I learned how to detail cars back in 1970 while working at a local Buick dealership. After a year or so, I wiggled my way into another dealership to recondition used import vehicles on weekends as a side gig.
Of course, like many detail start-ups, this involved working out of the trunk of my car. I had about $1,000 in equipment and supplies. It would have been a lot more if I wasn’t allowed to use the dealership’s equipment, such as an air compressor, wash rack, hand tools, lift, and utilities.
To give an idea of the cost, the last detail shop project I was involved with several years ago had start-up expenses of $125,000. This included the cost to renovate and outfit a small two-bay service facility on a quarter-acre lot. This is peanuts compared to the cost of building a commercial car wash, but it represents a significant hurdle to a budding detail operator. The principal reason is access to capital.
For example, the equity requirement for this amount may only be $18,750 (15 percent). However, since the property is leased, the borrower would need collateral or assets of $106,250 to secure the loan. Arguably, this is what leads many detailers to a home-based or mobile operation or trying to find a gig at a car dealership, auction, or rental agency.
Why does it cost so much? Let’s begin with the equipment. A well-rounded detail start-up kit containing enough equipment and supplies to launch is around $10,000.
A business needs insurance to protect it from ownership and business operating risks. For a detail operation, this would include commercial auto and general liability. In Florida, the average cost for a low-risk, small business is $147 per month for commercial auto and $42 per month for general liability.
A business needs lines of communication. This means a phone (the average cell phone service is $147 per month), a website that renders well on mobile devices (the one-time average price is $4,500), and business cards ($10).
A business needs a brand image. This means a uniform and a clean and attractive vehicle. After all, you don’t want to show up to detail someone’s $70K luxury vehicle looking unprofessional.
If cleaning cars with water, certain equipment will be required to comply with EPA requirements that prohibit discharging wastewater into storm drains or bodies of water. This may include a containment mat ($1,000) and a portable wastewater reclaim unit ($2,500).
Steam cleaning requires a commercial-grade steamer capable of providing 1,000 psi, a flow rate of 1.1 gpm, and a temperature of up to 250 degrees ($6,000).
Water-less washing has the lowest infrastructure and investment requirements. The downside is that chemicals are expensive, and it’s not advisable to clean vehicles that are more than modestly dirty.
A business needs administration. For example, there is cloud-based software available specifically designed for auto detail businesses. This software provides a host of features for a modest monthly subscription.
Finally, a start-up business needs operating capital to pay the monthly bills until it is generating sufficient gross sales (cash flow positive). For example, if anticipated annual sales are $200,000, fixed costs might be $100,000 or operating capital $50,000 (six months).
As shown above, the budget for our hypothetical detail start-up is around $75,000 and doesn’t include transportation costs.
The elephant in the room is operating capital. Unfortunately, many small business start-ups forgo this provision, choosing to make their start-up expenses appear more attainable.
