The car wash industry has seen a very rapid growth for the last several years and is expected to continue growing at least up to 2021. In 2016, the industry saw its revenue shoot up to US$ 10.2 billion, with net profits estimated at US$ 1.9 billion. And in 2016, the average net profit of a single-bay automatic car wash was estimated to be US$ 57,400. With all these gaudy numbers, venturing into the car wash business may not be such a bad idea – the market is ripe with potential pay dirt (or PAY CLEAN, perhaps?). Of course, the market is also swarming with fierce competition.
One of the most famous phrases in business is: “Nine out of ten new business start-ups fail”. Whether this is statistical fact or myth, it is definitely harder to start a business from scratch, or “build your brand” than it is to become a franchisee and “let the brand talk”. Nonetheless, it is important to be smart about your franchising options, because, in the end, it is customer satisfaction from your brand that will largely determine the success or failure of your business venture.
The first step in any endeavor is a good plan, and the foundation of a good plan is proper and accurate field information. It is critical to research and evaluate the actual demand of your car wash business-to-be, as well as the performance of existing similar establishments in your immediate vicinity (typically within a 5-mile or 10-kilometer radius). Majority of businesses that failed did so because there was either not enough demand for their product, or the intended market was already saturated, especially with established brands.
Once the need or the demand has been established, it is critical to get to know the brand (or brands) that you intend to franchise. The most obvious advantage of franchising is that a successful brand typically has an effective system already in place – from the physical set-up to staff training to marketing and continuous improvement – to help the brand succeed. Another advantage of franchising a brand with a good reputation is that the brand name itself is already a marketing tool that can draw customers to your business. Selecting a brand that has good value is a major predictor of the success of your franchise.
Keep in mind, however, that rapid growth is not always the best measure of the health and sustainability of a franchise. A franchise that is trying to expand too aggressively may lack the customer support to address even the most minor of problems that arise (support staff may be too overworked). On the other hand, a franchise that looks stagnant and is barely expanding may be suffering from poor profitability due to various reasons. Red flags to look out for include (but are not limited to): outstanding debt, legal issues, poor reputation with the community or customer base and very fast employee turnover rate.
Once you have done enough research and evaluation on the value of potential franchise ventures, it is now time to look into their business plan. A good business plan must include detailed information on market analysis, the structure of the car wash business/franchise, the services that the car wash offers, training of personnel, marketing strategies, plans for continual improvement/innovation and financing/funding strategies, among others.
Most modern car wash establishments revolve around a general business model of minimal labor, high service volume, and quick return-on-investment. To this end, your business plan must be able to illustrate how exactly your intended services will address the needs of the customer who expects high-quality work delivered in the least amount of time for the most competitive price. Again, the advantage of most established car wash franchises in this regard is that they already have a proven system that works.
Marketing is another important part of the plan. Making potential customers aware of your presence and the services you provide (and why you are better than the competition) is critical to the success of your business. The marketing plan should utilize a multifaceted approach using marketing staples, such as flyers/posters and the online social platforms, as well as developing good relations with other businesses around your immediate vicinity so they can advertise your car wash business.
One of the most integral aspects of acar wash business will be the personnel. Getting the right people for the job can mean the difference between success and failure. Your business plan should include a detailed section on how to train your staff and managers, not only in the initial skills and competencies needed to run your car wash business but also the “continuing development” aspect, especially when new technologies, new trends, and new techniques emerge in the industry.
The costs of starting a business or acquiring a franchise may be the most significant determining factor for several would-be business owners. Some established franchises have high initial overhead costs (you pay big for getting an established system that works – and sometimes, it is totally worth it), while others have low initial costs, but have higher recurring fees or expenses (i.e. royalties, percentage of your gross income, etc.). This is something a potential franchisee must look into carefully and understand before going all-in on committing to a franchise.
With the startup costs for a car wash business estimated at upwards of US$ 100,000, finding the funding to kick-start your car wash franchise can be a bit daunting. However, there are quite a number of options available to enable you to start operating a car wash. From bank financing to small-business cooperative loans to crowd funding and even individual investors or sponsors, there is a myriad of options available to help you get started.
How to buy a car wash franchise? You need to do market research and brand evaluation, look into the business plan and consider the startup costs.
DetailXPerts has over a decade of innovative experience with its patent-pending steam-cleaning technology. If you’re looking for a car wash franchise that is profitable, eco-friendly and has solid customer support and franchisee support services from initial research and planning all the way to continuing innovation and improvement, check out our franchise opportunities today!