Car Wash Business Plan

Luminous™

Business Plan

1. Prologue:1.1Origin of the report:

The business plan on Luminous™ automatic car washing company has been prepared for XXX XXX XXX (Course instructor of Entrepreneurship Development and Small Business Management) as a partial requirement of the course Entrepreneurship Development and Small Business Management. Real life does not go all the time like the theories and practical world is very critical and diverse. To understand the theoretical aspects of a subject one must understand the practical situation, problems, policies and implications of the theories. So the researchers were asked by the respected Course instructor to prepare a report in the very first class of this semester. Course instructor assigned this report understand what are the policy, procedure and steps that is to be taken to establish a new company which will offer a new innovative product or service. This report emphasizes on preparing a business plan, which is the outcome of an integrated process of making future plan for managing different organizational functions.

In order to prepare this business plan it was necessary to survey several other companies or service centers which are of relevant field, and to know their policy and procedure. There are some organizations, which are very popular in this field. So, the researchers decided to survey these service centers to prepare the business plan on The Luminous™ automatic car washing company. Researchers have tried to prepare this business plan in such a way that it reflects the total procedures of business description, marketing, manufacturing, ownership, management, service, potential risk, financial analysis etc.

Researchers have tried to prepare a business plan in such a way that it reflects the total process of establishing a new company that is Luminous™ automatic car washing company which will offer a new and innovative service of automatic car washing.

1.2 Objectives:

The objective of the business plan is to involve the researchers in practical situation about how a company is established. This business plan provides a clear view about how to start, select and run a business successfully. Practical life and practical situation is far different from the textbook or theory. There can be many unexpected situations. In this situation the textbook is not enough for gaining a clear idea about the new business establishment process. The Primary objective is to know the policy, procedure, necessity and activities of establishing a new company.

The primary objective of this business plan is to analyze the real situation and process of establishing a new business. This business plan will also furnish the opportunity to prepare a real business report that will help the

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researchers to make reports in future for other companies. Each of the segments has been stated in a manner that will be sufficient to have an idea about the Luminous™ automatic car washing company.1.3 Sources of information:

To prepare a business plan the researchers need much information. The information needed to prepare this business plan was collected from both primary and secondary information sources.

Primary sources:

The important data and information about this report was collected by interviewing personnel of several petrol pumps. The primary source includes the interviews of Manager, technical hands, and other employees of various filling stations and petrol pumps. The Manager, technical hands, and other employees responded to the questions asked by the researchers during the visit to their company. The researchers discussed with them and they answered various questions about the activities, specially the process of car washing of the company. A lot of information was collected from them. The researchers have also collected information from the customers. The researchers have also asked questions to the people who might be the customer in future.

Secondary sources:

Different Websites of the internet has provided important information about background, policy, procedure etc. Another important source of information was the books related to this field. Like “Entrepreneurship Development” by Nazrul Islam and Muhammad Z. Mamun and “Starting and Managing Small Business” by H. Kuriloff and Douglas Cloud. These books helped a lot to understand the different aspects related to this report. Some supporting papers brochures, different manuals etc were also very helpful.

1.4 Methodology:

The report is mainly based on the primary sources of information. Most of the information was gathered by interviewing different personnel of various petrol pumps in Dhaka. The basis of the report are-

Verbal interview of Manager, technical hands, and other employees of Santro petrol pump was taken.

Interview of Manager, technical hands, and other employees of Rupsha petrol pump was taken.

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Interview of Manager, technical hands, and other employees of Sonargoan petrol pump was taken.

The planning format given by the course instructor was followed by the researchers and tried to collect all required information.

Researchers collected company information from company profile & others related information from these sources.

Researchers have tried to match the information obtained by interview with the information gathered from the Internet.

After getting all the information, an intensive analysis has been conducted and the report has been submitted in presentable form.

Some part of this report is written from the observation, opinion of interviewers. Above all the report is based on the perception, imagination, and creativity and planning of the researchers. Website, books and others also contributed in some fields. Some assumptions are taken from the situational aspects.

1.5) Scope of the report:

The business plan of The Luminous™ automatic car washing company has been prepared for Ms. Jesmin Sultalna (Course instructor of Entrepreneurship Development and Small Business Management, MHR- 303) as a partial requirement of the course Entrepreneurship Development and Small Business Management. So the report mainly provides information about how to start select and run new business that will provide a service that is innovative. It provides-

Development of new business opportunity.

Evaluating and realizing which business should be chosen.

Researching the market to know about the prospect of the selected

business.

Developing a good marketing plan.

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Information about business goal, marketing plan, production plan, financial

plan.

Sales forecasting of the company.

Limitations:

Every time there is some problems while preparing a report. In this report the researchers also faced some problems while gathering information. Most of the problems are like as follows:

Company personnel have not disclosed all the information needed to prepare the report in the best manner due to their company policies.

The petrol pumps were not ready to disclose their actual costing and profit margin.

As it is an innovative service, there is no existing company of exactly this type of service from whom a practical view can be taken.

The primary data received from the officials could not be verified and might be biased.

The company’s personnel were very much busy. Although they tried a lot, they were not able to give enough time in the Rush hours. It was another reason that acted as an obstacle while gathering data.

For these reasons there are some limitations of the report. In spite of all this limitations the researchers has tried with our best to prepare the report in a presentable and faithful manner.

