The complete practical guide to starting a car wash – start your own business today
Shiny wheels, prominent windows, and not a scratch in sight. In today’s fast-paced world, we often don’t have time to do it ourselves, and when we do, other things quickly fill that time, starting a car wash.
So we head to the local car wash to get it done and check off the list so we can move on to other things.
How often have you sat thinking about having your own car wash while you wait for your car to finish? If it is more than once, then perhaps you should consider taking the leap and starting a car wash business.
Contents in this guide
- How to Choose What Kind of Car Wash to Open
- Steps to Register a Car Wash Business
- Car Wash Financing Options
- Choosing a Location for Your Car Wash
- Car Wash Insurance and Civil Liability Coverage
- Car Wash Equipment and Supplies
- Basics of Car Wash Marketing and Branding
- Hiring and Managing Your Car Wash Staff
- How to Set Your Prices?
How to choose what kind of car wash to open
The first decision to be made involves deciding between a franchise and an independent business model. Both come with their own set of risks and rewards, all of which have been set out in the table below.
The decision between an independent venture and a franchise opportunity must be a personal choice based on your personality.
In general – if you are someone who likes to blaze your own trail and like to have complete and utter control over every aspect of your business, then starting a car wash, or any business, as an independent is the way to go for you.
If, however, you are more into working within guidelines and you like someone else’s freedom, in this case, the parent company, which makes the decisions for you, then studying a franchise is the way forward.
When investigating the car wash franchise you are interested in, make sure you choose a recognizable brand with a good reputation to get the most out of buying a franchise.
With both franchising and independent ventures, you now also have the option of starting a mobile car wash, instead of a full-time stationary entity.
This also comes with pros and cons and these are listed below.
Steps to Register a Car Wash Business
Here are the main steps to register your new small or medium business:
Register your business with the Companies and Intellectual Property Commission (CIPC). This involves lodging a Notice of Incorporation (CoR 14.1) and a Memorandum of Incorporation (CoR 15.1 A-E). These forms are available at www.cipc.co.za. They take roughly five to seven days.
Alternatively, you can use a service that registers your company for you with the CIPC like this one. These services obviously have their own tariffs attached.
Next, you need to open a bank account for your business. Depending on the correctness of the application forms, this only takes a day or two and is free.
For an SME, earning less than one million rands per year, the only form required by SARS is the IT77C which must be accompanied by a certified copy of their identity document and a copy of the company registration documentation. The IT77C form is available at www.sars.gov.za. If your employees aged 24 to 65 will earn more than R5 000 per month, you will need to register with UIF and PAYE.
To sign up for Unemployment Insurance, visit www.labour.gov.za for more information on the procedure and forms.
The last step that takes place concurrently with the previous step is to cover employees in terms of work-related injuries, illness or death in terms of the Compensation Fund. This is optional. These forms are available at www.labour.gov.za
In terms of permits and licenses, you will need to start a car wash first to assess whether the space you want to work from is purely residential or whether it has been zoned to allow it to be a commercial property.
Additionally, to operate a car wash you may need to apply for a permit under water restriction laws depending on the municipality and province you are in. For more information on any permits required, visit the Department of Water Affairs website.
Car wash financing options
Before you even start looking for funding, at this point you will need to create a detailed business plan. No institution will give you funding without one. For instructions on how to put together a business plan, watch this video on business plans for dummies.
Finding financing for a start-up can be a bit of a challenge if you don’t know where to go or what to expect from you. Here’s a quick rundown of what you should prepare to encourage others, such as financial institutions, to give you the funding you need to start your own business.
There are broadly four main options available to entrepreneurs starting their own business. These are loans from financial institutions, equity, investors, and grants. Grants usually come from the government and are loans that you won’t have to repay, but grants come with strict guidelines on how the funds can be used.
It is always best to start with the bank you already have a business relationship with, that way they have all your information and know your financial habits and behaviors, as well as your credit record. Another option is to look at the credit unions.
When applying for a loan, here are some tricks to help you get the money:
- Make sure you have a detailed business plan that shows how the funds will be used and spent. It is extremely necessary that you have a detailed understanding of the costs involved in your business, from supplies to personnel, overheads, and equipment.
