Considering investing time and money in starting up a car wash or detailing business? Here are some statistics we found and you should know before diving in:
- The Malaysia Automotive Association has released the total of vehicles on Malaysia road at 28.2 million as of July 2017. (MAA)
- The automotive and motor vehicle sales industry contributed approximately 3.6% of Malaysia’s GDP in year 2017 ; A whooping RM40 billion industry and is expected to contribute roughly 10% GDP collectively by year 2020. (MAI)
- An average of 48,000 cars are sold monthly in Malaysia in year 2017. (MAA)
It is easy to understand why car wash service is a constant high demand in Malaysia and is expected to grow further. Moreover, most Malaysians prefer to have their car washed by others as it is rather affordable and less time consuming than doing it yourself.
Starting a car wash business may seems like another regular business startup (yes it is), but here are several insights on setups that may help you to put things into perspectives before capitalising your money.
As there are rather lengthy list of topics to cover, we will be breaking it into 3 episode of blogs. We will be mainly dealing with pre-operation setups in this chapter.
In episode 2, we will be discussing resources required in according to service rendered, and common risks and problem faced by the industry.
In our 3rd blog, we will be sharing on business and marketing strategy that may come useful in the detailing industry.
1. Have A Definitive Business Model and Setup Plan
This is perhaps the most crucial step above everything else. This will determine the course of your business approach, renovation and layout, marketing objective and basically the entirety of your business direction.
Here are some car grooming business models commonly found in Malaysia:
It is crucial that we understand our business objective and setup to accommodate our future business growth and venture.
For example, car owners are more likely to opt for detailing centers to have their car coated compared car wash centers. If your business priority is to meant to target mass market, it would make more sense to venture into car wash center that is able to handle high flow of traffic.
Capitalising on a professional detailing center would make lesser sense because detailing may take longer duration of time to complete, and stationed cars mean obstructing flow of incoming customers wanting for quick services. Moreover, it is safe to assume that customers that regularly visit car wash centers are not willing to wait 1 or 2 days for their cars to be fully detailed.
The bread and butter for each business model may vary. Deviating from your principal objective may do more harm than good on the long run.
Business model and setup of your choice determines the impression others have on your business, and in turn attracts the right prospect for your valued service.
It is also crucial to be realistic on our resources available at hand and understand the limitations each business model and setup will possibly meet.
Expecting to eventually advance a car wash center established in a petrol station into a high-end professional detailing center may seem overly idealistic, as there will be many restrictions imposed by the management. In addition, the branding and positioning of your service won’t make much sense as well. In such event, it is better to start off with a more appropriate outlet that will resonate your future business growth.
Knowing your endgame means having a clear direction of where your company is headed to. This means having the upper hand to circumvent possible hiccups and roadblocks and plan ahead as you grow your business.
Don’t forget to do your research too! Understand where the shift of trends and demands are heading towards.
2) Picking The Right Location
While strategic location and placement will contribute to the business exposure, the first and foremost consideration to survey from the demographic segmentation: Community, Income level and spending habits.
These will determine if your business setup has demand from the surrounding community.
For instance, if you intend to invest in a high-end detailing center, it would be more strategic to rent an area surrounded by medium to high income group or community with good spending habits. Your surrounding neighbours would most likely be your most immediate prospects.
While it doesn’t mean that you would have to open a high-end detailing center in an affluent area, the surrounding community and spending habits would likely indicate the level of expectation and acceptance of your business presence.
It is also advisable that local council and states laws are consulted prior to opening up a car wash or detailing center. Different states and council have different regulations when it comes to operating such businesses.
Based on several exchanges with car detailing operators and detailing owners, they have shared on how municipal council such as Petaling Jaya City Council gazette areas that can and cannot operate car detailing business or car accessories business. Whereas Kuala Lumpur City Council would likely to favour operators that are more mindful of waste management and the surrounding health and environmental impact. Hopefully by now you get the idea.
At this point, it is also best to scout for surrounding competitions. Is there a surplus or lack of demand in the neighbour for the service you intend to invest? Will your business stand out and differentiate from your nearest competitor?
3) Determine The Right Size of Working Space
Having to pick the right location means the need to determine how much working space is required for our business model next. This is crucial as rental contracts for business is customarily negotiated for 2 or 3 years. Will it accommodate the business requirement if it should grow steadily in the near future? Will there be a vacant unit that meets your requirement?
It is easier to work with if space isn’t much of an issue. Nonetheless this will be challenging in a prefix arrangement or budget. Here are some reference on various layouts practiced by industry players.
Here are some considerations:
- Does the business model requires more space for rotation of vehicles or for stationed vehicles?
- Does it have a dedicated area for car to stationed without hindering the incoming vehicles?
- Will the length of the premise accommodate a fully exposed doors of a vehicle without obstructing the workflow?
- Is there an area to store water tank in the event that water supply is disrupted?
- Does the premise have extended space that can be utilised further to the business advantage? (End lots usually have more advantages)
- Does the customer feel good entering your place? (Size of vehicle entry, ramp degree, cleanliness of shop and surrounding area)
- Is the space properly utilised or merely for aesthetics purposes rather than functionality?
Professional recommendation: If you have to sacrifice a working space for waiting area, DON’T!
E-hailing services have drastically change consumers behaviour : Between tapping their feet and wait aimlessly, tapping to escape is easier! Having a restaurant or cafe nearby is a huge bonus too!
4) Don’t Forget To Draft Your Costing Sheet and Initial Capital Cost
We can’t stress this enough; Every business requires capital and running cost! Diving in blindly means potentially risking your business and investment aimlessly.
Perhaps the most commonly overlooked capital expenses that business owners miss out is the cash reservoir (rolling cash) for initial startup. Having a healthy margin of reserve will ensure a peace of mind while spending more time on building your pool of customers. While it is a cash business, based on the feedbacks from several business associates, it is better to have a minimum reserve of 6 months to a year for detailing based outlets. Keep in mind that the bulk of your expenditure would be on rental and salary, be sure to include it in your operating expenses during your costing calculation.
It is also advisable to allocate a partial of resources into the marketing fund to grow your business on initial start up especially if you are starting from fresh! The more exposure means the more likelihood of conversion. (More will be covered in 3rd blog)
At this stage, it is also recommend to have your contractors and suppliers reviewed to better understand the cost involved for your budgeting.
We hope these insights would bring about much help in scrutinising the prerequisite investment of your business. There might be more matters that requires more attention, and we will try our best to cover the necessary topics in the upcoming blogs.
Should you have any further questions, we suggest getting in touch with us to have your questions answered. Drop us an email at : firstname.lastname@example.org
Stay tuned for the next update on managing resources and workflow, and common problems faced by detailers! Au revoir!