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Car Wash Self-service Business Plan

Auto Paradise

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Financial Plan

Our business is an "all cash" business that will pay for all variable and fixed expenses monthly. Thus, we will rapidly build cash flow to finance future growth. During the first nine months (six months of operation), two key issues will assist Auto Paradise in rapidly building capital:

  1. Nine months (three months construction, six months of operation) of deferred long-term loan repayment (£7,081 savings/month)
  2. CEO/manager will not receive a salary for at least six months (£3,000 savings/month).

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. From the beginning, we recognize that variable expenses are critical. Cost of water, sewer and electricity are our largest expenses. Water is our major concern in West Texas. We are planning for this possibility by installing all of the required storage, electrical and plumbing for a total water reclamation system.

Two of the more important underlying assumptions are:

  1. We assume our long term financing includes nine months of interim interest for repayment.
  2. We assume a sound economy, without major recession despite our modest pricing.
  3. We assume, of course, that there are no unforeseen changes in local regulations that will interrupt our service.
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 7.50% 7.50% 7.50%
Long-term Interest Rate 8.00% 8.00% 8.00%
Tax Rate 20.83% 20.00% 20.83%
Other 0 0 0

7.2 Break-even Analysis

The break-even analysis table below the following revenue sources: 

1.  Laser Car Wash Sales

2.  Vacuum/vending sales

3.  ATM revenue

4.  Reverse Osmosis water revenue.

Break-even Analysis
Monthly Revenue Break-even £16,059
Assumptions:
Average Percent Variable Cost 19%
Estimated Monthly Fixed Cost £12,964

7.3 Projected Profit and Loss

Projected Revenue. See "Sales Forecast" for a detailed breakdown of projected revenue.

Projected Operating Expenses.

  1. Direct Cost of Automatic Sales.
    • Chemicals. Average 8.6% of gross revenue. Chemicals include soap, wax and salt.
    • Utilities. Average 13.9% of gross revenue. Utilities include water, electricity, gas and sewer.
  2. Direct Cost of Self-Serve Sales. Total cost averages 11.1% of self-serve revenue.
  3. Direct Cost of Vacuum/Vending Sales. Average 1% of aggregate automatic and self-serve revenue.
  4. Variable/Fixed Expenses
    • Labor. Labor is estimated to be £2,000/month with an additional 15% burden to cover related payroll taxes and workman's compensation insurance. Based on two part time employees, 70 total hours/week @ £6.50/hr.
    • Repair and Maintenance includes £750/month for monthly service provided by WET and £100/month to clean each wash bay pit.
    • Real Estate Taxes are estimated at 3% of value of land and construction costs (£500,000).
    • General Liability Insurance is estimated at £1800/year.

Depreciation. Depreciation was calculated as follows:

  • Equipment. £295,000 ¸ 6 years ¸ 12 months = £4,097/month
  • Construction:  £390,000 ¸ 15 years ¸ 12 months = £2,167/month
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales £312,838 £651,382 £675,960
Direct Cost of Sales £60,297 £125,307 £130,018
Other Production Expenses £0 £0 £0
Total Cost of Sales £60,297 £125,307 £130,018
Gross Margin £252,541 £526,075 £545,942
Gross Margin % 80.73% 80.76% 80.77%
Expenses
Payroll £42,000 £102,000 £120,000
Sales and Marketing and Other Expenses £17,400 £34,800 £34,800
Depreciation £75,168 £150,336 £150,336
Accounting / Legal £1,200 £2,400 £2,400
Dumpster / Telephone / Pager £1,500 £3,000 £3,000
Insurance £1,800 £3,600 £3,600
Repairs / Maintenance £10,200 £20,400 £20,400
Payroll Taxes £6,300 £15,300 £18,000
Other £0 £0 £0
Total Operating Expenses £155,568 £331,836 £352,536
Profit Before Interest and Taxes £96,973 £194,239 £193,406
EBITDA £172,141 £344,575 £343,742
Interest Expense £55,603 £84,490 £111,401
Taxes Incurred £7,963 £21,950 £17,084
Net Profit £33,407 £87,800 £64,920
Net Profit/Sales 10.68% 13.48% 9.60%

