Spalatorie Auto
Spalatorie Auto
Executive Summary
Soapy Rides is a prominent hand car wash serving the East Meadow, Long Island, NY
community. Soapy Rides will be run by Mark Deshpande, of the prominent Deshpande family.
The Deshpande family has been serving the Long Island area with a car repair business and
property development /management for over 30 years. Mark will be leveraging the incredible
good will and brand recognition of the Deshpande family name to quickly gain market penetration.
The Business
Soapy Rides will be providing customers with three services: exterior car washing, , interior
cleaning, and detailing. Soapy Rides 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. Soapy Rides' 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.
The Customers
Soapy Rides will target three main groups of customers: individual car owner and leasers, car
dealerships, and local businesses. The surrounding area is quite affluent, 40% of the residents
earn over $70,000 a year. Consequently, they have nice cars and want them to look nice. There
are five different car dealerships within a three-mile radius which will require car washing services
for the various fleets. Lastly, there are many different local businesses that have company cars
and that require clean appearances.
Management
The strength of Mark's experience and his family's name equity and assistance is Soapy
Rides' competitive edge as well as a significant asset. Mark has been involved in the family's car
repair business for the last ten years. He has worked his way through the organization and has
been the manager for the last five years overseeing operations of $1.2 million annually. Before
the family venture, Mark received his MBA from Cornell University. With 30 years invested in the
community, the Deshpande family name has generated significant value as a fair, active member
of the community. Lastly, Soapy Rides will be able to leverage several of the Deshpande's for
their business expertise.
Soapy Rides is positioning itself as the premier hand car wash serving the Long Island area. Mark
has forecasted a 20% market share. The business will generate a 95% gross margin and an 11%
net margin after year one and 20.79% after year three. By year three the business will have
developed a yearly net profit of $48,000 .
Highlights
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The objectives for Soapy Rides Car Wash and Detail Service are:
The mission of Soapy Ride is to provide top-quality washing and detail service for luxury car
owners in East Meadow, NY. Soapy Rides will work to keep employees satisfied in order to
maintain impeccable customer service.
2. Company Summary
The company is solely owned by Mark Deshpande and will be funded by an initial
investment of $30,000. Soapy Rides is New York State registered C corporation.
The company will be solely owned by Mark Deshpande. Mark has been in the car
industry all his life, having grown up in the family car repair business. He came across
the location in East Meadow purely by accident and he felt it would be a perfect location
for a car wash service. 
The start-up expenses for Soapy Rides will be financed by Mark Deshpande, from the profits he
made in selling his part of the family car repair business. The property on Hempstead Road will
be leased in April 2001 for a minimum of three years, with the option to extend the lease for
another three years after that.
Mark 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 Mark 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 per month.  In addition, insurance for
the business will be approximately $200 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.
The location was previously used as a quick stop automobile service shop, so it is set up to move
vehicles quickly through the premises, but does not have all the necessary systems in place to
host a car wash and detail facility. The services of a contracting company will be sought to
convert the use of the facility and to improve the customer waiting room facilities.
Start-up
                                                 
Requirements                                     
                                                 
Start-up Expenses                                
Legal                                           $500
Stationery etc.                                 $400
Brochures                                       $450
Consultants                                     $0
Insurance                                       $200
Rent                                            $1,200
Research and Development                        $300
Expensed Equipment                              $4,100
Signs                                           $700
Building Materials                              $1,200
Building Labor                                  $1,000
Total Start-up Expenses                         $10,050
                                                 
Start-up Assets Needed                           
Cash Balance on Starting Date                   $8,700
Start-up Inventory              $250
Other Current Assets            $1,000
Total Current Assets            $9,950
                                 
Long-term Assets                $10,000
Total Assets                    $19,950
Total Requirements              $30,000
                                 
Funding                          
                                 
Investment                       
Investor 1                      $30,000
Investor 2                      $0
Other                           $0
Total Investment                $30,000
                                 
Current Liabilities              
Accounts Payable                $0
Current Borrowing               $0
Other Current Liabilities       $0
Current Liabilities             $0
                                 
