ASSOSA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF ECONOMICS

ACAR WASH BUSINESS PLAN

PREPARED BY;

1.CHALA MAMMAHAD BER/ /08

2.DEREJE OLUMA BER/ 1996/08

SUMITED,TO . MARAMLK

SUBMISSION DATE,JANUARY 2,20018. ASSOSA,ETHIOPIA

TABLE OF CONTENTS
 Contents Pages

1. Executive summary .............................................................................................................…...1

1.1Business....................................................................................................................................1
1.2The customer............................................................................................................................1
1.3 Objectives .......................................................................................…....................................2
1.4. Mission statement..................................................................................................................2
1.5 Principle and value.................................................................................................................2
1.6 key to success........................................................................................................................2
2.0 Company summary..................................................................................................................3
2.1 Company Ownership............................................................................................................3
2.2. Legal form...........................................................................................................................3
2.3 Start up summary...................................................................................................................3
2.4. Location................................................................................................................................4
2.5 Budgeting...............................................................................................................................4
3.0. Service ......................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................…...........5
4.1. Market Segmentation..............................................................................................................7
4.2 Target Market Segment Strategy............................................................................................7
4.3. Service Business Analysis.....................................................................................................7
4.4. Competition and Buying Patterns.........................................................................................8
5.0 Strategy and Implementation Summary..................................................................................8
5.1. Strengths.............................................................................................................................
5.2. Weaknesses........................................................................................................................
5.3. Opportunities.....................................................................................................................
5.4 Threats.......................................................................................................................... 9
5.5 Competitive Edge.........................................................................................................
5.6 Sales Strategy............................................................................................................... 10
5.7 Sales Forecast............................................................................................................... 10
6. Management Summary..................................................................................................... 12
6.1Personnel Plan............................................................................................................ 12
7.0 Financial Plan............................................................................................................... 13
Important Assumptions................................................................................................ 13

Break-even Analysis.................................................................................................... 14

Projected Profit and Loss............................................................................................ 14

Projected Cash Flow................................................................................................... 15

Projected Balance Sheet............................................................................................. 16

1. Executive Summary

Hidase car wash is a prominent hand car wash serving the Assosa. Hidase car wash will be run
by of the prominent yonas family. The yonas family has been serving the Long Assosa area with
a car repair business and property development management for over 5 years. Mark will be
leveraging the incredible good will and brand recognition of the yonass family name to quickly
gain market penetration.

1.1 The Business

Hidase car wash will be providing customers with three services: exterior car washing, interior
cleaning, and detailing. Hidase has no true competitors that are trying to offer a high quality
service for a reasonable rate. Most are trying to compete on price alone. Hidase ability to provide
a high quality service, both in regards to the actual washing as well as customer service is all
based on their ability to find the best employees. Hiring the best employees is cost effective
because it decreases HR costs associated with turnover and other employee costs. Hiring the best
employees and making sure that they are well taken care of ensures that they in turn take care of
the customers. Study after study proves that a happy employee is far more likely to provide the
highest level of customer service compared to an employee who is not happy and feels that they
are being taken advantage of.

1.2. The Customers

Hidase car wash will target mainly Assosa university employees service and all others small cars
of Assosa university lastly, there are many different local businesses that have individual
carownerand that require clean appearances.

1|Page
1.3. Objectives

The objectives for Hidase Car Wash

1. To be viewed as a premium car wash in Assosa area.

2. Maintain a very high gross profit margin.
3. Expand to two locations after third year of operation.
4. Increase Employment opportunity.
5. Increasing income through provision of extra job of washing the cars.

1.4. Mission

The mission of Hidase car wash is to provide top-quality car washing for the universities car and
for others in Assosa, Hidase car wash will work to keep employees satisfied in order to maintain
impeccable customer service

1.5. Principles and Value

Hidase car wash is committed to value such as Excellence, Passion, Quality, Integrity and
leadership which allow them to navigate challenges and provide for future opportunities these
core beliefs start with their commitment to their service and their employees

1.6. Keys to Success

 Meet the customer's needs by offering a comprehensive selection and knowledgeable

staff.
 Monitor the competitive environment ensuring differentiation.
 Employ strict financial controls

2|Page
2. Company Summary

The company is solely owned by yonas and will be funded by an initial personal investment.
2.1 Company Ownership

The company will be solely owned by Yonas. Yonas has been grown up in the family car repair
business. He came across the location in Assosa purely by accident and he felt it would be a
perfect location for a car wash service.

