To establish an automatic car wash business, a minimum investment of $500,000 is required. The following 13 factors determine the expenses involved in starting an automatic car wash business.
The car wash industry has witnessed a surge in consumer interest, resulting in revenues of almost $6 billion. This makes it an attractive option for entrepreneurs looking to start their own business. Automatic car wash structures are particularly popular and have the potential to generate substantial revenue for commercial operations.
What is an Automatic Car Wash?
Automatic Car Wash is the type of car wash that you will normally see at a convenience store or gas station, because it generally requires less space and labour than other car wash formats.
When you use this type of car wash, you will pay for the type of wash you want, your vehicle will be pulled into the car wash from a starting point, and you will wait in your car as the exterior of your vehicle is cleaned. Around 58,000 businesses in the united states are in-bay automatic car washes.
What is the Cost to Build an Automatic Car Wash?
If you are going to open an automatic car wash, you will be able to wash more cars per hour without having many people on your payroll, but you will have to replace your equipment every ten years or more often if it is not maintained properly.
This type of operation requires a significant investment of up to $500,000 because it is a much bigger facility than a self – service car wash.
Water is really costly, especially in places like California where the water is in short supply. Reclaiming water is important. This requires capturing the water and pumping it through a filtration system to clean it before it is used again. Automatic car washes use a lot of electricity as well. Labour is paid at the minimum wage because the workers also get tips.
For automatic car wash systems, the average charge is $10. Most customers like to add some extras and can pay as much as $15 for a wash with the extras of interior cleaning, freshener, tire treatment, and the application of car wax. An automatic car wash operating at 100 cars per day at the average price of $10 per car will make $1,000 in gross profits per day.
Labour will cost about $60 per hour so for an eight – hour shift, that is $480 plus $120 more for employment taxes paid by the employer. Electricity will be about $200 per day and water about $75 per day and supplies about $25 per day. Insurance will cost $2,000 to $3,000 per month.
Taking these expenses into consideration gross profits per day would be about $220 per day. The owner of a modestly successful automatic car wash would make around $6,600 per month in profits after paying all the expenses. In really busy areas, it is possible to make up to ten times this amount.
Estimated Cost Breakdown for Building an Automatic Car Wash
There are several variables that must be determined before you can realistically estimate your costs when opening an automatic car wash. For instance, the size of your building, the type of construction and even development expenses can vary significantly.
Have it in mind that the building is the first thing your customers will see when they are deciding whether or not to visit your business. Consider the importance of making a great first impression. Below is the cost breakdown of building an automatic car wash:
1.Location
Note that where you will build your car wash structure is one of the most important decisions you will have to make in starting up this business. You have to know whether the area is accessible to your target market and if the neighbourhood is safe and secure.
Meanwhile, the space needed for one bay of an in – bay automatic car wash is around 7,000 square feet. You have the option of building from scratch, buying an existing car wash structure or renting a car wash building.
In general, land acquisition costs are estimated at $100,000 – $200,000. Site work that includes building the foundation and landscaping costs around $200, 000 – $300, 000 while building construction (including electrical and plumbing) is at $350,000 – $500,000.
2.Permits, Licenses, and Professional Fees
To successfully start this business, some of the required paperwork and professional fees that you need to pay for are: architectural fees, engineering fees, studies and appraisals (e.g. impact, traffic), construction permit, business license, and environmental and safety permit.
The cost of permits and licenses is $150 – $200 on average. Including professional fees, the total of this part of the cost can go up to $50,000 – $150,000.
3.Efficient Waste Management System
In the United States, environmental authorities mandate car wash facilities to have an integrated system to collect and process and reuse wastewater. The more contaminants in the wastewater, the more you will spend on your wastewater recycling. A closed – loop system that can restore water for reuse right in the car wash facility costs from $35,000 – $100,000.
4.Automatic Car Wash Equipment
For automatic units, the cost of equipment can go as high as $31,000 – $49,000 per bay. Always ensure to do a canvass of equipment costs with your local distributors so you can compare prices. You may also want to consider buying used car wash equipment for lesser cost or getting them on consignment.
5.Insurance, Safety, and Security Systems
It is necessary to protect your business from potential risks and accidents that will cost you money. Types of insurance coverage that are recommended for car wash businesses are those that cover general liability, professional liability, and commercial property.
You will need to prepare at least $500 up to $15,000 for insurance coverage alone. It will help to research what specific insurance coverage you will need for your business and for your team.
6.Advertising and Promotion
As a new entrant into the industry, you will need to put the word out to attract potential customers. Advertising campaigns can cost $2,000 – $5,000 on average. Signage costs roughly $15,000 – $25,000.
From the detailed breakdown above, the estimated cost to build an automatic car wash is $500,000 – $1,400,000 (including land and construction costs), depending on the factors mentioned above. To further cut down on startup costs, consider getting a car wash franchise. Through franchising, you will save on a number of expenses while banking on an established brand and Business model.
Building an automatic car wash offers an excellent opportunity to sell additional items to clients who are waiting for their cars to be washed. One terrific and very successful idea is to have a drop – off dry cleaning and laundry service associated with a car wash.
Additionally, offering fast food is another revenue source. The typical automatic car wash customer can wait for about 15 minutes at a minimum for their car to be washed. This is an excellent time to sell them other things. Consider making deals with auto dealerships to wash cars at night as this is a great way to make extra money.
