Just bought my first hand car wash need advice

[altimaser]

ok so i'm excited i just took my first steps towards the purchase of a pre-existing car wash business. not the building but the business i will pay rent.

a bit of background. the place has been around for about 20 years -- the previous owner has had it for 5 years...
it is beside a restaurant. it has quite a bit of traffic and a red light that allows driver to to stare at it for 30 seconds at a time.

the place is runned down --- does not look neat --needs signage- needs paint ---and a major clean up--- but i loved the location...

the offer has been accepted
i've proven that i can pay for it.
the next step is getting a lease with the landlord ... a little nervous

the owner contractually promised to be around for one month to help.

what is the frist 5 things you would do??

I'm thinking leave things the way they are -- i can't do much because i've spent mucho money so far.

any advice is well appreciated...

 

[Red Baron]

1. Make sure all bays have good (1100 psi+) pressure.
2. Make sure all functions on the meterbox dial work on every bay.
3. Give them plenty of soap.
4. Make sure your vacs suck good.
5. Let customers see you're trying to tidy things up and many will be patient with you while you get things in shape.

 

[altimaser]

car counting -- is this good?

HI

I just completed some car counting and need to know if this is a a good amount of traffic in a day.

as i said in a previous post i'm about to become an owner of a hand car wash.... i counted cars for a week and want to know if this is a fairly performant car wash

here's the cars count
monday 50
tuesday 60
wednesday 70
thursday 23 (rain)
friday 91
saturday 97
sunday 73
average payouy 12.60 x 464 = 5846.40$ that week

monthly expenses 3800 plus 8900 payroll.

 

[Patrick H. Crowe]

Dear Altimiser:

1. Do you mean a self-service (coin-operated) wash or a "hand" wash. I've never owned a hand wash so if that's what you mean ignore this posting.

2. I sincerely hope your contract to buy the place is CONTINGENT upon being able to write a mutually satisfactory lease with the landlord. There is nothing wrong with leasing. I leased my first five washes because I had so little capital I could not consider a purchase of the land & building. Yet I have written again & again: It all depends on the terms & conditions of the lease - - those are critical, extremely so. Seek competent help if this is your first lease, PLEASE!

3. Space will not allow me to tell you all the things you need to know so I'll try & hit the major ones. Can you get options to renew the lease? Does the income show that your rent payment is feasible? Does the lease include an option to buy? If the lease is land only then who cares for the building, paving and other major items is obvious but if the lease is land & building then there's lots to negotiate. Who pays the real estate taxes? Who pays the business personal property taxes (if any) All these questions have answers which are known within the industry and I hope you have read the literature about them, (I wrote most of it)

When it comes to the building & equipment the main notions are two: 1. Sweat equity & 2. Do mostly what customers can see though you must have fully operational equipment (as an earlier poster noted). But there are so many secondary notions. Do you accept token? You must. These are the secret to almost all promotions.

Frankly kind sir, it sounds a bit like you jumped out of the plane and are now HOPING the chute will open. Good luck.

Patrich H. Crowe, www.carwashappraisal.com.

 

[altimaser]

Hi PAtrick

thanks for the advice-- i certainly appreciate it. i'm happy i found this site..

see my answers in CAPS --- I'm not yeling
you wrote
If the lease is land only then who cares for the building, paving and other major items is obvious but if the lease is land & building then there's lots to negotiate. Who pays the real estate taxes? I DO
Who pays the business personal property taxes (if any) I DO
All these questions have answers which are known within the industry and I hope you have read the literature about them, (I wrote most of it) I'LL CHECK IT OUT

When it comes to the building & equipment the main notions are two: 1. Sweat equity CAN YOU EXPLAIN?? & 2. Do mostly what customers can see though you must have fully operational equipment IS EQUIPEMENT USUALLY SUPPORTED BY THE LANDLORD(as an earlier poster noted).
But there are so many secondary notions. Do you accept token? I ASSUME TOKENS ARE FOR A SELF SERVE CAR WASH RIGHT?
You must. These are the secret to almost all promotions.

Frankly kind sir, it sounds a bit like you jumped out of the plane and are now HOPING the chute will open. Good luck.
YES I GUESS YOU CAN SAY THAT ... I'M ABOUT TO BE LAID OFF AND LIKED TO THIS... I'VE ALWAYS LIKED THIS STUFF AND THOUGHT I'D "JUMP"


THANKS AGAIN FOR YOU'RE HELP... I'LL LOOK FOR YOUR POSTS

KINDEST REGARDS,
FRANK

 

[jfmoran]

To answer your first question, this would be considered a very low volume car wash, approx. 25,000 cars per year (keep in mind that depending on where this wash is, the winter is the washing season, therefore these numbers might be the best you will see with probably half that volume going into the summer and fall). Based on your numbers, there seems to be a good amount of cash flow, but how much are you paying for this wash? whats the debt payment going to be? Is this a lease or are you purchasing the building and land? These are just a few of the questions I would want to answer.

 

[Patrick H. Crowe]

Kind Sir:

While the car count for a week is interesting in my view you would get more valid information by an analysis of the income and expense records of the business for the three most recent years. Look carefully at the percentage of gross annual revenues needed to pay expenses, i.e., get data on the past profitability. Add your rent and management fees to the expenses and budget for improvements.