- Know the sector and market you are entering. It may be useful for you to do a market analysis.
- You will most likely need to use your personal assets and wealth as collateral for your new business.
- It will show your dedication and commitment if you use your capital to make an initial investment. In some cases, you need to do this, as with SEFA, the Small Business Finance Agency that requires an initial personal investment of 10%.
Choosing a Location for Your Car Wash
With a fixed location, most of your business will come from “walk-in”. It is essential to your business that the car wash, or any service-based business, is in a convenient location.
Most of the time people don’t specifically decide to go and wash their cars, but rather end up doing it because it was readily available and they had the time.
Here are a few tips for choosing a successful location:
- Being near a shopping area is always preferable
- Heavily populated residential areas with high traffic volumes are better for business
- The site must be easily accessible from the road
- It must be easy for customers to get back onto the road once their car is clean
- Highly visible
- A decent size car wash has more than one washing and drying bay, there needs to be enough space for these as well as a waiting area
- Enough space for cars to queue
- It is also in your interest to pick a location that will allow for expansion as your business grows.
In South African law, verbal leases can be upheld in court, but it is always best to get the agreement in writing.
In clear and concise language that both parties can understand, make sure that your lease covers any changes you may or may not make both structurally and superficially.
Make sure you know how your rental will be calculated – it is usually quoted in Rands per square meter per month, excluding VAT for commercial and industrial properties in South Africa. Make sure you both agree on what costs will be covered by your rental and what costs you will incur (i.e. electricity).
Know under what circumstances the lease may be voided by either party. And finally, know who is liable for damages to the property or for instances of burglary.
Car wash insurance and civil liability coverage
First, for new owners, the importance of a disclaimer should be emphasized. A disclaimer may exempt car wash owners from covering the cost of repairing damaged vehicles at their location, but it does not cover gross negligence on behalf of the business owner.
It is the owner’s responsibility to ensure that all machinery and equipment are in good condition and are regularly checked for the presence of foreign objects that could cause damage. It is also the owner’s responsibility to ensure that all cleaning products used in the process are suitable for the car.
Furthermore, public liability coverage is not sufficient. Property in the custody, care or control of the car wash owner is excluded from public liability coverage. The correct policy to adopt is the internal section of car dealers.
YOUR INSURANCE COVERAGE LEVEL MUST BE HIGHER IF YOU AND YOUR EMPLOYEES ARE DRIVING AND MOVING CARS.
It is important that you as the owner of the car wash to have general liability insurance that covers:
- Medical expenses to yourself and your employees in case of injury
- Custody, care, and control coverage
- Equipment breaks down
- Damage to cars – you will need to set this limit for your policy
- It is also important (especially if you have bought the property) that you have property insurance that will cover your premise in terms of theft, damage, fire, flooding, etc.
Nkosinatha Mbatha who has been in the independent car wash industry for 12 years, knows that in order for his car wash to continue successfully, it is important that only management handles all the cars.
Not only does it make insurance coverage easier and cheaper, but customers are usually happier knowing that the person who might be moving their car is more accountable.
Car Wash Equipment and Supplies
In some cases, all you’ll need is a bucket, clean water, soap, and some good clothes – and the willingness to approach people to offer your services. But if you would like to open a more professional business and reach a broader market then there is some equipment that you’ll need.
If you are opening a franchise, the parent company or franchisor will be making the decisions for you. If you are opening an independent location or mobile business then you will need to source the necessary equipment.
The basic equipment needed for a manual car wash is:
- High-pressure system
- Oil/water separation Unit
- Drainage unit
- An industrial vacuum cleaner with a wet upholstery cleaning option
- Possibly an upholstery cleaner
- Depending on the products you choose you might need a foam attachment on your hose.
Alongside your basic equipment you will also need your location to have:
- Concrete wash bay slab
- Pump room
- Drying bay
- Ancillary Walling and Paving
The Basic equipment you will need for a mobile car wash is:
- Pressure washer hose with a compressor
- An industrial hose with nozzle and gun
- A good-sized tank in the back of the truck/van or even trailer
- A generator (remember to keep extra fuel handy)
- A powerful vacuum cleaner
For cleaning products and supplies, you have a multitude of varieties to choose from. If you are inclined to go the eco-friend route, there are even ranges of waterless cleaning solutions.
