Thinking about opening a SS - Help Please

[Mr.Mike]

Hello all,
first of all i am new to this forum.
i have been back and forth on the idea of opening a SS coin op car wash for a while, the only thing is i really dont know much about what is requires (just like every beginner)

so any advice on where to start getting information would be greatly appreciated.

also, it may be a long shot but i was hoping for a sort of mentor who is in the Canada GTA (i am in mississauga), and would be willing to show me your setup and give me some honest tips and figures.

im getting my realistate adgent to look for property in the next couple months where i could build a wash, i would really like a 6 bay wash but for a first one i was thinking just a 4 would get me off to a start and move up from there, maybe add to the structure in the future or just get a 2nd + location.

i have seen a few places up for sale that you would own the building but not the property... this seems a little sketchy to me.. what happens if the landlord decided to give you the boot? bye bye building and business?

what i am going to attempt is to try and get my parents to buy the land and ill lease it from them and then ill build on that... i havent approched them on this yet but i would say i have a 50-50 chance, this would give me the security of knowing im not going to loose my building and a good buy out option when the time comes.

so what would be a fair estimate to build the structure and get it up and running? it doesnt seem like there is much to the building and equiptment other than the ground heaters.

also ive seen them advertised as 65-120k a year profit... is this accurate? i know its a big range but those are the numbers i have seen listed on the businesses for sale and other sites with info on the SS washes.

any info appreciated... i know i have a lot of pages to flip through on here...

 

[Bubbles Galore]

65-120k profit per year at a self serve?!? Doubt it...Keep researching, because I think you are being given some misleading information...

 

[Mr.Mike]

65-120k profit per year at a self serve?!? Doubt it...Keep researching, because I think you are being given some misleading information...

this is just what i have been reading... thats why im looking for some info from people in the biz that arent trying to hype their location thats for sale.

got any realistic numbers you can toss my way or other info?

 

[pitzerwm]

Well, you have over 3500 pages of information here, when you read a good part of this, you will know the truth.

 

[Bubbles Galore]

I can tell you that if someone is telling you that those numbers are true, just ask them to prove it. Proforma's are a joke right now...tell them you want actual numbers and tax returns.

 

[MEP001]

also ive seen them advertised as 65-120k a year profit...

Think about it, if someone was making that kind of profit, why would they be selling it?

Those numbers can happen on a straight self-serve, but it's not the norm by any means. The national average gross income on a 6-bay is barely $120,000 (Not counting vacs and vending).

Despite how it appears, this is not going to be a low-risk, low-maintenance, high-profit investment. It takes a lot of work and knowledge in the industry to make it successful. If you plan on building, hiring an attendant and paying the distributor to do all the repairs, you might as well give up on any hopes of profit.

 

[Mr.Mike]

No attendant, ill take care of most repairs and daily maint,. For winter I was going to plow it myself.

What does it usually cost to build? I found a local company ADVANTEK that sells , builds and maintains the equiptment...they seem to be a all around service for washes, ill be contacting them for prices soon.

I realise there will be a financial risk and a lot of hard work, but it is obviously worth it or it wouldn't exist for anyone.

Do most of you own or lease the property wour SS washes are on?

 

[Randy]

You?re looking at a project cost of around $950K give or take a little. The last wash we were involved in came in at 1.3 Mil.

 

[wendy's wash]

if you ask for proof of income from a tax return. you had better get 4 to 6 years or more back. a smart seller will increase sales on return and pay the tax just to increase the selling price down the road. the person selling wash will say just about anything to get you to buy. he is selling usually because he does not make money. one reason he gives is he wants to seek other ventures. ha!!!!!!. he wants out of the dog he bought. run the other way. do read all in this forum and you will run.

 

[I.B. Washincars]

The last "self serve only" wash that I've seen built (1998) was across town from me. It is in conjunction with the owners C-store on the same lot. It is a total dog in an invisible location and low income neighborhood. Virtually all SS washes now include an IBA. Except in rare instances a SS only wash is a low paying part-time job. I wouldn't do it, but maybe the dynamic in Canada is different.

BTW, what does GTA stand for ?

 

[Randy]

"Greater Toronto Area" That's in Canader

 

[Waxman]

These total 'new investor' posts scare me.

I find it interesting that a would-be investor justs posts here with an idea that a SS carwash nets $65-100+k per year. He's going to get his folks invloved buying the land and build a new carwash.

Listen here: You need to get out there and do your own due diligence. A carwash is a serious endeavor, involving caferul research and study. Many of us worked at carwashes first or grew up in the business.

