How to buy a car wash business in Australia
The convenience of a car wash has been enticing more Australians than ever in recent years. Below is some advice on purchasing the right business to capitalise on strong, steady demand.
The car wash and detailing industry has been performing well in recent years. People are becoming more and more environmentally aware of not only water usage and restrictions, but also the possible damaging effects of water pollution caused by water run off when washing cars in residential areas. This has seen more vehicle owners choose third-party car washing alternatives and driven annual growth of around 2.5%1.
However, there is more to successfully managing a car wash than simply grabbing a sponge and bucket and getting to work. This guide describes the several varieties of car wash and suggests advice about purchasing an established business, in which you procure a fitted-out location, qualified staff, functioning equipment and everything else you need to make money from your first day on site.
Selecting goals
What style of car wash would you like – and can afford – to buy? You can swiftly generate a shortlist of businesses you may be interested in by looking at the car washes that ABBA Group has available on sites such as BusinessesForSale.com. Once you have browsed the available businesses you can create a shortlist according to your budget and preferences.
What kind of car wash?
Predominantly automatic operations can handle more customers – and generate more revenue – in a specified time frame, when compared to their manual counterparts. As well as offering larger margins, they are less labour-intensive, however, do occur some maintenance costs which you would need to consider.
The self-service design similarly cuts labour costs but inflicts inconvenience on the customer.
For all the appeals of automation, hand car washes do still thrive and succeed.
Businesses that are superior in car detailing – polishing, waxing and paintwork repair as well as a standard clean – can be appealing options too. Clients on higher incomes and car dealerships looking to improve resale value can offer a steady source of rewarding custom.
The least expensive option is the mobile car wash: this is where a van fitted with cleaning equipment travels to businesses and people’s homes to save them the effort of driving to a car wash.
Should you consider a franchise?
Although the car wash industry model is less complicated than in many other sectors, a franchise can make this even easier for you. A reputable franchise will assist you in the set-up of the business, give you training following a proven formula, deliver continuing support and run marketing campaigns. Car wash franchise brands active in Australia include WashTec, Magic Hand, Geowash, IMO Car Wash and Car Care.
Look at the business evaluation
Car washes are primarily valued by looking at profits over multiple years – increased by an industry standard ratio – as well as the value of property, land and equipment.
The location is essential
A car wash relies heavily on its location. To gauge a location’s desirability, you need to investigate how much traffic the road bears on a regular day. When visiting a business that you are interested in, observe the traffic for a while.
Having a car wash located near a heavily populated area is beneficial for instances when vehicle owners realise their car needs to be washed quickly. As they would pass the business frequently, they would know where to go, and know they don’t have to travel far. Another major location plus is being situated on the same site as a petrol station. As motorists have to periodically stop here anyway, they may be likely to use your services.
Have a look at the range of businesses that ABBA Group has available to buy in your area, or, even, other parts of the country. The more conscious you are of what is available, the more likely you are to find the car wash with the right location for you.
Consider the surrounding competition
The size of the car wash is another important consideration. How many cars can the business service at once? If the car wash is working well below capacity, then there is opportunity for increasing revenues – subject to the barriers to attracting more customers.
Before buying a business, it is essential to determine how much competition there is in the vicinity. You will need to compare speed, quality and prices of these competitors to the car wash you are looking to buy. Ex car wash owner and author of So You Want to Own a Car wash Steve Gaudreau advises that you “identify on a map all of the competition within a five-mile radius and determine what their trade area is, what your natural trade area is, and understand where there is an overlay.2”
If opponents have a competitive advantage, you will need to contemplate the time, effort and investment that it would take to bridge the gap. The business you are interested in will become a more or less attractive proposition depending on your conclusions – unless of course you are content with the present income levels.
Due diligence is an important aspect of buying a business
Once a contract to purchase a business is settled in principle, a period of due diligence should be commenced. This is your opportunity to confirm that information about the business delivered by the seller stands up to scrutiny.
Due diligence involves a comprehensive investigation of the properties, accounts, employees, brand reputation and other elements influencing the asking price. Financial statements are not reliable measurements of genuine income in an industry where a lot of cash goes through the register. You will need to form your sales numbers based on sales reports produced by the computerised, point-of-sale cash register.
Talk to the experts
It is worthwhile to request the guidance of professional experts in business acquisitions – notably lawyers, accountants and business brokers. They can assist you with obtaining funding, business evaluation, acquiring and inspecting paperwork, negotiations, due diligence and settling the deal.
For more information about buying a car wash business in Australia, please visit:
www.abbacarwashsales.com.au/buy-car-wash-business-australia-car-wash-business-brokers/