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2. Business description segment:

2.1 The company:

2.1.1) General description of the industry:

The world is changing day by day. Modern technologies are coming close to people’s life more quickly and easily. People are getting more and busier. In the recent days car is not thought as a luxury item. In this busy life a car is a necessary item of life. In last 10 years, the population of cars has increased many folds. So, the Car Wash industry has grown rapidly. In today’s context the owners themselves drive most cars and would any day prefer to have a quick car wash, rather than leaving the car the whole day at service station. It is not convenient for them to leave the car for a whole day to wash the car.

So, rather than the ordinary hand wash, it is necessary to find a way to wash the car by a sophisticated high impact pressure jet wash technology. Owning and running a car wash these days, is not just a mere business but, it is one of the most lucrative and respected business.

2.1.2) What is automatic car wash (Description of the service):

Automatic car wash is the modern way in which the cars are not washed by hands. In this new technology the cars are washed by a sophisticated high impact pressure jet wash technology.

2.2.3) The Luminous™ automatic car washing Co. (Description of the firm):

The Luminous™ automatic car washing co will be a new business opportunity in Bangladesh. This modern technology of car wash will provide the car owners a car wash for which they will not need to whit a long time. The Luminous™ automatic car washing co will wash a car within a few minutes. It will use latest proven and successful technology in washing vehicles. It is a so fast process that the owner or drivers need not to leave the car. They can jut wait a few minutes and take the delivery of a fresh and clean car. In this

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process nobody will use hand to wash the car. The total process is automated and the machines will do the duty of cleaning instead of the hands of the car washing people.

At present, we are Bangladesh based service provider of car wash, bus wash and truck wash. We have also developed a new two wheeler wash system, which can accommodate all types of two wheeler vehicles. Our equipments use high-pressure water for cleaning. We also use friction / brush type of equipments with specially made soft brushes that don’t scratch our customer’s car paint.

3. Marketing segment:

3.1 Marketing research:

3.1.1) Market area:

At first we had to survey and collect data to select the market area. We have surveyed in different places and different people. We took their opinion about when and where they want the service. We have asked the Municipal Corporation of our city, if they are planning to start some project which may affect the car population in our business locality in near future (Building of fly over, by - pass, etc.). At last we have decided that we will establish our Luminous™ automatic car washing company on Air port road. Because it a main road. Owners of the bus, truck, private car, every vehicle, which are our clients, will be available in this road very much.

This place is also near to Gulshan, Banani, Baridhara, Uttara, Mohakhali etc areas. We all know that the people living in these areas are almost all rich and have a standard lifestyle. So, they can afford and they will be willing to gat our service for their private cars.

Washable dimensions:

Height: 2.5m (98”)

Width: 2.5 m (98”)

Length: 6.7 m (263”)

3.1.2) Market size:

All the people who have a private car and all the bus and trucks are our target market. As we are the only provider of this service in our country, we

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can have a monopoly market here. We are expecting to have approximately 8000-9000 taka revenue per day from our washing plant.

3.1.3) Target customer:

We are targeting all the people who have a car to be our customer. Like, the private car owners are our customers. All the private cars in Dhaka city are our expected targets. We will try to get all of them. Again, we do not only serve the private cars. We have the capacity of washing the buses and trucks. All the buses and trucks are also our target customers. They can wash their car from us within a few minutes. So there will be no waste of time for the clients.

3.1.4) Competition:

As Luminous™ automatic car washing co. is new and innovative industry in our country, yet we do not have any competitor exactly like us. But there are several petrol pumps, which are providing this service manually. These petrol pumps are our main competitors now.

3.2) Marketing strategy:

3.2.1) Advertising and promotions:

For advertising we have to use several media. Because it’s a new business in our country and people are not aware of this service yet. So we have to advertise more to make them aware of this new opportunity of car wash. The process of our advertising is given below.

We will advertise on television.

We will advertise on newspapers.

We will send leaflets to the transport companies, so that they could be interested in our service.

We will advertise on the billboards.

3.2.2) Pricing:

As we will provide service to different type of vehicles, the pricing is also different. The main pricing forms are given below.

For private cars, we will charge Tk. 250 per car.

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For small trucks and buses we will charge Tk.300 per vehicle.

For large trucks and buses we will charge Tk.350 per vehicle.

3.2.3) Sales and credit terms:

No credit is given by the Luminous™ automatic car washing co. After washing the car, the customer will check the car for his/ her satisfaction. If there is any problem or objection then that will be solved. And finally the payment will be done before the delivery of the car.

Though we do not give any concession, but there is an option. That is like a company agrees to wash their 20 buses 5 times a month, and then there will be a 10% discount. Also some facilities will be given to the regular customers.

3.3) SWOT analysis:

Strength:

It uses latest, proven and successful technology.

It is a contact less or touches free system.

It uses internationally available and reliable components.

It requires a very little time.

It gives the car a shiny and new look.

Weakness:This is not a well-known process yet.

This process is little bit costly than hand wash.

There is only one washing zone. Many cars may find it distant from its way.

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Opportunity:There is a scope for expansion of new branches.

As it is a technology-based age, this process might become more popular.

In this new technological time people might find the hand washing system obsolete very soon and realize the automatic car wash only solution.

Threat:People might not take this new change very soon and they might prefer to

go to the hand wash system.

It might be very costly to make people aware of this new opportunity.

Many new companies might find it profitable and enter into the business.

4) Manufacturing segment:

4.1) Location analysis:

Location is a very important factor for establishing a new company. The location must be convenient and appropriate. Once the locality is selected, 2 - 3 lands will be looked for, where Car Wash may be started.

