Respecting the 3-Mile Rule When Starting a Car Wash
Car wash owners are a unique breed of individuals. Anyone who enters the industry thinking that owning a car wash will be a passive source of income quickly learns that it takes grit to build and run a successful car wash. Even if you have a supportive staff of management, you may still work and overwork yourself to stay above water.
But, like the mud, grit and grime that it’s your business to wash away, your hard work can seemingly drip down the drain if a new competitor comes into town.
Car Wash Capture Is All About Location
Unlike some other local businesses that merely require a warm body with cash in hand who is interested in your product or service, the car wash industry is very much dependent on vehicle access. Without a dirty car driving up to your location, you have no business.
This means that a successful car wash will probably be wherever the cars are. More cars equal more business.
With only so many main roads in a given city that have the highest level of traffic, competition can be fierce with other car wash owners. The scarcity of ideal spots for a successful car wash may mean you’ll find yourself sizing up a rival from across a dusty landscape while you lean against the doorpost of a local saloon. You maintain a steady gaze and stance while you spit out a toothpick with a quivering finger on your six-shooter and a gravelly voice hardened by the merciless desert into a low growl.
“This town ain’t big enough for the both of us, partner.”
The Problem with Building Too Close to Competition
It may be a hard, cruel world of cutthroat business tactics to get an edge in your market but sometimes the free market rewards a little karma to the greediest among us. According to Anthony Analetto, building too close to a competing car wash is one such instance.
In his 10 Mistakes People Make When They Start a Car Wash Business, #2 on his list is stealing another car wash owner’s business.
The problem with this is that the land that a car wash is built on is considered a “single-use property” by the bank. Lenders use this designation to evaluate risk. If a site is considered a single-use property, it can’t be easily converted for any other use. Infrastructure, such as car wash pits (which is Pit Crew’s cleaning specialty), are built into the site and are unique to the car wash industry.
If a bank lends an owner the money for a car wash and the business goes belly up, the bank can’t depend on a hair salon to set up shop in the conveyor tunnel and begin offering in-bay automatic hair washes. The hair salon would need some serious financial support to convert the equipment into hair washing and hair dressing tools… or else it just isn’t happening.
So the hypothetical situation has the potential to play out like this: you build a car wash across the street from a successful car wash, hoping to steal their business. One of three scenarios is possible:
- They put you out of business because they are more well-known
- You put them out of business because you’re shiny, new and ready to impress
- Both you and your competitor limp along with mediocre, stagnated business
The problem with this is that, even though #2 sounds like the ideal situation for you, it could come back to bite you. As soon as your competitor goes out of business, the bank is going to be looking for another car wash company that can scoop up the property. Chances are, your new neighbor could size you up for your weaknesses and do to you what you did to your competition.
What to Do Instead to Grow Your Business
So, if building too close to another car wash is a bad idea, what should you do? Many car wash owners consider the 3-mile rule to be the law of the land. It is both a courtesy rule and a way to avoid the pitfalls of too many hands in the same cookie jar.
If you can’t pick your ideal location for a car wash because someone else beat you to it, find a place that is almost just as good. If you are focused on good business principles for your car wash, you could end up building a car wash that is good enough for people to go out of their way to visit.