2.2 Legal Form

Hidase car wash will be organized as a sole proprietorship wholly owned by yonas .Hidase Car
wash is registered in Assosa

2. 3Start-up Summary

The start-up expenses for Hidase car wash will be financed by yonas, from his own personal
capital yonas is working with the family lawyer to set up incorporation and to discuss lease
issues before the business is launched. He is working with a local graphic designer to develop a
logo, letterhead, and company brochures. Although yonas has been in the car repair business, he
has not been in the wash and detailing business, which is a very different service (quick
turnaround per car is incredibly important). For this reason he is working with an acquaintance to
set up the system that will ensure efficient service even during peak usage.

Rent on the location has been negotiated and will be 1,200 Birr per month. In addition, insurance
for the business will be approximately 200 Birr per month and will be paid by direct debit on a
monthly basis. Expensed equipment includes three high-power water pumps, two industrial
vacuum cleaners, two computer terminals, and one cash register. All of the equipment will be
depreciated over three years

2.4 Location

3|Page
Hidase car wash will be located in Assosa University specifically around china camp .the car
wash is located in a major traffic area because at this place so many Bajaj’s are there

2.5. Budgeting and Funding:

In order to implement this project the followings needed to be implemented, most of the items
included are for the permanent so after that long term investments it is may take a long time
before renewed to provide fund again for this project. Also the fund management of the all profit
received from this work will be signed by the porters themselves under the management which
they will choose and the signatories to make sure that their money are utilized for the planned
activities.

NO ITEMS CAST $

1 Small washing machine 600

@..................x3

2 Large washing machines 1,000

@.................x2

3 Water pumps @................... 200

4 Generator 500

5 Electricity wiring and connection 1,500

6 Water taps wiring and 1,000

connection
7 Construction 10,000

4|Page
 8 Renting fees 1,500

9 Others 1,000

10 Total 17,300

3. Services

Hidase car wash will provide three services to its customers:

• Car washing (exterior)

• Car cleaning (interior)
• Car detailing

4. Market Analysis Summary

The car wash will be based in Assosa. This area has a number of benefits in terms of the market
that it will provide for the business. Over 40% of households in the immediate neighbourhood
earn over 70,000 Birr annually. Many people in the neighbourhood own and/or lease new cars
and place great value on their cars and how they look. There are a large number of car
dealerships in the area-five within three miles of the proposed location for Hidase Car wash

4.1 Market Segmentation

Hidase car wash segments its customers by type of car ownership. We believe that the type of car
that a person owns says volumes about their driving, and, therefore their car washing and
detailing requirements.,

5|Page
 Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Growth CAGR

Customers
New Car Owners 10% 7,200 7,920 8,712 9,583 10,541 10.00
%
Older Luxury Car 15% 12,500 14,375 16,531 19,011 21,863 15.00
Owners %

Sports Car Owners 15% 6,500 7,475 8,596 9,885 11,368 15.00
%
Lifetime Owners 10% 17,000 18,700 20,570 22,627 24,890 10.00
%
New and Used Car 7% 9 10 11 12 13 9.63%
Dealerships
Total 12.28% 43,209 48,480 54,420 61,118 68,675 12.28
%

4.2 Target Market Segment Strategy

The strategy behind Hidase car wash target segmentation is to attract customers who will be
repeat users and will frequent the business in the typically quiet times for a car wash business. It
will not be difficult to attract customers during the summer months and on the weekends, the
weekdays however, especially in the winter, people will not think about having their cars
washed. For this reason, Hidase car wash will target people who will tend not to be restricted to
these busy times.

• Business owners (new car owners) tend to be very busy people, but are often able to
make their own hours.

• Retired people (older luxury car owners) are not restricted by typical work schedules so
will be able to frequent the car wash during the week.

