"An entrepreneur without funding is a musician without an instrument."

Robert A. Rice Jr.'s quote reflects the primary and the most important stage of starting and running a business. What will you do without an initial investment to start your business journey? How will you take into consideration the establishment and purchase of required equipment? Can you ever think about starting a business without funding your business plan?

Raising capital for your business is the most challenging yet the most important task. Many brainstorming ideas transform into a business plan but fail to get executed due to lack of funding. According to Neil Patel, 90% of startups fail in their operations with inadequate knowledge on how to finance and from where to finance.

The same concept goes true for all business, irrespective of their nature and type. And here goes the car wash business in similar lines. Suppose you plan to start with your car wash business. In that case, the first thing you have to work upon is funding your business realistically and appropriately while gaining enough steam to keep the car wash business plan going and moving ahead.

To help you kickstart your business in alignment with your dreams, here are some of the best funding ways for your car wash business.

• Own Funds
• Friends and Family
• Partners
• Mortgage Loan
• Business Loan

Now, let us get into understanding each funding option in detail with their corresponding advantages and disadvantages. 

Own Funds

Also known as self-financing, it is one of the easiest ways of funding your business. However, you must consider all the ifs and buts before you make your start. The best is to stand in front of the mirror and analyze how strong is your financial standing. Standing there itself, go through the complete inventory of your assets, including saving accounts, fixed deposits, equity, and mutual funds. You can even consider real estate properties and automobiles that you possess because the same can be sold off for the business purpose. Further to that, it is best to seek professional advice and guidance to understand what percentage of your savings should you invest in and how you can proceed with self-financing your business. 

Pros:

• You know your limits in terms of cash availability to run your business. This can help you prioritize and categorize your expenditure for car wash tools, techniques, and equipment.
• You have complete ownership of your business. This means 100% profit is yours with increased revenue gains.
• You gain more control over your business. There is no complexity in managing partners and shareholders.
• You need not carry the burden of loan repayment and hefty interests. This will keep you stress-free all through your operations. 
• This is the easiest and quickest way of funding your car wash business. No hassles of visiting banks, connecting with partners, interest negotiation, and waiting for approvals.

Cons:

• With self-financing, your exposure to resources is limited. This, in turn, can restrict the growth of your business with regards to size and scope. 
• Like 100% profit is yours, so is 100% loss, if in case the venture fails at any given point of time. 
• There may be technical glitches and a lack of understanding of the depths of a car wash business when single-handedly managed by an entrepreneur. 
• Your funds can pose a threat to your family's financial requirements, including the need to maintain an emergency fund. 
• One more challenge of funding your business with your funds is poor networking if you are not a socially strong individual. 

Friends and Family

What do you think about borrowing funds from your family and friends? Precisely speaking, it can prove to be a good decision, provided you take it as a business and never intertwine the transaction with the emotional connection existing in a relationship. To have adequate funding support from friends and relatives, it is best to open your car wash business plan and strategies along with the long-term goal you aspire to achieve. This always is looked forward to a sensible choice of funding. However, the plan has to be clear; business and relationships are two different identities.

Pros:

• This provides an easy and quick way of getting the required investment for your car cleaning business. 
• It gives you the flexibility of repaying the loan at your convenience. This keeps you away from the challenges banks and financial lenders impose upon applying for a startup loan.
• You can even enjoy extended support to halt your payment while your business takes off the ground.
• The interest that you pay to friends and family is comparatively lower than what you will end up paying to a bank or any external financial lender. 
• Friends and family show more cooperation and support when it comes to lifting you emotionally in a business. This might back you up with improved confidence and faster growth.

Cons:

• One biggest disadvantage of funding your car business from family and friends is that there is no legal documentation, hence no proof of the discussed terms and conditions. 
• You may enter into tax liabilities without a documented proof of the funds invested into your car cleaning business. 
• There is, of course, social awkwardness when borrowing from your loved ones. If your business goes down at any given point in time, it can hamper your relationship. 

Find Partners

Partner financing is a way of strategic funding. At this point, a person shows interest in your business and agrees to invest in your car wash business to exchange mutually discussed profits. The profits can range from special arrangements for your products and distribution rights to sharing the car wash business resources and profit. It can be termed as an arrangement of sharing your profit margins. This proves to be a fund option that might work in your interest as it does not have any repayment schedules, only sharing of profits and, of course, even losses.