4.1.1) Land Selection:

Land selection is a critical part of the planning Evaluation should be done o the basis of shape and space, frontage, topography, street characteristics etc.

4.1.2) Basis of evaluation of the land:

Evaluation should be done on each piece of land according to following ideal criterion.

- Shape and space Rectangular

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Enough space for Customer Car parking and any future projects if desired.

- Frontage No physical obstructions like electric or telephone poles, guy wires, etc.

Easy turning of car into the land, which out much guiding hassles

- Topography Leveled and even (if uneven, can be excavated)

Connecting street must be flat at least 100 feet in each direction. (If Street in not flat, post big signboards so your car wash is visible from distance. Motorists can plan well in advance about having a car wash)

- Street Characteristics

Busy Street Turning, corner plot No Exit restrictions (One Way etc.) The site on the side by which the majority

of the drivers pass on their way home. Near a traffic signal

Near a Shopping Mall, Cinema Theatre, Gas Station, Car Service Station, Public Place, etc.

4.1.3) Selected Land:After analyzing various criterion we have choose land for Luminous™ automatic car washing co. in the area of Air port road in Banani of Dhaka Metropolitan area.

4.2) Description of premises and facilities:

The premise will be owned by the Luminous™ automatic car washing company. It will take certain amount of money to by the premise. The land will buy by the company name. That is Luminous™ itself will be the owner of that land. The land is well secured by a boundary wall surrounding the project area. The project area will be fully computerized security system that is all the security system is totally automated. There are two buildings and a coupon issue counter in the project area. In the first one the official work will do. The second one is the worksite. The actual car washing will do over there. There will be also a cafeteria and customer waiting room in the project area. There could stand maximum 7 cars at a time in the parking area including a car which might be in the washing system.

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Lay Out Plan of the Luminous™ Car

4.3) Site requirement:

4.3.1) Space for installation of equipment:

Bay length: 10 m (393.70”)

Bay width: 5 m (196.85”)

Bay height: 4 m (15748”)

[Including safety space of .5 m (20”)]

4.3.2) Space for control room:

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Room length: 3 m

Room Width: 3 m

Room height: 2.5 m

4.3.3) Electricity supply:

3 Phase 440 V A.C. 50 Hz.

[Equipment for different power standards can be manufactured if intimated during placing the order]

4.3.4) Water storage capacity:

5000 liters [1000 Gal (UK)]

4.4) Machinery and Equipment:

As it is a totally automated process, we will need many machines. The main machine will be the machine that will actually wash the cars. There will be needs for some other additional machines.

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Single Bay Automatic Car Wash Layout

4.5) Raw materials and supplies:

As raw material, we would mainly need the detergent and other washing solutions. We would like to have a regular supplier of our needed materials.

5) The Management of Luminous™ Co:

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5.1) Ownership:

The Luminous™ automatic car washing co would be structure with the articles of partnership. All the directors would have equal shares. The features of the company’s ownership are the following:

Industry would be created with the article of partnershipThe talent of the partners helps the business to growThe business and contracts of the partners have flexibilityMore capital in the industryHelps to develop cooperation and natural trust There will be unlimited liability on each partnerDanger of disagreement is there

-- Divided authority

5.2) Organizational structure:

The specialty of the Luminous™ automatic car washing co is it is fully automated. So a very little number of employees are needed to run the business. The organizational structure is given below:

In addition there will be permanent two cleaner and two watchmen and also some temporary worker who will work on daily basis.

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Managing Director(Tahmina Haque)

Director, HR (Syeda Israt

Afroz)

Director, Finance & Accounts

(Galib Farrokh)

Director, Marketing(Rahat Alam & Mehedi Alam)

Director, Operational

(Samsul Islam)

Assistant to the operator-2

person

Manager,

Account

Machine Operato

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5.3) Management Team:

The six founders of the Luminous™ automatic car washing Company will be the main authority of the company. All of them are the member of board of directors and Ms. Tahmina Haque will be the Managing Director of the company.

Mr. Galib Farrokh will be the director of Finance and Accounts Department. All the accounts and financial activities will be in his charge. Budget planning, insurance, dealing with bank, financial forecasting etc will be his duty. By owning 16% share, he is also one of the owners of the Luminous™ automatic car washing co. The person looks after the entire finance division. Takes assistances from finance manager and the chief accountant to prepare financial planning for the company and helps the company to maintain good relation with bank and other financial institutions.

Mr. Rahat Alam and Mr. Mehedi Alam will be the marketing director of the Luminous™ automatic car washing company. They will look after the marketing as well as the advertising and sales sector. Both of them own 16% of the company each. They are the persons in charge of the marketing division. They communicate and maintain the relationship with related industries as well as different most important clients around the country. Negotiating of business deals is also their responsibility.

Ms. Syeda Israt Afroz will be the Director, Human Resource. She will be in charge of the employees. The recruitment, selection, compensation and other activities related to the human resource will be in her charge. She is the owner of 16% of the Luminous™ automatic car washing company’s share. She is the person responsible for the H.R department. He with the help of managers and deputies chocks out the H.R processes of the entire industry. Mr. Samsul Islam looks after the operational activities. Actually he will look after the operations of washing and also supervise the employees. He will also own 16% of the share. This person is in charge of the daily production operations.And finally Ms. Tahmina Haque will be the Managing Director of the Luminous™ automatic car washing co by owning 20% shares. She would co-ordinate all the departments and performs the decision making task mainly. She will also take part in the financial activities. She is the most important person in the company. She helps to control and coordinate other managers and evaluates the performances of other managers.

