May 2001

This sample business plan has been made available to users of Business Plan Pro , business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of text may have been omitted from the original plans to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at [email protected]. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526. Copyright Palo Alto Software, Inc., 1995-2002

Confidentiality Agreement

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Table of Contents
1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 6 7 8 8 8 8 9 9 10

2.0

3.0 4.0

5.0

6.0 7.0

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 6.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 12 13 14 15 17 17

Soapy Rides Car Wash

1.0 Executive Summary
Soapy Rides is a prominent hand car wash serving the East Meadow, Long Island, NY community. Soapy Rides will be run by Mark Deshpande, of the prominent Deshpande family. The Deshpande family has been serving the Long Island area with a car repair business and property development /management for over 30 years. Mark will be leveraging the incredible good will and brand recognition of the Deshpande family name to quickly gain market penetration. The Business Soapy Rides will be providing customers with three services: exterior car washing, , interior cleaning, and detailing. Soapy Rides 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. Soapy Rides' 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 Soapy Rides 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 $70,000 a year. Consequently, they have nice cars and want them to look nice. There are five 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. Management The strength of Mark's experience and his family's name equity and assistance is Soapy Rides' competitive edge as well as a significant asset. Mark has been involved in the family's car repair business for the last ten years. He has worked his way through the organization and has been the manager for the last five years overseeing operations of $1.2 million annually. Before the family venture, Mark received his MBA from Cornell University. With 30 years invested in the community, the Deshpande family name has generated significant value as a fair, active member of the community. Lastly, Soapy Rides will be able to leverage several of the Deshpande's for their business expertise. Soapy Rides is positioning itself as the premier hand car wash serving the Long Island area. Mark has forecasted a 20% market share. The business will generate a 95% gross margin and an 11% net margin after year one and 20.79% after year three. By year three the business will have developed a yearly net profit of $48,000 .

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Highlights

$250,000

$200,000

$150,000

Sales Gross Margin Net Profit

$100,000

$50,000

$0 2002 2003 2004

1.1 Objectives
The objectives for Soapy Rides Car Wash and Detail Service are: 1. 2. 3. 4. To be viewed as a premium car wash and detail service in East Meadow. Maintain a gross profit margin of over 95%. Maintain a net profit margin of 10-15%. Expand to two locations after third year of operation.

1.2 Mission
The mission of Soapy Ride is to provide top-quality washing and detail service for luxury car owners in East Meadow, NY. Soapy Rides will work to keep employees satisfied in order to maintain impeccable customer service.

2.0 Company Summary

The company is solely owned by Mark Deshpande and will be funded by an initial investment of $30,000. Soapy Rides is New York State registered C corporation.

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2.1 Company Ownership
The company will be solely owned by Mark Deshpande. Mark has been in the car industry all his life, having grown up in the family car repair business. He came across the location in East Meadow purely by accident and he felt it would be a perfect location for a car wash service.

2.2 Start-up Summary

The start-up expenses for Soapy Rides will be financed by Mark Deshpande, from the profits he made in selling his part of the family car repair business. The property on Hempstead Road will be leased in April 2001 for a minimum of three years, with the option to extend the lease for another three years after that. Mark is working with the family lawyer to set up incorporation and to discuss lease issues before the business is launched. He is working with a local graphic designer to develop a logo, letterhead, and company brochures. Although Mark has been in the car repair business, he has not been in the wash and detailing business, which is a very different service (quick turnaround per car is incredibly important). For this reason he is working with an acquaintance to set up the system that will ensure efficient service even during peak usage. Rent on the location has been negotiated and will be $1,200 per month. In addition, insurance for the business will be approximately $200 per month and will be paid by direct debit on a monthly basis. Expensed equipment includes three high-power water pumps, two industrial vacuum cleaners, two computer terminals, and one cash register. All of the equipment will be depreciated over three years. The location was previously used as a quick stop automobile service shop, so it is set up to move vehicles quickly through the premises, but does not have all the necessary systems in place to host a car wash and detail facility. The services of a contracting company will be sought to convert the use of the facility and to improve the customer waiting room facilities.

