Car Wash FAQ

Thinking About Building a Car Wash?

Any investment can be risky - building a car wash is no exception. While more and more people are washing their vehicles at a car wash it has become a very competitive business. Professional car washes have been around for over 100 years. During that time what began as a relatively simple business has become very sophisticated and requires careful consideration when choosing to build a wash.

5 Key Factors To Know The Answers To:

1. How much time and effort will you be able to devote to the business?

What choice you make will depend a great deal on how much time and effort you are willing to devote to the business and your skill level at managing and operating a business.

2. How much money will it take to build and operate the wash?

While building a wash is an expensive proposition it is important that you get the most from your investment by looking at all the financing options available and what fits best with your budget.

3. What is the best location for my wash?

There are many important factors involved in selecting a site for your wash. Issues like traffic flow, demographics, site configurations, zoning, and available utilities are among the many aspects you must consider.

4. What equipment company should I choose to work with?

One of the most important choices you will make in the process is the company that will work with you to achieve your goal of building a successful wash. It is critical that you select an experienced company that can assist you through all phases of the project from initial planning to operating the wash.

5. What can I expect as a return for my investment?

As with any investment profitability and long term value are key considerations. While no one has a crystal ball that can guarantee that you will achieve your goals, careful planning from the inception of the project to the operation of the wash will go a long way to facilitate your success as a car wash owner and operator.

Is the Car Wash Business for Me?

Making the Commitment

Assuming you have already decided to take the plunge into the world of professional car washing some of the initial activities that you undertake may make or break your venture before it even begins. Professional car washing seems to be a fairly simplistic business for the casual observer. You build a wash, operate it as well as possible and collect the money. If it were really that simple many more would choose it as an investment and there would not be so many wash failures. The first consideration would be to take a personal inventory of what your strengths and weaknesses are and how they match up to the challenge of building and operating a successful car wash. As an individual investor expect to be a hands-on operator ready to spend long hours at a challenging business. This is not a business for the faint of heart or one who expects little personal involvement in it. Depending on the type of wash you decide to build, you can expect to deal with and depend on support personnel, suppliers and related businesses on a regular basis. There may be employee issues, accounting details, dealing with customers and the constant threat of competition moving in. In addition you will find your- self at the will of some things you have no control over like the weather . If you have considered all the pros and cons and decided to invest then let the fun begin.

Can You Afford It?

Like any investing in any other business the most important hurdle is financing. Before going too far into it, you need to have a very good idea of how much it will cost and how you will be able to finance the project. In today’s world, expect to be required to put at least 20% to 30% down or more, with good personal financial resources, a clean credit record and preferably successful experience in running a free standing business. Lending institutions willing to finance a wash have very strict guidelines for financing with very little if any leeway for the potential investor, especially if you have no previous industry or business experience. In addition to the money you put down you will need a financing package that should take into consideration cost of the land and building, equipment, contingencies and working capital. Make sure you have either a personal reserve to meet your personal obligations for a mini-mum of at least a year or more or plan for it in your financing arrangement. This is extremely important.

Make It A Team Effort

If you make it through the money matters you need to turn your attention to building a team to help you through from start to finish. An investment in a wash is not something you should undertake on your own. Put together a team of individuals whose judgment you trust including an architect/ general contractor, accountant, banker, lawyer and an industry specialist. Look for an independent consultant or a distributor you can trust to help you through the process. While the independent consultant may seem to cost more in the beginning, in the long run they may save you money and headaches by being on your side from the beginning with no other personal gain to be made other than the fees they charge. On the other hand, a well qualified, experienced distributor usually has no up front fee and will work for the profits they will make on selling the equipment and other wash supplies to you. Maker sure that either individual or company has already been involved in the process of building and operating a wash in the past. In either case be sure to check out their qualifi- cations and references thoroughly before choosing one to work with. This is one of the most critical decisions you will make in the entire process. After assembling your team you are now ready to put your plans into action. At this time, if you have not already done so, it is important to have a firm business plan in place with a detailed strategy with basic criteria to be met and written goals you intend to achieve with your investment. Before building a wash you might be able to save yourself a great deal of aggravation, time and money by checking out washes in the area you have chosen to operate in. Like many other industries, most existing washes can be bought for the right price, If you find one that meets your criteria and budget you will be able to avoid a great deal of work like site selection and development, feasibility studies, contracting services, dealing with local and state regulations and boards and the general headaches of the building process. Once again you must be able to rely on your team to assist you in making the decision to buy an existing wash or building one from the ground up.

The decision to invest in a car wash is one that should be done after careful research on the industry and an evaluation of how much you are willing to invest in terms of both time and money.

For that and many other reasons it is important that you make that decision with as much information as possible to help you finalize your plans. The professionals at Hydro-Spray have been building successful car washes for over 25 years. Here are some of the factors you should consider.

What Type of Wash is Best Suited for You to Invest in?

There are several types of car washes for you to consider. The three basic types are:

Self Service A popular choice for motorists that like to “do it themselves”. Customers at a self service wash drive into a bay and select the options they want to use when washing their vehicles then proceed to the vacuum area to finish the job.

