Do you want to start auto detailing business?
Do you want to start an auto detailing business? Well, auto detailing is the thing which keeps the valuable cars of vehicle owners in shape so the prospects of earning huge amounts of profits in this business are really high. But as with any other business, this business also requires top-notch planning for its startup as well as for its successful operation.
In case you aren’t sure how to start a mobile auto detailing business, the first thing you should do is develop a comprehensive business plan covering all aspects. The business plan not only lays the primary ground for establishing your company policies but it also helps you in startup. For helping you write an effective business plan, we are providing here the business plan of an auto detailing startup named ‘ProStar Auto Detailers’.
2.1 The Business
ProStar Auto Detailers will be started in a leased location adjacent to 6-Sigma Carwash in the main commercial district of San Jose, United States. We will be based at a ten minutes’ drive from the residential zone, that’s why our location is nearly ideal for starting a auto detailing business.
ProStar Auto Detailers will be owned and operated by Samuel King, who has been associated with automobile industry for more than 9 years. Samuel will hire a team of industry professionals for providing quality services to the customers.
The company will provide in-station auto detailing services at the facility while a mobile minibus will provide out-station auto detailing services to the customers. We plan to serve all sorts of customers, ranging from individual car owners to automobile dealers, located in the vicinity of our workshop.
2.4 Target of the Company
Our main business targets are summarized in the following column chart.
3.1 Company Owner
ProStar Auto Detailers will be owned and operated by Samuel King, who has been associated with this industry for more than 9 years. After graduating from High School, Samuel started working in Realtek Carwash & Auto Detailers. Within next 5 years, he was promoted to Manager Operations of the company’s Manhattan branch. He then served as General Manager of Star Carwash for next 5 years after which he finally decided to start his own auto detailing business startup.
3.2 Why the Business is being started
Samuel aims to start auto detailing business for making profits in this industry as well as for introducing innovative detailing solutions originated from his creative mind. Being associated with this industry for around a decade, Samuel knows how to run a successful auto detailing business.
3.3 How the Business will be started
ProStar Auto Detailers will be started in a leased location adjacent to 6-Sigma Carwash in the main commercial district of San Jose, United States. The company will provide in-station services at the facility while for providing out-station services, a mobile minibus will be procured. The location was used as a warehouse in past and a contractor will be hired for converting the facility into an auto detailing workshop. In addition to leasing the facility, the company will acquire an operating license from the state. The inventory needed for startup includes furniture for office and waiting area, cash registers, computer systems, carpet extractors, air/vacuum fresheners, steam cleaners and associated detailing equipment and tools. The major startup costs are summarized in the column chart below.
The detailed startup requirements and expenses are given in the table below.
|Research and Development||$42,750|
|TOTAL START-UP EXPENSES||$247,500|
|Other Current Assets||$222,500|
|Start-up Expenses to Fund||$121,875|
|Start-up Assets to Fund||$195,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$118,750|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$118,750|
|Cash Balance on Starting Date||$121,875|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$695,000|
|Loss at Start-up (Start-up Expenses)||$313,125|
|TOTAL CAPITAL AND LIABILITIES||$221,875|
Services for customers
Before starting a mobile auto detailing business, you must take many things into consideration such as you must consider what types of detailing services will you be providing to your customers. Deciding your services is extremely important since it helps you plan other components of your business so make sure to consider it before you think about how to start an auto detailing business. ProStar Auto Detailers will mainly provide following services to its customers:
- Exterior detailing: Exterior detailing will be done by providing a multi-step, scratch free, manual hand washes for giving an exquisite look to the valuable vehicles of our customers.
- Interior detailing: Interior detailing will be done by cleaning all hard surfaces; seats, dashboard, center console, instrument cluster, door panels, etc. by wiping them down to remove topical dust. After that debris will be removed from carpets by blowing out & vacuuming.
- Waxing & paint correction: Paint correction will be done by restoring the paint back to its true clarity by removing visible defects followed by waxing to protect and maintain the car’s paint.
- Ceramic coating: Ceramic coating will be done by coating the vehicles with a fine layer of quartz for protecting their surface and giving them a shiny look.
Marketing Analysis of auto detailing business
The most important component of an effective auto detailing business plan is its accurate marketing analysis. If you are starting on a smaller scale, you can do marketing analysis yourself by taking help from this auto detailing business plan sample or other auto detailing business plans available online. On the other hand, if you are starting a auto detailing business on a larger scale, it is always best to seek the counsel of marketing experts.
The success or failure of a business totally depends upon its marketing strategy which can only be developed on the basis of accurate marketing analysis. Therefore, it must be considered before you think about how to start auto detailing business. Samuel acquired the services of marketing experts to carry out the marketing analysis for his mobile auto detailing business plan.
