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Sample business plan: How financing your car wash works

If you want to start your own car wash business, one of the most important issues is financing. In order for your potential lenders to see that you have given thought to this and your planning stacks up, you must provide them with a suitable business plan that pays close attention to all aspects of the project. Here's an example of a business plan for a self-service car wash.

Your idea

Initially, you have to present your idea in full. What type of car wash is it, how big will it be, where is it going to be located, which customers do you expect to have their car washed there and what is the expected cost? This might look as follows:

Set-up idea car wash

I, John Sample, present with this business plan my idea for the construction and operation of a self-service washing facility including vacuum cleaners and vending machines for detergents and accessories.

The desired location is a site to be purchased in Sampletown with an area of XXXX square metres and which is located next to a petrol station and in the immediate vicinity of the XY shopping centre. The facility is expected to attract customers of the petrol station and the visitors to the shopping centre.

This business plan envisages a car wash of average size with five booths and three vacuum systems. If necessary, it should be easily possible to extend the facility, which is to be taken into consideration during the construction. The investment volume is about €XXX,XXX.

About you

Now you yourself come into play. Who are you, what do you do for a living, what is your marital status? Are you married, is your partner working? Explain what makes you suitable for running a car wash and what your financial background is. Here is an example:

Personal information on qualifications and background

I, John Sample, born xx.xx.xxxx, marital status ..., if applicable partner's profession, live in Anytown. – brief information on vocational training and career history, especially with regard to suitability for operating a car wash –
The manufacturer, with whom I also intend to conclude the maintenance contract, supplies the car wash as a turnkey system. The model I have chosen is not only environmentally friendly but also low maintenance.

On the financial situation – providing information about possible reserves, the job and earnings of the partner, existing loans, current expenses and earnings -

Your ideas about organisation and planning

In what form would you like to run the car wash? How will you organise the work? Do you need a lot of staff and what costs do you expect? This paragraph may look something like this:

Legal form of the company, organisational structure and personnel planning

Initially, I plan to operate the car wash as a sole trader, where I as an entrepreneur am liable with my private assets. This decision has been taken because of the low financial investment required. In the long term, however, the company is to be converted into a limited company, so that my personal assets are protected.
I will manage the facility and take over the management. My responsibilities include marketing, strategic development and accounting, but also keeping the facility clean, collecting daily takings, and performing minor maintenance tasks.

Since it is not necessary for a self-service car wash to have staff permanently on site, I will only need a temporary worker on a 450-euro basis, who takes over the tasks that arise when I am prevented due to illness or holiday.

Go into detail

Explain in greater detail which offers customers receive at your car wash. You can also list any additional services here, for example:

The product and the type of service

The customers select the programmes in the planned self-service car wash. They can independently combine the pre-wash, the care wash, spot-free rinsing and drying. The vacuum cleaners are an additional offering. In addition, the installation of a vending machine is planned, from which customers can buy additional cleaning products and accessories.

Is it worth it?

Whoever supports you with your financing needs to believe in your financial success. Therefore, explain exactly why the market in your area is not saturated and why you assume that you can win numerous customers. You should include individual figures from the region and describe the localities, such as here:

Market and customers

Since hand car washing in public places is no longer allowed in most areas, the number of customers for car washes is increasing. Those car owners who used to wash their cars by hand prefer to use self-service car washes. The local car wash potential depends on the population density within the immediate vicinity of five kilometres (here about XX,XXX persons) and on through traffic in front of the site. An additional revenue generator is the nearby shopping centre and the petrol station, which does not offer self-service washes. The environmentally friendly detergents planned to be used are in tune with the spirit of the times.

Evaluate the competition

Financiers are also interested in whether and how much competition there is in the area. Describe your competitors and explain why your car wash will still be a success in spite of them.

The competition

The next self-service car wash from the intended site is located in XXX, which is XX kilometres away. The car owners from the local area will therefore rather use the new car wash. The car wash in XXX is not to be considered a direct competitor, because the way of washing is different and is preferred by different people – car owners have their cars washed in the conveyor tunnel system, at the self-service car wash they wash them themselves.

Why this is the ideal location

The location of a car wash is key to deciding its success or failure. Explain why the place you have found is ideal for the car wash. Explain why large numbers of customers will use the facility.

The location

The desired location for the self-service car wash is its greatest potential. The regional competition is negligible, and the size of the site of XXXX square metres is ideal for the intended purposes. The site is situated directly adjacent to the main road, which makes wide accesses and exits possible, and has connections for electricity and water. There is a development or zoning plan.
Potential customers drive relatively slowly on this stretch of the main road due to the entrances and exits for the petrol station and the shopping centre. They will not be able to overlook the new self-service car wash. It is to be expected that particularly the people who live in the nearby residential area, who refuel and shop here, will soon integrate the car wash into their familiar routine.

What is planned in terms of Advertising?

Even the best car wash is nothing without the right marketing. Present your plans on how you aim to advertise the car wash. Include short-term strategies for the start-up stage, but also your long-term plans. Show that you have dealt with the topic and are using different marketing strategies.

