Creating a car wash business plan has a lot of elements. One of the most important elements is your financial business assumptions. This is the page where you will present business growth plans from a financial point of view. This is not only important for you in creating believable financial assumptions, but also to investors who may have an interest in your business. There are financial assumption elements that you should never forget to include. Here are some easy tips and guides that could help you put together a believable financial assumption report. You never would have thought it could be as easy as these simple and practical steps.
How to Create Realistic Financial Assumptions as Part of Your Car Wash Business Plan
1. Determine the general business atmosphere in your location, most especially the car wash business industry’s trend
At this point you will need to research your market size, market reach and the attitude of your market towards car wash services and auto detailing services, and pertinent data. It is important for you to know more about how your target market cares for their cars, or perhaps how much budget they can allot for car maintenance and car wash services. Some business owners hire a firm to do the research for them but nothing beats getting the details firsthand. Check out your competitors. How do you feel about the service they provide? You could also consult car wash associations, business and commercial groups, motorists clubs, and other such organizations that can give you valuable insights. You may also ask around, talk to friends, relatives, etc. Oftentimes this can be time consuming, but it can be a very helpful way to build a really good foundation for your business to continue to thrive. This can be critical in estimating car wash revenue. Furthermore, do not forget to keep in tune with the general business atmosphere. Is there an impending economic slowdown? How about global economic situations? What about inflation? Or other particular events in your area? All these can be essential, too.
This is also the part where you should analyze and take stock of the actual details of your services. For example, how many minutes does it take one car from the entrance bay until it exits your car wash, after a thorough cleaning? What was the actual total cost of the service? How much was the net cost? Investors will gauge how knowledgeable you are with the ins and outs of your own business by how extensive you have been in undertaking this step. The more detailed and extensive this research was accomplished, the more realistic your projections and assumptions will be.
2. Be familiar with your spreadsheets
The nitty gritty details come in at this stage. First you need to work on your income statement on a monthly basis for the next 2-3 years for which you are preparing the assumptions for. Use factual values and updated information as much as possible. Do not increase the revenue figures just to impress your investors with the high profit projection values. Remember that in the end this value may no longer be realistic. Include actual volume data based on factual research per month. This computation should include specific months with projected higher sales than the rest.
Also, do not underestimate details. Include the depreciation of your car wash equipment and your inventory of supplies. If what you have is a startup car wash business, it would naturally have higher costs than expected. Make sure that loans to be paid out or ways on how to get loans are included in the balance sheets.
3. Forecast your revenues and expenses with an open mind
It is crucial that you utilize realistic projections. This is where your output from Steps 1 and 2 could be put to good use. It is best to establish short-term and medium term projections. For instance, you can have a 1-year projection broken down by month. You can also have a 3-year or a 5-year projection divided into quarters or semi annual phases. When formulating your car wash business forecast, show projected increases not just in the revenues, but also in the operational costs. An investor who can see a probable increase in the prices of the services offered but does not see an increase in the wages, salaries, permits, licenses, rental and maintenance of equipment and facilities may sense some doubt about your projections in your car wash business. If you are aiming to expand and add more carwash bays and services, then your financial plan should not only include expenses for the expansion but additional labor costs and loss during time of renovation.
4. Remember vital key factors when making projections
Your business financial assumption should be very specific to your type of car wash business, business location and to the profile of clients you cater to. Do not assume that when a certain similar business in another area has projected to have this much profit in a few months, your own business would definitely reap the same figures.
At the end of your report, your values should be comparable with those of publicly traded companies in the car wash industry. Of course, these may not always come up with exactly the same results, but you should be able to explain the reason for such differences. Lastly, have an employee write down monthly expenses incurred by your team. There may be some details you could have missed out along the process. Marketing expenses, for instance, is most often taken out of the equation.
Working on realistic financial assumptions as part of your car wash business plan is really a daunting task. You need to take time and exert a lot of effort to make it as thorough and complete as would be necessary. Some would opt to seek the help of professionals. In the end, nobody can predict the future; we don’t go for accuracy in our numbers. Rather, we aim for the most realistic and credible figures possible.