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Table: Start-up Start-up Requirements Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance Rent Research and Development Expensed Equipment Signs Building Materials Building Labor Total Start-up Expenses Start-up Assets Needed Cash Balance on Starting Date Start-up Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Total Requirements Funding Investment Investor 1 Investor 2 Other Total Investment Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Current Liabilities Long-term Liabilities Total Liabilities Loss at Start-up Total Capital Total Capital and Liabilities $30,000 $0 $0 $30,000 $0 $0 $0 $0 $0 $0 ($10,050) $19,950 $19,950 $500 $400 $450 $0 $200 $1,200 $300 $4,100 $700 $1,200 $1,000 $10,050 $8,700 $250 $1,000 $9,950 $10,000 $19,950 $30,000

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Start-up

$30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Expenses Assets Investment Loans

3.0 Services
Soapy Rides will provide three services to its customers: Car washing (exterior) Car cleaning (interior) Car detailing.

4.0 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 Soapy Rides.

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4.1 Market Segmentation
Soapy Rides 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 Soapy Rides will keep their car looking as good as it did the day they drove it off the lot. 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. 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. 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. Dealerships: There are five new and used car dealerships within three miles of the proposed location of Soapy Rides. 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 Soapy Rides. 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.

2.

3.

4.

5.

6.

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Market Analysis (Pie)

New Car Owners Older Luxury Car Owners Sports Car Owners Lifetime Owners New and Used Car Dealerships

Table: Market Analysis Market Analysis Potential Customers New Car Owners Older Luxury Car Owners Sports Car Owners Lifetime Owners New and Used Car Dealerships Total Growth 10% 15% 15% 10% 7% 12.28% 2001 7,200 12,500 6,500 17,000 9 43,209 2002 7,920 14,375 7,475 18,700 10 48,480 2003 8,712 16,531 8,596 20,570 11 54,420 2004 9,583 19,011 9,885 22,627 12 61,118 2005 10,541 21,863 11,368 24,890 13 68,675 CAGR 10.00% 15.00% 15.00% 10.00% 9.63% 12.28%

4.2 Target Market Segment Strategy

The strategy behind Soapy Rides 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, Soapy Rides 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.

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4.3 Service Business Analysis
The hand car washing business in East Meadow consists of many small competitors. Everything from local children raising money for their youth group on a Saturday by cleaning cars, to the automatic car wash machines, are competition for Soapy Rides. However, these two alternatives aim to meet the needs of the price-conscious individuals who are choosing the service simply so they do not have to clean the car themselves. Soapy Rides on the other hand, targets the quality-conscious individuals who value their car enough to spend $10-$15 per week to make it look good.

4.3.1 Competition and Buying Patterns

There is one other hand car wash shop in East Meadow. 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 Soapy Rides 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 Soapy Rides targets will be more cost conscious, so prices will be approximately 30% less for these customers to promote volume usage.

5.0 Strategy and Implementation Summary

The key differentiator for Soapy Rides Car Wash is Mark Deshpande and his business and personal connections within the East Meadow neighborhood. 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. Soapy Rides, therefore, will depend on word-of-mouth advertising for the immediate community.

5.1 Competitive Edge

Soapy Rides' competitive edge will be Mark Deshpande and the quality of the family name in the East Meadow area. As mentioned, the family has been in the car business for over 30 years, and has an excellent reputation and a myriad of both business and personal contacts. In addition, Mark has 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.

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5.2 Sales Strategy
Sales strategy is on a one-to-one basis. All customers will feel they are a valued friend of Soapy Rides, 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.

5.2.1 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.

