Auto care business plan car wash and service station

1. Business Plan
Auto Care
Car wash and service center
By
Danushka Abeyratne
DCFM/DIP/2016/086
Entrepreneurship & Business Planning 2017
DIPB 02046
Department of Commerce & Financial Management
Faculty of Commerce & Management Studies
University of Kelaniya

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Declaration
The work described in this report was carried out by me under the supervision of R.S. Ranwala
And this material has not been submitted in whole or in part to any university or any other
institution for another Degree/ Diploma.
……………………….
Danushka Abeyratne

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Supervisor Approval
I certify that work described in this report was conducted under the supervision of me and the
report is suitable for submission to the university for the purpose of evaluation.
………………………….
R.S. Ranwala
Assistant Lecturer
Department of Commerce & Financial Management
University of Kelaniya

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Table of Contents
1.0 Executive Summary 04
2.0 Company Summary 05
2.1 Vision
2.2 Mission
2.3 Objectives
2.4 Company ownership
2.5 Start-up summary
3.0 Services 07
4.0 Market Analysis Summary 08
4.1 Market segmentation
5.0 Strategy and Implementation Summary 12
5.1 Positioning
5.2 Competitive Edge
5.3 Sales Strategy
6.0 Management Summary 16
6.1 Personal Plan
6.2 Organizational Structure
7.0 Financial Plan 19
7.1 Break-even Analysis
7.2 Projected profit and Loss
7.3 Projected cash flow
7.4 Projected balance sheet

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1.0 Executive Summary
Auto care is a prominent car wash and service center located in the city of Wattala. Auto care will
be run by Danushka Abeyratne. He has been observing the increase of demand for vehicle service
centers with the growth of vehicle imports to the country. Danushka will be leveraging the
incredible good will and would be concentrating on brand recognition of the business. In this study,
company summary will describe the vision, mission, objectives, company ownership and startup
summary of Auto Care Car Wash and Service Centre.
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.
Market Analysis
Auto Care has segmented their target market into 06 categories. They are; New car owners, Older
luxury car owners, Sports car owners, Lifetime owners and Dealerships.
Strategies
Positioning strategy, competitive edge and sales strategy will be practiced as key market strategies
by Auto Care to acquire potential customers to the business.
Management
Company structure elaborates the hierarchy of Auto Care and personal plan that explain yearly
activities and developments of the services.
Financial Plan
Break-even point, projected profit and loss, balance sheet, cash flow are analyzed under this
category.

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2.0 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
2.1 Vision
To be the most trusted, recognized and respected solution provider in the automobile industry
in Sri Lanka
2.2 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
2.3 Objectives
The objectives for auto Care Car Wash and Detail Service are:
1. Attract 100 clients with in the 1st
year.
2. Develop the market share by 15% every year.
3. Maintain a net profit margin of 25% every year.
4. Expand to two locations after third year of operation.
2.4 Company Ownership
The company will be solely owned by Danushka Abeyratne. Danushka is passionate and has a
good knowledge in the automobile industry. He came across the location in Wattala following a
detailed research and he felt it would be a perfect location for a car wash service center.

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2.5 Start-up Summary
The start-up expenses for Auto care will be financed by Danushka Abeyratne, from the earnings
he made working for a finance company and from a Bank loan. The property on Wattala will be
rented in April 2018 for a minimum of three years, with the option to extend the rent for another
three years after that.
Danushka is working with the family lawyer to set up incorporation and to discuss rental issues
before the business is launched. He is working with a local graphic designer to develop a logo,
letterhead, and company brochures. Although Danushka has not been in the wash and detailing
business, which is a very different service (quick turnaround per car is incredibly important) he is
working with an acquaintance to set up the system that will ensure efficient service even during
peak usage.
Rent on the location has been negotiated and will be Rs.50,000/- per month. In addition, insurance
for the business will be approximately Rs.50,000.00/- per annum and will be paid by cheque or
cash on a monthly basis. Expensed equipment includes three high-power water pumps, two
industrial vacuum cleaners, two computer terminals, and one cash register. All of the equipment
will be depreciated over three years.
The location was previously not used for any commercial purposes. But it is set up to move
vehicles quickly through the premises, although not having all the necessary systems in place to
host a car wash and detail facility. The services of a contracting company will be sought to convert
the use of the facility and to improve the customer waiting room facilities.

