BUYING A SMALL BUSINESS

Business for Sale: Southern Car Wash

An overview of a business offered for sale, complete with a price rationale as well as pros and cons of the purchase.
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THE BUSINESS
Looking to clean up on an investment? Drive through this full-service Georgia car wash, which scrubs about 2,000 cars a month for an average per-car revenue of $13.78, well above the industry norm. Car-wash investments live or die by their location and equipment. This business looks squeaky-clean: it's near a major highway, and although the facility is 30 years old, it has recently been renovated. The owner is ready to retire.

PRICE
$400,000 (owner financing possible)

OUTLOOK
With an estimated $30 billion in revenues, the United States' 75,000 car washes are thriving. So is this company, thanks to the completion of a two-year highway-expansion project: first-quarter sales for 1997 were up by more than 40%, compared with the same period last year. A new owner could soap up sales even more by staying open evenings and Sundays, or by advertising pricey high-end services. The best news? This facility could handle increased volume of 50% to 60% without hiring more staffers or investing in additional equipment.

PRICE RATIONALE
Full-service car washes tend to get valued in one of two ways. The simplest: multiply annual gross revenues by one. If you rely on the owner's post-highway-construction projections of $337,742 for '97, this deal looks pricey. Or multiply recast earnings by 1.75 to 2.25 (for $136,200 to $175,115, using 1996 results) and then add the value of fixed assets ($185,000), for a price of $321,200 to $360,115. A recent trend toward industry consolidation could push the price even higher.

PROS
With the right location, up-to-date equipment, and a good purchase price, a well-run car wash could be a money machine.

CONS
Price this deal wrong and it's you, not your car, that will take a bath. --Jill Andresky Fraser

Financials 1994 1995 1996
Gross Revenues $242,791 $262,934 $270,194
Recast Earnings* $54,680 $76,130 $77,829

*Before depreciation, interest, taxes, and owner's compensation

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Don McMichen at 770-941-4504.

Last updated: Jul 1, 1997




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