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. Hi-
Tech 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.
Services

Hi-Tech will provide three services to its customers:

 Car washing (exterior)

 Car cleaning (interior)
 Car detailing

Market Analysis Summary

The car wash will be based in East Meadow, New York. This area has a number of benefits in
terms of the market that it will provide for the business. Over 40% of households in the
immediate neighborhood earn over $70,000 annually. Many people in the neighborhood own
and/or lease new cars and place great value on their cars and how they look. There are a large
number of car dealerships in the area--five within three miles of the proposed location for Hi-
Tech.

Market Segmentation

Hi-Tech segments its customers by type of car ownership. We believe that the type of car that a
person owns says volumes about their driving, and, therefore their car washing and detailing
requirements.

1. 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. The goal with these customers is to promote regular use of the wash
and detail service. 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.
2. 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. Both of these groups want to keep their cars in the best shape possible.
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. These owners will bring
their cars in for regular washes and occasional details.
3. Sports car owners: These people are often younger or middle-aged men and will
regard the look of their car as important. They will also pride themselves on the look of
their car and will have their car hand washed (at least) weekly. These drivers will have
an occasional detail, but will keep their cars so clean the detail will not be necessary very
often.
4. Lifetime owners: Many of these people have owned their cars for more than five or six
years, and are more likely to be women. They are attached to their cars as friends and
though it may be more sensible for them to purchase a new car, they will bring their car
in for a wash occassionally, just when the car is dirty. They like their cars to look
presentable, and want to keep it in good shape but are not tied up in the look of their car.
 For this reason, they will not have a detail carried out on their car unless they are selling
it.
5. Dealerships: There are five new and used car dealerships within three miles of the
proposed location of Hi-Tech. These dealerships often use outside car wash services to
detail their vehicles before they are put up for sale. In addition, there are fifteen other car
dealerships within a seven mile radius of Hi-Tech.
6. Local businesses: Some local businesses have fleets of cars and small vans that must be
kept clean to maintain their company image. These businesses will be looking for a cost
effective, efficient car washing service to perform this service, and will prefer to use a car
wash service during the week rather than during weekends, like the general public.

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. It will not be
difficult to attract customers during the summer months and on the weekends, the weekdays
however, especially in the winter, people will not think about having their cars washed. For this
reason, Hi-Tech will target people who will tend not to be restricted to these busy times.

 Business owners (new car owners) tend to be very busy people, but are often able to
make their own hours.
 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.
 Dealerships will need cars detailed and washed regardless of the time of the day and
week. This will supply a constant flow of traffic.
 Businesses will need their fleet cars washed during the week during regular business
hours.

Competition and Buying Patterns

There is two other hand car wash shop in nearby areas. It is quite new and is trying to compete
with automatic car washes by offering low prices. However, it is not targeting the customers who
seek quality cleaning.

The customers who Hi-Tech is targeting have their cars washed based on the quality of the
job. 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. The businesses that Hi-Tech targets will be more
cost conscious, so prices will be approximately 20% less for these customers to promote volume
usage.
Strategy and Implementation Summary

The key differentiator for Hi-Tech Car Wash is personal connections within the neighborhood
persons. For this reason, the sales and marketing focus will be on a one-to-one basis, with the
emphasis on gaining loyal and repeat customers as "friends" of the business. Hi-Tech, therefore,
will depend on word-of-mouth advertising for the immediate community.

Competitive Edge

Hi-Tech competitive edge will be less cost ,time and the quality and has an excellent reputation
and a myriad of both business and personal contacts. In addition,we have put a great deal of
emphasis on creating a system that is both fast and efficient, which will keep costs, in terms of
time spent per car, to a minimum.

Sales Strategy

Sales strategy is on a one-to-one basis. All customers will feel they are a valued friend of Hi-
Tech, and that all employees care about the care and upkeep of each vehicle. We must be aware
that there are low switching costs in the car washing industry, so we have to work hard to
develop and keep repeat customers.

Sales Forecast

The following chart forecasts sales based upon the Market Segmentation Strategy. Sales are
seasonal in this industry, tending to be higher in the warmer summer months, and to drop off in
the winter. However, 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.

