Business Plan Outline Cover page Statement of financial need Table of contents 1. Executive summary 1.

1 Mission statement 1.2 Objective 1.3 Keys to success 2. Company summary 2.1 Ownership 2.2 Location 2.3 Facilities 2.4 Start-up costs 3. Services and products 3.1 Descriptions 3.2 Sourcing 3.3 R&D 4. Marketing summary 4.1 Consumer profile 4.2 Segmentation 4.3 Positioning statement 4.4 Market strategy 4.5 Sales forecast 5. Implementation 5.1 Production 5.2 Marketing 5.3 Distribution 5.4 Price 5.5 Promotion 5.6 Sales 6. Management 6.1 Summary 6.2 Organization 6.3 Management team 6.4 Personnel plan 7. Financial projections 7.1 Break-even analysis 7.2 Income statement 7.3 Cash flow 7.4 Balance sheet 7.5 Retained earnings 7.6 Financial position 7.7 Business ratios 8. Appendix A. Location analysis B. Demographics and traffic analysis C. Site plan D. Consumer survey E. Industry averages F. Demand forecast models G. Eq uipment list H. Detailed start-up costs I. Production inputs and MSDS sheets J. Resumes K. References and contacts R.R.

Creating a carwash business plan

A step-by-step model for writing an effective plan.
Summary: In the October 1999 issue of Professional Carwashing & Detailing the article, De veloping a carwash business model outlined a five-step process for developing a business model for a full-service carwash. The purpose of the modeling process was to develop a start-up plan to test the feasibility of a business concept. This process can be used to develop a formal business plan suitable for presenting to lenders and investors. This article outlines a sample business plan for a first-time owner/operator building a new full-service carwash. By Robert Roman

Why do you need a business plan? Unlike the modeling process mentioned above, which deals primarily with research, analysis and evaluation, business plans are based on actual and projected values and are designed to convince a specific audience (bankers, private investors, franchisers, etc.) that investing in your business makes sense. A business plan follows a simple outline (see Business plan outline in the sidebar). Heres a step-by-step guide to creating one for your carwash concept. 1. Executive summary 1.1 Mission statement Develop a mission statement that clearly defines the services your company will be dedicated to providing. Cover your core business and any peripheral or complementary services and products. 1.2 Objectives Clearly state your companys main objectives. This could include the amount of funding required for the project, how much commercial property is included in the purchase, what will be built and the operating profit that will be shown at each milestone. 1.3 Keys to success Describe the keys to your companys success. These must be clearly supported by elements within the plan.

For example, does the management team bring strong carwash experience to the project, does the proposed location have excellent demographics and traffic characteristics, are the projection statements conservative and realistic and what competitive advantages will your company gain from the industrialization of services (level of technology)? 2. Company summary Describe your companys business structure (sole proprietor, partnership or corporation). Include the facilitys street address, city, state and zip code. Describe the physical dimensions of the land and buildings, and the main features of each building. Include a copy of your site plan in the appendix. Provide a table that summarizes the major start-up cost centers. Include: property buildings site plan construction utilities equipment inventory professional fees impact fees closing costs operating capital miscellaneous expenses.

3. Services and products Describe each service and retail merchandise category you intend to offer. Provide a list of your vendors and the terms of payment. Describe any services or products you plan to research and develop in the future. 4. Marketing summary Identifying the appropriate target market is critical to the success of any business and is often the most difficult planning area for small business owners. Develop this part of the business plan in conjunction with a professional marketing consultant. 4.1 Consumer profile Determine the characteristics and needs of carwash consumers and determine a consumer group profile. This can be accomplished by using the results of the International Carwash Associations Study of Consumer Car Washing Attitudes and Habits (for information go to www.carwash.org). 4.2 Segmentation Decide which consumer segment(s) have the greatest potential for patronizing your carwash. This requires you to consider your companys objectives and strengths in relation to the level of competition and the size of the local market. Heres a segmentation example:

Benefit sought Desires quality, convenience and a good price Demographic traits College-educated, white-collar with higher income levels ($40K+) Lifestyle traits Family oriented; places premium on leisure time Level of consumption Usually washes several times per month
What Do Investors Want?

