CHAPTER I

1. 1 Description of the Business Plan

Manakamana car wash is the business being introduced by us. This business is taken into
consideration with rigorous effort in research, market survey and area selection, where
we found that the demand and prospect of car washing is huge in Kathmandu valley
because of growing demands for the cars. We, four members will be investing in the
business equally and be part of profit and loss business carries, equally.

The business will be registered as joint partnership Firm. For the establishing business the
capital amount is required is 5 million rupees at the initial stage of operation out of
which 40% will be on bank loan and rest will be contributed equally by four partners .

Brief profile of the entrepreneurs:

Entrepreneurs Residence Qualification/experience

Amod K shrestha Lalitpur Fresh MBA graduate.

Shree ram shah Birjung Worked as the head

mechanic in KIA motors for
5 years

Sunil Thakuri Palpa Worked at Hyundai motors

for last 7 years as an
accountant.

Pasang Sherpa Sholukhumbu Master degree in

automobile engineering.

Business Contribution to the local economy:.

• It provides job opportunity to local people.

• Quick service
• Quality assurance
 • Time saving

1.2 Company overview

Manakamana car wash will be the prominent automatic car washing centre for light
vehicles in Kathmandu Bhaktapur and lalitpur. It is owned by 4 partners Amod, Shree
ram, Sunil and Pasang , a young entrepreneurs who has worked in the field of car repair
and automobile business for over last 5 years.

The differentiator for Manakamana car wash will be 2nd automatic machine car wash in
the valley. It is believed that people will come to the car wash not only to have their cars
cleaned and detailed, but also to meet up with and chat with mechanic. Additionally, the
car wash will provide excellent service, efficiently and expertly cleaning customer's cars
so that they will be repeat users of the service.

The car wash will be based in koteshwor near Balkumari Bridge. This area has a number
of benefits in terms of the market that it will provide for the business. The main target
customer of the business is individuals and business houses.

Manakamana car wash will have 20% market share of the car wash business in the
koteshowor neighborhood by the end of year three, and it aims to convert a larger
percentage of people away from hand car washes, which damage a car's finish.
Manakamana car wash will maintain a 35% gross profit margin and make 22% net profit
margin after 12 months of operation. The company sales growth per year is 10%.

1.3 Mission

The mission of Manakamana car wash is to provide top-quality washing and detail
service for car owners in kathmandu, Bhaktapur and lalitpur area. Manakamana car wash
will work to keep employees satisfied in order to maintain impeccable customer service.

1.4 Vision

To be a leading car wash centre in the valley.

1.5 Objectives

• Increase repeat customers.

• Steadily increase market share every year
• Develop brand awareness and acceptanc to customes .

2  
 
Manakamana car wash we believes that a comprehensive marketing strategy and quality
service will be key to the success of the business. Manakamana car wash offers a
premium automatic car washing service provided. The basic market need is a premium
automatic car washing service that is far less time consuming than the traditional hand
wash cars. It only takes 15 minutes to clean a single car.

1.6 Market Summary

Manakamana car wash possesses good information about the market and knows a great
deal about the target customers. This information will be leveraged to better understand
who is served, their specific needs, and how Manakamana car wash can better
communicate with them.

1.7 Market Needs

Manakamana car wash is providing the market with a automatic car wash service for the
East part of Kathmandu Lalitpur, and eastern part community of Bhaktapur.
Manakamana car wash seeks to fulfill the following benefits that are important to the
customers:

Exemplary customer service- The target customers have money and are used to having
excellent customer service. They will not regularly use Manakamana car wash unless
they receive excellent service.

High quality washes- The target market value a higher quality wash for their upper-end
cars.

Convenience- The hours of operation as well as the time needed to provide the service
must be convenient and fast respectively, to gain market share.

1.8 Market Trends

The market trends for the car washing industry have been gravitation from hand washing
to automatic washing machine facilities. This trend has been fueled by the progression of
technology. The automatic washing machines have become more expensive but more
efficient over the last few years to the point that it is typically cost effective to invest in
these machines.

1.9 Market Growth

3  
 
The car washing market has seen steady, 15% growth for the last six years. 20% growth
is forecasted for the next four years. As the growing demand for cars in the Nepalese
market.

1.10 Financial Objectives

• Increase the profit margin by each year.

• Achieve a double digit growth rate each year for at least the first five years.
• Develop efficiencies in the delivery of the service through advanced training and
work-flow analysis.

