Todays working individuals always seem to be lacking enough time to run miscellaneous errands. In an attempt to lure in busy executives and other working people, as well as capitalize on consumer needs for convenience and environmental awareness, the MP Company is starting an eco-friendly mobile car wash business that will be simply named, “MP’s Eco-Mobile Car Wash.”
As the national economy mends, it is forecasted that between 2012 and 2017, industry revenue is expected to increase at an average annual rate of 2.7% to an estimated $7.1 billion. This is largely due to the availability of consumer disposable income at the end of the five year period. In addition, the environmental awareness of water usage calls for an increase in professional car washes since less than a third of the water is used than residential car washing (IBIS World, 2012).
MP will target the business and residential communities within a 3 to 5 mile radius of its car wash station in San Bernardino City, California. The targeted market segments are those households earning higher incomes who tend to have more disposable income to spend on more pricey auto detailing; apartment dwellers with no space to wash their cars; new owners of used or new cars; and the environmentally conscious consumer concerned about the impact of car washing on the environment. Results from our marketing survey reveal an eco-friendly mobile car wash service as a viable business; with almost 40% revealing that a mobile car wash service would be useful, and that 50% are sensible about the impact of car washing on the environment.
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Since there is no sales force at MP, the owners will promote from the station. Therefore, as a start-up, the marketing strategy is to promote increased awareness of the business through low cost methods in its first year such as hosting a grand opening event with prize giveaways. MP will also use monthly direct mailing of flyers and distribution of its posters at local businesses. The main form of advertising will be our company logo on the side of our mobile truck, complimentary from Alberto’s son, who happens to be an auto graphic designer. It will also advertise in the free and local Pennysaver weekly publication. It will use its own website, emails, and text messaging for quicker communication of specials, surveys, and other company information; and free social media like Yelp and Facebook for customer feedback.
As revenues for the company increases, MP would like to stay on par with the market industry of investing 1.7%, and invest in more advertising with television, radio, and the local newspaper
MP’s Eco-Mobile Car Wash targeted location is in a busy area of San Bernardino City, and its mobile unit will bring its car wash service to the customer in the surrounding business and residential communities. MP will position itself as a progressive leader in the car wash industry by applying eco-friendly methods and products.
The commercial property requires ample size to accommodate the car wash, vehicle staging areas, vehicle travel, vacuum islands and any other car care service desired. The site will also provide maximum visibility, easy access to the equipment and customer safety. Easy ingress and egress are essential. Spec include: Lot: 10,000 sq.ft , 2 wash bays: Spaces: 2 spaces per stall plus 2 space queuing area per stall, 1 space (1 space for each 250 sq. ft., staging spaces for mobile car wash unit, office/reception/waiting area building: 4,000 sq-ft
MP Mobile Car Wash services will consist of: a pickup truck and a trailer combination including a 150-gallon water tank, portable generator, and a storage chest stocked with the necessary cleaning products.
As our business grows, additional trailers with larger water tank capacities may be added to meet the future demand of providing fleet service for: organizations like police departments and other government vehicles; new-and-used automobile dealerships; automobile auctions; and other large corporate vehicle fleets
In regards to the technology plan, MP Mobile Car Wash will contribute to water pollution reduction and water conservation. According to Western Carwash Association, MP Mobile Car Wash will re-use an average of no more than 40 gallons of recycled water per car. The waste water containing pavement pollutants is cleaned through filtration or treatment systems prior to returning to the environment or it is used again. (Western Carwash Association). The usage of biodegradable solutions will contribute to reduce water pollution and protect our streams, rivers and water tables.
In case of unfortunate discontinuation of our business, we may consider: 1) seek an acquisition, 2) liquidate our assets. We may dissolve our business entity, as necessary
Even faced with recession, the Car Wash industry finds itself with a 4% growth annually. We are projecting an overall 2% sale increase on a monthly base. The constant trend of individuals and companies to an Eco – Friendly approach will not only help us gain customers but also aids in having new customers choose more product which in turn will cause an increase our sales forecast.
