5 Questions You Need to Ask Before Buying a Car Wash

For years, car washes have been a promising investment for those interested in buying a business. In the last five years alone, the industry has grown at a 3.9% annual rate. Still, there are specific challenges and aspects to address before making a purchase. Luckily, Sunbelt Business Brokers is here to offer five questions you must ask before buying a car wash business.

Must-Know Questions Before Buying a Car Wash

The increasing automation of car washes have made for some significant changes to the industry. If you’re thinking about buying a car wash business, there are several important questions to consider before you sign on the dotted line.

1. What type of car wash are you purchasing?

   There are three different kinds of car washes: full-service, express, and self-service. Determining which type of car wash is right for you as a business owner can narrow down your options. We’ve highlighted the main service offerings of each type below.

   Full-service car washes typically run around $14 with a labor-intensive process that often includes multiple add-ons such as detailing, fuel, convenience store, or a lube stop.

   For express car washes, the service is much like the name. Express car washes offer a variety of different price points that increase with respective services. Service usually costs between $3 to $12 and depends on a high amount of car volume to make its sales goals.

   Finally, self-service car washes provide wash bays for customers to wash their cars. While self-serve car washes used to be fairly popular, they are slowly losing ground to automatic car washes. Consumers prefer the automated washes over doing it themselves and don’t mind waiting for that service. Automatic wash bays can supplement service to help build a larger customer base.

   Asking prices for each type of car wash vary depending on a variety of factors. Always consult with a professional business broker when buying a car wash to ensure you are investing in a business that’s right for you.

2. Where is the car wash located?

   Location is something that is frequently overlooked by potential buyers. Understanding how the area around your business will impact revenue will help you determine the right car wash for your investment. There are three things to consider when it comes to choosing a location for your car wash.

   First, ensure there is an easy-access entrance and exit for the customers. Second, the likelihood of people stopping increases if the car wash is on the way home from work. And lastly, car washes tend to have more success if they are in a higher than average traffic area in a neighborhood with a good mix of both residential and commercial properties. If the car wash in question has at least two of these three qualities, it is likely a sound investment.

3. How much traffic does the wash see on every day of the week?

   Sometimes if a real estate agent is selling the car wash, they will bring you to the car wash on a Saturday when the business is guaranteed to be busy. While it’s good to see what the car wash is like on a high traffic day, you should see what it is like on other days of the week too. For instance, if it’s only busy Fridays, Saturdays, and Sundays, you are missing out on business four days of the week. Address any traffic concerns when deciding whether or not to invest.

   Since the car wash industry is predominantly a cash business, it can be more challenging for the current owner to grasp the worth of their small business. Working with a professional to ensure a fair valuation for both you and the seller can help alleviate this challenge.

4. Is all of the equipment in working order?

   The last thing you want is to buy a car wash and then find out that all of the equipment needs to be replaced. Be sure to have a thorough inspection done by someone experienced with car washes to ensure that everything is in working order. Brokers can assist you with finding an inspector to ensure the equipment is functional and in working order.

   After confirming that everything is working, it is a good idea to see if any upgrades can be made to the equipment. For instance, if everything is working, but the three other car washes in the area have the newest model of wax applicator, it would be a good business decision to upgrade. Factor the cost of new equipment, potential repairs, and upgrades into your purchase price.

5. Do you have an exit plan?

   Yes, this is an important question to ask when you are buying a car wash. Things happen. The car wash can end up consuming too much of your time. You may find a better investment, have health concerns, or a myriad of other things. It’s essential to have an exit strategy in place before you buy the car wash so you can feel secure in your investment.

If you are looking for listings of car washes for sale or have more questions about purchasing a business, contact a professional Sunbelt Business Broker. Our experienced brokers have years of experience and can guide you through the buying process so you can invest in confidence.