Future Owner Looking For Guidance

[Washing4coinS]

Hello everyone
My name is Kevin I am from South East Michigan.
I am currently a new member to the forum but I have been reading and learning on here for quite some time now. My ultimate dream in life is to own/run a SS car wash. However after all the reading I have done I am still a bit unclear what my initial first step needs to be? Even before looking at existing washes for sale.
Obviously this isn’t going to happen overnight, And I am not looking for a black and white answer but I would like some direction to start somewhere today...! Where did you start?

Do I
-Start Writing a business plan first? Even though I will be purchasing an existing wash in the future not knowing any information right now like location, sales ect.

-Start saving money & Raising Capital for down payment roughly $20k-$50k or more? Obviously I will need cash to spend on multiple other things like any improvements needed minor repairs some new vacs brushes or sprayers ect. But I was wondering what the banks normally require for a down payment on a loan 25%, 30%?

-Finding a mentor first in my area to show me what I need to know? In exchange for my labor like cleaning painting helping wherever. I would be open to this if someone is truly willing to spend time and show me the ropes I can definitely make it worth their time.




Any information would be a big help thanks

 

[robert roman]

It’s usually wise to start at the beginning.

For instance, goal for carwash is to make money now and in the future. So, the first question is how much? In other words, what is financial goal and objective?

Historically, investors bought or built a self-service to earn a passive income and once upon a time some appreciation in value of real estate.

Consider two scenarios; 1) earn $25,000 passive income or 2) earn sustainable income of $50,000 or a living wage.

Next question is what are the constraints that will limit progress towards achieving the goal?

One of the physical constraints is physical capacity. You need a carwash to generate sales.

For example, average revenue from 5 wand-bays, 8 vacuums and vending is $108,000.

Less expenses of 40 percent of sales equals net operating income of $64,800. Other expenses would be rent and property taxes or debt service like loan mortgage. Assume rent and property tax is 20 percent of gross sales or $21,600 which equals earnings before taxes of $43,200 ($64,800 - $21,600).

So, passive income or living wage is possible.

Next question is build or buy? Assume build “all in” is $600,000 and buy is $400,000.

So, next constraint to overcome is capital.

Assume bank requires 25 percent down payment and the “seller” is willing to finance 75 percent. Here, you would need capital of $150,000 to build and $100,000 to buy.

However, you’ve mentioned sweat equity which implies you probably don’t have any capital.

If this is the case, the next step would be to write a venture capital proposal to solicit and raise funds from angel investors like family, friends or other people you may know that have extra money to invest.

The issue here is angels will expect a piece of the business in exchange for capital because their money is totally at risk unlike a bank loan that is secured with collateral.

Thus, for each percentage of ownership you forego to acquire venture capital, you would need to give up an equal percentage of profit in the business.

Give up too much and you may not achieve the financial goal and objective (passive or sustainable income).

It can be a very slippery slope without sufficient capital.

Hope this helps.

 

[Waxman]

A business plan is nice, but what a bank wants is 3 years tax returns from the business. If the purchase price minus a 25% downpayment by you make sense given the provided tax returns, it's usually a go.

The bank wants a commercial appraisal as well as some reassurance that you are qualified to run the business properly.

Why not find a part time job at a car wash and see how you like it? I did and the bank was impressed. I won't say that fact clinched the deal, but combined with a business plan ( I built new) and using the land value ( I owned it outright), the loan went through.

If it were me, I would buy an existing wash after working at a car wash and seeing if I liked it.

 

[hkim310]

A business plan is nice, but what a bank wants is 3 years tax returns from the business. If the purchase price minus a 25% downpayment by you make sense given the provided tax returns, it's usually a go.

The bank wants a commercial appraisal as well as some reassurance that you are qualified to run the business properly.

Why not find a part time job at a car wash and see how you like it? I did and the bank was impressed. I won't say that fact clinched the deal, but combined with a business plan ( I built new) and using the land value ( I owned it outright), the loan went through.

If it were me, I would buy an existing wash after working at a car wash and seeing if I liked it.

Waxman gives you the best advice, go work at a car wash for at least 6 months to see if it is what you expect it to be. Looking from the outside is never the same as looking from the inside.......