Automatics For those motorists wanting convenience when washing their vehicle. Automatics can be stand alone or built along with self service bays. Customers drive into the wash and remain in their vehicle while the equipment moves around applying the wash options they have chosen.

Tunnels Growing in popularity among motorists, tunnels can be operated in several different formats. Vehicles are treated to the wash while they travel down a computer controlled conveyor.

Q. Marketing: What should I look for in a site?

A. Ideally a convenient, easily accessible site is best; located near shopping and apartments with good egress and ingress. Remember 90% of

your business generally comes from a 3-mile radius. The old rule of thumb of one bay per 1500 people in your trading area is still valid.

Evaluate the zoning of the property. A great piece of property that is zoned improperly and needs to be rezoned with a special use

permit may cause you more aggravation and lost time than you have. High speeds by your entrance (over 40 MPH) can be a negative for people exiting your property. Avoid a lot where heavy traffic can back up from a traffic light and block your entrance and/or exit.

Remember – self service customers usually plan to wash their vehicle, thus a high traffic count or prime exposure are not mandatory for a good location.

Q. Land: How much do I need? What should I pay?

A. Normal minimum lot size is based on your project size, although you can never have enough. Lot size guidelines:

2 bays: 115´ x 58´ 6 bays: 115´ x 122´

3 bays: 115´ x 74´ 7 bays: 115´ x 138´

4 bays: 115´ x 90´ 8 bays: 115´ x 154´

5 bays: 115´ x 106´

Concerning cost; there are two ways to look at it:

Purchase – An average price per bay for land is $20,000 to $30,000. If purchasing the property assuming a projected monthly income

of $10,000, a 10-year amortization is common. Thus, you could justify a purchase price of $180,000 ($1,500 x 120 months).

Lease – Rule of thumb is $200 to $300 per bay per month net. The average formula for calculating cost of property based on projected

income is 15% of the projected gross income.

Example: If wash were projected to do $10,000 monthly, $1,500 would be an affordable lease payment.

Q. Site Planning: What kind of building? How do I locate it?

A. DON’T: build a temple; it’s generally an overkill that makes it tough to make money. Remember maintenance free materials are the key.

Keep an adequate turning radius on both the entrance and exit side of the wash. A vehicle leaving a wash stall needs a minimum of

20´ just to make a turn. Keep enough space on the exit side for vacuum islands, for drying, and an open exit lane. Hydro-Spray will

be happy to provide customized lot flow layouts as attached to this guide.

DO: Where possible, have the building parallel to the street, bays open to traffic…. Customers will use them more and feel safer.

Q. Building Size: How big do I go? What should I consider as far as equipment?

A. A typical self-serve bay size is 28’x15’, although if you are in warm climates washing only cars and small truck, 26’x15’ is

okay. Automatic bay size is typically 32’x15’ although 40’x15’ is desirable. We recommend all ceiling heights to be 12’ and

minimum door openings 10’x10’ up to 12’x12’. Concerning equipment rooms, the same measurement of a wash bay is fine.

Car washes that are located in the more colder climates are required to have heated floors to reduce freezing and accidents.

Q. Building Cost: What should I budget for my project cost?

A. Concerning the building shell, this depends on climate considerations but $15,000 to $20,000 should be close.

Factors such as improvements to property, i.e. landscaping, paving, sewer, and water are variable and will depend on you decision to buy

or lease. Be aware that unusually high costs can occur such as excessive landfill, retaining walls or excessive permits.

Regarding the price of a finished self-service, per bay equipped should run $35,000 to $55,000; although, again, unusually good economics

or unusual site preparation could change this to $45,000 to $70,000 per bay, turnkey.

Q. Revenues: What kind of gross income can a Hydro-Spray Self-Service Car Wash generate?

A. A recent survey completed by a national publication states an average of $800 to $1,400 per bay per month depending on area, however, reports

from our distributors and customers show that most Hydro-Spray customers are above these averages. For planning purposes $1,200 to $1,700

per bay per month depending on the site is realistic. Estimated vacuum income is $203 per month and vending income approximately $93 per

week per site. When evaluating an equipment supplier, three key variables should be considered:

a. Length of time in the industry. This generally indicates that the company continuously builds quality, industry-accepted equipment.

If this were not the case, most companies wouldn’t survive

b. Use of industry standard and recognized components

c. System design and accessibility. Hard to reach or service components cause excessive down time for repairs.

As you might expect, these variables have a profound effect on not only your gross but your net income as well.

Q. Operating Cost: What does it cost to operate a Hydo-Spray Self-Serve Car Wash?

A. Hydro-Spray Self-Serve Car Washes are typical according to industry reports. On an average, variable operating costs (electricity,

heat, water, sewer, labor, maintenance and repair, chemicals, insurance and miscellaneous supplies) run 35% of gross.

Q. Other Costs: What about financing? Depreciation? Tax credits?

A. There is no one right answer; however, in general 65% of gross will be available for debt service, depreciation and taxes.

As far as depreciation schedules; buildings and equipment are different; therefore, what method you elect is up to good tax and

accounting principles. There are a number of tax credits depending on age of an existing site and investment that may be available.

Although we have addressed and answered, in general terms, the normal questions received, we felt the following work sheet

summary may be helpful for planning purposes.