,000 to rehab and I can expect to net $50,000 for my investment and by working 60 hrs per week my questions will have been answered and I will save the expense of the feasability study. I can remodel my current facility and net well over $200,000 per year just running a paint shop etc. One of my SCORE councelors used this wash for 20 years till it closed and thinks I have a great idea. This was the top wash in town till the former owner inherited it from his Father. My next step I think should be to find out what it will cost to get the IBAs repaired. The previous owner took some of the electric motors, the coin, bill and token machines etc, and some other parts for spares at his other wash. He also took the wands and brushes for the self serve, which I dont need since those bays will be detail bays. Some people would say Im opening 4 businesses at the same time in 2 locations while others would say Im opening an Auto Spa at 2 locations. I cant do painting at the car wash due to the zoning even if I had the space. Your comments have been helpful. Please feel free to add any additional comments. Thanks

 

[DiamondAuto]

mjc3333

Hi mjc3333, Thanks for your post. Your info on the $4,000 gross sales per month for the IBS's and $30,000 for the detail shop is what I was looking for at this early stage. Your input makes sense. When I said the equipment was cannibalized by the former owner for his other wash I should have said he removed some of the motors, coin machines etc, and some other parts. All of the big parts are in place but it still looks like a mess with cut wires etc. The wash was built by somebody who owned dozens of washes. Things went to hell when he died and his son took over. I will remove the self-serve equipment so no expense there. I assumed it could take $5,000 to $50,000 to replace the missing parts. I plan to have an expert take a look and Im looking for wash repair companies in this area to give me an estimate. I also question if 25 year old equipment is at the end of its usefull life anyhow so thats a question for you experts. Nobody is doing express detailing in my town and the only detail shops I know of are in parts of town my Mom would not drive through even at high noon. The people I talk to have asked how soon I can detail their cars. Some people can sell ice cubes to an Escimo. I dont claim to be that good but I have had very good success with my body shop customers in the past. With no decent detail shops and this top location I believe it could succeed. The demographics is good, the wash is on the north end of town where most of the money is. The town has been expanding north for over 50 years. The fast food restaurant next to me is on a corner lot and that corner lot has the highest traffic count in town. That intersection also has a McDonalds, a strip mall, and a large shopping center on the other 3 corner lots. The shopping center is across the street and another strip mall is behind me, as well as a bank on the other side so this is a prime location. From what I have read I understand the car wash business is not as easy as most assume, (sit back in your easy chair after topping off the soap and rake in the cash). With the economy I assume detail shop sales are down. I have read books but now its time to ask the experts like you for real world advice. Please feel free to add any additional comments. Thanks for your help.

 

[DiamondAuto]

rph9168

Hi rph9168, Thanks for your post. When I said the equipment was cannibalized by the former owner for his other wash I should have said he removed some of the motors, coin, token and bill machines etc, and some other parts. All of the big parts are in place but it still looks like a mess with cut wires etc. Its not as bad as it probably sounds. The wash was built by somebody who owned dozens of washes. Things went to hell when he died and his son took over. I will remove the self-serve equipment so no expense there. I assumed it could take $5,000 to $50,000 to replace the missing parts. I plan to have an expert take a look and Im looking for wash repair companies in this area to give me an estimate. I also question if 25 year old equipment is at the end of its usefull life anyhow so thats a question for you experts. The building looks very nice. The demographics is good, the wash is on the north end of town where most of the money is. The town has been expanding north for over 50 years. The fast food restaurant next to me is on a corner lot and that corner lot has the highest traffic count in town. That intersection also has a McDonalds, a strip mall, and a large shopping center on the other 3 corner lots. I have the shopping center across the street and another strip mall behind me, as well as a bank on the other side so this is a prime location. The property is owned by a 3rd generation family trust. They also own the fast food restaurant next door as well as other commercial property in town. The Grandfather owned 10 or more acres here before parcels were sold off and developed. The person in charge of this property manages the family real estate company. His brother and his cousins have no real estate background and let him take care of the trust. Its complicated and likely will never be sold Ive been told. They had a great deal of difficulty when they sold the property 2 doors east on the other side of the bank. The family had a great relationship with the man who built the wash. He renewed his lease every 5 years and had a 50 year option to renew. The trust will do a 1, 2, 5, 10, 20, or 50 year lease, wharever I want. They want $3000 per month, plus taxes ($18,000 per year), plus insurance. I assume this is in line for such a prime site but Im asking all of you experts out there. If I can get the equipment repaired for $25,000 I think this might be doable and not require owing the bank. The building just needs garage doors and a showroom/waiting area for my customers. Do you think the in-floor heating will be enough to heat the bays or do I need to add furnaces? I appreciate your comments and hope to hear from you again. Thanks

 

[Waxman]

Pay a good reputable consultant to help you.

