Over the years modes of transportation have changed, but one thing remains the same. Every vehicle needs a good cleaning from time to time. From automatic car washes to washing and waxing exteriors to full interior detailing, there’s a steadily increasing market for car wash businesses in the U.S.
According to Grand View Research, the global market for car wash businesses hit a $29.3 billion evaluation in 2021, with a projected CAGR (compound annual growth rate of 3.1% between 2022 and 2030. In short, it’s not a bad time to get in on the ground floor and start your own car wash business.
Through this guide, we’ll touch on all the essentials of how to start a car wash business. Topics include market research, registering a legal business entity, marketing, sourcing car wash equipment, and more.
1. Conduct Car Wash Business Market Research
Car wash market research tells you who your customer is, what they want, and how many competitors are waiting in the weeds. There are two types of market research, primary and secondary.
- Primary research is obtained through first-person activities. Interviewing locals, visiting the competition, and speaking to suppliers are all forms of primary research.
- Secondary research requires fact-finding through pre-existing information. Government statistics, online reviews, and industry infographics are all secondary research sources.
Both types of market research are useful, although primary tends to offer more immediate insight. Secondary takes less elbow grease but tends to be less informative about niche specifics.
Through your car wash business research, look for information such as:
- Number of car wash businesses in your area
- The average age of drivers in town
- How many locals own vehicles
- Number of vehicle owners who wash their own car vs. going to a car wash
- Best-performing car wash products and equipment
- Popular car wash services
- The average price for car wash services
You should also look into similar businesses indirectly related to your business. Things like autobody shops that offer detailing services, and self service car wash bays with wax and polish options.
Choosing the Right Services for Your Car Wash Business
Car wash businesses are versatile regarding service options. Apart from the general scrubbing of vehicle exteriors, there are a variety of treatments for interiors as well.
You’ll learn a lot about what local vehicle owners are looking for in a car wash service structure during market research. Some of the most common services include:
- Wash and dry
- Tire shine and gloss
- Rain repellant treatment
- Leather conditioning
- Interior glass polish
- Vacuuming and pet hair removal
- Mat washing
- Clay bar detailing
Many car wash businesses package services by difficulty and price point. A basic package might include a wash and dry, while a premium package could include a tire shine and clay bar detailing.
Full detailing packages clean vehicles insight and out. Some even offer upholstery shampooing for the interior.
2. Analyze the Competition
The car wash industry is saturated in the United States. According to Car Wash Industry Information, there were more than 62,600 car wash businesses in America as of 2020. Most of these are owned by small to mid-sized businesses.
Knowing your local competitors helps you:
- Choose the right service types
- Create a competitive price list
- Analyze gaps in the industry that your brand can fill
There are three types of competitors. Those competing with you directly (full service car wash), those with similar products or services but not in your exact line of work (automatic or self service car wash options), and those in different industries with similar services (autobody shops).
There are several different methods of data collection during competitor analysis, such as:
- Visiting competitor shops in person
- Checking them out online
- Asking locals about their experiences
- Reading online reviews
- Trying local services for yourself
Car wash business competition is local unless you plan on taking a mobile wash on the road. While there are sure to be some major players in your city, these are some of the top car wash competitors in the country.
Zips is an automatic car wash service with add-on options. They operate out of more than 230 locations across the country. Zips stands apart from other car wash brands by offering fleet care for commercial vehicles. A fleet is a minimum of 10 vehicles by Zips standards.
Tommy’s Express has more than 200 sites across the U.S. They offer franchising options to entrepreneurs with a base franchise fee of $50,000. Franchise owners also sign off on a 4% royalty and 1% allocation to the national brand fund. Franchise owners benefit from equipment sourcing including the Tommy tunnel washing system.
Tidal Wave offers unlimited washes for a monthly membership fee. They also offer fleet plans for fleets of 5 vehicles or more. The Tidal Wave main office is based in Thomaston, GA. Currently, they have more than 156 locations across the country.
