Last month, news broke that the country’s largest car wash business, Mister Car Wash, had sold to a private equity firm. The price tag was figured to be in the vicinity of $380 million, easily placing it among the ranks of the most valuable car washes ever to trade hands.
Unfortunately, most car washes will never reach such towering value. On the website bizquest.com, which allows small business owners to list their companies for sale, 273 businesses turned up in a search for car washes. The highest asking price is $10 million for a car wash in New York. It’s unclear — and probably unlikely — whether the seller will get anywhere near that price.
In an article posted in The New York Times this week, Josh Patrick, of Stage 2 Planning Partners, wrote that the vast majority of small businesses simply are not sold. There are a few reasons for that. A major one, he writes, is the revenue model. Attractive businesses have easily recurring revenue models. For a car wash business, that means loyalty programs, memberships or perhaps even just extremely consistent month-to-month revenue over many years.
Another problem is that for many small businesses, the owner is the business. “The goal is to be a passive owner, one who is not essential to the day-to-day operation of the business,” Patrick writes. “Not only do passive owners have a better chance of selling their businesses when they want to, they also have more options of how to run the business while they still own it.”
Indeed, the most difficult part of selling your car wash is preparing to sell your car wash. In a useful article in Professional Carwashing & Detailing magazine, the owner of another small business broker website writes that “Preparing to sell means building upon your strengths and fixing weaknesses so that you can secure the best possible purchase price for your business. Above all, make the transaction process easy for the buyer. This means being honest about your motives, expectations and business difficulties.”
In addition to arranging your books and simplifying administrative processes, there are a lot of institutional reforms that should happen, including employee training, enhancing the customer base and phasing out what he calls “partialities” — “Don’t put a new owner in the position of having to deal with a customer who expects special treatment or another with whom you have a verbal contract.”
Ultimately, there’s a lot, particularly the market, that’s not in your control. But it is possible to make money or retire happily with a successful car wash sale. The preparations within your control take a lot of time and energy, as well as expense, but with a good plan and help from an expert or two, you can make it happen.