Long-term Liabilities           $0
Total Liabilities               $0
                                 
Loss at Start-up                ($10,050)
Total Capital                   $19,950
Total Capital and Liabilities   $19,950
Start-up
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3. Services
The car wash will be based in East Meadow, New York. This area has a number of
benefits in terms of the market that it will provide for the business. Over 40% of
households in the immediate neighborhood earn over $70,000 annually. Many people in
the neighborhood own and/or lease new cars and place great value on their cars and how
they look. There are a large number of car dealerships in the area--five within three miles
of the proposed location for Soapy Rides.
Soapy Rides segments its customers by type of car ownership. We believe that the type of car
that a person owns says volumes about their driving, and, therefore their car washing and
detailing requirements.
     1. New car owners: Owners of newer cars are most likely to use a hand car washing
        service. These owners take great pride in their cars and will bring them often to the wash
        and detail service. The goal with these customers is to promote regular use of the wash
        and detail service. The aim is to inform these customers that Soapy Rides will keep their
        car looking as good as it did the day they drove it off the lot.
     2. Older luxury car owners: These people have either owned their high-end luxury cars for
        several years or are unable to afford the expense of a new luxury car but want the feel of
        relaxed driving. Both of these groups want to keep their cars in the best shape possible.
        Those who have bought second-hand cars will often spend many hours in their cars and
        will place high importance on keeping their cars looking good. These owners will bring
        their cars in for regular washes and occasional details.
     3. Sports car owners: These people are often younger or middle-aged men and will
        regard the look of their car as important. They will also pride themselves on the look of
      their car and will have their car hand washed (at least) weekly. These drivers will have
      an occasional detail, but will keep their cars so clean the detail will not be necessary very
      often.
   4. Lifetime owners: Many of these people have owned their cars for more than five or six
      years, and are more likely to be women. They are attached to their cars as friends and
      though it may be more sensible for them to purchase a new car, they will bring their car in
      for a wash occassionally, just when the car is dirty. They like their cars to look
      presentable, and want to keep it in good shape but are not tied up in the look of their car.
      For this reason, they will not have a detail carried out on their car unless they are selling
      it.
   5. Dealerships: There are five new and used car dealerships within three miles of the
      proposed location of Soapy Rides. These dealerships often use outside car wash
      services to detail their vehicles before they are put up for sale. In addition, there are
      fifteen other car dealerships within a seven mile radius of Soapy Rides.
   6. Local businesses: Some local businesses have fleets of cars and small vans that must
      be kept clean to maintain their company image. These businesses will be looking for a
      cost effective, efficient car washing service to perform this service, and will prefer to use
      a car wash service during the week rather than during weekends, like the general public.
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Market Analysis
Potential
             Growth     2001        2002         2003        2004        2005         CAGR
Customers
New      Car
             10%        7,200       7,920        8,712       9,583       10,541       10.00%
Owners
Older
Luxury Car 15%          12,500      14,375       16,531      19,011      21,863       15.00%
Owners
Sports Car
             15%        6,500       7,475        8,596       9,885       11,368       15.00%
Owners
Lifetime
             10%        17,000      18,700       20,570      22,627      24,890       10.00%
Owners
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                                              [back to top]
The strategy behind Soapy Rides 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, Soapy Rides will target people who will tend not to be restricted to these busy times.
          Business owners (new car owners) tend to be very busy people, but are often able to
           make their own hours.
          Retired people (older luxury car owners) are not restricted by typical work schedules so
           will be able to frequent the car wash during the week.
          Dealerships will need cars detailed and washed regardless of the time of the day and
           week. This will supply a constant flow of traffic.
          Businesses will need their fleet cars washed during the week during regular
           business hours.
There is one other hand car wash shop in East Meadow. 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 Soapy Rides 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 Soapy Rides targets will be
more cost conscious, so prices will be approximately 30% less for these customers to promote
volume usage.
Soapy Rides' competitive edge will be Mark Deshpande and the quality of the family
name in the East Meadow area. As mentioned, the family has been in the car business for
over 30 years, and has an excellent reputation and a myriad of both business and personal
contacts. In addition, Mark has put a great deal of emphasis on creating a system that is
both fast and efficient, which will keep costs, in terms of time spent per car, to a
minimum.
Sales strategy is on a one-to-one basis. All customers will feel they are a valued friend of
Soapy Rides, 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.
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 Monthly
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Sales Forecast
Unit Sales              FY 2002                  FY 2003                  FY 2004
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               FY 2002    FY 2003                  FY 2004
Full Wash                 $15.00     $15.00                   $15.00
Exterior Wash             $9.00      $10.00                   $12.00
Interior Clean            $8.00      $9.00                    $9.00
End User Detail           $140.00    $145.00                  $150.00
Business Fleet Washes     $10.00     $10.00                   $10.00
Car Dealership Details    $70.00     $75.00                   $80.00
                                                               
Sales                                                          
Full Wash                 $26,400    $34,320                  $44,616
Exterior Wash             $18,450    $26,650                  $41,574
Interior Clean            $6,160     $9,009                   $11,712
End User Detail           $18,060    $27,985                  $43,425
Business Fleet Washes     $6,150     $9,225                   $13,838
Car Dealership Details    $34,580    $48,150                  $77,040
Total Sales               $109,800   $155,339                 $232,204
                                                               
