Business Plan for a Car Washing Service Truck in Saudi Arabia - Report Example

Executive Summary

The business plan has incorporated several components that are vital. These include the historical background of the business idea, which has detailed out the idea recognition and reasons behind its qualification. The feasibility is also discussed, with a discussion of the product feasibility, industry feasibility, organizational feasibility, and the financial feasibility. The business model has then been discussed comprehensively followed by the analysis of the industry and the competitors. Other aspects discussed include company description, market analysis, business economics, marketing plan, operations plan, company structure, management team, overall structure and the financial projections.

History and Background

Car wash refers to an auto wash utilized in the cleaning of the interior and the interior of the motor vehicles. It can be fully automated, self-service or full service. Car care and car wash industry have experienced progressive evolution in the Middle East. Manual means of washing cars were used in the olden days when the cars were still new in Saudi Arabia. However, the modern convenience associated with touchless automatic washers has made the industry to go high-tech. The first semi-automatic washer arose in the 1950s, after which the industry has grown progressively with several evolutions associated with invention and innovations in the industry. Since the company is committed to research and development, it always has secluded substantial amounts of finance every year just for the research and development. It is through these researches that the car washing truck came in. Several car owners were fond of washing their cars along the road, keeping the roadsides flooded ever. This indicated the unavailability of the immobile car wash in some regions where they were required by the clients. For that reason, the personnel at the company's research and development department brainstormed on how a car wash could be availed in such regions with the avoidance of the flooding and the idea of car washing service truck.

The car washing service truck to be launched in Saudi Arabia is more than just a car wash. It is a combination of design, technology, and innovation. It is also associated with several sophistications. The car wash is self-service and is hoped to satisfy the company and the customers articulately. The truck has a space of sixteen by twenty meters space, with the normal height of the truck, where the washing occurs. There is a plumbing system with the truck that controls the flow of the wastewater after the washing. At the front section of the truck, is the water for washing is stored. The customers insert tokens or coins in the controller point; then several options are availed. Such options include tire cleaner, clear water rinse, soap; all of which are dispensed from a sprayer with a nozzle, which produces the solvents at high pressure, making them appear as form.

The idea was considered an opportunity after the presentation by the research and development team, in which they highlighted the efficiency of the plan. Its implementation was to be considered based on cost efficiency as it did not require labor (it is self-service). Its automation enhances substantial reduction in the operation cost, a feature that was desired to impress the corporate head of the organization, to make them have a reason to allow its implementation, despite the high initial capital associated to acquiring the two trucks planned for the start. Besides, the idea is solving the societal problem of the flooding that is evident along the roads of the major towns due to the manual washing by the car owners. The main market gap, filled with this idea is the insufficiency of the car washers at some of the points that owners may need them. In the case of this idea, the car owner only needs to make a call, and the truck moves to where it is ordered. The car is washed without any flooding as the plumbing system within the truck collects and stores the wastewater for disposal at the right place after the washing.

Feasibility of the Study

This section outlines the controlled process applicable in the identification of the opportunities and the problems, which will be helpful in the determination of the objective of the idea, situation description, definition of the successful outcomes and assessment of various ranges of costs and the benefits related to the proposed idea, intended to solve a problem.

Service Desirability

The car washing truck makes sense in that; it will meet the convenience need of the customers who may desire to wash their car in places that the immobile car washers are unavailable. They only need to make a call for booking and specify the location where the service needs to be offered. The contacts for communication will be made available on the company website and in the advertisement. Besides meeting the convenience need of the customers, the idea will also solve the flooding challenge that has been evident all over the towns which have led to the pools of stagnant water in some sections of the roads. This makes the towns to appear untidy, and the stagnant wastewater has become the breeding sites for some of the harmful organisms to human health. Introducing this idea to the market now is vital as it has been confirmed by the researchers that have been made among some of the potential customers, who hinted the mobility of car washers. The only fatal flaw that can be counteracted in advance is the source of power. The battery which will enhance the system's operation needs sufficient charging before the truck lives to offer the service.

Concept Statement Sheet

The organization will identify some of the potential customers who have been receiving the immobile car washing services. The customers will then be informed of the procedure of how to make orders for the service. The trial session will then occur after which the clients will be requested to give feedback, in which they will confirm the quality of the service and its viability.

