How Much to Start a Self Service Car Wash

Start a car wash by following these 10 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your car wash. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Check out our How to Start a Business page.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?
• What will you name your business?

Luckily we have done a lot of this research for you.

What are the costs involved in opening a car wash?

The costs involved in starting this business depend on the level you want to operate.

Level One – Hand Car Washing

Anyone who can afford a few hundred dollars can start at this level. You will need:

• A water supply (monthly cost is $20+)
• Buckets - $10 each
• Soap - $20
• Sponges - $10
• Window Squeegees - $10 each
• Chamois - $10 each
• Industrial Wet/Dry Vacuum - $100
• Promotional Flyers - $50
• Signage - $75
• Shade Cover - $150

Level Two – Self-Service Car Wash

This type of operation requires a significant investment of up to $200,000 or more depending on the location. You will need:

• Self-Service Car Wash Equipment - $50,000
• Car Wash Shed Building - $100,000
• Lease Payment and Deposits - Allow $5 per square foot. For example, a 1,000 square feet facility would typically require $5,000 per month rent and a $10,000 security deposit.
• Signage - $2,500

Level Three – Car Detailing

Some automatic car washes and touchless car washes offer car detailing as an enhanced service. However, it is also possible to operate a car detailing business independently and do all the work by hand. The startup investment for an independent car detailing business is similar to a hand-washing business, except because you will offer more services you will need additional supplies and perhaps helpers. You will need:

• A water supply (monthly cost is $20+)
• Buckets - $10 each
• Soap - $20
• Car Wax - $25
• Water Repellant - $35
• Armor All - $50 (used for treatment of tires and other surfaces)
• Window Cleaner - $25
• Leather Restorer - $30
• Air Freshener - $20
• Chrome Polish -$25
• WD-40- $50
• Sponges - $10
• Window Squeegees - $10 each
• Chamois - $10 each
• Industrial Wet/Dry Vacuum - $100
• Pressure-Wash Cleaning Equipment - $500 (used to clean the engines and undercarriages)
• Promotional Flyers - $50
• Signage - $75
• Shade Cover - $150

Level Four – Automatic Car Wash

This type of operation requires a significant investment of up to $500,000. It is a much bigger facility than a self-service car wash. You will need:

• Automatic Car Washing Equipment - $250,000
• Car Wash Building Construction - $200,000
• Lease Payment and Deposits - Allow $5 per square foot. For example, a 5,000 square feet facility would typically require $25,000 per month rent and a $50,000 security deposit.
• Signage - $5,000

Level Five – Touchless Washing

This is the highest level of car washing that uses automated equipment with lots of hands-on workers. Luxury vehicle owners are especially attracted to this type of car wash because nothing except human hands and soft clothes touches the car. These facilities can easily cost up to $1 million or more to start and many find it easier to buy an existing one rather than create a new one. You will need:

• Touchless Car Washing Equipment - $250,000
• Car Wash Building Construction - $500,000
• Lease Payment and Deposits - Allow $5 per square foot. For example, a 15,000 square feet facility would typically require $45,000 per month rent and a $90,000 security deposit.
• Signage - $25,000

If you are going to open a commercial car wash you will need to make a significant investment in the equipment needed to operate the car wash. The best places to have a commercial car wash are on very heavily used streets with lots of auto traffic passing by. This means the rent will be a very substantial expense.

Car washes need to have plenty of space for the cars to pass through the washing system and for them to be parked while they are being dried by hand to make each car ready. Typical car wash lots are at least 5,000 to 10,000 square feet and rent for a minimum of $10,000 to $50,000 per month. To be really successful operating a commercial car wash, you will need to do at least 100 cars per day at an average profit of $10 each per car.

What are the ongoing expenses for a car wash?

Water is really expensive, especially in places like California where the water is in short supply. Reclaiming water is important. This requires capturing the water and pumping it through a filtration system to clean it before it is used again.

Automatic car washes use a lot of electricity as well. Labor is paid at the minimum wage because the workers also get tips.

Level One – Hand Car Washing

The expenses depend on the number of cars you wash per month.

To wash about 50 cars your monthly expenses will be:

• Water - $20+
• Soap - $15
• Replace worn out sponges/equipment - $25 to $50
• Flyers - $50

Level Two – Self-Service Car Wash

Your expenses will be water, supplies, electricity, rent, and the cost of maintenance of the equipment. This averages in total to be about $5,000 to $7,000 per month.

Level Three – Car Detailing

If you work independently your expenses will be similar to hand washing of about $135 per month, except you need to allow for additional supplies of $150 per month. You may have to pay a commission and/or a fee to have an association with another business.

Level Four and Five – Automatic and Touchless Car Wash

Your monthly expenses for this type of operation will include the following:

• Rent - $10,000 to $25,000 per month
• Labor- $5,000 to $12,000 per month
• Water - $2,000 to $3,000 per month (depending on the part of USA)
• Supplies - $2,500 per month
• Electricity - $3,000 to $5,000 per month

Who is the target market?

The best customers are the ones that return weekly to get a car wash. Many car wash companies give a free wash after a certain number of washes to get customers to come back again and again.

How does a car wash make money?

Each car wash has a basic charge and there are typically additional things that can be requested by clients, such as using auto freshener or wax that are sold for an additional charge. Detailing is the most expensive because of all the additional services provided.

How much can you charge customers?

The average price for a simple hand car wash is $5 to $7. For self-service systems, the charge is usually $1 to $2 for a 15-minute use of the washing equipment. Vacuum charges are about the same. The average customer might spend $2 to $4.

For automatic car wash systems, the average charge is $10. Most customers like to add some extras and can pay as much as $15 for a wash with the extras of interior cleaning, freshener, tire treatment, and the application of car wax.

