Business Plan

Auto Care
Car wash and service center
By
Danushka Abeyratne
DCFM/DIP/2016/086

Entrepreneurship & Business Planning 2017 Department of Commerce & Financial Management
DIPB 02046 Faculty of Commerce & Management Studies
University of Kelaniya
 Business plan outline

1. About the Company

2. Services
3. Market Analysis
4. Strategy and
Implementation
5.

6.
Management
Financial Plan
Auto Care
Car wash and service center
 Company Summary
The company is solely owned by Danushka Abeyratne and will be funded by an initial personal
investment. Auto Care is to be registered under the business registration act of 1990 in Sri Lanka

 Vision

To be the most trusted, recognized and respected solution provider in the automobile industry in Sri Lanka

 Mission

We strive to provide the best quality automobile product and services through conveniently
located Car Care Service Centre’s, at affordable prices by making our brand a consumers’ first choice for
automobile product and service supports. Trust will be gained from consumers through the genuine support
given to them by our skilled and dedicated service staff. We are committed to deliver our service values and
we are proud of our customized service

 Objectives

The objectives for auto Care Car Wash and Detail Service are:

Attract 100 clients with in the 1st year.

Develop the market share by 15% every year.
Maintain a net profit margin of 25% every year.
Expand to two locations after third year of operation.
 Services
Auto Care is mainly focuses on their key services, which are Car washing, Auto
Detailing and Lubrication Services which is mainly known as Full Service in this
industry.

Car Washing Auto Detailing Lubrication Services

 Market Analysis

The car wash will be based in Wattala. 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 Rs.500,000 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 six kilometers of the
proposed location for Auto Care.

Market segmentation

Auto Care 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

2. Older luxury car owners:
3. Sports car owners:
4. Lifetime owners:
5. Dealerships:
6. Local businesses:
 TARGET MARKET SEGMENT ANALYSIS (PIE)

6. Local businesses
11%
5. Dealerships 1. New car owners
10% 29%

2. Older luxury car

owners
13%
4. Lifetime owners
30% 3. Sports car owners
7%
Service Business Analysis

The hand car washing business in Wattala consists of many small competitors.
Everything from local children raising money for their youth group on a Saturday
by cleaning cars, to the existing car wash machines, are competition for Auto
care. 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. Auto care on the other hand, targets the quality-
conscious individuals who value their car enough to spend Rs.500-2,000 per week
to make it look good.

Competition and Buying Patterns

There is four other hand car wash shop in the Wattala area. 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 Auto care 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 Auto care targets will be more cost conscious, so prices
will be approximately 30% less for these customers to promote volume usage.
 Strategy and Implementation

Positioning Strategy

Auto Care intends to provide high quality customer service for a very low price so that they
can position their business in a competitive state. Their aspired market position is showed in
the chart.

Price
3.5

High 3

2.5

1.5

1
Aspired position
0.5 of Auto Care
Low
0
0 0.5 1 1.5 2 2.5 3 3.5

Low High Service Quality

Competitive Edge

Auto care' competitive edge will be Danushka Abeyratne and the quality of his services
in the area. In addition, Danushka 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.

Sales Strategy

Sales strategy is on a one-to-one basis. All customers will feel they are a valued friend
of Auto care, 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.

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 late November. However, we will aim to flatten sales across the sales
cycle by targeting.
 Sales by Year
LKR 8,000,000.00

LKR 7,000,000.00

LKR 1,200,000.00
LKR 6,000,000.00

LKR 5,000,000.00 LKR 1,080,000.00

LKR 960,000.00

LKR 4,000,000.00 LKR 840,000.00 LKR 912,000.00

LKR 672,000.00 LKR 840,000.00

LKR 3,000,000.00
LKR 600,000.00
LKR 480,000.00 LKR 1,080,000.00
LKR 2,000,000.00
LKR 360,000.00 LKR 840,000.00
LKR 192,000.00
LKR 120,000.00
LKR 360,000.00
LKR 1,000,000.00
LKR 1,440,000.00 LKR 1,680,000.00
LKR 960,000.00
LKR -
Year 1 Year 2 Year 3
Full Washers Exterior wash Interrior clean End User detail Business Fleet Washes Car Delearship detail
 START-UP REQUIREMENTS LKR

Start-up Expenses
Legal 10,000.00

Stationery etc. 2,000.00

Brochures 5,000.00

Consultants 2,000.00

Insurance 30,000.00

Rent 50,000.00

Research and Development 2,000.00

Expensed Equipment 350,000.00

Building Materials 120,000.00

Building Labor 15,000.00

TOTAL START-UP EXPENSES 586,000.00

Start-up Assets
Cash Required 400,000.00

Start-up Inventory 5,000.00

Other Current Assets 1,000.00

Long-term Assets 100,000.00

TOTAL ASSETS 506,000.00

Total Requirements 1,092,000.00

 START-UP FUNDING
Start-up Expenses to Fund 586,000.00
Start-up Assets to Fund 506,000.00
TOTAL FUNDING REQUIRED 1,092,000.00
Assets
Non-cash Assets from Start-up 106,000.00
Cash Requirements from Start-up 400,000.00
Additional Cash Raised -
Cash Balance on Starting Date 400,000.00
TOTAL ASSETS 506,000.00
Liabilities and Capital
Liabilities
Current Borrowing -
Long-term Liabilities -
Accounts Payable (Outstanding Bills) -
Other Current Liabilities (interest-free) -
TOTAL LIABILITIES -
Capital
Planned Investment
Investor 1 1,092,000.00
Investor 2 -
Other -
Additional Investment Requirement -
TOTAL PLANNED INVESTMENT 1,092,000.00
Loss at Start-up (Start-up Expenses) (506,000.00)
TOTAL CAPITAL 586,000.00
TOTAL CAPITAL AND LIABILITIES 586,000.00
Total Funding 1,092,000.00
 Management