All of the six members of managing committee of the Luminous™ automatic car washing company are graduates of Business Administration with different major subjects.

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5.4) Legal Structure:

The Luminous™ automatic car washing company will establish under the company law (1994) which will fully owned by the six members of the board of directors. They are the only shareholder and beneficiary of the company. No share will offer to the share market as it will be a private limited company.

No full time legal advisor will be appointed. They will hire when it is necessary. Like, in the beginning a legal firm will be hired to complete the formalities to establish the company.

All employees are hired on a permanent basis. All employees have an agreement with the company about their service. Some workers will be hired on daily basis when the company will need.

5.5) Employee Agreement:

Not long ago, key personnel could be hired with a handshake; the unwritten compact between employer and employee included mutual expectations of loyalty, trust and long-term commitment. Now, as companies find they must depend on increasingly transient executives, managers and technical employees, all parties are asking for protection in the business equivalent of the “prenuptial” – the employment agreement.

Employment agreements take many forms – from “sign and return” offer letters to fully comprehensive contracts. What these agreements should accomplish – to one extent or another – is to allow the parties to begin and end the employment with a clear understanding of their rights and responsibilities. Set forth below are three types of terms employment agreements might include:

Those setting forth the expectations of the parties regarding the employment, e.g., job duties and compensation; those intended to protect the company’s interests; and those dealing with terminations, with and without cause.

Getting It Right at the Outset An employment agreement should reflect accurately the understandings of the parties upon which the employment relationship is based. Clarification of open or uncertain issues is in the early stages.

While good feelings prevail is much easier than sorting out vagueness during a difficult exit. Note that the offer letter is often only a shorthand statement of the terms. Additional thinking, and writing, is often required to produce a satisfactory definitive agreement. Key areas to consider include:

Title and Responsibilities:

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The agreement of our company will indicate the employee’s title, responsibilities, and line of report. If these could change, the agreement should say how this would be implemented, and what the outer limits are: “or such other work suitable for a senior executive as the board of directors may request.” Understandings regarding Board of Director participation should also be spelled out.

o Relocation:

The employment may require relocation; the agreement of our organization will include terms regarding the payment of, e.g., pre-move long distance commuting and temporary housing costs, moving costs and the costs of selling one home and purchasing another. As an alternative, the employer may offer a lump sum amount or cap.

o Compensation and Incentives:

We will accurately state the initial compensation package. It will be adjusted with the base salary. If the employee is eligible for one or more bonuses then we will provide that with the salary.

o Benefits and Fringes:

Our agreement will little more than state the amount of annual vacation, and assure provision of health, disability, life insurance coverage in an employer-sponsored program, as well as participation in its retirement benefits. However, particularly for the senior executive, more detail is required. Executive benefits may include enhanced life and disability insurance coverage, defense and indemnification coverage, participation in non-qualified retirement plans, change of control protection and so forth.

5.6.1) Protecting the Company’s Interests:

The following are often found in employment agreements used by companies relying on employees with specialized knowledge or abilities.

Protection of Confidential Information:

Key employees are often required to protect and not disclose, or use detrimentally, the employer’s confidential information. The protection always runs during and generally after employment.

The definition of confidential information may vary but it generally includes trade secrets and all items that confer competitive advantage, such a customer lists, pricing information, know-how, technical information, and business plans. Trade secrets are protecting able even if the underlying information would not meet standards of copyright or patent protection. Once

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public, the information is, of course, no longer confidential, and so the employee should not be bound to protect information that becomes public through no fault of the employee. Agreements may contain “carve-outs” addressing ways confidential information may become public, and thus releasing the employee from the obligation to protect that information.

Assignments of Inventions:

It’s no secret that the competitive advantage of many companies depends on the work of their technical employees, such as engineers, scientists, analysts, and designers, who “add value” to the employer’s enterprise by means of the intellectual property (IP) they create while employed. Under patent and copyright law, the employees own their IP unless they assign their “inventions” to the employer or agree that original works of authorship were done for the employer’s benefit. An employment agreement will usually contain elaborate provisions for assuring that the IP becomes the exclusive property of, or is licensed to, the employer and that the employee assist the employer in perfecting the IP protection. A carve-out of “prior inventions” and those unrelated to the employer’s business should be considered. The savvy technical employee is likely to demand such change. Conversely an assignment of inventions may include a “trailer” post-employment whereby relevant inventions occurring during, say, the first year after employment is presumed to be the IP of the former employer unless the employee can rebut the presumption. This should be carefully analyzed by an employee contemplating starting or joining a company in an arguably related technical business.

Covenants Not to Compete:

Key employees are often asked to provide covenants not to compete. During employment, the covenant is consistent with an employee’s duty of loyalty to the employer, and breach may serve as grounds for termination for cause. More controversial are the post-employment covenants, as these may in effect restrict an employee’s access to a new job. However, an employer may impose reasonable limitations such that its trade secrets and confidential information not be used competitively against it. Both the employer and employee benefit from analyzing realistically the scope of a post employment covenant. If the employer insists on, or carelessly permits, protection so broad so as perhaps to prevent the employee from earning a living, the covenant may not be enforceable. Courts tend to side with employees unless the employer can show that the employee has a specialized talent or knowledge that arguably could be used to its competitive detriment. Furthermore, covenants are more likely to be enforced if narrowly drafted, e.g., to prevent an employee from soliciting certain customers or clients, from working for a direct competitor, and/or from working within a specific geographical territory for a limited period of time. Unless the post-employment covenant is part of the bargain when starting employment, it

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should be supported by payment (sometimes referred to as “consideration”) such as severance pay, if agreed to on exiting employment.