Service Demand

The research and development department has conducted both the primary and the secondary researchers about the service demand. In the primary research, relevant first-hand information was collected from the potential clients, and the information was analyzed. The methods applied in obtaining the first-hand information included the use of the questionnaires and conducting a focus group on the idea. The secondary research involved the online research on the internet and use of the local data. From the primary research, the feedback from the questionnaires had a ninety percent positive response. The focus groups also confirmed the need for the service and the willingness and ability to order for it. The secondary research also availed the need of the mobile car washer, as it was an evident gap in the relevant market researchers that were availed on the internet.

Industry Feasibility

In this section unveils the assessment of the appeal of the target market and industry for the business idea that is proposed. In the industry, car care and car wash, there are several firms which offer services similar to the one that the organization should consider, however the only difference in that the organization's idea has will be the fact that it will be the first mobile car was within Saudi Arabia that never floods the street.

Industry Attractiveness

During the research within the industry, Porter's five force model was applied. The threat of new entrants is quite low due to the high initial capital that is required to initiate the idea. Most of the players in the industry are immobile, a feature that the organization's idea takes advantage of. This boosts the industry attractiveness.

The threat of substitutes exists but to a limited extent since the clients may find the immobile washers at the point of their stoppage. However, the local authority's is also committed to discouraging the immobile washers due to the flooding. In future, if the immobile service providers consider constructing systems to channel the water through the wash, then this will substitute the organization's service at those points. Therefore, regarding threat of substitution, the threat can be speculated in the future, which can be counteracted by increased the quantity of our services through the increase of the trucks to cover larger regions of the country. At this point the industry attractiveness moderately high.

The bargaining power of the suppliers is quite low since they only manufacture the truck in order with the deposit payment. This is because the production cost is high. Therefore, the low bargaining power of the suppliers makes the industry to be highly attractive.

Buyers' bargaining power fluctuates, and it all depends on the availability of other washers within the region that the client's order for the services. This is s quite unstable making the bargaining power of the buyers to be moderately low. Therefore, this makes the industry moderately attractive.

Finally, the rivalry in the industry is very high, due to the high number of the immobile washers. The mobile washers are quite a few, and they include Mena water and Myron L Company among the few, and these do not portray any intense rivalry. Due to the rivalry faced by the immobile service providers, it threatens the industry attractiveness, though it is moderate.

Target Market Attractiveness

The segment of the market targeted is that of the highest income earners, who value their cars due to the value of their cars. Such customers are sophisticated and prestigious. The business idea will, therefore, be of preference to them due to its sophistry and interesting technology. This segment is large enough and will be supplemented with the medium income earners.

Organizational Feasibility

The analysis of organizational feasibility is conducted for the determination of the sufficiency of the management expertise, resources, and the general organizational competence, about the new idea. Its main focus is on the resources that are non-financial.

Management Prowess

The prowess, in this case, refers to the ability of the organization's management team, in the satisfaction of they have the expertise and passion that enhances the launching of the idea. The required ability required for the management of the new idea is similar to which was applicable in the immobile washer that the company is running, with an addition of a driver for every truck. The main difference is the charging point of the battery that enhances the flow of the washing detergents and water. Therefore, these capabilities are within the organization, only charging the battery will require some training to the staff that will be selected for the new idea.

Resource Sufficiency

Some of the nonfinancial resources that are critical in the determination of the successfulness of the business include the quality of the pool of labor, about the efficiency in response to the clients' order. This can be planned, depending on the distance to be covered before reaching the clients' location of service. The second resource is the willingness of the employees with high-quality skills in driving, to join the firm. This will help in meeting the short deadlines in case of the agency from the client.

Financial Feasibility

In this last component of the feasibility analysis, entails the preliminary assessment of the finance, about its sufficiency.

Total start-up Cash Needed

The mobile washer has a very low cost of starting. This is as shown below:

• Stationary and T-Shirts for identity - $600
• Truck - $18, 455
• Personal organizer system - $140
• Truck Bed -$ 6, 895
• Supplies Inventory -$493
• Signage - $112
• Water System -$150
• Computer and printer -$3, 200
• Carpet Extractor - $350
• Credit card Machine - $ 1,695
• Vacuum/Air freshener - $ 1,000
• Lights, tank - $400
• Steam Cleaner - $6, 000
• TOTAL - $ 39, 490

Financial Performance of Similar Business

Below is the income statement of an established company operating a similar business. This is helpful in the comparison with the financial performance of the speculated idea.