Mom & Pop (MP) Eco-Mobile Car Wash is seeking a $300,000 small business loan at the rate of 1.74 percent with the payment schedule to include interest and principle payments and repaid within 10 years. Collateral for this loan can include $100,000 from Sandra Javier and the equipment that is valued at $42,679 for this loan guarantee. In addition there is another $50,000 available for collateral from Mr Yun Chung if it becomes necessary. The startup costs include payroll, marketing, expenses, and an initial deficiency in sales for the first year.
Based on extensive research through industry analysis, reasonable marketing costs, efficient operations, financial opportunities, and consumer surveys, we will learn that investing in a car wash offering convenient services to consumers is a viable investment.
“At MP’s Eco-Mobile Car Wash, we aim to provide the most reliable, convenient and eco-friendly service for the best value. We will accomplish this by building our reputation, and taking advantage of the opportunity for new and improved services based on consumer feedback, while keeping on trend with the industry, and ecological needs of the community and environment.”
MP’s Eco-Mobile Car Wash
The Mom & Pop (MP) Company would like to present its business plan to the Small Business Administration (SBA), for its eco-friendly car wash station and mobile car wash service. The name of the start-up business will be simply MP’s Eco-Mobile Car Wash.
The company is proposing a business that will appeal to busy professionals, who never seem to have enough time, to wash their cars. MP’s Eco-Mobile Car Wash will provide this reliable and convenient service by catering its car wash service to the customer. MP will wash and detail cars on regularly scheduled visits to companies and business parks. Scheduled residential appointments will also be available.
MP’s Eco-Mobile Car Wash will use eco-friendly products that are biodegradable, where only small amounts are needed. MP will also recycle its rinse water as a sustainable method in providing its own water source for the station and mobile service. MP hopes that these eco-friendly features will match today’s growing trend of businesses that are going green; and to appeal to the environmentally conscious consumer.
Hours of operation for car wash station: M-F 8am to 7pm, Saturday and Sundays 8am to 5pm
Mobile car wash service by appointment.
The MP’s Eco-Mobile Car Wash is a Limited Liability Corporation (LLC). The owners are Sandra Javier, Alberto Cotton, Cynthia Escartin, and Yun Chung. Sandra Javier is the Chief Executive Officer of the company. She will oversee all branches of management and set a vision and strategies for MP. Cynthia Escartin is our Human Resources Manager and Manager of Sales. She will bring to MP her invaluable expertise working as Vice President for another corporation. Yun Chung is our Chief Operations Officer in charge of daily operations. Our Chief Finance Officer is Alberto Cotton, and will greatly assist management with all fiscal matters. All together, the four owners have almost 50 years of management experience that will ultimately guide MP to success in its first years and beyond.
MP’s Eco-Mobile Car Wash is located near the busy cross streets of Waterman Avenue, and East 5th Street, in San Bernardino City, California. The main car wash station is situated here in the hub of San Bernardino County, which leads to four main interstate highways. Its mobile car wash service will be dispatched from this main station.
The warm climate and sometimes dry and dusty conditions make this an ideal location for MP. There is also evidence that opportunities for growth in this area may positively impact the company and increase its demand for car wash services.
Prior to 2012, revenue for the car wash and auto detailing industry had decreased at an average annual rate of 1.4%, at an estimated $6.2 billion. The nation’s economic recession impacted consumer likelihood to spend discretionary income on non essential services. Thus industry operators were adversely impacted. In addition, to cope with the rising costs of gas, consumers changed driving habits to include carpooling and use of public transportation. These trends caused industry revenue to contract 5.1% and 7.7% in 2008 and 2009 respectively. More recently, due to the modest rise in per capita disposable income, demand for car washing has begun to rise. In 2012, industry revenue is expected by rise 2.2% ( IBIS World, 2012 ).
Despite the fact that profit margins for an average car wash company fell from 4.4% in 2007 to 3.9% in 2012 with a decline in car washing companies at an average annual rate of 1.1%, the industry has begun to invent ways to adapt to the economic climate. For instance, more companies are adding ancillary, value-added services such as: interior cleaning, waxing and rim shining. In addition, more car washing locations are also adapting to technology in offering Wi-Fi, TV and coffee lounges in an effort to secure a consistent client base.