Demographic information to consider includes: age, gender, occupation, income, education, marital status, number of vehicles, type of housing and location. 4.3 Positioning statement Include a map indicating the number, type and location of each competitor within a 5 to 8 mile radius of your site. Describe each competitor in terms of their strengths and weaknesses. Identify the attributes of your competitors and select a position for your company that exploits your competitors weaknesses. 4.4 Marketing strategy A marketing strategy identifies and describes the services youll sell, how youll sell them, at what price and how youll promote them.

According to industry experts, this information is what investors will look most closely at in your business plan:

Unlike a tangible good, marketing a nonessential service such as full-service carwashing requires a strategy focusing on performance attributes including technical competence, R.R. interpersonal skills and client relationships. Marketing programs must create an image that emphasizes convenience of location, personalized service, flexible prices, fast service and long operating hours. Use segmentation to determine the final service mix and how competitive to set your prices.
Revenue Projection Methods

Experience in the field and personal net wo rth are very important Existing operating statements Realistic demand and sales forecasts (projection statements) Expert recommendation to support the projection statement Three-year projections for each profit center and department Solid demographics Business strategy that matches the local consumer market Return on investment

4.5 Sales forecast Monthly wash volume and sales will be the greatest indicator of success for this type of service business. Unfortunately, this is an area often difficult for small business owners to accurately project. Pie-in-the-sky sales projections (i.e.; forecast based solely on national average capture rate) are a sure way to get your plan rejected. Regardless of the methodologies you must account for seasonal variations expected for your sites geographical Revenue projection methods in the 5. Implementation use, the trend in sales that should be location. (See also sidebar.)

Sales and revenue projections must be more than an intellectual exercise. You will need to be creative and provide several different types of projection methods and supporting analysis that will serve as a sanity check. For example, you can use real-world examples by comparing your estimates and projections with those from carwashes that have similar locations and demographics. You can also examine how well other businesses are doing in the neighborhood by talking with regional managers from other firms. Supporting analysis can be based on tax records and utility bill records. Alan Bussey,Car Wash Loans

5.1 Production and operations Describe the production and operations management processes you will use to wash and detail vehicles. Include the queuing system, automated wash process, maintenance and

equipment repair program, health and safety program, technical and customer service training program, waste disposal, water treatment, etc. Describe any special features such as state-of-the-art equipment, chemicals or automated processes that will optimize productivity and quality and minimize operating costs. In the appendix, include a copy of the material safety data sheet for each chemical you will use. Provide a table that includes engineering estimates of expected operating costs expressed in dollars per month for three consecutive years. Some of the costs will include: chemicals, utilities, labor, mortgage, maintenance, advertising, property insurance, telephone, attorney fees, vehicle damage, merchant service, office expenses, sludge removal, accountant fees, equipment repair and workmans com p. 5.1 Promotion State how you will reach your customer base and how the marketing and promotional effort will be sustained during the first three years of operation. This includes a complete description of each component, its source and associated cost. See Marketing programs in the sidebar. 5.3 Distribution Outline your companys hours of operation and sales commission structure. Include copies of press releases, coupons, flyers and media advertisements in the appendix. 5.4 Prices Create a table that lists your services by category and include the price for each service. Include a copy of your actual service menu in the appendix. 6. Management summary In this section describe how the business will actually be run, who will do the work and how much they will be paid. State the principal investors and describe the type of relationship they will have with management. Include the names of each manager and describe their individual roles and responsibilities. Describe the management style that will be practiced. Describe who will be responsible for administrative, human resource and accounting functions. Provide a table that summarizes planned annual labor costs by department. In the appendix include an organizational chart, manager resumes and job descriptions for each staff position. 7. Financial summary

