How to Start a Car Detailing Business

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How to Start a Car Detailing Business

Meticulous, detail-oriented, and a fan of working with vehicles? If your car is always the cleanest one around and you take pride in doing great work, then you could put those talents to use by opening a car detailing business. Car detailing is an exciting industry that offers some significant earning potential, and when you establish a great reputation in your local community, news about your business can quickly spread.

Business Overview

Car detailing businesses offer meticulous cleaning services that include a car’s exterior, interior, and underside. These services help keep the car looking good, but they can also make a car last longer. Common services include washing and drying a car before polishing and waxing the exterior. Interior detailing usually involves vacuuming, shampooing, wiping down, and deodorizing the interior.

Detailing a car offers many benefits, making it an appealing service to many vehicle owners. Regular detailing helps protect drivers from germs and allergens while also maintaining the vehicle’s condition. Vehicle owners often have a car detailed just before selling it since a clean car has a higher resale value than a dirty vehicle.

Industry Summary

From 2013 to 2018, the car wash and car detailing business underwent significant growth. According to IBIS World statistics, the industry experienced annual growth at a rate of 3.9 percent, and in 2018 the total revenue was $12 billion. The number of businesses also increased over this period, and by 2018, 67,382 businesses employed 219,894 people.

Industry Trends

As the economy has improved and disposable income has increased, the auto detailing industry has also seen corresponding growth. During the 2008 recession, Americans largely held onto their vehicles, but with increased disposable income, more people are buying new vehicles – and having those vehicles detailed. In 2009, total United States auto sales were 10,431,510 for the year. In contrast, auto sales reached 17,208,748 in 2017. With more people buying new vehicles, the market for auto detailing to preserve those cars has also increased.

While many car owners once washed and detailed their cars at home, increased awareness of the environmental impacts of auto detailing and washing has increased the demand for eco-friendly detailing services. Some auto detailers have moved away from using water entirely, opting for waterless products instead. Other detailers still use water but prioritize water conservation trends and methods in their businesses.

Target Market

Target markets can vary according to location and the car detailing business’ marketing. Some car detailers may find an ideal market in used car dealers, offering their services to these businesses and detailing any used cars that come into the lot. Other detailers may market their services specifically for luxury car owners, while other detailers may take a more general marketing approach to the everyday driver who doesn’t have time to detail their own vehicle.

High earning households are generally much more likely to utilize car detailing services than lower-earning households. They tend to have higher disposable income, less time, and more expensive vehicles.

Checklist for Starting a Car Detailing Business

If you’re thinking about starting your own car detailing business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.

Step 1: Write a Business Plan

After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful small business.

Related: How to write a business plan

Step 2: Form a Business Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a car detailing business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 3: Choose a Business Name

Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for naming a car detailing business

Step 4: Select your Location

For businesses with a physical location, leasing a garage or other space is a necessary expense. Having a physical location offers the convenience of saving on driving time between jobs while increasing efficiency and the number of jobs a business can take. Lease costs will vary according to location and the size of the space available. In addition to budgeting for a lease, be sure to account for some modifications, like improved lighting, adequate drainage, and ventilation.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

The owner of a detailing business must obtain various licenses and permits before starting the business. These requirements can vary depending on location; a local town hall or business administration office can advise you about the permits you’ll need. Since your business will be dealing with waste weather, your city may require environmental clearances before you begin operation.

For instance, California requires all businesses that offer car washing and polishing to register with the California Department of Industrial Relations.

Additionally, an auto detailing business may need general business registrations such as a local business license, state sales tax permit, and Employer Identification Number from the IRS.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a car detailing service is another. While the cost to start an auto detailing business isn’t huge, it may be difficult to get funding if funding is needed. To get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

Marketing costs will vary according to the marketing methods used and their volume. Common types of marketing for car detailing businesses include flyers, direct mail, print advertising, and social media.

Returning customers are valuable to a car detailing business, so consider establishing a loyalty rewards program to encourage repeat customers. A referral rewards program can also help build clientele as your existing customers refer your business to their friends. If you’re looking for a business that you can start on a part-time basis, a mobile car detailing business offers that flexibility. It makes for an easier entry into business ownership than some traditional retail businesses do.

