How to Start a Profitable Car Detailing Business in 2022
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Car detailing is a business that has been growing in popularity for the past 20 years. It can be a very profitable business in the US. This 13.7bn industry is continuing to grow at a rate of 4.2%.
So, how do you start one? Is the car detailing business profitable? What tools and software do you need to start an auto detailing shop? Let’s look at the answers to this and a lot more in this blog post!
What is Car Detailing
“Car detailing” is the process of restoring and cleaning the exterior and interior of a vehicle. For some, it is a very satisfying business that is financially fulfilling. In case you’re wondering why it is called “detailing” instead of just cleaning, it’s because this kind of service includes a thorough cleaning of the car, exterior and interior. Light cosmetic touch-ups are part of the process but repainting and body repair are not included in the services of auto detailing businesses.
Origin of Car Detailing Businesses
The auto detailing businesses date back to the early 1800s and therefore predate the invention of the car, which happened in 1886. So what did these businesses do back then?
In 1800, the world’s first version of wax was created from animal fats in Bischofsheim, Germany. This wax was used to protect the paint on horse carriages. Yes, the first vehicles to be “detailed” were horse carriages! By 1888, after the first car was invented, various solid and liquid compounds were developed. As cars became more sophisticated, so did the methods and tools used to maintain them.
Scope of Car Wash & Detailing Business in the US
You might be wondering how much do car detailers make? On average, a one-person detailing business generates upwards of $90,000 annually. This number is based on receiving three jobs a day for five days a week. An average car detailing and washing service costs around $120, if we look at a very conservative number. Low-end jobs can rack around $120 while high-end detailing services can easily cross $200.
Given that there are about 56,385 car wash and detailing businesses in the U.S, one can say they make up a large chunk of the auto industry.
Keep in mind that cars are now more expensive than ever. This is the primary reason why people are keeping old cars for a longer time than before. In the 1970s, the average person kept the same car for around 5 years. This number has skyrocketed to 11.5 years in today’s world. More used cars on the road mean more business for auto repair and related industries like car wash and detailing.
Auto detailing businesses are profitable, however, the revenue can vary a lot based on the type of detailing business you want to run. What services do you offer? Do you want a physical shop or are you more inclined towards mobile detailing?
How to Start a Car Detailing Business
Is the car detailing business looking appealing to you? Let’s see how you can get started with your business.
Estimate Your Expenses
Before you splurge on tools and equipment needed to start your very own auto detailing business, figure out your expenses. How much do you pay for:
Rent & Utilities
And because you’re just starting out, you’ll need to add the following to your expenses list as well.
Incorporation Fee (Legal)
Vehicle (if you have a mobile business)
The goal is to balance expenses and revenue to maintain a steady profit. Once you’ve established a baseline, you can start streamlining operations to increase the profit margin.
Market research is vital if you want to test the waters before starting a car detailing business. You need to figure out if there is demand for services in the area you’re targeting. If there aren’t many people looking for auto detailing services in your area, you might not be able to attract many potential customers. You might want to answer these questions:
How many potential customers are in the area?
What’s the competition like? What services do they offer?
Is there room to scale and grow?
What’s your unique selling proposition (USP)? What makes you different?
Once you’ve answered these questions, you will know where you stand in the market. If it looks feasible enough, you can move on to the next step. To help you choose a state, here’s the number of auto detailing shops in every state:
SWOT Analysis is a great way to know where you stand amongst the competition. This helps you have a better view of the market, the challenges you might face and the potential for growth. By having a bird’s eye view of the market, you can rest assured that you will start your car detailing business with a definitive edge over your competitors!
Strengths What do you do better than competitors? (Your USP) How many resources do you have? (funding, employees, tools, supplies etc)
Weaknesses In what aspects does your business struggle? What advantages do your customers have over you?
Opportunities What do your potential customers want? Is there more room to grow? Is there less competition?
Threats What challenges could you face in the future? (more competition, change in laws) Is the target market changing?
A business plan is a written document used to describe the business or company you want to start. It is a formal, business-like document that outlines your company’s mission, business model, products, and services. It’s a roadmap that helps you plan your company’s future, map your strategy, and set a clear path to reaching your goals.
A business plan is an essential tool for any business. It allows you to communicate your vision and goals, map out your strategy and set a clear path to reaching your targets. A well-crafted business plan can help you secure funding, attract investors, and get everyone on the same page about the direction of the company.
There’s no one-size-fits-all template for a business plan, but there are key elements that every good plan should include. Here’s a rundown of what should be in a business plan:
An executive summary: This is a brief overview of your company’s history, structure, products or services, target market, competitive advantages, and financial projections.
The company description: This section gives more detail about your company’s history, mission statement, values, and other important information.
The products or services: Describe what you’re selling and how it benefits your customers or clients. Include any patents or proprietary information here.
The market analysis: Research and describe your industry, target market(s), competitors, and expected growth. This section should also include the SWOT analysis of your business.
