May 2001
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Table of Contents
1.0
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1
Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2
Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.0
Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1
Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2
Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.0
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
4.0
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
6
7
8
8
5.0
Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1
Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2
Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3
Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
8
9
9
10
6.0
Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1
Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.0
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 .
Page 1
Soapy Rides Car Wash
Highlights
$250,000
$200,000
$150,000
Sales
Gross Margin
$100,000
Net Profit
$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.
Page 2
Soapy Rides Car Wash
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.
Page 3
Soapy Rides Car Wash
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
$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
Funding
Investment
Investor 1
Investor 2
Other
Total Investment
$30,000
$0
$0
$30,000
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Current Liabilities
$0
$0
$0
$0
Long-term Liabilities
Total Liabilities
$0
$0
Loss at Start-up
Total Capital
Total Capital and Liabilities
($10,050)
$19,950
$19,950
Page 4
Soapy Rides Car Wash
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.
Page 5
Soapy Rides Car Wash
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.
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 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.
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.
Page 6
Soapy Rides Car Wash
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%
2001
7,200
12,500
6,500
17,000
9
2002
7,920
14,375
7,475
18,700
10
2003
8,712
16,531
8,596
20,570
11
2004
9,583
19,011
9,885
22,627
12
2005
10,541
21,863
11,368
24,890
13
CAGR
10.00%
15.00%
15.00%
10.00%
9.63%
12.28%
43,209
48,480
54,420
61,118
68,675
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.
Page 7
Soapy Rides Car Wash
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.
Page 8
Soapy Rides Car Wash
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
Full Wash
$5,000
Exterior Wash
$4,000
Interior Clean
End User Detail
$3,000
Business Fleet Washes
$2,000
Car Dealership Details
$1,000
$0
May Jun
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Page 9
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
2002
1,760
2,050
770
129
615
494
5,818
2003
2,288
2,665
1,001
193
923
642
7,712
2004
2,974
3,465
1,301
290
1,384
963
10,376
Unit Prices
Full Wash
Exterior Wash
Interior Clean
End User Detail
Business Fleet Washes
Car Dealership Details
2002
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
2003
$15.00
$10.00
$9.00
$145.00
$10.00
$75.00
2004
$15.00
$12.00
$9.00
$150.00
$10.00
$80.00
Sales
Full Wash
Exterior Wash
Interior Clean
End User Detail
Business Fleet Washes
Car Dealership Details
Total Sales
$26,400
$18,450
$6,160
$18,060
$6,150
$34,580
$109,800
$34,320
$26,650
$9,009
$27,985
$9,225
$48,150
$155,339
$44,616
$41,574
$11,712
$43,425
$13,838
$77,040
$232,204
Direct Unit Costs
Full Wash
Exterior Wash
Interior Clean
End User Detail
Business Fleet Washes
Car Dealership Details
2002
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
2003
$0.80
$0.45
$0.35
$3.50
$0.75
$3.50
2004
$0.90
$0.50
$0.40
$4.00
$0.80
$4.00
2002
$1,232
$820
$231
$387
$431
$1,482
$4,583
2003
$1,830
$1,199
$350
$676
$692
$2,247
$6,994
2004
$2,677
$1,732
$521
$1,158
$1,107
$3,852
$11,047
Direct Cost of Sales
Full Wash
Exterior Wash
Interior Clean
End User Detail
Business Fleet Washes
Car Dealership Details
Subtotal Direct Cost of Sales
5.3 Milestones
The following table outlines the important milestones in the planning and implementation of
Soapy Rides.
