Small business plan proposal

Business opportunity Macro environment analysis Market analysis Market research Business Plan Marketing Plan Marketing Strategy Operational Financial Funding Forecast Break even Cash flow Profit and loss Break even

Coffee at Carwash

Executive summary

The following report is a thoroughly researched proposal for a new business. A number of people now use car wash, and as they wait inside vehicles, awaiting their turn or during washing, light refreshments such as coffee and snacks can be offered/sold, and even packaged as a single product with car wash. The proposal is to start a drive-through take-away light refreshment (coffee + snacks initially) selling stall/shop for idle/waiting-in-queue customers at car wash dealers as a market test and upon success, expand the business based on a franchise model in partnership with car wash businesses, branding the stores as “Coffee@Carwash” (trading name). The first three months test marketing is a key element of the plan as this will provide details about market size, market segmentation, consumer behaviour, competition, consumer willingness to pay and pricing. The ultimate objective is to have joint-ventures with the car wash owner/dealership/franchise to offer a packaged product – car wash + light refreshments (coffee, tea, other drinks + snacks) throughout UK by the independent franchisees.



Table of Contents

Executive summary. 2

Business opportunity. 6

Macro environmental analysis. 7

Swot analysis. 7

PEST. 7

Porter’s 5 forces. 7

Market analysis. 8

Market research. 9

Feasibility. 10

Task 2. 11

Organisational mission. 11

Goals and Objectives. 11

Business Plan. 11

Marketing Plan. 12

Marketing Objectives. 12

Marketing Strategy. 12

Product 12

Place. 12

Price. 13

Promotion. 13

Management and Operational Details. 13

Operational Plan. 15

Financial Plan. 16

Funding. 16

Financial Costings and Forecast 16

Pricing of products. 16

Conclusions. 19

Future opportunities. 19

References. 20

Appendix I – Porter’s 5 forces analysis. 21

Bargaining power of customers. 21

Bargaining power of suppliers. 21

Threat of new entrants. 21

Threat of substitutes. 22

Competitive rivalry in the industry. 22

Appendix II – PEST analysis. 23

Political factors. 23

Economic factors. 23

Social factors. 23

Technological factors. 23

Appendix III – Notes for activities. 24

Appendix IV.. 29

Cash flow statement (Independent store/stall business projection) 29

Proforma profit and loss. 30

Full year Cash flow statement 31

Full year Profit and Loss. 32

Break even estimation. 33

Appendix V.. 35

Cash flow statement – 1st Year (monthly) 35

Cash flow statement – 2nd & 3rd year (quarterly) 36

Consolidated Cash flow statement 37

Proforma profit and loss – 1st year (monthly) 38

Proforma profit and loss – 2nd & 3rd year (quarterly) 39

Consolidated profit and loss statement 40

Appendix VI – Break even. 41

Appendix VII 43

Business opportunity

Coffee@Carwash is offering value addition at car wash centres. At the basic level it is a business selling light pre-packed refreshments to idle/waiting customers at car wash centres by partnering with them; hence capitalising on the “idleness” during carwash but by offering the items as a package along with car wash. The primary product for these customers are getting their car washed; and refreshments are secondary, but offering them as a package (refresh & wash) could improve the attractiveness of the car wash centre itself as this enhances the value addition for customer.

Many individuals, plan their itinerary in advance like getting the carwash on the way to office in the morning and offering extra facilities at the car wash centre would attract more customers for the dealership and hence an appealing opportunity for carwash owners. Further there is insignificant infrastructure/upfront cost, as an outlet/shop, dining area, chairs, tables and other associated features of the traditional shop are not required. The light refreshments would be offered as takeaway from a small one-man stall placed at the start of the queue to the carwash (point of sale approach).

Macro environmental analysis

Swot analysis

Strengths Weaknesses
1.     Low upfront cost (removable stall, refrigeration, heating units)

2.     Packaged product and pricing (carwash + light refreshments)

3.     Ideal place (stall placed at the start of queue at carwash)

4.     Low maintenance, running cost

1.     Restricted target market (only customers of carwash centre)

2.     Limited product offerings (only prepacked light refreshments)

3.     Limited expansion potential to other modes – online.

4.     Limited branding potential

Opportunities Threats
1.     Captive target market-idle/waiting customers of carwash centre

2.     Expansion through franchising

3.     Limited investment growth model

4.     Easy exit in case of unviability

5.     Horizontal expansion through addition of new packaged food/beverages

1.     Threat of hijacking of business ideas/model by independent carwash owners/franchisees

 

 

PEST

An evaluation of the political, economic, social and technological factors (refer appendix II) does not indicate any significant elements that can affect the potential of the business. The developed social media platforms (technological) are a facilitator as it enables marketing of the business. Regulations related to health and safety has to be considered in detail especially due to the nature of delivery of products (storage, refrigeration of food and beverages).

Porter’s 5 forces

Coffee@Carwash can be considered to be in the hospitality industry as it offers food and beverages, but has differentiated based on place – carwash centre.

Figure 1 – Porter’s 5 forces

Source – developed by author (refer appendix I)

Market analysis

The total number of automated rollover carwashes in UK is about 4200 and the hand carwashes number around 20,000; with majority of them in the unorganised (independent, owner operated) sector (Daily Mail 2015). There is also a shift from automated/self-service to assisted/services hand car wash in UK (Autoblog 2016). IMO car wash group trading as ARC in UK has 281 outlets in UK. According to a report by Hudson (2013) based on a survey conducted by Central Contacts a car leasing firm

  • 78% respondents preferred a car wash by professionals and automated machines.
  • More women preferred professional carwash.
  • Individuals in the age range 21-35 preferred professional carwash.
  • Busy lifestyle is the main reason for taking professional carwash.
  • Professional, better and inexpensive service are attractiveness.

The number of people opting for professional and automated machine based carwashes is increasing, which is evident in the increasing number of carwash centres. A large majority of these carwash centres offer opportunities for setting up Coffee@Carwash outlets.