5.6.2) Ending the Employment:

In addition to the post-employment effect of non-competes and assignment of inventions discussed above, employment agreements often address the triggering event for termination.

o Termination for Convenience:

Either side may wish to be able to “walk away” from the relationship merely by giving notice, a so-called termination “without cause”. This tends to benefit an employer as it can terminate on short notice without stating a reason, perhaps because of change in a company’s strategy, or because the employee’s performance was marginal. Employees often negotiate for a period of notice and severance pay. If the employee exits during the employment term, the severance is typically forfeited, although some agreements provide that a significant reduction in responsibility is effectively a termination and grounds for the employee to leave without forfeiting severance.

o Termination for Cause:

Provisions permitting termination for cause based on an employee’s egregious misconduct (embezzlement, fraud), substance abuse or criminal convictions are not typically controversial. But where the grounds are poor performance (personal or corporate), disclosure or misuse of confidential information, failure to execute directives, or engagement in competitive activity, the employee may request written notice, opportunity to cure and perhaps, if the employee is in senior management, the opportunity to be heard in person by the board of directors. Dispute Resolution and Negotiation Employers may include a waiver of the right to a jury trial in the event of a dispute, preferring arbitration because this is considered less risky than being exposed to jurors who may empathize with the employee, or out of a concern that litigation is slow and expensive. If arbitration is the chosen method, the parties should consider, e.g., how it is started, where it occurs, how the arbitrator(s) is/are chosen, and who pays the expenses. Employment agreements, like pre-nuptial agreements, must be negotiated gingerly. Attorney involvement is sometimes more effective when indirect, i.e., coaching a client rather than directly negotiating with opposing counsel. Overt displays of mistrust and over-reaching may undermine the relationship before the “marriage” has even begun. However, as many employers, and

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employees, have learned, a failure to come to terms beforehand can lead to time-wasting controversy during the employment and, all too often, litigation after it has ended.

5.7) Board of directors:

The six founder members are the member of board of directors. They have the core responsibility to take any decision about the Luminous™ automatic car washing company. The board of directors of the company will consists of six main people.

The Directors are:

¥ The Managing Director¥ Director, Human Resource¥ Director, Marketing and Sales¥ Director, Operations¥ Director, Finance & Accounts

5.8) Supporting professional services:

The Luminous™ automatic car washing company will not employ any full time audit firm. The Luminous™ automatic car washing company will hire the Audit companies for their annual report ant budgeting on a contractual basis.

No full time legal advisor will be appointed. They will be hired when it is necessary. Like, in the beginning a legal firm was hired to complete the formalities to establish the company.

The company initially will like to hire professional people as consultants for gather their valuable advice. The company also would think to higher quality professional in different needs both from local and foreign fields.

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6) Process of providing service:

The process of the service will be very simple. The cars will enter into the machine, and water will be sprayed. After that the machine will wash the car with necessary washing solutions and detergents. Then the car will be washed again by water. Finally the car will be dried by hot air and the car will come out, neat and clean.

6.1) Automatic high-pressure car wash:

The Luminous™ automatic car washing co has a fully automatic system. It has a three step washing sequence. The first pass is high-pressure pre- wash which has wetting chemicals to wet dirt on car surface. The second pass is soap application process by special nozzles. The third pass is high-pressure rinse, which removes all the dirt, off the car surface. The horizontal water nozzles bank follows the contour of the vehicle. A high-pressure plunger pump assists the main washing arch for cleaning the tire and rocker panels.

6.2) Pre wash arch:

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This is special spray arch, equipped with low discharge, wide coverage nozzles. The pre wash arch sprays water initially over the vehicle to soak the hard mud stains, salt deposits, bird drippings etc.

6.3) Soap system:

Soap system sprays soap and chemical formulation over the car surface. Soap spraying assists the high-pressure washing and enhances the cleaning value.

6.4) Contour Following Nozzles:The horizontal bank of nozzles follows the contour of the car, whichever it is. The horizontal bank always maintains, safe 300 mm distance away from the car surface. The water jets always adjust their angle according to the vehicle, i.e. at beginning; the jets face the bonnet and the wind shield for better cleaning action and so on.

6.5) Wheel and rocker panel wash system:

Special high-pressure nozzles located at wheel level remove darts from hard to clean areas near the wheels. Special plunger pump, which enhances the pressure to knock off dirt from wheel and rocker panel areas.

6.6) Wax systems:

After the high pressure rinsing is over, wax is sprayed on the vehicle surface to give them a shiny finish. There are two types of wax systems- silicon wax system and triple foam wax system. Any one can be provided as needed. These two systems are described in the next page:

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Silicon wax system: silicon wax is sprayed on the car surface. The silicon wax is sprayed all over the car using special atomizing nozzles, after the washing cycle. Although wax formulation gives instant shine and protection, in addition, it softens the hard rubber wipers and beading of the car. Secondly it is water repellant and hence avoids staining of glasses due to droplet formulation.

Triple foam wax system: Triple foam wax commonly known as tri wax, which contains three-colored wax, which is sprayed on the vehicle. The foam created on the vehicle surface gives a sense of satisfaction to the customer, for which he is paying for. The triple foam wax is sprayed by special foam generating nozzles. A high-pressure pass washes off the foam created on the vehicle surface.