Sales Monthly
$8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details

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Soapy Rides Car Wash

Table: Sales Forecast Sales Forecast Unit Sales Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Total Unit Sales Unit Prices Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Sales Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Total Sales Direct Unit Costs Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Direct Cost of Sales Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Subtotal Direct Cost of Sales 2002 1,760 2,050 770 129 615 494 5,818 2002 $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $26,400 $18,450 $6,160 $18,060 $6,150 $34,580 $109,800 2002 $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 2002 $1,232 $820 $231 $387 $431 $1,482 $4,583 2003 2,288 2,665 1,001 193 923 642 7,712 2003 $15.00 $10.00 $9.00 $145.00 $10.00 $75.00 $34,320 $26,650 $9,009 $27,985 $9,225 $48,150 $155,339 2003 $0.80 $0.45 $0.35 $3.50 $0.75 $3.50 2003 $1,830 $1,199 $350 $676 $692 $2,247 $6,994 2004 2,974 3,465 1,301 290 1,384 963 10,376 2004 $15.00 $12.00 $9.00 $150.00 $10.00 $80.00 $44,616 $41,574 $11,712 $43,425 $13,838 $77,040 $232,204 2004 $0.90 $0.50 $0.40 $4.00 $0.80 $4.00 2004 $2,677 $1,732 $521 $1,158 $1,107 $3,852 $11,047

5.3 Milestones
The following table outlines the important milestones in the planning and implementation of Soapy Rides.

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Table: Milestones Milestones Milestone Complete Business Plan Sign Rental Contract Convert Premises Hire Car Wash Staff Hire Admin Staff Open for Business Distribute Flyers Press Release Follow-up on Press Release Totals Start Date 2/1/01 3/20/01 4/1/01 4/20/01 4/20/01 5/1/01 4/28/01 4/29/01 4/30/01 End Date 5/1/01 3/20/01 4/30/01 4/20/01 4/20/01 5/1/01 5/5/01 4/29/01 4/30/01 Budget $0 $475 $0 $200 $200 $0 $75 $25 $0 $975 Manager ABC Mark Contractors Mark Mark Staff Friends Mark Mark Department Department Owner Contractors Owner Owner Staff Friends Owner Owner

6.0 Management Summary

Mark Deshpande is the sole owner and manager of Soapy Rides. In addition, he will be helped (on an unofficial basis) by his father, Barry Deshpande. Barry has over 30 years experience as an entrepreneur, both in the car business and in property development and management. Mark will also have the assistance of John Shine, the family accountant, in creating a longterm strategic vision for the company. John is a family friend and has worked with the Deshpande family for 23 years. He has worked with hundreds of small- and medium-sized businesses during his career.

6.1 Personnel Plan

Since car washing is a seasonal business, with business increasing in the warm summer months, and being busier on the weekends than during the week, Soapy Rides will rely on both temporary and part-time help. The company will hire one full-time car wash/detail specialist and one full-time car wash specialist when it opens for business. Although it will rely on temporary and part-time help, quality will not be compromised, since all washers and detailers will receive thorough training. The company will also hire an administrative assistant who will assist Mark with paperwork and act as a receptionist.
Table: Personnel Personnel Plan Owner Car Washers Admin/Sales Total People Total Payroll 2002 $18,000 $30,240 $13,440 0 $61,680 2003 $30,000 $43,312 $15,000 0 $88,312 2004 $40,000 $51,174 $22,000 0 $113,174

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7.0 Financial Plan
The following plan outlines the financial development of Soapy Rides. The business will be initially financed by a $30,000 investment by Mark Deshpande and will finance growth through cash flow. This will mean that the company will grow more slowly than it could, but it will ensure that Mark retains control over the direction of the company. In year three, it is hoped that the company will be able to open a second location. It is envisioned that an outside loan or equity funding will be sought at that time.