As the national economy mends, it is forecasted that between 2012 and 2017, industry revenue is expected to increase at an average annual rate of 2.7% to an estimated $7.1 billion. This is largely due to the availability of consumer disposable income at the end of the five year period. In addition, the environmental awareness of water usage calls for an increase in professional car washes since less than a third of the water is used than residential car washing.
Prime establishment for a car wash is correlated with population levels and weather patterns. Regions with a warmer climate and lower rainfall typically have a higher usage of car washing services. In addition, the number of vehicles in particular regions also determines the industry’s distribution
It is reported that the West has the third highest share of industry establishments and second largest revenue generator for the industry. About 17.5% of the nation’s car wash facilities are located in the West and account for 19.2% of industry, with California dominating industry. California alone is responsible for 14.4% of industry revenue due to their warm climate and low precipitation, 2 key factors in driving growth. An added factor benefitting California car wash industry is the fact that more city-wide regulations prohibit households from washing their cars at home ( IBIS World, 2012 )
In any industry, trends can be external factors that take place in the business’ environment that can positively or negatively affect it. The trends that MP Mobile Car Wash has noticed since its short lived inception is that other mobile car wash competitors approach any business that has vehicles in the parking lots. These competitors do not seem to offer any variety in services other than a basic wash and vacuuming to the vehicle owner
As far as trends go, MP Mobile Car Wash can be considered a trend-setter in vehicle care as they have brainstormed for ideas to capture the most business in terms of most cars washed per day, with the least amount of travel time possible. MP has decided to strategize in partnering with large business buildings, business parks, and business owners in an attempt to maximize the number of vehicles serviced at each site.
Additional factors or trends affecting MPs business goals is the tendency for many businesses to operate for long hours, keeping the employees from much wanted and needed free time for personal business and leisure. This visible trend in today’s workforce compelled MP Mobile Car Wash to emphasize its convenience, availability, and reasonable prices to all potential customers
As the economy bounces back, car sales will rise thereby increasing the number of registered vehicles, thus increasing the customer market for the industry. Over the five years to 2017, vehicles registrations are forecast to increase at an annual rate of 1.5% ( after the slow 0.5% annualized growth in the previous five years ). In addition, used car sales are expected to increase
US unemployment is projected to decline slowly over the next five years, with great strides being made in 2014 when it is forecasted to decline to 7.7% Falling unemployment will boost per capita disposable income, which is expected to grow at an annualized rate of 2.3% over the next five years. As incomes rise, consumers will be more likely to spend on services such as car washes and auto detailing. Between 2012 and 2013, industry revenue is forecast to rise 3.6%
Market share concentration for the industry is low. The top 4 companies will generate an estimated 6.5% of industry revenue in 2012, which is characterized by small scale operators, with the majority of companies operating locally with just one location. Though the industry is fragmented, market share concentration rose in the past five years. In 2007, 6.3% of industry revenue was generated by the top four companies
Market share concentration has been on the rise due to prominent industry player acquisitions to increase its client base. Specifically, Mister Car Wash showed substantial growth in large part due to acquisitions. It acquired no less than 6 regional operators over the five years to 2012, causing it to become the second largest industry player. The largest company in the industry, Wash Depot Holdings, acquired four locations from Mace Security International in 2008
Conversely, the industry has a high degree of competition due to a large number of companies with little market power, who compete on price and offer discounts through coupons. In addition, many car wash companies have wash cards to encourage repeat business
The industry also faces substantial competition from other industries that also provide car wash services such as gas stations, which also compete on price and convenience
Governmental Influences / Regulations Review
Industry operators must adhere to the EPA’s ( Environmental Protection Agency ) Clean Water Act of 1977 whereby industrial, municipal and other facilities need to obtain a permit to discharge pollutants into navigable waters. The industry is also subject to federal and state laws and regulations with respect to the offer, sale and termination of franchises and regulation of franchisor/franchisee relationship. Documentation of such is but a small cost on franchise operators. In addition, there are federal state and local environmental laws and regulations involving transportation, storage, presence, use disposal, and handling of hazardous materials and waste and underground fuel storage tanks. The cost of compliance is low for the industry, relative to the potentially high fines and penalties for non-compliance.
