to know if your proposed car wash business will cover the note and all the expenses including your salary, you need to create three years of cash flow projections. You need to start with the daily traffic count and use a multiplier for your hopeful average of cars per day. In my business plan about 20 years ago I plugged in 3/10 of 1% of the average daily traffic count in front of my site. I struggled a lot at the beginning because I came nowhere near that number in actual cars washed. There were several factors involved. My speed limit was a little high out in front of my site even though I thought my egress was good. I was running a machine that although it was affordable proved to be problematic right from the beginning and I found myself doing a lot of repairs and re-engineering and honestly I was in way over my head.
Many of the expense that go on your cash flow projections can be obtained but it takes some work. You have to find out what your taxes will be, what your insurance policy is going to cost, you have to get an idea of chemical cost based on your sales projections, you have to factor in things like licenses and permits. Then you have to factor in for things like cost overruns on your construction which in my plan I used 20% and that really helped when I reloaded my automatic wash a few years ago.
The other thing that is important is that when you create your cash flow projections you do a worst case scenario, a best case scenario, and Hopeful average.
In my mind, this is the right approach for almost any business. You have to start with a business plan. Any other way is asking for trouble.
Agree completely! A guy I work with is already in the process of installing an almost identical site that I am looking at building. He has a 16,000 cpd count and I have a 17,000 cpd count. He has a 5 year business plan projected and it shows great returns even after a salary is paid.
Some of my concerns are that we are "trusting" what the equipment vendor is telling us and using their numbers. The daily traffic we were told to use (and google says the same) is .75% and you are talking about .33%. That's a huge difference. The "salesman" owns his own wash and is building a 2nd now. He has shared some of his numbers and has offered to share his books and tax returns for verification, but I wanted to do some research on my own first before jumping in bed with anyone.
The 2 lane highway out front has 45 mph speed limit and has a stop light that is a 2-300 yards down the road so the traffic is a lot of stop and go. The light turns into a very high end neighborhood.
We're currently in the middle of helping to manage a $500M manufacturing expansion so I understand quite a bit about the process on a construction site, the plans, dealing with architects and trades, and those types of things. I have owned businesses in the past and built business plans for loans before, been a while, but done it. My buddy has also already gotten approval from the bank, and they are telling him he should have no issues and his numbers are actually worse than what the bank has estimated. weird.
I definitely appreciate everyone's comments and the feedback. What a great community this forum has!
businessplantemplate.growthink.com
