Business Plan for a ‘Mobile Car Wash and Grooming (MCWG)’ idea. By Tune Chien Jung 23 June 2016 Executive Summary:
A business opportunity exists in highly urbanised population centres with a large number of car owners, such as in Singapore. Generally car washing and maintaining the look of one’s car is usually a chore that is actively triggered by the car owner. The MCWG idea is seeks to be a platform to offload the exterior aesthetic maintenance of a car (or any private vehicle) from the car owner to that of an enterprise that will monitor and perform (subject to owner’s permission) beautification works on the said car, with a subscriptionpaid rinseless car wash service as its core business. The value to the customer is that he/she need not spend time bringing the car to a car wash, or have to wash the car by themselves, given competitive pricing. The MCWG car wash or grooming services take place with the car owner’s consent but without needing the owner’s presence or even keys to the car.
MCWG leverages on the fact that many cars in Singapore are parked in multistorey car park complexes and seeks to operate efficiently by soliciting customers to regularly park in those said multistorey carparks in a particular district or city block that is geographically near to minimise transportation costs/time for MCWG. Different MCWG teams service different geographical regions. MCWG is mobile in the sense that the service crew and necessary equipment are ferried between nearby carpark buildings in a van. Another factor that works in favour of the MCWG is that since the customer base targeted are those who park regularly indoors and are only lightly soiled vs cars parked outdoors, this makes usage of the ‘rinseless’ car wash technique feasible within indoor carparks were traditional car wash techniques using copious amounts of water are frowned upon or banned due to the mess they create.
MCWG can be a platform to introduce other products/services to the customer besides
its core business of rinseless car washes. This is done by having workers scrutinising the car body and recommending the relevant beautification or repair work to the owner the actual services may be performed by MCWG workers or subcontracted to more capable third parties but with MCWG getting a referral fee, which MCWG is able to negotiate, along with any preferential pricing for its customer base, depending on volume of required thirdparty services (eg. dent repair, waxing, tyre change, etc.) that is collated.
In effect, MCWG intends to be a ‘manager’ of a car’s exterior condition by being able to
offer many relevant services to the car owner, of which a few frequentlyneeded and core services such as the rinseless car wash and light paintwork damage repair as its core business. The customer only needs to agree on the level of expected cleanliness and pricing of services to achieve that level of grooming beforehand.
The Opportunity and The Need
It is from personal observation and experience that long car queues often form at the petrol station car wash stations in Singapore on Fridays and Saturdays as car owners rush to complete that chore. The waiting times (3045 minutes) can be far in excess of the time take to actually wash and dry the car (1015 minutes) and are by people who presumably do not want to dirty their hands nor have the necessary space and resources do it by themselves but are willing to pay the standard SGD8.00 per sedan car (more for larger vehicles) price plus wait in a queue as long as that to see a doctor. So instead of going to a car wash, why not let the car wash come to you at a preagreed time and place? … and with more types of relevant services that just a wash? By intercepting the need of a car wash ahead of the traditional car wash outlet, MCWG can potentially draw quite a bit of business for itself. UVP: By letting the owners fix the timing as to when their cars are washed/groomed (via an online website or app), it offers the convenience of avoiding peak periods at traditional car washes. Also, avoiding peak hours by ‘spreading’ out jobs with customers throughout the day (inclusive of nighttime jobs), MCWG may actually have more throughput than a traditional car wash, as the latter tends to get business when customers are not at work or have some break time (eg. during lunchtime, or just after work) but is mostly quiet outside of those peak periods.
The Company and Its Products (Services) and Strategy
MCWG’s services: *Prescheduled, onsite indoor rinseless car washes, with regular quick cleanup if customer is on subscription (will have MCWG decal) instead of ondemand car wash. *Minor car grooming (removal of small paintwork damage, tyre shine, quick wax) *Major car grooming (whole car polishing, coating/waxing) *Regular exterior examinations, and recommending 3rd party services as necessary. 5 forces analysis:
1.) Supplier Power a.) Many alternate suppliers are available for good car grooming supplies. b.) Volume of supplies usage is not any more than a typical car wash. c.) Permission to operate in indoor carparks will be subject to private carpark
management may require a cut in profits. Operating in government run public indoor carparks is tolerated.
d.) It is common for workers to jobhop and also carry with them their knowhow and experience, unless salary raises are done frequently enough to their liking. The Singapore labour market is currently tight at all levels after recent government restrictions on importing in foreign labour to favour employment of locals.
