You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your car detailing business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a car detailing business?
Unlike most new business ventures, a car detailing business requires very little investment capital. Industry leaders estimate an initial budget of $5,000 to $25,000.
When detailing your business plan, include the following items in your budget:
- Auto detailing certification - certification will set you apart from your competitors. There are a number of classes offered throughout the country.
- Insurance - coordinate with a trusted agent to determine the best liability coverage for your needs.
- A business cell phone
- Auto detailing tools - save in overall cost by purchasing items as a startup kit. These range in price from $1,900 to over $14,000.
- Reliable transportation
- Trailer - some find it more convenient to keep all their tools in a trailer
- Lease - if you decide to have an on-site location, you will need to find a workspace that’s both affordable and designed for the services you perform.
If you are considering investing in one of the many franchising opportunities, your startup budget should be significantly higher. While the capital investment starts at $118,000, this does provide the support and training necessary to ensure long-term support.
What are the ongoing expenses for a car detailing business?
Like the start-up costs, your ongoing expenses will be fairly minimal. Items you should include in your monthly budget are:
- Fuel costs
- Replenishment of supplies
- Routine upkeep on vehicle and trailer
- Equipment maintenance
- Insurance - $75 t0 $150 per month
- Payroll and taxes
- Marketing - $50 to $100 monthly
Who is the target market?
When first starting out, many detailers accept almost any job that comes their way. As your name starts to carry more weight in the community, your focus will be in the high-value market of your region. This will generate more referrals and higher paying jobs.
How does a car detailing business make money?
Car detailing businesses generate revenue through the services they offer and are paid on a per-job basis.
How much can you charge customers?
Your prices will vary depending upon the specifics of the services you perform. The region you service is also a factor when setting your prices, which typically range from $75 to over $250.
How much profit can a car detailing business make?
Experienced car detailer owners report annual profit ranging from $40,000 to over $100,000, depending upon the number/type of additional services offered, number of employees, and region in which they reside.
How can you make your business more profitable?
To ensure a profitable business, consider implementing some of the following strategies:
- Partner with hotels to offer concierge services
- The following are also effective businesses to partner with, generating steady business: car shows, auto and RV dealerships, car rental companies, and limousine companies.
- Offer additional services such as: mechanical services, windshield crack and chip repair,
- 24k gold plating systems
- Headlight restoration
- Odor elimination
- Body pin striping and side molding
- Window tinting
- Invest in a water reclamation system/strategy, which will significantly boost your profit margins.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your car detailing business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
In most states, it is necessary to obtain a car detailing license) (Certain state permits and licenses may be needed to operate a car detailing business). Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Car detailing businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your car detailing business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Certificate of Occupancy
A car detailing business is generally run out of a garage. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a car detailing business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your car detailing business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a car detailing business
When first starting out, offer to service your friends’ and family’s vehicles. Set it up during regular business hours and go to their workplace to perform your services. This offers an instant opportunity to showcase your talent and, hopefully, gains their co-workers as new customers. Keep business cards on-hand at all times. You never know when you might meet your next best customer.
Additionally, pass out mailers at local businesses and homes in the area you service. A magnetic vehicle sign is also an effective way of advertising your services. Spend some time each week pounding the pavement. Visit businesses, both large and small, and hand out your business cards. Be persistent, but not pushy. If you haven’t heard from anyone at Business XYZ, visit them again in a month or two. Car detailing is a service many consumers need, but it’s generally not at the top of the to-do list. If someone is in need, but haven’t had a moment to call and make an appointment, your visit will be a welcomed surprise.
Every modern business should maintain an online presence, particularly on social media sites. Keep your clients apprised of the latest industry news and company specials by regularly posting on these sites.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
In this industry, it is critical that you do your best work every time. When it comes to “luxury” services, one poor job will leave a lasting impression.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Car Detailing Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
This is the perfect opportunity for the entrepreneur is who ready to venture out on their own, yet has little startup capital to work with. Successful car detailers enjoy working with their hands, braving the outside elements day in, day out.
What happens during a typical day at a car detailing business?
While the vehicles you detail will vary, your days will be similar in nature. Your duties will include the following:
- Marketing your business
- Checking in on current customers to see if their vehicles are ready for another detail job
- Conversing with clients, answering any questions they have
- Researching the latest in industry trends
- Reviewing inventory numbers and place orders when necessary
- Performing car detailing services
- Performing administrative tasks
What are some skills and experiences that will help you build a successful car detailing business?
Like any business venture, running a car detailing business requires a certain level of business finesse. This goes beyond being able to manage your books. It means understanding how to interact with customers, properly market your services, and properly price your services for maximized profits.
To realize long-term success, you should also be knowledgeable and skilled in automotive detailing. The International Detailing Association offers members information regarding how to get started, advice on managing your business, and the latest in industry trends.
What is the growth potential for a car detailing business?
Auto detailing is one of the fasted growing industries, generating an annual revenue of over $10 billion. Growth is expected to continue at a rate of 3.1% per year, leaving much opportunity for new entrepreneurs entering the market.
TRUiC's YouTube Channel
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a car detailing business?
Leaders in the auto detailing industry offer the following advice:
- Before investing in any equipment or tools, check the water discharge laws in your region.
- Consider utilizing waterless car wash products.
- Know your worth and be unwavering when discussing fees with customers. If you have a customer come to you with $150 worth of work and they want you to detail for $75, you must be able to say no.
- Invest in high-quality detailing supplies.
- When you’re first starting out and things are slow, ask used car dealerships about detailing for them. The pay is low, but it is consistent and will offer immeasurable experience.
How and when to build a team
Car detailing is a one-person job, so you will want to start out on your own. As you start to build a customer base that you cannot service on your own, consider adding a team member. This will not only allow your business to service more customers, it will also allow your to expand your service area. Just make sure each employee is experienced, professional, and personable.