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How to Start a Car Wash Business

Written by:

Edited by:

Reviewed by: Daniel Javor

Published on November 18, 2021

Updated on September 20, 2022

How to Start a Car Wash Business

Disclaimer: Step by Step Business’ content is for informational and educational purposes only. It’s not intended to be a substitute for professional legal or tax advice. All of our articles are thoroughly reviewed and fact-checked by our editorial team. Read our editorial guidelines for more details.

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Fast Facts

Investment range

$2,350 - $157,800

Revenue potential

$37,000 - $100,000 p.a.

Time to build

3-6 months

Profit potential

$20,000 - $55,000 p.a.

Industry trend

Growing

Commitment

Flexible

How to Start a Car Wash Business

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.

Pros

  • Constant demand — Cars will always need washing
  • Profit potential — Steady income and strong margins
  • Startup costs — Low compared to other auto businesses

Cons

  • Seasonality — Car washing is much less frequent in colder months
  • Maintenance — Maintaining your facility and equipment can be costly
  • Competition — Most high-traffic areas will already have a car wash or two

Car wash industry trends

The industry’s growth reflects consumers’ greater interest in car care and increased desire for convenience.

Industry size and growth

car wash industry size and growth

Trends and challenges

Car wash trends include:

  • Increasing automation and use of sonar technology that senses the car’s size and adjusts accordingly
  • Rising popularity of ceramic treatments to prevent beading and pooling
  • Growing demand for sanitation and disinfection services

Challenges in the car wash industry include:

  • Tough competition among the small operators in the industry
  • High fuel prices are deterring road trips, which impact car wash services
car wash industry Trends and Challenges

What kind of people work in car wash?

car wash industry demographics

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.

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
Startup CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Business licenses and permits$200 - $300$250
Insurance $100 - $500$300
Business cards and brochures$200 - $300$250
Website setup $0 - $3,000$1,500
Initial marketing budget$100 - $500$300
Cleaning supplies$100 - $3,000$1,550
Location rental deposit or purchase down payment$1,500 - $50,000$25,750
Car wash automation equipment$0 - $100,000$50,000
Total$2,350 - $157,800$80,075

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 (3,750 total) at $10 each, you’ll have $37,000 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.

car wash business earnings forecast

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

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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. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

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. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

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
car wash business idea rating

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.; Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

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 using our Domain Name Search tool. 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. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

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, assess 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, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

what to include in a business plan

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 are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to car washes. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

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 main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • 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.
  • C Corp – 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. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your Articles of Organization, and answer any questions you might have.

types of business structures

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.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a car wash business. You might also try crowdfunding if you have an innovative concept.

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 (DBA), health licenses and permits 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 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, but 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 ensure you’re fully compliant.

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.

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.
types of business insurance

Step 11: Prepare to Launch

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

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.

Marketing

Some of your business will come from the casual drive-by customer, but still, you should invest in digital 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. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Schedule Now”. This can sharply increase sales.
  • Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

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.
  • Signage – Put up eye-catching signage at your store and website.
  • Flyering – Distribute flyers in your neighborhood and at industry events.
  • Post a video – Post a video about your car wash services. Use humor and maybe it will go viral!
  • Start a blog – Start a blog and post regularly. Change up your content and share it on multiple sites.
  • Seek out referrals – Offer incentives to generate customer referrals to new clients.
  • Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
  • Influencer marketing – Pay people with large social media followings to promote your  car wash. You can find micro-influencers with smaller followings and lower rates.
  • Testimonials – Share customer testimonials about how your car wash services helped them.
  • Create infographics – Post infographics and include them in your content.

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.

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.

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your car wash business could be:

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

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a car wash business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in car wash for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in car wash services. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

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!

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 if you manage to differentiate yourself from the competition. One way to do this is to invest in the latest technologies.

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

Car Wash Business FAQs

Is owning a car wash a good investment?

You can start a car wash with a relatively small investment, around $2,000 for a hand-wash business. You could quickly make that money back and start earning a profit and grow your business into something much larger. The sky is the limit!

What licenses do I need to start a car wash business?

There are no specific licenses required for a car wash, but you may be required to get licenses at the state or local level. Check with your state and municipal governments to see what’s required.

How can I make a car wash business successful?

Your location is critical – you want a place that’s convenient with high visibility, in an area where you’ll find your target market. You also need unique selling points to stand out from the competition. A great marketing plan will also help to get you to profitability faster.

How long does it take to launch a car wash business?

Finding the right location may take some time, as well as acquiring all the necessary equipment. You can probably count on it taking about 3 to 6 months to get an automated car wash business off the ground. For a hand-washing business, you could start washing cars within a few weeks.