4  
 
 CHAPTER II

INDUSTRY ANALYSIS

2.1 PEST analysis

i. Political analysis

There is no such type of political risk that affect the business. Only frequent strike and
bandas may cause some problem which affects this business. We registered into the
concern department to take the license and to operate our business. We pay tax to the
concern authority.

ii. Economic analysis

In case of economic instability there will be lower down the demand for the cars in the
market that will decrease the business activities. No effect in the business of change in
exchange rate

iii. Social analysis

The demand for these kind of services are increasing because of increasing number of
cars in the society .There is a trend going on the society to buy a cars for the higher
income people. Customer gets quick service so that they can manage their busy time
schedule.

iv. Technological analysis

Since the business will operate fully automatic there is a huge risk of technology risk. To
overcame and manage technology we will give adequate amount of training to its
operator and manage adequate amount of inventory level for its spare parts and try’s to
build good relationship with the suppliers.

2.2 Business analysis

• Profit margin of this industry is very much high

• High establishment cost because of advance technology.
• Competition is low because it is newly introduce technology.
• High growth business because of growing demand for the cars.
• Less advertisement cost.

5  
 
2.3 Market analysis on the basis of Porter’s Five Force model:

i. Barriers to new Entry:

There will be certain barriers to the new companies who will follow our footstep in the
industry as follows:

They will have to make huge investment on the equipment and technology to come into
light of industry as we’ll have already established at location. We suppose to hire
excellent and skilled man power and well trained them , being second mover we’ll also
gain competitive advantage over other in that way too.

ii. Bargaining Power of Suppliers:

In regard to Suppliers, the human resource is skilled and well trained. Qualified human
resources are not easily available in Kathmandu valley. They have to be hired from
outside Kathmandu. They have to be paid higher and give training to them. Bargaining
power of suppliers is powerful.

iii. Bargaining Power of Customers:

Due to the lack of acute competitor, there is not the availability of this kind of service,
based on . But the customers may tend to compare it with the prevailing system off hand
wash and fully automatic machine wash Due to the ample availability of substitute
products in the market.

iv. Threat of new Entrants:

Automatic car wash is quite a new phenomenon in the context of Nepal, So people who
were aware about this sector and who are running the manual car wash may have good
interest to invest. And Due to attractive business environment and good profit margin, we
cannot avoid the risk of new entrance in the business industry.

v. Threat of Substitutes:

Manual car wash centre are the main threat for the service industry that people may not
prefer the new technology. But we provide quality service at quick time with reasonable
price.

6  
 
2.4 SWOT Analysis:

i. Strengths:
• New way to provide service
• Quality service at quick succession
• Prime location at the location hub between Kathmandu, Lalitpur and Bhaktapur
• Fully automatic and newly introduced technology

ii. Weaknesses:
• Little bit High cost compare to manual car wash.
• Lack of own land
• Technology may breakdown
• Opportunities:
• No direct competitors form manual car wash
• Increasing income level of the customer
• Increasing immigration rate to Kathmandu valley
• Increasing no of cars in the market
• Customer are aware of change in technology

iii. Opportunities:
• Profit making potential
• Penetration in new market with new product
• Quality service at quick succession

iv. Threats:
• Customer may not familiar with new technology
• May substitute servicing centers.
• Existing competitors may introduce same kind of technology.
• Other industries may attract the competent trained employee.

7  
 
 CHAPTER III

MARKETING ANALYSIS

3.1 Target market

Manakamana car wash segments its customers by type of car ownership. Manakamana
car wash believes that the type of car that a person owns says volumes about their
driving, and, therefore their car washing and detailing requirements.

New car owners: Owners of newer cars are most likely to use a automatic car washing
service. These owners take great pride in their cars and will bring them often to the wash
and detail service. The goal with these customers is to promote regular use of the wash
and detail service. The aim is to inform these customers that Manakamana car wash will
keep their car looking as good as it did the day they drove it off the lot.

Older car owners: These people have either owned their high-end cars for several years or
are unable to afford the expense of a new car but want the feel of relaxed driving. Both of
these groups want to keep their cars in the best shape possible. Those who have bought
second-hand cars will often spend many hours in their cars and will place high
importance on keeping their cars looking good. These owners will bring their cars in for
regular washes and occasional details.

Dealerships: There are five new and used car dealerships within three km of the
proposed location of manakamana car wash . These dealerships often use outside car
wash services to detail their vehicles before they are put up for sale. In addition, there are
five other car dealerships within a five km radius of Manakamana car wash.

