First way, is the traditional way in evaluating the value of any business related to its offering price. Secure the figure of the net, net income of the business, and then multiply that number by three. As an example, the business shows a net income of $80,000. Then the business is worth three times that net income, or $240,000.

This type of evaluation is very conservative. It assumes that in three years time you will get all the money back you paid for the business simply based upon the existing business’s net income, and without any changes whatsoever. You may have in your mind to make changes here and there that should increase the bottom line to more than the $80,000. However, to be conservative, you do not use those ideas or potential net income in your calculations. (Some very wise and successful people are able to do even better by only buying a business with a multiple of one times the net income, but they are very rare).

Somehow or other, you are so convinced that you can really make a lot more money if you do this or that for the business, that you start reasoning that if you do this or that, your net income would be $120,000. So you arrive at a multiple of net income to the offering price for the business of 3 times that projected amount which is now $360,000. So from the real and not projected income the multiple now lies between 4 to 5 times the net income. The new projected net income has now allowed you to offer more based on your projected evaluation. Just remember, the more you project of future income, the higher the offering price is allowable. The more you offer is based upon projections, and not real true current income. The more risk you will be taking. Many deals have been consummated by people who paid more than the general market wanted to pay, and their calculations proved correct by their success in making changes that truly affected the profitability of the business. So the others who were not willing to pay the premium, lost securing the deal because their offers were too low; that is what bidding is all about, and knowing how much to pay for anything.

So the multiple can vary depending on other factors other than the net income, and this calls for the second way to evaluate what price you are willing to pay. This way is based on what I shall call “The Hidden Assets”. The assets and good will of the business, or other heretofore items that were not allowed into your calculations.

Let’s look at each one of these contributing evaluation factors, and see if we can calculate what they are worth in adding to our net income to determine the gross estimated funds that could alter our offering price, or to accepting the offer made by the seller.

1. Good Will

Usually not considered since it could vanish over night depending on an array of factors. But there may be long standing contracts with clients, or a special historical characteristic of age (the business may have a great reputation for fifty years), or no competition. You may discover other factors where ordinarily Good Will is not considered that are worth something in the purchase price that other buyers do not see, that you do.

Good Will Value

$____________________

2. The Lease

You may get a lease that is far below the current or projected rent in the area. It may be a lease for 30 to 50 years. This has value that can be added to your offer.

The Lease’s Value

$_______________________

3. New Equipment

Then there is some new equipment that was just recently been installed that vastly improved the potential of the business. Equipment that you might have had to purchase if you bought the car wash. This then could have a value in your evaluation.

The Value Of New Equipment

$_________________

4. A Radical Change

A radical change that will soon occur that would affect the business’s income and exposure spectacularly.

The town has just announced that a new road is going to be built, or across from the business a Mc Donald and a Home Depot will be built. How much will that be worth in two years from now, or in ten years from now. So you now add up your estimates for the value of the good will, the lease, the value of the new equipment, a radical change which includes the potential of your new neighbor’s businesses presence in front of your location, or any other dramatic change. Add that on to the net, net income, and your multiple for purchasing the business increases. This is the second way to determine how much you can pay for the business.

These two methods, The Conservative One, or The Liberal One, can be used depending upon your inclinations, and will vary upon your direct personal evaluations, or any other ideas where you determine that should be added to the net income. This would permit you to pay more for the business than the standard conservative 3 times multiple mentioned above.

1. Good Will $_______
2. The Lease Value $_______
3. The Value Of New Equipment $_______
4. Future Radical Change $_______
5. New business Concept* $_______
6. “Your Idea” $_______

Total Hidden Asset Factors to add to Net Income to determine the possible purchasing price
Hidden Assets Total $___________
Net Income + Hidden Assets = Total Dollar Evaluation Times 3 = Projected Negotiating Price $_______

*Adding on a Express Lube, Convenience Store, or any other business that could generate added income and net income to the car wash.

The only last caveat is don’t buy a doggie location ever. The location must be superb or walk away quickly. Our business is still based on the three most important factors in deciding whether to buy or not to buy. LOCATION, LOCATION, and finally LOCATION.

Philip Pearl CPA, of TBC Brokers found at http://www.bizbuysell.com/tbcbb.htm (I sent you the full address on Monday use it or I will send it again) assisted me in the writing of this chapter, and whom I consider one of the best business brokers in the country. Looking for a business, contact him and you will be well rewarded. Email .