• Dealerships will need cars detailed and washed regardless of the time of the day and
week. This will supply a constant flow of traffic.

6|Page
 • Businesses will need their fleet cars washed during the week during regular business

hours.

4.3 Service Business Analysis

The hand car washing business in Assosa consists of many small competitors. Everything from
local children raising money for their youth group on a Saturday by cleaning cars, to the
automatic car wash machines, are competition for Hidase car wash. However, these two
alternatives aim to meet the needs of the price-conscious individuals who are choosing the
service simply so they do not have to clean the car themselves. Hidase car wash on the other
hand, targets the quality-conscious individuals who value their car enough to spend $10-$15 per
week to make it look good.

4.4 Competition and Buying Patterns

There is other hand car wash shop in Assosa. It is quite new and is trying to compete with
automatic car washes by offering low prices. However, it is not targeting the customers who seek
quality cleaning.

The customers who Hidase car wash is targeting have their cars washed based on the quality of
the job. They do not mind spending a little more each week to have their car washed and waxed
in order to keep the paint work in excellent shape. The businesses that Hidase car wash targets
will be more cost conscious, so prices will be approximately 30% less for these customers to
promote volume usage
5. Marketing Strategy and Implementation:

The primary strategy is to differentiate this business from others by highlighting the unique hand
washing and clean guarantee, which signal the highest quality in car cleaning services. To
position Hidase Car wash as the premier automobile hand washing and detailing company in the

7|Page
area, and to steadily increase market share, we must create customer awareness, develop a
customer base, and work toward building customer loyalty.
.

5.1 Competitive Edge

Hidase car wash competitive edge will be Yonas and the quality of the family name in the Assosa
area. As mentioned, the family has been in the car business for over 5 years to develop good
business strategies, perform a SWOT analysis of your business. It's easy with our free guide and
template.

5.2 SWOT Analysis

The SWOT analysis examines the strengths and weaknesses of Hidase car wash that need to be
addressed. Further, this section examines the opportunities presented to car wash as well as
potential threats.

5.2.1 Strengths

• Hidase car wash is a unique care has firsthand experience, in operating and starting new car
wash.

• Handpicked baristas will bring professionalism and enthusiasm to the shop.

5.2.2 Weaknesses

• Lack of finance money to start the business

• The Hidase car wash has a minimal budget and is competing against larger and more
established wash house for market share.

8|Page
5.2.3 Opportunities

• The Overland Park demographics support the need for a unique car wash place.
• Additional opportunities to target the active and recently retired target market and many
years group.

• Encouraging car buyer to become car connoisseurs is the key to continued growth.

5.2.4 Threat

 The Morning Glory Car wash is currently for cleaning; should another independent
purchase this car washing, it could pose significant threat to market share.

5.3 Promotion and Advertising

Hidase car wash will promote their service through TV, website like face book and twitter

5.4 Sales Strategy

Sales strategy is on a one-to-one basis. All customers will feel they are a valued friend of hidase
car wash, and that all employees care about the care and upkeep of each vehicle. We must be
aware that there are low switching costs in the car washing industry, so we have to work hard to
develop and keep repeat customers.

5.3.1 Sales Forecast

The following chart forecasts sales based upon the Market Segmentation Strategy. Sales are
seasonal in this industry, tending to be higher in the warmer summer months, and to drop off in
the winter. However, we will aim to flatten sales across the sales cycle by targeting segments that
will want to keep their cars clean and looking good year round.

Sales Forecast

9|Page
 Year 1 Year 2 Year 3

Unit Sales
Full Wash 1,760 2,288 2,974
Exterior Wash 2,050 2,665 3,465
Interior Clean 770 1,001 1,301
End User Detail 129 193 290
Business Fleet Washes 615 923 1,384
Car Dealership Details 494 642 963
Total Unit Sales 5,818 7,712 10,376
Unit Prices Year 1 Year 2 Year 3
Full Wash 15.00 Birr 15.00 Birr 15.00 Birr
Exterior Wash 9.00 Birr 10.00 Birr 12.00 Birr
Interior Clean 8.00 Birr 9.00 Birr 9.00 Birr
End User Detail 140.00 Birr 145.00 Birr 150.0 Birr
Business Fleet Washes 10.00 Birr 10.00 Birr 10.00 Birr
Car Dealership Details 70.00 Birr 75.00 Birr 80.00 Birr

