Would you buy a car wash? Is it easy to be an owner and not be a operator?

[Chrisk123]

Hi, I want to buy a new business. It has taken 5 years for my other business to by 90% passive. I now want to do that with another business and diversify.

I heard an operator say he is at 40% profit margin and is going to travel for a year on his 4 tunnel car washes. This made me look at car washes in my area and it looks like I can find a potential deal, with improvements needed, and better systems around sales.

I am hoping to be active for 1 year then want it to be passive.

So , would you buy a car wash again if you had to do it all over?

Are you collecting mostly passive income?

Thanks in advance I am in southern california

 

[Waxman]

car wash ownership is far from passive income. I got into the business because it excited me. I was genuinely interested in it and I thought it would be an excellent addition to my car detailing operation. I was right.

I enjoy my career as a car wash owner and I work six days a week. It's really seven days a week when you consider the mental energy that goes into the business all the time to make it its best. I think in reality there are very few businesses that are passive income. I think the stock market is more passive income.

 

[Earl Weiss]

Tunnel owner / operator for 37 years - started selling then and have sold all 4. I worked 7 days a week. Many days visited all 4 locations .Also on call 24 7 for issues and burglar alarms etc. I rarely left town during the snow season. I know when a did go on vacation I had to figure an additional cost for lost income because employees could not put out the fires as quickly as I could.- Had an 8 Bays SS. Much less work and if one by or one of 3 changers went down I was still in business. Easier for employees to trouble shoot.

 

[kentadel]

36 years in it, and like Waxman and Earl posted, it's not passive. An owner is married to the business, 7 days a week. There are plenty of times when everything goes great and you feel on top of the world, and boom, there are days when all sorts of issues present themselves leaving you scrambling to keep up. It's a great business to be in and has it's rewards. Good luck!

 

[Keno]

I've never been in the tunnel business, but there is another side of the coin to what these experienced operators are saying. There are a ton of tunnel chains, big and small where the owner is not doing the daily operations on the individual washes. It has been proven that it can be done. It's a give and take, you will be giving up profit on a per location basis to be more hands off. You will have to find and train the right people and compensate them accordingly to care about your wash. There are still headaches, it'll just be a different set of headaches.

 

[washnshine]

I've never been in the tunnel business, but there is another side of the coin to what these experienced operators are saying. There are a ton of tunnel chains, big and small where the owner is not doing the daily operations on the individual washes. It has been proven that it can be done. It's a give and take, you will be giving up profit on a per location basis to be more hands off. You will have to find and train the right people and compensate them accordingly to care about your wash. There are still headaches, it'll just be a different set of headaches.

Keno is correct - you can always be more hands off - you just pay for it one way or another. You either suffer from decreased revenue because things are not running smoothly or you pay a premium for an individual (or more) that can keep things operating smoothly. Either way, it is less income back to the business.

 

[Chrisk123]

I've never been in the tunnel business, but there is another side of the coin to what these experienced operators are saying. There are a ton of tunnel chains, big and small where the owner is not doing the daily operations on the individual washes. It has been proven that it can be done. It's a give and take, you will be giving up profit on a per location basis to be more hands off. You will have to find and train the right people and compensate them accordingly to care about your wash. There are still headaches, it'll just be a different set of headaches.

This is how my other business is. I give up about 150k a year to pay staff above market and a team of 4 managers enough to put out fires. The biggest fires are injuries and staffing. I still get involved with those. If the business did not generate enough money to pay the managers, then I would have to be hands on.

I wonder if it is possible the pay 100k to a manager on a car wash and still make 100-200k passively in the car wash business. The thing that seemed to be a benefit is that training would not be as hard. I even thought there would be enough money to hire repair people every time a break down happened.

 

[Chrisk123]

Tunnel owner / operator for 37 years - started selling then and have sold all 4. I worked 7 days a week. Many days visited all 4 locations .Also on call 24 7 for issues and burglar alarms etc. I rarely left town during the snow season. I know when a did go on vacation I had to figure an additional cost for lost income because employees could not put out the fires as quickly as I could.- Had an 8 Bays SS. Much less work and if one by or one of 3 changers went down I was still in business. Easier for employees to trouble shoot.

Wow, working that much would seem like the hourly pay would be low compared to w2 because w2 would have overtime and benefits. Did you do that just to make as much as possible or would you had negative cashflow if you paid others enough to do it?

 

[Chrisk123]

I've never been in the tunnel business, but there is another side of the coin to what these experienced operators are saying. There are a ton of tunnel chains, big and small where the owner is not doing the daily operations on the individual washes. It has been proven that it can be done. It's a give and take, you will be giving up profit on a per location basis to be more hands off. You will have to find and train the right people and compensate them accordingly to care about your wash. There are still headaches, it'll just be a different set of headaches.