Local businesses: Some local businesses have fleets of cars and small vans that must be
kept clean to maintain their company image. These businesses will be looking for a cost
effective, efficient car washing service to perform this service, and will prefer to use a car
wash service during the week rather than during weekends, like the general public.

The single objective is to position Manakamana car wash as the premier automatic car
washing company in the area, steady increasing market share. The marketing
strategy will seek to first create customer awareness, develop a customer base, and work
toward building customer loyalty.

The message that MCW will seek to communicate is that their AUTOMATIC CAR
washes are superior to the hand washed alternatives to cars. This message will be
communicated through several different methods.

8  
 
 • The first method is the placement of advertisements in the local newspaper.
• The second method will be through broad casting networks.
• The third method is publishing through social media.

3.2 Market Trends

The market trend for the car washing industry has been gravitation from hand washing to
automatic washing machine facilities. This trend has been fueled by the progression of
technology. The automatic washing machines have become more expensive and more
efficient over the last few years to the point that it is typically cost effective to invest in
these machines.

3.3 Market Growth

The car washing market has seen steady, 15% growth for the last six years. 20% growth
is forecasted for the next four years. As the growing demand for cars in the Nepalese
market.

3.4 Competition

There is only one automatic car wash in the valley but other hand wash .It is quite new
and is trying to compete with other hand wash offering low prices but more time
consuming. However, it is not targeting the customers who seek quality and in quickly.

The customers who Manakamana car wash is targeting have their cars washed based on
the quality of the job. They do not mind spending a little more each week to have their
car washed and waxed in order to keep the paint work in excellent shape. The businesses
that Manakamana car wash target will be more cost conscious, so prices will be
approximately 10% less for these customers to promote volume usage.

3.5 Service Offering

• Manakamana car wash will provide the following services:

• Car washing (exterior).
• Car cleaning (interior).
• Car detailing.
• Waxing and polishing.

9  
 
3.6 Keys to Success

Manakamana car wash keys to success are:

• High quality services.

• Benchmarked customer service.
• Convenience.

3.7 Marketing plan

Manakamana car wash marketing analysis is comprised of the following approaches to

pricing, distribution, advertising and promotion, and customer service.

i. Pricing- The pricing scheme is based on a per service price. A " Manakamana
previlage card " can be given to the loyal customer and 15% discount on each
wash.The pricing is comparatively similar to its competitors.
ii. Place- Manakamana car wash is providing the service in the market with a
Automatic car wash service for the East part of Kathmandu , Lalitpur and western
part of Bhaktapur. Manakamana car wash seeks to fulfill the following benefits
that are important to the customers.
iii. Product- Customer service will be provided at any time. Manakamana car wash
provide service 6 days a week to the customer. The business follows the business
policy “ satisfied customers are the self advertisement and try’s to give the quality
service at reasonable price.
iv. Distribution- The offered services will be distributed from Manakamana car wash
facilities.
v. Advertising and Promotion- Manakamana car wash will use several different
methods for advertising and promotion. Social network is used for the promotion
for the cost saving and provide Special festival discount during the festival time.
vi. Customer service- Customer service will be provided at any time.

10  
 
 CHAPTER IV

OPERATIONS AND MANAGEMENT

4.1 Identify Location: advantages

• Sufficient water supply for car washing

• Supportable environment
• Prime location
• Proximity to raw materials
• Economic labor cost as compared to other places.
• Proper Infrastructure facilities like road, power, transportation etc are easily
available.

4.2 Organizations Structure:

The business will be managed by mainly by four members and are being supported by
other employees working in our company.
Being medium enterprise, the business will be managed in a formal and professional
manner. Strict rules will be made for following:-
Quality assurance and quick delivery of service.

• Marketing strategy of service

• Customer complaints, choices and advice.
• Delivery of goods in time.
• Ethics in working environment.
• Proper control of Accounts.

11  
 
The organizational structure is depicted in the organization chart as follows:

Figure 1: The organizational structure

manager    
Pasang    

Marke4ng  Manager   Administra4ve  

servicing    dept   And  Finance  
Sunil       manager  
Shree  ram    
Amod  

2  office  assistance    
2   1  machine   and  security  gurad    
workers(hired Operato(hire
)   d)  

4.3 Pre-Operating Activities:

We have listed down following activities to be undertaken before we can operate

business:

• Registering the business 2 days

• Preparing the business Plan 4 weeks

• Applying for loan and approval 8 weeks

• Contracting equipment suppliers 2 weeks

• Construction of factory 6 weeks

• Hiring & training labors and machine operator 2 week

12  
 
 • Installing the equipment 3 days

• Purchasing raw materials 5 days

• Trial service period 2 weeks

4.4 Pre-Operating Expenses:

Training the workers will be necessary since there involves few procedure, but it will not
be much complex. Our machine operator will be trained, so he will train newly recruited
labor. Hence cost will be of providing them breakfast and food while training for few
days.

