Buy a car wash and you get a business model with three compelling advantages:
One, the model is comparatively uncomplicated. Two, demand is strong, steady and fairly recession-resilient: most households own a car – many more than one – and outsourcing the cleaning is fairly inexpensive.
And three, they’re not among the most expensive of businesses to buy. Many are hand car washes with a modest building for their office and shop front and only inexpensive equipment and inventory.
Buying an established operation has multiple benefits - everything’s set up and operational, and they’re invariably located in prime locations on busy roads.
Business transfer agents
Whichever sector you venture into, it’s worth hiring a solicitor or business transfer agent with experience of overseeing acquisitions of similar businesses. They can help you secure finance, find credible buyers, conduct an independent valuation, obtain and scrutinise paperwork, conduct negotiations and due diligence and close the deal.
Of course, this comes with a price tag – but they could pay for themselves, and then some if they help you secure a quicker deal at a lower price than you otherwise might have negotiated on your own.
Types of car cleaning business
There are of course different kinds of car cleaning businesses – some more expensive than others, typically depending on what’s included in terms of premises, technology and the breadth of services on offer.
Drive-through, automated operations are, naturally, often more expensive than hand car washes. They can also service more customers – and generate more revenue – in a given time frame. Less labour-intensive they require fewer cleaning staff, potentially offering larger margins, albeit with maintenance costs to factor in.
The self-service model, meanwhile, also cuts labour costs and the cleaning apparatus is probably cheaper to maintain – but does require more effort from the customer.
When the first semi-automatic car wash was invented in 1946, its inventor may have envisaged the extinction of hand car washes within a few decades. Yet here we are in the 21st century and hand car washes are perhaps still more numerous than automated operations.
The big plus is they are comparatively inexpensive – for both you, buying the business, and the customer.
Co-location with a petrol station, which gets a steady stream of business day and night, is a massive advantage too.
Car valeting or detailing, which involves more substantial work like polishing, waxing and paintwork restoration tends to attract customers on high incomes and car dealerships seeking to enhance resale values – which means precious, high-value repeat business.
Mobile valeting businesses are often comparatively inexpensive since they rarely involve bricks-and-mortar premises. They also offer convenience to the customer, who needn’t leave their home to get their car cleaned.
You can quickly establish a shortlist of targets by filtering car washes for sale on BusinessesForSale.com by price, location, sales revenue, real property or leasehold, accommodation included or not, whether they offer owner finance or not, and so on. You can also filter with keywords like ‘automated’, ‘mobile’ or ‘petrol station’.
If car washes have a relatively simple business model, then the training, support and tried-and-tested formula of a car cleaning franchise makes life easier still.
However, you will have to stick rigidly to the aforementioned proven formula. Essentially, then, the choice between a franchise and an independent can be framed as entrepreneurial freedom versus a (typically) higher chance of success.
Business valuation
The seller usually has the business valued by an independent expert. However, it could be worth getting your solicitor or agent to conduct their own valuation to make sure you pay a fair price – especially if the seller has valued it themselves (sellers rarely undervalue their own business).
Like many sectors, car washes are generally valued according to profits over several years, multiplied by an industry-standard ratio, with the value of any property, land and equipment added too.
At the time of writing, car washes for sale on this site range from £19,950 to £850,000 in price (though the most expensive is primarily a petrol station).
Due diligence
An agreement reached in principle is set out in ‘heads of terms’. Then it’s time to undertake due diligence: a comprehensive examination of the premises, accounts, business’ reputation and local market conditions.
Financial statements are not always reliable gauges of revenue in a sector where lots of cash goes through the register, so appoint a good accountant to assess the books.
Location is important for any high street business. This is particularly true when passing traffic accounts for a big share of custom – and in few sectors is this more applicable than the car wash business.
So don’t just assess the car wash itself; also spend time watching the traffic go by. But you needn’t do this all in person; you can plot a Google Maps route through the road at various times of the day and night.
You’ll probably know that Google Maps colour-codes traffic with red indicating heavy congestion, amber showing moderate congestion and green, no congestion. You can also gauge typical traffic by entering the business’s postcode into this government website.
Also assess rival car washes competing for this traffic: both their number and how their services compare in terms of price, quality and range.
Steve Gaudreau, ex-car wash owner and author of So You Want to Own a Car wash, recommends identifying “on a map all of the competition within a five-mile radius and determine what their trade area is, what your natural trade area is, and understand where there is an overlay.”
