How to Create a Car Wash Business Plan
Are you considering starting your own car wash business? The car wash industry is booming, and small business owners own 90% of car washes. These days, you do not always need a degree in business or years of relevant experience to successfully start a business — what you do need is patience, passion and a well-developed business plan.
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Why Consider Kick-Starting a Car Wash Business?
If you want to start a business that is always relevant, easy to expand and involves little physical involvement in the day-to-day operations, consider a car wash business.
- There is always a need: No matter how often the interior technology of vehicles changes, the exterior will still need cleaning. Car washes are one type of business that can exist in competition. Some towns and cities have dozens of car washes for customers to choose from. Customers will select which car wash to use based on several factors, including proximity, price and services offered.
- Franchising opportunity: If your business is successful enough and you find yourself wanting to expand, the car wash industry is full of franchising opportunities.
- The business runs itself: As with any business, there is plenty to do behind-the-scenes of your operation, such as employee management, budgeting and inventory. However, because car washes are typically either self-serve or automatic, they require a minimal amount of physical involvement in the operation itself.
Automatic or Self-Service — Which Is Better?
There are two types of car wash businesses — automatic and self-service. With an automatic car wash, cleaning machinery and rollers clean the car without any need for the customer to exit their vehicle. Self-service car washes require someone — either the customer or your employees — to clean the car manually. Each method comes with benefits and drawbacks.
For example, self-service car washes are a smaller financial investment, but they may require trained employees who know how to wash a car’s exterior without damaging the paint. Automatic car washes save time and labor, but they cost more to purchase and maintain.
The Importance of a Business Plan
A business plan is the most critical part of starting a business. Your self-service or automatic car wash business plan will act as a guide while you navigate your new business and will inspire confidence in lenders, investors and suppliers. A well-developed car wash business plan:
- Acts as a guide: A business plan is not just another step in the process — it is the process. The research and analysis you do for a business plan will determine much of your business’ success. How much cash flow do you need each month to operate in the green? What is the competition like, and how can you stand out from your competitors? It will also assist you in the day-to-day operations of your business, such as managing employees and payroll. The questions you answer and the strategies you develop at this stage of the process will set up the future of your car wash.
- Is important to lenders and investors: If you plan to seek financial assistance, whether through a business loan, investor or business partnership, you need a business plan to demonstrate your qualifications. Lenders and investors want to see that their money will be handled responsibly.
- Assists suppliers: If you seek a line of credit from a supplier, most will want to see a well-developed business plan in place.
- Makes your business easier to sell and franchise: If a business plan is in place, the operation will be much easier to sell in the future. Most potential buyers want to see an organized system if they plan to pick up the business where you leave off. Additionally, should you decide to franchise in the future, a business plan will help you determine the best way to go about an expansion.
A Guide to Creating Your Car Wash Business Plan
Starting a business requires hard work and great attention to detail. Before starting your car wash business, you should learn everything you can about the industry and use that information to detail and execute a thorough business plan.
1. Conduct Research Before You Start
A successful business is built on the back of thorough research. Understanding your business’ location, competition and customers gives you insight into the best way to approach your business plan. Conduct research about:
- Your location: Whether you are just starting the search for the perfect place or already have one in mind, you need to research a few things about your potential business space. Depending on where it is, you may need to consider factors like zoning, infrastructure and local laws and regulations. You should also consider how visible and accessible the location is from your city’s main roads, as well as the distance from any competitors. You might also decide to start a mobile car wash business.
- Your competition: You need to research your competition thoroughly. Where are the other car washes located? What equipment do they use? What services do they offer and at what price? Analyze the similarities in your business structure, as well as the key differences that will set you apart.
- Your industry: Understand the expectations, laws and regulations that relate to the car washing business, as well as the equipment and supplies you need to be successful.
- Your plan: Research potential financial avenues, examples of successful business structures and other essential elements before diving into your business plan so you know the options available to you before making any final decisions. Consider looking at sample business plans for inspiration on how to create yours.
- Your customers: You need to understand who your potential and target customers are and where they are located in comparison to your car wash. You also need to know how they currently satisfy their car washing needs and what it will take to convince them to use your business.
