Creating a Car Wash Business Plan

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Creating a Car Wash Business Plan

Before embarking on writing a business plan				Pricing
for starting a car wash, a definition of what
a business plan is in order. A business plan				The effects of pricing play a large role on
is a document to identify an opportunity,				how your product is perceived in the
research why this opportunity is profitable				marketplace. Price too low compared to the
and the steps needed to capitalize on the				competition and your product could be
opportunity. The business plan can be a				perceived as cheap and unreliable. Price too
formal document or it can be written on the				high with the features and benefits of your
back of a napkin but the mere act of writing				product and few customers come through the
the idea down forces you to get the idea out				door. While this is a complex issue, here are
of your head and on paper which helps find				a few things to keep in mind.
hidden business flaws and makes you think
carefully about each phase of your business.				Make sure you can make a profit at whatever
				price you are selling at.
Creating a business plan is something anyone
can do, even if you don’t know anything				If you want to have lower costs and
about business or finances. Even though the				“get your foot in the door” it
business plan is critical to getting the idea				may be better to offer discounts or coupons
off of the ground, many entrepreneurs				initially until your business is better
procrastinate when it comes to preparing a				known.
written plan. If you don’t know
anything about business or finances, this is				Don’t be afraid to charge more for your
the best time to begin learning as the				product or service than the competition if
chances of your business being successful				you have something of more value to offer.
will be limited without this knowledge. Just
as a builder won't begin construction without				Pricing is the easiest of the marketing mix
a blueprint, entrepreneurs shouldn't rush				to change. You may find that a large
into new ventures without a plan. The old				competitor will under price you to ensure you
saying that “those who fail to plan,				can’t make a profit and your car wash
plan to fail” is very relevant when				goes out of business.
talking about starting a business.
SBA’s statistics claim over half of new				Management & Employees
businesses fail in the first three years and
the common factor is poor planning or				In this section you would describe who is
under-capitalization (which is also poor				going to manage the business on a daily basis
planning).				as well as provide strategic direction (if
				these positions are separate). Each of these
Getting Started				people need to have a brief biography
				included as well as a resume in the appendix.
The first step in creating a business plan is				Try to show how the experience and education
just getting started. Writing the business				of these people will be able to successfully
plan may seem overwhelming at first, but if				execute the strategy in the business plan and
you break the plan down to bite sized pieces				succeed. Many times the owner may not have
and work on one section at a time won’t				the specific experience for this business, so
seem as daunting. Begin with what you know				it is very important to pull their other
first and describe your business and your				professional experience in and explain how it
product or services. Work towards the more				will make for a successful operation. Next, a
difficult subjects such as marketing,				brief explanation of the employees is in
operations and financials. Don’t worry				order including:
about it being perfect now, just get the
concepts on paper - expand and refine later.				What positions need to be filled
If you get stuck on a section in the plan,
skip it for now and come back later when you				When they need to be filled (This is
have more details.				important in developing financial projections
				as you may have some employees come on after
Who is your audience?				you start)

When writing your car wash business plan, you				How much they get paid (Be sure to calculate
need to keep in mind who your intended				payroll taxes as well, estimate 15% if not
audience is and why you are writing the plan.				sure)
Why? A plan for the bank will be less
interested in the exit strategy and return on				It is also recommended to add the
investment than one for equity investors.				professional and advisors to your business.
Additionally, a plan for written for internal				These people include:
use will be different than one looking for
financing as a bank is not necessarily				Board of directors
interested in detailed operations of the
business.				Consultants

Structure				Accountants

Business plans tend to have a lot of elements				Attorneys
in common. While there is not a format that
all business plans follow, there are				Bankers
generally accepted guidelines that most
follow as the order in which the subjects				Mentors
flow are not random. The Business Description
of a business plan is aimed at painting a				Operations & Location
picture of your business and why this
business will be successful. The Marketing,				The operations and location section of the
Management and Operations sections are				plan illustrates how you are going to make or
researched and a strategy of how your				acquire your product and information about
business will compete and operate is				your business location.
developed. Last financial projections show in
numbers what you explained in the business				Operations – Explain how and where your
plan for the sales and expenses.				products or services are made. A few points
				to include in your plan
Breaking these three major sections down even
further, a business plan consists of six key				How does your car wash operate, what steps
components:				are in your service?

Executive Summary				Who are your suppliers?