The organizational structure: Outline who will be responsible for what within the company. If you have partners or investors, their roles should be outlined here as well.
Creating a comprehensive yet concise business plan is no small feat—but it’s definitely worth the effort. By taking the time to really understand your business inside and out, you’ll be able to make better decisions, avoid common pitfalls, and chart a course for success.
Next up, you need to decide what kind of detailing business you want to start. The two main ones are physical shops and a mobile detailing setup.
Physical Shops vs Mobile Detailing
Both approaches to running a detailing business have their own pros and cons. Read on to find out which is the right fit for you!
Starting an auto detailing or car wash business will cost you much more than a mobile setup. You can expect to pay around $30,000 to set up your shop and $12,000 monthly to keep it running. These numbers may seem daunting at first but with a physical shop, you are not limited to a one-person business. As a result, your profit will be much, much higher (around $300,000 in your first year) than that of a person providing mobile detailing services.
If owning a physical shop isn’t your thing, don’t fret! Mobile detailing businesses are also quite popular. They might generate less revenue but the upkeep cost is far less than that of a brick and mortar store.
Let’s see how much it takes to start a mobile detailing business. You’re looking at a $20,000 initial investment to get started. After that, your monthly expenses will be around $1,500. When you’re in a mobile business, there are a few more factors at play. For example, you would be better off running a mobile detailing business in southern regions due to the mild winters. The further north you go, freezing temperatures will lead to a significant slowdown in your mobile operations.
Much higher revenue
Lower initial cost
More room to scale and grow
Lower monthly cost
More jobs per day
Clients pay higher rates
Need to look for a prime location
Lower overall revenue
Higher initial investment
Highly dependent on weather
Higher recurring costs
Less community visibility.
You will need to apply for multiple permits and licenses to start a car detailing business. These are necessary at the federal and state level. The cost of each license and permit varies from state to state and even sometimes city to city.
Here’s a list of possible licenses and permits you’ll need to start your car detailing business:
General Business License
This is an essential license required to operate a business in any city.
“Doing business as” license or permit (DBA)
In some states, you may be required to have this license if your business has a fictitious name.
Sales tax permit
This is also called the seller’s permit. If you are selling anything at your shop, for example, car cleaning supplies, you’ll need this permit.
Federal and state tax identification number
Most businesses have to apply for this. It is also called the employee identification number.
You cannot just open a business anywhere. You need to comply with local zoning laws and having a zoning permit gives you legal permission to open a business in a specific area.
Home occupation permit
If you’re running a business from your home, such as a small garage shop, certain states require you to have a home occupation permit.
This is usually required for establishments that serve food but it is a good idea to check if your state requires it.
Car detailing businesses often use chemicals that may pollute air or water so having environmental permits is mandatory.
Certain businesses require an occupational license in some states. The industries that require this vary from state to state.
Fire department permits
The fire department permit is essential for car detailing and car wash shops as a lot of the chemicals used are flammable.
Special state licenses
Special licenses are required by several states for companies that sell alcohol, such as restaurants and bars. These permits often serve as proof that a company has satisfied state-mandated requirements.
Building or construction permit
You may require a building or construction permit from your local authorities if you want to make structural alterations to the location where your business will be located.
To put up a sign, certain businesses must seek a permit from their local government. The regulations may also specify other restrictions, such as the sign’s size and where it can be placed.
Special federal licenses and permits
A federal license or permit is required if your business is involved in an activity that is regulated by a federal agency.
Hiring a Team
It is possible to run a 1 or 2-man car detailing business. However, in the long run, you will need more people to help you scale your business. Even big mobile detailing businesses have multiple crews to take on more jobs in less time.
Sometimes, it is a good idea to start a business with family members. Who knows, maybe you need a mentor or a coach. You need to decide if you want to go for contractors or employees. Both have their pros and cons which you can read about here.
You might run into certain legal regulations while running an auto detailing or car wash shop. It is a good idea to call the city hall and get some more information from them. This will go a long way in avoiding legal trouble!
For example, car detailing businesses often use a lot of water. You might have to comply with certain environmental regulations which define how much water you’re allowed to use. If you have a mobile detailing business, this is often not big of a deal as you usually use your customer’s water sources. But for established detailing shops, you will need to comply with these regulations.
Business Bank Account
Using your personal bank accounts is not a great way to manage the money you make from your detailing business. Having a separate business account protects you and your assets in case your business isn’t doing well. Mixing your business and personal account often causes a lot of problems. As soon as you get your employee identification number (EIN), open a bank account for your business.
It is much easier to track your business cash flow with a separate account. For example, if you are using auto detailing software to track your profits and expenses, you don’t want your recent grocery trip to be included in there!
Tools and Supplies Needed in an Auto Detailing Shop
A big chunk of your expenses in an auto detailing shop comes in the form of tools and supplies. You will need different types of cleaning supplies to cater to different types of situations. Just a towel and a bucket won’t cut it!
Let’s look at a few tools and supplies you’ll need to get the most out of your detailing or car wash business.