7.1 Important Assumptions

The financial projections for Soapy Rides are based on the following assumptions. These assumptions are thought to be quite conservative, as are the financial forecasts.
Table: General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Sales on Credit % Other Calculated Totals Payroll Expense Sales on Credit New Accounts Payable Inventory Purchase 2002 1 10.00% 10.00% 25.00% 15.00% 0.00% $61,680 $16,470 $95,749 $4,816 2003 2 10.00% 10.00% 25.00% 15.00% 0.00% $88,312 $23,301 $133,324 $7,249 2004 3 10.00% 10.00% 25.00% 15.00% 0.00% $113,174 $34,831 $178,202 $11,474

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7.2 Break-even Analysis
Fixed monthly costs for Soapy Rides are estimated to be approximately $7,500, and break even monthly units are 203 units per month.

Break-even Analysis
$6,000 $4,000 $2,000 $0 ($2,000) ($4,000) ($6,000) ($8,000) 0 60 120 180 240 300

Monthly break-even point

Break-even point = where line intersects with 0

Table: Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 203 $9,122 $45.00 $8.00 $7,500

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7.3 Projected Profit and Loss
The following Profit and Loss table illustrates income and expenses monthly for the first year, and annually for the next two years.
Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales Include Negative Taxes 2002 $109,800 $4,583 $0 -----------$4,583 $105,218 95.83% $61,680 $2,600 $2,070 $0 $3,325 $1,800 $4,800 $15,420 $0 -----------$91,695 $13,523 $0 $3,381 $10,142 9.24% TRUE TRUE 2003 $155,339 $6,994 $0 -----------$6,994 $148,345 95.50% $88,312 $1,550 $2,070 $0 $3,500 $1,800 $5,500 $22,078 $0 -----------$124,810 $23,535 $0 $5,884 $17,651 11.36% TRUE 2004 $232,204 $11,047 $0 -----------$11,047 $221,157 95.24% $113,174 $1,700 $2,070 $0 $3,750 $1,800 $6,000 $28,294 $0 -----------$156,788 $64,370 $0 $16,092 $48,277 20.79%

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7.4 Projected Cash Flow
The following Cash Flow table illustrates that if Soapy Rides meets projected sales, it will have positive cash flow after month three of operation.

Cash
$25,000 $20,000 $15,000 $10,000 $5,000 $0 ($5,000) May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Net Cash Flow Cash Balance

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Table: Cash Flow Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income Sales Tax, VAT, 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 Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance 2002 2003 2004

$93,330 $13,918 $107,248 $0 $0 $0 $0 $0 $0 $0 $0 $107,248 2002 $2,072 $93,565 $95,637 $0 $0 $0 $0 $0 $0 $0 $0 $95,637 $11,610 $20,310

$132,038 $22,242 $154,280 $0 $0 $0 $0 $0 $0 $0 $0 $154,280 2003 $2,548 $132,822 $135,370 $0 $0 $0 $0 $0 $0 $0 $0 $135,370 $18,910 $39,220

$197,374 $33,044 $230,417 $0 $0 $0 $0 $0 $0 $0 $0 $230,417 2004 $4,082 $176,586 $180,668 $0 $0 $0 $0 $0 $0 $0 $0 $180,668 $49,750 $88,970

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7.5 Projected Balance Sheet
Soapy Rides' balance sheet illustrates a healthy financial position for this new company. The monthly estimates are included in the appendices.
Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital 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 Net Worth 2002 $2,184 $0 $0 $2,184 $0 $2,184 $30,000 ($10,050) $10,142 $30,092 $32,276 $30,092 2003 $2,686 $0 $0 $2,686 $0 $2,686 $30,000 $92 $17,651 $47,743 $50,429 $47,743 2004 $4,302 $0 $0 $4,302 $0 $4,302 $30,000 $17,743 $48,277 $96,020 $100,322 $96,020 2002 $20,310 $2,552 $483 $1,000 $24,346 $10,000 $2,070 $7,930 $32,276 2003 $39,220 $3,611 $737 $1,000 $44,568 $10,000 $4,140 $5,860 $50,429 2004 $88,970 $5,398 $1,164 $1,000 $96,532 $10,000 $6,210 $3,790 $100,322

7.6 Business Ratios

The following table contains important ratios for the car wash industry, as determined by the Standard Industry Classification (SIC) code, 7542.