Page 10
Soapy Rides Car Wash
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
Page 11
Soapy Rides Car Wash
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%
2003
2
10.00%
10.00%
25.00%
15.00%
0.00%
2004
3
10.00%
10.00%
25.00%
15.00%
0.00%
$61,680
$16,470
$95,749
$4,816
$88,312
$23,301
$133,324
$7,249
$113,174
$34,831
$178,202
$11,474
Page 12
Soapy Rides Car Wash
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
203
$9,122
Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost
$45.00
$8.00
$7,500
Page 13
Soapy Rides Car Wash
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
TRUE
2002
$109,800
$4,583
$0
-----------$4,583
$105,218
95.83%
2003
$155,339
$6,994
$0
-----------$6,994
$148,345
95.50%
2004
$232,204
$11,047
$0
-----------$11,047
$221,157
95.24%
$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%
$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%
$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%
TRUE
TRUE
Page 14
Soapy Rides Car Wash
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
Net Cash Flow
$10,000
Cash Balance
$5,000
$0
($5,000)
May Jun
Jul
Aug Sep Oct Nov Dec Jan Feb Mar Apr
Page 15
Soapy Rides Car Wash
Table: Cash Flow
Pro Forma Cash Flow
2002
2003
2004
Cash Received
Cash from Operations:
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
$93,330
$13,918
$107,248
$132,038
$22,242
$154,280
$197,374
$33,044
$230,417
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
$0
$0
$0
$0
$0
$0
$0
$0
$107,248
$0
$0
$0
$0
$0
$0
$0
$0
$154,280
$0
$0
$0
$0
$0
$0
$0
$0
$230,417
Expenditures
Expenditures from Operations:
Cash Spending
Payment of Accounts Payable
Subtotal Spent on Operations
2002
2003
2004
$2,072
$93,565
$95,637
$2,548
$132,822
$135,370
$4,082
$176,586
$180,668
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
$0
$0
$0
$0
$0
$0
$0
$0
$95,637
$0
$0
$0
$0
$0
$0
$0
$0
$135,370
$0
$0
$0
$0
$0
$0
$0
$0
$180,668
Net Cash Flow
Cash Balance
$11,610
$20,310
$18,910
$39,220
$49,750
$88,970
Page 16
Soapy Rides Car Wash
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
2002
$20,310
$2,552
$483
$1,000
$24,346
2003
$39,220
$3,611
$737
$1,000
$44,568
2004
$88,970
$5,398
$1,164
$1,000
$96,532
$10,000
$2,070
$7,930
$32,276
$10,000
$4,140
$5,860
$50,429
$10,000
$6,210
$3,790
$100,322
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
2002
$2,184
$0
$0
$2,184
2003
$2,686
$0
$0
$2,686
2004
$4,302
$0
$0
$4,302
Long-term Liabilities
Total Liabilities
$0
$2,184
$0
$2,686
$0
$4,302
$30,000
($10,050)
$10,142
$30,092
$32,276
$30,092
$30,000
$92
$17,651
$47,743
$50,429
$47,743
$30,000
$17,743
$48,277
$96,020
$100,322
$96,020
Liabilities and Capital
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
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.
Page 17
Soapy Rides Car Wash
Table: Ratios
Ratio Analysis
2002
0.00%
2003
41.47%
2004
49.48%
Industry Profile
3.00%
Percent of Total Assets
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
7.91%
1.50%
3.10%
75.43%
24.57%
100.00%
7.16%
1.46%
1.98%
88.38%
11.62%
100.00%
5.38%
1.16%
1.00%
96.22%
3.78%
100.00%
8.70%
9.50%
26.40%
44.60%
55.40%
100.00%
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
0.00%
0.00%
0.00%
100.00%
0.00%
0.00%
0.00%
100.00%
0.00%
0.00%
0.00%
100.00%
29.30%
27.80%
57.10%
42.90%
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
100.00%
95.83%
86.59%
0.91%
12.32%
100.00%
95.50%
84.13%
0.74%
15.15%
100.00%
95.24%
74.45%
0.56%
27.72%
100.00%