3. Understand the Costs of Starting a Car Wash Business
Before you start washing cars, you need to put some money into your business. There are many expenses throughout the life of a car wash company, including initial investments and ongoing costs.
Here are some of the expenses you’ll face as you learn how to start a car wash business.
What Does It Cost to Start a Car Wash Business?
The startup costs for a car wash business vary based on how your business is structured. Businesses will pay more for automated drive-through car wash bays with mechanical washing mechanisms. You’ll also pay more if you buy the property or build the wash bays yourself.
Self-serve car wash bays are less costly as no electronic components are involved. Similarly, traditional full service car wash with manual services are cheaper for the same reason.
Finding a commercial property leasing wash bays will cut the costs of building your own. This is a niche industry. Commercial car wash lots for lease are rare.
Some of the expenses you’ll encounter during your startup include:
- Employee training and wages
- Website design and maintenance
- Legal fees
- POS system
- Accountant fees
- Business insurance
- Property lease or purchase
On average you can expect to spend somewhere between $50,000 and $150,000 if you lease property. If you buy land and build your own wash bays, the price goes up exponentially based on the market cost for materials, real estate, and labor.
Franchising a car wash costs more because of the readily available branding, marketing, and even customer base. Your overall investment varies based on the company you invest in.
Tommy Express has franchise fees of $50,000 but requires franchisees to have liquid capital in the range of $1.5 to 2 million for full ownership or $1 to $1.5 million for a lease.
A car wash requires equipment, tools, and washing, waxing, and polishing products to function. These costs add up. Here’s a basic breakdown of some of the common equipment costs you’ll encounter:
- Brushes – $25 to $125
- Booms – $300 to $600 per brush boom
- Spray guns – $30 to $100 per spray gun
- Carpet shampoo – $10 per 1 gallon
- Sealant – $300 to $500 per 5 gallons
- Presoak – $80 to $100 per 5 gallons
- Clear Coat – $150 to $180 per 5 gallons
- Drying Agent – $150 to $200 per 5 gallons
- Mat clamps – $2.50 to $8.25 per clamp
- Pumps – $500 to $1,200
- Polishing machine – $280 to $650
Cost of Renting or Leasing a Location
Finding a car wash bay location is one of the toughest parts of starting a car wash business. There are a few options depending on your car wash business plan.
- Create a pop-up or mobile site: Purchase inflatable car bay tunnels from companies like Yolloy, and take your business on the road.
- Lease an existing wash bay: The cost of a lease varies based on the size and location of the building. For the lease alone, no equipment included, you’ll likely rent by the square foot. For a 1,000-square-foot building, for example, leasing at $30 per square foot, you’ll pay $30,000 for the year.
- Build a car wash bay: This could run you $100,000 or more for building equipment. Add $25,000 for equipment and machinery, and labor costs.
- Buy a car wash: A fully built car wash business with multiple bays can sell for more than $1 million depending on location and shop size.
Look for local car washes that are closing or selling. Even if you can’t afford to buy the place outright, you may be able to get some equipment or lease their property.
Opening any business requires you to register with the Small Business Administration. Here you’ll register a business name and obtain any licenses or permits you need to get started. The entire process costs somewhere between $300 and $800, depending on the permits you need.
Small businesses require business insurance. A car wash has plenty of opportunity for liability suits, especially if there is a slip-and-fall incident, or if a customer’s car is damaged. Most car wash businesses opt for general liability insurance. You may also want to invest in commercial property insurance.
There’s no escaping the cost of utilities for a car wash. Things like water and electricity are especially expensive because of their consistent use. Depending on where you live, you could pay around $10 per 1000 gallons of water. Your water bill should also include sewage.
What Are the Ongoing Costs of a Car Wash Business?
As you learn how to start a car wash business you’ll come across ongoing costs. These are expenditures that continue throughout the life of your business. Some of the ongoing costs you’ll encounter include:
- Liquid cleaner/polish/wax, etc.