7. Critical Risks Segment:

7.1. Potential Problems:

The potential problems for the industry are the following-

Unknown field: the main problem that we will face is the problem of lack of popularity. The automatic car washing is not very much popular by now. Many people even do not know what the automatic car wash is. So it will be difficult to make them aware of our service.

Unstable Political situation and the affects: The country of Bangladesh is not politically stable. There are often strikes. So it may cause risk for us.

Unskilled work force: At the initial stages the industry may not find proper skilled workers or even labors to operating purpose. It may cause some negative changes to the companies desired output.

Entering the market: The target group of customer for the company will be available from the local area. We expect that we will be able to reach the desired segments, but the volume that we have estimated for our service may not match initially. On the other hand, the other normal car washing companies will never let us have any advantage. So we have to be very careful and aware about the steps of the marketing.

Transportation Problem: Our country has got little stability on situations those goes around. The main transportation for the industry is the land transportation; our land transportations because of the labor unions related to this often faces strikes. This may cause us very harmful financial losses. To survive the competition our services needs to be accurate and proper, for the strike problems we may not be able to get customers within schedule time.

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7.2 Alternative courses of action:

To protect the firm from all of these difficulties we will be following steps:

We should advertise moreWe make people aware of our service

We should provide adequate training to the operators.

7.3 Long range future plans:

In future we have a plan to have at least 7 automatic car washing section in seven different areas of the city. After that we would try to make it popular in the other cities and we also have a plan to open new branches in those cities.

8) Financial Management:

The fields of finance is closely related to economics and accounting. And in the Luminous™ car washing company, financial analysis and the keeping records of daily transactions will be done by the finance and accounts department.

The main function of the finance and accounts department will be the too keep records of daily cash transaction, budget construction, ratio analysis, preparing cash flow of income statement, balance sheet, maintaining of cash book, accounts payable records, loan management, customer billing records, payroll records etc.

8.1) Required budget for the proposed business plan:

We have estimated that the required capital for the automatic car washing plant need around Taka: 25,000,000. And most of the amount needed to be financed will be raised by the owners of the Luminous™ Automatic Car Washing Co.; related data are shown in the table below:

Amounts needed to be Invested Tk: 25,000,000

Investment by the Owners Tk:20,000,000

Borrowing from Bank (Financial Institution)

Tk: 5,000,000

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Total Amount to be Invested

Tk:25,000,000

8.2) Use of funds:

For the 1st year most of the fund will be used for starting, installation and beginning of the project. These includes, land acquisition, purchasing of equipments, license & tax insurance premium, legal and audit fees and other operating expenses. We will spend most of the amount of money in acquisition of land and in purchasing equipment of washing plant. The amounts are given below:

Acquisition of land Tk: 13,000,000

Purchase equipment for washing plant Tk: 10,000,000

Total Tk: 23,000,000

8.3) Financial Forecast:

The most comprehensive means of financial forecasting is to develop a series of projected, financial statements. Now here we are going to present our projected cash flow statement for five years, projected income statement for five years, and projected balance sheet of five years.

8.3.1) Cash Flow Statement:

Cash Flow Statement

Luminous™ Automatic Car washing Co.

For 1st year

Cash Receipts (Cash In)

January February March April

Opening cash balance

25000000 2021000 2095500 2178500

Cash Sales 150000 170000 180000 200000

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Total Cash In 25150000 2191000 2275500 2378500

(-) Cash Disbursement (cash out)

Management Salaries 17000 17000 17000 17000

Other salaries & wage

18000 18000 18000 18000

Legal & Audit Fees 10000 -- -- --

Utilities 1000 1500 1500 2000

Telephone 500 500 500 500

Repair & Maintenance

500 500 1000 1000

Licenses & Tax 25000 -- -- --

Insurance 2000 2000 2000 2000

Other operating exp. 5000 6000 7000 8000

Payment for purchasing equipment

10000000 -- -- --

Payment for acquisition of land

13000000 -- -- --

Interest expenses (12%)

50000 50000 50000 50000

Income Tax (25%) -- -- -- --

Dividends Paid -- -- -- --

Total Cash Out 23129000 95500 97000 98000

Surplus/Deficit Closing Cash Balance

2021000 2095500 2178500 2280500

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* The Luminous™ Co. desires a minimum monthly ending cash balance of Tk.2000000

Cash flow statement will continue in next page.

Cash Flow Statement


For 1st year


May June July August


2280500 2380500 2489000 2586000

Cash Sales 200000 210000 200000 220000

Total Cash In 2480500 2590500 2689000 2806000




18000 18000 18000 18000

Legal & Audit Fees -- -- -- --

Utilities 2000 2000 2500 3000

Telephone 500 500 500 500

Repair & 1500 2000 2000 3000

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Maintenance

Licenses & Tax -- -- -- --

Insurance 2000 2000 2000 2000



-- -- -- --


-- -- -- --


50000 50000 50000 50000

Income Tax (25%) -- -- -- --


Total Cash Out 100000 101500 103000 105000


2380500 2489000 2586000 2701000


Cash Flow Statement


For 1st year

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September

October November

December

Total

Opening cash balance 2701000 2814000 2906000 3006000 25000000

Cash Sales 220000 200000 210000 220000 2380000

Total Cash In 2921000 3014000 3116000 3226000 27380000


Management Salaries 17000 17000 17000 17000 204000

Other salaries & wage 18000 18000 18000 18000 216000

Legal & Audit Fees -- -- -- -- 10000

Utilities 4000 4000 4500 4500 32000

Telephone 500 500 500 500 6000

Repair & Maintenance 3000 3500 3500 3000 24500

Licenses & Tax -- -- -- -- 25000

Insurance 2000 2000 2000 2000 24000

Other operating exp. 12500 13000 14500 16500 124000


-- -- -- -- --


-- -- -- -- --


50000 50000 50000 50000 600000

Income Tax (25%) -- -- -- 778625 778625

Dividends Paid -- -- -- 300000 300000

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Total Cash Out 107000 108000 110000 1190125 25344125