Now that you know you need to conduct research, you might be wondering how to start the research process. There are several ways to do this:
- Conduct surveys: Send out surveys to potential and target customers through the mail or online. You might ask questions about what your target audience values in a trip to the car wash, or what they anticipate paying once they get there. The answers to these questions will help guide you through the rest of your business plan and ensures you are reaching — and surpassing — customer expectations.
- Visit competitors: Take a close look at how your competitors are doing business. What services do they offer? What supplies are they using? What do they charge their customers? Do this not so you can emulate their practices, but so you know how to set yourself apart.
- Interview potential and target customers: Interviewing is similar to conducting surveys but in person. Not only does meeting somone face to face allow you to better gauge responses, but it will enable you to establish a relationship and start building your brand’s reputation on a personal level.
- Incorporate data from secondary resources: Secondary data comes from government agencies, chambers of commerce, the media and more. Data from these sources can help shape your business plan by factoring in statistics and local data. It is also a good way to find out more about your target demographic.
2. Create Your Executive Summary
An executive summary is a brief outline of your business’ objectives, market description and growth potential. If presenting your business plan to a financial lender, it will overview the funds you are seeking. There is no need to go into extreme detail just yet — you will dig deeper into the numbers and data later. Include the following in your executive summary:
- Intended business: List the name, address and type of business structure you plan to operate under.
- Business objectives: These are your goals. Do you want to become the most profitable car wash in the city? Make a certain amount of profit by the end of year two? Whatever your business objectives are, summarize those here.
- Market description: Paint a quick picture of the state of the car wash market as well as your targeted customers. Briefly explain what is going to set you apart in the marketplace.
- Growth potential: Include a sentence or two summarizing your growth potential based on the data you will analyze.
- Funds sought: If presenting your business plan to lenders, this is the part where you total the amount of money you are seeking. You will go into more detail later.
3. Create a Company Summary
Consider the company summary the birds-eye-view of your business. In it, you provide:
- The name and location of your business: Include the anticipated name and address of your business.
- Your legal structure: Define your legal structure. For example, your car wash may be a sole proprietorship, a limited liability company or a partnership.
- Your business structure: Decide how many employees you will need, as well as how you plan to manage them.
- Your company mission statement: What do you value as a company? Excellent customer service? Community involvement? What do you hope to achieve? Your mission statement should be brief but concise enough to showcase who you are and what your business has to offer the community.
- The company history: What makes you want to — and qualified to — to start a car wash business? How did you get here?
- A business description: Briefly explain what services, products and amenities you will offer at your car wash, as well as how those services will meet the needs of your targeted market.
- Your competitive advantage: After you have researched your competition and studied how they operate, what makes you different? Will you offer higher quality soaps, lower prices or automatic service? This is the section to talk about any competitive advantages you have.
- Your business’ goals and projections: Take your business objectives from your executive summary and expand upon them in this section.
4. Detail Services and Amenities
This is where you will detail which services, amenities, tools, equipment and supplies your business plans to use while in operation. Include those you already have, as well as things you still need. Cover things like:
- Services and amenities: Decide whether your business will operate as either an automatic or self-service car wash. You also need to consider what additional amenities you may offer, such as air dryers, tire pumping stations and more. The decision often comes down to what your business can afford.
- Equipment: Detail the pieces of equipment, tools and machinery you need. Which parts do you have, and which do you still need?
- Supplies: Supplies include soaps, industrial washes, pre soaks, polishes and cleaning tools, as well as operational supplies.
- Operation: How do you plan to operate your day-to-day? Break down details like hours of operation, employee duties, accepted methods of payment and more.
5. Provide a Market Analysis Summary
This is where all the market research you conducted will come in. Take the research you did and analyze and summarize those findings. Later, you can apply these results to your marketing initiatives. Your market analysis summary should include information about the following:
- Description and outlook: Explain the car wash industry. Remember, not everyone you present your business plan to will be familiar with the inner workings of a car wash business. Include any challenges you may face, special considerations and the general outlook of the industry.
- Target market: Who are your targeted potential customers? Discuss their demographics as well as more qualitative information about them. What do they value in a car wash service? Which needs are not being met, and how will you meet those needs?
- Competitive analysis: Conduct a Strength, Weakness, Opportunity, Threat (SWOT) analysis of your business to provide a better picture of where you stand in the market. A SWOT test will show which areas you need to improve in and which to highlight.