Overall Financial Attractiveness of the Proposed Venture

Some of the other factors that relate to the enhancement of the potentiality of the business idea include the rapid growth and steady flow of sales during the first five to seven years in the market niche. This has a high probability due to the demand research conducted besides other market analysis. Secondly, the revenue will recur at a higher percentage, because the service will grasp the clients, by the qualifying offers. Lastly, other business operations within the organization will help in financing and fund the sustenance and the growth of the new idea, to boost its survival.

Business Model

The business idea is more of a disruptive business model, this because it will take its initial root in simple implementation at a moderate level in the market, then moves up the market relentlessly, and eventually, it will displace the competitors that are already established.

Business Model Template

In relation to the core strategy, the business mission is to state that: the carwash should provide auto detailing business service, and car washing are costs that have effective rates to the clients, as it makes robust gains, by ensuring that the interests of the business are secured perfectly by creating mutual trust platform between the esteemed clients and our organization. The basis of differentiation that is intended to make the services appear unique and attractive is the water system within the truck that prevents flooding and also the protective wears that the clients will put on to protect themselves from getting wet. The new logo that will be printed on the truck will also form a basis of differentiation. The market segment that is targeted is that of the high-income earners who are like associating themselves with sophistry and prestige. Regarding the service and the market scope, the business will only focus on the washing service. This is intended to enhance the concentration of the organization's effort in offering quality services to the clients.

Resources

The core competencies that are valued in this business include the driver, and the operations supervise, while the clients serve themselves, with the service. Some of the key assets required in this business include the truck and its system of operation.

Financials

The key revenue streams considered for the idea is from the fixed orders that will be received from organizations like banks among other companies, which will prefer washing their staff's cars. The relationship will dictate the payment periods as either monthly or in ninety days.

Some of the fixed start-up costs include personal organizer system, water system, carpet extractor, vacuum/air freshener, steam cleaner, lights and tank, credit card machine, computer and printer, truck, truck bed, and signage. The variable costs, on the other hand, include stationery, supplies inventory, maintenance cost. All these areas indicated below, except for the maintenance cost which is not quite predictable.

• Stationary and T-Shirts for identity - $600
• Truck - $18, 455
• Personal organizer system - $140
• Truck Bed -$ 6, 895
• Supplies Inventory -$493
• Signage - $112
• Water System -$150
• Computer and printer -$3, 200
• Carpet Extractor - $350
• Credit card Machine - $ 1,695
• Vacuum/Air freshener - $ 1,000
• Lights, tank - $400
• Steam Cleaner - $6, 000
• TOTAL - $ 39, 490

The main sources of funding for the business will be savings, personal services, and the traditional bank financing.

Operations

Considering service production, the initial step is owning the truck and all its components and the required staff. Other requirements include wet/dry vacuum, buffer/polisher, brushes, mini carpet shampooer, soap, rags, wax, and window cleaner, tire cleaner, a hose and the electric power. Liability insurance-check will be vital in with the agents for terms and prices. The distribution channel of the service is direct without any intermediary. That is, the customers receive the service from the organization directly. Some of the key partners that will consider during the operation include the mobile washers' association which will avail the opportunity of being up to date with the trends in the industry and even help in controlling competition and rivalry.

Industry and Competitor Analysis

The accessibility of the car care and car wash industry is enhanced as there is no any barrier. The government has placed favorable policies that enhance ease of access, besides the initial capital is affordable in the case of our organization, hence no barrier. The markets within the industry are ripe, about the primary and the secondary researches did about the demand for the services. The questionnaires indicated a need for most of the potential customers. The main positions within the industry are divided by mobility, that is, the mobile car wash and the immobile car wash. Therefore, the industry offers a realistic position for the new venture as it fit in the mobile position of the industry, where there is a ready market. The organization is also capable of doing a better job than the rest of the players on the industry by offering the most appealing quality service, and even being very responsive to the orders that the clients make. The responsiveness to the locations without the immobile car wash that the orders will always be made will enhance the performance of the firm. However, there are unique positions that diminish and even avoid forces suppressing the profitability of the industry, which the sophisticated positions, which mainly attracts high-income earners, who are able and willing to make extra pay associated to the convenience of the services. One of the superior business models that can be applied to and cannot be duplicated by the other players in the industry relates to the logistic system of operation. This is the process of making the potential clients aware of the mobile services, how they make their orders, how the order is delivered, and payment made profitably.

