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Business Plan Sekhon

Business Plan Sekhon

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Published by: Raj Kamboj on Apr 26, 2011
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Car Wash Business Plan

Hi-Tech is a prominent hand car wash serving the local community. Hi-Tech will be providing customers with three services: exterior car washing, interior cleaning, and compounding. HiTech will target three main groups of customers: individual car owner and leasers, car dealerships, and local businesses.

Executive Summary
Business Hi-Tech will be providing customers with three services: exterior car washing, , interior cleaning, and compounding. Hi-Tech has no true competitors that are trying to offer a high quality service for a reasonable rate. Most are trying to compete on price alone. Hi-Tech ability to provide a high quality service, both in regards to the actual washing as well as customer service is all based on their ability to find the best employees. Hiring the best employees is cost effective because it decreases HR costs associated with turnover and other employee costs. Hiring the best employees and making sure that they are well taken care of ensures that they in turn take care of the customers. Study after study proves that a happy employee is far more likely to provide the highest level of customer service compared to an employee who is not happy and feels that they are being taken advantage of. The Customers Hi-Tech will target three main groups of customers: individual car owner and leasers, car dealerships, and local businesses. The surrounding area is quite affluent, 40% of the residents earn over 50000 a Month. Consequently, they have nice cars and want them to look nice. There are Four different car dealerships within a three-mile radius which will require car washing services for the various fleets. Lastly, there are many different local businesses that have company cars and that require clean appearances. The objectives for Hi-Tech Car Wash and Detail Service are: 1. To be viewed as a premium car wash and detail service in ludhiana. 2. Maintain a modest, steadily growing net profit margin. 3. Expand to two locations after third year of operation.

Mission The mission of Hi-Tech is to provide top-quality washing service for luxury car owners in ludhiana. Hi-Tech will work to keep employees satisfied in order to maintain impeccable customer service.

Market Segmentation Hi-Tech segments its customers by type of car ownership. Older luxury car owners: These people have either owned their high-end luxury cars for several years or are unable to afford the expense of a new luxury car but want the feel of relaxed driving. This area has a number of benefits in terms of the market that it will provide for the business. 4. They like their cars to look presentable. Many people in the neighborhood own and/or lease new cars and place great value on their cars and how they look. Lifetime owners: Many of these people have owned their cars for more than five or six years. Both of these groups want to keep their cars in the best shape possible. just when the car is dirty. they will bring their car in for a wash occassionally. and want to keep it in good shape but are not tied up in the look of their car. . New York. The aim is to inform these customers that Hi-Tech will keep their car looking as good as it did the day they drove it off the lot. Those who have bought second-hand cars will often spend many hours in their cars and will place high importance on keeping their cars looking good.000 annually. 2. Sports car owners: These people are often younger or middle-aged men and will regard the look of their car as important. therefore their car washing and detailing requirements. New car owners: Owners of newer cars are most likely to use a hand car washing service. These owners take great pride in their cars and will bring them often to the wash and detail service. We believe that the type of car that a person owns says volumes about their driving. 3. They are attached to their cars as friends and though it may be more sensible for them to purchase a new car. These owners will bring their cars in for regular washes and occasional details. and are more likely to be women. They will also pride themselves on the look of their car and will have their car hand washed (at least) weekly. The goal with these customers is to promote regular use of the wash and detail service. There are a large number of car dealerships in the area--five within three miles of the proposed location for HiTech. and. but will keep their cars so clean the detail will not be necessary very often. 1. These drivers will have an occasional detail.Services Hi-Tech will provide three services to its customers: y y y Car washing (exterior) Car cleaning (interior) Car detailing Market Analysis Summary The car wash will be based in East Meadow. Over 40% of households in the immediate neighborhood earn over $70.

efficient car washing service to perform this service. Businesses will need their fleet cars washed during the week during regular business hours. people will not think about having their cars washed. there are fifteen other car dealerships within a seven mile radius of Hi-Tech. It is quite new and is trying to compete with automatic car washes by offering low prices. This will supply a constant flow of traffic. For this reason. The businesses that Hi-Tech targets will be more cost conscious. it is not targeting the customers who seek quality cleaning. especially in the winter. It will not be difficult to attract customers during the summer months and on the weekends. Target Market Segment Strategy The strategy behind Hi-Tech target segmentation is to attract customers who will be repeat users and will frequent the business in the typically quiet times for a car wash business. and will prefer to use a car wash service during the week rather than during weekends.For this reason. They do not mind spending a little more each week to have their car washed and waxed in order to keep the paint work in excellent shape. Retired people (older luxury car owners) are not restricted by typical work schedules so will be able to frequent the car wash during the week. Local businesses: Some local businesses have fleets of cars and small vans that must be kept clean to maintain their company image. Competition and Buying Patterns There is two other hand car wash shop in nearby areas. but are often able to make their own hours. Hi-Tech will target people who will tend not to be restricted to these busy times. These dealerships often use outside car wash services to detail their vehicles before they are put up for sale. they will not have a detail carried out on their car unless they are selling it. Dealerships will need cars detailed and washed regardless of the time of the day and week. like the general public. These businesses will be looking for a cost effective. In addition. the weekdays however. y y y y Business owners (new car owners) tend to be very busy people. 5. 6. However. so prices will be approximately 20% less for these customers to promote volume usage. Dealerships: There are five new and used car dealerships within three miles of the proposed location of Hi-Tech. The customers who Hi-Tech is targeting have their cars washed based on the quality of the job. .