Exterior Detailing Products
Here are a few tools you need to clean the exterior of the vehicles in your garage.
Buckets With Dirt Filter
Ordinary buckets can get the job done, however, a bucket with a dirt filter will help you get the washing done faster with clean water. You can find a lot of dirt filters on Amazon! Basically, with a filter, you need to make less trips to get clean water.
Car Wash Hand Mitts
Yes, sponges can get the job done but a car wash hand mitts are a lot better. Firstly, they are like gloves and this makes them very comfortable to use. Secondly, dirt and other debris trapped in a sponge can cause scratches all over your car’s paint. However, the dirt sticks to the mitts securely and reduces the likelihood of scratches.
A foam cannon is a much better way of washing a car. Sure, you could use a soapy towel but a foam cannon offers a number of advantages:
A foam cannon applies much more soap than mitts
It reduces the risk of cross-contamination since you’re not dipping dirty mitts in the water
It is a lot faster to work with a foam cannon
Foam cannons are a lot of fun!
Interior Detailing Products
Cleaning the interior is just as important as the exterior when it comes to car detailing businesses. The interior is often neglected more than the exterior, so it can sometimes be a pain to clean it. Here are a few tools you can use to make your job easier!
Plastic Razor Blade
No, not the shaving kind. A steel razor will likely scratch any surface you use it on. Using a plastic razor is a much safer way to detail the interior of a car. Furthermore, these razors do not rust so you can use them for a long time.
Detailing Cleaning Gel
You might have seen a lot of videos of people using slime to clean the interior if their cars. A car detailing cleaning gel is very sticky and causes any dirt to adhere to itself. For example, cupholders: they are very annoying to clean with a brush or towel. Instead, just slap some gel on it and watch it take the dirt way with itself!
Vacuum & Blower
This is a staple tool of any car detailing shop. Get a 2-in-1 vacuum and blower, so you can easily clean the seats and floor mats. Plus, a blower comes in handy when you need to get rid of dust on any surface.
Auto Detailing Software
So, we’ve covered the tools you need to clean the exterior and interior of cars. But what about running your car detailing business? Yes, there are modern tools available that help you with a lot of operational tasks in your repair garage. Auto detailing software is one of them.
It is not some magical tool that helps you detail cars. Rather, it is a computer program that helps you streamline and manage the workflow of your detailing shop. Let’s look at a few of the features of this software.
You no longer need to use a separate program like Google Calendar to manage your appointments. Simply book appointments in your detailing shop with a few clicks, without ever leaving the auto detailing software.
If you have a website, you can also let your customers make appointments straight from there and all your appointments will show up in your calendar in your scheduling software.
Digital Vehicle Inspections
Throw your paper inspection checklists away because you can use digital vehicle inspection software instead! So why should you use the digital versions of inspections? For starters, they are faster. Simply pull them up on your iPad and use them! Moreover, you can create custom inspection templates for different jobs and vehicles. This saves you a lot of time when you only need to inspect specific areas of a car.
Estimates are probably the first thing your customers ask for when they contact you. It is important to be able to create estimates quickly. Thankfully, estimating software for detailing shops makes it very easy to generate estimates on the go! You can add markup, industry-standard labor times, rates and much more automatically.
Work Order Management
As a business owner, you often get stuck in operational tasks. This is detrimental to your business, as you should be focusing on growing and scaling your business instead. Want to see how many jobs you have lined up for the day? Just open the job board in your auto detailing software. From there, you get a bird’s eye view of all the pending, scheduled and completed jobs.
Moreover, you can also see which employees are assigned to each job so you don’t overcommit in appointments!
Invoicing & Payments
Auto detailing software also streamlines invoicing and payments. We’ve reached your favorite part of running your own business: getting paid. Do you want to create an invoice for a detailing job that is completed? Just view the relevant and click a button to generate a detailed invoice. Invoicing software for auto detailing shops helps you speed up the invoicing process and improve transparency as all invoices are created straight from the estimates that your customer (or their insurance provider) approved.
In your car detailing shop, you should offer as many payment methods as possible. Everyone has a preference when it comes to paying. Some people prefer paying with cards while others prefer good old cash. Some also prefer quick payment methods such as text-to-pay.
Okay, now you know how to start your business. But to make your business successful, you need to tell people that your business exists. Building on that, you need to convince people to choose you over your competitors.
This is where digital marketing services for auto detailing shops come in handy. You don’t need to be an expert in web development, SEO, or social media to promote your business. Let us do it for you!
Torque360 Digital is a service we offer to help market your business and services to a wider audience. There’s a lot more to digital marketing in 2022 than what meets the eye. There are a lot of intricate ways of outranking your competition. Leave the marketing side to Torque360 while you focus on excellent customer services.
Wrapping It Up
So, are you ready to take on the challenge of creating the best car detailing business in town? Grab your foam cannon and go for it! Auto detailing is a very profitable business and you can gain a competitive edge over your competitors by using the information in this post. Best of luck!