- POS system fees
- Staff wages
- Baking fees
- Retail merchandise inventory
You’ll also pay for machinery upgrades, maintenance, and parts throughout the life of your car wash.
4. Form a Legal Business Entity
U.S. businesses must form legal business entities to operate. There are four main types of entities, although there are subcategories within these classifications. The most common entities are Limited Liability Corporations, Sole Proprietorships, Partnerships, and corporations.
As a small startup, an LLC is the best option. Here’s a bit more about each entity to show you why.
Limited Liability Corporation (LLC)
An LLC is a solid choice for a small business formation. It gives you the final say on business decisions and separates your personal and professional assets. If something happens to your car wash and it goes under, your personal finances are safe from lenders.
A Sole proprietorship still keeps you in the driver’s seat where business decisions are made. Any single person, or married couple owning a business together, can register as a sole proprietorship.
Where this entity differs from an LLC is in liability. Your personal assets and wealth are at risk in a sole proprietorship. If a customer’s car is damaged in a wash, your personal savings could get sucked into a legal battle.
A partnership is a good option for family members to open a business together. It offers split ownership over a business entity with each member having decision-making ability. Like a sole proprietorship, a partnership comes with no added protection to personal assets. Any legal or financial trouble could use your personal assets for collateral.
A corporation entity is best suited to large businesses or business chains. You might be part of a corporation if you operate as a franchise beneath a large company umbrella. Chances are, you won’t need to register as a corporation as a small local car wash business.
Corporation entities are extremely sturdy. They maintain distance between personal and professional assets. They’re also difficult to apply for, and involve a lengthy and expensive application process.
5. Register Your Business for Taxes
Another step in legalizing your car wash business is registering your employee identification number, or EIN. This is also sometimes referred to as a tax ID number because it’s used to file and pay business taxes.
To obtain an EIN, apply through the U.S. Small Business Administration. The process is straight forward and all the forms can be found online. You can also use the U.S. government website to double-check sales tax in your state before pricing your business.
6. Setup Accounting for Success
Car wash businesses have multiple revenue streams to monitor. Especially if yours offers both a full and self service car wash.
Tracking all the incoming and outgoing funds gets complex as time goes on. Organized record-keeping is crucial for accurate tax reporting. This is where an accounting system becomes important.
Digital resources like accounting software are one way to monitor and organize bookkeeping. Programs like QuickBooks offer support in areas like:
- Cashflow management
- Bill management
- Invoice reporting
- Inventory control
- Job costing
It automates a lot of the functions carried out by a bookkeeper during day-to-day accounting duties. This saves you time and money better spent in other areas of your car wash business.
Find an Accountant
Accounting software does a lot of the heavy lifting, but some processes require a certified accountant. Accountants are trained in business and tax law. They know what your car wash needs to do to keep things above board with the IRS.
Hiring an experienced accountant can be costly. You’ll pay anywhere up to $400 an hour, especially during tax season when they’re in high demand. The cost is worth the outcome to ensure your tax return is filed without a hitch.
Get a Business Bank Account
Business bank accounts are handy to have. They separate all personal and professional spending, making it easy for you to account for the money coming in and out. The IRS recommends a separate bank account for all business activity.
Benefits of a business bank account include:
- Holding your car wash accountable
- Maintaining organized records for IRS representatives
- Keeping finances organized for accurate reports
- Convenience during business expenditures
Having a business bank account also maintains an air of professionalism. Any checks sent to employees have the business name and address instead of your own.
Apply for a Business Credit Card
A business credit card offers much the same advantages as a business bank account. Business cards also come with perks such as travel miles, low APR, and cash-back rewards. Personal credit scores are impacted by business credit cards, so be mindful when spending.
7. Obtain Business Licenses and Permits
You may require certain permits to build a car wash bay as well. Building permits are also sought through city or state officials.
8. Get Business Insurance
Insurance products protect you, your employees, and your business against financial hardship caused by legal or liability issues. Car wash businesses are high-risk zones for slip and fall incidents and damage to property.