2.) Buyer Power
a.) Customers unlikely to know each other to gang up to demand more concessions. b.) Car wash is usually seen as a personal chore and are unlikely to be compared
and discussed over lunch talk, unlike, say, mobile data plans or insurance plans. c.) There could be dissatisfied customers that could make noise on social media or
other channels due to unmet expectations or even accidental damage to their cars during the grooming.
3.) Barrier to Entry a.) No one particular big barrier to entry. b.) Initial startup cost is low, <S$10000 per team of 4 workers. c.) The concept of a mobile car wash has already been implemented for years
already in other countries but so far seem to work only at outdoor locations with a ready water supply.
d.) Will require staff trained with some skill in car grooming and in the technique of rinseless car washing (not a common technique but not difficult to learn) to be viable in indoor carparks where wet washes are forbidden.
e.) This new way of operating a car wash will probably not attract new entrants until news spreads, when and if it is profitable and sustainable which could be years later, giving the first entrant at least a time advantage over later entrants.
f.) If MCWG can capture the majority of regular customers in a concentrated area (ie. several carparks that are nearby each other), newcomers will find it less profitable or even prohibitive as having to transport workers farther and more frequently incurs substantial costs compared to MCWG.
4.) Threat of substitutes a.) The traditional car wash is always there as an alternative for those who don’t
mind queueing for it, usually after pumping fuel. b.) Some parking lots already have a permanent stall/shop offering car grooming
services. c.) There are already mobile car grooming services in Singapore, but all are known
to offer higherpriced infrequently needed services such as detailed waxing and interior cleaning (will still require owners’ presence for the keys), but not car wash.
d.) It is likely that a car owner, after observing MCWG workers, decides to DIY on rinseless car wash after realising it’s not that difficult nor timeconsuming to do, relative to their available spare time.
e.) In some public indoor parking lots, illegal car wash operators are present and may be able undercut MCWG with lower pricing for customers with lower expectations.
5.) Degree of Rivalry a.) The rivalry between competing firms for car grooming services can be quite
intense as much effort is put into advertising/promoting such services through traditional advertising (eg. flyers, salesmen, etc.), and on online platforms (enthusiast’s forums, social media).
b.) The rivalry for car washing servicing is much more subdued. Advertising for car wash is uncommon and most traditional car washes here seem to operate on the “if you build it, they will come” principle.
c.) The knowledgeable or shrewd customer can easily source his/her own additional car grooming services instead of taking those extras recommended by MCWG as the internet is awash with information and alternatives for the resourceful person this will deny MCWG revenue from referral fees.
In summary, MCWG is a viable business that is easy to start, but needs to quickly capitalise on the firststarter advantage to carve out a sizable loyal customer base for its prescheduled car wash and grooming services. Competition can be intense for car grooming, but not so much for its breadandbutter ‘rinseless’ car wash service which is also at the moment unheard of for indoor carparks where wet washing is not allowed. Retaining an experienced crew is challenging but is important as MCWG can live or die based on the impressions of the handiwork of MCWG employees.
The Management Team: MCWG has a simple hierarchy (here, assuming 3 working mobile teams):
The Marketing Plan: Initially, MCWG will be operating at a loss as we start to accumulate the customer base. We will do so by offering onetime free washes to potential customers at targeted indoor carpark buildings where customers will leave their cars there for work or overnight or generally for long, predictable periods. Carparks where parking is transient (ie. shopping malls where cars are left only as long as the owners need to complete their errand) will not be targeted. A leaflet stating boldly ‘FREE (HALF) WASH’ will be left on their car door handle or under a windshield wiper and has contact details to start the onetime trial (eg. some web link or scannable QB code that leads to the booking website) rinseless car wash. The trial car wash does not wash the whole car (to deter opportunists) but just noticeable areas like the front hood and driver/passenger doors so that the potential customers can evaluate the quality of the work and contrast it against the rest of the uncleaned car. The can pay a heavily discounted rate of S$5 to get a full car wash firsttime, instead of the partial trial car wash. To get that trial, potential customer need to furnish contact details (phone number, email, parking location) upon registering online so that we may follow up (job for Marketing Manager and me). The above free trial will be conducted over a large area in Singapore and will be conveyed as a survey of interest. Based on the data collected, we will analyse which areas have the highest concentration of potential customers and render the free car wash and then follow up by contacting them afterwards. We may still render the free car wash to the fewer respondents outside of the large clusters of responses to maintain goodwill but may just reply with “Sorry, fully redeemed” if it proves to be too much. The workers of MCWG will also have to do some footwork by personally dropping by the receptions of companies in commercial or industrial complexes (where there is a sizable car population as well) and distributing the leaflets with permission of the reception staff. Delivering the leaflets to the mailboxes of apartment complexes is also another option and more so to gauge the demand for nighttime washes. Paid advertising on local enthusiast car websites cum forums like http://www.mycarforum.com/ is also another easy way to market this new service.