The target market and the market size for the business is the same as the total market for the carwash business. Except self-service carwash centres, where the car owners themselves do the washing, there is potential for business partnership with all others – hand and automated. There are no direct competitors for the business as the idea is unique; however some carwash centres might have the same kind of services already established. With the branding of the business, it is expected that partnerships can be developed with even these carver centres. The target market segment is male/female, in the age range 21-35, professionals, with the busy lifestyle; as these are the main customers of carwash centres and also exhibiting behaviour of taking light refreshments whenever the opportunity arises.

Market research




The initial three months period is solely focused on market research through formal and informal methods. The owner/proposer intends to do an actual market test, by setting up a stall with coffee and snack items at the till/counter of a carwash centre in south London. The pricing for carwash + coffee and snacks as a package would be negotiated with the owner of the carwash. The plan is to develop a partnership with car wash centre.

The following data would be collected based on personal observation.

  • Number/type/model/registration number of vehicles.
  • Number/gender/age range of passengers in each vehicle.
  • Time of arrival and departure after carwash.

The other quantitative data would be sales information which will contain the number of products sold, timing of sales (morning, midday, evening) and quantity. It is planned to have the type of vehicle, demographic characteristics of passengers and time of sales captured in the sales figures through a computer-based system (tablet).




The owner/proposer also intends to have informal chats and discussions with the customers arriving at carwash centre to analyse the overall market opportunity in terms purchasing light refreshments, the type of refreshments they prefer, viewpoints about prices, quality of products.

The data would be analysed at the end of each month for three months to identify the total market opportunity which includes the potential sales, profitability, type of products to be offered and arriving at the optimum pricing for the products and the packaged product. A data rich business plan would be formulated at the end of three months.

Feasibility

Based on the macro environmental analysis and limited data about the potential market, the product/service appears to be feasible. However the entire objective of the actual market test with the stall/store during the initial three months is to evaluate the market size, market segments, consumer behaviour and ultimately the feasibility of the business. Only limited budget is required for the market test, which would provide all relevant details required for analysis.

Task 2

Organisational mission

Coffee@Carwash aim to refresh and rejuvenate customers of car washing centres by

  • removing boredom, idleness, waiting time
  • offer light refreshments to be consumed during car washing

Goals and Objectives

The objective is to expand Coffee@Carwash throughout the country using a branded franchise model

  • Initial plan is to test the market by offering coffee and snacks at a car wash centre by the business owner and collecting market information through structured/formal and informal research.
  • With 3 month market research data and personal experience the idea would be pitched to more number of carwash dealers/owners/franchises like IMO, using the stall/store and market data as evidence of market potential.
  • A formal business plan with solid details based on market research would be used for gaining a bank loan or an angel investor.
  • With financial backing franchise agreements would be finalised with carwash dealers/owners/franchises over the next 6 month period.
  • Expected to have about 30 franchises operating by the end of 1st

Business Plan

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Coffee@Carwash would be a franchised business model, with branded stores/stalls in partnership with carwash centres, offering light refreshments to customers. Initially the owner/proposer will start a self-designed stall/store in a south London and carwash, operating it for three months, with the objective of gaining market data/research to be developed into a full-fledged business plan to be pitched to angel investors. With investment of £200,000 (own equity) and £400,000 (angel investor), 6 new company operated stores/stalls would be set up across the country to attract franchisees. The first five franchisees would be identified and set up by the 9th month, followed by another 25 to make a total of 30 franchises by the end of the first year of operations. The six stores/stalls started in the first year would be converted to franchises by the end of the year. Consequently the company would not own or operate any stall/store and hence would become an asset light company, only managing the operations of the franchises. The capital equipment/initial investment for each new store/stall would remain in the books of the company as assets which would be depreciating over a three-year period, providing significant tax benefits. Plan is to have 180 franchises by 2nd year and 360 by 3rd year. The breakeven point of the business would come at 28 months from the start, achieving total revenue of about £885,000 in August 2019.

Marketing Plan

The target market is the carwash customers and based on market analysis, younger segment of the population is more prone to using carwash centres, who also quite busy and do not want to waste any time. Further conspicuousness consumption is the behaviour found in young customers which leads to better prospects for the Coffee@Carwash business model.

Marketing Objectives

The main marketing objective is to ensure packaging of the different product offerings with the variety of carwash facilities which ensures automatic sale. The marketing objective also includes higher than industry level profitability as the product is packaged.

Marketing Strategy

Product

Coffee + light refreshments would be the product offering. The product can be packaged with carwash and considered as a single product or offered as retail. In the second year of operations, the menu (light refreshments) would be changed each month. Coffee would be the main attraction followed by attractive menu options. Other beverages would include fruit juices, squash, Tea. From quarter 3 in the second year, new menu products beyond light refreshments would be offered to increase the revenue and as a method of horizontal expansion in product base.

Place

Stall/store located at the entrance of the carwash centre, offering a packaged product – Coffee + Light Refreshment + Car Wash, in different combinations. The packaging of the product is a main function and the idleness of the customers at the carwash centre makes the offering attractive.

Price

Packaging of the product with carwash in various combinations offers legitimacy to the prices of the products and the market research during the initial three months would be mainly used to arrive at the appropriate pricing levels of the different variety of products and the combinations. It is expected that the price would command a higher margin than conventional food and beverage outlets.

Promotion




The main promotion would be the signage and advertisement at the store/stall at the entrance. The point of sale approach ensures less need for conventional promotion such as advertisements. Nevertheless branding of Coffee at Carwash would be conducted through social media channel which is least costly. Hence there is minimal cost for promotions and advertisement.

Management and Operational Details

The initial operations of the single stall/store would be done by the owner to develop a data rich business plan, expecting to gain funding from angel investors. By the fifth month, Coffee at Carwash would be set up as a company completing all legal formalities as a franchise operating the brand name and managing the franchises. The proposer intends to be the CEO with the backing of angel investors and the company would employ 5 staff with the following organisational structure.

