Scaling Car Washes

Car Wash Image with Title - Top Tips to Set Yourself Up for Success When Scaling or Selling Your Car Wash Business

Top Tips for Scaling and Selling Success in Your Car Wash Business

Are you thinking today about how to most effectively set up your car wash business for scaling and selling success in the future? Don’t miss these top tips about how your setup can really impact scaling and selling success. In our latest Scaling Car Washes episode, JT talks with M&A expert Jeff Pavone of Amplify Car Wash Advisors. Jeff shares many powerful tips that can help car wash business owners who are looking to scale or sell their businesses. Don’t miss these great tips, and for more tips, listen to episode 10!

Play the Long Game When Setting Up Your Car Wash Business

Set Up Systems: From the start, taking the time to establish clear systems and procedures can help you with long range scaling and selling goals. It is worth the time you invest on the front end to have a strong set of systems in place so that scaling and selling will be much easier. 

Partners: Be very cautious as you approach potential partners. Make sure that you do a lot of work to ensure that it’s a good fit before you take on a partner. Jeff advises that you meet with more than one potential partner (preferably somewhere between three and five!) and that you have a lawyer involved in the process. 

Get Professional Help: When considering scaling or selling your car wash business, get professional help from companies such as Amplify Car Wash Advisors so that you can ensure someone is looking out for your best interest and getting you the best opportunities.

Run Clean Books: Always keep in mind that others will see your bookkeeping and will need to understand your records. It’s a good idea to keep things clean and organized so that others can quickly and easily tell everything about your business’s finances.

"Many of you are going to take investors in. It pays to get a good lawyer who’s going to make sure you’re papered up properly, so you do have the right to go sell the company without seeking five guys signing off on a deal. Because everybody’s going to be at a different place in their life. Some people may not want to sell. That minority investor that holds 20% may be the guy that screws up your deal, because he’s not looking to sell. "So, you’ve got to make sure you get the right professionals up front that are giving you guidance; otherwise, you’re going to have a problem. And I can tell you, it happens more than not! And a lot of these partners or investors are friends, family members… And so, don’t think just because they’re close to you, that they’re going to go along with whatever you say and do; you really need to make sure it’s in writing."

Jeff Pavone

What Does It Mean to Run Clean Books?

Here are a few tips that help car wash owners think about what it means to run clean books.

Personal Costs – You can still run some costs through your business, but you need to be clear and specific so that when someone comes to buy the business, they can support you on add backs. Document everything carefully and make notes so that you remember the details!

Add Backs – Remember that an add back is an expense that will not be included in the buyer’s future profit and loss statements for the company. One time expenses can almost always be considered add backs; it’s good to note any of that in your book keeping as you go.

Make sure your books can be tied. Your financial statements should tie to your sales reports, and your GSRs will be reviewed.

Just remember that in a sale, you’ll be handing off your records to the other side, so something like QuickBooks is sufficient as long as it’s well managed.

Financing spreadsheet image - important for scaling or selling success

How to Finance When Scaling Your Car Wash: Consider Your Options

Debt Financing: There are lots of opportunities to get traditional loans from banks. Shop around to see what you can find!

You can get a 7A or 504 loan. Be careful because they both have pre-payment penalties! SBA loans and conventional loans are both options, and banks support this path. Remember that you can use local banks, and it’s okay to use multiple banks if the local bank only wants to support one location!

With debt financing, always watch out for pre-payment penalties and personal guarantees! 

Private Equity Investors: Another route to consider that is different from traditional loan financing is taking on investors. Be sure to get professional help and have a lawyer involved if you plan to have investors so that you will not find yourself unable to scale or sell when the time comes.

"Everything you do is negotiable! So, even when you’re getting your financing, if I’m getting my conventional loan, I’m taking it out to three banks and letting them compete on rates and terms! Because they will! Everything’s negotiable!"

Jeff Pavone
Finances spreadsheet and calculator

Should You Lease a Property When Scaling Your Car Wash Business?

The short answer: If the property is a great fit for your business but a lease is the only option, go for it! Do make sure that you get a good term for the lease.

A tip to remember: Sale-leaseback options are good for big scaling operations, but they aren’t a great fit for smaller scales. Conventional lending is a more doable and affordable option in that case.

"But you’re building a business now; you’re not running a car wash. And again, you’ve got to separate the two if you’re really going to get a lift on it! Because when somebody looks to acquire you eventually they’re going to look and say, 'Wow, I’ve got this guy who is working this carwash for 80 hours a week! How am I ever going to step in and manage it?' They’ve got to make sure that there’s a team that is transferable to the new owners, and the new guy is going to say, 'All we’ve got to do is just plug this thing into our own network of car washes, and it’ll keep running! And we’re going to accelerate it with more money.' But again, if you’ve got an owner that is involved in every detail of that wash, it becomes far less attractive."

Jeff Pavone

The Bottom Line: Your Role as Owner

Don’t miss this very important tip from Jeff when thinking about your team and your own role in the business!

The bottom line when building your car wash business: Treat it like the big business it is in today’s market, and be sure to build a team so that you’re not the one doing all of the work.

When assessing to see whether the owner is doing all of the work in a business, Jeff offers the thoughts below. Remember to build up your team, and be sure that you’re teaching them how to run the business!

"Look at how they’re getting compensated and how they’re compensating. The really successful, high volume sites that we have pay a lot for a good manager, a good district manager. They pay their people well because they’re driving great volume and getting results! I would say a less effective owner is the guy that’s looking to pay minimum wage, and do everything himself. And he’s going to make money through keeping your expenses low. I’ve got to tell you, that’s the guy that’s going to be far less attractive than a guy who was paying his team really, really well, but he’s driving great numbers on his operations and making money from operations!"

Jeff Pavone

Want to hear more tips from Jeff Pavone of Amplify Car Wash Advisors? Don’t miss the Scaling Car Washes episode where host JT Thomson talked with Jeff!