Direct Unit Costs         FY 2002    FY 2003                  FY 2004
Full Wash                 $0.70      $0.80                    $0.90
Exterior Wash             $0.40      $0.45                    $0.50
Interior Clean            $0.30      $0.35                    $0.40
End User Detail           $3.00      $3.50                    $4.00
Business Fleet Washes     $0.70      $0.75                    $0.80
Car Dealership Details    $3.00      $3.50                    $4.00
                                                               
Direct Cost of Sales      FY 2002    FY 2003                  FY 2004
Full Wash                 $1,232     $1,830                   $2,677
Exterior Wash             $820       $1,199                   $1,732
Interior Clean            $231       $350                     $521
End User Detail           $387       $676                     $1,158
Business Fleet Washes     $431       $692                     $1,107
Car Dealership Details    $1,482     $2,247                   $3,852
Subtotal Direct Cost of
                          $4,583     $6,994                   $11,047
Sales
5.3 Milestones                                [back to top]
The following table outlines the important milestones in the planning and implementation of
Soapy Rides.
Milestones
Milestone        Start Date        End Date          Budget       Manager            Department
Complete
                 2/1/2001          5/1/2001          $0           ABC                Department
Business Plan
Sign      Rental
                 3/20/2001         3/20/2001         $475         Mark               Owner
Contract
Convert
                 4/1/2001          4/30/2001         $0           Contractors        Contractors
Premises
Hire Car Wash
                 4/20/2001         4/20/2001         $200         Mark               Owner
Staff
Hire      Admin
                 4/20/2001         4/20/2001         $200         Mark               Owner
Staff
Open         for
                 5/1/2001          5/1/2001          $0           Staff              Staff
Business
Distribute
                 4/28/2001         5/5/2001          $75          Friends            Friends
Flyers
Press Release 4/29/2001            4/29/2001         $25          Mark               Owner
Follow-up on
                 4/30/2001         4/30/2001         $0           Mark               Owner
Press Release
Totals                                               $975                             
6. Management Summary
Mark Deshpande is the sole owner and manager of Soapy Rides. In addition, he will be helped
(on an unofficial basis) by his father, Barry Deshpande. Barry has over 30 years experience as an
entrepreneur, both in the car business and in property development and management.
Mark will also have the assistance of John Shine, the family accountant, in creating a
long-term strategic vision for the company. John is a family friend and has worked with
the Deshpande family for 23 years. He has worked with hundreds of small- and medium-
sized businesses during his career.
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, Soapy Rides will rely on both temporary
and part-time help. The company will hire one full-time car wash/detail specialist and one full-time
car wash specialist when it opens for business. Although it will rely on temporary and part-time
help, quality will not be compromised, since all washers and detailers will receive thorough
training. The company will also hire an administrative assistant who will assist Mark with
paperwork and act as a receptionist.
Personnel Plan
                        FY 2002                  FY 2003                    FY 2004
Owner                   $18,000                  $30,000                    $40,000
Car Washers             $30,240                  $43,312                    $51,174
Admin/Sales             $13,440                  $15,000                    $22,000
Total People            0                        0                          0
Total Payroll           $61,680                  $88,312                    $113,174
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7. Financial Plan
The following plan outlines the financial development of Soapy Rides. The business will
be initially financed by a $30,000 investment by Mark Deshpande 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 Mark 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.
The financial projections for Soapy Rides are based on the following assumptions. These
assumptions are thought to be quite conservative, as are the financial forecasts.
General Assumptions
                            FY 2002               FY 2003                   FY 2004
Plan Month                  1                     2                         3
Current Interest Rate       10.00%                10.00%                    10.00%
Long-term        Interest
                            10.00%                10.00%                    10.00%
Rate
Tax Rate                    25.42%                25.00%                    25.42%
Sales on Credit %           15.00%                15.00%                    15.00%
Other                       0                     0                         0
7.2 Break-even Analysis                                               [back to top]
Fixed monthly costs for Soapy Rides are estimated to be approximately $7,500, and break even
monthly units are 203 units per month.
Break-even                                                                               Analysis
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Break-even Analysis:
Monthly Units Break-even                         203
Monthly Revenue Break-even                       $9,122
                                                  
Assumptions:                                      
Average Per-Unit Revenue                         $45.00
Average Per-Unit Variable Cost                   $8.00
Estimated Monthly Fixed Cost                     $7,500
7.3 Projected Profit and Loss                                            [back to top]
The following Profit and Loss table illustrates income and expenses monthly for the first year, and
annually for the next two years.
The following Cash Flow table illustrates that if Soapy Rides meets projected sales, it will have
positive cash flow after month three of operation.
Cash
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Soapy Rides' balance sheet illustrates a healthy financial position for this new company. The
monthly estimates are included in the appendices.