Operational Plan

 

(Detailed notes for each activity is given in Appendix III)

 

Financial Plan

Funding

Initial seed funding of about £25,000 is required for setting up, operating, conducting market research and overall for the first 4 months, which would be owner’s equity from personal finances. With the help of the business plan and the proven business model, induction of not more than four angel investors is expected to gain an aggregate funding of £400,000, to which owner’s equity of £200,000 would be added. The proposer intends to raise £200,000 mainly from personal sources, with a portion as bank loan.

Financial Costings and Forecast

 

Detailed cash flow statements, profit and loss and breakeven estimation is given in the appendixes. As part of proving the business model/plan, the actual cash flow and profit loss of the three-month operation of the single stall/store is projected for the entire year (appendix IV). With a seed funding of £25,000 and capital equipment of £10,000, the single stall/store would break even in 17 months. For the standalone stall/store, the first year net profit is expected to be £10,442 and four second year £50,313. The owner/proposer intends to utilise these features which are based on actual operations (three months) to convince angel investors.

Appendix V provides the financial projections for the business model based on franchising. After the initial three-month operation, two months period would be utilised for gaining funding, completing the legal formalities and the further setup of another 6 stores/stalls through the funds and purchase of capital equipment for £42,000. These 6 stores located across the country would be showcase/promotional material to attract franchises and over the next three months, discussions would be conducted with individuals to set up franchises at carwash centres. The arrangement between the franchisor and franchisee would be on profit-sharing basis, after considering all the expenses such as rent/profit share for the carwash centre. The division of the profit share would be 50:50.

Pricing of products

The light refreshments (coffee + snacks) will be priced between £5 and £10; expected to achieve average revenue of £20,400 from an average 100 sales/day/franchise. The average profit expected is 25% of each sale.

Average
Product price (£) 7
No of sales/franchise (nos) 97
Revenue per day/franchise (£) 681
Monthly revenue/franchise (£) 20434
Net profit/franchise (£) 4087
Profit share/franchise (£) 2043
Average total franchise fee/month 438295

 

(Detailed calculation in appendix VII)

Discussions would also be conducted with major carwash centres, both independent as well as branded to develop packaged pricing. The initial setup cost would be borne by the company and the operational cost by the franchisor. Nevertheless the financial projections have enough room to consider the inclusion of certain raw materials, consumables, electricity and water and other expenses for the three year period. The business arrangement with the carwash centres would be either on rent or profit share and this would be negotiated independently.

 

The main suppliers for food products and beverages are expected to provide at least one-month credit and the equipment manufacturers is expected to give long-term maintenance contracts at discounted prices as well as discounts for the total cost as the equipment would be purchased in bulk. As the equipment is owned by the company, the depreciation on it is a substantial part in reducing the taxes. By the end of the first year 30 franchises would be opened which will include the 6 owned and operated by the company which will be converted to franchises. Hence by the end of the first year, the company would not own/operate any store/stall and hence moves on to an asset light model with a centralised office. This contributes to low operating cost, even though adequate provisions are given in the cash flow and profit and loss statements to accommodate certain recurring expenditure. Since the equipment is owned by the company, the franchisees can be removed in the case of disputes. At the end of the first year the cash balance is expected to be around £650,000, enough for expansion in the second and third year. In the second year, 30 new franchises would be opened which will significantly increase the franchise fees. In the third year 30 new franchises would be opened




While by the end of the first year, company operated stores are converted to franchises, there is no impact on profitability. On the other hand due to the addition of 30 new franchises in the second year, the franchise fee which is the revenue for the company would be tripled. During the second year, more products would be offered through the stall/store of the franchises to increase the revenue. Similarly options for reducing the cost of operations such as new agreements with lower cost for the food products and beverages as well as cost of equipment and annual maintenance would be negotiated as the scale of the operations increases. Based on the present financial plan, the breakeven is expected to be at the 28th month as a result of the doubling of franchises.

 

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Conclusions

 

Coffee@Carwash intends to develop as a branded franchising model offering beverages and light refreshments for carwash customers. The main revenue from the second here onwards would be the profit share of the franchises. The idea is to initially start a stall coffee + snacks to customers waiting in line at a single car wash outlet within the M25 of London and conduct a research on business potential for a period of three months by collecting information/data from customers about the wider business opportunity. At the end of three months, the stall would be showcased to the larger car wash franchise chains such as IMO at the end of three months and presented as a business opportunity to the car wash centres. The attractiveness for carwash centres is to attract more customers as the idle time or waiting time of customers is converted to money, a part of which would be offered to the car wash owner as rent/extra income. Angel investors would be sought based on the strength of the business plan as a three-month operation is enough to prove the business model including financial projections. Coffee at Carwash plans to completely converted to a management organisation with an asset light business model, even though the equipment would remain in the ownership of the company; however operated by the franchisees.

Future opportunities

There are opportunities for horizontal expansion by increasing the number of products that can be sold through the stall, along with packaged pricing. The packaged products would be the carwash + food products + beverages, which can be sold through online portal as a coupon and over a smart phone application specifically developed by the drive through coffee outlet.

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References

Autoblog (2016) Can Automatic Car Washes Damage Your Car? [online] available at http://www.autoblog.com/2010/06/30/automatic-car-wash-tips/, accessed on 28 February 2017

 

Daily Mail (2015) Demise of the automatic car wash as the Eastern Europeans clean up: Number of sites has halved in 15 years as hand-wash businesses boom, [online] available at http://www.dailymail.co.uk/news/article-3360199/Number-automatic-car-wash-sites-halved-15-years-hand-wash-businesses-boom.html, accessed on 1 February 2017

 

Hudson, P., (2013) British drivers too lazy to wash their cars, [online] available at http://www.telegraph.co.uk/motoring/news/9867834/British-drivers-too-lazy-to-wash-their-cars.html, accessed on 1 February 2017

 


Appendix I – Porter’s 5 forces analysis

Bargaining power of customers

 

Low – insignificant price of products, potentially high purchasing power of customers, but with a limited captive target market (carwash customers)

 

Customers are expected to be having higher purchasing power (as they own cars and can send the surplus income on a carwash) and adding to low-priced product to enhance the value of the customers during the idle time is attractive.

