Buy or Build?
Purchasing a wash gives many the comfort of knowing an estimated P&L. For some people this is key. Car Washes are not cheap businesses to purchase. A high end wash will sell for at least $1.8- $3.2 Million. Buying cash flow and equity is a safe investment. This will not yield the highest returns. Revenue reporting should not be the only way to judge buying a wash. The wash quality and the human element should be closely evaluated. No matter how well the wash functions the human element cannot be forgotten. A recent advancement has been the attendant. Self Serve washes for many years have not had attendants. It has been found that a part-time employee raises sales. Basically they more than pay for themselves.
Buying a wash is a good way to get into the wash industry quickly. However there are many pitfalls along the way and there after purchasing a used wash. There is no insurance as to the longevity of any piece of equipment. Manufacture warranties are usually only valid for 1 year. One gentleman purchased a wash and within 2 months of closing he had spent almost $20,000.00 in repairs. A single part could cost $1,000 or more. Replacing a large pump could cost upward of $2,000. So you understand how only a few seemingly small items can add up quickly. This also does not dismiss the general costs of repair and maintenance that comes with owning a wash. Brand new washes will also have wear items and general repair costs. Get an inspection.
Some say it would be a higher risk to build a new wash vs buying an existing facility. I would quickly disagree. Building a new wash with the right guidance and support staff of car wash experts is not difficult. A new wash has the appeal of being new. This means people out of curiosity will try you once or twice before judging the car wash on those experiences. An existing facility has been judged prior to the new owner. Those customers are the most difficult if not impossible to service again. A new wash protects itself from other washes going in since a new wash is a powerful vehicle. There is little or nothing to stop a new wash from being built next to or nearby an older wash facility. With a new wash the equitable value of the wash is up to the owner / operators ability to produce sales. A new clean well run car wash will outsell an older wash most every time. I like having a clean slate. Has a "Under New Management" banner ever really got you to try a bad restaurant again?
Should I Buy?
Should I Build?