The Mom & Pop (MP) Eco-Mobile Car Wash is an eco-friendly car wash station and mobile car wash service. The car wash station will be located in a busy area of San Bernardino City, and will be open with later hours for convenience. Its mobile unit will schedule appointments to bring its car wash service to the customer in the surrounding business and residential communities. MP would like to position itself as a progressive leader in the car wash industry by applying eco-friendly methods and products. In doing so, our plan is to gain a reputation as an independent, sustainable, and environmentally responsible company.
TARGET MARKET & SEGMENTATION
The main target market area is within a 3 to 5 mile radius from MPs main car wash station and is comprised mostly of local businesses and residents. More specifically, MP will target the busy working professionals in this area who never seem to find the time to have their cars washed, due to long work hours or tight schedules, by providing car wash services at the business locations of customers. The car wash station will also be open later for these professionals that finish work before 7pm.
Market segments are the diverse mix of geographic and socio-economic factors that group the population by income and behavioral preferences. San Bernardino City is located in San Bernardino County, geographically the largest county in the United States. The city is part of a growing metropolis, consisting of residential communities, and established and up and coming businesses. The population of San Bernardino City grew 1.5% from 2010 to 2011; and population growth for the greater San Bernardino County is expected to average 1.6% from 2011 to 2016.
Household Incomes. MP would like to capture the households sector, which at 76.3% is the largest market segment of the car wash industry (IBIS, 2012). Statistics for the target area show a varied range of household incomes. The 2011 median household income for San Bernardino City was $35,118, one of the lowest in the County. However, 13% earn between $50,000 and $75000 and 9.1% earned between $75k and $100,000. Surrounding cities within the target market area, have higher median household incomes in Highland ($51,950) and in Grand Terrace at $67,598 (U.S. Census Bureau). Those households with higher incomes tend to have more disposable income to purchase car wash services that are more costly and generate more revenue.
Appartment Dwellers. MP intends to market to those customers who live in multi-unit structures, where there may be often limited space for washing their own cars. Multi-unit structures account for about 30% of the housing types in San Bernardino City from 2006 – 2010(U.S. Census Bureau).
Buying Habits of Customers. It is projected that as the economy improves and with more disposable incomes, customers are more likely to purchase new or used cars, which should increase the demand for car wash services. The National Automotive Dealers Association has also reported that vehicle usage increased to 248.4 million in 2009 (IBIS, 2012). Currently, there are up to three cars available for each household in the state of California (U.S. Census Bureau).
The Environmentally Conscious Consumer . There is a growing awareness of the environment and an increasing trend for companies to go green. MP will target those customers based on their knowledge of, or attitude toward, using a professional car wash and its environmental impact.
VALUE PROPOSITION AND COMPETITIVE EDGE
Our primary research reveals there is a viable use for an eco-friendly car wash station with a mobile car wash service. 35% of the samplers from our online survey find a mobile car wash service to be useful if it were available to them; and almost 50% essentially care about the impact that car washing has on the environment. Industry reports identify access to efficient techniques, and the ability to accommodate environmental requirements, as key factors to success in the car wash business (IBIS World, 2012).
See Appendix A for results of our online survey.
Most car wash services in San Bernardino are either a stand-alone car wash station or a mobile car wash and detailing service. MP has the advantage of having two features: a car wash station and a mobile car wash service. This provides a unique service and the utmost convenience for busy professionals and residents. MP also has the advantage of starting early to establish itself in the growth and development of the Inland Empire Region. This growing metropolitan area, which includes the San Bernadino City and County, is attracting new businesses because of the large availability of low cost land. In 2009, commercial and industrial real estate space was 30% to 50% less expensive in the Inland Empire, than in the coastal counties of Los Angeles and Orange County. Rental rates for commercial and industrial space in San Bernardino were also lower when compared to the coastal regions (Board of Directors County of San Bernardino, 2010). MP is also located in an ideal location as San Bernardino is a gateway to 4 highways leading to other major counties like Los Angeles and Las Vegas.