5.1 Market & Industry Trends
Before you start an auto detailing business, you must analyze whether the market is feasible for startups or not. For analyzing the market trends, you can also take help from this auto detailing business plan template. According to IBISWorld, the car wash and auto detailing industry generate $11 billion in revenue every year in the United States. As of 2018, there are more than 65,000 businesses in this industry which are responsible for employing more than 212,000 people in the United States. The number of car wash and auto detailing companies has been increasing over the past years while the industry is growing at an estimated rate of 3.1%. Considering the number of established businesses in this industry, the environment has become extremely competitive especially for the startups. Starting an auto detailing business is easy but sustaining it and making it profitable is something which can only be achieved by impeccable planning and effective marketing.
5.2 Marketing Segmentation
Our primary target market is the residential community living in San Jose. Nearly all people based in the area have their own vehicles either new or leased. Our secondary market will be the car dealerships located in the vicinity. Our experts have identified the following type of target audience which can become our future consumers:
The detailed marketing segmentation of our target audience is as follows:
5.2.1 New car owners:
This group comprises of customers who have recently bought a new car. These customers are very conscious about their cars and want them to look new as long as possible. Our detailing services will provide the perfect solution to them. In addition to exterior and interior detailing, these customers are also expected to have their vehicles ceramic coated by us for preserving their new look.
5.2.2 Sports car owners:
Many young and middle-aged men in the neighborhood own expensive sports cars. These people will also need our services for maintaining the exquisite looks of their expensive vehicles.
5.2.3 Luxury car owners:
Luxury car owners have totally different requirements and they can easily spend a lot of cash for maintaining their high-end expensive cars and keeping them in the best possible shape. These customers prefer quality to cost that’s why we will offer premium packages for them.
5.2.4 Local businesses:
Since we will be located in the main commercial district of the city, we will be surrounded by several companies and local businesses, most of which have fleets of small vans and cars. Although these businesses own a lot of cars, their contribution to our revenue and sales will be negligible since they seldom require car detailing services.
There are 5 car dealerships within 6 miles of our location. These car dealers sell old as well as new cars and need their cars to be in the best possible state. That’s why they will regularly require our auto detailing services.
The detailed market analysis of our potential customers is given in the following table:
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
|New car owners||35%||22,334||32,344||43,665||52,544||66,432||13.43%|
|Sports car owners||15%||11,433||13,344||16,553||18,745||20,545||10.00%|
|Luxury car owners||18%||12,867||14,433||15,999||17,565||19,131||15.32%|
5.3 Packages Pricing
Considering the competitive environment, we have priced all our services in the similar ranges as of our competitors except for the interior detailing. While many of our competitors offer interior detailing services for about $100 on average, we have priced this service in relatively lower ranges. This is done to achieve a competitive advantage since interior detailing is the most frequently availed detailing service. Our services are priced as follows:
- Exterior detailing starting at $50
- Interior detailing starting at $80
- Waxing & paint correction starting at $200
- Ceramic coating starting at $400
The pricing varies with the type of car and will generally be 30% more for SUVs and trucks.
5.4 Target of the Company
Our main business targets to be achieved as milestones over the course of next three years are as follows:
- To become the best auto detailing service in San Jose within next five years of launch by providing high-quality services
- To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
- To balance the initial cost of the startup with earned profits by the end of the second year
After identifying the market demand, market trends, and the potential customers of the startup, the next step is to define an effective strategy for attracting those customers. Like marketing analysis, sales strategy is also an important component of a mobile auto detailing business startup and must be properly planned before you think about to start your own auto detailing business.
6.1 Competitive Analysis
As mentioned earlier, there are more than 65,000 similar businesses in the United States and for surviving in such intensely competitive environment, one needs to have certain competitive advantages. Our biggest competitive advantage is our location which is nearly ideal to start mobile auto detailing business. We are located in the main commercial district but the residential zone is just at a ten minutes’ drive from us. Secondly, we have priced our interior detailing service in relatively lower ranges as compared to our competitors so as to promote our sales and build trust among customers. Another aspect which will distinguish us from other similar businesses will be our unparalleled and exceptional customer service. At our company, all esteemed customers and their valuable vehicles will be dealt with utmost respect and care.
6.2 Sales Strategy
After carrying out a detailed analysis, our experts came up with the following brilliant ideas to advertise and sell our services.
- We will advertise our company on social media.
- We will make a company webpage by which our customers can make a reservation with us.
- We will offer various discounts on special occasions to attract new customers.
