Iron Fox prides itself on the growing success of it’s entrepreneurs. We help those foreign to the car wash industry build and brand their company.
Tag: carwash entrepreneurs
The Car Wash and Auto Detailing industry is already worth over $11 billion, and that number is expected to increase over the next 5 years.[1] The highly fragmented nature of the playing field makes it an ideal investment opportunity for a variety of savvy investors. The right location, strategy, and execution can create one, or a string of, successful small businesses that generate large amounts of passive income. Just like every opportunity, these rewards do not come without risk though.
Car wash locations are marked as special use buildings which can make liquidity difficult. There is also the risk of over-investing in resources and inventory. What many first-time owners fail to understand is just how complicated opening a new location can be. The best operator on earth can’t fix a business in the wrong place.
There are several factors that can determine the success or failure of a car wash before the first customer ever arrives. The best way to mitigate risk is with a solid plan. In this post, we’ll cover some of the most common and vital areas of risk and what steps can be taken to avoid pitfalls.
The first step in creating a successful car wash is developing a nuanced understanding of the different available models. Will the location be full-service? Flex and exterior? Some models, like the exterior wash, will generate an increased competition for optimal sites. The answer to these questions will be extremely important for determining the class and quality of a location.
After deciding on an appropriate model that fits your investment profile and risk tolerance, it is important to map out how you will select your location. Start by weighing initial costs with expected returns, but create SMART (Specific, Measurable, Attainable, Realistic, Time-Based) goals to reduce the potential for over-extending and inviting potential catastrophes. Experienced industry professionals who have successfully opened and managed several locations often utilize well-funded real estate teams to analyze the viability of all new locations.
The next step is pricing out equipment and supplies. Be careful to take information from manufactures with a grain of salt. They will make money even if your location fails. Brokers want to maximize the sale or lease rate. Everybody has their own best interest at heart and might encourage you to open a non-viable location.
It is important to remember that success in the car wash industry is a mix of smart location and operational know-how. Consulting with experts can reduce the risks of overbuilding and poor design.
At IRON FOX, we help you avoid risk with complete and sophisticated volume analytics to help you make the best investment decisions. At the start of planning, we offer a free preliminary site inspection and analysis. Our many years of experience in retail site selection for carwash operations as well as operational knowledge allow us to assist you in decision-making to set your business up for success.
Learn more about how IRON FOX can help you avoid risk in your next carwash venture.
[1] https://www.ibisworld.com/industry-trends/market-research-reports/other-services-except-public-administration/repair-maintenance/car-wash-auto-detailing.html
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Historically, car wash operators have relied upon customer service and maintaining a small number of locations, if not a single one. However, the truth is that the explosion of exterior express platforms has exploded in popularity for entrepreneurs, with many opening multiple sites. There’s a lot to be said about a small business. But the hard truth is that one of the most profitable models is owning and operating many locations, and that’s only recently become viable.[1] With better price points and attractive amenities bringing in the cash, investor interest is reaching an all-time high. Manufacturers, entrepreneurs, and private equity are noticing this wave of cash and getting ready to vacuum up as much as they can. The time is ripe, now more than ever, to enter the car washing industry.
Around a decade ago, industry experts predicted the development of two major operator types: cheaper, high-volume exterior washes that could work through a large volume of cars per day at a low price point, and a full-serve experience for wealthier customers ready to shell out.[2] The experts got most of it right, enough to be useful, at least. With approximately 4 out of every 5 new car washes utilizing the exterior models, investors are chomping at the bit. This influx of private capital has offered entrepreneurs a way to exit their investments once they’ve reached maximum value. The truth is, entrepreneurs want to take advantage of a specialized industry like this one while minimizing their risk, and now that’s possible. But what’s all this hype for this new model about? Does it hold up to honest scrutiny?
An exclusively exterior platform is more scalable than full service as it avoids the need to manage a bunch of employees, reducing time spent micro-managing. Managers also don’t need to worry about liabilities and other expenses that add up quick. Interior services are notorious for nitpicky customers, so focusing on the exterior makes customer satisfaction easier to manage. Finally, while working on cash alone has advantages, shifting to card payment is the next big thing. Tracking data on services, expenses, and trends is useful when dealing with hundreds of locations across the country.
In an industry buzzing with new investor attention, Iron Fox sees an opportunity for experienced advice to serve the increase in business, consolidation, and innovation. Bigger chains means more consolidation. Business will quit dealing with employees to spend more time on equipment and operational issues. Iron Fox has credible experts to partner with new car washing ventures and old dogs in the industry looking to expand. It’s not enough to have tested methods and industry knowledge. Getting ahead of the competition requires an honest perspective that recognizes trends but doesn’t get too caught up in them.
To learn more, visit Iron Fox today at: www.ironfox.com
[1] https://www.carwash.com/the-express-exterior-phenomenon/
[2] http://www.carwashmag.com/home/article/is-size-it-express-flex-whats-next/4c38370285dbf94e64d0d16b32a0f2cc.html