Between the chemicals used to clean cars, and the constant flow of water, there’s a chance something could go wrong. General liability insurance covers you against damage to any person or property caused by your business’ service or products.
General liability insurance rates differ from state to state and by company. In general, you should pay somewhere between $300 and $1,500 a year for $1 million in coverage.
9. Create an Office Space
Most car wash bays aren’t rife with office space. If you don’t have an office on-site, there are several options to create a workspace.
Offices are important for dealing with administrative duties, filing paperwork, and even interviewing potential employees. Here are some of the ways to create an office for your car wash business.
Building a home office is as simple as placing a desk and chair in an unused spare bedroom at home. This is a smart option for new business owners looking to cut back costs and reduce the need for lengthy contracts.
A home office also qualifies for tax deductions, including internet, mortgage payments, remodeling costs, and fuel to get to and from the car wash. The IRS deducts by $5 per square foot up to 300 square feet, or per individual item. The maximum amount you can claim each year is $1,500.
Coworking office spaces are a time and money saver for modern business owners. These spaces require no long-term contracts because they’re shared among other businesses in your network.
One of the top coworking office providers is WeWork. WeWork has a range of packages for every budget and business style. They offer private, semi-private, and shared business offices, including corporate office spaces. The benefit? No wasting time finding a workspace and no long lease.
Commercial Building Office
There are some business owners who prefer a commercial building office over other options. This is a good fit for a large business or a business with an influx of revenue. Commercial offices are expensive, and often require long commitments to obtain.
10. Source Your Equipment
Car was business equipment is niche. Fortunately, with a saturated market in the U.S., there are many places to secure the right products and materials at wholesale prices.
There are two ways to source the equipment you need to start a car wash business. Buying new and buying used.
New equipment is always an attractive choice in terms of quality. You can rest assured the machinery and supplies will last and require less maintenance than used equipment.
Used equipment can work as well as new. In fact, if the products are of like-new quality, you may get many years out of them. Source used products from other car wash businesses closing out and liquidating assets. You can also source through Facebook Marketplace and Craigslist.
11. Establish Your Brand
Building a brand for your business is like building a reputation. Online and in-person, your brand speaks to locals and tells them who you are and why you deserve their business.
Branding includes a variety of factors, including customer engagement tactics, web design, and logos. Here, we’ll talk a bit about what goes into branding and how to make yours stand out.
Get a Business Phone Number
A business phone number provides a professional vibe for your car wash business. It also lets you safely list it online and in the phone book without concern that your personal phone will be targeted by pranksters. Apart from privacy, some reasons to use a business line include:
- Organizing client calls from personal calls
- Providing customers with a stable mode of contact
- Creating a line for all employees to answer business calls
One option for a new business line is Google Voice. Popular mobile companies like AT&T and T-Mobile also offer business lines. Google Voice has the benefit of being accessible from various mediums, including phones, tablets, or laptops. Business lines start at $10 a month.
Create a Logo & Brand Assets
Logos are very telling to consumers. Some logos become more recognizable than the business name itself. A great example of this is the golden arches of the McDonalds logo. Your car wash may not become a national symbol for clean vehicles, but it sets you apart from local competitors.
Looka is a logo platform designed to create with AI. Looka uses your personal tastes in terms of colors, font, size, and imagery, and offers multiple logo options. Choose the logo that best suits your style.
Create Business Cards and Signage
For a wide assortment of business cards, signs, stickers, labels, and more, try Vistaprint. Like, Looka, Vistaprint helps design your stationery and signage based on your preferences. Sort through different design options and card stock to find the right fit for your brand.
Business cards are a worthwhile investment. Leave them on the front desk, hand them out at local hot spots, and use them to introduce your brand at networking events.
Purchase a Domain Name
Your domain name should reflect your business name and industry. It’s essentially a business address for your digital storefront. Branding your car wash with a real domain name offers an air of authority and professionalism. It also gives a leg up on competitors who only bother to register a Facebook or LinkedIn account.
