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Competition Profile

A thorough consideration of the competition in the trade area is imperative to the success of the car wash. The size of the trade area can change depending on many things, but a three mile radius is generally accepted as standard unless you can identify obvious reasons to extend or shrink it.  A survey must be made of existing and planned car washes that fall within its boundaries. See "20 Questions About Site Selection" in this section for sample questions to ask when considering a site.  Pay particular attention to the following items while conducting personal visits to your competitors’ stores:

  • Estimate your competitors’ dollar-per-car average and annual volume.
  • Pay close attention to the total number of competitive offerings in the trade area. 
  • Pay attention to the number of competitors in the same traffic pattern as the prospective site. 
  • Look not only at the number of competitors but also analyze their professionalism and service quality.
  • Pay attention to your competitors’ ability to respond to a new entry in the trade area and how many sites may be planned for future construction, including the number of locations zoned correctly for potential new competitors.

After the culling process has reduced the prospective sites to a few, a value decision must be made. Each site that is still an acceptable alternative has to be compared against the others from a cost and return standpoint. 

The cost analysis must include not only the land cost, but also the site work required prior to building.  For instance, if the site is clear of trees then there will be no additional costs for clearing and tree replacement.  If it is flat then it will not require grating and dirt haul-away.  Or if there is space for proper detention above ground then it will not require underground detention.  When viewed in these terms, the cost of a more expensive, but better prepared, site may equalize with a less expensive, less well prepared location.  When the best site is selected, ask your realtor to prepare comparables to ensure the asking price is fair. 

Once a site is selected it needs to be “tied up” so you can begin reviewing it comprehensively for feasibility.  There are many ways to tie up a site.  The most common is to sign a conditional purchase agreement (lease agreement) with the owner.  This agreement may or may not include the transfer of money (which is negotiable).  A good realtor has these types of contracts at their disposal.  The contract will specify a due diligence period during which you must complete your feasibility study. Either you or an engineering firm should perform the feasibility study.  The feasibility study is an in-depth investigation with the objective of uncovering all potential criteria which are not obvious and upon discovery will be difficult or expensive to correct.  For instance, sewer impact fees may be extraordinarily expensive, or your phase one environmental study may uncover contamination. The due diligence period needs to be long enough for you to complete the investigation, prepare site plans and construction documents, complete your business plan to verify funding approvals for the purchase of the property, and be approved for special or conditional use if required. At the end of the due diligence period, you either complete the transaction or move on to a different location.

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