The car wash business is predicated on having the best location. If the location does not meet the criteria of a heavy traffic count moving at moderate speeds, or with interspersed traffic lights that slow the speed down in front of your location, it will not be the right location. The “three rule” fits car washing more than any other type of business. Location, location, and location are the three requirements for the right positioning of a car wash business.

Your first task is to research the demographics. How many people live within a five-mile radius where you want to build or buy your business? Is it industrial, residential or a combination of both? What is the mean income of the people in the area? Is the trend in population indicative of growth or decline? What is the average daily traffic count of cars passing in front of your selection?

Check with the municipality or county administrative offices to learn more about your market area. If data is lacking, for instance, the daily traffic count, then use your investigative skills to find out. Sit in front of the location with a hand held meter and click the number of cars that pass by at different hours and extrapolate the daily and hourly average of passing traffic.

In addition to these demographic factors, your location should have easy ingress and easy egress, without disturbing the existing traffic flow. The size of the location should be as much land as possible to be able to develop both the car wash, and the complementary businesses that will allow for cross marketing from one to the other: e.g. gas, convenience store, oil change, donut shop, etc. Must you have them all? No, but the more you have at your location either under your control or leased out to other business people, the more prosperous and successful your car wash business will be.

You will also need to know if the location is zoned for industrial, commercial, or car wash use. If it is, then you are set. If not, you will need to get a permit for operating a car wash there. This will take time, patience, and knowing the right people. In many cases it’s a matter of finding someone who has influence with the local board who will approve it. A good attorney is essential. Here, it is who you know and not what you know that counts.

You might have to do some difficult selling to get the permit. But it can be achieved even though it might take more time than you planned. Remind the planning board or town council that your carwash will attract new customers to your market area, be a convenience for existing businesses and residents, and serve as an environmental steward to your community.

From my book “Make Your Fortune Washing Cars”

SERVICES

• Espresso Bar with full time server-coffee, espresso, soup, hot dogs, chili and cold slushies…can be expanded
• Detailing and Shampooing
• 10 minute oil/lube
• Tire rotation
• Fuel injection service
• Transmission flush
• Radiator flush
• Emission service
• Differential service
• Brake service and replacement
• Light mechanical
• Spectacular Full Service Car Wash

PERSONNEL
The Company currently employs 6 to 19 persons in the car wash depending upon day of week and weather. The Company employs 4 persons in the oil/lube service.

ASSETS

• 135’ tunnel
• New state-of-the-art blower system installed 11/1/11
• Outside vac installed 2 years ago
• Conveyor system 4 years old
• Coffee/Espresso Bar recently installed
• 3 oil/lube lifts
• Compressors
• Oil guns
• 500 gallon above ground tank for waste oil
• Two 1,000 gallon above ground tanks for fresh oil
• Brand new inner wall in tunnel installed 10/28/11
• Various other items

EXPANSION OPPORTUNITIES

• The business is run absentee. The owner lives in Florida. He employs two extra managers which would not be needed if the business were run by an owner/operator, thus saving in excess of $160,000, not to mention the improved hands-on operation which should significantly add to revenues and profits.
• Currently a bay is being rented to a window tinting business at $30,000 a year. The new owner should take over that service and benefit from sales and profits far in excess of the rental income.
• Expand hours of operation up to as much as 24/7. The location is perfect for such an operation. There’s a company UBC that owns 20 car washes operating 24/7.
• Build another lube bay. The Company is currently running at capacity and is turning away customers at peak times.
• Add Lottery; the Espresso Bar beckons for this.
• Build a Nail Salon on the second floor. The area, including many nearby office buildings, is in need of such services. It would also cross sell with all the other service offerings.
• Use waste oil for heating the buildings.
• The owner has had off and on conversations with the adjacent property owner about a joint venture to develop a multi-story office building. Zoning permits up to 40 stories. This certainly would be an incredible project for the future.

