There are many ways to create a passive income stream that lets you focus your time on things that matter to you in your life, and one of them is with an in-bay automatic car wash. Self service car washes do not require you to show up with a bucket of soapy water to clean cars every day. The whole process is automated so that the client easily gets their car washed, and drives away.
How to create passive income from an automatic car wash? There are fairly simple steps involved in setting up an in-bay automatic car wash business. If located in the right spot and maintained correctly, this business can make an excellent passive income stream.
Quote from Chuck King on LinkedIn: “I used to own a self serve car wash that would net around $50,000 where I owned the land and the business. “
With the example above, that comes to $4,000/month of passive income. You can imagine what owning a couple of these business operations can earn you. What is especially interesting is that the process is fairly automated, and therefore does not require you to spend a day in your life actually washing your clients’ cars or presiding over the business’ operations. Knowing that, you are probably wondering – how do I set up an in-bay automatic car wash? If so, you are right where you need to be.
1. Deciding if the Business Can Work for You
As far as passive income businesses, an automatic car wash is far from the cheapest business to start. We talk about passive income sources that cost nothing to start (notably online), but this physical business endeavor is costly, especially if you want to own the land it is located on.
According to JBS Industries “In general, if you don’t already own land for your car wash business, you can expect to pay around $80,000 to construct and equip each bay your business is going to have.” However, Buzz Glover, who opened several car washes in the US, states he budgets for over $1M to open this type of facility. As you can see, the price ranges can vary greatly. The overall cost of the business will be determined by the equipment type, the brand, and the location, among others. Therefore, you have to decide if this business is right for you (notably with regards to your financial situation) before getting started.
Americans spend approximately $5.8 billion a year at car wash facilities. 90% of car washes are owned by a small business owner. $6.34 is the average price of an in-bay carwash.
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Check out these passive income ideas for anyone with $0 to invest to create passive income.
2. Budgeting for a Successful Passive Operation
After spending so much money on starting this business, you might be quite concerned and anxious about its chances of success. Study the most successful automatic car wash companies in your specific location when they started out so that you can replicate the results with your business. What type of location do they serve? Does their hardware break down often or not? How much did they invest to get the company started? What are their ongoing fees? We give some general ideas of this in this article, but the answers to these questions will vary locally. Let’s have a look at some of the expenses associated with this business.
Registering the Business
Starting this business requires that you register it with the help of a lawyer. This will cost a little money as well since you have to pay the lawyer and also pay for insurance. You should also consult an accountant and tax specialist in your area to setup and maintain your business’s books. If you want, you can also register your business name at the U.S. Patent and Trademark Office to ensure nobody else can use it.
Purchasing Land
Armed with your registered business name and the capital to build the self-service car wash, you can go ahead and lease or purchase the land you will use to run your car wash business. The biggest concern here will the location, as you will need a place that will easily attract customers. You also have to prepare yourself financially as this will be one of your greatest expenses. You also need to make sure this land is zoned to be able to accommodate a car wash. Also check local utility usage codes to make sure that the sewage can process car wash waste.
If you purchased or lease land, you will also need to consider costs related to sitework and construction. This includes foundation work and asphalting the land, electrical, plumbing, architectural, engineering, impact, traffic studies, appraisals, loan closing costs, construction permits and connecting to public utilities such as water and sewage manes.
Buying Equipment
Equipment costs depend on location and brand. Equipment for an automatic unit can cost between $31,000 $49,000 per bay (source). Other state the cost between $400,000 $500,000 (source). Therefore, it’s very important to research the cost in your area. The sort of machines you buy can also depend on the kind of space you have. That is why you should ensure you have enough space for the machine if purchasing it before construction, that way you don’t spend money on a machine that does not have anywhere to go.
Promoting The Business
You can start promoting your business to create hype a couple weeks before it opens. This can be done on social media and everywhere you might find potential customers, such as on local papers, radio, or by handing out flyers. You can also hang posters in local businesses, send postcards in your area or implement a texting program. You can offer discounted prices, or offer the promise of an environmentally friendly operation (if it’s true), now that people are so keen on saving water and using organic cleaning compounds to reduce chemical pollution.
Ongoing & Maintenance Fees
You can start promoting your business to create hype a couple weeks before it opens. This can be done on social media and everywhere you might find potential customers, such as on local papers, radio, or by handing out flyers. You can also hang posters in local businesses, send postcards in your area or implement a texting program. You can offer discounted prices, or offer the promise of an environmentally friendly operation (if it’s true), now that people are so keen on saving water and using organic cleaning compounds to reduce chemical pollution.