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Table: Ratios Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Business Vitality Profile Sales per Employee Survival Rate Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 2002 0.00% 7.91% 1.50% 3.10% 75.43% 24.57% 100.00% 0.00% 0.00% 0.00% 100.00% 100.00% 95.83% 86.59% 0.91% 12.32% 11.15 10.93 6.77% 44.94% 41.90% 2001 $0 2002 9.24% 33.70% 6.45 43 12.00 43.84 5 3.40 0.07 1.00 $22,162 0.00 0.29 7% 9.76 3.65 0.00 2003 41.47% 7.16% 1.46% 1.98% 88.38% 11.62% 100.00% 0.00% 0.00% 0.00% 100.00% 100.00% 95.50% 84.13% 0.74% 15.15% 16.60 16.32 5.33% 49.29% 46.67% 2002 $0 2003 11.36% 36.97% 6.45 48 11.46 49.64 80 3.08 0.06 1.00 $41,883 0.00 0.32 5% 14.98 3.25 0.00 2004 49.48% 5.38% 1.16% 1.00% 96.22% 3.78% 100.00% 0.00% 0.00% 0.00% 100.00% 100.00% 95.24% 74.45% 0.56% 27.72% 22.44 22.17 4.29% 67.04% 64.16% 2003 $0 2004 20.79% 50.28% 6.45 47 11.62 41.43 86 2.31 0.04 1.00 $92,230 0.00 0.43 4% 20.92 2.42 0.00 Industry Profile 3.00% 8.70% 9.50% 26.40% 44.60% 55.40% 100.00% 29.30% 27.80% 57.10% 42.90% 100.00% 0.00% 68.20% 1.50% 2.70% 1.53 0.88 57.10% 3.40% 8.00% Industry $0 0.00% n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a

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Appendix
Appendix Table: Sales Forecast Sales Forecast Unit Sales Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Total Unit Sales Unit Prices Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Sales Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Total Sales Direct Unit Costs Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Direct Cost of Sales Full Wash Exterior Wash Interior Clean End User Detail Business Fleet Washes Car Dealership Details Subtotal Direct Cost of Sales May 90 90 40 3 25 15 263 May $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $1,350 $810 $320 $420 $250 $1,050 $4,200 May $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 May $63 $36 $12 $9 $18 $45 $183 Jun 130 130 50 5 40 17 372 Jun $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $1,950 $1,170 $400 $700 $400 $1,190 $5,810 Jun $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Jun $91 $52 $15 $15 $28 $51 $252 Jul 170 185 50 7 55 20 487 Jul $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,550 $1,665 $400 $980 $550 $1,400 $7,545 Jul $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Jul $119 $74 $15 $21 $39 $60 $328 Aug 190 220 55 10 60 26 561 Aug $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,850 $1,980 $440 $1,400 $600 $1,820 $9,090 Aug $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Aug $133 $88 $17 $30 $42 $78 $388 Sep 190 230 60 12 60 32 584 Sep $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,850 $2,070 $480 $1,680 $600 $2,240 $9,920 Sep $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Sep $133 $92 $18 $36 $42 $96 $417 Oct 185 220 65 12 55 40 577 Oct $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,775 $1,980 $520 $1,680 $550 $2,800 $10,305 Oct $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Oct $130 $88 $20 $36 $39 $120 $432 Nov 135 180 70 14 55 56 510 Nov $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,025 $1,620 $560 $1,960 $550 $3,920 $10,635 Nov $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Nov $95 $72 $21 $42 $39 $168 $436 Dec 135 170 80 9 55 45 494 Dec $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,025 $1,530 $640 $1,260 $550 $3,150 $9,155 Dec $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Dec $95 $68 $24 $27 $39 $135 $387 Jan 120 150 80 11 55 56 472 Jan $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $1,800 $1,350 $640 $1,540 $550 $3,920 $9,800 Jan $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Jan $84 $60 $24 $33 $39 $168 $408 Feb 120 150 85 14 50 60 479 Feb $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $1,800 $1,350 $680 $1,960 $500 $4,200 $10,490 Feb $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Feb $84 $60 $26 $42 $35 $180 $427 Mar 140 160 75 15 50 60 500 Mar $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,100 $1,440 $600 $2,100 $500 $4,200 $10,940 Mar $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Mar $98 $64 $23 $45 $35 $180 $445 Apr 155 165 60 17 55 67 519 Apr $15.00 $9.00 $8.00 $140.00 $10.00 $70.00 $2,325 $1,485 $480 $2,380 $550 $4,690 $11,910 Apr $0.70 $0.40 $0.30 $3.00 $0.70 $3.00 Apr $109 $66 $18 $51 $39 $201 $483