DEMOGRAPHICS

• City population 273,000 people
• Households 91,000
• Density 11,500 persons per square mile
• An established middle income urban community with a defined commercial district
• Excellent highways and transportation network making it an attractive place to reside and work
• The city has undergone significant redevelopment in recent years. Major new office, commercial and residential construction has been taking place to a tremendous degree. Existing buildings that were once vacant and unwanted are being renovated and leased up. Investors have been buying vacant or other buildings in poor condition especially in the downtown area, upgrading them to compete for corporate clients, and achieving superior income.
• There have been numerous projects over the last few years aimed at making the City an entertainment destination. Many of these projects are in close proximity to the Car Wash and have had a significant influence on property values in the surrounding areas. The neighborhood is within walking distance of the densely developed downtown commercial district. The area is home to municipal, county and federal government services as well as four universities, twenty-eight elementary schools, two police precincts, four fire houses, and a library. Commercial office and retail development is extensive in the area surrounding the Car Wash. The Car Wash is considered to be in the heart of the City’s downtown retail district.

FINANCIAL HIGHLIGHTS

• Revenues…….1,861,500
• Cost of Sales….300,950
• Gross Profit….1,560,550
• Expenses…….509,832
• Profit…….1,050,718

Footnote: the above financial highlights assumes the purchase of the property. If the buyer elects to lease the property, then a rent factor needs to be imputed.

ASKING PRICE

• Business and Equipment……$3,400,000
• Inventory..approx………………..58,000
• Land and Buildings…………..5,200,000
• If buyer prefers to lease land and building, owner will offer a long term lease with an option to buy the land and buildings
• Seller financing available to qualified buyer

Business Type: Established business

Business Category: Services – Auto Repair, Parts & Services

Location: Essex County, New Jersey

Asking Price: $3,400,000

Gross: $1,861,500

Cash Flow: $1,050,718

FF&E: $600,000+ (included in the asking price)

Inventory: $58,000 (not included in the asking price)

Real Estate: $5,200,000 (not included in the asking price)

Interested in purchasing? Please contact us.

Your towels may lose there moisture if not kept in a closed container and they fail to effectively do their job of cleaning and polishing your windows. If your towels do lose their moisture after a few hours of standing around refresh them by washing them anew. Of course if you are very busy the chances are that your towels will not lose any moisture at all before they are used.

Always keep them in your cooler with the cover on. In the bottom of the cooler place a very wet moist bath towel. Place your window towels on top of the wet towel and close the container. Moisture from the wet towel will fill the cooler with moisture and help keep your towels moist and ready to use. In the summer time or when the weather is extremely hot use a second towel on top of the towels you have placed in the cooler. Now the moisture will be increased from two directions.

If you are not getting consistently clean windows, or you see some streaking, call us and we will diagnose the problem and help you to solve the problem in a number of ways. We now have a few hundred Crystal Clear Window Cleaning Users, and we have our trouble shooting down to a science. Call Leo or Ira at 1-800-872-8695 and we will work with you until you fully satisfied and you are achieving the perfect windows we promised you.

We are always working to improve our system. If you have any suggestions to help us, call us and we will be most eager to hear your ideas which we will relay to all the other users. Thank you.

Ira A Feinberg, The Dean Of Clean, 40 years of dedication and innovation for the car wash industry.

Provide a high quality towel for every customer who wishes to add the finishing touches to their vehicle. Charge them $2.00 only one time. They take the towel home with them and when they return they exchange the soiled towel for a new
clean one at no cost to them.

Provide a high quality window towel injected with Hot Glass® Window Cleaner Charge them $2.00 only one time. They take the towel home with them and when they return they exchange the soiled towel for a new clean one with the Hot Glass® Window Cleaner in the towel at no cost to them.

Now they always have special towels to clean the body of the car and polish the windows, and even be able to clean the interior console and dash. This program
will bring them back again and again. The word of mouth service with some advertising will bring you many more customers.

This program has been tested and proven by an outstanding car wash operator who has found incredible success with it.

Your cost will be $4.84 a day with our special finance program, and of course
you will need extra towels as the program advances. We provide you with 120 towels to start you off and with our unique “Crystal Clear Window and Body Cleaning System® a US Patented System.

Call us at 1-800-872-8695 for more details, and to place your order.

Description: E-Series 20-pound capacity high-performance washer-extractor

FREE – 1yr Panaram Intl. Phone-based Technical Support ($500 Value)

With a Modified Energy Factor (MEF) of 2.21 and a Water Consumption Factor (WCF) of 5.03, the 20-pound capacity model is listed by ENERGY STAR as the most energy-efficient washer in its class.

The freestanding design of E-Series commercial front load washer allows for quick installation and same-day operation.

