How to Start a Car Wash Business - Step By Step Business (2023)

Some people love their cars – they really, really love their cars. They like them looking clean and perfect all the time. If you’re a car lover, you might lean toward starting a car wash business so that you can make everybody’s car shine. There’s real money to be made in car washing, as the industry boasts healthy profit margins.

Starting a business is rewarding, no doubt, but it also takes work and dedication. You need to begin with information so that you know what you’re getting into, and how to get started. This step-by-step guide will get you on the road to starting a profitable car wash business.

Step 1: Decide if the Business Is Right for You

Pros and Cons

Every business has its ups and downs, its pros and cons. You should carefully weigh them to determine if starting a car wash business is right for you.

Industry trends

Market analyst Grandview Research valued the global car wash services market at almost $28 billion in 2020, expecting nearly 4% annual growth through 2028. The industry’s growth reflects consumers’ greater interest in car care and increased desire for convenience.

New car wash trends include ceramic treatments to prevent beading and pooling, increased automation, and even sonar technology that senses the car’s size and adjusts accordingly.

How much does it cost to start a car wash business?

Startup costs will vary depending on the type of car wash you open. You can start a handwashing business for as little as $2,500 or an automated self-service wash for $150,000 or more. The main expenses on the high end are the facility and the machinery.

How much can you earn from a car wash business?

The average cost of a car wash is about $4.50, while the average price is about $10, resulting in a 55% profit margin.

If you can do 15 car washes 250 days a year (3750 total) at $10 each, you’ll have $37,500 in annual revenue and more than $20,000 in profit, assuming a 55% margin. As your brand gains recognition, you might do 10,000 car washes in a year and $55,000 in profit.

Once you know your costs, you can use the Step By Step profit margin calculator to nail down your prices and project profits.

What barriers to entry are there?

There are very few barriers to entry for a car wash business. Your biggest challenges will be:

• Location – Finding a strong location with adequate infrastructure
• Expenses – Costs to start are high if you go the automated route
• Competition – Many areas are saturated with car washes

Step 2: Hone Your Idea

Now that you know what’s involved in starting a car wash, it’s a good idea to hone your idea in preparation to enter a competitive market.

Why? Identify an opportunity

Look for an area of your city or town where there are few or no car washes or look for a type of car wash that is missing. You’re looking for market gaps that you can fill. Perhaps a full-service car wash with automation, vacuuming, and hand polishing services is not currently available, and you can fill that gap.

What? Determine your products or services

In addition to a basic car wash, you could offer:

• Interior and exterior detailing
• Waxing and polishing
• Tire shining and mat cleaning
• Free accessories, like air fresheners

You can offer various packages of services for different prices.

How much should you charge for a car wash?

As mentioned above, your average car wash costs about $10. But with add-on services like waxing and detailing, a full-service wash can run as high as $40. Check car wash businesses in your area for their prices and offerings.

Who? Identify your target market

Knowing your target demographic will help you determine your service offerings as well as your marketing approach. If you want to launch a full-service car wash and command higher prices, your business should be located in a more high-end district. Your customers are likely to be aged 30 and above, so you might target them with ads on Facebook or Angie’s List.

Where? Choose your business premises

Your location should be convenient and see a lot of car traffic and a lot of your target market. For example, if you’re going to have a hand-washing car wash with discount prices, you may want to be in an area with a younger demographic, like a university district.

In the early stages, you may want to operate your business from home to cut costs. But as your business grows, you’ll likely need to hire workers and may need to rent out a car wash facility. Find commercial space to rent in your area on Loopnet, Craigslist, Crexi, and Commercial Cafe.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “car wash” or “waxing”, boosts SEO
• Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names at a web cataloging site such as NameChk. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. And if you’ve exhausted all your creative juices but still don’t have a business name, don’t stress! Instead, check out our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your car wash’s offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand you might consider looking elsewhere, as some states offer real advantages when it comes to washing cars.

If you’re willing to move, you could really maximize your business!

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your car wash will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the four main options:

• Sole proprietorship – The most common structure for small businesses makes no legal distinction between company and owner: you get to keep all the profits, but you’re personally liable for all debts.
• Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses.
• Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.

We recommend that most new business owners form an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can quickly and cheaply form an LLC using ZenBusiness’s online LLC formation service (it can take as little as 5 minutes). They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you have about the company formation process.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online. It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
• Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Step 8: Apply for Licenses/Permits

Starting a car wash business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

You may also need state-level licenses and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. You could also check this SBA guide for your state’s requirements.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

For peace of mind and to save time, we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state, and provide them to you to make sure you’re fully compliant.

Step 9: Open a Business Bank Account

Before you start making money, you will need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your car wash business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet is vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

You can create your own website using services like WordPress, Webflow, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. We examine several of them below.

You can use software for car wash businesses that provides point of sale (POS) and management tools such as Washify, ezWash, or Wash Systems.

Marketing

Some of your business will come from the casual drive-by customer, but still you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products:

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Equipment

You’ll need a handful of items to successfully launch your car wash. Here’s a list to help you get started:

• Automated washing systems
• Chemicals for cleaning
• Car waxes, polishes, and accessories
• Dryers and vacuums
• Brushes and towels

Step 12: Build Your Team

If you’re starting out small from a home-based office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a car wash business would include:

• Car Washers – Vacuum, clean, wax, detail cars
• Receptionist – Welcome customers, process payments
• Office Manager – Scheduling, ordering supplies, staff oversight
• Marketing Lead – SEO, social media strategies

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn or Facebook. You can also use free classified sites like Jobs and AngelList. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Start Making Money!

Focus on USPs

Unique selling propositions, or USPs, are the unique characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your car wash meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Some signature USPs for your car wash business could be:

• Exceptionally fast service
• Comprehensive full-service for the perfect wash
• Budget-friendly wash at discount price
• The best car accessories anywhere

Kickstart Marketing

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

• Competitions and giveaways – Generate interest by offering prizes, such as the first customer of the day getting a free car wash.
• Optimize calls to action – Experiment with text, color, size, and position of calls to action such as “Schedule now”. This can sharply increase purchases.
• Signage – Put up eye-catching signage at your store and website
• Flyering – Distribute flyers in your neighborhood and at industry events

Consider a Niche

You should consider creating a niche for yourself by specializing in a certain aspect of your industry. This could jumpstart your word-of-mouth marketing within your niche market.

Build Affiliate Relationships

Affiliate marketing isadvertising in which you compensate third parties (i.e. your affiliates) in order to generate traffic to your website. You can develop long-term relationships with these affiliates and generate traffic for each other on an ongoing basis.

Wrapping it up

A car wash has the potential to be a very profitable business once you grow a strong customer base. It’s an industry that always seems to be growing, because most people don’t like to wash their own cars! You can start a basic handwashing car wash for very little money and eventually expand. You may even be able to franchise and build your own car wash empire.

Now it’s time to start the engine on your car wash business!