Marketing Programs Here are examples of a marketing program: Short-term program During the first sixty days, customers will initially be reached through press releases, a direct mail campaign, local newspaper ads and a grand opening. Weekly press releases will be issued for a period of 30 days prior to opening. A half-page advertisement will be placed in the consumer section of the local Sunday newspaper for a period of 60 days prior to opening. 10,000 coupons will be distributed by direct mail 30 days prior to opening. The short-term program will conclude with a grand opening that will include special introductory prices, prizes, free food and beverages and entertainment. Development and implementation of the short-term program will be contracted out to XYZ Marketing, Inc. Long-term program

Monthly direct mail coupons Quantity discounts Municipal discount program Clean car warranty Courtesy washes Charitable contributions Gender or age discount days Lower prices during off -peak periods

The financial summary includes an analysis of financial statements and a ratio analysis. The income or profit and loss statement, balance sheet, statement of retained earnings and the statement of changes in financial position provide lenders and investors with important information to evaluate the companys expected financial condition. Ratio

analysis provides a relative measure to assess the companys expected financial performance. Provide financial statements and ratios, determined in conjunction with your accountant, for at least three consecutive years. 7.1 Break-even analysis Break-even analysis (BEA) is used to determine the level of operations (sales in dollars and/or units) necessary to cover operating costs and to evaluate profitability with various levels of sales. BEA (units) = total fixed costs/(price - variable costs per unit) BEA (dollars) = total fixed costs/[1-(variable costs per unit/price)] 7.2 Income statement (profit and loss) Include a table of projected profit and losses (P&L) for three consecutive years: Calculate your Total sales by adding sales from your carwash, detail shop, lobby store and any other profit centers you will have. Then calculate your Total cost of sales by adding your expenses such as chemicals, utilities and inventory. Subtract the Total cost of sales from Total sales to arrive at your Gross margin. The next step is to arrive at your Operating expenses by adding advertising, payroll, payroll burden, leases, maintenance, repairs, vehicle damage, pit sludge removal, rent/mortgage, property tax, insurance, professional fees, merchant service, license fees, office expenses, depreciation and other miscellaneous expenses. To find your Profit before interest and taxes subtract your Operating expenses from the Gross margin. Next list your Interest expense and Taxes incurred. To calculate your Net profit: Profit before interest and taxes (Interest expense + Taxes incurred) Finally, find your Net profit/sales by dividing Net profit by Total sales. 7.3 Projected cash flow Chart your projected cash flow:
Year 1 Net Profit Plus Depreciation Change in accounts payable Change borrowing (repayment) Increase (decrease) other liabilities Long-term borrowing (repayment) Subtotal Year 2 Year 3

Less Change in inventory Change in other short-term assets Capital expenditures Dividends Subtotal

Net Cash Flow Cash Balance

7.4 Projected balance sheet Chart your projected balance:

Starting Balance Assets Short-term assets Cash Inventory Total Short-term assets Year 1 Year 2 Year 3

Long-term assets Liabilities and capital Accounts payable Short-term notes Other short-term liabilities Subtotal short-term liabilities Long-term liabilities Total liabilities Paid in capital Retained Earnings Earnings Total capital Total liabilities and capital Net worth (total assets - total liabilities and capital)

7.5 Retained earnings The statement of retained earnings reconciles the net income earned during the year and cash dividends paid with the change in retained earnings between the start and the end of the given year.

7.6 Financial position The statement of change in financial position provides a summary of the funds flow (relationship between the sources and uses of cash) over the period of concern. 7.7 Business ratios Ongoing businesses develop ratios from audited financial statements. However, ratios for a proposed business must be based on start-up projection statements. As such, a great deal of care must be exercised to determine reasonable and believable estimates. For a start-up business, the interpretation of ratios should be based on comparisons with industry averages and real world examples.

Robert Roman is a carwash operator and frequent contributor to Professional Carwashing & Detailing magazine. The author thanks Harvey Miller, Car Wash/Oil Lube Consultants; George Akers, George Akers Consulting; and Alan Bussey, Car Wash Loans, for their assistance with this article.
Copyright 1999 National Trade Publications, Inc. Reprinted with permission from Professional Carwashing & Detailing. For subscription and advertising information go to: www.carwash.com or call 518-783-1281.