Self-Serve Wash, Self-Storage, Self-Doubt?
Copyright 2014 by Virgo Publishing.
By: Fred Grauer
Posted on: 02/01/2004



 

Self-storage and car-washing are two of the fastest-growing business opportunities today—opportunities that are still within the reach of most investors.

In the past few years, the incentive for professionals to start their own companies has been overwhelming. I experienced this firsthand a few months ago when my company hosted a car-wash investment seminar. The response was staggering. More than 40 people from a multi state area participated in the class. I was amazed at the backgrounds and professions of the participants. We had everyone from captains of industry to doctors. After that presentation, I took the seminar to other areas of the country. The demand for these tutorials was also high and drew people of similar walks of life.

At the beginning of every seminar, I ask two questions: “Why are you here?” and “What do you want to leave with?” Participants almost always ask me why they should consider the car-wash business. They also want to know what the initial investment would be and what kind of return on that investment they could expect. There are some obvious standard answers to these inquiries, but the more specific responses are as difficult and as varied as the people inquiring.

I tell participants to ask themselves some questions. What are their needs, resources, goals and objectives? I tell them to take an inventory of the opportunities that exist and create a realistic plan that can and will be executed. Once those questions have been answered, participants want to know how they can get into the car-wash business.

Types of Car Washes

There are basically three forms of professional car-washing: the self-serve car wash (commonly referred to as the 25-cent wash); the in-bay automatic car wash; and the conveyorized full-serve or exterior-only tunnel wash. All three require significantly different investments and have varied site requirements. As a result, they each have different levels and barriers to entry. Interestingly enough, they all are very close when you look at the criteria of return on investment, or return on assets or cash.

The most requested form of car wash is the self-serve wash, because many investors see it as being the least expensive option. Typically, a self-serve car wash will consist of four or more bays, an in-bay automatic car wash, and a number of vended items, such as self-serve vacuums and other car-care products. Generally, selfserve car washes are considered nonimpulse or planned purchases; they are, therefore, typically located on nonprimary sites. Ingress and egress are the some of the key location factors, as well as permitted use, utilities, demographics, competition and a host of other factors.

For most communities, self-serve car washes are a welcome addition to their retail base. Motorists are always looking for a place to care for their vehicles, and with more people living in communities that frown on washing in driveways, the environmental benefits of a professional car wash are extremely attractive.

As a potential developer of a car wash, you will need to think of yourself as a real estate developer. You will also need to be sure the carwash business creates enough profit to pay all the costs associated with the site. That site will need to generate a return on investment sufficient enough to support the value of the land. Simply put, do the numbers work? Is the car wash the highest and best use of the land?

Like death and taxes, land—especially permitted retail sites—is a sure thing. It will become scarcer and more valuable. The availability of small, single-purpose sites at reasonable investment costs are hard to find. What should you do when faced with the predicament of larger than required site? Like any successful developer, you will need to look for alternative profit opportunities or automotive businesses that work well with a self-serve car wash.

One industry that offers good business synergy is self-storage. There is a general rule of thumb that says the deeper you go on a site, the less value it has for prime retail. Even if this is true, you will still need to generate a return. What a perfect place for self-storage units! Organize your business with a car wash in the front and self-storage units in the rear.

From what I’ve read, the investment on a typical self-storage facility is about the same as a self-serve car wash, approximately $350,000, with net profits before taxes of about $89,000. A four-bay self-service car wash without an in-bay automatic, depending on the part of the country, has approximately the same cost and profit picture. Both businesses do well in areas of apartments, cater to customers of a similar age, have a population base that is mobile, require minimal labor and are well suited to less-than-primary retail sites.

So erase those self-doubts. The timing and opportunity exists, and car-washing and storage may be just the right combination to provide the highest and best use for your site.

Fred Grauer is the vice president of corporate accounts for Mark VII, a car-wash equipment manufacturer located in Arvada, Colo. He has made a life-long career of designing, selling, building and operating car washes. He can be reached at fgrauer@mark7inc.com.