Reactive maintenance consists in fixing damage when it occurs. This may require an on-call mechanic who can come in at any time the machines break down to carry out repairs. You can avoid reactive maintenance with regular preventative maintenance checkups and a clear checklist of daily, weekly or monthly checkups that need to be carried out on the machines. Check out the maintenance checklist ideas on this site.
Other Expenses
Other expenses include signage and a security system to protect your location, among others. Also consider ongoing fees such as chemicals, soaps, water, electricity and so on. Don’t forget credit card processing fees if your automatic car wash will accept cards. Also make sure to create a full business plan to map your business goals.
Here is an outline for an in-bay car wash business plan.
2. Enjoy Your Passive Income
Once things are finally rolling and you have passed the break-even point in your business, you will be able to start enjoying passive income as this kind of business can be fairly automated. Once you set up the car washing machines, have an outsourced plan in place for regular maintenance, and an efficient payment system, you should have no other inputs to provide. You can even continue enjoying your passive income while you travel.
How Passive is an Automatic Car Wash?
A self-service car wash business is passive, however it will become very costly and require a lot of maintenance if not setup correctly. There is no point at which a client needs to interact with a real person during the process of using an automatic car wash, unless it breaks down or is malfunctioning.
You need to have an automated process in place to avoid having to physically fix the machine (ie. automatically call upon a mechanic when there is a breakdown). However, the customer can get their car clean without any assistance. Furthermore, the payments are collected by the machine. This, again, eliminates the need for human assistance. So, this business is fairly passive.
Scalability
A coin-operated car wash business scalable by location. However, you only need a couple successful car wash locations to make excellent passive income. Many people even start subsequent car wash businesses using the proceeds of their first car wash operation.
Startup Costs
Starting a coin-operated car wash business can be quite expensive. Luckily, even with average industry prices, a successful automatic car wash should recoup these costs and break even within several months.
Difficulty
There will be challenges as when starting any business, but it is not impossible to set up a coin-operated self-service car wash business. After you have found a good location to set up your business, you only need to have the car wash built and the automatic machines put in place. It’s mostly about having the right location and enough money to create the business. However, it should not be difficult, especially after it’s up and running.
Time
Once it’s up and running, it should not take much time to run your automatic car wash business. After you get the necessary equipment and have the car wash built, you can start serving your customers right away and making money. Therefore, this is a passive business that can start making you a lot of money very soon. You may need to spend time on maintenance, however, you can outsource this to a savvy mechanic.
Risk
This business requires a large initial financial investment so be aware of that risk. Since this business does not require you to hire anyone to keep it running, it is pretty low-risk staff-wise. However, car washes can and do breakdown. You will need to be available to fix the carwash or know a savvy mechanic who can lend a hand.
Any business carries with it some risk. But assuming you did due diligence and are confident that the concept and the location you have chosen will help you make some money, you will have little else to worry about save for the occasional maintenance costs. Otherwise, insurance should take care of any major challenges that you face as you run your business.
Seasonality
In some areas, car washes are not really seasonal, as people use their cars all the time. But in places with harsh Winters, business will probably go down as people are less likely to seek car wash services in the winter. But in places where the weather if favorable all-year long, seasonal dips in business are nothing to be concerned about.
Return On Investment
A very successful coin-operated car wash business can make money and provide ROI. But obviously, a number of factors come into play, including the location of the car wash, and its client base. Some well-run automatic car washes can make $900,000/year (source). Generally, a car wash business has very high ROI, although the investment cost can be a little intimidating. Here are some more arguments towards the broader ROI of a car wash including environmental and community benefits.
Related Questions
What is the average car wash income? According to the US Census Bureau, an in-bay automatic car wash generates on average $139,000 of revenue per year and provides a net yearly profit of $86,531. The average cost of getting your vehicle washed in an in-bay car wash is $6.34, which yields an average profit of $4.35 per wash.
How much does it cost to build a car wash? Purchasing land, equipment, construction, equipment and expenses may differ per location among other factors. Therefore make sure to carry out through research and to talk to the right professionals in your area before getting started. You can expect to pay between $80,000 and $1M+ to build an in-bay automatic car wash.