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MP is a start-up company and will have to build its business with few limited resources. Most of the car wash businesses in the target market area have been established for several years and don’t have to do much advertising. Since it is necessary to advertise for a period in launching its business, MP will have to carefully plan to target the higher income households in surrounding cities, which may increase marketing costs.
Environmental opportunities. The area’s warm weather and low precipitation is an ideal setting for a car wash station and services. There are increasing regulations on household water use and initiatives to conserve water usage from drought conditions. The ability to reuse rinse water will allow us to be more sustainable and independent by reducing water usage and sewer costs. By using our own tanks filled with this recycled rinse water, we are even more independent in our mobile service because we don’t have to rely on other water sources. We will also gain the reputation as an environmentally responsible company.
Growth opportunities. Currently a new Amazon fulfillment center is being built with the projected hiring of 1,000 employees. Job opportunities in transportation and warehousing are expected to rise and influence the growth of other jobs in wholesale trade. Employment in the San Bernardino county is expected to grow at an average 3.4% from 2011 to 2016 (San Bernardino County Economic Forecast). This employment opportunity will increase traffic in the area and impact MP’s business.
New entrants to the market are a huge threat, since the opportunities are great for acquiring land in this area. Larger stand-alone car washes may add a mobile service. Large mobile services like Palm Auto Detail(PAD), may acquire a car wash station. PAD appears to be the largest competitor in the mobile car wash sector and already has an enterprise to sell equipment to those who would like to start a mobile car wash business.
Indirect competitors may also detract from using our professional car wash business. Convenience store/gas station combos may add a car wash station for added convenience. Full service gas stations will wipe windows clean as a quick fix for touching up cars. Local retailers like Walmart sell eco-friendly car wash kits which appeal to do-it-yourself type customers.
MP has arrived at a pricing system that is comparable to the car wash stations and mobile car wash services available in the target area. Using our local competitors as guides, we have devised a pricing strategy for several wash packages. The various wash packages and their prices were determined to give the best value for the on-the-go customer.
On occasion, we will offer discounts on a selection of these packages at $2 off from the standard price.
MP’s Main Car Wash Station:
At MPs car wash station, we will offer prices for package washes:
$12 for a basic exterior car wash and dry, clear coat, and tire dressing, air freshener,
$15 for an advanced exterior car wash and dry, clear coat, chassis bath, exterior dressing, and air freshener
$21 for an ultra exterior wash and dry, clear coat, chassis bath, complete exterior dressing, and air freshener.
*To promote repeat business, customers will receive a free basic car wash after using our car wash 10 times.
Vacuuming interior $4
Vacuuming and shampooing interior incl. mats $10
Professional Services (by appointment only):
Paint Sealant $100
Rust inhibitor $100
MP’s Eco-Mobile Car Wash:
MP will offer package deals for a minimum of 8 customers:
$20 for exterior car wash & dry, tire dressing
$25 for exterior car wash & dry, tire dressing, and vacuuming, air freshener
And $35 for exterior car wash & dry, tire dressing, vacuuming, interior detailing (carpet & upholstery shampoo), air freshening
Discount on packages for purchase of 10 of first package( $2 off $20 price package = $18)
SALES & MARKETING STRATEGY
The advantage of having both a car wash station and ancillary mobile car wash service is that no real sales force is needed. Much of the promotion of the company will be done through marketing and by word of mouth. The owners are also able to self-promote its mobile service through the car wash station and by fielding phone calls.
MP will use direct distribution to sell its services through its car wash station and mobile car wash. The company plans to target the busy working people in its surrounding businesses and residential areas through direct mailing of flyers. The company would also like to capture those market segments of high income households, new car owners, apartment dwellers, and the eco-conscious consumer, through direct mail, low cost publications, water saving incentives, and by promoting our recycling rinsewater effort.
