Coin operated car wash…where do I begin? This could be the ultimate passive income or the ultimate bust if your startup costs are through the roof. I often delve as deeply into a business as I can, to attempt to locate the passive income opportunities, which most entrepreneurs just past by, because they think either they are “too hard,” or “not worth my time.” This is why I’ve looked so deeply and so hard at a coin operated car wash.
Coin Operated Car Wash – True Passive Income?
Are coin operated car washes completely passive? The real answer is, no. Completely passive car wash income would mean you would never touch anything involved in the business and you could sit back and relax. Car washes need repairs and always will need someone to refill supplies and remove all the coins which are deposited. For a brick and mortar business however, a coin operated car wash is probably the closest to a passive income as you can create and not have to be hands on every single day.
Car Wash Passion
In a large population of the United States, having a clean, gleaming vehicle which was just washed is the ultimate satisfaction. There is a sense of pride about having the nicest and looking vehicle for a lot of the world and the coin operated car wash business can will capitalize on the huge market. There are two things you can count on for your consumer market: First one, time is money, and the quicker a task can be completed the better it is and Two, people will pay good money for upgrades and add-on services which are easy to choose from. You will always have folks who want to do it themselves, and that is fine, these people are not your target market.
Coin Operated Car Wash Target Market
As shown above, people pay for time and for add-on services. Your target market includes, young adults who work a lot of hours, the middle age population who has a family, practices, and work, and the elderly market, who do not have the ability to do the work themselves. This is who you should advertise to exclusively. Do not try to force someone who washes their car on their own to switch, because they don’t trust a car wash. Either because of the rumor that car washes cause damage, or they believe they can do a better job. If you want to go after your main target market, find a location which is central to things like, shopping malls, grocery stores, and strip malls. Your customers will also be customers at the other locations.
Finding the Perfect Location
Like I said above, look for locations which are close to large grocery stores, malls, and strip malls which are heavily traveled. You want a main road in a city with a moderate population. Your coin operated car wash business needs to have convenience written all over it. It needs to be easily accessible as well as easy to leave once the car wash is completed. There also needs to be a large staging in the parking lot where a customer can park and inspect and look over the great service you just provided. Remember, you also need to have enough space to allow cars to park bumper to bumper for a large amount of distance, because the last thing you want is someone to pass by your business because the line is too long. That is a lost sale and will only hurt you in the long run, because they will just go to your next competitor.
Best States for a Coin Operated Car Wash Business
My advice is look into your weather surroundings. The middle of the United States is known for snow as well as sunny nice weather in the spring and summer. Snow is great if the state uses salt to treat the roads, because the first nice batch of weather you get, the car washes will be flooded with business. The downside you run into is once the weather gets extreme and below freezing, good luck keeping your doors open. If there is an extremely cold winter, you could be looking at a 3-6 month shut down with no income producing business from your car wash.
What about the south, like Florida? Your customer market is filled with retiree’s and the weather is mostly warm year round. Your could essentially run your business 12 months out of the year and have income from your coin operated car wash business. One huge downfall is, everyone other business has already flooded the market based off the factors I just told you. Everyone knows warm weather and keeping open a car wash business would be perfect for your monthly income, but your other downfall is, you have to stand out against your competition, either with an endless amount of advertising or going to a smaller city. Not my idea of the perfect situation.
My ultimate location is from Tennessee and a little south and here’s why. Hot or warm weather for approximately 75% of the year. The winters normally are not huge in terms of snowfall, however if there is snow on the ground, they typically use salt. There is usually a break in the weather even in the winters where a coin operated car wash could still do business and clean all the car destroying salt off. These states in the surrounding areas have a ton of businesses including some major tourist towns which can lure in customers from other states which you wouldn’t normally have access to.
But remember do your research, find the location that is best for you, because I’m not running your business and I don’t own it.
Initial Cost of a Coin Operated Car Wash
There are two routes to look at when you are looking for a car wash, a brand new build, or an established business who is looking to sell all of the assets.