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Appendix
Appendix Table: Personnel Personnel Plan Owner Car Washers Admin/Sales Total People Total Payroll May $1,500 $2,240 $1,120 0 $4,860 Jun $1,500 $2,240 $1,120 0 $4,860 Jul $1,500 $3,360 $1,120 0 $5,980 Aug $1,500 $3,360 $1,120 0 $5,980 Sep $1,500 $3,360 $1,120 0 $5,980 Oct $1,500 $2,240 $1,120 0 $4,860 Nov $1,500 $2,240 $1,120 0 $4,860 Dec $1,500 $2,240 $1,120 0 $4,860 Jan $1,500 $2,240 $1,120 0 $4,860 Feb $1,500 $2,240 $1,120 0 $4,860 Mar $1,500 $2,240 $1,120 0 $4,860 Apr $1,500 $2,240 $1,120 0 $4,860

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Appendix
Appendix Table: General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Sales on Credit % Other Calculated Totals Payroll Expense Sales on Credit New Accounts Payable Inventory Purchase May 1 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $630 $6,554 $115 Jun 2 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $872 $6,969 $322 Jul 3 10.00% 10.00% 25.00% 15.00% 0.00% $5,980 $1,132 $8,517 $403 Aug 4 10.00% 10.00% 25.00% 15.00% 0.00% $5,980 $1,364 $8,891 $448 Sep 5 10.00% 10.00% 25.00% 15.00% 0.00% $5,980 $1,488 $9,071 $447 Oct 6 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $1,546 $7,917 $446 Nov 7 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $1,595 $7,985 $441 Dec 8 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $1,373 $7,571 $338 Jan 9 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $1,470 $7,927 $428 Feb 10 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $1,574 $7,959 $446 Mar 11 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $1,641 $8,055 $463 Apr 12 10.00% 10.00% 25.00% 15.00% 0.00% $4,860 $1,787 $8,334 $522