Customers do not have significant bargaining power, although some may plan in advance and brings light refreshments during their carwash in advance.

The price of the product (refreshments) is quite insignificant.

Bargaining power of suppliers

 

Medium – potential hijacking of business model by carwash owners

 

The main supplier would be the supplier of space/place (carwash centre) for which a rent or profit-sharing model could be adopted, which is an additional income for the owner/franchise. The carwash centre owners and major franchises like IMO/ARC can hijack the business model and start on their own at their premises.

The other suppliers are packaged food product manufacturers with low bargaining power.

 

Threat of new entrants

 

Medium – low investment, franchise model can be replicated easily; however profit margins are low

 

The attractiveness of Coffee@Carwash would be based on packaging the product (various refreshments along with carwash) and offering them at a specified price ranges and this is accomplished by a joint-venture with the owners or franchises of carwash centres. Once joint-venture agreements are completed, especially with major franchises like ARC/IMO, new entrants might have difficulty in entering the market. However independent carwash dealers can open similar business model.

 

Threat of substitutes

 

Low – insignificant substitution products/services.

 

Substitutes for the larger food and beverage segment are traditional food and beverage outlets (restaurants), the concentration (numbers and availability) will depend on area of operations, but they are available in almost every locality. However their impact on the proposed business is limited as they act as insignificant substitutes.

 

Coffee@Carwash offers value addition for customers while they wait for their turn at the car wash and the opportunities to capitalise on the idleness/waiting period. Modern information technology and gadgets (smart phones, tablets, laptops) are an indirect substitutes as they reduce the idleness of individuals.

 

Competitive rivalry in the industry

 

Medium – no direct competitors as the place is unique (carwash centre) compared to other food and beverage outlets, that offers same products at standalone premises.

 

The indirect competitors are the traditional food and beverage outlets and most similarity is with fast food retailers, especially branded fast food such as McDonald’s. The pricing of the products of the business is expected to be similar to or less than these indirect competitors. Further the advantage of the business is its unique location.

 

The business basically offers light refreshments and unlike traditional food and beverage outlets are not targeting customers the particular need/want for food and beverages or refreshments to quench their hunger, thirst or the other characteristics associated with a branded for unbranded food and beverage outlets or restaurant. However the competitive rivalry is high as there are a number of such small-scale food and beverage outlets, but the business model is unique as it is targeting idle customers and offering value addition to customers who intend to do a carwash and capitalise on the boredom or idleness.

 

Appendix II – PEST analysis

 

Political factors

 

There is insignificant in reference of regulation in the food and beverages sector from the government; however food and safety regulations and legal aspects of the business have to be considered.

Concentrating on the specific factors of the business, the local legislation related to food and safety has to be considered. Further the idea is to promote the business as a franchise and hence the legal elements of the business have to be evaluated.

Economic factors

 

Light refreshment business is immune to the recession, inflation, interest rate changes, employment policies or other economic factors. However the economic factor related to labour/unemployment could be an important function as the franchise model requires a number of employees.

Social factors

There is a change in social mentality towards getting more services outsourced or done by professionals and hence the success of carwash centres. Coming to the specific business, taking light refreshments has become a social and cultural part of the young population in the UK. The lack of time and the busy schedules of the young target market is a facilitator for the business.

Technological factors

 

No significant technological factors play a role in the delivery of products. The traditional methods used by common food and beverage retailers such as sourcing and marketing would be used. Nevertheless increasing use of social media is beneficial to the business as it is a major plank for marketing.

 


Appendix III – Notes for activities

No Activity Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
1 Negotiations for store
2 Finalise Package Pricing
3 Stall/store arrangements
4 Purchase of equipment
5 Setting up store
6 Operations
7 Market research
8 Research data analysis
9 Formulate business plan
10 Discussions with banks, angel investors
11 Negotiations for new stores
12 Stall/store arrangements
13 Gain funding
14 Purchase of equipment
15 Set up 4-6 stores in carwash centres
16 Setting up business with legal formalities
17 Discussion with product suppliers
18 Purchasing equipment for franchises
19 Finalising franchise agreement document
20 Identifying & finalising initial 5 franchises
21 Setup of first 5 franchises
22 Negotiations with new franchises (5 nos)
23 Monitoring franchises
24 Setup of next batch franchises (5 nos)
25 Negotiations with new franchises (5 nos)
26 Setup of next batch franchises (5 nos)
27 Negotiations with new franchises (15 nos)
28 Setup of next batch franchises (15 nos)

 

Activity 1 – 4 – Negotiations with Carwash Centre at South London, expected to last around 1 month to consider pricing, stall arrangements, set up, purchase of equipment. Finalising pricing of integrated/packaged product – carwash (various types) + light refreshments (various types). Expect to reach an agreement with 10% sales of products to be given as rent for carwash centre.

 

Activity 5 – 6 – After negotiations, store would be set up by the end of the first month, commencing full-scale operations from the second month

 

Activity 7 – 9 – The initial three months period is solely focused on market research through formal and informal methods. The following data would be collected based on personal observation.

  • Number/type/model/registration number of vehicles.
  • Number/gender/age range of passengers in each vehicle.
  • Time of arrival and departure after carwash.

 

The other quantitative data would be sales information which will contain the number of products sold, timing of sales (morning, midday, evening) and quantity. It is planned to have the type of vehicle, demographic characteristics of passengers and time of sales captured in the sales figures through a computer-based system (tablet).

 

The owner/proposer also intends to have informal chats and discussions with the customers arriving at carwash centre to analyse the overall market opportunity in terms purchasing light refreshments, the type of refreshments they prefer, viewpoints about prices, quality of products.