in terms of time spent per car. tending to be higher in the warmer summer months. All customers will feel they are a valued friend of HiTech. Sales are seasonal in this industry. In addition. In addition. and that all employees care about the care and upkeep of each vehicle. with the emphasis on gaining loyal and repeat customers as "friends" of the business. Sales Strategy Sales strategy is on a one-to-one basis. therefore. we will aim to flatten sales across the sales cycle by targeting segments that will want to keep their cars clean and looking good year round. insurance for the business will be approximately Rs 1000 per month and will be paid by direct debit on a monthly basis. Expensed equipment includes one automatic car washer. Financial Plan The company is solely owned by Anupinder Singh and Harmeet Singh and will be funded by an initial personal investment in equal partnership. We must be aware that there are low switching costs in the car washing industry. to a minimum. All of the equipment will be depreciated over three years. . Competitive Edge Hi-Tech competitive edge will be less cost . Sales Forecast The following chart forecasts sales based upon the Market Segmentation Strategy. Hi-Tech. two industrial vacuum cleaners. which will keep costs.one high-power water pumps. the sales and marketing focus will be on a one-to-one basis. and to drop off in the winter. For this reason. and we felt it would be a perfect location for a car wash service. will depend on word-of-mouth advertising for the immediate community.Strategy and Implementation Summary The key differentiator for Hi-Tech Car Wash is personal connections within the neighborhood persons. so we have to work hard to develop and keep repeat customers. Rent on the location has been negotiated and will be Rs 8000 per month.time and the quality and has an excellent reputation and a myriad of both business and personal contacts. one generator set.we have put a great deal of emphasis on creating a system that is both fast and efficient. However.

and for the next two years.44% 72000 12000 99000 Year 3 1296000 290000 $0 290000 1006000 77. Pro Forma Profit and Loss Year 1 Sales 648000 Direct Cost of Sales 204000 Other 0 Total Cost of Sales 204000 Gross Margin 444000 Gross Margin % 68.51% Expenses Payroll 72000 Sales and Marketing and 25000 Other Expenses Depreciation 110000 Year 2 1080000 276000 0 276000 804000 74.3 Projected Profit and Loss The following Profit and Loss table illustrates income and expenses annually for the first year.66% 72000 12000 89000 .Start-up Expenses:Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance Rent Expensed Equipment Signs Building Materials Building Labor Total Start-up Expenses 200 2000 0 1000 8000 1100000 3000 100000 40000 1254200 7.

VAT. VAT.68% 32000 8000 144000 0 357000 649000 0 0 649000 50. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax. HST/GST Paid Out Principal Repayment of Year 2 Year 3 600000 48000 648000 1000000 80000 1080000 1200000 96000 1296000 0 0 0 0 0 0 0 648000 Year 1 400000 33000 430000 0 0 0 0 0 0 0 0 0 1080000 Year 2 480000 40000 520000 0 0 0 0 0 0 0 0 0 1296000 Year 3 510000 48000 558000 0 0 . Pro Forma Cash Flow Year 1 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax.Utilities Insurance Rent Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales 7.20% 30000 10000 120000 0 343000 461000 0 0 461000 42.4 Projected Cash Flow 24000 12000 96000 0 339000 105000 0 0 105000 16.07% The following Cash Flow table illustrates that if Hi-Tech meets projected sales. it will have positive cash flow after half a year of operations.

5 Projected Balance Sheet Hi-Tech' balance sheet illustrates a healthy financial position for this new company.Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Cash Balance 0 0 0 0 0 430000 218000 0 0 0 0 0 520000 560000 0 0 0 0 0 558000 738000 7. Pro Forma Balance Sheet Year 1 Assets Current Assets Cash 218000 Accounts 20000 Receivable Inventory 15000 Other Current 12000 Assets Total Current 265000 Assets Long-term Assets Long-term 300000 Year 2 Year 3 560000 30000 20000 12000 622000 738000 32000 20000 12000 802000 300000 300000 . The monthly estimates are included in the appendix.

Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital 110000 99000 410000 399000 89000 389000 675000 1021000 1191000 Year 1 Year 2 Year 3 15000 0 0 15000 0 20000 0 0 20000 0 20000 0 0 20000 0 20000 300000 222000 15000 20000 500000 400000 55000 140000 105000 461000 649000 660000 1001000 1171000 675000 1021000 1191000 .

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