- Unique advantages: Consider any advantages your business has, such as unique services your business will offer, specialized knowledge you have, an exclusive cleaning machine model you own or a reputation that you have taken years to establish. All of these things are selling points that let investors know you will not be chased away by competition.
- Laws and regulations: Address all laws and regulations regarding a car wash business, including any licenses and inspections you will need. The process for obtaining a car wash license differs from state to state. Check with your state’s website, as well as with local officials, to see which permits, licenses and inspections you need.
6. Demonstrate Financial Understanding
Demonstrating your financial understanding is the most crucial part of your business plan. If you are seeking funds from a bank or lender, they want to see reasonable proof of repayment, as well as your capabilities as an owner. Financial understanding includes knowing all costs associated with starting and maintaining your business, what your budget is and the details of your projected financial future. Make sure you have these items:
- Financial data: Use charts and graphs to show the details of your financial data, including your estimated startup costs, car wash income statement, overall budget, salaries, insurance, cost of rent and utilities and marketing initiatives.
- Annual projections: Have an overview of your projected operational costs and cash flow, as well as a projection plan. Your projection plan is a picture of what your company will look like by a certain point, like three or five years after opening. Base your projection on a list of assumptions — such as predicted percentage of growth — and include it in this section.
- Balance sheet: A balance sheet should include your equity and liabilities and how they add up to create your assets. Read more about creating a balance sheet here.
- Growth strategy: Explain how you plan to grow your business and meet your objectives, including the car wash marketing strategies you plan to use.
7. Highlight Who You Are
Your business plan is not all data and projections — it is also the place to demonstrate your capability as a business owner and operator. This is especially important for business plans you plan to present to financial backers. For this part of your plan, be sure to highlight:
- Your background: A business plan should have an entire section dedicated to showcasing you and any partners in the business. This section acts almost like a resume, highlighting your work history, education, awards and relevant professional experience.
- Professional affiliations: Affiliations include any clubs, membership programs or volunteer organizations you belong to that are relevant to your business or professional life.
- Professional references: Professional references are people you have worked with in the past, including vendors, colleagues, managers, supervisors and clients.
8. Consider the Little Things
There are several other things to consider beyond your business plan. These decisions are often easier to make but require as much research and consideration as the information in your plan. Don’t forget about these important considerations:
- Branding: Good branding ensures your business will stick out, and customers will remember you. It includes everything from color schemes, logos, uniforms and signage to your customer service, online presence and tagline.
- Monthly reviews: Just because you finish your business plan doesn’t mean it is done. Schedule monthly reports to go over the information you compiled and compare it to business performance. Make adjustments as needed.
- Develop good habits: A good reputation is essential in business. As an owner and manager, you need to establish and maintain good habits from day one. Good habits include your standard for delivering exceptional customer service, how you will respond to negative reviews, your employee training program and more.
- Car wash specifics: When it comes to your car wash supplies, the type of products you use can make all the difference. Familiarize yourself with the basics of car washing. There are two types of wash available on the market today — friction and touchless. Friction car wash products require manual scrubbing with rollers or brushes to be activated. Touchless car wash products only require the cleaner and water to touch the car.
It’s Time to Start Your Car Wash Business
Whether you choose automatic or self-service, starting your own car wash business can be a profitable decision. There is steady demand for your services, it is franchisable, and it involves little physical involvement in the day-to-day operations. A good business plan will help you evaluate the industry, understand your customers, prioritize certain services and understand the financial reality of your new venture. This plan is what your investors and lenders will look at to determine your creditworthiness.
Start with thorough research to evaluate your location, competition and customer demographic. Do this by distributing surveys, conducting personal interviews, analyzing your competition and consulting secondary resources. Detail the product and services you will offer, as well as the business structure you will use. Summarize your findings in your executive and company summaries. Lay out your market research and analyze the data you have collected. Demonstrate your financial understanding by keeping detailed records of all current and projected costs and income. Do not forget to provide information about who you are, what your company values and why you are uniquely qualified to start a car wash business. Finally, pay attention to the little things, like branding, customer service and high-quality cleaning products. These decisions will support your reputation and help you profit in the long run.