Spic N Span Car Wash and Auto Detailing Center - Case Study Example

SPIC N SPAN CAR WASH AND AUTO DETAILING CENTER I. BACKGROUND The Auto Detailing Business is perhaps the most interesting entrepreneurial venture that a car enthusiast can do. Not only can he enjoy dressing and cleaning up assorted type of vehicles. He could also practice his creativity and get paid for it. This is why the author thought of opening this kind of business. More than targeting to build a successful business, the author wishes to display his expertise when it comes to automobile care. He also wishes to share his passion for cars for other individuals who have the same interests, while creating business opportunities out of it. According to the article “Why Start a Car Business”, there are approximately 90,000 car washing businesses in the United States (Why Start a Car Business 2010). Car washing businesses have definitely thrived and made money, and it is obvious that there will always be a demand for this type of service, basically because people have lesser time to spend cleaning their vehicles and the convenience that a car wash shop brings to them. It is with these interests in mind that the owner came up with Spic n Span Auto Detailing Center. Spic n Span will be a full service car wash shop; a professional detailing company providing customers with three main services, from hand car wash, interior cleaning (power wash and vacuum), and professional interior / exterior detailing (wax, buff, shine). Spic n Span will build strong brand recognition by providing its customers with a promising and fulfilling service experience at a reasonable rate. It will target all vehicle owners from economic vehicles to luxury vehicles. Customers will be from word of mouth, and dealerships, as the quality of Spic n Span’s work will be well known. The company will be able to provide quality services by employing the best skilled employees available, as Spic n Span believes that quality comes first. It will ensure that customers will feel that their vehicles are handled by the best and are taken care of, by providing guaranteed customer satisfaction. Spic n Span is a startup company to be located at Denver, Colorado. It aims to capture its target market through its professional approach to the business, capped with outstanding customer care and after sales services. The owner is part entrepreneur, part-hobbyist, which explains the business’ dedication towards this cause. Spic n Span is a corporation owned by the principal investor and four other friends who are car enthusiasts as well. The incorporators will invest a total of $ 75,000 each for the initial branch. The owners will open stocks ownership by the third month of operations, if needed. No lenders will be needed to support the company financials, and therefore, there are no deemed benefits for their purpose. The company’s projected market share by the end of its 6th month of operations would be 25%, in contrast to other car detailing businesses in the area, and a higher rate of 35% by the end of its first year of operations. Spic n Span targets market dominance by creating a loyal base of customers who will return to them for repeat purchase and patronage. II. VISION AND MISSION STATEMENT With the numerous competitors in the area, Spic n Span Car Wash and Auto Detailing Center wishes to create a niche for the company as the preferred Auto Care Shop of choice among the target market. It wishes to be known as a full service Auto Care Center that offers complete services at a reasonable price, Its Mission is to provide the customers with 100% satisfaction when it comes to car care. It aims to offer service that is unparalleled. The trick is to provide the best services at a reasonable cost, and at the fastest speed. This is because we give value to our customers’ time. We understand that we exist to provide convenience to our target market, and that is exactly what we are going to do. III. OBJECTIVES Spic n Span targets to launch in June 2010, opening its first branch that would offer full detailing and cleaning services. It further plans to expand with two other branches in neighboring cities after its first year of operations, and this would only happen if the management gets a 100% return of investment during their first year of operations. Spic n Span hopes to open the business to franchisees who wish to open a Car Detailing Business in Colorado as well. The goal is to be able to do this at the beginning of its third year of operations. Spic n Span wants to create solid marketing relationships with local car dealers and car manufacturers to boost the business. IV. STAFFING The business will be operated mainly by the owners, who will have their own work assignments. As such, there will be five major departments: Marketing, Operations, Administration (with sub sections Human Resources, Training and Procurement), and Finance. Under Marketing would be one Marketing Officer who is in charge of implementing marketing campaigns and monitoring advertisements and promotions for the company. He will also act as the Public Relations point person who will build relationships with media people in the area. The Operations Manager will oversee the daily operations