Sales
Full Wash 26,400 Birr 34,320 Birr 44,616 Birr
Exterior Wash 18,450 Birr 26,650 Birr 41,574 Birr
Interior Clean 6,160 Birr 9,009 Birr 11,712 Birr
End User Detail 18,060 Birr 27,985 Birr 43,425 Birr
Business Fleet Washes 6,150 Birr 9,225 Birr 13,838 Birr
Car Dealership Details 34,580 Birr 48,150 Birr 77,040 Birr
Total Sales 109,800 Birr 155,339 Birr 232,204
Birr
Direct Unit Costs Year 1 Year 2 Year 3
Full Wash 0.70Ce 0.80 Ce 0.90 Ce
Exterior Wash 0.40 Ce 0.45 Ce 0.50 Ce
Interior Clean 0.30 Ce 0.35 Ce 0.40 Ce
End User Detail 3.00 Birr 3.50 Birr 4.00 Birr

10 | P a g e
 Business Fleet Washes 0.70 Ce 0.75 Ce 0.80 Ce
Car Dealership Details 3.00 Birr 3.50 Birr 4.00 Birr

Direct Cost of Sales

Full Wash 1,232 Birr 1,830 Birr 2,677 Birr
Exterior Wash 820 Birr 1,199 Birr 1,732 Birr
Interior Clean 231 Birr 350 Birr 521 Birr
End User Detail 387 Birr 676 Birr 1,158 Birr
Business Fleet Washes 431 Birr 692 Birr 1,107 Birr
Car Dealership Details 1,482 Birr 2,247 Birr 3,852 Birr
Subtotal Direct Cost of Sales 4,583 Birr 6,994 Birr 11,047 Birr

6. Management Summary

Yonas is the sole owner and manager of Hidase car wash. In addition, he will be helped (on an
unofficial basis) by his father, yonas has over 5 years’ experience as an entrepreneur, both in the
car business and in property development and management.
The strength of yonas's experience and his family's name equity and assistance is Hidase car wash
competitive edge as well as a significant asset has been involved in the family's car repair
business for so many years.
Hidase car wash is positioning itself as the premier hand car wash serving the Assosa area. yonas
has forecasted a 20% market share. The business will generate a very high gross margin and a
modest net margin after year one and comfortable margin after year three. By year three the
business will have developed a respectable yearly net profit.
Yonas will also have the assistance of Yohanis the family accountant, in creating a long-term
strategic vision for the company. Yohanis is a family friend and has worked with the yonas
family for 5 years.

6.1 Personnel Plan

Since car washing is a seasonal business, with business increasing in the warm summer months,
and being busier on the weekends than during the week, Hidase car wash will rely on both
temporary and part-time help. The company will hire one full-time car wash/detail specialist and

11 | P a g e
one full-time car wash specialist when it opens for business. Although it will rely on temporary
and part-time help, quality will not be compromised, since all washers and detailers will receive
thorough training. Hidase will also hire an administrative assistant who will assist yonas with
paperwork and act as a receptionist.

Personnel Plan Year 1 Year 2 Year 3

Owner
18,000 40,000
30,000
Car Washers 30,240 43,312 51,174

Admin/Sales 13,440 22,000

15,000
Total People 0 0 0
Total Payroll 61,680 88,312 113,174

7. Financial Plan

The following plan outlines the financial development of hidase car wash. The business will be
initially financed by a personal investment by yonas and will finance growth through cash flow.
This will mean that the company will grow more slowly than it could, but it will ensure that
yonas retains control over the direction of the company. In year three, it is hoped that the
company will be able to open a second location. It is envisioned that an outside loan or equity
funding will be sought at that time.

7.1 Important Assumptions

The financial projections for Hidase car wash are based on the following assumptions. These
assumptions are thought to be quite conservative, as are the financial forecasts.

