Starting a car wash business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful car wash business.
Importantly, a critical step in starting a car wash business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Car Wash Business Plan Template here.
14 Steps To Start a Car Wash Business:
- Choose the Name for Your Car Wash Business
- Develop Your Car Wash Business Plan
- Choose the Legal Structure for Your Car Wash Business
- Secure Startup Funding for Your Car Wash Business (If Needed)
- Secure a Lease for Your Location
- Register Your Car Wash Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Car Wash Business
- Buy or Lease the Right Car Wash Business Equipment
- Develop Your Car Wash Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Car Wash Business
- Open for Business
1. Choose the Name for Your Car Wash Business
The first step to starting a car wash business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your car wash business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your car wash business.
2. Develop Your Car Wash Business Plan
One of the most important steps in starting a car wash business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your car wash business.
- Company Overview – this section tells the reader about the history of your car wash business and what type of car wash business you operate. For example, are you a self-service car wash, an automatic car wash, or a detailing car wash business.
- Industry Analysis – here you will document key information about the car wash industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products or services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your car wash business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your car wash business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Car Wash Business
Next you need to choose a legal structure for your car wash business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the car wash business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to open a car wash business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a car wash business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a car wash business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your car wash business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Car Wash Business (If Needed)
In developing your car wash business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a car wash business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a car wash business that they believe has high potential for growth.
5. Secure a Lease for Your Location
When starting a car wash business, the first thing you need to do is find a location. You’ll want to choose a spot that is easy for customers to access and is in a highly trafficked area. You may also want to consider choosing a location that is close to other businesses, so you can attract customers from those businesses as well.
You’ll want to look around for a location that can accommodate all of your car wash equipment. You’ll need a bay or stall where your customers will wait and you’ll also need space for the washing equipment and supplies. Make sure you will have access to enough water and electricity as well.
The best locations for a car wash business are those that can accommodate large numbers of customers and self-service locations that are open 24 hours a day.
6. Register Your Car Wash Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your car wash business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your car wash business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
A car wash business typically needs a business license from the local government, as well as a permit to operate a car wash. This depends on the city’s business license requirements. Other permits may depend on where you live, what you will be washing, and if there are specific health or environmental regulations that pertain to your location. Some examples of these types of permits include a storm water discharge permit from the local government, a pollution control device permit from the state environmental protection department, and a wastewater discharge permit from the local board of health.
10. Get Business Insurance for Your Car Wash Business
Below are the main types of insurance to consider for your business:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Car Wash Business Equipment
To start a car wash business, you will need a few pieces of equipment. You will need a pressure washer, a number of hoses, buckets, and some cleaning supplies. For automatic car washes, you will also need a vehicle wash system. These systems are pricey, but they will make the process of car washing much quicker. Some car washes also offer vacuums for customers to use after they have washed their vehicles.
12. Develop Your Car Wash Business Marketing Materials
Marketing materials will be required to attract and retain customers to your car wash business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your car wash business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional car wash business website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your car wash business.
13. Purchase and Setup the Software Needed to Run Your Car Wash Business
To start a car wash business, you’ll need software to help manage your operations. Car wash business software can help you track customer information, charge customers and make appointments.
Here are some popular car wash business software solutions:
- Car Wash POS – Track customer information and process payments with this point-of-sale (POS) software. You’ll be able to track customers’ loyalty program status, view transaction history, and more.
- Car Wash Management Software – Manage daily tasks with this software, which helps you schedule appointments, produce reports, and stay on top of marketing efforts. You’ll also be able to track customer information for each vehicle that enters your car wash business.
- Car Wash Cleaning Scheduling Software – Store details about your equipment and cleaning chemicals, and then use this software to schedule jobs. You can choose the type of equipment that will be used for each job, what chemicals are needed, and more.
- Car Wash Marketing Software – Promote your car wash business with this software, which helps you manage customer lists, target ads to specific audiences, produce reports, and more.
14. Open for Business
You are now ready to open your car wash business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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Car Wash Business FAQs
No, it's not. In fact, it's quite easy to get started and operate a car wash business. All you need is the necessary know-how and a location with sufficient space for your equipment and operational needs.
You can start a car wash business with no experience by doing the following:
- Research the competition in your area and come up with a plan to differentiate your car wash from the others.
- Create a business plan and get funding, if necessary to help get your business started.
- Purchase the necessary equipment and supplies needed to run your car wash business
- Hire employees and get started.
Yes, investing in a car wash is an excellent idea and can be very profitable. You can start small and scale it up as you go along without investing too much money initially. The initial setup cost is quite low, mainly the equipment itself depending on its size, type and how elaborate your car wash business plan is.
There are many different types of car wash businesses, but the most profitable type is the full-service car wash. This type of business offers a wide range of car wash services, such as vacuuming, shampooing, and waxing the car. The equipment and supplies for this type of business can be expensive, but the market is currently booming.
The cost to open a new car wash business varies depending on the location and size of the business. This figure includes the cost of purchasing commercial property, construction and equipment.
Additional start ups costs include:
- Licenses and permits
- Insurance: general liability insurance, workers compensation insurance and vehicle liability insurance
- Repair and maintenance
- Utilities: electricity, water/sewer, natural gas, sewage disposal
There are a few ongoing expenses to consider when starting a car wash business. These include water bills, trash removal and supplies. Depending on the size of your car wash business, you may also need to hire employees and pay for advertising.
A car wash business makes money by charging customers a fee to have their car washed. Another way a car wash business can make money is by selling car cleaning products and supplies to customers. A car wash business can also make money by providing other services, such as auto detailing or oil changes.
Yes, owning a car wash business is very profitable.
A car wash is a business that is always in demand. The fact that it is a recurring service means that you will always have customers. In addition, a car wash is relatively simple to start, and with the right marketing, you can see significant profits from this business.
A car wash business can fail for a number of reasons, but the most common reason is a lack of marketing. Other reasons include a lack of proper maintenance, not catering to customer needs, and not having the right team in place. These are all factors that can be controlled, meaning that a business owner has the opportunity to turn things around, no matter how dire the situation might be.