"Car Wash" Business Plan:
1.0 Executive Summary
2.0 Company Summary
3.0 Services
4.0 Market Analysis Summary
5.0 Strategy and Implementation Summary
6.0 Management Summary
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
Business Ideas applicable for this business plan:
Investor for car wash and hospitality chain in West Africa
This business plan was originally published
by Palo Alto Software, Inc. All rights reserved.
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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.
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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.
|
| General Assumptions |
| |
2001 |
2002 |
2003 |
| Plan Month |
1 |
2 |
3 |
| Current Interest Rate |
10.00% |
10.00% |
10.00% |
| Long-term Interest Rate |
10.00% |
10.00% |
10.00% |
| Tax Rate |
25.42% |
25.00% |
25.42% |
| Sales on Credit |
15.00% |
15.00% |
15.00% |
| Other |
0 |
0 |
0 |
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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
|
| Break-even Analysis: |
| Monthly Units Break-even |
203 |
| Monthly Revenue Break-even |
$9,122 |
| |
| Assumptions: |
| Average Per-Unit Revenue |
$45.00 |
| Average Per-Unit Variable Cost |
$8.00 |
| Estimated Monthly Fixed Cost |
$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.
|
| Pro Forma Profit and Loss |
| |
2001 |
2002 |
2003 |
| Sales |
$109,800 |
$155,339 |
$232,204 |
| Direct Cost of Goods |
$4,583 |
$6,994 |
$11,047 |
| Other |
$0 |
$0 |
$0 |
|
|
------------ |
------------ |
------------ |
| Cost of Goods Sold |
$4,583 |
$6,994 |
$11,047 |
| Gross Margin |
$105,218 |
$148,345 |
$221,157 |
| Gross Margin % |
95.83% |
95.50% |
95.24% |
| Expenses: |
| Payroll |
$61,680 |
$88,312 |
$113,174 |
| Sales and Marketing and Other Expenses |
$2,600 |
$1,550 |
$1,700 |
| Depreciation |
$2,070 |
$2,070 |
$2,070 |
| Leased Equipment |
$0 |
$0 |
$0 |
| Utilities |
$3,325 |
$3,500 |
$3,750 |
| Insurance |
$1,800 |
$1,800 |
$1,800 |
| Rent |
$4,800 |
$5,500 |
$6,000 |
| Payroll Taxes |
$15,420 |
$22,078 |
$28,294 |
| Other |
$0 |
$0 |
$0 |
| |
------------ |
------------ |
------------ |
| Total Operating Expenses |
$91,695 |
$124,810 |
$156,788 |
| Profit Before Interest and Taxes |
$13,523 |
$23,535 |
$64,370 |
| Interest Expense |
$0 |
$0 |
$0 |
| Taxes Incurred |
$3,204 |
$5,884 |
$16,361 |
| Net Profit |
$10,318 |
$17,651 |
$48,009 |
| Net Profit/Sales |
9.40% |
11.36% |
20.68% |
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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
|
| Pro Forma Cash Flow |
| |
2001 |
2002 |
2003 |
| |
| Cash from Operations: |
| Cash Sales |
$93,330 |
$132,038 |
$197,374 |
| Cash from Receivables |
$13,918 |
$22,242 |
$33,044 |
| Subtotal Cash from Operations |
$107,248 |
$154,280 |
$230,417 |
| |
| Additional Cash Received |
| Sales Tax, VAT, HST/GST Received |
$0 |
$0 |
$0 |
| New Current Borrowing |
$0 |
$0 |
$0 |
| New Other Liabilities (interest-free) |
$0 |
$0 |
$0 |
| New Long-term Liabilities |
$0 |
$0 |
$0 |
| Sales of Other Current Assets |
$0 |
$0 |
$0 |
| Sales of Long-term Assets |
$0 |
$0 |
$0 |
| New Investment Received |
$0 |
$0 |
$0 |
| Subtotal Cash Received |
$107,248 |
$154,280 |
$230,417 |
| Expenditures |
2001 |
2002 |
2003 |
| Expenditures from Operations: |
| Cash Spending |
$2,072 |
$2,548 |
$4,082 |
| Payment of Accounts Payable |
$93,389 |
$132,822 |
$176,854 |
| Subtotal Spent on Operations |
$95,461 |
$135,370 |
$180,936 |
| |
| Additional Cash Spent |
| Sales Tax, VAT, HST/GST Paid Out |
$0 |
$0 |
$0 |
| Principal Repayment of Current Borrowing |
$0 |
$0 |
$0 |
| Other Liabilities Principal Repayment |
$0 |
$0 |
$21,000 |
| Long-term Liabilities Principal Repayment |
$2,584 |
$7,750 |
$7,750 |
| Purchase Other Current Assets |
$0 |
$0 |
$0 |
| Purchase Long-term Assets |
$0 |
$0 |
$0 |
| Dividends |
$0 |
$0 |
$0 |
| Subtotal Cash Spent |
$95,461 |