0.00%
68.20%
1.50%
2.70%
11.15
10.93
6.77%
44.94%
41.90%
16.60
16.32
5.33%
49.29%
46.67%
22.44
22.17
4.29%
67.04%
64.16%
1.53
0.88
57.10%
3.40%
8.00%
2001
$0
2002
$0
2003
$0
Industry
$0
0.00%
2002
9.24%
33.70%
2003
11.36%
36.97%
2004
20.79%
50.28%
6.45
43
12.00
43.84
5
3.40
6.45
48
11.46
49.64
80
3.08
6.45
47
11.62
41.43
86
2.31
n.a
n.a
n.a
n.a
0.07
1.00
0.06
1.00
0.04
1.00
n.a
n.a
$22,162
0.00
$41,883
0.00
$92,230
0.00
n.a
n.a
0.29
7%
9.76
3.65
0.00
0.32
5%
14.98
3.25
0.00
0.43
4%
20.92
2.42
0.00
n.a
n.a
n.a
n.a
n.a
Sales Growth
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
n.a
n.a
n.a
Page 18
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
May
90
90
40
3
25
15
263
Jun
130
130
50
5
40
17
372
Jul
170
185
50
7
55
20
487
Aug
190
220
55
10
60
26
561
Sep
190
230
60
12
60
32
584
Oct
185
220
65
12
55
40
577
Nov
135
180
70
14
55
56
510
Dec
135
170
80
9
55
45
494
Jan
120
150
80
11
55
56
472
Feb
120
150
85
14
50
60
479
Mar
140
160
75
15
50
60
500
Apr
155
165
60
17
55
67
519
Unit Prices
Full Wash
Exterior Wash
Interior Clean
End User Detail
Business Fleet Washes
Car Dealership Details
May
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Jun
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Jul
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Aug
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Sep
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Oct
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Nov
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Dec
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Jan
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Feb
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Mar
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Apr
$15.00
$9.00
$8.00
$140.00
$10.00
$70.00
Sales
Full Wash
Exterior Wash
Interior Clean
End User Detail
Business Fleet Washes
Car Dealership Details
Total Sales
$1,350
$810
$320
$420
$250
$1,050
$4,200
$1,950
$1,170
$400
$700
$400
$1,190
$5,810
$2,550
$1,665
$400
$980
$550
$1,400
$7,545
$2,850
$1,980
$440
$1,400
$600
$1,820
$9,090
$2,850
$2,070
$480
$1,680
$600
$2,240
$9,920
$2,775
$1,980
$520
$1,680
$550
$2,800
$10,305
$2,025
$1,620
$560
$1,960
$550
$3,920
$10,635
$2,025
$1,530
$640
$1,260
$550
$3,150
$9,155
$1,800
$1,350
$640
$1,540
$550
$3,920
$9,800
$1,800
$1,350
$680
$1,960
$500
$4,200
$10,490
$2,100
$1,440
$600
$2,100
$500
$4,200
$10,940
$2,325
$1,485
$480
$2,380
$550
$4,690
$11,910
Direct Unit Costs
Full Wash
Exterior Wash
Interior Clean
End User Detail
Business Fleet Washes
Car Dealership Details
May
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Jun
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Jul
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Aug
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Sep
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Oct
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Nov
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Dec
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Jan
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Feb
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Mar
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
Apr
$0.70
$0.40
$0.30
$3.00
$0.70
$3.00
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
$63
$36
$12
$9
$18
$45
$183
Jun
$91
$52
$15
$15
$28
$51
$252
Jul
$119
$74
$15
$21
$39
$60
$328
Aug
$133
$88
$17
$30
$42
$78
$388
Sep
$133
$92
$18
$36