This is my model idea. 40% margins make that very feasible. 15%, means there is not enough meat on the bones to pay others. Did you have the experience where you had enough income to hire a hi paid manager?

 

[Wash4Life]

This is how my other business is. I give up about 150k a year to pay staff above market and a team of 4 managers enough to put out fires. The biggest fires are injuries and staffing. I still get involved with those. If the business did not generate enough money to pay the managers, then I would have to be hands on.

I wonder if it is possible the pay 100k to a manager on a car wash and still make 100-200k passively in the car wash business. The thing that seemed to be a benefit is that training would not be as hard. I even thought there would be enough money to hire repair people every time a break down happened.

Car wash mechanics are another web. I would recommend hiring an in-house mechanic. That'll save a lot of time and money.

When it comes to getting outside help, they may not be able to come to you quickly.

 

[Earl Weiss]

ff. You will have to find and train the right people and compensate them accordingly to care about your wash. There are still headaches, it'll just be a different set of headaches.

Therein lies the piece of the puzzle I could never solve. Find people who you can pay enough who not only care but understand enough to keep things running well and still have $ left for yourself. Memberships have helped change the income dynamic. Finding the right people has not.

 

[Earl Weiss]

Wow, working that much would seem like the hourly pay would be low compared to w2 because w2 would have overtime and benefits. Did you do that just to make as much as possible or would you had negative cashflow if you paid others enough to do it?

When the weather was right there was money to be made. It wasn't just an issue of how much you paid - it as the scarcity of people who could do the job like I did especially putting out the "Fires" I found a few who were pretty good and some were grabbed up by large chains when I sold and even moved to other larger chains who desperately needed them - then a couple left the large chains because they didn't like the large chain culture as opposed to dealing directly with the #1.

 

[Earl Weiss]

Wow, working that much would seem like the hourly pay would be low compared to w2 because w2 would have overtime and benefits.

Was asked the other day how much Parental leave I got. Told her my boss was a cheapskate - None.

 

[Earl Weiss]

Car wash mechanics are another web. I would recommend hiring an in-house mechanic. That'll save a lot of time and money.

When it comes to getting outside help, they may not be able to come to you quickly.

You would need multiple sites to make this feasible. You can train staff to do a lot of part replacement..

 

[Roz]

Tunnels are very different than IBA/SS, very different. Pros and cons to both models.

You can tell if a place is operated by an absentee owner or someone engaged in the daily operations immediately after going to the wash. If is obvious by the way the place looks and how the services clean your vehicle.

The more hands off the pulse of any business the less you make due to employees who will never think like an owner who seeks to grow revenue and reduce expenses. The more hands off the greater the risk of revenue not making it to the owner even with the best checks.

Rarely you can find a gem of an employee who is honest, hard working, enjoys working 40 plus hours and has some common sense when it comes to problem solving. You them do everything possible to keep them. Unfortunately we have deported most of those people or they are in hiding/keeping a low profile so the pool of people is very small.

Alt you can purchase a tunnel as the property owner and get a 5-6% return on a NNN lease long term. That’s a passive model in the carwash industry. Was much easier when interest rates were closer to zero. You do need to be very careful with reading the lease documents to avoid major pitfalls and headaches. Most of the better deals have been taken before hitting the marketplace by private equity.

No such thing as a passive or free lunch if you call yourself a business owner - regardless of the business.

Lastly unless you personally know the person making the claim I would suspect the claim as BS. There are ALOT of people who claim to know the industry and are just creating click bait content.

 

[liftheavy]

if you have a system and training in place, it is possible, but not optimal.

when i first started, we didnt have a standard operating procedures, checklists, PMCS, etc in regards to hiring, training, maintenance, etc.

there are apps in the market to help you for sure, but couple years down the line i found it easier to just create my own system that i understood using my own guidelines and was easy for our guys to use -- this is where i was able to use my experience in the military and working in logistics operations.

one of the biggest thing i learned in the military is this: doers are going to do what the checkers are going to check. if you aren't checking to see if your frontline operators are doing the right thing regularly, they will always take the path of least resistance and quickly deviate from the standard.

at the least i make sure to connect with each site once a week with the site manager and assistant manager via google meeting to go over KPI powerpoint presentation (we made it so all updates are automated once data is inputted), but preferably i like to drop in on different site in person at least once a day (not sure how this will work if we ever get to double digit amount of sites).

i actually went to visit couple sites at a different state that was in the market and several were sites w/ absentee owners. it was immediately noticeable... employees congregating together at a table while the site manager was smoking a cigarette... tunnel is filthy with mold and algae... most of the high pressure nozzles clogged... and the revenue... one site net revenue was $1.5m in 2021, but currently doing $700k... owner just let the site fall apart.

at the end of the day, no one is going to care about your stuff more than... well, yourself.