ENTR311 Business Plan Foundations : Hand Car Wash Companies

Company Description

Soapy Rides

Soapy Rides is one of the prominent hand car wash companies, which is located in the East Meadow, Long Island, New York and has been serving the people in the community for long.

Vision

The vision of Soapy Rides is to become the best car washing company in the United States within 2020. It is working hard to provide additional benefits to become the best company in car washing.

Mission

The mission of the company is to provide top quality washing services to all types of customers from luxury car owners to those having cars not so expensive. Soapy Rides always try to give the best service to increase the satisfaction level of the customers. It is introducing the automated car washing facilities for the new location.

Service

Soapy Rides has the plan to provide hand wash as well as automated car washing facilities to the customers based on the level of the service. It will provide service in interior car washing, exterior car washing and car detaining.

About Industry

There is an intense competition in the car wash industry in US and the growth of the industry is also very good. The growth is forecasted for a yearly rate of 3.3 percent until 2018. It is also tied to the dependence of the industry on the consumer discretionary spending. This is believed to increase in the next five to six years (Rutz, Tappel & Zirger, 2014). The increased sale of new as well as used cars is the positive indicators about the growth of car washes in the next few years. Sale of cars has increased considerably in USA, which has shown opportunities for the car washing companies. People in USA have become very conscious about the environment and are resorting to professional car washing (Schmidt, Spann & Zeithammer, 2014). The car washing industry in US has revealed three different types of car washing namely the express, flex and full. Full is expected to do well in the future as the competition may shrink. It needs continuous focus on the customer experience and value proposition. Flex is the combination of Express and off-line after care. It requires less labor than the Full serve. The Flex washes are also expected to increase with time (Baker, 2014).  

Market

Market and target customer

There has been a huge market of car washing companies in US as people have no time to wash their cars by their own (Schaper et al. 2014). The sale of cars is also increasing in the country and people have become frequent to the car washing centres. 

Soapy Riders has planned to target different types of customers including the cars of the local businesses, individual car owners, car dealers and the leasers. The target market strategy of Soapy Rides is to attract the customers who will be frequent and even repeat users for taking the car washing service (Perreault Jr, Cannon & McCarthy, 2013). The specific users will be business owners who always remain busy and do not have time to wash their cars. Other segment can be the retired people using the luxury cars and are not tied up with any types of business schedules, are frequent to the car washing centres. The dealers of cars also need their cars to be frequently washed. They can be one of the prospective customers of Soapy Rides (Tur?an, 2015).   

Competition, competitive advantage and Business Model

There has been an intense competition between the car washing companies in US because of the increased number of vehicles in the country. The companies are resorting to advanced technologies to differentiate themselves in the market (Gummesson, Kuusela, & Närvänen, 2014).

Soapy Rides will be having a competitive advantage in the car washing industry, as it will be offering automated cleaning at a relatively low cost than the competitors. It is targeting the customers who want quality cleaning in a short period. Another competitive advantage of Soapy Rides is the brand value of the company in terms of service it is providing to the existing customers for so many years (Watson, McGowan & Cooper, 2016).

The Mentioned car wash company has developed a successful business model to facilitate the smooth running of the business. Soapy Rides has followed some simple steps to prepare the model. The model prepared by the mentioned car washing company has some special features. They are;

• Location- Selection of the location was the first and foremost thing to attain success in business. The company carried out a detailed research before selecting the site. The location of the car washing unit was selected after a detailed analysis based on the population in the area, number of cars in the area, number of other car washing facilities in the particular area, the infrastructure of the adjoined area. The particular research to select the location has helped the mentioned company to develop a sustainable business plan for the future. The company has also kept in mind about the targeted area and the group of people that the company intends to provide service.
• Competition- The research done by the company identified a number of competitors who were already present in the area. The company decided to carefully analyze the marketing techniques of the other companies. The presence of high competition in the area will surely not help the company. Apart from a number of international companies local companies can also pose a threat to the organization as customers prefer these units more than the others.
• Paperwork- The Company verified about the different offices to obtain trade license and also verified about the tax rates, business policies and different rules and regulations that were followed in the particular area. The company also verified about the different price of the sanitary wares, the local equipments and the rates of the local workers that the company wishes to employ. The advance works will help the company to have a ready infrastructure in hand.
• Approval process- After the obtaining of the license the company has to visit the office of the local authority to approve their business. Soapy rides have put up a nice presentation in front of the different officials. The innovative presentation was praised by the officials and after some formal verification processes they gave their approval to set up the unit.
• Innovation- One of the main strategies of the business models are the different innovating techniques that are adopted by the company to meet the demands of the customers and have a competitive edge in the market. Soapy Rides has a dedicated panel of technicians that are always involved in developing the latest and time efficient techniques to make the car wash more effective.
• Operational Decisions- Operational Decision is one of the crucial elements of the business model of the concerned company. The management of the company was in a dilemma of whether they would be running the business on their own terms or they would appoint a franchisee to run the business. Both of the models have their own set of positives and negatives. The company finally decided to run the business independently. They planned to appoint a professional operations manager who would help the organization to attain success.
• Financing- The most crucial element of Business Model is the financing of the company. A compact model of revenue is needed to convince the investors to come forward and invest their money in the business. Soapy car wash was highly successful in creating the model. The management of the company was able to lure the investors by showing them the potential of the company to be a future giant in the car wash sector.