$42
$96
$417
Oct
$130
$88
$20
$36
$39
$120
$432
Nov
$95
$72
$21
$42
$39
$168
$436
Dec
$95
$68
$24
$27
$39
$135
$387
Jan
$84
$60
$24
$33
$39
$168
$408
Feb
$84
$60
$26
$42
$35
$180
$427
Mar
$98
$64
$23
$45
$35
$180
$445
Apr
$109
$66
$18
$51
$39
$201
$483
Page 1
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
Page 2
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%
Jun
2
10.00%
10.00%
25.00%
15.00%
0.00%
Jul
3
10.00%
10.00%
25.00%
15.00%
0.00%
Aug
4
10.00%
10.00%
25.00%
15.00%
0.00%
Sep
5
10.00%
10.00%
25.00%
15.00%
0.00%
Oct
6
10.00%
10.00%
25.00%
15.00%
0.00%
Nov
7
10.00%
10.00%
25.00%
15.00%
0.00%
Dec
8
10.00%
10.00%
25.00%
15.00%
0.00%
Jan
9
10.00%
10.00%
25.00%
15.00%
0.00%
Feb
10
10.00%
10.00%
25.00%
15.00%
0.00%
Mar
11
10.00%
10.00%
25.00%
15.00%
0.00%
Apr
12
10.00%
10.00%
25.00%
15.00%
0.00%
$4,860
$630
$6,554
$115
$4,860
$872
$6,969
$322
$5,980
$1,132
$8,517
$403
$5,980
$1,364
$8,891
$448
$5,980
$1,488
$9,071
$447
$4,860
$1,546
$7,917
$446
$4,860
$1,595
$7,985
$441
$4,860
$1,373
$7,571
$338
$4,860
$1,470
$7,927
$428
$4,860
$1,574
$7,959
$446
$4,860
$1,641
$8,055
$463
$4,860
$1,787
$8,334
$522
Page 3
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
25%
May
$4,200
$183
$0
-----------$183
$4,018
95.65%
Jun
$5,810
$252
$0
-----------$252
$5,558
95.66%
Jul
$7,545
$328
$0
-----------$328
$7,218
95.66%
Aug
$9,090
$388
$0
-----------$388
$8,703
95.74%
Sep
$9,920
$417
$0
-----------$417
$9,503
95.80%
Oct
$10,305
$432
$0
-----------$432
$9,874
95.81%
Nov
$10,635
$436
$0
-----------$436
$10,199
95.90%
Dec
$9,155
$387
$0
-----------$387
$8,768
95.77%
Jan
$9,800
$408
$0
-----------$408
$9,393
95.84%
Feb
$10,490
$427
$0
-----------$427
$10,064
95.93%
Mar
$10,940
$445
$0
-----------$445
$10,496
95.94%
Apr
$11,910
$483
$0
-----------$483
$11,427
95.94%
$4,860
$500
$172
$0
$250
$150
$400
$1,215
$0
-----------$7,547
($3,530)
$0
($882)
($2,647)
-63.04%
$4,860
$300
$172
$0
$275
$150
$400
$1,215
$0
-----------$7,372
($1,814)
$0
($454)
($1,361)
-23.42%
$5,980
$300
$172
$0
$300
$150
$400
$1,495
$0
-----------$8,797
($1,580)
$0
($395)
($1,185)
-15.71%
$5,980
$300
$172
$0
$300
$150
$400
$1,495
$0
-----------$8,797
($95)
$0
($24)
($71)
-0.78%
$5,980
$300
$172
$0
$300
$150
$400
$1,495
$0
-----------$8,797
$706
$0
$176
$529
5.33%
$4,860
$100
$172
$0
$275
$150
$400
$1,215
$0
-----------$7,172
$2,701
$0
$675
$2,026
19.66%
$4,860
$100
$172
$0
$275
$150
$400
$1,215
$0
-----------$7,172
$3,027
$0
$757
$2,270
21.34%
$4,860
$100
$172
$0
$275
$150
$400
$1,215
$0
-----------$7,172
$1,596
$0
$399
$1,197
13.07%
$4,860
$300
$172
$0
$275
$150
$400
$1,215
$0
-----------$7,372
$2,020
$0
$505
$1,515
15.46%
$4,860
$100
$172
$0
$275
$150
$400
$1,215
$0
-----------$7,172
$2,891
$0
$723
$2,168
20.67%
$4,860
$100
$172
$0
$250
$150
$400
$1,215
$0
-----------$7,147
$3,348
$0
$837
$2,511
22.95%
$4,860
$100
$172
$0
$275
$150
$400
$1,215
$0
-----------$7,172
$4,255
$0
$1,064
$3,191
26.79%
Page 4
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
0.00%
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
$3,570
$0
$3,570
$4,939
$336
$5,275
$6,413
$759
$7,172
$7,727
$1,010
$8,737
$8,432
$1,255
$9,687
$8,759
$1,430
$10,189
$9,040
$1,519
$10,559
$7,782
$1,572
$9,354
$8,330
$1,477
$9,807
$8,917
$1,425
$10,341
$9,299
$1,525
$10,824
$10,124
$1,610
$11,733
$0
$0
$0
$0
$0
$0
$0
$0
$3,570
$0
$0
$0
$0
$0
$0
$0
$0
$5,275
$0
$0
$0
$0
$0
$0
$0
$0
$7,172
$0
$0
$0
$0
$0
$0
$0
$0
$8,737
$0
$0
$0
$0
$0
$0
$0