 

The data would be analysed at the end of each month for three months to identify the total market opportunity which includes the potential sales, profitability, type of products to be offered and arriving at the optimum pricing for the products and the packaged product. A data rich business plan would be formulated at the end of three months.

 

Activity 10 – Data rich business plan formulated after thorough market research from actual operations would be used for gaining investment from angel investors or bank loan. The initial objective would be to attract the interest of angel investors can get full funding from them by offering 50% stake of the company. In case sufficient investment is not gained from angel investors, the secondary option of bank loans would be considered.

Activity 11 – 15 – Over the next three months plan is to set up 4-6 stores in carwash centres in North London, Manchester, Newcastle, Birmingham, Glasgow and Belfast. From the fifth month onwards six new stores would be opened with people employed on salaries to work at the stall/store of Coffee at Carwash at the major cities to be used as promotions for attracting franchisees. The stores would be directly operated by the company. These new stores would be set up with the external funding from lenders (banks/angel investors) in order to project them to potential franchisees.

 

Activity 16 – The model of the business with the percentage of stake for angel investors the equity of the owner, the legal form of the business and other aspects such as insurance etc would be finalised by the end of August (fifth month). It is planned to set up offices in London and employ people mainly in supply chain management, franchise management, finance management and marketing.

 

Activity 17 – The objective is to set up a number of franchises across the country at carwash centres. For this an efficient supply chain is necessary to provide the products to the franchises. The model is an asset light business and suppliers in different geographies would be identified to provide the required raw materials and finished packaged products to franchises directly. The overall management of the supply chain would be from the head office, but the company will not have any assets for delivery or storing.




Activity 18 – The business would be investing in the equipment for the franchises. This equipment would be the assets of the business and as a long-term plan these equipment would be purchased in bulk from the manufacturers in order to ensure better credit facilities, payment options, long-term maintenance agreements and discounts as a result of bulk purchase. The objective is to ensure this equipment is maintained by the manufacturers through annual maintenance contracts and gain longer term warranties. These would involve the following

 

  1. Refrigeration/freezing/cold storage equipment
  2. Coffee equipment
  • Cooking range
  1. Cooking open/grill
  2. Kitchen utensils
  3. Cleaning equipment, consumables
  • Packaging material (for takeaway products)
  • Foldable stall, food preparation tables

 

Activity 19 – The model of the business would be to develop franchise agreements with Coffee@Carwash as the franchisor and individuals with entrepreneurial capability and funds for sustaining the operations as franchisees. The franchisor (Coffee@Carwash) would be investing in initial equipment, initial funding, negotiations with carwash centres, consultation, marketing, training of franchisees, supply chain management.

 

Franchisees will have to invest a certain upfront fee, but only for the day-to-day functioning, which would include the purchase of the products, which would be provided on credit on a monthly basis at first and then moved on to a weekly basis from the third month onwards. The responsibility of the franchisees will be to ensure quality of products, insurance and other legal requirements, adhering to health and safety provisions for which training would be provided. Franchisor will develop supply chain agreements with packaged light refreshment product manufacturers and beverage suppliers, which would be delivered directly by the suppliers to each franchisee at the carwash centre.

 

The franchise agreement would be based on profit share. The fixed cost of each stall/store is known. This would be the rental or profit share for the carwash centre. The recurring cost would be electricity, water, consumables, insurance answered marketing and promotions expenditure. The franchise agreement would be based on profit sharing between franchisor and franchisee (30%: 60%) with the remaining 10% profits from each stall/store to go into monthly development expenses which would be at the discretion of the franchisee. The franchise agreement would be for a 12 month basis.

 

Activity 20 – 28 – It is expected that by the end of the year 30 franchise agreements can be concluded. At the end of the 7th month, Coffee@Carwash would have six stores to be used as models for franchisees. The stores would be the basic promotional material for attracting franchisees. From the 6th month, the company would be scouting for new franchisees across the country and the following plan of action is decided for achieving 30 franchisees by the end of the year.

 

  • 5th month – a total of six stores
  • 8th month identifying and finalising 5 new franchises
  • 9th month – setup of 5 franchises
  • 10th month – negotiations with 5 new franchises
  • 11th month – setup of 5 new franchises + negotiations with 15 potential franchisees
  • 12th month – setup of 15 new franchises + negotiations with 10 potential franchises

 

By the end of 12 months it is expected to have 15 franchises across the country. These franchises would be monitored by the operations department as well as the franchise department of the company. Adequate training in operations, maintenance, health and safety, legal and financial matters would be provided by the operations department and the finance department of the company for the franchisees.

 


Appendix IV

Cash flow statement (Independent store/stall business projection)

Cash flow statement Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18
Opening balance 0      12,500      15,900      20,460      26,095      32,090      38,464      45,235      52,423          59,612          67,238      74,864                82,950                91,518              100,592              110,198              120,361              131,111
Paid in capital (Owner Equity)      25,000                –                –
Paid in capital Angel Investor
Bank Loan                –                –
Cash sales          6,000          9,000      11,700      12,870      13,514      14,189      14,899      15,644      15,644          16,426          16,426      17,247                18,109                19,015                19,966                20,964                22,012                23,113
Total cash receipts      31,000      21,500      27,600      33,330      39,609      46,280      53,363      60,879      68,067          76,037          83,663      92,111              101,059              110,533              120,558              131,162              142,373              154,224
Cash purchases/payments
Fixed cost Equipment      10,000                –                –                –                –                    –                –                        1                        2                        3                        4                        5                        6
Rent/profit share for car wash              800              800              800              800              800              800              800              800              800                800                800              800                    800                    800                    800                    800                    800                       800
Stock / Raw materials          6,000          3,000          4,000          3,861          4,054          4,257          4,470          4,693          4,693            4,928            4,928          5,174                  5,433                  5,704                  5,990                  6,289                  6,604                  6,934
Salaries                –                –                –                –
Electricity & Water              180              270              351              386              386              386              386              386              386                386                386              386                    386                    386                    386                    386                    386                    386
Consumables              300              180              234              257              270              284              298              313              313                329                329              345                    362                    380                    399                    419                    440                    462
Other              500              270              351              386              386              386              386              386              386                386                386              386                    386                    386                    386                    386                    386                    386
Taxes and Interest              720          1,080          1,404          1,544          1,622          1,703          1,788          1,877          1,877            1,971            1,971          2,070                  2,173                  2,282                  2,396                  2,516                  2,641                  2,774
Total cash payments      18,500          5,600          7,140          7,235          7,518          7,815          8,128          8,455          8,455            8,800            8,800          9,161                  9,541                  9,941                10,360                10,800                11,263                11,748