Marketing strategy

The marketing strategy of Soapy Rides will be a 360 degree strategy which will include television ads, ads in the radio, social media, newspaper ads and distribution of leaflets (Veit et al. 2014). It can also promote through direct mail to the business leaders and the corporate people who have cars. Direct selling can be another way of promotion by Soapy Rides (McKenzie, 2015).

Organization

Legal and organizational structure

The most important decision to be made is the proper legal an organizational structure for the business. However, it may not have an impact on the day to day transaction of the company like the Soapy Riders but it shall have an impact in the long run when the company will require borrowing money or attracting investors (Boons et al. 2013). Soapy Riders is a corporation which shall be controlled by the shareholders and managed by the board of directors. The company shall appoint such number of officers for the day to day running of the business (Wagner III & Hollenbeck, 2014).

Key personnel

The company shall have the following key personnel as the representative of the principal company. It shall have the following key personnel:

Chief Executive Officer (CEO): The CEO shall be responsible to support the company and will act as a driving force behind the company.

General Manager: The General Manager shall look after the functioning and the operations of the company. He shall make sure that all the operations run smoothly and economically. He shall be responsible to the upper management for the operations of the company and shall look after that the works of the company are done properly and within the stipulated deadline. The manager shall also look after the requirements of the employees and will act as a recruiter to the employees.

Financial Officer: This is a key function. The person holding this role shall look into and keep records of the monthly financial statement of a company. Prepare balance sheet, keep records of loans and advances taken on behalf of the company and debts and credits provided in the day to day transactions.

Quality control and risk mitigating unit: The officers appointed in this department shall look after that the quality of the production of the company is in its right way. The officers will also include some legal personnel who will look after those the company policies and day to day transactions are legal and no illegal act is performed by the agents of the company.

Professional Staff: The Company should have a professional and skilled staff who have knowledge as a motor vehicle mechanic.

Receptionist: The person will act as the frontline person and will handle phone calls, greet customers, handle mails, customer billing and performs any other task as required.

Related service providers

The related service providers will include suppliers of tyres, different spare parts of the vehicles, which need to be changed during servicing (Boons & Lüdeke-Freund, 2013). In the related service provider, the company shall provide its customers with other related services like change of motor tyres, seat covers, spare parts, fittings of glasses and rear mirrors, electronic gadgets particularly for motor vehicles (Price, 2017).

Location

Motor Ranch Road and Grand Park Highway both the spots are well located The spots will give the company a good amount of business in the long run as the locations are on the highway. The locations will be beneficial for the company and its customers as the high way connects the cities and large number of vehicles travels through this highway.

Financials

The company estimated a total round up cost of Approximate in between $800,000 to $1,200,000 to start the Car Wash Service (Wirtz et al. 2016). The estimated figures includes the different costs that will be involved in the process like buying the land, constructing the infrastructure, acquiring machines, obtaining trade licenses and other related direct or indirect costs (Aghdaie & Alimardani, 2015). The company will take a loan from a prominent financial institution of the area and the remaining funds will be managed from the investors (Wagner III & Hollenbeck, 2014).

Critical risks

There are some critical risks that every car washing company faces. Soapy Rides have to be very much careful about these risks. Some of them are;

• Using wrong detergents can lead to the damage of the expensive cars and will follow a legal action. The mentioned company being new in the market will face it tough to address such a legal concern.
• Employee injuries are very much common in car wash facilities. The equipments and machineries are very much dangerous and loss of concentration can lead to fatal injuries.
• The mentioned company will be new to the market and it will be hard for them to replace new machinery if they somehow get damaged. The organization has to maintain the equipments with care
• Finally there are threats to business from large organizations as customers prefer to wash their cars from reputed and big companies. This makes the organization vulnerable to external threats in the market.  

Financial statements

Income Statements and Assumptions

The income statements of the company consist of different factors related to sales and profits. It includes the revenue earned from sales, the cost of sales and the gross or net profit. The statement also deducts the tax and other expenses of the company.

The management of the company has assumed its revenue to be around $1,500,000 at the first year with a profit of around $300,000.

Cash Flow and Assumptions

Cash Flow assumptions will be made by the company on the basis of a number of factors like the present scenario of the business, the present condition of the market, any change in the industry, customer variety and promotion of the service that will be provided by the company (Casadesus?Masanell & Zhu, 2013).

Start Up Expenses

As mentioned earlier the company have to spend around $800,000 to $1,200,000 on starting the operations of the organization.

Financial Assumptions

The management of the company has estimated a decent growth of the company in the coming two years. Their assumption is based on certain critical points like absence of a advanced and innovative car wash facility in the area, choice of customers and many more.

References

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