Sales and Marketing

With a self-service car wash, there is no customer loyalty through offering a friendly service. Accordingly, the marketing strategy must ensure that advertising can always be seen, for example, on posters in and around the local area. Alternatively and additionally, advertisements in newspapers or commercials on local radio inform people about the car wash. Particularly during the start-up phase, offering discounts is also a good idea, where potential customers are informed by flyers tucked behind the windscreen wipers – thanks to the nearby car park of the shopping centre, I can quickly reach lots of car owners with this information. It is also possible to ask the owner of the petrol station to put the flyers on display. Other forms of cooperation may be possible here.

How much will you charge?

Anyone drafting a business plan, has to speak about money. The point has now come where you specify concrete sums for your prices. Do not limit yourself to the average prices for the most popular washes, but list all sums in detail. This might look as follows:

Pricing

In addition to easy accessibility, it is the price that keeps customers coming back. The various programmes have different prices. Whilst pre-washing and spot-free rinsing are slightly cheaper, care wash and wax are slightly higher in price per minute.

  • Pre-wash: €X.XX
  • Care wash: €X.XX
  • Underbody wash €X.XX
  • Spot-free rinsing €X.XX
  • Drying: €X.XX
  • Wax €X.XX
  • Vacuuming: €X.XX

Altogether, this results in an average total price of around €X.XX per X minutes of washing.

In the founding year, net sales of approx. €XXX,XXX are expected. Assuming net sales per customer of €X.XX, that would mean that XX customers would have to wash their car per day, that is about X per hour in a 10-hour day. After a certain establishment phase, during which the potential customers in the area get used to the car wash, I assume that the annual turnover for the following two years will increase by about 10%. Approximately XX% of sales are spent on goods such as wax, detergents and accessories, and another XX% on site, electricity and water costs.

How you plan to address the local people

You need to tell local people that there is a new car wash in their area and persuade them to visit. What are your plans to do this? Write them down in detail.

Advertising

The potential customers for the planned self-service car wash come from the surrounding area. Advertising locally is therefore essential. The planning takes several marketing options into account:

  1. The car wash will be equipped with highly visible flags bearing the logo, and the routes from the main road, petrol station and shopping centre car park signposted (in each case with the permission of the petrol station owner and the shopping centre manager).
  2. With the local council's approval, signs are put up in the surrounding roads. Billboard advertising in a central location is also planned.
  3. Flyers are placed under the windscreen wipers of the cars parked on the shopping centre's car park, displayed at the petrol station with the owner's permission and distributed through letterboxes.
  4. Advertising through ads and local radio stations is costly, but it's likely to be worthwhile for the opening of the car wash. After this, it is used only occasionally, such as when advertising special seasonal discount promotions.

Set out the financial planning

Simply listing the prices is not enough – you now have to sketch out the bigger picture. As part of financial planning, you first estimate the initial outlay.

Financial planning

On the basis of the current planning, the initial outlay comes to around €XXX,XXX. This is made up of the cost of

  • the site
  • the permits
  • the purchase and installation of the car wash
  • the start-up costs for the business
  • the liquidity requirements for ongoing operations

Further information can be found here in the investment, liquidity and profit projection plan.

What do you need to invest?

In addition to the initial outlay from the previous point, you also need to estimate the costs for advertising. All costs for the foundation and starting up the business are listed in the investment plan:

Investment plan

Here is a list of the above-mentioned initial costs including the investment in advertising for the start-up period.

In each case the individual sums with a percentage of the total of:

 

  • Preparation costs (training, courses, exams, consulting, market surveys, etc.)
  • Start-up costs (registration costs, permit/business licence, taxes/fees/duties, etc.)
  • One-off start-up costs (business acquisition, takeover of addresses, advertising for opening, etc.)
  • Investments (site, connections, installations, conversion, vacuum cleaners, car washing equipment, tools, office equipment, etc.)
  • Basic equipping with operating supplies (storage facility, wax, detergents, accessories, etc.)
  • Total sum start-up and investment costs

How do you remain solvent?

How much will you take in the first few months, what will you spend? Will you always remain solvent? You answer these questions in the liquidity plan:

Liquidity plan

This entails considering the permanent solvency. Payment delays and outstanding accounts are not an issue for self-service car washes.

The liquidity planning for the first year includes the payments per month, which are made up of net sales, loans, advance payments, government subsidies, shareholdings, etc.

Under the disbursements, the monthly costs are entered for materials, personnel, premises, third-party services, advertising, vehicle, communication, fees, insurances, contributions, consultations, interest, repayments, Investments, taxes, etc.

Monthly coverage, the balance of the previous month and the effective liquidity are calculated.

The big overview

What results, including profits and losses, do you anticipate in the first three years? Your calculations are shown in the profit projection plan:

Profit projection plan

This is where you outline the desired result of the first three years of business activity.
The profit and loss account includes income and expenses, the result of operations, earnings before taxes, net income, net loss and depreciation.

In the planning phase, the earnings necessarily only take into account the sales revenues.
The expenses are composed of goods used, personnel costs and other operating expenses.

Summary

The costs for local marketing and for personnel are manageable and easy to plan. The respective needs are clearly defined. The expenses for starting up the business can be calculated relatively accurately, as well as the necessary user volume.

Thanks to the excellent location, the low level of competition and people's continuing love for their cars, it is to be expected that the eco-friendly self-service car wash at the planned site will be a financial success.

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