 

 

 

 

 

 

Proforma profit and loss

Proforma profit and loss
Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18
Sales Direct sales          6,000          9,000      11,700      12,870      13,514      14,189      14,899      15,644      15,644          16,426          16,426      17,247                18,109                19,015                19,966                20,964                22,012                23,113
Cost of sales          6,300          3,180          4,234          4,118          4,324          4,541          4,768          5,006          5,006            5,256            5,256          5,519                  5,795                  6,085                  6,389                  6,708                  7,044                  7,396
Gross margin            -300          5,820          7,466          8,752          9,189          9,649      10,131      10,638      10,638          11,170          11,170      11,728                12,314                12,930                13,577                14,255                14,968                15,717
Expenses                                      
Salaries                –                –                –                –                –                    –                    –                –                        –                        –                        –                        –                        –                         –
Rent              800              800              800              800              800              800              800              800              800                800                800              800                    800                    800                    800                    800                    800                    800
Stock raw materials          6,000          3,000          4,000          3,861          4,054          4,257          4,470          4,693          4,693            4,928            4,928          5,174                  5,433                  5,704                  5,990                  6,289                  6,604                  6,934
Electricity & Water              180              270              351              386              386              386              386              386              386                386                386              386                    386                    386                    386                    386                    386                    386
Consumables              300              180              234              257              270              284              298              313              313                329                329              345                    362                    380                    399                    419                    440                    462
Other              500              270              351              386              386              386              386              386              386                386                386              386                    386                    386                    386                    386                    386                    386
Total operating expenses          7,780          4,520          5,736          5,691          5,897          6,113          6,340          6,578          6,578            6,828            6,828          7,091                  7,367                  7,657                  7,961                  8,281                  8,616                  8,968
Profit before Interest & tax      -8,080          1,300          1,730          3,061          3,293          3,536          3,791          4,059          4,059            4,341            4,341          4,637                  4,947                  5,273                  5,615                  5,975                  6,352                  6,748
Interest and Taxes              720          1,080          1,404          1,544          1,622          1,703          1,788          1,877          1,877            1,971            1,971          2,070                  2,173                  2,282                  2,396                  2,516                  2,641                  2,774
Net profit      -8,800              220              326          1,517          1,671          1,833          2,003          2,182          2,182            2,370            2,370          2,567                  2,774                  2,991                  3,220                  3,459                  3,711                  3,975

 

 

 

 

 

 

 

 

 

Full year Cash flow statement

Cash flow statement 1st Year 2nd year
Opening balance
Paid in capital (Owner Equity)                                                    25,000                                                            –
Paid in capital Angel Investor                                                            –                                                         –
Bank Loan                                                            –                                                            –
Cash sales                                                  163,557                                                  288,249
Franchise fee                                                            –                                                            –
Total cash receipts                                                  633,438                                              1,974,091
                                                           –                                                            –
Cash purchases/payments                                                            –                                                            –
Fixed cost Equipment                                                    10,000                                                            78
Rent/profit share for car wash                                                      9,600                                                     9,600
Stock / Raw materials                                                    54,057                                                    86,475
Salaries                                                            –                                                            –
Electricity & Water                                                      4,276                                                      4,633
Consumables                                                      3,451                                                      5,765
Other                                                      4,596                                                      4,633
Taxes and Interest                                                    19,627                                                    34,590
Total cash payments                                                  105,607                                                  145,774
                                                           –                                                            –
Cash balance                                                    82,950                                                  225,425

 

 

 

 

Full year Profit and Loss

Proforma profit and loss 1st Year 2nd year
Sales Direct sales                                                  163,557                                                  288,249
Cost of sales                                                    57,508                                                    92,240
Gross margin                                                  106,049                                                  196,010
Expenses                                                              –                                                            –
Salaries                                                            –                                                            –
Rent                                                      9,600                                                      9,600
Stock raw materials                                                    54,057                                                    86,475
Electricity & Water                                                      4,276                                                      4,633
Consumables                                                      3,451                                                      5,765
Other                                                      4,596                                                      4,633
Total operating expenses                                                    75,980                                                  111,106
                                                           –                                                            –
Profit before Interest & tax                                                    30,069                                                 84,903
Interest and Taxes                                                    19,627                                                    34,590
Net profit                                                    10,442                                                    50,313

 

Break even estimation

 

Month Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18
Fixed expenses      10,000      10,000      10,000      10,000      10,000      10,000      10,000      10,000      10,000          10,000          10,000      10,000                10,000                10,000                10,000                10,000                10,000                10,000
Variable costs          8,500          5,600          7,140          7,235          7,518          7,815          8,128          8,455          8,455            8,800            8,800          9,161                  9,540                  9,939                10,357                10,796                11,258                11,742
Total expenses      18,500      15,600      17,140      17,235      17,518      17,815      18,128      18,455      18,455          18,800          18,800      19,161                19,540                19,939                20,357                20,796                21,258                21,742
Total revenue          6,000          9,000      11,700      12,870      13,514      14,189      14,899      15,644      15,644          16,426          16,426      17,247                18,109                19,015                19,966                20,964                22,012                23,113
Profit      -8,800              220              326          1,517          1,671          1,833          2,003          2,182          2,182            2,370            2,370          2,567                  2,774                  2,991                  3,220                  3,459                  3,711                  3,975

