Buying A Car Wash - Three Types To Consider

One of the most popular business offerings is the car wash. It’s considered easy to run, the number of cars on the road continues to increase, while it doesn’t seem that car wash installations are being added to keep pace.

But there are some challenges involved in buying a car wash business for sale.

Three Models:

Small business buyers considering this industry will be aided by understanding its three basic business models.

The "tunnel" wash uses a long building for soaping and rinsing as each vehicle travels on a conveyor and later is dried and vacuumed by hand. This is the costliest way to get into the business--usually priced over $1 million, and the one producing the highest revenues and profits. With employees to manage, and a seven-figure cost, this is the most demanding of the carwash models. The owner of this business type often is a corporation or partnership, with two or more people involved, each investing capital, borrowing ability and management time.

Much smaller installations are the "drive through" arrangements that require the customer to stay in the car while it’s being washed. There is no hand labor involved except the customer’s do-it-yourself vacuuming at the end.

Least costly and also the lowest revenue producer is the "self-service" installation using individual bays with wash wands, soap brushes and, once the customer has cleaned the metal finish--front to back, some coin-operated vacuum cleaners to do the same to the interior.

A review of car wash businesses currently available on this site reveals there are opportunities in each of the three categories, with some businesses that seem to be hybrids, offering a mixture of facilities. And while some for-sale carwash businesses involve an installation on leased property, other offerings include the real estate.

Most car wash buyers are particularly interested in businesses with real property offered in the package. It means security; no risk of losing the right to conduct business on the site, and the possibility of enjoying property appreciation.

Other buyers in this category, however, want their investment to go strictly for revenue production. The more money they can put in, the more immediate income they expect to receive. For this part of the market, a carwash with a long lease, perhaps an option to buy the property in the future is the most appealing opportunity.

Valuation

A car wash for sale might be a relatively uncomplicated business to operate. But determining its value usually is a challenge.

Various appraisal approaches are advocated, and the valuation problem is complicated by the question of whether real property is involved.

One popular guideline suggests starting with a determination of market value for assets, including equipment and improvements, inventory and--if this is the case--the real estate. Arriving at the total will involve taking inventory of parts and supplies at their costs, and adding the appraised value of the property, buildings and equipment.

To this value, add what the business is worth. That’s a figure determined by using a factor between two and three to multiply against the annual discretionary income of the seller. And whether the appropriate multiplier is closer to two, or to three, depends on the same factors taken into consideration when evaluating any business, such as location and condition of the equipment.

On a cautionary note, it should be pointed out that many municipalities are concerned about the land use, water use and wastewater discharge associated with car wash businesses. A visit to City Hall should be part of the investigation of any carwash business, to make sure there are no planned changes in laws or ordinances that will negatively affect the business.

One of the best ways to find and buy a California car wash in California is to place a 'business wanted to buy request" in the BizBen Network and get the word out to all the business brokers and agents who sell car washes. Buyers who are signed up and a part of the Business Buyers Success Program are able to take advantage of this BizBen Network feature.

About The Author:  Peter Siegel, MBA is the Founder of BizBen.com and the Director of the BizBen Network. If you are searching to buy a California car wash make sure you are a part of the BizBen Business Buyers Success Program and get the word out about your search criteria to all business brokers and agents throughout California that sell car washes.  If you have a question about the BizBen Network or BizBen.com  please feel free to phone Peter Siegel at: 866-270-6278.

Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business