2814000 2906000 3006000 2035875 2035875

8.3.2) Income Statement:

Income Statement


For 1st year

Particulars Amounts in Taka

Service Revenues: 2380000

Operating Expenses:

Management Salaries 204000

Other salaries & wage 216000

Legal & Audit Fees 10000

Utilities 32000

Telephone 6000

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Repair & Maintenance 24500

Licenses & Tax 25000

Insurance 24000

Other operating exp. 124000

Total Operating Expenses 665500

Operating Profit (EBIT) 1714500

Interest Expense (12%) 600000

Earnings before taxes (EBT) 1114500

Taxes (25%) 778625

Earnings after taxes (EAT) 335875

Dividends paid 300000

Increase in retained earnings 35875

8.3.3) Balance Sheet:

Balance Sheet


For 1st year

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Assets Amounts In TakaCash 2035875Land 13000000Washing Equipments 10000000Total Assets 25035875

Liabilities & Owner’s EquityBorrowing from Bank 5000000Owner’s Equity 20000000(+) Increase in Retained Earnings 35875Owner’s Equity 20035875Total Liabilities & Owner’s Equity 25035875


Cash Flow Statement


For 2nd year



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2035875 2129875 2241875 2342875

Cash Sales 210000 230000 220000 210000

Total Cash In 2245875 2359875 2461875 2552875




19000 19000 19000 19000


Utilities 4500 5000 5000 5500

Telephone 1000 1000 1000 1000


2500 3000 3000 3500


Insurance 2000 2000 2000 2000



-- -- -- --


-- -- -- --


50000 50000 50000 50000

Income Tax (25%) -- -- -- --


Total Cash Out 116000 118000 119000 121000

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2129875 2241875 2342875 2431875


Cash Flow Statement


For 2nd year




2431875 2531875 2639875 2756875

Cash Sales 220000 230000 240000 240000

Total Cash In 2651875 2761875 2879875 2996875




19000 19000 19000 19000


Utilities 5000 5500 6000 6000

Telephone 1000 1000 1000 1000

Repair & 3000 3500 4000 2000

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Maintenance


Insurance 2000 2000 2000 2000



-- -- -- --


-- -- -- --


50000 50000 50000 50000

Income Tax (25%) -- -- -- --


Total Cash Out 120000 122000 123000 122000


2531875 2639875 2756875 2874875


Cash Flow Statement


For 2nd year

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September

October November

December

Total

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Cash Sales 250000 240000 250000 260000 2800000

Total Cash In 3124875 3242875 3372375 3509875 4835875




Legal & Audit Fees -- -- -- -- --

Utilities 5500 5000 5500 6000 64500

Telephone 1000 1000 1000 1000 12000


Licenses & Tax -- -- -- -- --

Insurance 2000 2000 2000 2000 24000



-- -- -- -- --


-- -- -- -- --


50000 50000 50000 50000 600000

Income Tax (25%) -- -- -- 846500 846500

Dividends Paid 300000 300000

Total Cash Out 122000 120500 122500 1270500 2596500

Surplus/Deficit Closing Cash

3002875 3122375 3249875 2239375 2239375

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Balance


Income Statement


For 2nd year



Operating Expenses:



Utilities 64500

Telephone 12000


Insurance 24000

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Interest Expense 600000


Taxes (25%) 846500





Balance Sheet


For 2nd year

Assets Amounts In TakaCash 2239375Land 13000000

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Washing Equipments 10000000Total Assets 25239375



Cash Flow Statement


For 3rd year




2239375 2382375 2534375 2685375

Cash Sales 270000 280000 280000 270000

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Total Cash In 2509375 2662375 2814375 2955375




20000 20000 20000 20000

Utilities 6000 6500 6500 7000

Telephone 1000 1000 1000 1000


3000 3500 3500 4000

Insurance 2000 2000 2000 2000



50000 50000 50000 50000

Income Tax (10%) -- -- -- --


Total Cash Out 127000 128000 129000 130000


2382375 2534375 2685375 2825375


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Cash Flow Statement


For 3rd year




2825375 2975375 3107375 3238375

Cash Sales 280000 260000 260000 250000

Total Cash In 3105375 3235375 3367375 3488375




20000 20000 20000 20000

Utilities 6000 5000 5000 4000

Telephone 1000 1000 1000 1000


4000 4000 4000 4000

Insurance 2000 2000 2000 2000



50000 50000 50000 50000

Income Tax (25%) -- -- -- --


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Total Cash Out 130000 128000 129000 127000


2975375 3107375 3238375 3361375


Cash Flow Statement


For 3rd year


September

October November

December

Total


Cash Sales 250000 270000 270000 280000 3220000

Total Cash In 3611375 3756375 3898375 4049375 5459375



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Legal & Audit Fees -- -- -- 10000 10000

Utilities 3000 4000 5000 5000 63000

Telephone 1000 1000 1000 1000 12000


Insurance 2000 2000 2000 2000 24000



50000 50000 50000 50000 600000

Income Tax (25%) -- -- -- 977000 977000

Dividends Paid -- -- -- 400000 400000

Total Cash Out 125000 128000 129000 1519000 2929000


3486375 3628375 3769375 2530375 2530375


Income Statement

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For 3rd year



Operating Expenses:




