Top Tips For Buying A Car Wash Business For Sale In Melbourne.
The article is for people who are looking for a car wash for sale in melbourne and a bit of a backgrounder on buying car washes as as a business. The aim of this article is a “where to” go for more information about buying a car wash business (largely directed to Melbourne readers), what are the different types of car wash businesses that are available and a run down of the steps in selecting or establishing a car wash business. We also list who are the most active business brokers in Melbourne dealing with car washes for sale as well as locating businesses for sale online.
If you are looking to buy a car wash business in Melbourne then the first port of call would be to ring a business broker like Valentines we have mentioned below. This market is quite specialised and Valentines at the time of writing had quite a number of car washes in and around Melbourne for sale.
Car washes in Melbourne have been making the news in other ways. In March 2014 the Melbourne Age reported that Bikie gangs were muscling in on the Melbourne car wash business scene. Acquiring stakes in several car washes in Port Melbourne and St Kilda and made threats to owners of rival business in neighbouring suburbs.
Before buying a business you might want to look at the following to do with car washes.
- Check out the Australian Car Wash Association. The Australian car wash association has businesses for sale on their website but .. around Australia. These guys will provide a wealth of information if you are interested in buying a car wash business.
- Attend any Expo’s that might be on. Did you know on 25-27th August 2015 there will be held a car wash expo? This expo will be held at Etihad stadium in Melbourne.
There are different types of car washing setups.
Self Serve car washes generally handle 6 to 8 cars/p/hour per washing bay.
Touch free car washing systems can handle 8-12 cars per hour;
Soft touch auto car washing systems can handle 10-16 cars /hr;
Drive through car washing systems can handle say to 60 vehicles per hour;
Tunnel car washing equipment can handle as many as 200 vehicles per hour.
The process of starting a car wash business from scratch can be time consuming and long. From councils to real estate agents to landlords and building companies down to dealing with the finance companies and ordering the gear (the providers of car washing equipment) can be a long process. It will certainly, if you are wanting to get into the business of car washes test your commitment levels.
General steps to car washing business:
Advice has to be sound. This is about financial advice and getting decent advice from a financial planner or accountant. Entering into any business can be a risk especially if you have never owned or operated a Melbourne car wash business before. You’ll need to do your homework thoroughly. Speak to existing Melbourne car wash operators, Equipment suppliers, people in the industry, the car wash association people, business brokers, network… network… network. Do onsite inspections of car washing operations.
Hand washing or Automatic Machines: As a rule of thumb hand washing operations are generally lower for startup costs but have far higher ongoing operational costs compared to automated car washing systems. Hand Washing can be very very labor intensive. You then have the problem of sourcing and dealing with finding good staff as well as paying the right remunerations. Customers generally pay a premium for hand washing a vehicle over automated systems. The real estate requirements for a hand wash car wash business are a lot lower though than your automated car washing business. Typical layout will be a small cafe and waiting area, your administrative area, storage room and equipment room. There will be the standard outdoor inclusions ie. Shade sales and sun cover. Electrical work is substantially less compared with the automated car washing businesses and the setup costs there.
With the automated car washing equipment you’ll have to factor in a replacement life for the equipment. There’s less human dependance needed and staffing costs so the HRM and wages aspect is a lot less. Handwashing has limited turnover of vehicles compared with the automated washing systems can put through a lot more vehicles per hour especially given automated systems are cheaper, there results in more customers.
The throughput using a handwashing or automated system is something you’ll have to think about and you might even elect to go for a hybrid (mix of the two) systems.
What about buying an existing car wash for sale in Melbourne?
Perhaps good? A way to enter the industry. Car washes I am told typically go for around a 1 to 3 times their yearly profit multiple. You’ll have to clarify this with an accountant or a business broker even the Australian car wash association guys as I am not qualified to make any statements in respect of the current multiples for car wash businesses being sold in Melbourne. With buying an existing business you’ll need to look at the existing equipment, what state of repair or condition its in and the property itself ie. The properties lease, how long the lease is left to run and more.
There might be a reason the business is run down. You’ll have to carefully weigh up giving the business a whole spruce in life. There may be another reason that the business has run down and that’s the location factor. Initial site selection by the current operator who may have started the business and sunk a lot of money into the car washing business might have been poor.
Property or site selection – the same principles of real estate apply. Location Location Location.
Key is traffic flow. Good frontage and access. Ability to have good vision from the road ie. Signage and visibility. Largely a residential area (you don’t want to be stuck in a dead area like an industrial estate that after on weekends etc is absolutely dead as everything is shut), have a look at the demographics of the area and abilities to cross market with surrounding businesses.
Local council zoning – including constraints. Engage a town planner if you are out there doing site selection to see if its “as of right” able to set up a car wash business. Have your consultants on board including your real estate agent who might be hunting down sites for you. You’ll also need to have your builders on side and be familiar with the construction costs if required or if an existing premises to do a remodelling, re plumbing job on the premises.
Have you suppliers ready and sorted. This is all your equipment, the costs, suppliers and what you are using and also where you will get replacement parts if doing an automated car washing business and where you will get parts in the event of equipment breakdowns.
Know the compliance and be covered. That’s everything from environmental compliance to local government to insurance. Theres also workers compensation to consider.
One approach is to work in the business for a while say the first year to “bed it in”. You need to stay on top of the numbers and work closely with getting the information your accountant needs. You’ll have to be proactive in marketing the business.
Business for sale directories with car wash listings.
Businessforsale.com.au – there are a number of directories out there that aggregate the listings of brokers ie. Pull in the information. You might find some listings through these types of websites to save hunting around from site to site, business broker to business broker in Melbourne looking for listings for car washes for sale. At the time of writing there were some private sellers on this website selling their car wash businesses in Melbourne and this may have its advantages or disadvantages in terms of dealing direct with the business owner.
Seek Commercial also had a ton of listings with handwash carwashes and franchise or automated car washes for sale when I checked.
Strangely enough there were a couple of listings on the gumtree website which is a free to post general advertisements for businesses for sale but I wouldn’t hold much hope in finding a good business through this medium.
Another company with Melbourne car wash businesses for sale is BizListings.com.au and you might want to check them out although they had significantly less listings that the above and Valentines Business brokers website below.
Melbourne Business Brokers (car wash for sale melbourne)
One company that appears to actively advertise car washes for sale in Melbourne is Valentines Business Brokers. These guys are based in Malvern East and have quite a number of sales staff on their team. The Valentines business brokers website featured at the time of writing around 18 car washes for sale in Melbourne suburbs. The listings were predominantly in the $200,000 to high $300,000 price bracket with various takings per week quoted.
Another business broker in Melbourne that apparently deals in car washes for sale is called Klemms. Klemms had 5 Melbourne car washes for sale on their website at the time of writing. You might want to try Klemms Business brokers. It really is quite sporadic online depending on who’s listing what as the listings appear thin to nil through most of the Melbourne business brokers. Absolute business brokers had one car wash for sale in Melbourne at the time of writing and that’s it.