$135,370 |
$180,936 |
| |
| Net Cash Flow |
$11,787 |
$18,910 |
$49,481 |
| Cash Balance |
$20,487 |
$39,397 |
$88,878 |
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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
|
| Pro Forma Balance Sheet |
| |
| Assets |
| Current Assets |
2001 |
2002 |
2003 |
| Cash |
$20,487 |
$39,397 |
$88,878 |
| Accounts Receivable |
$2,552 |
$3,611 |
$5,398 |
| Inventory |
$483 |
$737 |
$1,164 |
| Other Current Assets |
$1,000 |
$1,000 |
$1,000 |
| Total Current Assets |
$24,522 |
$44,745 |
$96,440 |
| Long-term Assets |
| Long-term Assets |
$10,000 |
$10,000 |
$10,000 |
| Accumulated Depreciation |
$2,070 |
$4,140 |
$6,210 |
| Total Long-term Assets |
$7,930 |
$5,860 |
$3,790 |
| Total Assets |
$32,452 |
$50,605 |
$100,230 |
| |
| Liabilities and Capital |
| Current Liabilities |
2001 |
2002 |
2003 |
| Accounts Payable |
$2,184 |
$2,686 |
$4,302 |
| Current Borrowing |
$0 |
$0 |
$0 |
| Other Current Liabilities |
$0 |
$0 |
$0 |
| Subtotal Current Liabilities |
$2,184 |
$2,686 |
$4,302 |
| |
Long-term Liabilities |
$0 |
$0 |
$0 |
| Total Liabilities |
$2,184 |
$2,686 |
$4,302 |
| |
| Paid-in Capital |
$30,000 |
$30,000 |
$30,000 |
| Retained Earnings |
($10,050) |
$268 |
$17,919 |
| Earnings |
$10,318 |
$17,651 |
$48,009 |
| Total Capital |
$30,268 |
$47,919 |
$95,929 |
| Total Liabilities and Capital |
$32,452 |
$50,605 |
$100,230 |
| Net Worth |
$30,268 |
$47,919 |
$95,929 |
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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.
| |
| Ratio Analysis |
| |
2001 |
2002 |
2003 |
Industry Profile |
| Sales Growth |
0.00% |
41.47% |
49.48% |
3.00% |
| |
| Percent of Total Assets |
| Accounts Receivable |
7.86% |
7.14% |
5.39% |
8.70% |
| Inventory |
1.49% |
1.46% |
1.16% |
9.50% |
| Other Current Assets |
3.08% |
1.98% |
1.00% |
26.40% |
| Total Current Assets |
75.56% |
88.42% |
96.22% |
44.60% |
| Long-term Assets |
24.44% |
11.58% |
3.78% |
55.40% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
| |
| Current Liabilities |
6.73% |
5.31% |
4.29% |
29.30% |
| Long-term Liabilities |
0.00% |
0.00% |
0.00% |
27.80% |
| Total Liabilities |
6.73% |
5.31% |
4.29% |
57.10% |
| Net Worth |
93.27% |
94.69% |
95.71% |
42.90% |
| |
| Percent of Sales |
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
95.83% |
95.50% |
95.24% |
0.00% |
| Selling, General & Administrative Expenses |
86.59% |
84.13% |
74.45% |
68.20% |
| Advertising Expenses |
0.91% |
0.74% |
0.56% |
1.50% |
| Profit Before Interest and Taxes |
12.32% |
15.15% |
27.72% |
2.70% |
| |
| Main Ratios |
| Current |
11.23 |
16.66 |
22.42 |
1.53 |
| Quick |
11.01 |
16.39 |
22.15 |
0.88 |
| Total Debt to Total Assets |
6.73% |
5.31% |
4.29% |
57.10% |
| Pre-tax Return on Net Worth |
44.68% |
49.11% |
67.10% |
3.40% |
| Pre-tax Return on Assets |
41.67% |
46.51% |
64.22% |
8.00% |
| |
| Additional Ratios |
2001 |
2002 |
2003 |
|
| Net Profit Margin |
9.40% |
11.36% |
20.68% |
n.a |
| Return on Equity |
34.09% |
36.83% |
50.05% |
n.a |
| |
| Activity Ratios |
| Accounts Receivable Turnover |
6.45 |
6.45 |
6.45 |
n.a |
| Collection Days |
43 |
48 |
47 |
n.a |
| Inventory Turnover |
12.00 |
11.46 |
11.62 |
n.a |
| Accounts Payable Turnover |
43.76 |
49.64 |
41.49 |
n.a |
| Payment Days |
5 |
7 |
7 |
n.a |
| Total Asset Turnover |
3.38 |
3.07 |
2.32 |
n.a |
| |
| Debt Ratios |
| Debt to Net Worth |
0.07 |
0.06 |
0.04 |
n.a |
| Current Liab. to Liab. |
1.00 |
1.00 |
1.00 |
n.a |
| |
| Liquidity Ratios |
| Net Working Capital |
$22,338 |
$42,059 |
$92,139 |
n.a |
| Interest Coverage |
0.00 |
0.00 |
0.00 |
n.a |
| |
| Additional Ratios |
| Assets to Sales |
0.30 |
0.33 |
0.43 |
n.a |
| Current Debt/Total Assets |
7% |
5% |
4% |
n.a |
| Acid Test |
9.84 |
15.04 |
20.89 |
n.a |
| Sales/Net Worth |
3.63 |
3.24 |
2.42 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |
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