Editor’s Note: This is the last in a three-part series examining some of the challenges and business dangers that operators face when entering the carwash business. Read Part 1 and Part 2.
Oh, the challenges facing us as we follow our dream! It has been said by wise men that the road to the summit is steep, rocky and slippery. No one knows this better than our new carwash operators Mike and Jill. Their road to the summit certainly has had its share of mazes, impasses, sheer walls, cliffs, bandits, oxygen deprivation, and Oh-My-God moments.
Theirs is a tale of exaltation, exhaustion and endurance. And although this is the end of our three-part series, it is actually the beginning of many new operational challenges for Mike and Jill.
If you have been following their saga, you have witnessed their dream, the creation of a vision, a plan, site selection, supplier choice, permitting, construction, and finally the day when they began washing cars for money. It has been an education by fire. Their journey has been difficult and beyond what any new operator should have to endure.
So what could or should Mike and Jill have done to minimize the gut-wrenching aspects of building their carwash business?
It would be easy to point a finger and say that Mike and Jill dropped the ball and didn’t do their homework. It also wouldn’t be true. As we illustrated, they examined a number of businesses before choosing carwashing. They attended association meetings, read articles and studies, talked with operators and explored the Web. When they decided to give the carwash industry a try, they sought local engineers and real estate experts, and met with city officials before receiving permission to build their “dream” business.
Basically, they did most all the things that any investor might do. In their mind they had dotted every “I” and crossed every “T” and felt confident in their business direction and choices. So what went wrong?
Unfortunately, the carwash industry, like so many businesses, suffers from “agendaitis.” Most everyone you interview in the business has their own story, agenda and vision of what is right for anyone who has the time and interest to listen. Like many of these businesses, the carwash industry also fits the 80/20 rule. Twenty percent of the suppliers do 80 percent of the business.
Why? Because among that group are those who understand that a round peg must go into a round hole and that no single carwash business model fits all site applications. Few carwash suppliers or their representatives understand the fiduciary responsibility they have in dealing with a prospect. Few sales organizations have owned, operated or sold all the various systems applicable for all carwash business models.
Of the “good” guys — those who understand this — there are those who still suffer from “agendaitis.” They know what they know, and they believe their business model is correct — that their round peg works in every situation. It doesn’t!
Fortunately, the remainder is a group comprised of dedicated, caring professionals who thrive on creating successful opportunities for their clients. A new investor’s objective, like Mission Impossible, is to seek and find those individuals who have their best interest at heart and can deliver on what they say to maximize the client’s return on investment and assist in creating a successful carwash.
So what’s the bottom line? How could Mike and Jill have been open earlier, preserved resources and had a much more rewarding experience?
It boils down to planning and using a disciplined approach in all aspects of business creation. There are no short cuts in this process. Each phase needs to be investigated, detailed, documented, added and/or modified (in your business plan where necessary), and, above all, executed as flawlessly as possible. What steps would have resulted in fulfilling a dream rather than creating a nightmare?
Due Diligence & Investigation
The first thing you have to do is take personal inventory. Are you sure you are meant to be an entrepreneur? Are you emotionally, physically, mentally and financially prepared for the challenges of owning your own business? Small business development centers can often provide valuable consulting and testing to see if you fit the entrepreneurial mode.
You also need to determine the level of financial and physical risk you are comfortable with. What will be the level of your involvement in your business? U.S. Small Business Administration funding requires you to be an active participant in the business.
Similarly, how do you feel about the number of employees needed to run your business efficiently? Each carwash model requires varying amounts of labor. Will you be able to come up with 20 percent to 25 percent cash to fund your portion of the business?
Also, do not underestimate the value and necessity of your support structure as you set out to build your business. Will you have total family support for your venture?
As you begin to examine your carwash business opportunities, it is imperative that you investigate and understand the various business models and the commitment in resources that each requires. In addition, it is critical that you understand and apply a SWOT analysis within your markets in order to evaluate your future site’s strengths, weaknesses, opportunities and threats, as well as your competitors’. This will enable you to add keen observations to your overall analysis and aid in developing a sound strategic plan for your business.
As mentioned earlier, you also need to understand the principle of fitting a round peg into a round hole. Chances are a cookie-cutter approach will not be right for you. Whether you are creating a start-up or embarking on an expansion, every new business brings a unique set of challenges. Some general methods and philosophies will work well in many situations, but trying to leverage a formulaic, blanket solution without adapting it to your specific set of parameters will likely lead to headaches and heartbreak.
Similarly, take the time to understand the principles of real estate selection and investment. As mentioned earlier in this series, the importance of creating wealth through the ownership of real estate became very clear to Mike and Jill at the outset of their investigation. Accordingly, they eliminated any opportunities that would preclude them from land ownership.
Besides conducting a business, you also have the opportunity to flourish in the real estate market. This may not seem critical in the beginning stages of operation, but it could mean everything to you in the future if and when