Your $30k per month is very optimistic for someone who's never run a detail operation.

You seem to hype the location alot in your posts. That's great, but still just your opinion. I would check yourself ,as they say, with a paid professional before you enter into what appears to be a huge, monsterous undertaking.

 

[soapy]

Detail shop. The SS bays converted to detail bays would be a little tight on space but doable. Does not leave a lot of room for detail equipment in each bay. I would try to keep at least 3 of the SS bays working and start with 3 detail bays . You can always convert more over if you need to. $4000 per automatic bay seems a little short. If you run the autos right 6K per bay is more in line with industry averages per month. I would work on getting 2 autos up and running correctly first. One of the auto bays could be used for the larger details that you might get like pickups and large SUVs. Until your auto bays are doing at least 8K per month I would not put the expense into the third bay. By keeping some of the SS bays working you get an additional $1500 per SS bay income and use them wash cars for your detail operation.

 

[rph9168]

I think this will cost you much more than $75,000 to remodel and rehab and purchase the equipment as well as other start up costs you will need to operate as you plan. If you proceed with your plans I think it would be advisable to do it in stages like Soapy suggests. This would lessen the initial investment and give you time to get a better feel for the whole plan.

This seems like a risky proposition. When a wash is down for that length of time it takes quite a while for people to return. It sounds like even before it closed things were not in great shape which complicates it even more. I am not a big fan of leasing property even if it is for a long term. I would at least propose a lease/purchase deal. If this property is as prime a location as you feel it is I am concerned that it has taken so long to get someone to take it on. It seems that there might be some hidden expense or complications that may have caused others to pass. Even in a bad economy there are people willing to take on good deals if it is one.

I worked for a car wash chain that always bought existing washes rather than build. The owner once told me that he had passed on many more deals than he took on. He was very shrewd and did a lot of legwork before committing. I would do a lot more investigation of the possibilities on this without committing any money. The cost of a good consultant could save you a lot of money and possible problems in the long run. You could get yourself into a much more expensive project than you planned for with a slow return.

 

[DiamondAuto]

Waxman

Hi Waxman, Thanks for your input. Yes the $30,000 is a high estimate. I plan to have 3 detail bays. The book I read said a 3 bay detail shop should gross $15,000. I also plan to perform express details and assumed I might do another $15,000. All I have to go by are the books I have read so getting info from you experts is a plus. With a 29,000 traffic count I assume a Grand Opening will help get the word out. There is a large shopping center across the street and a smaller one right behind the wash. I have a fast food place on 1 side and bank on the other. I asked my SCORE advisor if offering free car washes at the Grand Opening would get me noticed. He said I would probably fill the parking lot between me and the shopping center behind the wash. I cant say enough about the location. Other than the gas station washes there have been no new washes for over 10 years. Most are pretty old. Two are 12-15 years old. Nobody does any detailing. We have 2 tunnels that will vac your carpets and wipe your windows but thats it. There are no detail shops in town that my Mom would go to, (bad locations), and I assume that somebody will make this location work. The family trust who owns the property are in the middle of a lawsuit against the former owner who inherited his Fathers car wash empire. They could not attempt to lease this property till last December but didnt try till the weather cleared a few weeks ago. The original owners son screwed up a good thing and I dont know how he could loose his Dads fortune (dozens of washes Im told). Perhaps all the profits went up the noses of him and his friends, it wouldnt be the first time a family fortune was lost. I do want to hire a consultant before going too far but wanted to get some free advice first. As far as I can tell the wash needs 4 motors and all of the timers or switches in the control boxes. Probably more but the major stuff is there. Since its 25 years old is it too worn out to repair or do I need to have it looked at? Im looking for an equipment repair company in Illinois to take a look and give me an estimate for repairs. Can anybody suggest an expert? Thanks

 