General Assumptions Year 1 Year 2 Year 3

Plan Month 1 2 3

12 | P a g e
 Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42 %
Other 0 0 0

Start-up Requirements

Startup Expenses

Legal 500
Birr

Stationery etc. 400

Birr

Brochures 450
Birr

Consultants 0 Birr

Insurance 200
Birr

Rent 1,200
Birr

Research and Development 300

Birr

Expensed Equipment 4,100

Birr

Signs 700
Birr

Building Materials 1,200

13 | P a g e
 Birr

Building Labour 1,000

Birr

Total Start-up Expenses 10,050

Birr

Start-up Assets

Cash Required 8,700

Birr

14 | P a g e
 Start-up Inventory 250
Birr

Other Current Assets 1,000

Birr

Long-term Assets 10,000

Birr

Total Assets 19,950

Birr

Total Requirements
30,000

Start-up Funding

Start-up Expenses to Fund 10,050

Birr

Start-up Assets to Fund 19,950

Birr

Total Funding Required 30,000

Birr

Assets

Non-cash Assets from Start-up 11,250

Birr

Cash Requirements from Start-up 8,700

Birr

Additional Cash Raised 0 Birr

Cash Balance on Starting Date 8,700

Birr

Total Assets 19,950 Birr

Liabilities and Capital

15 | P a g e
 Liabilities

Current Borrowing 0 Birr

Long-term Liabilities 0 Birr

16 | P a g e
 Accounts Payable (Outstanding 0 Birr
Bills)

Other Current Liabilities (interest- 0 Birr

free)

Total Liabilities 0 Birr

Capital

Planned Investment

Investor 1 30,000 Birr

Investor 2 0 Birr

Other 0 Birr

Additional Investment Requirement 0 Birr

Total Planned Investment 30,000 Birr

Loss at Start-up (Start-up Expenses) (10,050)

Birr

Total Capital 19,950 Birr

Total Capital and Liabilities 19,950 Birr

Total Funding 30,000 Birr

7.2 Break-even Analysis

Show the monthly break-even analysis calculations for Hidase car wash. Break-even Analysis

17 | P a g e
 Monthly Units Break-even 423 Monthly

Revenue Break-even 7,974

Assumptions:

Average Per-Unit Revenue 18.87

Average Per-Unit Variable Cost 0.79

Estimated Monthly Fixed Cost 7,641

7.3 Projected Profit and Loss

The following Profit and Loss table illustrates income and expenses monthly for the first year,
and annually for the next two years.

Pro Forma Profit and Loss Year 1 Year 2 Year 3

Sales 109,800 Birr 155,339 Birr 232,204 Birr
Direct Cost of Sales 4,583 Birr 6,994 Birr 11,047 Birr
Other 0 Birr 0 Birr 0 Birr
Total Cost of Sales 4,583 Birr 6,994 Birr 11,047 Birr
Gross Margin 105,218 Birr 148,345 Birr 221,157 Birr
Gross Margin % 95.83% 95.50% 95.24%

Expenses
Payroll 61,680 Birr 88,312 Birr 113,174 Birr
Sales and Marketing and Other 2,600 Birr 1,550 Birr 1,700 Birr
Expenses
Depreciation 2,070 Birr 2,070 Birr 2,070 Birr
Leased Equipment 0 Birr 0 Birr 0 Birr

18 | P a g e
 Utilities 3,325 Birr 3,500 Birr 3,750 Birr
Insurance 1,800 Birr 1,800 Birr 1,800 Birr
Rent 4,800 Birr 5,500 Birr 6,000 Birr
Payroll Taxes 15,420 Birr 22,078 Birr 28,294 Birr

Other 0 Birr 0 Birr 0 Birr

Total Operating Expenses 91,695 Birr 124,810 Birr 156,788
Profit Before Interest and Taxes 13,523 Birr 23,535 Birr 64,370 Birr
EBITDA 15,592 Birr 25,605 Birr 66,440 Birr
Interest Expense 0 Birr 0 Birr 0 Birr
Taxes Incurred 3,204 Birr 5,884 Birr 16,361 Birr
Net Profit 10,318 Birr 17,651 Birr 48,009 Birr
Net Profit/Sales 9.40% 11.36% 20.68%

7.4 Projected Cash Flow

The following Cash Flow table illustrates that if hidase car wash meets projected sales, it will
have positive cash flow after half a year of operations.