7.4 Projected Cash Flow

The following table outlines are estimated cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales £312,838 £651,382 £675,960
Subtotal Cash from Operations £312,838 £651,382 £675,960
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 £771,390 £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 £312,838 £1,422,772 £675,960
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending £42,000 £102,000 £120,000
Bill Payments £148,606 £299,321 £338,283
Subtotal Spent on Operations £190,606 £401,321 £458,283
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 £0
Long-term Liabilities Principal Repayment £9,168 £40,808 £57,792
Purchase Other Current Assets £0 £0 £0
Purchase Long-term Assets £0 £857,100 £0
Dividends £65,000 £65,000 £65,000
Subtotal Cash Spent £264,774 £1,364,229 £581,075
Net Cash Flow £48,064 £58,543 £94,885
Cash Balance £142,564 £201,107 £295,992

7.5 Projected Balance Sheet

The following table indicates our estimated balance sheet totals.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash £142,564 £201,107 £295,992
Other Current Assets £0 £0 £0
Total Current Assets £142,564 £201,107 £295,992
Long-term Assets
Long-term Assets £799,000 £1,656,100 £1,656,100
Accumulated Depreciation £75,168 £225,504 £375,840
Total Long-term Assets £723,832 £1,430,596 £1,280,260
Total Assets £866,396 £1,631,703 £1,576,252
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable £13,656 £25,582 £28,003
Current Borrowing £0 £0 £0
Other Current Liabilities £0 £0 £0
Subtotal Current Liabilities £13,656 £25,582 £28,003
Long-term Liabilities £690,832 £1,421,414 £1,363,622
Total Liabilities £704,488 £1,446,996 £1,391,625
Paid-in Capital £234,000 £234,000 £234,000
Retained Earnings (£105,500) (£137,093) (£114,293)
Earnings £33,407 £87,800 £64,920
Total Capital £161,907 £184,707 £184,627
Total Liabilities and Capital £866,396 £1,631,703 £1,576,252
Net Worth £161,907 £184,707 £184,627