Business Description				What are the terms and lead time for this
				product?
Marketing
				Location – Location is where you will
Managers & Employees				be doing business out of. If you are in the
				classic, I can’t get my location until
Operations & Location				I get a loan so I can’t finish my
				business plan scenario, list what features
Financial Projections				you are looking at in a building along with
				average prices or rents and pad that number a
In addition to these sections, a business				little just in case. A few things to add:
plan should also have a cover, title page and
table of contents.				Department of Transportation traffic count
				– most states have this information
How Long Should Your Business Plan Be?				online to show how many vehicles pass your
				location each day.
The answer that nobody liked in school
applies to a business plan which is,				Building description
“as long as it needs to be”. The
more complex a business or the more				What is the size
sophisticated investors or funds requested
will increase the length of a plan. An				Where is it located
average car wash business plan narrative
should be 4-15 pages plus financials and				Specific reasons for this property
appendix items.
				Proximity to suppliers, roads, airports,
Business Plan Outline				railroads, and shipping centers, etc.

Executive Summary				Zoning

The executive summary is the first part of				Average utilities – Be sure to get the
the business plan but is the last to be				last 12 months from the electric company if
written. It gives the reader a quick glance				the building had been occupied. This could be
of what your business proposal is about and				an expensive lesson from a dishonest
what you are asking for. This part is				landlord. If you are opening a new location,
critical as most readers will scan this				try to talk with other car wash operators in
section before deciding whether to read				a non-competitive area to get a estimate
further.
				Add pictures to the appendix
The executive summary should typically be
about one-half of a page in length and				Add a floor plan to the appendix
include what you would cover in an elevator
pitch such as:				Purchase price or monthly rent/lease

Explain the condensed version of the business				Include sales/rent/lease agreement in
concept				appendix

Product description or service proposition				If building or renovating be sure to include
				quotes as this is an area frequently
This section should emphasize any unique				underestimated in costs.
features or benefits that what is currently
in the industry or area, aka why would				Financial Projections
someone buy your product over the
competition.				Financial projections are placed at the end
				of your business plan, before the appendix
The demographics of your market				but it a very critical piece to the plan. The
				three must-have financial statements are a
The Management team				cash flow statement, a profit and loss
				statement and a balance sheet. The
When the anticipated start date is				information already provided in the narrative
				portion of the business plan must match the
Your equity position				financial projections. Most financial
				projections are three years in length. It is
How much are you asking for				a good idea to include a Notes &
				Assumptions to Financial Projections page to
Concise is the key in the executive summary.				both help make sure all of your numbers come
You will go into more detail later in the				through and provide an itemized list to
business plan.				provide clarity for the reader.

Business Description				Notes & Assumptions to Financial
				Projections
The purpose of the business description is to
objectively describe the car wash business				Loans
details and future potential include:
				Break out each loan (building, equipment,
Mission				inventory)

What the business does				Amount

Description of products and/or services				Interest rate

Industry information				Length

Business Organization				And any monthly costs not discussed in
				business plan narrative
Status of the business (start-up, expansion
or purchasing)				Cost of goods/inventory

Current and future goals				Advertising

Any facts or figures should be noted and				Employee wages
sources included in the business plan. This
information is important should you need to				Insurance
defend your data and assumptions. The
business description is where you are trying				License & fees
to paint a picture of the potential of your
business along with the facts to support it.				Miscellaneous
Try to inject energy and excitement to get
the reader enthusiastic about the idea,				Professional fees
without going overboard of course.
				Rent/property taxes
After describing the business, it is time to
describe and additional products or services				Repairs & maintenance
your car wash is selling. Keep in mind that
it is important to show how your products and				Supplies
services are better than the competition. If
you don’t have a good answer than you				Telephone
should rethink your strategy. What is it
about your car wash that is going to get the				Utilities
customer to change doing business with the
competition?				Vehicle expense

Marketing				Etc.