Industry Attractiveness

Industry attractiveness at this point refers to the ease and magnitude of making a profit when compared to the risks associated with the operations that are offed within the industrial sector. It mainly depends on the number of competitors, demand rate of growth, competitors' relative strength and width of margin among others.

In this case, considering environmental trends, the players in the industry are under the local authority's obligation to ensure avoidance of flooding around the public places inappropriately while conducting their operations. Besides, the composition of the chemical used for washing is harmful to the vegetation, and therefore the environmentalists are concerned about the same. The business idea will abide by these environmental concern as it has a system that collects wastewater and therefore no flooding and harm to the vegetation. The collected wastewater will be disposed at the right disposal site, as recommended by the environmentalists.

Regarding the business trends, social media has become a compulsory need for ever business. Most businesses explore Facebook, WhatsApp, Twitter and Instagram among others to enhance their exploration of various aspects of the business and mainly to learn trends in customers' behavior. Our organization will consider abiding by the trend effectively to stay ahead in the industry.

Five Competitive Forces Model

As discussed earlier in the industry attractiveness, Porter's five forces model was analyzed to learn the level of attractiveness of the industry. The threat of substitutes exists but to a limited extent since the clients may find the immobile washers at the point of their stoppage. However, the local authority's is also committed to discouraging the immobile washers due to the flooding. In future, if the immobile service providers consider constructing systems to channel the water through the wash, then this will substitute the organization's service at those points. Therefore, regarding threat of substitution, the threat can be speculated in the future, which can be counteracted by increased the quantity of our services through the increase of the trucks to cover larger regions of the country. At this point the industry attractiveness moderately high.

The threat of new entrants is quite low due to the high initial capital that is required to initiate the idea. The business idea will manage to counteract it by acquiring funds from the sources indicated earlier. This is a risk that most of the players within the industry fear to undertake. Most of the players in the industry are immobile, a feature that the organization's idea takes advantage of. This boosts the industry attractiveness.

The rivalry in the industry is very high, due to the high number of the immobile washers. The mobile washers are quite a few, and they include Mena water and Myron L Company among the few, and these do not portray any intense rivalry. The main point of difference between the services lies in the sophistry of the operation, which in the case of our business, the wastewater system is unique to the other players. This also enhances the incapability of the players to duplicate the operation easily. The industry growth rate about the mobile washer is quite low, hence few rivals are expected. Fixed costs of the business are also quite high. Due to the limited rivalry from the mobile service providers, the industry attractiveness is quite high.

The bargaining power of the suppliers is quite low since they only manufacture the truck in order with the deposit payment. Besides, they are very few with most of them being foreigners. This is because the production cost is high. The forward integration threat is very low since not a single supplier supplies all the components required to build up the truck, they are sourced from different suppliers who have specific parts. Therefore, the low bargaining power of the suppliers makes the industry to be highly attractive.

Buyers' bargaining power fluctuates, and it all depends on the availability of other washers within the region that the client's order for the services. This is s quite unstable making the bargaining power of the buyers to be moderately low. Backward integration is impossible due to the costs and benefits associated with the service, except for a case that the clients resort for manual washing, which is rare with our target market. Therefore, this makes the industry moderately attractive.

Type of Industry

The industry that encompasses the mobile washers can be described as one which is growing. This is because, they are very few within Saudi Arabia, not more than ten. Meaning, there is still room to enjoy the benefits of first entry.

Competitor Analysis

The business idea does not have much competition close to it since within the country the sectors of the industry (mobile car wash), the market is very due to the capability of reaching places that the immobile washers are not able to reach. However, the attractiveness of the venture may enhance competition in the future, which may reduce our market share. This is not a threat since, by that time, our business will have several loyal consumers and our operations will be advanced due to the continuous researches that we intended to do in the field. The competition is more of indirect from the immobile washers since the mobile washers which are expected to give a direct competition are very few and do not have quality trucks like the one designed for our business. Below is the competitive analysis grid.

Strength

Our Organization

Myron L Company

• Innovative
• Quality
• Ease of use
• Low cost

• Low cost
• Perfect branding
• Strong partners

Weakness

Our Organization

Myron L Company

• High Price
• Not favourable to low income earners.