Pro Forma Cash Flow Year 1 Year 2 Year 3

Cash Received
Cash from Operations
Cash Sales 93,330 Birr 132,038 Birr 197,374 Birr
Cash from Receivables 13,097 Birr 21,902 Birr 32,470 Birr
Subtotal Cash from Operations 106,427 Birr 153,940 Birr 229,843 Birr
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0 Birr 0 Birr 0 Birr
New Current Borrowing 0 Birr 0 Birr 0 Birr
New Other Liabilities (interest-free) 0 Birr 0 Birr 0 Birr
New Long-term Liabilities 0 Birr 0 Birr 0 Birr

19 | P a g e
 Sales of Other Current Assets 0 Birr 0 Birr 0 Birr
Sales of Long-term Assets 0 Birr 0 Birr 0 Birr
New Investment Received 0 Birr 0 Birr 0 Birr
Subtotal Cash Received 106,427 Birr 153,940 Birr 229,843 Birr

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending 61,680 Birr 88,312 Birr 113,174 Birr
Bill Payments 33,052 Birr 46,837 Birr 67,743 Birr
Subtotal Spent on Operations 94,732 Birr 135,149 Birr 180,917 Birr

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out 0 Birr 0 Birr 0 Birr
Principal Repayment of Current 0 Birr 0 Birr 0 Birr
Borrowing
Other Liabilities Principal Repayment 0 Birr 0 Birr 0 Birr
Long-term Liabilities Principal Repayment 0 Birr 0 Birr 0 Birr
Purchase Other Current Assets 0 Birr 0 Birr 0 Birr
Purchase Long-term Assets 0 Birr 0 Birr 0 Birr
Dividends 0 Birr 0 Birr 0 Birr
Subtotal Cash Spent 94,732 Birr 135,149 Birr 180,917 Birr
Net Cash Flow 11,695 Birr 18,791 Birr 48,927 Birr
Cash Balance 20,395 Birr 39,186 Birr 88,112 Birr

7.5 Projected Balance Sheet

Hidase car wash balance sheet illustrates a healthy financial position for this new company.
Pro Forma Balance Sheet

Year 1 Year 2 Year 3

Assets

20 | P a g e
 Current Assets
Cash 20,395 Birr 39,186 Birr 88,112 Birr
Accounts Receivable 3,373 Birr 4,772 Birr 7,133 Birr
Inventory 668 Birr 1,019 Birr 1,609 Birr
Other Current Assets 1,000 Birr 1,000 Birr 1,000 Birr
Total Current Assets 25,435 Birr 45,976 Birr 97,854 Birr

Long-term Assets
Long-term Assets 10,000 Birr 10,000 Birr 10,000 Birr
Accumulated Depreciation 2,070 Birr 4,140 Birr 6,210 Birr
Total Long-term Assets 7,930 Birr 5,860 Birr 3,790 Birr
Total Assets 33,365 Birr 51,836 Birr 101,644 Birr
Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable 3,097 Birr 3,917 Birr 5,716 Birr
Current Borrowing 0 Birr 0 Birr 0 Birr
Other Current Liabilities 0 Birr 0 Birr 0 Birr
Subtotal Current Liabilities 3,097 Birr 3,917 Birr 5,716 Birr
Long-term Liabilities 0 Birr 0 Birr 0 Birr
Total Liabilities 3,097 Birr 3,917 Birr 5,716 Birr
Paid-in Capital 30,000 Birr 30,000 Birr 30,000 Birr
Retained Earnings (10,050) Birr 268 Birr 17,919 Birr
Earnings 10,318 Birr 17,651 Birr 48,009 Birr
Total Capital 30,268 Birr 47,919 Birr 95,929 Birr
Total Liabilities and Capital 33,365 Birr 51,836 Birr 101,644 Birr
Net Worth 30,268 Birr 47,919 Birr 95,929 Birr

21 | P a g e
22 | P a g e