Organizational Structure

Owner

General
Manager

Accountant Workers
 Financial Plan

Break-even Analysis

The table and chart below show the monthly break-even analysis calculations for
Auto Care
Projected Break-even
LKR 800,000.00

LKR 600,000.00

LKR 400,000.00

LKR 200,000.00

LKR -
70 140 210 280 350 420 490 560 630 700 770

LKR (200,000.00)

LKR (400,000.00)

LKR (600,000.00)

LKR (800,000.00)
 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.
Projected Profit Monthly
LKR 500,000.00

LKR 400,000.00

LKR 300,000.00

LKR 200,000.00

LKR 100,000.00

LKR -
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

LKR (100,000.00)

LKR (200,000.00)

Profit Monthly
 Projected Profit Yearly
LKR 5,000,000.00

LKR 4,500,000.00

LKR 4,000,000.00

LKR 3,500,000.00

LKR 3,000,000.00

LKR 2,500,000.00

LKR 2,000,000.00

LKR 1,500,000.00

LKR 1,000,000.00

LKR 500,000.00

LKR -
Yearly 1 Yearly 2 Yearly 3

Profit Yearly
 PROJECTED PROFIT AND LOSS STATEMENT
YEAR 1 YEAR 2 YEAR 3
Sales LKR 2,472,000.00 LKR 5,352,000.00 LKR 6,792,000.00
Direct Cost of Sales 50,000.00 75,000.00 85,000.00
Other - - -
TOTAL COST OF SALES 50,000.00 75,000.00
85,000.00
Expenses
Payroll 105,000.00 195,000.00 265,000.00
Sales and Marketing and Other Expenses 172,000.00 300,000.00 400,000.00
Depreciation 50,000.00 75,000.00 100,000.00
Leased Equipment 122,000.00 400,000.00 500,000.00
Utilities 35,000.00 75,000.00 100,000.00
Insurance 40,000.00 50,000.00 60,000.00
Rent 50,000.00 50,000.00 50,000.00
Payroll Taxes 22,500.00 29,250.00 39,750.00
Other 200,000.00 300,000.00 400,000.00
Total Operating Expenses 796,500.00 1,474,250.00 1,914,750.00

Profit Before Interest and Taxes 1,675,500.00 3,877,750.00 4,877,250.00

Interest Expense - - -
Taxes Incurred 175,500.00 285,500.00 360,889.00
Net Profit 1,500,000.00 3,592,250.00 4,516,361.00
Net Profit/Sales 1.65 1.49 1.50
 Projected Cash Flow

The following Cash Flow table illustrates that if Auto Care meets projected sales, it will
have positive cash flow after half a year of operations.

Projected Cash Flow LKR LKR LKR

YEAR 1 YEAR 2 YEAR 3
Cash Received
Cash from Operations
Cash Sales 2,472,000.00 5,352,000.00 6,792,000.00
Cash from Receivables
SUBTOTAL CASH FROM OPERATIONS 2,472,000.00 5,352,000.00 6,792,000.00
SUBTOTAL CASH RECEIVED
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations 511,500.00 1,049,250.00 1,364,750.00
Cash Spending 200,000.00 300,000.00 400,000.00
Bill Payments 85,000.00 125,000.00 150,000.00
SUBTOTAL SPENT ON OPERATIONS 796,500.00 1,474,250.00 1,914,750.00
SUBTOTAL CASH SPENT 796,500.00 1,474,250.00 1,914,750.00
Net Cash Flow 1,675,500.00 3,877,750.00 4,877,250.00
TAX 175,500.00 285,500.00 360,889.00
Cash Balance 1,500,000.00 3,592,250.00 4,516,361.00
Projected balance sheet
Projected Balance Sheet LKR LKR LKR
YEAR 1 YEAR 2 YEAR 3
Assets
Current Assets 150,000.00 250,000.00 375,000.00
Cash 400,000.00 575,000.00 685,000.00
Accounts Receivable - - -
Inventory 35,000.00 55,000.00 85,000.00
Other Current Assets 125,000.00 135,000.00 155,000.00
TOTAL CURRENT ASSETS 710,000.00 1,015,000.00 1,300,000.00
Long-term Assets - - -
Long-term Assets - - -
Accumulated Depreciation 50,000.00 75,000.00 100,000.00
TOTAL LONG-TERM ASSETS 50,000.00 75,000.00 100,000.00
TOTAL ASSETS 760,000.00 1,090,000.00 1,400,000.00
Liabilities and Capital 85,000.00 270,000.00 399,000.00
Current Liabilities 50,000.00 50,000.00 50,000.00
Accounts Payable 150,000.00 245,000.00 305,000.00
Current Borrowing - - -
Other Current Liabilities - - -
SUBTOTAL CURRENT LIABILITIES 285,000.00 565,000.00 754,000.00
Long-term Liabilities - - -
TOTAL LIABILITIES 285,000.00 565,000.00 754,000.00
Paid-in Capital 300,000.00 300,000.00 300,000.00
Retained Earnings - - -
Earnings 175,000.00 225,000.00 346,000.00
TOTAL CAPITAL 475,000.00 525,000.00 646,000.00
TOTAL LIABILITIES AND CAPITAL 760,000.00 1,090,000.00 1,400,000.00
Net Worth 475,000.00 525,000.00 646,000.00
THANK YOU.

Auto Care
Car wash and service center