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Appendix
Appendix Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales Include Negative Taxes May $4,200 $183 $0 -----------$183 $4,018 95.65% $4,860 $500 $172 $0 $250 $150 $400 $1,215 $0 -----------$7,547 ($3,530) $0 ($882) ($2,647) -63.04% Jun $5,810 $252 $0 -----------$252 $5,558 95.66% $4,860 $300 $172 $0 $275 $150 $400 $1,215 $0 -----------$7,372 ($1,814) $0 ($454) ($1,361) -23.42% Jul $7,545 $328 $0 -----------$328 $7,218 95.66% $5,980 $300 $172 $0 $300 $150 $400 $1,495 $0 -----------$8,797 ($1,580) $0 ($395) ($1,185) -15.71% Aug $9,090 $388 $0 -----------$388 $8,703 95.74% $5,980 $300 $172 $0 $300 $150 $400 $1,495 $0 -----------$8,797 ($95) $0 ($24) ($71) -0.78% Sep $9,920 $417 $0 -----------$417 $9,503 95.80% $5,980 $300 $172 $0 $300 $150 $400 $1,495 $0 -----------$8,797 $706 $0 $176 $529 5.33% Oct $10,305 $432 $0 -----------$432 $9,874 95.81% $4,860 $100 $172 $0 $275 $150 $400 $1,215 $0 -----------$7,172 $2,701 $0 $675 $2,026 19.66% Nov $10,635 $436 $0 -----------$436 $10,199 95.90% $4,860 $100 $172 $0 $275 $150 $400 $1,215 $0 -----------$7,172 $3,027 $0 $757 $2,270 21.34% Dec $9,155 $387 $0 -----------$387 $8,768 95.77% $4,860 $100 $172 $0 $275 $150 $400 $1,215 $0 -----------$7,172 $1,596 $0 $399 $1,197 13.07% Jan $9,800 $408 $0 -----------$408 $9,393 95.84% $4,860 $300 $172 $0 $275 $150 $400 $1,215 $0 -----------$7,372 $2,020 $0 $505 $1,515 15.46% Feb $10,490 $427 $0 -----------$427 $10,064 95.93% $4,860 $100 $172 $0 $275 $150 $400 $1,215 $0 -----------$7,172 $2,891 $0 $723 $2,168 20.67% Mar $10,940 $445 $0 -----------$445 $10,496 95.94% $4,860 $100 $172 $0 $250 $150 $400 $1,215 $0 -----------$7,147 $3,348 $0 $837 $2,511 22.95% Apr $11,910 $483 $0 -----------$483 $11,427 95.94% $4,860 $100 $172 $0 $275 $150 $400 $1,215 $0 -----------$7,172 $4,255 $0 $1,064 $3,191 26.79%

25%

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Appendix
Appendix Table: Cash Flow Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income Sales Tax, VAT, 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 Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

$3,570 $0 $3,570 $0 $0 $0 $0 $0 $0 $0 $0 $3,570 May $53 $6,091 $6,144 $0 $0 $0 $0 $0 $0 $0 $0 $6,144 ($2,574) $6,126

$4,939 $336 $5,275 $0 $0 $0 $0 $0 $0 $0 $0 $5,275 Jun $99 $6,568 $6,667 $0 $0 $0 $0 $0 $0 $0 $0 $6,667 ($1,393) $4,733

$6,413 $759 $7,172 $0 $0 $0 $0 $0 $0 $0 $0 $7,172 Jul $116 $8,374 $8,489 $0 $0 $0 $0 $0 $0 $0 $0 $8,489 ($1,317) $3,416

$7,727 $1,010 $8,737 $0 $0 $0 $0 $0 $0 $0 $0 $8,737 Aug $157 $8,530 $8,687 $0 $0 $0 $0 $0 $0 $0 $0 $8,687 $50 $3,465

$8,432 $1,255 $9,687 $0 $0 $0 $0 $0 $0 $0 $0 $9,687 Sep $177 $8,897 $9,075 $0 $0 $0 $0 $0 $0 $0 $0 $9,075 $613 $4,078

$8,759 $1,430 $10,189 $0 $0 $0 $0 $0 $0 $0 $0 $10,189 Oct $205 $7,679 $7,883 $0 $0 $0 $0 $0 $0 $0 $0 $7,883 $2,306 $6,384

$9,040 $1,519 $10,559 $0 $0 $0 $0 $0 $0 $0 $0 $10,559 Nov $212 $7,919 $8,131 $0 $0 $0 $0 $0 $0 $0 $0 $8,131 $2,427 $8,811

$7,782 $1,572 $9,354 $0 $0 $0 $0 $0 $0 $0 $0 $9,354 Dec $166 $7,971 $8,137 $0 $0 $0 $0 $0 $0 $0 $0 $8,137 $1,217 $10,028

$8,330 $1,477 $9,807 $0 $0 $0 $0 $0 $0 $0 $0 $9,807 Jan $206 $7,583 $7,788 $0 $0 $0 $0 $0 $0 $0 $0 $7,788 $2,018 $12,046

$8,917 $1,425 $10,341 $0 $0 $0 $0 $0 $0 $0 $0 $10,341 Feb $209 $7,928 $8,138 $0 $0 $0 $0 $0 $0 $0 $0 $8,138 $2,204 $14,250