For volume sales, look to networking with a local car dealership owners. While the profit per car will be low, the number of vehicles may be worth it.

Related: Low-cost ideas to market a new business

One important task while working on the marketing is developing an online presence. A website developer may be out of the budget, but Wix makes it easy for non-technical people to get a website running quickly and affordably.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a car detailing business. A few of these include:
– Commercial liability insurance covers the business in case a detailer ever damages a customer’s car. It also provides coverage if a customer is ever hurt while at the business’ garage or facility.
– Worker’s comp insurance is required for any detailing business that hires employees and can pay for lost wages or medical bills if they are hurt while working.

The cost to insure a car detailing business will vary based on many factors such as the location of your business, the policy deductible, policy coverage, and the value of your equipment will all influence the insurance premium. To find the best policy for your business, request quotes from a number of different companies and consider how they stack up in terms of their deductibles, coverage, and premiums.

Related: What types of insurance does a car detailing business need?

Step 10: Hiring Employees

Depending on the size and success of a detailing business, staff may be needed to keep up with the increasing demand.
According to PayScale, entry-level automobile detailers earn about $10.21 per hour. Detailers who have between one and four years of experience average $10.85 an hour, while mid-year detailers with five to nine years of experience earn about $12.18 per hour. Experienced auto detailers with 10 to 19 years of experience earn about $12.95 per hour.

Hiring employees means additional expenses such as workers comp insurance, paid time off, and unemployment insurance contributions.

The largest expense for most vehicle detailers is labor, so be sure to monitor the amount of time staff spend on each vehicle.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your car detailing business is critical to your business’s long-term success.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a car detailing business?

One major benefit to starting a detailing business is that it carries relatively low startup costs than other businesses. While some car detailers operate out of a garage or other space, many detailers begin with a mobile business, eliminating the need to purchase or rent property and facilities. You could potentially even operate out of your driveway or home garage. Expect to spend between $5,000 and $25,000 on startup supplies and equipment.

Some common startup costs for a car detailing business include:
– Auto detailing tools such as rotary buffer, air compressor, vacuum
– Carpet and floor mat shampoo machine and/or extractor and pressure washer
– Soap, polishes, waxes, and shampoos
– Tools and supplies to repair vinyl and leather upholstery
– Supplies such as paper towels, microfiber towels, buckets, brushes, and sponges
– Truck/van and trailer (for a mobile operation)

How much can a car detailing business owner make?

A car detailing business’s annual income and profits will depend on location, clientele, the number of hours worked, and the business’ age and existing roster of clients. Simply Hired indicates that owners of mobile detailing businesses earn an average annual salary of $80,000.

What skills are needed to run a car detailing business?

Starting a car detailing business doesn’t require a business degree, but certain skills, training, and experiences will increase your business’s chance of success.

Attention to detail. Perhaps the most important skill to have in this industry is paying attention to and noticing little details. Car detailing is all about perfection, so paying attention to the little things is very important in performing quality work.

Understanding of detailing techniques. Some experience in car detailing is necessary to start up an independent business. Knowledge of the chemicals and detailing techniques used will help ensure that the business’ work is professional and will please customers.

Doing detailing well takes some talent, and you’ll be working with highly valuable cars, so it’s best to gain some experience either working as a detailer or working as an apprentice with a detailer. Understanding the specific materials that you’re working with and the chemicals that you’re using can help you to get the best results and can also help to avoid damaging a vehicle.

Vehicle knowledge. When specializing in higher-end cars, some vehicle knowledge helps customers feel more confident in entrusting their vehicles to the business for detailing.

Time management skills. Adherence to deadlines and time management skills can increase a business’ productivity while keeping customers satisfied with the detailing timeline.

Marketing skills. Some marketing skills and talents will benefit any detailing business owner. Even if an owner manages their social media, a personal touch on marketing can positively portray the business and bring in new customers.

Are there grants to start a car detailing business?

It’s extremely rare to find a grant to start a car detailing business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a car detailing business?

The NAICS code for a car detailing business is 811192.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Resources:
International Detailing Association

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