[DiamondAuto]

soapy

Hi Soapy, Thanks for your reply. I had a feeling the SS bays would be tight but I have a plan on that. If I were to keep 3 SS bays I will have that equipment to repair as well. There is an SS only wash a mile down the road. Its the cheapest in town and the most run down. I suspect it would be hard to get his customers away and I could not charge more than the 75 cents he charges. Lots of expense to get the SS working for 75 cents per wash. The SS pumps and motors are gone but the IBA pumps and motors are still there. I think I could make more money detailing, especially express details since nobody else is offering that service. Your info about the IBAs getting $6,000 helps. My book said $3,500 to $4,500 per IBA and $1,500 per SS bay. Yes I thought about getting 2 of the IBAs running first and using the other like a SS bay for my detail shop. Is the equipment at the end of its usefull life at 25 and need replaced or should I still look into having it repaired? Thanks again

 

[Waxman]

There was a Magic Wand 3 bay SS setup complete, I believe 4 yrs old, on ebay for $5000 and it got zero bids and did not sell.

You could buy something like that and get your SS going.

Your statement about not being able to compete w/a very run down SS charging 75 cents shows your rookie status. SS revenue is not to be taken lightly. Some money is always better than no money and customers want quality. You could be $2 for 3.5 min. and if the water is hot, the soaps rich, and everything clean and working you have the best SS in town; quite a big deal, actually.

Learn more about the business before you commit any real money, because it's evident how little you do actually know.

Most carwashers here would wipe the streets with that type competition!

 

[Waxman]

This looks like a duplicate post from General section.

Why not keep it simple and use the original post as your thread exclusively? Might get you closer to solving your problems.

This is also likely the reason you've gotten 1 reply in the detail section (me).

 

[soapy]

It would be nice to have one operating SS bay just for cleaning the cars that you will be detailing. Muddy trucks, engine cleaning etc. is nice to do outside of a detail bay so you are not walking around on a wet floor all the time.
If the IBA are over 15 years I would consider replacing them with new equipment. New equipment is faster and cleans with lower wash costs per wash. The new features on a IBA provides the sizzle to draw in customers. IBA have really come down in the last 2 years and the factories are hungry for any sale. Plus who wants to have to always repair broke down autos. It leads to a bad reputation if you can't keep them open.

 

[MEP001]

There have been a number of replies in the post under the General section.

 

[DiamondAuto]

I'm new here, just found this forum last week. I was not sure where I would get exposure for my questions or if I would get any replies at all. Having been online for over 10 years I have been to sites that have little traffic. I have been happy with the responses so far so thanks to you all. Since I want to open a car wash I assumed the car wash owners would look there and the detail only shops might never look at my original post. By posting again in detailing I felt I would cover both bases. Thanks

 

[DiamondAuto]

rph9168

Hi rph9168, Thanks for your reply. This is looking like a much higher cost venture than I suspected but thats good to find out. At this time I am looking for info and trying to get some numbers to see if this will work. There is another wash in town for $950,000 but its location is not as good, although traffic count is 9,000. They have 2 IBAs and 6 SS bays. Its 11 years old. Somebody has said that the IBAs should be replaced after 15 years. If thats correct thats a lot of money for a wash that will need rebuilt in 4 years with a so so location. The property I'm looking at is owned by a family trust. They wont sell but the 5 in the trust are age 68-92. The two in their 60s have majority interest and would sell but not till after the other 3 are dead. I suspect the next generation would not have a problem selling. The $3,000/month rent plus $18,000 taxes and insurance sounds reasonable but I would like to know what others think. With a 29,000 traffic count I suspect that everything in this area is pretty high. I'm surrounded by shopping centers and fast food places. I hope to get a few answers from you experts before spending money. What might I expect to pay a consultant and where would I find one? Thanks

 

[DiamondAuto]

soapy

Hi Soapy, You have a very valid point about having a SS bay. I read here that engine detailing can lead to problems with all the electronics, even if you have them sign a waiver so I've decided against that. I expect to make a profit from the wash and detail shop but part of the reason for considering this is to combine it with my body shop and touch up repairs and use the wash location for a sales office for all. A 1 stop shop for all cosmetic and protection services, Diamond Auto Spa. I was not aware that the IBAs may need replaced after 15 years so thats usefull information as well. Thanks again