Touchless wash is about $20 per car and with some extras added on the charge can go up to about $30 per car. Car detailing is the most expensive and the customers pay about $50 to $150 per car.

How much profit can a car wash make?

Level One – Hand Car Washing

• About $7 per car

Level Two – Self-Service Car Wash

• About $3 per car

Level Three – Car Detailing

• About $50 to $75 per car

Level Four – Automatic Car Wash

• About $10 to $15 per car

Level Five – Touchless Car Wash

• About $12 to $18 per car

An automatic car wash operating at 100 cars per day at the average price of $10 per car will make $1,000 in gross profits per day. Labor will cost about $60 per hour so for an eight-hour shift that is $480 plus $120 more for employment taxes paid by the employer. Electricity will be about $200 per day and water about $75 per day and supplies about $25 per day. Insurance will cost $2,000 to $3,000 per month. Taking these expenses into consideration gross profits per day would be about $220 per day.

The owner of a modestly successful commercial car was would make around $6,600 per month in profits after paying all the expenses. In really busy areas, it is possible to make up to ten times this amount.

How can you make your business more profitable?

Level One – Hand Car Washing

• Also advance from simple hand-washing to offer car detailing as well.

Level Two – Self-Service Car Wash

• Open in multiple locations and create brand awareness.

Level Three – Car Detailing

• Contract for providing service to customers of high-end luxury hotels and luxury auto dealerships.

Level Four and Five – Automatic and Touchless Car Wash

• There is an excellent opportunity to sell additional items to clients who are waiting for their car wash to be finished. One terrific and very successful idea is to have a drop-off dry cleaning and laundry service associated with a car wash.
• Offering fast food is another revenue source. The typical car wash customer, using an automatic or touchless car wash, is waiting for about 15 minutes at a minimum for their car to be washed. This is an excellent time to sell them other things.
• Making deals with auto dealerships to wash cars at night is a great way to make extra money. Typically, the public is not looking for a car wash at night. However, car companies and auto rental places need to have cars washed at all times of the day and night. This is a great deal to seek for extra income if there are such dealerships and car rental places nearby.

What will you name your business?

Choosing the right name is important and challenging. If you don't already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Car Wash Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your car wash is sued.

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can start an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

• LLC Taxes
• Sole Proprietorship vs LLC
• LLC vs Corporation
• LLC vs S Corp
• How to Start an S Corp

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account

• This separates your personal assets from your company's assets, which is necessary for personal asset protection.
• It also makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Open net-30 accounts

When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.

Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.

Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

Get a business credit card

• This helps you separate personal and business expenses by putting your business' expenses all in one place.
• It also builds your company's credit history, which can be useful to raise money and investment later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

In accordance with the Clean Water Act of 1972, car washes must obtain a wastewater permit from the NPDES. A list of state specific regulations can be found here.

• Learn more about licensing requirements in your state by visiting SBA's reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:

• Check with your town, city or county clerk's office
• Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.

Labor Safety Requirements

It is important to comply with all Occupational Safety and Health Administration requirements.

Relevant regulations include:

• Appropriate hazard identification
• Injury reports
• Proper safety precautions when operating potentially dangerous equipment

Certificate of Occupancy

A car wash is generally run out of a physical location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease a location:
• It is generally the landlord's responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a car wash business.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

• If you plan to purchase or build a location:
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for you business' location to ensure your car wash business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company's financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you're unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it's a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers' Compensation Insurance. If your business will have employees, it's a good chance that your state will require you to carry Workers' Compensation Coverage.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a car wash

Level One – Hand Car Washing

Your best promotion will be receiving positive word-of-mouth referrals from existing customers. Giving them a discount card to hand out to their friends and business associates is a really good idea. Distributing flyers in the local area and walking around to do a "meet and greet" with local residents and businesses is an excellent way to find new customers. Offering to collaborate with another business such as a restaurant or a parking lot is another way to create new business.

Level Two – Self-Service Car Wash

Staying open 24-hours with bright signage when located on a busy thoroughfare is the best way to attract business to this kind of operation. People are attracted to use these services by seeing them when they drive by.

Level Three – Car Detailing

For this type of business, you will be looking for customers that have luxury vehicles. One excellent way to promote your services is to create an affiliation with a five-star hotel and offer the car detailing to guests. You will make their cars look perfect overnight and ready the next day as sparkling clean.

Level Four and Five – Automatic and Touchless Car Wash

These businesses use different equipment; however, the promotional methods are the same.

How to keep customers coming back

Asking existing customers to spread the word about your services by giving them a discount coupon to give to their friends is an effective marketing method. Register the discount cards, which are numbered, to the person you give them to. If someone uses the numbered discount coupon, the registered person gets a free wash.

Loyalty programs work very well. Issuing a reward card for the number of washes and giving a free wash after a certain number of paid washes is a terrific way to keep customers loyal. Giving rewards to customers that come back for repeat business is a really good idea.

In dirty environments, such as big metropolitan cities or winter road conditions that throw destructive salt up to the undercarriage, a car wash is needed about once per week. This means that a single customer that returns once per week for a year will be a very valuable customer.

Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it's out of their reach because they don't have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn't delay building your website:

• All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
• Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
• Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don't need to hire a web developer or designer to create a website that you can be proud of.

Using our website building guides, the process will be simple and painless and shouldn't take you any longer than 2-3 hours to complete.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That's not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We've reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2021 to find the best phone service for your small business.

Recommended Business Phone Service: Nextiva

Nextiva is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

How Much to Start a Self Service Car Wash

Source: https://howtostartanllc.com/business-ideas/car-wash

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