Operating Plan: Activity map:
Generally, there are 3 key operations in MCWG:
1.) The online scheduling/booking and payment system. It is an actively maintained website that manages customer contact/relations and their booking of services. All jobs are prepaid. Also, this online platform will be use to suggest additional services (inhouse or 3rdparty) to registered users as time goes by. The system, on a daily basis, will consolidate job bookings and generate (via some common logistics algorithm) job orders for the mobile wash crews, in order to optimise the wash crew’s time vs the many locations of car wash/grooming jobs ordered. Creation and maintenance of the site will be subcontracted to a local IT firm specialising in online commerce.
2.) Mobile wash team. This is a 4man team consisting of an experienced supervisor and 3 car wash workers. They will follow the job order generated by the online booking system in going around town fulfilling job requests. The system will also notify them of any ‘member’ vehicles in their vicinity (will also have a decal on the windscreen) so that they can opportunistically touchup that vehicle to reduce the cleaning effort before the next full wash.
3.) Marketing and forward planning. This is probably a twoman show between the General
Manager and Business Manager. Here, the results of the business and future opportunities are discussed and perhaps prototyped at small scales (eg. hiring temp workers just to test out some new service that is not part of the core mobile wash team’s scope) to plan for the expansion of the business. Time will also need to be spent building rapport with suppliers and business partners (eg. key 3rdparty service providers) by meetings, attending events, conducting roadshows, etc.
Financial Plan: A simple spreadsheet estimate of the feasibility of MCWG show that operating at a modest 20% operating margin is quite possible.
Cost
item Montly
cost (SGD) Cost
% Comments **Singapore
Corporate tax = 17%
Van
rental 1200 23.9
0% http://www.sianghock.com.sg/Comme
rcialVihicle.php of taxable income (ie.
minus expenses, reliefs)
Van
petrol 400 8.00
% Based on my personal 30km per day
commute, x2 pessimistic est.
Worker
(2 pax) 3000 59.7
0% Based on known rate of S$60/day for
car wash workers, 6days/wk
Van
parking 428 8.50
% Based on commercial park rates
(S$2.14/hour), parked 10 hours per workday
Total: 5028 100.
00%
Typical worker working hours = 8 hours/day (8am6pm, but 2
hours for breaks, travel between car parks)
Typical drivein car wash price = S$8 / sedan car
Price to charge per car wash = S$8 / sedan car
Consumables cost per car = S$2 / car (shampoo, water,
towels/wipes)
Profit/c
ar = $6.00
How many cars to wash to break even, per month? (2 workers)
838 cars/mont
h
34.9 cars/day (24 weekday/mo, 8 hours work/day)
17.5 cars/work
er/day
27.49 Minutes needed per car per worker
How many cars to wash to earn 20% pretax operating margin
with 2 workers: ($5028 * 1.2)
1005.6 cars/mont
h
41.9 cars/day (24 weekday/mo, 8 hours work/day)
21 cars/work
er/day
22.91 Minutes needed per car per worker
How many cars to wash to earn 50% pretax operating margin
with 2 workers:
1257 cars/mont
h
52.4 cars/day (24 weekday/mo, 8 hours work/day)
26.2 cars/work
er/day
18.33 Minutes needed per car per worker
How many cars to wash to earn 20% pretax operating margin:,
but with 3 workers:
1305.6 cars/mont
h ($5028 + $1500)*1.2
54.4 cars/day (24 weekday/mo, 8 hours work/day)
18.1 cars/work
er/day
26.47 Minutes needed per car per worker
How many cars to wash to earn 50% pretax operating margin,
but with 3 workers:
1632 cars/mont
h ($5028 + $1500)*1.5
68 cars/day (24 weekday/mo, 8 hours work/day)
22.7 cars/work
er/day
21.18 Minutes needed per car per worker
How many cars to wash to earn 20% pretax operating margin:,
but with 4 workers:
1605.6 cars/mont
h ($5028 + $3000)*1.2
66.9 cars/day (24 weekday/mo, 8 hours work/day)
16.7 cars/work
er/day
28.7 Minutes needed per car per worker
How many cars to wash to earn 50% pretax operating margin:,
but with 4 workers:
2007 cars/mont