of the shop. The car wash staff will report to him for all activities in the shop. He will also ensure that the equipment are 100% working, and is able to meet the standards set by the management. Under him are three full time and five part time shop sales and customer service associates. The Administration team will act as the support group/ backbone of the business. They will ensure that all items are in place. The procurement officer will ensure that the company purchases at par equipments and touch base with other suppliers for other materials that would be on sale inside the shop. The Human Resources and Training Manager, meanwhile, is in charge of the recruitment of manpower for the shop. He will also find ways to continuously educate the staff not only on the work, but on how to deliver good customers service. The Finance Manager is in charge of monitoring the finances of the shop, and that the team meets their daily and monthly targets. V. TARGET MARKET Spic n Span’s primary target market is private car owners who are residents of Denver, Colorado. These are people who use their cars as their primary means of transportation to work and to other personal errands. This group of people have sufficient budget allocated for the care and maintenance of their cars, and they give utmost importance to their vehicles, being their primary means for mobilization. They can spend on car care, particularly car washing and interior cleaning as they have no time to perform this due to their busy schedules. For this group of people, it is a need to maintain and care for their vehicles as this supports them in their daily activities particularly going to and from work. Denver is known to be a baby boomer capital (Denver – The City 2010). The expected increase in the number of population signifies that there is more room to grow for businesses in this county. The continuous expansion of trade and commerce, and the promise of more advances in technology give the owners a long-term goal of being able to build a solid business with a strong customer base. Spic n Span also targets vehicle owners from neighboring counties and states. Colorado is in between big states such as Chicago and St. Louis, making it a natural area for goods storage and distribution. There is such high level of activity when it comes to trade (Denver 2010), and there is also high traffic of vehicles going cross country. These are among the business’ target market. Spic n Span will cater to all car types, and would offer relatively similar prices for car care for any model. There would be a slight difference, of course, in basic car care for low and high end cars, but it will see to it that it will attract both ends of the market to ensure that it will cover a wide range of clientele. Spic n Span also targets public utility vehicles for their car wash service. As mentioned earlier, the company will give importance to the transaction count and would definitely serve the commercial vehicles as well as private vehicles. There are over 20 large car care shops in Denver, and about the same number of small ones. Competition is indeed very stiff, and basically, there are no distinctive qualities that would really make any one of the shops stand out. However, Spic n Span will compete in terms of pricing, in such a way that its pricing strategy will slightly be lower than most of the competition. It will also focus on outstanding customer service and after-sales benefits such as follow up check up, and extended warranty on selected services. This way, the company could offer its customers value for money and be able to make a mark in the industry. Major players in the industry are Waterway Gas & Wash Company and Finish Car Wash and Detail Center, both of which are using state of the art technology in their services. Waterway Gas & Wash Company boasts service excellence (A Better Way to Clean 2010), while Finish Car Wash and Detail Center emphasizes on their packaged costs that offer comprehensive products and services to its customers (Finish Line 2010). Both are similarly priced in terms of its services and have their own websites to help promote the services. Spic n Span will position itself as a shop that offers similar services at a lower cost. It will also highlight its after-sales benefits to entice the customers to keep coming back for more, and other value added services while customers wait. The small shop will showcase a cafeteria where customers can wait, and a small express spa and salon where the customers could relax while Spic n Span works on their vehicles. VI. ADVERTISING As discussed earlier, Spic n Span will position itself as a full service auto detailing shop that is priced lower than most of the competition. The target is to get many customers to purchase frequently to obtain growth in sales. It will focus on raising transaction count versus putting higher profit margin for every product or service sold. For example, a typical hand car wash costs about $10.00 in most of the competitor stores. Spic n Span will price at $ 9, with free snacks for one. The small difference in pricing, capped with a value added product, will put the shop to its advantage. To achieve positive revenues, Spic n Span