 

[Kevin James]

I don’t really understand why anyone would want to get into the car wash business. We are in it for the land only, we buy car washes for the sole purpose of redeveloping the property. We’ll run them until we find a better suited use of the property. There really isn’t much real skill required to be a car wash owner/operator, basically all you are is a janitor wiping the butts of society. There is no glamour or prestige in being a car wash owner, look at the publics perception of the car wash industry as a whole its pretty low. I don’t tell anyone any more that we own car washes, when you first meet someone and you tell them you’re in the car wash business they look at you like your some kind of loser.

 

[Washmee]

I don’t really understand why anyone would want to get into the car wash business. We are in it for the land only, we buy car washes for the sole purpose of redeveloping the property. We’ll run them until we find a better suited use of the property. There really isn’t much real skill required to be a car wash owner/operator, basically all you are is a janitor wiping the butts of society. There is no glamour or prestige in being a car wash owner, look at the publics perception of the car wash industry as a whole its pretty low. I don’t tell anyone any more that we own car washes, when you first meet someone and you tell them you’re in the car wash business they look at you like your some kind of loser.

My conveyor car wash is very profitable. It is worth far more than the land it sits on. In the future please don't paint with such a broad brush.

 

[Robert2181]

I agree. It probably depends in what area you are in, and if your area was part of the over building era.

 

[robert roman]

“We are in it for the land only….We’ll run them until we find a better suited use of the property.”

“There really isn’t much real skill required….basically all you are is a janitor wiping the butts of society.”

Maybe you don’t understand self-serve business model is no longer commercially viable.

Want glamour or prestige?

Build a 34,000 SF carwash like Metro Express.

This wash can wipe 5,000 butts a day.

 

[rph9168]

Nothing personal Kevin and I really don't want to start a war here but I think you are more in the scavenger business than the car wash business. Like people that buy old cars and sell them for parts. If the people you talk to think you are a loser because you are in the car wash business that says more about them and your operations than the industry. I think your comment about considering operating a wash as being a janitor wiping society's butts says it all as far as that goes. Most of the people I have talked to regard it as a good business but I guess that depends on the kind of people you talk to are. As far as operators go, I find that many are very good, hard working, honest and successful business people and find you observation about them rather uninformed. I have enjoyed working with many of them in my 35+ years in the industry. If you are so down on the industry maybe you should try another one that suits you better.

 

[mac]

Kevin I think that you might be overlooking a few things. There seems to be two yypes of self serve operators. The ones that just do the basics, and the ones that really care and run a top notch operation. I have one customer with a 6 bay SS, no auto. He grosses about 250K per year. Everything on his place is clean and working real good. I see a lot of ones with weeds growing all over, usually bays and/or vacs out of order, and lousy chemicals. I know of operators with 4 or 5 washes that keep everything top notch, and they are doing quite fine thank you. I know this business can be depressing at times, but when you look at your business as wiping societies butt, well it might just be time to find something else, if nothing else to live a happier life.

 

[Robert2181]

Also there were a lot of car-washes built in early 2000's that flooded the market and sliced the pie smaller. Which did contribute to apart of the decline.(how much???).

The self service is still a very good business.

 

[robert roman]

There was a lot of building during 2000’s, but self-service was already in a decline due to consumer trend from DIY to DIFM.

Then came sustained high gas prices in 2006, real estate crisis 2007, financial crisis 2007-2008 and recession 2009.

Each of these events affected most those with the least. Those with the least are those most likely to use self-serve.

“….self service is still a very good business.”

So, self-serve “can” be a good business if you have the right location.

 

[hkim310]

I tend to agree with the other operators who have chimed in on this subject. A modern day car wash owner is someone who knows business, finance, HR, engineering, information technology, I could go on and on. Any business owner in just about any industry should be commended as it is very difficult to run just about any business efficiently and successfully.

One a side note, is there really a car wash that can clean 5000 cars a day? Even with a dual tunnel that seems to be A LOT of cars....

 

[robert roman]

"One a side note, is there really a car wash that can clean 5000 cars a day? Even with a dual tunnel that seems to be A LOT of cars...."

http://www.metroexpresscarwash.com/sheridan/

http://www.denverpost.com/business/ci_27845905/new-car-wash-south-metro-denver-be-nations