Some cost will incur in registering the business, others cost such as transportation will
also incur. All other operating cost including above mentions are:-

Table 1: Pre operation cost

S.N. Descriptions Amount

1. Registration cost 10,000

2. Sample service 7,000

3. Survey Costs 5,000

4. Training Costs 15,000

5. Transportation Cost 3,000

6. Electricity Cost 1,000

7. Stationery Cost 1,500

Total Pre-Operating Expenses 42,500

4.5 Office Equipment:

Since we are opening our business at the prime location of the country, we will be
expending some amount in office equipment. We will buy few chairs, tables, calculators,
carpets, sofa, information board and few more. All these will cost us about 240000. The
life of these equipments is estimated to be of 10 years. So, monthly depreciations of these
equipments is Rs 2000 per months.

13  
 
 CHAPTER V

FINANCIALS, BUDGETS AND SALES FORECASTING

This section will offer a financial overview of Manakamana car wash as it relates to the
marketing activities. Manakamana car wash will address Break-even Analysis, sales
forecasts, expense forecasts, and how they relate to the marketing effort.

5.1 Break-even Analysis

The break-even analysis indicates that 80,000 are needed in monthly revenue to break-
even to cover the fixed and variable expenses of the business.

5.2 Expense Forecast

The expense forecast will be used as a tool to keep the department on target and provide
indicators if corrections need to be made. Additionally, it will require the department to
undertake long-term analysis.

5.3 Sales Forecast

Table 2: Sales forecast

1st year 2nd year 3rd year 4th year 5th year

Sales 2,700,000 2970000 3267000 3593700 3953070

(450*12*500)

Sales is expected to grow at 10% per annum

14  
 
5.4 Fixed Capital Requirement:

Table 3: Fixed Capital Requirement

S.N. Descriptions Qt. Rate Amount

1. Office equipment 240,000

2. Building 525,000

3. Machine and Equipment

4. AUTOMATIC Machine 1 2,500,000 2,500,000

5. Vacuum cleaner 1 50,000 50,000

6. COM PERSSURE 1 150,000 150,000

7. Others & equipment 500000

8. Total machine & equipment costs 3,200,000

9. Total fixed capital investment 39,65,000

5.5 Life of Fixed Capital:

The life of building is 20 years and for the machinery and equipment, it is expected to be
of about 10 years, because of its regular involvement in daily operation and constant
contact with heat, chemical and water. This makes the depreciation charge 5% per year
for building and 10% per year for machine and equipment. The depreciation method used
is straight-line depreciation method.

15  
 
5.6 Depreciation charges:

Table 4: Depreciation Charges

S.N. Descriptions Rate Total Depreciation (Rs.)

1. Buildings 5% 525,000 26250

2. Machinery & equipment 10% 32,00,000 320000

3 Office equipment @10% 2400000 24000

Total Depreciation 370250

Per Month 30,855

Maintenance and Repair:

As the machine is simple in design and structure, it is easy to operate. So, minute
problems will be solved by the machine operator himself, for complex machine failures;
nearby engineering workshop will be available. As in kathmandu there are many of those
available. So we won't face any problem.

5.7 Sources of Equipments:

All the machines needed will be imported from India as cheap and good machine is
available there. All the cost including transportation and installations charges are
mentioned above already.

i. Planned Capacity:

The demand is much more then what is being produced now, domestically as well as
internationally, as we are planning to cover international market also. So our current
service 9000 units of car per annum.

That is 25 cars service per day. But our capacity is 25 cars per day At the beginning we
operate at 80% of our capacity, so we will provide service 20 cars per day at working 23
days a month.

16  
 
 ii. Future Capacity:

Our service capacity will increase by 20% every year as our service efficiency will
increase with experience. i.e. 80% for first year, 90 % in second year, and 100 % in 3rd
year and so on.