will manage the usual costs for one regular hand car wash. Operational costs on water and soap, as well as other components will be managed in such a way that the production cost will be reduced without sacrificing the quality of course. The trick is to go micro in terms of pricing, and purchase the raw materials in bulk, where applicable. The company plans to spend 30% of its monthly operational budget to Marketing, Advertising and Promotions to be able to launch, advertise and sustain market visibility. Again, to cut on costs, Spic n Span shall employ full time marketing officers to implement the promotional plan to do away with the additional costs that an ad agency will entail. Advertising and promotions will be in house, and budgets for these shall be controlled to be able to maintain the company’s pricing strategy. Management will tie up with suppliers for other possible promotional strategies that may be executed jointly. Tie ups would mean lower costs for both parties in terms of product promotions and gimmicks. This way, there would also be other opportunities for free PR publicity. As earlier mentioned, Spic n Span will highlight its after-sales services and to create advantage over competition. This means that a free check up will be offered for applicable services. This would also serve as the company’s warranty for its services. To achieve the desired effect, which is to have the customer return for positive reasons, there should be a given timeframe for every free check up. Customer complaints will be entertained with utmost care, and would be handled to ensure that the customers get their satisfaction from Spic n Span’s services. VII. COMPETITION Competition wise, there are about a handful of other shops offering similar service in Denver, Colorado. Others have been in the business for a very long time already, therefore having loyal customer base from the last few years. But competition makes the owner feel positive in the venture, in such a way that they are confident that they could contend both technology and customer-service wise. Spic n Span will put a premium in their professional and personalized services, and would offer after sales car care particularly to loyal customers of the shop. Spic n Span would also embark in pricing war, creating introductory prices that would create advantage over the e competition. Spic n Span sees Mr. Steam Car Wash and Ocean Auto Detailing as two of the most remarkable competitors. These two are very visible in terms of promotions are highly popular among the target market. Spic n Span’s expansion plan for two other branches in other cities is motivated by the owner’s desire to achieve a positive return of investment by its first year of operations. The plan is invest wisely in highly- dependable machineries sourced out from the most cost-efficient suppliers to be able to establish good pricing advantage. Spic n Span would like to rely more on customer count than offering relatively high prices to attract the target market. This would also ensure that Spic n Span will be able to compete heads on with the other businesses identified. VIII. START UP EXPENSES The principal investor and his four other incorporators plans to shell out $ 75,000 each as start up fund for the business. Additional funding may be needed and this will be executed through a bank loan. Bulk of the total budget will go the construction expenses and acquisition of needed facilities. Second aspect that would need a large chunk of the budget would be marketing and promotions. A considerable amount shall also be allocated for Human Resource concerns, not only for wages but for training expenses as well. IX. PROFIT AND LOSS ANALYSIS Spic n Span plans to break even by the first six months of operations, and start earning back the start up investments on the 7th month. This is on the assumption that the shop will hit 100% or more of the targeted sales per month.   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Projected Gross Income Investment Carried Over 375,000 128,000 112,000 102,000 47,000 47,000 Services 10,000 15,000 20,000 25,000 30,000 35,000 Total Projected Gross Income $ 385,000 $ 143,000 $ 132,000 $ 127,000 $ 77,000 $ 82,000 Projected Expenses Business Permit Costs 5,000           Brochures/ Flyers/ Business Cards 6,000 10,000 10,000 10,000 10,000 10,000 Billboard Production/ Rentals 10,000 5,000 5,000 5,000 5,000 5,000 Construction 100,000           Phone Line Connection/ Connectivity 1,000 1,000         Personal Computers 10,000           Manpower Costs 15,000 15,000 15,000 15,000 15,000 15,000 Equipment 80,000     50,000     Website Creation and Hosting 3,000           Miscellaneous 2,000           Total Production Costs 25,000           Total Projected Expenses 257,000 31,000 30,000 80,000 30,000 30,000 Net Income $ 128,000 $ 112,000 $ 102,000 $ 47,000 $ 47,000 $ 52,000 Works Cited “Why Start a Car Business.” Car Wash. April 12, 2010. http://www.entrepreneur.com/downloads/guides/1076_Car_Wash_08_ch1.pdf “Denver – The City.” April 15, 2010. http://www.hometodenver.com/Stats_Denver.htm#pop “Finish Line” April 15, 2010. http://www.finishlinecarwashes.com/ “Waterway Carwash” April 15, 2010. http://www.waterway.com/AboutUs.aspx Read More