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7542, Car washes, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 108.22% 3.77% 3.00%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 26.40%
Total Current Assets 16.45% 12.32% 18.78% 44.60%
Long-term Assets 83.55% 87.68% 81.22% 55.40%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 1.58% 1.57% 1.78% 29.30%
Long-term Liabilities 79.74% 87.11% 86.51% 27.80%
Total Liabilities 81.31% 88.68% 88.29% 57.10%
Net Worth 18.69% 11.32% 11.71% 42.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.73% 80.76% 80.77% 0.00%
Selling, General & Administrative Expenses 70.15% 67.28% 71.06% 68.20%
Advertising Expenses 0.38% 0.37% 0.36% 1.50%
Profit Before Interest and Taxes 31.00% 29.82% 28.61% 2.70%
Main Ratios
Current 10.44 7.86 10.57 1.53
Quick 10.44 7.86 10.57 0.88
Total Debt to Total Assets 81.31% 88.68% 88.29% 57.10%
Pre-tax Return on Net Worth 25.55% 59.42% 44.42% 3.40%
Pre-tax Return on Assets 4.77% 6.73% 5.20% 8.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 10.68% 13.48% 9.60% n.a
Return on Equity 20.63% 47.53% 35.16% n.a
Activity Ratios
Accounts Payable Turnover 11.88 12.17 12.17 n.a
Payment Days 27 23 29 n.a
Total Asset Turnover 0.36 0.40 0.43 n.a
Debt Ratios
Debt to Net Worth 4.35 7.83 7.54 n.a
Current Liab. to Liab. 0.02 0.02 0.02 n.a
Liquidity Ratios
Net Working Capital £128,907 £175,525 £267,989 n.a
Interest Coverage 1.74 2.30 1.74 n.a
Additional Ratios
Assets to Sales 2.77 2.50 2.33 n.a
Current Debt/Total Assets 2% 2% 2% n.a
Acid Test 10.44 7.86 10.57 n.a
Sales/Net Worth 1.93 3.53 3.66 n.a
Dividend Payout 1.95 0.74 1.00 n.a
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General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 7.50% 7.50% 7.50%
Long-term Interest Rate 8.00% 8.00% 8.00%
Tax Rate 20.83% 20.00% 20.83%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even £16,059
Assumptions:
Average Percent Variable Cost 19%
Estimated Monthly Fixed Cost £12,964
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales £312,838 £651,382 £675,960
Direct Cost of Sales £60,297 £125,307 £130,018
Other Production Expenses £0 £0 £0
Total Cost of Sales £60,297 £125,307 £130,018
Gross Margin £252,541 £526,075 £545,942
Gross Margin % 80.73% 80.76% 80.77%
Expenses
Payroll £42,000 £102,000 £120,000
Sales and Marketing and Other Expenses £17,400 £34,800 £34,800
Depreciation £75,168 £150,336 £150,336
Accounting / Legal £1,200 £2,400 £2,400
Dumpster / Telephone / Pager £1,500 £3,000 £3,000
Insurance £1,800 £3,600 £3,600
Repairs / Maintenance £10,200 £20,400 £20,400
Payroll Taxes £6,300 £15,300 £18,000
Other £0 £0 £0
Total Operating Expenses £155,568 £331,836 £352,536
Profit Before Interest and Taxes £96,973 £194,239 £193,406
EBITDA £172,141 £344,575 £343,742
Interest Expense £55,603 £84,490 £111,401
Taxes Incurred £7,963 £21,950 £17,084
Net Profit £33,407 £87,800 £64,920
Net Profit/Sales 10.68% 13.48% 9.60%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales £312,838 £651,382 £675,960
Subtotal Cash from Operations £312,838 £651,382 £675,960
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 £771,390 £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 £312,838 £1,422,772 £675,960
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending £42,000 £102,000 £120,000
Bill Payments £148,606 £299,321 £338,283
Subtotal Spent on Operations £190,606 £401,321 £458,283
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 £0
Long-term Liabilities Principal Repayment £9,168 £40,808 £57,792
Purchase Other Current Assets £0 £0 £0
Purchase Long-term Assets £0 £857,100 £0
Dividends £65,000 £65,000 £65,000
Subtotal Cash Spent £264,774 £1,364,229 £581,075
Net Cash Flow £48,064 £58,543 £94,885
Cash Balance £142,564 £201,107 £295,992
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash £142,564 £201,107 £295,992
Other Current Assets £0 £0 £0
Total Current Assets £142,564 £201,107 £295,992
Long-term Assets
Long-term Assets £799,000 £1,656,100 £1,656,100
Accumulated Depreciation £75,168 £225,504 £375,840
Total Long-term Assets £723,832 £1,430,596 £1,280,260
Total Assets £866,396 £1,631,703 £1,576,252
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable £13,656 £25,582 £28,003
Current Borrowing £0 £0 £0
Other Current Liabilities £0 £0 £0
Subtotal Current Liabilities £13,656 £25,582 £28,003
Long-term Liabilities £690,832 £1,421,414 £1,363,622
Total Liabilities £704,488 £1,446,996 £1,391,625
Paid-in Capital £234,000 £234,000 £234,000
Retained Earnings (£105,500) (£137,093) (£114,293)
Earnings £33,407 £87,800 £64,920
Total Capital £161,907 £184,707 £184,627
Total Liabilities and Capital £866,396 £1,631,703 £1,576,252
Net Worth £161,907 £184,707 £184,627
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 108.22% 3.77% 3.00%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 26.40%
Total Current Assets 16.45% 12.32% 18.78% 44.60%
Long-term Assets 83.55% 87.68% 81.22% 55.40%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 1.58% 1.57% 1.78% 29.30%
Long-term Liabilities 79.74% 87.11% 86.51% 27.80%
Total Liabilities 81.31% 88.68% 88.29% 57.10%
Net Worth 18.69% 11.32% 11.71% 42.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.73% 80.76% 80.77% 0.00%
Selling, General & Administrative Expenses 70.15% 67.28% 71.06% 68.20%
Advertising Expenses 0.38% 0.37% 0.36% 1.50%
Profit Before Interest and Taxes 31.00% 29.82% 28.61% 2.70%
Main Ratios
Current 10.44 7.86 10.57 1.53
Quick 10.44 7.86 10.57 0.88
Total Debt to Total Assets 81.31% 88.68% 88.29% 57.10%
Pre-tax Return on Net Worth 25.55% 59.42% 44.42% 3.40%
Pre-tax Return on Assets 4.77% 6.73% 5.20% 8.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 10.68% 13.48% 9.60% n.a
Return on Equity 20.63% 47.53% 35.16% n.a
Activity Ratios
Accounts Payable Turnover 11.88 12.17 12.17 n.a
Payment Days 27 23 29 n.a
Total Asset Turnover 0.36 0.40 0.43 n.a
Debt Ratios
Debt to Net Worth 4.35 7.83 7.54 n.a
Current Liab. to Liab. 0.02 0.02 0.02 n.a
Liquidity Ratios
Net Working Capital £128,907 £175,525 £267,989 n.a
Interest Coverage 1.74 2.30 1.74 n.a
Additional Ratios
Assets to Sales 2.77 2.50 2.33 n.a
Current Debt/Total Assets 2% 2% 2% n.a
Acid Test 10.44 7.86 10.57 n.a
Sales/Net Worth 1.93 3.53 3.66 n.a
Dividend Payout 1.95 0.74 1.00 n.a