5.8 Terms & Conditions of Purchase of Machinery & Equipments:-

All the machines and equipments will be bought in total cash, no agreement of later
payment.

i. Factory location and layout:

The servicing will be located in its hired land in Koteshwor . Our servicing center will
cover an area of 800sq. m.

ii. Raw Materials Requirements:

Our only raw material for washing car is cleaning liquid, which will be bought from the
supplier. 2 liter of cleaning liquid can be enough for 5 cars. In one day we clean 20
cars. So for one day cleaning, we need 8 liters of cleaning liquid.

iii. Cost of Raw Materials:

Table 5: Cost of Raw Materials

S.N. Descriptions Unit Qt. Rate Days Amount

(Rs.) (Rs.)

1. Cleaning liquid ltr 200 160 32000

Total cost of raw materials 32000

per month

Per year 384000

iv. Raw Materials Availability:

17  
 
Cleaning liquid is the only raw material we need. And it is easily available in Kathmandu
.it is mainly imported from the India. So we do not have supply problems.

v. Number of Labors:

All our partners will be involved in many departments like accounting, marketing, and
managing. Then we will hire six people who will be responsible for washing, one skilled
machine operator having sound knowledge about machinery and equipment, one office
assistance, one security guard and 3 workers in washing centre, all these will work full
time.

vi. Cost of Labor:

Table 6: Cost of labor

S.N. Descriptions No. Payment Rate Amount

style.

A. Direct labor

1. Workers 2 Monthly 2*8000 16000

Per year 192,000

B. Indirect labor

1. Machine Operator 1 Monthly 9,000 9,000

2. Office Assistance 1 Monthly 7,500 7,500

3. Security Guard 1 Monthly 8,000 8,000

4. Office Worker 1 Monthly 7,500 7,500

Indirect labor cost/ month 32,000

Per year cost 384,000

Total labor cost per year. 576,000

18  
 
 vii. Labor Availability:

Workers for these types of industrial jobs are easily available in Kathmandu. Since there
is lack of employment opportunity, we can easily train and get the worker as per our
requirements. Kathmandu being capital city number of people came here for searching
for the jobs, we will have easy access to workers throughout the year.

viii. Labor Motivation:

Salary to direct labor and other works will be paid on the 15th day of the current months
as pay is high compared to what market is paying, so they would not want to loose this
job. And others are paid monthly. They will be give extra benefits if they work well and
provide extra sum of money during festivals. During break of 1 hour coffee will be
provided to them.

ix. Factory Overhead Expenses:

Table 7: Factory Overhead Expenses

S.N. Descriptions Amount

1 Indirect Labor 32000

2 Electricity and Water 2500

3 Repair and Maintenance 5000

4 Coffee for workers 2000

5 Transport of Raw Materials 1,000

6 Depreciation 30,855

7 Rent 25,000

Total Factory overhead per 98355

month expenses

Per year 1,180,260

19  
 
 x. Wash cost per unit:

Washing cost per car can be calculated as:

Table 8: Wash cost per unit

S.N. Descriptions Amount

1. Raw materials 30*1667 32000

2. Direct labor 16,000

3. Factory overhead 96355

Total cost per month 144355

Total service car per month 450

Per unit cost of service 320.78

Hence, per washing car is Rs 320.78

xi. Loan pay back schedule:

Table 9: Loan pay back schedule

Year Pmt Interest 10% Principle Ending balance

0 - - - 2000000

1. 527594 200000 327594 1672405

2 527594 167240 360354 1312050

3. 527594 131205 396389 915660

4. 527594 91566 436028 4792631

5. 527594 47963 479631 0

Interest rate on loan is @10% per annum

20  
 
 xii. Projected Income statement

Table 10: Projected Income statement

particular year1 year 2 year 3 year 4 year 5

sales 2700000 2970000 3267000 3593700 3953070

less variable cost 12* 48000 576000 576000 576000 576000 576000

contribution margin 2124000 2394000 2691000 3017700 3377070

less fixed cost

depreciation 12*30855 370260 370260 370260 370260 370260

overheads 67500*12 810000 810000 810000 810000 810000

EBIT 943740 1213740 1510740 1837440 2196810

less intrest 200000 167240 131205 91566 47963

EBT 743740 1046500 1379535 1745874 2148847

LESS: tax 20% 148748 209300 275907 349174.8 429769.4

EAT 594992 837200 1103628 1396699 1719078

Net profit margin 0.22 0.28 0.34 0.39 0.43

21  
 
 xiii. Projected Cash Flow Statement:

Table 11: Projected Income statement

Particulars Pre- 1st year 2nd year 3rd year 4th year 5th year
operating

Cash Inflow

Equity 3000000

Loan 2000000

Sales 2,700,000 2970,000 3267000 3593700 3953070

Total cash from sales 2,700,000 2970,000 3267000 3593700 3953070

Total Cash Inflow 5000000 2,700,000 2970,000 3267000 3593700 3953070

Cash Outflow

Pre-operating expenses 42,500

Purchase of fixed assets 3965000

Direct cost less 576,000 576,000 576,000 576,000 576,000

depreciation(16000+32000)*12

Administrative cost less dep 810,000 810,000 810,000 810,000 810,000

(98355-30855)

Interest expenses 200000 167240 131205 91566 47963

Loan amortization 327594 360,354 396389 436028 479631

Dividend paid - - 200000 400000 800000

Tax paid 148748 209300 275907 349174 429769

Total cash outflow 4,007,500 2062342 2122894 2389501 2662768 3143363

22  
 
Net cash flow 992,500 637658 847106 877499 930932 809707

Cash beginning balance 0 992500 1630158 2477264 3354763 4285695

Cash balance at the end 992,500 1630158 2477264 3354763 4285695 5095402

xiv. Balance Sheet:

Table 12: Projected Balance sheet for 5 years

Particulars Pre- 1st year 2nd year 3rd year 4th year 5th year
operating

Assets

Cash 992500 1630158 2477264 3354763 4285695 5095402

Inventories 100,259 145526

Account receivable 270000 -

Total current assets 992500 1964158 2622790 3354763 4285695 5095402

Machinery 3965000 3965000 3965000 3965000 3965000 3965000

&Equipment

Less: Accumulated 370260 740520 1110780 1481040 1851300

depreciation

Net fixed assets 4957500 3594740 3224480 2854220 2483960 2113700

Preliminary 42500 42500 42500 42500 42500 42500

expenses

Total assets 5000000 5601398 5889770 6251483 6812155 7251602

Liabilities & Equity

23  
 
Long term loan 2000000 1672405 1312050 915660 479631 0

Outstanding rent 121415 454785 350000

Tax payable 331265

Owners equity

Equity capital in the 3000000 3000000 3000000 3000000 3000000 3000000

beginning

Retain earning - 594992 837200 1103628 1396699 1719077

ACCUMULATED 370260 740520 1110780 1481040 1851300

depreciation

Total owners equity 3000000 3965252 4577720 5214408 5877739 6570377

Total liabilities & 5000000 5637657 5889770 6251483 6812155 7251602

owner’s equity

xv. Payback Period

Table 13: Payback Period

Year Cash Flow Cumulative Cash Flow

0 (3,965,000) (3,965,000)

1 637658 (3327342)

2 847106 (2480236)

3 877499 (1602737)

4 930932 (671805)

5 809707 137902

Calculation:- payback period= 4+671805/809707

24  
 
 = 4+0.82

= 4.82years

xvi. Break even analysis

BEP Percentage = fixed cost × 100%

Sales - Variable costs

= 3965000× 100 %

2700000-1386000

= 301%

xvii. Return on Investment (ROI):

ROI = Net Profit ×100

Total capital

Requirements

= 594992 ×100

= 15.00%

ROI = 3965000

xviii. Return on Equity

ROE = Net Profit ×100

Owner’s capital = 594992×100

=19.83%

xix. Net profit margin for 5 years

Net profit margin= net profit / sales

Table 13: Net Profit Margin

net profit margin 0.22 0.28 0.34 0.39 0.43

25  
 
Table 14: Return on Assets and Capital

Return on Assets Net Profit/Assets×100% = 14.95%

594992/3965000×100%
Return on Capital Net Profit/Capital×100% = 11.85%
594992/500000×100%

Project Feasibility:

Considering the service features, the conservative estimates in sales, realistic costs
estimates, the entrepreneurs proven track records and the sound financial analysis, the
project is considered very reliable.

CHAPTER VI

26  
 
6.1 Harvesting and Exiting

The firm has the harvesting plan of selling the ownership of the firm to someone who are
interested in automobile business. However, two of the partners will require certain
percentage of shares to sell the ownership. The business is expected to grow at a good
pace. Provided the environment will be favorable, the net income will exceed 1.7 million
at the end of the 5th year. The cash flow is very positive and is expected to grow from
Year 1 to Year 5. The business can even be merged in favorable circumstances. The
partners are not expected to see the personal benefit only. They are expected to see the
firm, society and country that will create well-being for people.

27