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3.0 Services
3.1 Car Wash
Regular maintenance of the exterior of vehicles is very important regardless of the type or age of
the vehicle. Which is why auto care knows how to groom it so it looks like new. The thorough,
professional cleaning not only makes a visual difference but is also a precaution, preserving vehicle
paintwork and keeping damaging environmental influences at bay.
3.2 Auto Detailing
Auto Care, offers detailing solutions that provide the vehicle with high quality cleaning from
bumper to bumper. The automated, state of the art machinery removes dirt, residue and road
inflicted damage from daily use, while helping maintain the vehicle's appearance for years to come.
Auto detailing also increases the lifetime of vehicle components.
3.3 Lubrication Service
Lubrication Service, which is also known as FULL SERVICE is a 7 step process at Auto Care.
 Lubrication – Auto care offers engine oil, transmission, brake, clutch and power steering fluid
change or top up with high performance lubricants.
 Undercarriage Degreasing – Pressure washes with advanced pressure sensors to remove old
grease from vehicle undercarriages.
 Vacuuming – Ensuring that the vehicle interior is free of dust and dirt and grit.
 Tyre & Dash Dressing - Restoring the true colour and natural gloss to the dashboard and
leaving the tyres looking new.
 Exterior waxing- Auto care applies a hard wax with a clear coat that produces a high-gloss
finish to new or old car paint. The wax also acts as a protective layer that helps maintain the
paint and protect it for longer.
 Windscreen & Glass clearing- Glass treatment at auto care improves wet weather driving
visibility. The treatment uses a non-streaking formula, ammonia free and safe for tinted
windows. This is ideal for high humidity conditions.
 Visual safety checking - A detailed feedback form is issued after every full lubrication service.

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4.0 Market Analysis Summary
The car wash will be based in Wattala, Srilanka. 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.
4.1 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: Owners of newer cars are most likely to use a hand car washing
service. These owners take great pride in their cars and will bring them often to the wash
and detail service. The goal with these customers is to promote regular use of the wash and
detail service. The aim is to inform these customers that Soapy Rides will keep their car
looking as good as it did the day they drove it off the lot.
2. Older luxury car owners: These people have either owned their high-end luxury cars for
several years or are unable to afford the expense of a new luxury car but want the feel of
relaxed driving. Both of these groups want to keep their cars in the best shape possible.
Those who have bought second-hand cars will often spend many hours in their cars and
will place high importance on keeping their cars looking good. These owners will bring
their cars in for regular washes and occasional details.
3. Sports car owners: These people are often younger or middle-aged men and will
regard the look of their car as important. They will also pride themselves on the look of
their car and will have their car hand washed (at least) weekly. These drivers will have
an occasional detail, but will keep their cars so clean the detail will not be necessary very
often.
4. Lifetime owners: Many of these people have owned their cars for more than five or six
years, and are more likely to be women. They are attached to their cars as friends and
though it may be more sensible for them to purchase a new car, they will bring their car in
for a wash occasionally, just when the car is dirty. They like their cars to look presentable,
and want to keep it in good shape but are not tied up in the look of their car. For this reason,
they will not have a detail carried out on their car unless they are selling it.

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5. Dealerships: There are five new and used car dealerships within six kilometers of the
proposed location of Auto care. These dealerships often use outside car wash services to
detail their vehicles before they are put up for sale. In addition, there are ten other car
dealerships within a 15 kilometer radius of Auto care.
6. Local businesses: Some local businesses have fleets of cars and small vans that must be
kept clean to maintain their company image. These businesses will be looking for a cost
effective, efficient car washing service to perform this service, and will prefer to use a car
wash service during the week rather than during weekends, like the general public.
Target Market Segment Strategy
MARKET ANALYSIS
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Potential Customers Growth
New Car Owners 10%
7,200.00 7,920.00 8,712.00 9,583.00 10,541.00
Older Luxury Car Owners 15%
12,500.00 14,375.00 16,531.00 19,011.00 21,863.00
Sports Car Owners 15%
6,500.00 7,475.00 8,596.00 9,885.00 11,368.00
Lifetime Owners 10%
17,000.00 18,700.00 20,570.00 22,627.00 24,890.00
New and Used Car
Dealerships
7%
9.00 10.00 11.00 12.00 13.00
Total 12%
43,209.00 48,480.00 54,420.00 61,118.00 68,675.00
29%
13%
7%
30%
10%
11%
Market analysis (Pie)
1. New car owners
2. Older luxury car owners
3. Sports car owners
4. Lifetime owners
5. Dealerships
6. Local businesses

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The strategy behind Auto care target segmentation is to attract customers who will be repeat users
and will frequent the business in the typically quiet times for a car wash business. It will not be
difficult to attract customers during the much warmer months (May to august) and on the
weekends. The weekdays however, people will not think about having their cars washed. For this
reason, Auto care will target people who will tend not to be restricted to these busy times.
 Business owners (new car owners) tend to be very busy people, but are often able to make
their own hours.
 Retired people (older luxury car owners) are not restricted by typical work schedules so will
be able to frequent the car wash during the week.
 Dealerships will need cars detailed and washed regardless of the time of the day and
week. This will supply a constant flow of traffic.
 Businesses will need their fleet cars washed during the week during regular business hours.
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.

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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.

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5.0 Strategy and Implementation Summary
The key differentiator for Auto care Car Wash is Danushka Abeyratne and his business and
personal connections within the Wattala neighborhood. For this reason, the sales and marketing
focus will be on a one-to-one basis, with the emphasis on gaining loyal and repeat customers as
"friends" of the business. Auto care, therefore, will depend on word-of-mouth advertising for the
immediate community.
5.1 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.
0
0.5
1
1.5
2
2.5
3
3.5
0 0.5 1 1.5 2 2.5 3 3.5
Price
Low
High
Service Quality
Low High
Aspired position
of Auto Care

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5.2 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.
5.3 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.
5.3.1 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.

