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Auto Paradise is a dynamic start-up company that will provide exceptional car care services to the members of the San Angelo community. Quality services that exceed expectations will establish Auto Paradise as the premiere car wash service in San Angelo, Texas. It will provide that following products and services to the local community:
- Two Laser Automatic “touch-free and spot-free” car wash bays
- Four “self-serve” bays
- Vacuum and car wash vending services
- Reverse osmosis drinking water.
Auto Paradise will establish its first location one lot from the intersection of Avenue N and Byrant Avenue, which are two of the busiest streets in San Angelo. The lot faces Avenue N and will be accessible from two sides. The ATM and RO dispensers will be accessible from a side road and will not interfere with the car wash traffic.
The facility will have two automatic car wash bays, four self-serve bays and an equipment room/office in the middle of the bays. It will also have four high powered vacuum islands (eight total vacuums), vending area, and an ATM/RO water area.
2.1 Company Ownership
Mr. Lewallen will create Auto Paradise as a Texas C corporation based in Tom Green County. Mr. and Mrs. Lewallen will be the majority owners (80%) with principal investors owning the remaining 20%. As of this writing, it has not yet been chartered and Mr. Lewallen is still considering alternatives.
2.2 Start-up Summary
Total projected start-up expenses (including construction, equipment, land, landscaping and related start-up expenses) come to $934,100. The start-up costs are to be financed by direct owner investment and long term financing.
A. Investment Options. Auto Paradise will open approximately 90 days after securing financing. Mr. Lewallen is offering several ways to invest in Auto Paradise:
- Company stock: Mr. Lewallen is offering 20% of company stock to investors. Auto Paradise is offering 1% of company stock for $7,500. Capital will help establish the first Auto Paradise location and provide “head start” on the second location. Auto Paradise plans to distribute $2,500 per 1% share each of the first three years.
- Secured Investment: Mr. Lewallen is offering a guaranteed 10% return for a three year investment. Mr. Lewallen is willing to secure these investments with personal assets/investments.
B. Financing. The SBA loan that Mr. Lewallen will secure from the SBA is structured to ensure Auto Paradise’s success during the early months of operation. The $740,400 loan includes two elements designed to help build operating capital. First, the loan includes a 10% ($69,000) construction contingency that will convert to operating capital if the construction costs are consistent with the estimate. It also includes 9 months of interim interest which will defer the long-term mortgage payment for 9 months (6 months of operation).
C. Land. Auto Paradise is in the process of securing a lot near (one lot from corner) the intersection of Bryant Ave. and Avenue N, which are two of the busiest streets in San Angelo. The lot will be 165′ along Avenue N and 175′ deep. The purchase is pending the results of a phase I environmental inspection, which is expected to produce favorable results.
D. Construction. Getting a firm construction bid is the next step in the process after securing the initial investors. The architect plans and an actual bid will be the last elements necessary to secure bank financing. The estimates included are from previous projects and are considered generous (on the high-side). The estimated $390,000 includes total construction costs for two automatic and four self-serve bays, parking lot, signage, landscaping and architect fees.
E. Construction Contingency. The 10% construction contingency will cover any unexpected expenses or shortfalls. This may be re-negotiated as a “line of credit” in order to reduce the amount of the loan.
F. Equipment. Washing Equipment of Texas (WET) has provided a detailed estimate for the purchase and installation of the equipment for two automatic bays, four self-serve bays, four vacuum islands (eight vacuums) and a reverse osmosis water dispenser. WET, which is located in San Angelo, will also provide all maintenance and repair services.
The assumptions are shown in the following tables and chart.
|Start-up Expenses to Fund||$40,500|
|Start-up Assets to Fund||$893,500|
|Total Funding Required||$934,000|
|Non-cash Assets from Start-up||$799,000|
|Cash Requirements from Start-up||$94,500|
|Additional Cash Raised||$0|
|Cash Balance on Starting Date||$94,500|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investors (20% Ownership)||$150,000|
|10% Construction Contingency||$39,000|
|Additional Investment Requirement||$0|
|Total Planned Investment||$234,000|
|Loss at Start-up (Start-up Expenses)||($40,500)|
|Total Capital and Liabilities||$893,500|
|Project Closing Costs||$25,000|
|Summit Funding Fee||$10,500|
|Total Start-up Expenses||$40,500|
|Other Current Assets||$0|