• High price
• Not favourable to low income earners and is inconvenient due to immobility.

Company Description

As indicated earlier, the company mission states that; the carwash should provide auto detailing business service and car washing are costs that have effective rates to the clients, as it makes robust gains, by ensuring that the interests of the business are secured perfectly by creating mutual trust platform between the esteemed clients and our organization. The main service will be car washing. This will give an opportunity for specialization which will give room for invention and innovation to keep the company ahead of the competitors. Currently, the organization is running an immobile car wash, and the mobile one is yet to be implemented. Some of the legal requirements in running the mobile car wash include incorporation articles, bylaws, driver's license, operating agreement, employee' letter of offer, tax and insurance.

Market Analysis

Market segmentation is based on the income level, in the case of this business idea. This is because the low-income earners prefer the manual immobile washers, while the middle-income earners use the immobile but sophisticated washers. Buyers’ behaviors in this market are related to what triggers the consumers to prefer one service provider than the other, which in this case is the income level and the car quality. The clients with high tech cars will decide on the service providers who can enhance the maintenance of the quality.

Economics of the Business

The revenue drivers in this business are the number of the customers receiving the services, quality of the service that is delivered and the price that is charged for the service. These are the key determinant of the level of revenue that can be received from the business. The profit margin may be low at the start but is speculated to widen as the business progress. Fixed costs are high than the variable costs. This quite favorable because, once the fixed costs are incurred, they will only need maintenance cost which is relatively cheaper.

Marketing Plan

About the marketing strategy, we shall consider looking into the low costs initially and some of the creative ways of promotion. The promotion swill did by use of promotional merchandise like pens, shirts, and notebooks among others. We shall also consider creating the business's online presence by use of the company website and the social media. These will enable marketing at a lower cost.

The pricing strategy will depend on several factors. For instance, for the standard car wash, the charging will be between $25 for the cars and the SUV which are small, to $50 to the cars that are a bit bigger. Auto wax and hand wash will be charged between $63 for the cars and the SUV which are small, to $10050 to the cars that are a bit bigger. Ensuring clients' retention will be done by giving the staff training on how to capture loyal clients, we shall also run campaigns for the limited time that can deliver growth explosively.

Operations Plan

The operations of the business will be approached professionally based on the experience of the staff, in directing the client on self-service. The client will be oriented on how the system operates and keen supervision will be applied to assist the new clients.

Location of the head office will provide the garage where the trucks will be accommodated. The head office will be at the Riyadh city center where the traffic is quite rampant with several branches across the country. The location I preferred due to its strategic positioning associated with the high level of traffic. The equipment that we required for the business includes Stationary and T-Shirts for identity, two truck, personal organizer system, truck bed, supplies Inventory, signage, water system, computer and printer, carpet extractor, credit card machine, vacuum/Air freshener, lights, tank, steam cleaner.

Management Team and Company Structure

The founders of the idea are the members of the research and development depart of the current immobile car wash company. Board of directors is the owners of the whole organization who finance it and the main gainers from its operation. Advisers are mainly the professional business managers who are mainly hired as consultants. The organizational structure is as shown below.

Board of Directors

Board of Advisers

General Manager

Departmental Managers

Supervisors

Casual workers

Overall Structure

The legal entities will be established by dividing the equity of the project among the board of directors which are the shareholders. The dividends will be distributed depending on the shares contributed towards the equity. The completion of the prototype will occur after six months. From it, other operations will be duplicated and even improved. No rental facilities will require as the organization already owns a section that can act as a temporary garage, as it waits to build a standard garage. The main source of financing will be from the bank loans or equity that will be contributed from the shareholders' savings. The production of the services can be started in the second quarter of the year 2018, and the first sales will be obtained six months after the starting date. This will enable substantial time of monitoring the trend in sales.

Financial Projections

The organization's accountant and the financial manager will generate the financial statements. The value that is projected for pro forma income statement in the first year of operation is a profit of $170, 555. The pro forma balance sheet is projecting a net worth of $250, 800 by the end of the first year of operation. The pro forma cash flow statement aims at having a positive flow from the initial month of operation, and the projected closing cash balance at the end of the first year is $300, 800. Since the business has not operated the ratios may not be obtained. However, the targeted ratio for the liquidity is 2.87 to 1.