 


Appendix V

Cash flow statement – 1st Year (monthly)

Cash flow statement Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18
Opening balance 0      12,500      15,900      21,460      21,459 567,458 573,132 590,643 615,729        620,033        659,842 675,180
Paid in capital (Owner Equity)      25,000                –                – 200,000
Paid in capital Angel Investor 400,000
Bank Loan                –                –                –
Cash sales          6,000          9,000      11,700                –                –      46,800      70,200      91,260 109,512        111,702        113,936 116,215
Franchise fee            5,000          10,000      37,500
Total cash receipts      31,000      21,500      27,600      21,460 621,459 614,258 643,332 681,903 725,241        736,735        783,779 828,895
Cash purchases/payments
Equipment      10,000      42,000                –      30,000          30,000      90,000
Rent/profit share for car wash              800              800              800                  1                  1          2,000          3,000          3,000          3,000            3,000            3,000          3,000
Stock / Raw materials          6,000          3,000          3,000                –                –      12,000      18,000      27,378      32,854          33,511          34,181      34,865
Salaries                –                –                –                –      12,000      18,000      18,000      18,000      18,000          18,000          18,000      18,000
Electricity & Water              180              270              351                –                –          1,404          2,106          2,738          3,285            3,351            3,418          3,486
Consumables              300              180              234                –                –              936          1,404          1,825          2,190            2,234            2,279          2,324
Other              500              270              351                –                –          1,170          1,755          2,282          2,738            2,793            2,848          2,905
Taxes and Interest              720          1,080          1,404                –                –          5,616          8,424      10,951      13,141          14,004          14,872      18,446
Total cash payments      18,500          5,600          6,140                  1      54,001      41,126      52,689      66,174 105,208          76,893        108,598 173,026
Cash balance      12,500      15,900      21,460      21,459 567,458 573,132 590,643 615,729 620,033        659,842        675,180 655,869

 

 

 

Cash flow statement – 2nd & 3rd year (quarterly)

 

2nd Year 3rd Year
Cash flow statement Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4
Opening balance          2,025,191          2,097,142          2,758,103          3,748,484          6,155,309          9,335,585        16,016,809        24,320,663
Paid in capital (Owner Equity)                        –                        –                        –                        –                        –                        –                        –                        –
Paid in capital Angel Investor                        –                        –                        –                        –                        –                        –                        –                        –
Bank Loan                        –                        –                        –                        –                        –                        –                        –                        –
Cash sales                        –                        –                        –                        –                        –                        –                        –                        –
Franchise fee              139,500              285,750              443,087              875,779          1,165,754          2,235,481          3,075,662          3,560,464
Total cash receipts          2,164,691          2,382,892          3,201,190          4,624,263          7,321,063        11,571,067        19,092,471        27,881,127
                       –                        –                        –                        –                        –                        –                        –                        –
Cash purchases/payments                        –                        –                        –                        –                        –                        –                        –                        –
Equipment                        –                90,000                        –                90,000                        –                90,000                        –                        –
Rent/profit share for car wash                  7,500                  7,500                  7,500                  7,500                  7,500                  7,500                  7,500                  7,500
Stock / Raw materials                        –                        –                        –                        –                        –                        –                        –                        –
Salaries                45,000                45,000                55,000                60,000                60,000                60,000                60,000                60,000
Electricity & Water                  3,486                  3,486                  3,486                  3,486                  3,486                  3,486                  3,486                  3,486
Consumables                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324
Other                  2,905                  2,905                  2,905                  2,905                  2,905                  2,905                  2,905                  2,905
Taxes and Interest                16,740                34,290                53,170              105,093              139,890              268,258              369,079              427,256
Total cash payments                77,956              185,506              124,387              271,310              216,107              434,474              445,296              503,472
                       –                        –                        –                        –                        –                        –                        –                        –
Cash balance          2,086,734          2,197,386          3,076,803          4,352,953          7,104,957        11,136,593        18,647,176        27,377,655

 


Consolidated Cash flow statement

Cash flow statement 1st year 2nd year 3rd year
Opening balance 0                                                  655,869                                              1,740,826
Paid in capital (Owner Equity)                                                  225,000                                                            –                                                            –
Paid in capital Angel Investor                                                  400,000                                                            –                                                            –
Bank Loan                                                            –                                                            –                                                            –
Cash sales                                                  686,326                                                            –                                                            –
Franchise fee                                                    52,500                                              1,744,116                                        10,037,361
Total cash receipts                                              5,737,163
Cash purchases/payments
Equipment                                                  202,000                                                  180,000                                                    90,000
Rent/profit share for car wash                                                    22,402                                                    30,000                                                    30,000
Stock / Raw materials                                                  204,788                                                            –                                                            –
Salaries                                                  138,000                                                  205,000                                                  240,000
Electricity & Water                                                    20,590                                                    13,946                                                    13,946
Consumables                                                    13,907                                                      9,297                                                      9,297
Other                                                    17,612                                                    11,622                                                    11,622
Taxes and Interest                                                    88,659                                                  209,294                                              1,204,483
Total cash payments                                                  707,957                                                  659,158                                              1,599,348
Cash balance                                                  655,869                                              1,740,826                                            10,178,840

 


Proforma profit and loss – 1st year (monthly)

 