- We will initially offer 20% discount on all services for first three months.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
|Unit Sales||Year 1||Year 2||Year 3|
|Waxing & paint correction||539,320||770230||1,002,310|
|TOTAL UNIT SALES||3,494,170||4,588,370||4,807,410|
|Unit Prices||Year 1||Year 2||Year 3|
|Waxing & paint correction||$700.00||$800.00||$900.00|
|Waxing & paint correction||$50,110||$71,600||$93,000|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Waxing & paint correction||$0.30||$0.35||$0.40|
|Direct Cost of Sales|
|Waxing & paint correction||$17,900||$35,000||$52,100|
|Subtotal Direct Cost of Sales||$1,294,100||$1,699,400||$2,104,700|
Personnel plan is also an important component of an auto detailing business plan since it gives you an estimate of the staff required for your startup as well as the costs incurred on their salaries. So, make sure to duly consider it before thinking about how to start a auto detailing business. The personnel plan of ProStar Auto Detailers is as follows.
7.1 Company Staff
Samuel will act as the General Manager of the company and will initially hire following people:
- 1 Accountant for maintaining financial and other records
- 2 Sales Executives responsible for marketing and discovering new ventures
- 10 Workers for manually washing the cars and providing detailing services
- 3 Technicians for operating the equipment and machines
- 1 Driver for driving the mobile van to customers
- 1 Technical Assistant for managing the company’s official website and social media pages
- 1 Customer Representative for interacting with customers
To ensure the best quality service, all employees will be selected through vigorous testing and will be trained for a month before starting their jobs. Since the traffic for car detailing service varies month to month so part-time workers will also be hired to facilitate the company staff in the busy summer months.
7.2 Average Salary of Employees
The following table shows the forecasted data about the salaries of the employees for the next three years:
|Year 1||Year 2||Year 3|
The last component of auto detailing business plan is an in-depth financial plan. The financial plan crafts a detailed map of all the expenses needed for the startup and how these expenses will be met by the earned profits. It is recommended that you hire a financial expert for guiding you through all financial aspects needed to be considered for starting an auto detailing business.
The company will be financed by Samuel himself and he will control the direction of business to make sure that it is expanding at the forecasted rate. As for the auto detailing business start up, no equity funding or outside loan will be required. With the help of financial experts, Samuel has developed the following financial plan for his auto detailing start up business, which outlines the financial development of ProStar Auto Detailers over the next three years.
8.1 Important Assumptions
The financial projections of the company are forecasted on the basis of following assumptions. These assumptions are quite conservative and are expected to show deviation but to a limited level such that the company’s major financial strategy will not be affected.
|Year 1||Year 2||Year 3|
|Current Interest Rate||10.00%||11.00%||12.00%|
|Long-term Interest Rate||10.00%||10.00%||10.00%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5530|
|Monthly Revenue Break-even||$159,740|
|Average Per-Unit Revenue||$260.87|
|Average Per-Unit Variable Cost||$0.89|
|Estimated Monthly Fixed Cost||$196,410|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$15,100||$19,153||$23,206|
|TOTAL COST OF SALES||$15,100||$19,153||$23,206|
|Gross Margin %||94.98%||94.72%||94.46%|
|Sales and Marketing and Other Expenses||$1,850||$2,000||$2,150|
|Total Operating Expenses||$188,766||$220,744||$252,722|
|Profit Before Interest and Taxes||$105,205||$146,040||$186,875|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$7,023||$8,610||$9,297|
|SUBTOTAL CASH FROM OPERATIONS||$47,143||$53,651||$59,359|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$47,143||$53,651||$55,359|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$35,296||$39,549||$43,582|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$35,296||$35,489||$43,882|
|Net Cash Flow||$11,551||$13,167||$15,683|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$201,259||$237,468||$273,677|
|TOTAL LONG-TERM ASSETS||$980||$610||$240|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$9,482||$10,792||$12,102|
|TOTAL LIABILITIES AND CAPITAL||$198,839||$232,978||$267,117|
8.6 Business Ratios
|Year 1||Year 2||Year 3||Industry Profile|
|Percent of Total Assets|
|Other Current Assets||1.75%||2.02%||2.29%||27.40%|
|Total Current Assets||138.53%||150.99%||163.45%||54.60%|
|Percent of Sales|
|Selling, General & Administrative Expenses||74.29%||71.83%||69.37%||65.20%|
|Profit Before Interest and Taxes||26.47%||29.30%||32.13%||2.86%|
|Total Debt to Total Assets||2.68%||1.04%||0.76%||67.10%|
|Pre-tax Return on Net Worth||66.83%||71.26%||75.69%||4.40%|
|Pre-tax Return on Assets||64.88%||69.75%||74.62%||9.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||19.20%||21.16%||23.12%||N.A.|
|Return on Equity||47.79%||50.53%||53.27%||N.A.|
|Accounts Receivable Turnover||4.56||4.56||4.56||N.A.|
|Accounts Payable Turnover||14.17||14.67||15.17||N.A.|
|Total Asset Turnover||1.84||1.55||1.26||N.A.|
|Debt to Net Worth||0||-0.02||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$120,943||$140,664||$160,385||N.A.|
|Assets to Sales||0.45||0.48||0.51||N.A.|
|Current Debt/Total Assets||4%||3%||2%||N.A.|
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