Small Business

A Good Car Wash Is Hard to Find


By Karen E. Klein Q: I am looking to buy an existing self-serve car wash, but it's hard to find any for sale. Should I use a broker or continue driving around looking for owners that may be on-site? Do you have any other suggestions?

---- A.B., Houston

A: Unfortunately, you may be looking for the proverbial needle-in-a-haystack if you limit your business prospects to this very narrow category. Experienced business brokers say full-service car washes very rarely come onto the market, and smaller, self-serve car washes are even less likely to be for sale.

There are a couple of reasons for this: Often these businesses were built decades ago on land that has appreciated in value, so that the property is now worth considerably more than the business itself, says John Bates, a broker and the president of Spectrum Business Resources in Laguna Hills, Calif. "Also, many of these are built on land that needs to be 'parked' while it appreciates in value, and the income from the business basically covers real estate taxes until it's sold for redevelopment," Bates says. Owners sitting on a hot property aren't likely to part with it lightly, and when they do sell, they'll list it at a price that will reflect the land's potential for commercial or other development.

SIC IT. If you're really determined to pursue this goal, however, you do have a few options. You can buy a list of all the self-serve car washes in your area from a list broker, then contact the business owners directly to find out if any of them want to sell. You can find list brokers online or in the yellow pages, and for a minimal fee, you can search their databases by Standard Industrial Classification code (the SIC code for car washes is #7542) and ZIP code to get the contact information you need.

Send an inquiry letter out first. Then follow up with a telephone call, Bates recommends. If you're fortunate, you might come up with more than one prospective seller and find that you have an advantage in negotiations.

If you can't find an existing business for sale, you might find some buildable land and develop your own car wash, suggests Gene Pepper, a business broker in Glendale, Calif. "You must determine that the zoning laws and environmental regulations will permit a car wash on that site," Pepper says.

She recommends that whether you decide to build or buy, you should contact the commercial real estate brokers in your area, since they typically have databases of commercial and industrial real estate ownership that may be helpful to you. Give the brokers your specs -- size, location, revenue -- and be ready to buy when something that meets your criteria comes up for sale.

Depending on your goals for business ownership, you may find that other types of businesses generate better income for the same investment -- or even slightly less. An experienced business broker should be able to give you some suggestions and comparisons. Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


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