There's chemistry, mechanics, electrical and plumbing involved. You have to know and study your market and competition. You have to choose the proper equipment and building. You have to engineer the project properly with regard to traffic flow and egress. You need to connect to public utilities. You need permits and sometimes variances.

You need a comprehensive business plan with 3 years cash flow projections. It has to have a marketing plan. You also need a contingency plan.

With all due respect, you are insulting all of us who have legit. carwashes that we own and operate ourselves with your vague generalized questions and a plan where mommy and daddy buy the land.

 

[Mr.Mike]

These total 'new investor' posts scare me.

To get information you have to start somewhere, this is one place I have started looking, along with going around to ss washes and checking who makes the equipment and reading online many other WebPages. They give breakdowns of what items in your wash makes what amount of money (variable estimates obviously)
I understand there are plumbing and electrical planning and regulations and requirements. Ground heating systems, coin changers, compressors, vacuums.....and for each item obviously you get what you pay for, just like anything in life.
I have made business plans before, I?m not just jumping into something without knowing the market, the cost to build, open and run for 5 years...not 3...as most banks are looking for a 5 year projection when going in for loans. I have one area I am considering due to the high population growth, and the high number of townhouses and apartments going in... No private driveways and low competition. I?m not going to overlook any aspect of my possible investment.
I have spoken with a good friend of mine who works for an investment firm in the U.S, he is going to be helping me research and put together a business plan to propose to his company. His job is to sit back and when a company they invested in does not reach a minimum profit within a given time period he takes over management to clean up their mess and make their money back... so from a business standpoint I feel I will have a strong support system and good business advice will come from him.

 

[Mr.Mike]

As for thinking about having my parents purchase the land... how is this insulting or a bad idea? my parents also do investments so why should I lease land from someone else and let them make money off me and that could just turn around say too bad and then I lose my building (potentially). I have seen a lot of SS washes for sale but the property the building on is not for sale. I didn’t say "hey guys , my parents said they will buy me a business, I saw a car wash for sale yesterday and it looks cool so I’m signing papers on a SS wash this afternoon, what should I be looking for?"
How would what I am considering doing be anything but a legit carwash?
You have to start somewhere, I bet that most people on here owe money somewhere for their business, especially for ones that are newer. First businesses generally have some sort of shareholder.
General questions cannot be overlooked, without them there would be holes in my potential plan.
I will continue my research, I never said I am jumping into this next week, just thought who better to get some insight from than people who are successfully running the SS washes, and obviously it is worth it otherwise you would have jumped ship.
So don’t be insulted by questions, if anything you should feel good to have someone think that you’re doing well with your businesses and that you may hold some valuable information. You are also on here for a reason; I’m sure you have asked some questions on here and replied to others. I’m just looking for some insight.

 

[Greg Pack]

Mr Mike,

SS only construction are rare businesses these days. I haven't seen a SS-only wash built in this area since I got in the business in the early nineties. The numbers of a SS-only wash are usually too low to net enough to make it worthwhile. It may work in a very dense urban area, but look at annual per bay revenue per SS bay and start running numbers. Almost every site would benefit from the addition of an In Bay Automatic.

In this day and age I would not advise someone to build a SS wash. I would reccomend looking for existing washes to buy. Personally, I think just about all SS bays that will ever be built in my area are here and will just change hands over the next 20-30 years. New Investors around here are looking more at autos and Express tunnels.

 

[JustClean]

Hi Mr Mike
A lot of people on this board are very helpful and have given me and others some great ideas and help. So, to not overstretch this, good advise is to READ this forum first, then READ more, READ again and then ask some detailed questions in regards to a specific issue. To give you an example: Once my wife's friend called me at work on my mobile (I was actually sitting on the toilet) and said: "Hey, I just came back from the shop and bought myself a computer. Looks great! Have you got a minute to tell me how to operate this thing?" - This was her first computer. Of course she "had to start somewhere!"

I heard from a salesman that only 1.5% of inquiries he got ended up in a contract. This makes people very tired...
The advice that comes to my mind in regards to your post:

1) Try to get a job in a car wash first for a few months to see how everything works and what could work better at your new place. This also gives you the opportunity to work in your future job as this will be what you will be doing till you sell or die!

2) Do your OWN homework and don't give out your plans to any real estate agent. You could also put your ideas in the paper for every other investor to read!!! - (Caution: Irony!)

3) Spend months counting cars at your competition.

4) Talk to other car wash operator a bit further away and what they think about the industry. What they would change/improve, etc.

5) When/if you still want to build a car wash keep in mind your future customers are usually stupid, ignorant and can't read. Built it accordingly or deal with the consequences later.