I now gather this is not a coin operated, self-service wash. Rather by "hand" wash you mean one where the cars are washed by hand by people as opposed to equipment, right?

That's not the type of was I have ever owned so my advice may not be worth much and I do not have industry numbers for such washes. Still the questions about the lease apply to most businesses.

Good luck with it. I can tell you are excited and that's a joy to behold and it will be contagious to your employees; simultaneously make prudent business decisions.

Patrick H. Crowe, www.carwashappraisal.com

 

[bigleo48]

HI

i counted cars for a week and want to know if this is a fairly performant car wash

You could have saved yourself a week and got the count from the city!

In this business, you need to work hard and smart!

Good Luck with your wash!

BigLeo

 

[altimaser]

I 'm paying 72k for the car wash ---i'm leaseing for 2300 a month -- the owner told me to add about 1500 in other monthly expenses not counting employees--- i'm not buying the building -- the car wash is located in montreal so i think the washing season is the spring. apparentently march april may are the major hi flow months since the cars get so dirty from the melting snow... july is slow as the city kind of shuts down for vacations-- fall is i guess steady ..the begining of winter is ok .. and the jan is the slowest dues to the extreme cold. i'm not usre what you mean about the debt payment... i guess as much as i can comfortable pay back..i'm paying cash for it


thanks for your help---let me know what you think??

 

[altimaser]

Hi Big leo--

the city could tell me that?? i'm in montreal canada... btw..
i just go to city hall--- how would they know? now i'm curious and a little ****ed that i wasted a week counting cars... live and learn i guess.

thanks

 

[Waxman]

I'd proceed with caution here.

Have you received tax returns from this wash? Maybe I missed that but I hope so.

It's all about the numbers, like any business. You must carefully consider income and expense to try and determine the amount you can make personally from this wash while maintaing a comfortable level of cash flow.

I'd be reluctant to purchase any business that did not come with real estate. I know in cities this is often not possible, due to high property values. However, I consider a major part of my investment into my own carwash and detail business to be in the real estate. Remember what Roy Crock said about McDonald's?

I'm sure leasing makes sense in some circumstances, but it's not for me.

 

[jfmoran]

In over your head

I'm curious as to how you arrived at the price, if you have not seen any financials? There are a lot of questions: like how long is the lease and what are the terms? The owner told you to add about $1500 for expenses (Huge Red Flag!) Your paying cash, owner is not holding any portion of a note? Good luck getting any help from him once he has check in hand. This deal has disaster written all over it. Proceed with caution and due some serious Due Diligence on this wash. I don't want to offend you, but you are currently in way over your head.

 

[bigleo48]

Hi Big leo--

the city could tell me that?? i'm in montreal canada... btw..
i just go to city hall--- how would they know? now i'm curious and a little ****ed that i wasted a week counting cars... live and learn i guess.

thanks

The city does traffic measurement just about everywhere every couple of years or so. They could give you traffic counts for your location or close to it.

Also, everyone needs to keep in mind that this carwash is in Quebec. The carwash business in Canada (let alone in Quebec) is very different. For example, in Canada, the big oil companies control over 90% of automatic car washes. In Quebec, people prefer friction automatics and very much shy away from SS bays (no sure why). So coming up with a realistic value and sales projection is different. I personally would be somewhat pessimistic on the outlook. That way you can be pleasantly surprised if it does better. I'd be looking at $1200 to $1500 per bay per month.

Also, Oct to Dec is slow, Jan to April is busy (depending on weather), spring varies, Summer is good.

BTW...what the hell is wrong with the Habs? They can't seem to win a game lately...Go Sens GO!

BigLeo

 

[jfmoran]

Correct me if I'm wrong, but this is a hand car wash, not a self-serve, so I think Leo's comments are not relevant to this situation.

Lastly, you have a great quote as a tag line on your postings. This may seem sarcastic, but have you actually read it, because I think it is quite relevant to your situation. While your enthusiasm is great, I believe you have allowed it to cloud your judgment and have clearly not done the due diligence necessary to move forward with this deal. Please re-read your own quote and then heed its message.


Doing a job badly and then getting someone in to sort it out can be much more expensive than getting someone in to do the job properly in the first place.

 

[Jeff_L]

I think you have a lot of research and things to cover, which this site will help you out. There are a lot of owners who frequent here.

As for the previous owner staying around for a month, that's nice, but I don't feel it's long enough. If the wash is like most others on this forum, there are a lot of self-engineered items in your equipment room. Which only the person who put them together can explain, however, if you're a great troubleshooter and don't panic, you may be able to figure them out.

I would ask for a longer contract from the current owner. Not one that will mandate they are there everyday, but one that obligates him to return your calls in an acceptable amount of time. Also commit them to arrive onsite within an acceptable amount of time to help you troubleshoot something.

Just my two cents.

 

[bigleo48]

Correct me if I'm wrong, but this is a hand car wash, not a self-serve, so I think Leo's comments are not relevant to this situation.

JF,

I believe in Quebec, Self-Serves are generally called "Lave a Main" which directly translates from French to English as "Hand Wash". So I assumed it was indeed a Self-Serve or Coin Wash. But perhaps I assumed incorrectly and that certainly wouldn't be the first time since we all know the quote "assuming will make an ass of you and me"

BigLeo