$0
$9,687
$0
$0
$0
$0
$0
$0
$0
$0
$10,189
$0
$0
$0
$0
$0
$0
$0
$0
$10,559
$0
$0
$0
$0
$0
$0
$0
$0
$9,354
$0
$0
$0
$0
$0
$0
$0
$0
$9,807
$0
$0
$0
$0
$0
$0
$0
$0
$10,341
$0
$0
$0
$0
$0
$0
$0
$0
$10,824
$0
$0
$0
$0
$0
$0
$0
$0
$11,733
Expenditures
Expenditures from Operations:
Cash Spending
Payment of Accounts Payable
Subtotal Spent on Operations
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
$53
$6,091
$6,144
$99
$6,568
$6,667
$116
$8,374
$8,489
$157
$8,530
$8,687
$177
$8,897
$9,075
$205
$7,679
$7,883
$212
$7,919
$8,131
$166
$7,971
$8,137
$206
$7,583
$7,788
$209
$7,928
$8,138
$220
$7,962
$8,182
$251
$8,064
$8,315
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
$0
$0
$0
$0
$0
$0
$0
$0
$6,144
$0
$0
$0
$0
$0
$0
$0
$0
$6,667
$0
$0
$0
$0
$0
$0
$0
$0
$8,489
$0
$0
$0
$0
$0
$0
$0
$0
$8,687
$0
$0
$0
$0
$0
$0
$0
$0
$9,075
$0
$0
$0
$0
$0
$0
$0
$0
$7,883
$0
$0
$0
$0
$0
$0
$0
$0
$8,131
$0
$0
$0
$0
$0
$0
$0
$0
$8,137
$0
$0
$0
$0
$0
$0
$0
$0
$7,788
$0
$0
$0
$0
$0
$0
$0
$0
$8,138
$0
$0
$0
$0
$0
$0
$0
$0
$8,182
$0
$0
$0
$0
$0
$0
$0
$0
$8,315
($2,574)
$6,126
($1,393)
$4,733
($1,317)
$3,416
$50
$3,465
$613
$4,078
$2,306
$6,384
$2,427
$8,811
$1,217
$10,028
$2,018
$12,046
$2,204
$14,250
$2,642
$16,892
$3,418
$20,310
Net Cash Flow
Cash Balance
Page 5
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
Starting Balances
$8,700
$0
$250
$1,000
$9,950
May
$6,126
$630
$183
$1,000
$7,938
Jun
$4,733
$1,166
$252
$1,000
$7,150
Jul
$3,416
$1,538
$328
$1,000
$6,282
Aug
$3,465
$1,892
$388
$1,000
$6,745
Sep
$4,078
$2,124
$417
$1,000
$7,619
Oct
$6,384
$2,240
$432
$1,000
$10,055
Nov
$8,811
$2,317
$436
$1,000
$12,564
Dec
$10,028
$2,118
$387
$1,000
$13,533
Jan
$12,046
$2,111
$408
$1,000
$15,565
Feb
$14,250
$2,260
$427
$1,000
$17,936
Mar
$16,892
$2,375
$445
$1,000
$20,712
Apr
$20,310
$2,552
$483
$1,000
$24,346
$10,000
$0
$10,000
$19,950
$10,000
$172
$9,828
$17,766
$10,000
$345
$9,655
$16,805
$10,000
$517
$9,483
$15,764
$10,000
$690
$9,310
$16,055
$10,000
$862
$9,138
$16,757
$10,000
$1,035
$8,965
$19,021
$10,000
$1,207
$8,793
$21,356
$10,000
$1,380
$8,620
$22,153
$10,000
$1,552
$8,448
$24,012
$10,000
$1,725
$8,275
$26,211
$10,000
$1,897
$8,103
$28,815
$10,000
$2,070
$7,930
$32,276
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$0
$0
$0
$0
May
$463
$0
$0
$463
Jun
$864
$0
$0
$864
Jul
$1,007
$0
$0
$1,007
Aug
$1,369
$0
$0
$1,369
Sep
$1,542
$0
$0
$1,542
Oct
$1,780
$0
$0
$1,780
Nov
$1,846
$0
$0
$1,846
Dec
$1,446
$0
$0
$1,446
Jan
$1,790
$0
$0
$1,790
Feb
$1,821
$0
$0
$1,821
Mar
$1,914
$0
$0
$1,914
Apr
$2,184
$0
$0
$2,184
Long-term Liabilities
Total Liabilities
$0
$0
$0
$463
$0
$864
$0
$1,007
$0
$1,369
$0
$1,542
$0
$1,780
$0
$1,846
$0
$1,446
$0
$1,790
$0
$1,821
$0
$1,914
$0
$2,184
$30,000
($10,050)
$0
$19,950
$19,950
$19,950
$30,000
($10,050)
($2,647)
$17,303
$17,766
$17,303
$30,000
($10,050)
($4,008)
$15,942
$16,805
$15,942
$30,000
($10,050)
($5,193)
$14,757
$15,764
$14,757
$30,000
($10,050)
($5,265)
$14,685
$16,055
$14,685
$30,000
($10,050)
($4,735)
$15,215
$16,757
$15,215
$30,000
($10,050)
($2,710)
$17,240
$19,021
$17,240
$30,000
($10,050)
($440)
$19,510
$21,356
$19,510
$30,000
($10,050)
$757
$20,707
$22,153
$20,707
$30,000
($10,050)
$2,272
$22,222
$24,012
$22,222
$30,000
($10,050)
$4,440
$24,390
$26,211
$24,390
$30,000
($10,050)
$6,951
$26,901
$28,815
$26,901
$30,000
($10,050)
$10,142
$30,092
$32,276
$30,092
Liabilities and Capital
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
Page 6