A very important part of your business plan				Anything else that needs to be explained in
is the marketing section. Regardless of the				the financials that is not in the narrative
quality of your products and your services,
your business will be lost in the clutter of				Financial Projection Sections
advertising. If you don’t know your
customers, how will they ever find you? All				Startup Expenses – These are all
of this begins with doing some research.				expenses you will incur prior to opening your
				car wash. It is recommended to have quotes
Customers: Who Is Your Market				available or in the appendix for the larger
				items. It is also recommended that you pad
The first step is to determine who you are				your numbers some as there will always be
going to sell to by identifying common				unexpected expenses that were not accounted
characteristics of your market such as age,				for.
income, race, religion, education, interests
and/or geographic locations. While everyone				Sources and Uses of Funds – This
will want to wash their car product how are				section details how the loan money will be
you going to effectively advertise to				used (inventory, car wash equipment, repairs
everyone and still make a profit? What you				and improvements, working capital, etc) and
need to do instead is determine the group or				who is providing it (bank, investor or
groups of people who are most likely to use				owner). You will likely need to be injecting
your car wash services and market to them.				20% of your own money and maybe more
After all you are trying to generate a				depending on the risk assessment of the
positive return on your marketing dollars, so				business and your personal finances.
use them wisely.
				Cash Flows - The cash-flow statement is one
Competition				of the most important pieces of your business
				plan. It shows a schedule of the money coming
In today's ultracompetitive marketplace,				into the business and expenses that need to
there is going to be competition, no matter				be paid and whether you have enough cash to
how creative your business concept is.				sustain the business gained during the warm
Attempting to run a portion of your car wash				month to cover the costs during the winter
business better than the competition may be a				months. Every part of your business plan is
difficult challenge so it is often better to				important, but none of it means a thing if
focus on planning on being different and				you run out of cash. Should this number be
competing with them less directly. Can you				negative, you either need to raise sales,
serve a particular market niche such as the				reduce expenses or have more cash. Your cash
elderly that isn’t being looked at? Can				flow statement will typically be three years
you identify a unique operations/marketing				in length with the first year analyzing the
distribution strategy with a mobile approach?				monthly figures and later years by quarter.
Even if you don’t have direct				Don’t be intimidated with the cash flow
competition in your area meaning someone				statement as it is merely a future look into
selling the same or similar products				your checking account.
services, you will have indirect competition
for replacement products/services. If you				Profit & Loss – This statement,
indicate in your plan there is no competition				while similar to the cash flow statement but
it will be viewed that there is either no				illustrated annually looks at the effects of
market for your product or you have not done				non-cash charges such as depreciation and
your research.				amortization to get an accounting overview of
				the operations of your business.
Optimally you will want information on at
least three but no more than five				Balance Sheet – The balance sheet is a
competitors. List information about who they				summary of the value of all assets,
are, how long they have been in business,				liabilities and equity for an organization at
location, products or services offered,				the end of each year. A balance sheet is
perception on pricing, quality, etc. and				often described as a "snapshot" of
compare your advantages and disadvantages. If				a company's financial condition and will show
the information you are looking for is not				the value of the business over time.
available online, you may need to pretend you
are a customer to get some of this				Personal Financial Statement – If you
information.				are looking at bank financing every person
				who will have a 20% or more ownership
Distribution - How Will You Get the Product				position will need to provide a personal
To The Customer: By looking at who your				financial statement to show how effective
market and competition is, you will have an				they are at managing your money. This
idea of how to get your product to them.				statement will show your assets (checking
Perhaps through your research you will find a				& savings accounts, cd’s ira, 401K,
strategic advantage to serve the customer				valuables, home, vehicle, etc) as well as
that the competition does not.				assets (mortgages, credit card bills,
				installment accounts, etc)
Promotional Strategy
				Appendices
With the above steps researched, the
promotional strategy follows. The promotional				Appendix items are various pieces of
strategy is where most entrepreneurs fail as				information that help make your case. Include
they use the blanket statement that they are				details and studies used in your business
going to advertise in the newspaper, radio				plan; for example:
and/or television without thinking through
the process or the customer. The promotional				Quotes for items over $500
strategy provides you a map of how you are
going to reach your market in the most				Resumes of the management team
efficient manner possible. Advertising is
expensive, use it wisely.				Industry research

Sales Projections				Demographic data and trends

On of the more difficult areas of the				Maps/floorplans/blueprints of location
business plan is coming up with sales
projections. This number is probably going to				Leases and contracts
be wrong and that’s ok. What you want
is a figure backed up with justifiable data.				Letters of support
Just grabbing a number out of the air saying
you will make $300,000 won’t work.				There is a lot to creating your business plan
There are many sources to help come up with				but will definitely make your business
this number including:				stronger. While it may seem easier to have
				someone else write your plan, there is no
Industry journals				substitute to writing it yourself. This is
				your business and by writing it yourself you
Trade groups				will have a better understanding of your
				business and strategies for success. There
Car washes in similar demographic areas				are also many free business plan templates
				and workbooks available on the web to help
Industry experts				you get started. You can use these to help
				get started creating your business plan and
Census data				then modify it for your car wash business.

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