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. and we felt it would be a perfect location for a
car wash service. 

Rent on the location has been negotiated and will be Rs 8000 per month. In addition, 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,one high-power water
pumps, two industrial vacuum cleaners, one generator set. All of the equipment will
be depreciated over three years.
Start-up Expenses:-

Start-up
Expenses
Legal
Stationery etc. 200
Brochures 2000
Consultants 0
Insurance 1000
Rent 8000
Expensed 110000
Equipment 0
Signs 3000
Building 100000
Materials
Building Labor 40000
Total Start-up 125420
Expenses 0
7.3 Projected Profit and Loss

The following Profit and Loss table illustrates income and expenses annually for the first year,
and for the next two years.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales 648000 1080000 1296000
Direct Cost of Sales 204000 276000 290000
Other 0 0 $0
Total Cost of Sales 204000 276000 290000
Gross Margin 444000 804000 1006000
Gross Margin % 68.51% 74.44% 77.66%
Expenses
Payroll 72000 72000 72000
Sales and Marketing and 25000 12000 12000
Other Expenses
Depreciation 110000 99000 89000
Utilities 24000 30000 32000
Insurance 12000 10000 8000
Rent 96000 120000 144000
Other 0 0 0
Total Operating Expenses 339000 343000 357000
Profit Before Interest and 105000 461000 649000
Taxes
Interest Expense 0 0 0
Taxes Incurred 0 0 0
Net Profit 105000 461000 649000
Net Profit/Sales 16.20% 42.68% 50.07%
7.4 Projected Cash Flow

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.

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales 600000 1000000 1200000
Cash from Receivables 48000 80000 96000
Subtotal Cash from 648000 1080000 1296000
Operations
Additional Cash Received
Sales Tax, VAT, HST/GST 0 0 0
Received
New Current Borrowing 0 0 0
New Other Liabilities 0 0 0
(interest-free)
New Long-term Liabilities 0 0 0
Sales of Other Current Assets 0 0 0
Sales of Long-term Assets 0 0 0
New Investment Received 0 0 0
Subtotal Cash Received 648000 1080000 1296000
Expenditures Year 1 Year 2 Year 3
Expenditures from
Operations
Cash Spending 400000 480000 510000
Bill Payments 33000 40000 48000
Subtotal Spent on Operations 430000 520000 558000
Additional Cash Spent
Sales Tax, VAT, HST/GST 0 0 0
Paid Out
Principal Repayment of 0 0 0
Current Borrowing
Other Liabilities Principal 0 0 0
Repayment
Long-term Liabilities 0 0 0
Principal Repayment
Purchase Other Current 0 0 0
Assets
Purchase Long-term Assets 0 0 0
Dividends 0 0 0
Subtotal Cash Spent 430000 520000 558000
Cash Balance 218000 560000 738000
7.5 Projected Balance Sheet

Hi-Tech' balance sheet illustrates a healthy financial position for this new company. The monthly
estimates are included in the appendix.

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets
Current Assets
Cash 21800 560000 738000
0
Accounts 20000 30000 32000
Receivable
Inventory 15000 20000 20000
Other Current 12000 12000 12000
Assets
Total Current 26500 622000 802000
Assets 0
Long-term
Assets
Long-term 30000 300000 300000
Assets 0
Accumulated 11000 99000 89000
Depreciation 0
Total Long- 41000 399000 389000
term Assets 0
Total Assets 67500 102100 119100
0 0 0
Liabilities and Year 1 Year 2 Year 3
Capital
Current
Liabilities
Accounts 15000 20000 20000
Payable
Current 0 0 0
Borrowing
Other Current 0 0 0
Liabilities
Subtotal 15000 20000 20000
Current
Liabilities
Long-term 0 0 0
Liabilities
Total Liabilities 15000 20000 20000
Paid-in Capital 50000 400000 300000
0
Retained 55000 140000 222000
Earnings
Earnings 10500 461000 649000
0
Total Capital 66000 100100 117100
0 0 0
Total Liabilities 67500 102100 119100
and Capital 0 0 0