$9,299 $1,525 $10,824 $0 $0 $0 $0 $0 $0 $0 $0 $10,824 Mar $220 $7,962 $8,182 $0 $0 $0 $0 $0 $0 $0 $0 $8,182 $2,642 $16,892

$10,124 $1,610 $11,733 $0 $0 $0 $0 $0 $0 $0 $0 $11,733 Apr $251 $8,064 $8,315 $0 $0 $0 $0 $0 $0 $0 $0 $8,315 $3,418 $20,310

0.00%

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Appendix
Appendix Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital 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 Net Worth $0 $0 $0 $0 $0 $0 $30,000 ($10,050) $0 $19,950 $19,950 $19,950 May $463 $0 $0 $463 $0 $463 $30,000 ($10,050) ($2,647) $17,303 $17,766 $17,303 Jun $864 $0 $0 $864 $0 $864 $30,000 ($10,050) ($4,008) $15,942 $16,805 $15,942 Jul $1,007 $0 $0 $1,007 $0 $1,007 $30,000 ($10,050) ($5,193) $14,757 $15,764 $14,757 Aug $1,369 $0 $0 $1,369 $0 $1,369 $30,000 ($10,050) ($5,265) $14,685 $16,055 $14,685 Sep $1,542 $0 $0 $1,542 $0 $1,542 $30,000 ($10,050) ($4,735) $15,215 $16,757 $15,215 Oct $1,780 $0 $0 $1,780 $0 $1,780 $30,000 ($10,050) ($2,710) $17,240 $19,021 $17,240 Nov $1,846 $0 $0 $1,846 $0 $1,846 $30,000 ($10,050) ($440) $19,510 $21,356 $19,510 Dec $1,446 $0 $0 $1,446 $0 $1,446 $30,000 ($10,050) $757 $20,707 $22,153 $20,707 Jan $1,790 $0 $0 $1,790 $0 $1,790 $30,000 ($10,050) $2,272 $22,222 $24,012 $22,222 Feb $1,821 $0 $0 $1,821 $0 $1,821 $30,000 ($10,050) $4,440 $24,390 $26,211 $24,390 Mar $1,914 $0 $0 $1,914 $0 $1,914 $30,000 ($10,050) $6,951 $26,901 $28,815 $26,901 Apr $2,184 $0 $0 $2,184 $0 $2,184 $30,000 ($10,050) $10,142 $30,092 $32,276 $30,092 Starting Balances $8,700 $0 $250 $1,000 $9,950 $10,000 $0 $10,000 $19,950 May $6,126 $630 $183 $1,000 $7,938 $10,000 $172 $9,828 $17,766 Jun $4,733 $1,166 $252 $1,000 $7,150 $10,000 $345 $9,655 $16,805 Jul $3,416 $1,538 $328 $1,000 $6,282 $10,000 $517 $9,483 $15,764 Aug $3,465 $1,892 $388 $1,000 $6,745 $10,000 $690 $9,310 $16,055 Sep $4,078 $2,124 $417 $1,000 $7,619 $10,000 $862 $9,138 $16,757 Oct $6,384 $2,240 $432 $1,000 $10,055 $10,000 $1,035 $8,965 $19,021 Nov $8,811 $2,317 $436 $1,000 $12,564 $10,000 $1,207 $8,793 $21,356 Dec $10,028 $2,118 $387 $1,000 $13,533 $10,000 $1,380 $8,620 $22,153 Jan $12,046 $2,111 $408 $1,000 $15,565 $10,000 $1,552 $8,448 $24,012 Feb $14,250 $2,260 $427 $1,000 $17,936 $10,000 $1,725 $8,275 $26,211 Mar $16,892 $2,375 $445 $1,000 $20,712 $10,000 $1,897 $8,103 $28,815 Apr $20,310 $2,552 $483 $1,000 $24,346 $10,000 $2,070 $7,930 $32,276

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