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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
LKR 960,000.00
LKR 1,440,000.00 LKR 1,680,000.00
LKR 360,000.00
LKR 840,000.00
LKR 1,080,000.00
LKR 120,000.00
LKR 600,000.00
LKR 840,000.00
LKR 192,000.00
LKR 672,000.00
LKR 912,000.00
LKR 360,000.00
LKR 840,000.00
LKR 1,080,000.00
LKR 480,000.00
LKR 960,000.00
LKR 1,200,000.00
LKR -
LKR 1,000,000.00
LKR 2,000,000.00
LKR 3,000,000.00
LKR 4,000,000.00
LKR 5,000,000.00
LKR 6,000,000.00
LKR 7,000,000.00
LKR 8,000,000.00
Year 1 Year 2 Year 3
Sales by Year
Full Washers Exterior wash Interrior clean End User detail
Business Fleet Washes Car Delearship detail Column1

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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

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6.0 Management Summary
Danushka Abeyratne is the sole owner and manager of Auto care. In addition, he will be helped
with his knowledge in innovative entrepreneurship and business administration which he has
previously followed at a remote university. His experience working at a finance company will also
help him to handle financial and non-financial assets of the organization. As an advantage of
working in his former Workplace Danushka also has a lot of influence with several Automobile
dealers throughout the district which will help him to spread the word about his new car wash
business.
Danushka will also have the assistance of an accountant who is a close friend, in creating a long-
term strategic vision for the company. He has been with of Danushka since his school days. He
has worked with plenty of small- and medium-sized organizations during his career and as a result
he has the rewarded with the ability to identify any existing loose ends within the financial structure
of the company.
Mr. Sandeep Nicholas will be operating as the general manager of the company. Crucial
employees include an operation’s manager who will assist in maintaining and reviewing operations
of the Auto care Service station.
Both Full and Part-time personnel will be hired to handle Washing, Rinsing, Cut & Polishing,
Servicing and all the other vital maintenance function. The expected number of Workers to be
recruited for the above functions are 2 at the beginning.

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6.1 Organizational Structure
Auto care is owned solely by Danushka Abeyratne. He would be the major mentor of Auto care.
A General Manager will assist in maintaining and reviewing operations of the Auto Care.
Both Full and Part-time personnel will be hired to handle Washing, Rinsing, Cut & Polishing, and
Servicing.
The marketing will also be handled by the general manager, and accounting function will be
handled by the accountant and would be directly reporting to the general manager.
6.2 Personal Plan
Since car washing is a seasonal business, with business increasing in the warm summer months,
and being busier on the weekends than during the week, Auto care will rely on both temporary and
part-time help. The company will hire one full-time car wash/detail specialist and one full-time car
wash specialist when it opens for business. Although it will rely on temporary and part-time help,
quality will not be compromised, since all washers and detailers will receive thorough training.
Owner
WorkersAccountant
General Manager
Mmanager

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Auto Care expects the first year to be rather lean, since there will only be one location none of
which will be deployed for the entire year. The total headcount for the first year, including
management, administrative support, and customer service (production), will be 5, with a
payroll and payroll burden total expenditure as shown in the following table and in the monthly
breakdowns appendices.
PERSONNEL PLAN
YEAR 1 YEAR 2 YEAR 3
Owner 35,000.00 45,000.00 55,000.00
Car Washers 30,000.00 100,000.00 150,000.00
Admin/Sales 40,000.00 50,000.00 60,000.00
TOTAL PEOPLE 5 7 9
Total Payroll 105,000.00 195,000.00 265,000.00

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7.0 Financial Plan
The following plan outlines the financial development of Auto Care. The business will be
initially financed by a personal investment by Danushka Abeyratne 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 Danushka retains control over the direction of the company. In year four, 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.
7.1 Break-even Analysis
The table and chart below show the monthly break-even analysis calculations for Auto Care
LKR (800,000.00)
LKR (600,000.00)
LKR (400,000.00)
LKR (200,000.00)
LKR -
LKR 200,000.00
LKR 400,000.00
LKR 600,000.00
LKR 800,000.00
70 140 210 280 350 420 490 560 630 700 770
Break-even

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7.2 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.
LKR (200,000.00)
LKR (100,000.00)
LKR -
LKR 100,000.00
LKR 200,000.00
LKR 300,000.00
LKR 400,000.00
LKR 500,000.00
Month
1
Month
2
Month
3
Month
4
Month
5
Month
6
Month
7
Month
8
Month
9
Month
10
Month
11
Month
12
Profit Monthly
Profit Monthly
LKR -
LKR 500,000.00
LKR 1,000,000.00
LKR 1,500,000.00
LKR 2,000,000.00
LKR 2,500,000.00
LKR 3,000,000.00
LKR 3,500,000.00
LKR 4,000,000.00
LKR 4,500,000.00
LKR 5,000,000.00
Yearly 1 Yearly 2 Yearly 3
Profit Yearly
Profit Yearly

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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

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7.3 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

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7.4 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

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