The initial cost of a brand new coin operated car wash, based off my original estimates are anywhere from $500,000 to upwards of $2,000,000. For my entrepreneurs, these numbers are painful to look at, and securing a jumbo loan, would require a significant amount of cash and assets to secure any where close to that. I truly do not believe this will be a worthwhile investment to build a brand new building. The money doesn’t even factor in the amount of time to find a new location, pay a Realtor, secure the proper zoning for your business and also the amount of time you will take to work with an engineer to get everything up and running. You also need to remember that your business and creating any passive income will be on hold until you can actually get your business up and running. Any additional delays will also push back your profitability mark.
My advice is it look for the used and established business. A lot of people don’t like the word “used” because it seems like its damaged or not worth it. But if you have a well maintained business with good owners and a great location, buying assets at a discounted rate, can get you to your profitability goal quicker. Costs may vary state by state and also on what size you actually are purchasing for a car wash, but estimates show you could purchase a used coin operated car wash business for between $250,000 to possibly $1,100,000. Even though those numbers still seem large, they are more attainable than the first estimates.
Some positives of purchasing an established business is they can show you the business numbers. They can show the average number of customer transactions per day. The average amount per check the customers pay. What options and add-ons the customers purchase most frequently.
It is great to see what the other business owners show you, but always be cautious. Hire a CPA or an accountant and comb through the business figures with a fine tooth comp. Coin operated cash washes by name are a cash heavy business. Financials can be hidden and money used for poor business practices which does nothing more than hurt the new owners.
Recurring Monthly Costs of a Coin Operated Car Wash
Water. The water company is not your friend, and they don’t want to be yours. You are at the mercy of the water company and the rates they wish to charge. If they pass a bill to raise the cost per gallon, your overhead costs for your business automatically increase.
Electricity. The same statement applies to electricity. If the company wants to increase your rates, they can, and there is nothing you can do to stop them. The more cars you service the higher your electricity and water bill will be every month.
Soap, Wax, Preventative Maintenance, and money Pickups. Your costs will vary, I can’t give you an exact number because different companies charge different amounts. If you have an exclusive contract with someone to use only one type of soap and one type of wax, you may get a discount. Preventative maintenance will depend on what types of machines you service and how many you have in service currently. Money pickups will depend based off if the business owner decides to pick up the money, count it and deposit it. Or if the business owner picks it up, takes it to a bank and has the bank count it for them.
The initial estimates about costs per car that you provide service for is roughly $0.55 to $0.65, however it can go higher depending on your overhead expenses. Making your coin operated car wash business as passive as possible will assist you in keeping your costs. down.
Overcoming the Profit Hump
How many cars would you need to service to create a profitable coin operated car wash business?
Lets say your initial business loan amount is $500,000. Your payment per month is roughly $4,680.00 and you actually run the entire business by yourself with no additional workers. Your base car wash is $7.00. Now if you want to make your business actually reach a profit every single month you would need a total of 727 vehicles to complete a service treatment every single month.
Sound like a lot? Not really. That is approximately 1 car per hour! During the day time hours during the summer this should be easily attainable, and if you are open for 75% of the year it should be a no brainer. If the business averages three cars per hours your net income before expenses would be $20,160.00 per month. Minus your loan payment, and minus your expenses you are looking at roughly $13,896.00 in profit if you are dedicated to keeping your expenses low. Per year in profit alone, if you were open 75% of the year, that would be $125,000 in profit. Not a bad living if I do say so myself.
Remember the statement I said about add-ons earlier in the article? I based by estimates off of a basic car wash. What if you had a coin operated car wash that had upgraded features, like under carriage washing, or an additional wax upgrade feature to a brand name wax? Those would automatically raise your bottom line and help you create an even more profitable business.
Even though this business is not 100% passive, for $125,000+ a year, I could work between 2-4 days a week for maybe 3-4 hours each of those days and have a pretty relaxing lifestyle.
Maybe you should rethink your life choices? or maybe jump on it and buy a used coin operated car wash now!