Utilities 63000

Telephone 12000


Insurance 24000






Taxes (25%) 977000



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Balance Sheet


For 3rd year



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Cash Flow Statement


For 4th year




2530375 2666375 2777375 2897375

Cash Sales 270000 240000 250000 230000

Total Cash In 2800375 2906375 3027375 3127375




21000 21000 21000 21000

Legal & Audit Fees -- -- --

Utilities 4000 3000 3000 3000

Telephone 1000 1000 1000 1000

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3000 4000 4000 3000

Insurance 2000 2000 2000 2000



50000 50000 50000 50000

Income Tax (25%) -- -- -- --


Total Cash Out 134000 129000 130000 127000


2666375 2777375 2897375 3000375


Cash Flow Statement


For 4th year




3000375 3111375 3222375 3341375

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Cash Sales 240000 240000 250000 240000

Total Cash In 3240375 3351375 3472375 3581375




21000 21000 21000 21000


Utilities 4000 3500 4000 3500

Telephone 1000 1000 1000 1000


3000 3000 4000 4000

Insurance 2000 2000 2000 2000



50000 50000 50000 50000

Income Tax (25%) -- -- -- --


Total Cash Out 129000 129000 131000 130000


3111375 3222375 3341375 3451375


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Cash Flow Statement


For 4th year


September

October November

December

Total


Cash Sales 250000 260000 260000 270000 3000000

Total Cash In 3701375 3830875 3960375 4097875 5530375




Legal & Audit Fees -- -- -- 10000 10000

Utilities 4000 4000 5000 5000 46000

Telephone 1000 1000 1000 1000 12000


Insurance 2000 2000 2000 2000 24000


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50000 50000 50000 50000 600000

Income Tax (25%) -- -- -- 956000 956000

Dividends Paid -- -- -- 400000 400000

Total Cash Out 130500 130500 132500 1500500 2933000


3570875 3700375 3827875 2597375 2597375


Income Statement


For 4th year



Operating Expenses:

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Utilities 46000

Telephone 12000


Insurance 24000






Taxes (25%) 956000





Balance Sheet

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For 4th year




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Cash Flow Statement


For 5th year




2597375 2726375 2854375 2975375

Cash Sales 260000 260000 250000 270000

Total Cash In 2857375 2986375 3104375 3245375




21000 21000 21000 21000


Utilities 4000 5000 4000 5000

Telephone 1000 1000 1000 1000


3000 3000 3000 5000

Insurance 2000 2000 2000 2000



50000 50000 50000 50000

Income Tax (25%) -- -- -- --


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Total Cash Out 131000 132000 129000 135000


2726375 2854375 2975375 3110375


Cash Flow Statement


For 5th year




3110375 3240375 3362375 3486375

Cash Sales 260000 250000 250000 240000

Total Cash In 3370375 3490375 3612375 3726375




21000 21000 21000 21000


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Utilities 5000 4000 4000 3000

Telephone 1000 1000 1000 1000


2000 2000 3000 2000

Insurance 2000 2000 2000 2000



50000 50000 50000 50000

Income Tax (25%) -- -- -- --


Total Cash Out 130000 128000 126000 124000


3240375 3362375 3486375 3602375


Cash Flow Statement


For 5th year

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September

October November

December

Total


Cash Sales 250000 250000 270000 280000 3090000

Total Cash In 3852375 3976375 4117375 4265375 5687375




Legal & Audit Fees -- -- -- 10000 10000

Utilities 4000 4000 5000 6000 53000

Telephone 1000 1000 1000 1000 12000


Insurance 2000 2000 2000 2000 24000



50000 50000 50000 50000 600000

Income Tax (25%) -- -- -- 1030000 1030000

Dividends Paid -- -- -- 300000 300000

Total Cash Out 126000 129000 132000 1475000 2897000


3726375 3847375 3985375 2790375 2790375

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Income Statement


For 1st year



Operating Expenses:




Utilities 53000

Telephone 12000


Insurance 24000

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Taxes (10%) 1030000





Balance Sheet


For 1st year

Assets Amounts In TakaCash 2790375Land 13000000Washing Equipments 10000000

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Total Assets 25790375


8.8) Break-even analysis:

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Ratio Analysis:

For 1st year: Analysis:

1. Current Ratio: Tk: 2035875/5000000=0.41:1

2. Quick Ratio: Tk: 2035875/5000000=0.41:1

3. Debt Equity Ratio: Tk: 5000000/20000000=0.25:1

4. Operating Expense Ratio: Tk: 1114500/2380000=0.46:1

5. Return on Asset: Tk: 35875/25035875=0.0043:1

6. Return on Equity: Tk: 35875/20000000=0.0079:1

For 2nd year:

1. Current Ratio: Tk: 2239375/5000000=0.44:1

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2. Quick Ratio: Tk: 2239375/5000000=0.44:1





For 3rd year:

1. Current Ratio: Tk: 2530375/5000000=0.51:1

2. Quick Ratio: Tk: 2530375/5000000=0.51:1





For 4th year:

1. Current Ratio: Tk: 2597375/5000000=0.52:1

2. Quick Ratio: Tk: 2597375/5000000=0.52:1





For 5th year:

1. Current Ratio: Tk: 2790375/5000000=0.56:1

2. Quick Ratio: Tk: 2790375/5000000=0.56:1


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Documents

Car Wash Business Plan