Pros:

• The partner financing options is a way to quick execution of your car wash business plan. This is because the documentation and legal processes are almost cut down to half compared to the loan taking the process from banks. 
• You stay free from paying the interest and repaying the loan because the arrangement here works to exchange your profits.
• You get a good market reach with your partner having a strong standing in your business vertical. This can help you leverage your business knowledge, make maximum use of your partner's distribution rights, and gain better market insights.
• This helps you start and run an informed, balanced, and meticulous car wash business operation. 

Cons:

• The first and foremost disadvantage of partner financing is that you share the ownership and control of your business. There is nothing that stays exclusively under your control. 
• When it comes to losses and liabilities, you and your partner both have to share the consequences. Hence, if your car wash business comes to the stake, your assets come to a toll. 
• Differences and conflicts are very common when you venture into partner financing. This is because the silent partner who funded the business and you as a functional partner have different viewpoints regarding strategic business direction, investment in different car wash equipment, resources required for technical skills, and designing the marketing strategies. 

Mortgage Loan

A mortgage loan is a loan provided by financial lenders or banks in return for any of your assets that work as collateral for the loan. It is mainly a secured type of loan with a fixed or reducing interest rate sanctioned against any immovable property like real estate property, gold, investment policies, or similar assets. Compared to other types of loans existing in the market, a mortgage loan is one of the most sensible loans because of the low-interest rate. However, you need to be cautious about borrowing the required funds because your assets are at stake here. 

Pros:

• A mortgage loan for your car wash business can prove to be an affordable loan. This is because the repayment amount is more manageable with a lower interest rate available against your property or asset. 
• You have the flexibility of scheduling your repayment term depending on your requirement. You can opt for short-term and pay a high amount every month or opt for long-term and reduce your monthly payments.

Cons:

• If you take it for the long-term, you are liable to pay heavy interest. This, in turn, states that the cumulative amount paid at the end of the repayment term can be a lot more than you borrowed. 
• One biggest disadvantage of a mortgage loan is that it is sanctioned against your property. So, if you fail to make the payment timely, you are at risk of losing your asset.

Business Loan

A business loan is a loan taken from a bank or financial establishment to start a new business venture. If you are aspiring to start your car wash business, you can certainly opt for a business loan. Banks and similar establishments are always the mainstays for startups, small and medium enterprises. However, this loan process is very lengthy and tedious, covering all the legal formalities, a secured loan with several benefits, and certain risks that might trap you at a later stage in your business journey. However, it is best to meticulously draw your car wash business plan and then put it to the funding approach with an appropriate strategy and understanding.

Pros:

• If you present your car wash business idea in a compelling and rewarding manner, the process of loan approval and disbursal become faster.
• With a timely loan resource from the bank, you can start with early operations and expand your market potential.
• You enjoy and preserve the ownership of your car wash business with no risk of losing your asset.
• You have complete control over your business because once the loan applications get approved, there is no interference from the commercial lender. They are only concern about their repayment schedules or EMIs that you are liable to pay.
• With the business loan received from a bank, you find yourself open to new ideas and opportunities in the car cleaning business. This eventually works to help you create an optimum balance between the funds you have and funds you have borrowed from the bank.
• With the business loan, you can even have tax benefits depending upon the category of your income slab.
• Quick money, you get a financial standing, and with that, there is easy and better reach to various car wash business resources like equipment, tools, machinery, and technologies. 

Cons:

• The approval has a lengthy process because the lender goes deep into understanding your business idea, agenda, and goals before actually approving the loan. Hence, if you fail to convince the bank personnel, this loan stays far away from your reach. 
• Banks often have a fluctuating rate of interest, which may hamper your business's financial functioning. 
• If you fail to propose your debt, the bank undergoes various unexpected procedures to get their money back. This is the most bothersome aspect of a business loan.
• Valuation of your business also comes to a toll, with heavy instalments being paid every month. 

The Bottom Line

So, now, the choice is yours! You can opt to go for any funding method after deeply understanding the pros and cons. Once you make up your mind with the type of business funding, we at KKE Autocare are there to stand beside you with all the equipment, tools, and machines you look to have for your business. Whether you go for an automatic car wash system, car detailing establishment, or a traditional car wash store, we have anything and everything to perfectly fit your business. 

Take a smart and wise decision, and undeniably success is yours!