E-Series commercial front load washers quietly and gently reach extract speeds up to 354 G-force, about 250 G-force more than most hard-mount washers. The result is reduced dry time, operating time, utility consumption and labor expense. By cutting dry time, heat exposure and mechanical action are reduced, resulting in less linen wear.

Documents: Brochure, Warranty Bond, Technical Specification, Bid Specification – Logi Control, Parts Manual, ASDFADS, Service Manuals

Item Number: EH020

For Pricing: Please contact us and provide the item number above. Leasing options available

Description: E-Series 30-pound capacity high-performance washer-extractor.

FREE – 1yr Panaram Intl. Phone-based Technical Support ($500 Value)

The freestanding design of E-Series commercial front load washer allows for quick installation and same-day operation.

E-Series front load commercial washers can use as little as 13.4 gallons of water, while most topload washers consume 31-40 gallons. Less water used equates to less water heated and additional savings in gas and electricity.

E-Series commercial front load washers quietly and gently reach extract speeds up to 354 G-force, about 250 G-force more than most hard-mount washers. The result is reduced dry time, operating time, utility consumption and labor expense. By cutting dry time, heat exposure and mechanical action are reduced, resulting in less linen wear.

Documents: Product Brochure, Warranty Bond, Technical Specification, Bid Specification – Logi Control, Bid Specification – Inteli Control, Parts Manual, Service Manuals

Item Number: EH030

For Pricing: Please contact us and provide the item number above. Leasing options available

Description: E-Series 40-pound capacity high-performance washer-extractor.

FREE – 1yr Panaram Intl. Phone-based Technical Support ($500 Value)

The freestanding design of E-Series commercial front load washer allows for quick installation and same-day operation.

E-Series front load commercial washers can use as little as 13.4 gallons of water, while most topload washers consume 31-40 gallons. Less water used equates to less water heated and additional savings in gas and electricity.

E-Series commercial front load washers quietly and gently reach extract speeds up to 354 G-force, about 250 G-force more than most hard-mount washers. The result is reduced dry time, operating time, utility consumption and labor expense. By cutting dry time, heat exposure and mechanical action are reduced, resulting in less linen wear.

Documents: Product Brochure, Warranty Bond, Technical Specification, Bid Specification – Logi Control, Parts Manual, Service Manuals

Item Number: EH040

For Pricing: Please contact us and provide the item number above. Leasing options available.

Description: The 55-pound Pro-Series Washer-Extractor.

FREE – 1yr Panaram Intl. Phone-based Technical Support ($500 Value)

More than 90% of the costs associated with laundry room productivity can be positively impacted by Continental’s Pro-Series High Performance Washers*. Here’s how:

Labor (50-60%) Labor is the single largest cost of an on-premise laundry!
- Quick installation allows for immediate production, virtually no time is lost.
- High G-force extraction reduces time lost due to bottlenecks created at the dryer, as well as shorter wash cycle times.
- Features on the PM Control such as auto programming and delayed start can significantly reduce labor expenses.

Linen Replacement (8-12%)
- Reduced dry time due to high G-force extraction decreases linen damage and resulting linen replacement costs.
- The controllable wash time feature on the PM Control protects linen from unnecessary processing and chemical exposure, further increasing linen life.

Chemicals (7-10%)
- The thermostatically controlled temperature and programmable fill levels using the PM Control allow you to control wash variables that can significantly reduce chemical consumption and cost.

Utilities (7-10%)
- High G-force extraction reduces dry time and therefore cuts the utility consumption associated with drying.
- Programmable fill levels and no-sump design reduce water/sewer volume and related costs.

Equipment Replacement (6-9%)
- The soft-mount design and suspension system reduce the amount of stress on the machine, therefore increasing the life of the washer.
- Reduced dry time dramatically extends the life of drying tumblers.

Other (4-7%) Maintenance, Insurance, Financing
- No on-going maintenance concerns relating to anchor bolts and concrete.
- The PM Control provides self diagnostics for easy servicing.
- Continental’s 5/3 year limited warranty assures operational cost control.

Documents: Product Brochure, Water Recovery Brochure, Warranty Bond, Technical Specification, Bid Specification, Bid Specification – Water Recovery, Parts Manual, Service Manuals

Item Number: H2055

For Pricing: Please contact us and provide the item number above. Leasing options available.