The cleaning product basics you would need are:
- Car soaps
- Metal polish
- Plastic polish
- Car wax
- Glass cleaner
- Fabric shampoo
- Leather cleaners
- Detergent for the pedals
- And then sponges, cloths, brushes – preferably suitable for use on all cars.
Here are some suppliers of equipment and cleaning products:
Keep all equipment in good working condition with regular check-ups. For an easier resale, make sure you have detailed maintenance records on all equipment.
In Mbatha’s car wash, they purchase R3000 worth of stock every month – which covers the 360 or so cars that they clean.
Basics of car wash marketing and branding
Branding and marketing are two very different concepts, both of which are highly important to the effectiveness of your business.
In order to bring the customers to you, there are a couple of things you could do. These involve connecting on an emotional level, staying relevant and flexible, committing to the community you work in, staying visible and finally aligning your marketing tactics with your brand strategy.
The biggest marketing secret is being able to differentiate yourself from the competition. Brand Strategy Insider is an online resource for branding and marketing and lists 50 ways to differentiate your brand.
For the car wash business here are the applicable ones:
- Expand your appeal
- Rewrite the experience
- Break away from conventional wisdom
- Be the expert
- Share values with your customers
- Engage the senses
- Focus on aesthetics
- Treat people differently than your competitors do (treat them better)
When you are implementing these values in your brand, make sure that they go deeper than just your aims. Make these things that make you different the foundation of your business.
That means engraving these changes in the mission statement and instilling it in your staff. It’s important to note that your staff are your brand ambassadors. A good service experience means that people will come back and more than that, they will tell others about you too. Word of mouth is a powerful tool in launching a new business.
Mbatha says that the best marketing strategy they have is their car wash’s visibility.
In terms of marketing schemes available to you as a new business owner, you have a couple of easy options:
- Keep the conversation active with your customers
- Customer databases so that you can text or email them your specials (these must be opt-in)
- Advertisements in local papers and on local sites
- Always squash any bad word of mouth by proving the opposite
- Consider loyalty reward programs to encourage repeat customers.
Hiring and Managing Your Car Wash Staff
“Good management and good staff is the most important thing,” says Mbatha. With your staff often handling the money, it is easy for untrustworthy staff to “slip it into their pocket.”
Make sure your staff is reliable and Degee advises that you need to keep theft as low as you possibly can.
If you open a bigger operation than just yourself, or if you are needed to expand your business as it grows, then you will need to hire staff. Because you are in the service delivery industry, you need to remember that your staff needs to treat your customers well – as do you.
To this effect, hire people that are
- Have a good sense of service delivery.
The number of people you hire depends on your expected workload. The more washing and drying bays you have, the more people you will need. You also need to consider how many days of the week you are open and how many hours a day.
Obviously, if you want to go the more automated route with a machine-run conveyor system, then the need for physical staff will be less.
How to Set Your Prices?
If you are going to give a variety of different services then you should have options for all budgets and time frames to suit the biggest market possible.
As with any service industry business, you need to be competitively priced for the services you offer. It is important to do some market research in your area on what your competitors are charging for which services.
Important factors to consider:
- The cost of your cleaning supplies
- Your overhead costs
- The number of cars you can do in an hour
- The number of staff members you have
- Your working hours for the week
- Competitor prices for similar services
- The type of area you are in (residential, urban, rural, business?)
For a mobile car wash, it is important to consider many of the same factors including fuel price and distance traveled. In general, the cost of a mobile car wash service is higher than that of a car wash that a patron will go to because of the added convenience factor for the customer.
When deciding on prices for a mobile business, you will once again need to do current market research into what your competitors are charging.
To end off, it is important that you and your staff do a good job on the cars that you clean. The best way to get repeat customers is to supply the ones you have with amazing service. For an in-depth tutorial on how to professionally clean a car.
Advice from Car Wash Pros
The degree offers a few tips for an entrepreneur starting his own car wash.
- Trustworthy staff is hard to find. Sort that out before anything else.
- Sometimes, the easiest way to bring in new staff is through our existing staff.
- A high turnover rate brings the possibility of more theft – try keeping good staff for as long as possible.