5 Common Questions About Buying A Car Wash

July 28, 2022

5 Common Questions About Buying A Car Wash

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5 Common Questions About Buying A Car Wash

Unconventional Acquisitions

July 28, 2022

Why in the world would anyone want to buy an existing car wash? I know, I know. It’s certainly not the sexiest small business out there, but it might be the sudsiest.

In 2019, the International Carwash Association (yes, that is a thing) found that 77% of car drivers washed their vehicles at a professional car wash service. And that small, mom-and-pop business is a $24 billion industry. 

I bet you never thought that some soap and water could lead to a billion-dollar industry, but you better believe it. 

And according to Avanton, the average cost to buy a car wash franchise can be anywhere from $40,000 to $3,000,000, whereas mobile car wash businesses will typically sell for $30,000 to $100,000.

Here are a few of our most frequently asked questions we get asked about buying an existing car wash (and why we think they should be next on your list of assets):

1. Are car washes profitable?

Absolutely. It’s one of the reasons we’re so into it here at Unconventional Acquisitions. According to Road Less Traveled Finance, the average profit margin for an in-bay automatic car wash is around 69% (but keep in mind that there are a variety of car wash types). 

Part of what makes car washes so profitable is their ability to add on additional services or upsells. Small additions like tire cleaning, wax treatment, premium detergents, and other products can easily increase your margin. 

Another benefit that makes car washes profitable is how easy it is to increase prices and adjust to the going market rate. You can also offer washes at multiple tiers based on the quality of the wash, which can also spike up the profit margin. 

2.  Are car washes recession-proof?

Hell yes, which is another reason we’re so into them. The thing that makes car washes so interesting is that there will always be a need for people to have clean cars. 

Yep, even in a recession or economic downturn. 

Also…there aren’t a lot of bells and whistles to owning a car wash once you’ve purchased your equipment and the actual retail location. 

Once you’ve acquired those assets in your portfolio, your most complicated expenses will be labor (if you’re not operating an automatic car wash), water, and electricity. 

And while car washes are a recession-proof business, they are also a seasonal business. If you’re considering buying a car wash, be sure to buy one that isn’t located somewhere that sees a lot of rain or snow. 

If you do, then you’ll find that your sales and revenue are highly dependent on the weather which may not be a steady and predictable income option for you. 

Since the goal around here is to buy businesses that cash flow, you’ll want to make sure that the one you’re interested in buying has a somewhat predictable sales and customer base. 

3. Are car washes a good investment? 

Ah…another one of our favorite questions. Just like anything, investments are only as good as we’ve set them up to be and the market they operate in. 

However, all things considered…there’s a strong case for car washes being a good investment. 

A few of the pros:

  • They are profitable on day one
  • They’re considered a recession-proof business
  • You can hire an operator to run the business for you
  • There are minimal labor costs and team management
  • You can profit even with a relatively low marketing budget
  • It’s easy to set up additional and/or recurring revenue streams

And a few of the cons:

  • They’re weather reliant—not ideal for locations with snow or a lot of rain
  • Location is your #1 selling point—get this wrong, no customers or convenience
  • Maintenance and machinery can be a complex and expensive fix
  • If your car wash breaks, it may take a few days to repair

4. Can you buy a car wash with no money? 

Another common misconception is that you’ll have to a lot of cash upfront to purchase a car wash. This is a total myth. 

When it comes to M&A financing, especially for boring businesses like a car wash, you have a lot of options available to you. 

One common way to finance a business acquisition is through an SBA loan. Since traditional bank loans can be extremely difficult to obtain, SBA loans are a great backup option for you. 

The most accessible option is an SBA 7(a) loan which is a very flexible option and less complex than it sounds. SBA loans are typically easier to obtain than a regular loan through a bank because they are guaranteed by the U.S. Government. 

They also feature longer repayment terms than a typical bank loan, making it ideal if you don’t have a lot of cash on hand to put down on your car wash. 

This is all well and good, but one of our favorite ways to finance a car wash deal is actually through something called seller financing. 

When you use seller financing to fund a deal, you agree on an upfront amount to pay as a down payment, and then pay the remaining balance back to the previous owner over time. The payback terms for seller financing can take anywhere from weeks, months, or even years. 

This is such a great option for car washes in particular because they are immediately profitable on day one. This means you’ll be paying back the previous owner using some of the cash flow you acquired immediately after purchasing the business (and saving some for yourself, too). 

5. How do you buy a car wash?

First things first, you’ll need to actually find a car wash that’s worth even starting up a conversation about buying. But it’s not as complicated as you might think. 

There are websites out there like BizBuySell.com that will list thousands of small businesses that are currently up for sale. It’s a great option if you’re just starting to dip your tow into acquiring a business, but keep in mind…it can get a little crowded in there sometimes. 

One of the best places we recommend looking to buy an existing car wash is actually good ‘ole Google.com. Just type in car washes and your search area and start to scroll. 

Typically, you’re going to want to look for businesses where the owner is approaching retirement or they are looking to get out of the business for whatever reason. 

Sometimes sellers are also not actively open to selling their business, so you may need to swing by and talk to the owner yourself. 

Want the inside scoop and our whole bag of tricks to buying your first car wash? We’ll walk you through the exact process of acquiring a business in our online course for small business buyers

…or if you’re really serious about buying a car wash and want the playbook and accountability AND support from us, our mastermind is the place you need to be. 

Yours Unconventionally,

Codie & Ryan

Co-founders – Unconventional Acquisitions

If you want to learn more about how to find and buy businesses, check out these articles👇

You can also register for the course here OR if you are serious about buying a small business, join our mastermind.

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