There are plenty of places to shop for affordable domain names. Namecheap.com is one spot to grab a .com address for as low as $6 a year.
Build a Website
Your web address is important, but not as important as the website it takes customers to. Web design is becoming increasingly important to businesses around the world. Things like mobile-friendly browsing and simple navigation are often emphasized during online skill-building events.
There are many ways to build a solid website, even if you’re not much for digital design. Fiverr is one way to find professional web designers at bargain prices. Fiverr is a freelance portal where business owners can hire experts in a variety of fields, including web design.
12. Join Associations and Groups
They say no man is an island. Perhaps the same goes for businesses. Having a strong network of supporters in your corner is a big help when starting a new business. Joining industry associations and groups for car wash owners will help you learn the ropes quickly, and gain insightful tips on running a successful company.
Seeking local associations is particularly useful as they offer information on your specific market base. To find local car wash business groups, ask around at other shops, or run a quick Google search.
There are many to choose from, depending on your state and city, such as the Car Wash Association of Pennsylvania.
Local meetups like trade shows and conventions are useful for meeting colleagues in your industry. Tools like Meetup are useful for pinpointing events in your area, or in nearby towns. If you don’t see one on the site, create your own.
Meetup is easy to use. Search by city, zip code, and organization type.
Another place to find car wash business owners and industry support is Facebook. Facebook is a free (apart from paid advertisements) and often underused business tool. Some groups to try include:
You can join as many groups as you like, both internationally, and locally.
13. Focus on Marketing
Marketing is the best way to gain brand recognition for a new business. Local marketing tells your community what your car wash business does, and how you’ll serve them above and beyond competitors.
Market research offers insight into the types of marketing most beneficial to your target audience. From social media and email campaigns to direct mail flyers and loyalty punch cards. Here are some marketing tips to get the ball rolling.
Ask Friends, Family, and Coworkers
Your friends and loved ones are the first step in a successful marketing strategy. They know you better than anyone else and want your brand to succeed.
Ask your family and friends to participate in the initial steps of marketing by:
- Handing out business cards
- Spreading the word
- Sharing social media posts
- Posting online
- Leaving reviews
Hearing from other community members is a powerful motivation to modern consumers.
Digital Marketing Ideas
The world does a lot of things online. It only makes sense to take your marketing to the digital business scape. Digital marketing comes in all shapes and sizes, including:
- Online ads (Facebook and Google)
- Email campaigns
- Social media
- Online contests
Digital marketing helps you reach that little bit further than word of mouth alone. It also offers straightforward reporting on ROI analytics based on traffic, clicks, and other factors. In short, it’s easy to monitor and track your online ads, see what’s working, and what’s not, and fix it.
Traditional Marketing Ideas
Traditional marketing is far from dead and gone. These are the tangible ads we see, touch, and even taste or smell in some cases (ie. samples). Traditional marketing helps bring your brand to consumers in a way they can’t ignore. There’s no junk mail filter or quick delete button.
Some examples of traditional marketing to try with your car wash business include:
- Newsprint ads
- Customer loyalty cards
- Bus signs
- Park bench signs
Other forms of traditional marketing include branding your uniforms, merchandise, and company vehicle.
14. Focus on the Customer
Turning your attention to your customers is a great way to build brand loyalty by humanizing your car wash company. In a world dominated by AI and apps, it’s nice to see customer service shine in small businesses.
There are several ways to shine a spotlight on your customers and show them you care, including:
- Online engagement
- Exclusive offers
- Customer loyalty rewards
- Referral rewards
- Special events (grand opening, anniversary celebrations, etc.)
Customer focus doesn’t need to be complex. When customers leave comments, comment back. When clients start coming for regular services, give them a small incentive to keep coming back.
We hope this guide has offered some useful insight into how to start a car wash business. Best of luck with building your brand!