The UK car wash industry is worth an estimated £1 billion a year, with some companies diversifying into alternative eco-conscious valet services.
This sector has fierce competition from franchises and big companies, so you need to consider what USPs will set your business apart before you think of setting up shop.
When the UK’s economy is strong, the car valet industry performs much better; drivers have more of a disposable income to spend on non-essentials services, instead of cleaning their cars themselves. Motor traders also use valet services more when car sales are high.
As well as this, drivers change cars more frequently when the economy is strong, which increases the demand for valeting services. Since 2013, the number of new cars purchased was on the rise, with new car registrations reaching a record breaking 2.7 million in 2016.
However, as the uncertainty of Brexit continues to weigh down on the UK’s economy, new car registrations reduced by 6% in 2017. Consumer spending has become more restrained in recent months, which in turn will negatively impact the car wash and valet service sector.
Nevertheless, technological advancements in the car repair sector could benefit car wash and valet businesses. Offering SMART repairs for minor cosmetic damage, such as chipped paintwork or bumper scuffs, could help you to diversify and profit from an essential service.
There are challenges within the car wash industry that entrepreneurs should be fully aware of before they consider starting a business. Firstly, the machinery used to wash cars is very expensive to buy and costly to insure, maintain and repair. You need a contingency plan.
There is also a lot of competition from petrol stations and franchise companies that have a dominant presence within the car wash sector. You need to find a USP to set yourself apart, or secure contracts with local car dealers and offer a more independent, personal service.
Another very important factor to consider is the impact the weather can have on the car wash trade. The more rain there is the less likely drivers are to have their car valeted, which can be a problem in the UK, where wet weather is inevitable and, in some seasons, continual.
It’s important to have hands-on experience before you start your own car valet business. Cars can be very expensive items, so the more knowledge you have on cleaning methods, and how to perform the various detailing and protective services, the better your business will be.
If you plan to employ a team, you need to have skills on recruitment, training and managing employees. The more successful you are at this task, the easier your role will be in the long-term. However, you should expect to be hands-on during the early stages of the business.
You need to be passionate about cars and the motor industry; the more knowledge you have on the different equipment used for cleaning cars, the better your initial investments will be. Be patient and spend time researching and sourcing long-lasting and efficient equipment.
You need to run a tight ship and keep your variable costs low to be successful in this sector. Be aware that a car wash can use a lot of electricity, gas – heated blowers used to dry the vehicles – and water; these costs can eat into your profit margins if you’re not careful.
Buying a business
Find out what kind of reputation the business has with its customers, clients and suppliers. If a business is rundown, you will have an upper hand when it comes to negotiating a price. However, be prepared to spend a lot of time and money on rebranding the business image.
Find out what machinery will be included in the sale; how old is the equipment, and when was it last serviced? Request a list of all the tangible assets and consider whether any of the equipment needs replacing so you can account for post-sale costs when you make an offer.
Decided what type of car wash business you prefer to operate? The location will determine the type of car wash; conveyor belt car washes tend to be found at petrol stations, whereas a shopping mall car wash usually employ a team of employees using wand-style equipment.
Ensure you conduct thorough due diligence on any business you’re interested in. Review the last three years of accounts and check the car wash site meets all city and county zoning regulations; contact the local Small Business Administration office if you need help with this.