I could keep adding things but most of them are within this forum somewhere.
I hope you don't mind my straight forward talk...

Cheers JustClean


PS
I don't mind the idea of getting the parents involved UNLESS YOU AND THEY have done the research properly.

 

[TurboJet]

Mike, I think you've done some good initial homework, and you might be feeling a little dismayed by some of these of these comments. But please take these as words of wisdom.

I run 19 SS bays at 3 locations out here on the west coast of Canada. Am I making money - YES. Do I like what I'm doing - YES. Would I be making money at current land and construction costs - NO. Would I then like what I am doing - Absolutely NOT.

Alot of people come by a car wash on a sunny day and think this would be a cool/easy business to get into, and make alot of money while they are at it. The reality is that this is a capital intensive business. If you don't hit your numbers to pay the bills, what are you going to do with your car wash? It's not a typical commercial building that you can lease to a Subway store or a Curves lady workout shop. It's a car wash and you are stuck with it. Who is going to lease your building from you to run as a wash if you can't make it - no one!

I know many operators on this forum may sound a little grumpy, and its probably because like me, they have had numerous people talk to them about how easy/great a business they must have. These people have no clue what is involved.

From experience I can tell you just to build a wash from scratch is an undertaking. For some reason city hall thinks a 24 hour self serve is a cross between a casino and a pawn shop when it comes to zoning and bylaw requirements, not to mention the new enviromental issues. Don't underestimate the grief you may encounter with city hall.

You have been given some good advice in earlier posts. Given the state of the economy in southern Ontario, I would be patient and look for a wash that is for sale under stress conditions. Given earlier post numbers for average bay revenues, figure 40 to 45% for operating expenses, then see whats left after carrying costs. The great unkown is always gross revenues. Unfortunately there is no magic formula. Good luck.

Turbo.

 

[ken-pro]

Mr. Mike -

In reading some of the responses on the forum, keep in mind that the majority of people here are from the USA. The wash dynamic south of the border has always been a little different than in Ontario.

Many sites in the USA have 2 or 3 SS bays, with 2 or more automatic bays. The mentality of customers is different than here.

There are still people building SS only sites in Ontario, and still making money. SS washes still have a large customer base in this province.

It's not unheard of for a large SS site (6 or more bays) to net 100k a year in Ontario - BUT these are sites with top notch equipment, highly visible locations, and usually an on-site attendant, or very attentive owner.

In Mississauga, in order to compete you need to build at least 6 bays. Much of the competition in the west end of the GTA has a minimum of 6, and sites with 10 bays or more are common.

Cleanliness and site maintenance are crucial - Expect to spend at least 2-3 hours a day (More on weekends) doing routine cleaning - Bays, vacuums and islands, lawn maintenance etc...

Don't discount the idea of installing an automatic wash either though - These can generate as much as 3-4 SS bays worth of revenue and can help capture more of the car wash market in your area.

Do your due diligence, and ask lots of questions. This is not a get rich quick type of business, but with patience and hard work you can be successful.

 

[Waxman]

I hope I didn't sound grumpy, but maybe I did. I felt you were asking questions that were very generalized as well as asking revenue numbers. Many operators do not share those with even close friends.

Here's my non-grumpy advice:

1.do not get a partner/investor.

2. do not mix family and $$$.

3. keep your cards close to the vest.

4. go work at a carwash for a year.

5. study like it was passing the bar exam.

6. make sure there is a demand.

7. check references of everyone you intend to pay.

 

[soapy]

Mr Mike here is my Napkin Proforma that has been gathered from various trade publication I have read over the last 20 years. First off in the US the average SS bay will do around $1500 per month per bay. really good ones do around 2500 per bay (US). Average Vacuum income is aorund $200 per month with around $300 vending income. Most surveys show the variable costs to run a SS bay is about 40% for soaps, utilities etc. After that you have labor and debt service to consider.
So you build a 6 bay wash and after a couple of years you get the income up to $9000 per month for SS bays and lets say another 2K for vacs etc. That will give you 11K per month gross. It will cost $4400 to achieve this not including labor and debt service. So you have $6600 per month for debt service, labor and any profit. You will have to determine what it will cost you to build the wash and if it pencils out. At the most recent car wash conference I was at a proffesional carwash appraiser stated the the average 4 bay SS wash with 2 automatics now cost 1.6 million dollars to build. If you exclude to 2 automatic bays the cost here in the US would be around 1 million.
Also the appraiser stated that the average SS wash now sells for an average of 4.6 times the gross which is down from what it was at 2 years ago.