h ($5028 + $3000)*1.5
83.6 cars/day (24 weekday/mo, 8 hours work/day)
20.9 cars/work
er/day
22.96 Minutes needed per car per worker
How many cars to wash to earn 20% pretax operating margin:,
but with 5 workers:
1905.6 cars/mont
h ($5028 + $4500)*1.2
79.4 cars/day (24 weekday/mo, 8 hours work/day)
15.9 cars/work
er/day
30.23 Minutes needed per car per worker
How many cars to wash to earn 50% pretax operating margin:,
but with 5 workers:
2382 cars/mont
h ($5028 + $4500)*1.5
99.3 cars/day (24 weekday/mo, 8 hours work/day)
19.9 cars/work
er/day
24.18 Minutes needed per car per worker
Minutes per car per worker at 20% op margin:
Workers Time
2 22.91
3 26.47
4 28.7 * Most feasible
5 30.23
Minutes per car per worker at 50% op margin:
Workers Time
2 18.33
3 21.18
4 22.96
5 24.18
At the required operating margin, the operating plan would be best served by 4 workers per team, with each person within the team given just slightly under halfanhour to fully clean a car. Online research (from car care forums) shows rinseless washing a car may take anywhere between 10 minutes to 45 minutes depending on the size and condition and skill level of the washer. The times surveyed are from car owners washing their cars at a presumably leisurely pace. Most of the operating cost is borne by the salary of the workers. At the worst case, only 2 workers is needed (given the same time to clean a car) to break even. Two key assumptions that need to be verified are:
1.) Profitability per wash. Currently it assumes at a price of S$8 per wash (on par with traditional drivein washes), the material cost is S$2. This is an estimate more on the high side and could be very well under S$1 once better deals are made for the bulk purchase of consumables and laundering of towels used. Or, it could end up higher. It might be better to offer the service at S$9 per wash, with the extra S$1 premium justified as the shiny wax finish (most rinseless formulas have them anyway) but is not available at traditional washes unless an extra S$23 is paid.
2.) Working time. It is assumed that out of 10 hours contractual working time per work day,
the workers spend 8 of it actually cleaning cars, with 2 hours on break times (as the job is physically demanding) and travelling to the next nearby carpark lots. This will require verification in a pilot run.
There should be some fees needed for some sort of business insurance but it has not been taken into account. Probably some form of liability insurance (against claims of accidental damages).
PCV analysis:
Price: $8.00 per most basic car wash option offered
Cost: $5.75 consumables, manpower per car washed (S$60/day), 30 minutes a wash with the 4 workers per team configuration.
Value: $19.75 estimated from median income (S$3949/mo) of singaporeans for time wasted to wait 30 minutes for car wash + car wash pricing market value (S$8)
Social margin:
$14.00
Client margin:
$11.75
Company margin:
$2.25
Comment: Trying to split the company and client margins more evenly will be challenging because of a psychological 'anchor' of most people that basically asks "why should I pay more for this new car service vs just for a traditionaly stoneandmortar car wash?". Significant effort needs to be put into the promotion of MCWG to make clients realise that the value of freeing up their time vs waiting physically unproductively at car wash sites, is worth paying extra for. Then only the base service price can be risen to increase company margin. The other way is to by pushing more higher ROI services inaddition to washing (polishing, waxing, scratch removal, etc.).
Risk analysis:
Key Type of risk Impact Likelihood Mitigation plan:
1 Operational
1a Damage to clients cars, payout for damages.
3 3 Business insurance.
1b Bad reviews by dissatisfied clients (eg. Social media).
7 3 Need to hire customer relations expert.
1c Worker turnover is high. 5 5 Either raise costs a bit to retain skilled staff or make methods simpler to enable new staff to pickup skills faster.
2 Technological
2a Invention of new, more rapid car wash centres.