Proforma profit and loss
Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18
Sales Direct sales          6,000          9,000      11,700                –                –      46,800      70,200      91,260 109,512        111,702        113,936 116,215
  Franchise fees                –            5,000          10,000      37,500
Cost of sales          6,300          3,180          3,234                –                –      12,936      19,404      29,203      35,044          35,745          36,460      37,189
Gross margin            -300          5,820          8,466                –                –      33,864      50,796      62,057      74,468          80,958          87,477 116,526
Expenses                          
Salaries                –      18,000      18,000      18,000      18,000          18,000          18,000      18,000
Marketing & Promotions                –                –          1,170          1,755          2,282          2,738            2,793            2,848          2,905
Rent              800              800              800                  1                  1          2,000          3,000          3,000          3,000            3,000            3,000          3,000
Stock raw materials          6,000          3,000          3,000      12,000      18,000      27,378      32,854          33,511          34,181      34,865
Electricity & Water              180              270              351                –                –          1,404          2,106          2,738          3,285            3,351            3,418          3,486
Consumables              300              180              234                –                –              936          1,404          1,825          2,190            2,234            2,279          2,324
Other              500              270              351
Total operating expenses          7,780          4,520          4,736                  1                  1      35,510      44,265      55,223      62,067          62,888          63,726      64,581
Profit before Interest & tax      -8,080          1,300          3,730                -1                -1      -1,646          6,531          6,834      12,401          18,069          23,751      51,946
Interest and Taxes              720          1,080          1,404                –                –          5,616          8,424      10,951      13,141          14,004          14,872      18,446
Net profit      -8,800              220          2,326                -1                -1      -7,262      -1,893      -4,117            -740            4,065            8,878      33,500

 


Proforma profit and loss – 2nd & 3rd year (quarterly)

 

 

2nd Year 3rd Year
Proforma profit and loss Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4
             129,664              129,939              130,214              130,488              130,759              131,034              131,309              131,584
Sales Direct sales                        –                        –                        –                        –                        –                        –                        –                        –
  Franchise fees              139,500              285,750              443,087              875,779          1,165,754          2,235,481          3,075,662          3,560,464
Cost of sales                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324
Gross margin              137,176              283,426              440,763              873,455          1,163,430          2,233,157          3,073,338          3,558,139
Expenses                          –                        –                        –                        –                        –                        –                        –                        –
Salaries                45,000                45,000                55,000                60,000                60,000                60,000                60,000                60,000
Marketing & Promotions                  2,905                  2,905                  2,905                  2,905                  2,905                  2,905                  2,905                  2,905
Rent                  7,500                  7,500                  7,500                  7,500                  7,500                  7,500                  7,500                  7,500
Stock raw materials                        –                        –                        –                        –                        –                        –                        –                        –
Electricity & Water                  3,486                  3,486                  3,486                  3,486                  3,486                  3,486                  3,486                  3,486
Consumables                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324                  2,324
Other                  1,453                  1,453                  1,453                  1,453                  1,453                  1,453                  1,453                  1,453
Total operating expenses                62,669                62,669                72,669                77,669                77,669                77,669                77,669                77,669
                       –                        –                        –                        –                        –                        –                        –                        –
Profit before Interest & tax                74,507              220,757              368,094              795,786          1,085,761          2,155,488          2,995,669          3,480,471
Interest and Taxes                16,740                34,290                53,170              105,093              139,890              268,258              369,079              427,256
Net profit                57,767              186,467              314,923              690,692              945,870          1,887,230          2,626,590          3,053,215

 


Consolidated profit and loss statement

1st year 2nd year 3rd year
Sales Direct sales                                                  686,326                                                            –                                                            –
  Franchise fees                                                    52,500                                              1,744,116                                            10,037,361
Cost of sales                                                  218,694                                                      9,297                                                      9,297
Gross margin                                                  520,131                                              1,734,819                                           10,028,064
Expenses                                                              –                                                            –                                                            –
Salaries                                                  126,000                                                  205,000                                                  240,000
Marketing & Promotions                                                    16,491                                                    11,622                                                    11,622
Rent                                                    22,402                                                    30,000                                                 30,000
Stock raw materials                                                  204,788                                                            –                                                            –
Electricity & Water                                                    20,590                                                    13,946                                                    13,946
Consumables                                                    13,907                                                      9,297                                                      9,297
Other                                                      1,121                                                      5,811                                                     5,811
Total operating expenses                                                  405,298                                                  275,675                                                  310,675
                                                           –                                                            –                                                            –
Profit before Interest & tax                                                  114,834                                              1,459,143                                              9,717,389
Interest and Taxes                                                    88,659                                                 209,294                                              1,204,483
Net profit                                                    26,175                                              1,249,850                                              8,512,906

 

 

 

Appendix VI – Break even

 

 

 


Appendix VII

Year Average 1st Year 2nd year
Number of franchises 5 10 30 30 30 30 30 90 90 90 90 90 90 180 180
Product price 7 6 6 6 6 6 6 6 5 5 6 6 6 7 7 7
No of sales 97 60 60 70 80 80 90 90 90 90 90 90 90 90 90 90
Revenue per day 681 333 333 417 500 500 550 550 417 458 504 555 582 611 642 674
Revenue 20434 10000 10000 12500 15000 15000 16500 16500 12500 13750 15125 16638 17469 18343 19260 20223
Net profit 4087 2000 2000 2500 3000 3000 3300 3300 2500 2750 3025 3328 3494 3669 3852 4045
Profit share 2043 1000 1000 1250 1500 1500 1650 1650 1250 1375 1512.5 1664 1747 1834 1926 2022
Franchise fee/month 438295 5000 10000 37500 45000 45000 49500 49500 112500 123750 136125 149738 157224 165086 346680 364014

 

Year 3rd year
Number of franchises 180 180 180 180 360 360 360 360 360 360 360 360
Product price 7 7 7 8 8 9 8 8 8 8 8 8
No of sales 100 100 100 100 100 100 120 120 120 130 130 140
Revenue per day 708 708 743 780 819 860 903 949 996 1046 1098 1153
Revenue 21234 21234 22296 23411 24581 25810 27101 28456 29879 31372 32941 34588
Net profit 4247 4247 4459 4682 4916 5162 5420 5691 5976 6274 6588 6918
Profit share 2123.413 2123.413 2229.584 2341.063 2458.116 2581.022 2710.073 2845.577 2987.856 3137.249 3294.111 3458.816758
Franchise fee/month 382214.4 382214.4 401325.1 421391.4 884921.9 929168 975626.4 1024408 1075628 1129410 1185880 1245174