MP will start to advertise by less expensive methods, due to the fact that it is a small start-up company with few resources. An initial amount of around $5,000 is budgeted for MP’s first year of marketing expenses. Its main form of advertising is a big colorful logo on the side of our mobile truck that displays the company’s information and will be largely visible as the truck drives around town. It is designed free of charge by the son of Alberto, who is one of the owners.
MP will first send out and post flyers for its Grand Opening event. At MP’s Grand opening there will be a grand prize drawing for a 42 inch flat screen T.V. with a retail value of $500, as well as raffle prizes. Refreshments and swag (air freshener, coupons from surrounding businesses), will also be provided and MP should plan for 100 attendees. It will be advertised that car wash kits (microfiber cloth, cleaner products) will be given to first 100 customers that use our car wash station or mobile service. Extra promotional items can always be used in the future. For example, an air freshener card will be mailed to each customer that fills in our online survey. Please see Appendix B for price list of promotional items.
Print and Direct Mail
Direct mail is still considered an effective means of marketing, and is more personal and focused. MP will use this method to distribute flyers, brochures, coupons, and promotional products to target customers. The U.S. Postal Service Every Door Direct Mail (www.usps.com) is preferred because it will mail up to 5,000 pieces of mail per day, to our specified target area without requiring a permit. No addresses are necessary, just the zip code of the mailing route and USPS will deliver to all in that route. If MP targets those zip codes with the most businesses in the city, it will cost approximately $700 in direct mail. MP can also select to mail directly to those bordering cities that have higher household incomes, like Highland or Colton, for an estimated $500 per city.
Printed matter can be produced by our own company at a minimal cost or made at a local printer. An estimate for 5000 colored flyers professionally made is $365 at the local FASTSIGNS. Comment cards can be printed for a minimal cost and will be used to gather feedback from our customers.
Cross promotions can be used to partner with other local businesses. For example, coupons can be used for water saving initiatives in collaboration with other local car wash stations. Flyers can be posted at local diners and bulletin boards of other businesses with high traffic.
As an alternative to advertising in the more expensive local newspapers, MP will use free advertisement in the weekly Penny Saver Publication for the San Bernardino-Riverside region. The ad would be under the Automotive Services section and run for 6 months. This is an optimum frequency because professionals estimate it takes nine exposures to an ad before someone notices it (Abrams, 2012). Also, many people search the ads for used cars in the Penny Saver, which is distributed in high traffic areas such as local diners, convenience stores, and auto service shops.
Website: Vistaprint monthly charge of $14.99 a month allows us to design and change our website, an email address for communications, and a mobile website. Emails can be integrated into our website for an extra $5 per month, and can be used for feedback, surveys, and notifications of specials and printable coupons.
Text messaging SMS – from our website database we can get smart phone/mobile phone numbers from our patrons and use direct marketing to send out text messages periodically. This is a virtually free service where we can send out text messages to customers from websites, and cell phones, as reminders to save water and have their car washed by us. We can also notify our customers of discounts and offers.
Social media can be used for customer feedback in order to improve the business. These are usually free services at online sites like Yelp and Facebook.
As the company becomes more profitable, MP intends to stay on par with the industry and devote 1.7% of its yearly revenues to marketing costs (IBIS, 2012). Then it can advertise on local t.v. networks which require a budget of at least a $10K to $15K to run an ad campaign (http://www.nationaltvspots.com/local-cable) . As more profits are realized, MP may look into multimedia marketing which simultaneously captures different media venues (TV, online PC, radio), and for a lower price, given that the trend for media is more fragmented than before (http://www.comcastspotlight.com/2012_SEM/home.htm) .
The Mom & Pop (MP) Eco-Mobile Car Wash, LLC is an eco-friendly car wash station and mobile car wash service. The car wash station will be located in a busy area of San Bernardino City, and its mobile unit will bring its car wash service to the customer in the surro
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