9 1 Continual improvement of processes and technology used to decrease a job's timetaken, before such a disruptive technological change hits us.
2b Online booking system, membership database gets hacked.
10 2 Have IT security audits done often, store only nonsensitive data on online platform.
3 Legal/IP
3a Branding/image may be copied by copycat competitors.
5 3 Will need to pay to retain a legal advisor.
3b Optimised operations/processes copied by others.
7 3 NDA signed with suppliers, highlevel staff.
4 Competitors
4a Copycat competitors 7 5 Business alliances, buyouts, stronger brand identity.
4b Sabotage/harassment by illegal indoor car 7 3 Business insurance, work with
wash operators authorities to report illegal operations, rackets. Do not service problemprone areas.
5 Regulatory
5a Carpark owners may not permit car washes.
10 2 Need to negotiate profit sharing or introduce a new valettype service whereby client's car is washed elsewhere and then only parked into the designated car park. Throughput of car washers per day will be impacted. Security concerns (car theft).
6 Market
6a Traditional car washes undercut pricing. 7 7 Need to increase marketing efforts to stress the value to customer on time saved by NOT personally going to a car wash.
6b In bad economy, people may wash cars themselves or wash less often to save money.
7 5 Need to streamline processes to survive on a lower margin.
6c Car population slowly decreasing due to S'pore gov't 'carlite' policy.
5 10 Need to open up other markets, eg. For motorcycles, commercial vehicles (taxis, vans, buses, etc.) at their depots.
From the above chart, the risks we need to pay most attention to immediately are 4a, 1c, 6a, and 6c.
Conclusion: This business plan should be considered a draft and by no means finalised. It has not been reviewed by experts in the field (due to the limited time available to do this assignment), and has some key assumptions. One key implied assumption is that the rinseless car wash technology is mature enough for such a large scale operation and that most cars/customers targeted are presumed to not soil the exterior of their cars till it is impossible for a rinseless car wash to work (very dirty cars require a traditional car wash with pressure hose). In terms of the management team as operations, it is perhaps a bit too simplistic and maybe some key person or key infrastructure or enabling service could be missing. Financially, the analysis is also simplistic and only focused on the car wash service, presumed to be the most frequent, indemand service but with the lowest profitperworker’stimespent, and makes assumptions on workers being able to sustain at least 8 hours of working per day. However, to progress further, one may have to conduct small scale prototype/experiments to verify those key assumptions as well as to partner early on with someone or some party that has been in the same/similar business for awhile. Thinking back, would you still choose the same solution, what would you do differently?
Yes, but perhaps the key technical process behind the minimum viable product (rinseless car wash)
needs to be reviewed. There could be better profitabilitytoeffort technologies as car wash is a very
costcompetitive business that hinges heavily on manpower costs. Perhaps some level of
automation to reduce manpower needs.
Did you identify threats/risks, and update your plan accordingly?
Yes, the main two threats and risks are basically the traditional car washes (which people are very
accustomed to, vs something new like rinseless car wash), and the ease in which newcomers can
enter the same business model and take away market share. The only mitigating strategy so far is to
capture as much potential customers in given areas, and try hard to maintain their loyalty so that
newcomers see no opportunity to expand to those areas.
Are you convinced that you really chose the best option for creating value?
Yes, I believe a lot of chore and services do unnecessarily use up a customer’s time even though
the customer is not really needed at the spot/time. Car washes is one of them and I intend to deliver
value in two ways: free up time with little or no extra cost incurred for the customer vs traditional
options, and secondly, deliver value by exposing customers to more than what they normally
experience at a car wash, essentially turning an experience of being/doing a chore, to that of nearing
a hobby to maintaining a beautiful car but will with minimal direct effort.
Did you consult with others/experts, considered their ideas carefully and implemented changes?
Sadly no, not in this time frame.
Did you find products that provide a partial solution, and may be integrated in your plan?
Yes, the socalled ‘steam jet’ cleaning technology that is also gaining popularity in other countries.. It has a high initial investment cost but is able to clean cars much faster than the rinseless chemicals, thus minimising manpower costs and increasing throughput. It also uses minimal water (2L per car) and does not flood the wash area with waste water which is a nono in indoor carparks here. However, it will require a power source and a portable petrol/diesel generator could be it. Unfortunately it may not be permissible to operate such generators in indoor carparks due to safety regulations and this needs some more research done into it.