By Jim Utter
Director of Journalism
Investing in car washes remains a smart financial move, but in choosing any investment it’s best to explore the many options available.
The car wash industry continues to show growth, although it has slowed somewhat in recent years after a large uptick following the COVID-19 pandemic.
Still, car wash services bring with them a consistent demand – people always need to clean their cars, high profit margins, generally lower labor and inventory costs and the flexibility to scale your site (or sites) to match your customer’s needs.
That flexibility, however, brings up one of the biggest questions new owners must face – buy an established car wash site or build one from scratch?
The choice isn’t an easy one.
The final decision will likely be determined by access to capital and how any purchase will be funded but both options present unique benefits.
The case to build
Many of the benefits to building a new car wash are similar to the new construction of any new commercial site.
Building your own site offers the benefit of customization and with it your creation of your own brand. You can design the car wash however you like it, utilizing whatever features and technology you believe best serves your market. At the same time, you can develop your own brand identity to help differentiate yourself from your competition, whether it be in pricing, amenities or type of washes offered.
With the customization also comes the ability to scout the optimal location, one that puts you in the best location to attract customers, whether it be based on traffic or being strategically located near other businesses from which you could potentially draw crossover customers. Granted, available land may be limited in some areas, but you at least have input in the choice.
By building, also comes the “newness” factor, having a property that features a modern design, which may be source of pride for the community you’re serving. There may also be financial incentives available from state and local government entities, who are always looking to attract new businesses that also produce new jobs.
A new site also comes with the ability to tell your own story. No worries about any carryover issues from pervious owners, whether it be from unsatisfied customers or issues related to the site’s location itself.
The cost of land, equipment and construction for a newly built car wash can be substantial, which may be a barrier for some, but the payoff can be quite large if you’re willing to be patient.
The case to buy an existing site(s)
Purchasing an existing site clearly offers the “ready to go” option, unless a buyer plans to do extensive remodeling or rebranding.
The primary benefit comes from the ability to begin seeing a revenue stream very quickly. Unlike unveiling a new entity, buying an existing car wash usually means you already have a customer base, at least one that knows of the site’s existence and are accustomed to its availability. If the car wash is operational, that also means a source of revenue is available from day one.
In purchasing an operational car wash, a new owner also already has likely made the choice at least in part because the business model in place was already working, and you also see the potential to grow it. There are few unknowns surrounding whether such a business can flourish in that area.
An established car wash entity may also come with brand recognition and/or loyalty from the customer base and with that analytical data regarding the clientele the previous owners have already served.
There may also be some benefits in securing capital as some lenders may be more amenable to financing a proven entity that has produced revenue rather than a startup, which may incur unexpected additional costs.
Getting off the ground more quickly and growing on an already established customer base may also provide the means and willingness to consider expansion on a far more expedited timetable than starting from scratch.
