At the 2024 Car Wash Show Australia, Tom Rockliff joined CWSA Managing Director Rory Hilton onstage during the presentation 'Uncover the Secrets to Identifying and Financing Your Ideal Car Wash Site' to dive into the best strategies and options available for financing car wash investments. Tom provided valuable insights to help prospective car wash owners navigate the complexities of the industry and make informed decisions by answering the key questions below.

At the 2024 Car Wash Show Australia, Tom Rockliff joined CWSA Managing Director Rory Hilton onstage during the presentation 'Uncover the Secrets to Identifying and Financing Your Ideal Car Wash Site' to dive into the best strategies and options available for financing car wash investments. Tom provided valuable insights to help prospective car wash owners navigate the complexities of the industry and make informed decisions by answering the key questions below.

A: One of the biggest issues we see is people running multiple sites through one business entity. This setup can become very messy when it comes time to sell, making it difficult for potential buyers and investors to assess the value of individual sites. Setting up your business properly from the beginning is crucial for smooth financing and the eventual sale.

A: There are several ways to finance a car wash business, depending on whether you are buying the business, the land, or upgrading equipment. Sale and leaseback arrangements are quite popular, especially with private equity firms, allowing business owners to sell the real estate and then lease back the business to free up capital. Vendor financing, on the other hand, is becoming less common due to the competitiveness of the market.

For equipment upgrades, we work with over 40 lenders to find the best terms. Options can range from 5-year terms for commercial loans to equipment financing for specific needs like automation in wash systems.

A: Lenders need to see accurate financials and clear business plans. We've had cases where vendors were unwilling to provide financial details, which makes it nearly impossible to secure financing. Lenders need to understand how their money will be repaid, so accurate financial data is essential. They also consider factors such as the experience of the applicant, property ownership, and the location of the car wash—metropolitan versus rural can make a big difference in the required deposit.

A: Car wash equipment is considered a tertiary asset, meaning it can be harder to secure financing compared to other types of equipment like vehicles. If the equipment is fixed in place, it cannot easily be repossessed, which increases the risk for lenders. As a result, lenders may require a higher deposit—sometimes up to 50% of the equipment cost.

A: The ideal client is someone with industry experience—at least two years—who owns property, has run a successful business, and has cash reserves. This makes it much easier to secure funding as it shows stability and a track record of success. New entrants to the industry can still get financing, but they may face more hurdles, including higher deposit requirements and more stringent terms.

A: Engage with an expert from the start. Whether it’s understanding financing options or structuring your business properly, having expert guidance can make all the difference. The car wash industry is exciting and has great potential, but it requires careful planning and strategic decision-making, particularly when it comes to financing.

Tom also emphasized the importance of making informed investment decisions and working closely with professionals to maximise returns. With the right strategy, financing a car wash business can be a successful venture, but preparation is key to navigating the unique challenges of the industry.