Location: Arkadelphia, AR
The attached spreadsheet model is for Super Bubbles Cleaning Solutions located in Arkadelphia, AR. This car wash was listed for sale for $250,000. The model includes a pro forma income statement and balance sheet for the car wash based on market assumptions in the area, and an analysis of the costs of capital and internal rate of return forecasted for the car wash. The model allows variables to be changed for all the major inputs of the computations, and includes citations for assumed values in the model.
Our projected Weighted Average Cost of Capital was 4.09%. The internal rate of return required based on our calculations was 12.64%. If we subtract our WACC from our IRR, the car wash has an estimated 8% return. We feel that the price of the car wash is a fair price, and that if our projected model holds, there is potential for this car wash to be a good investment to future buyers.
We believe that the car wash is a good buy. We project that we would need to refurbish the car wash during our 5th year in business. We estimated that we would spend $50,000 to resurface the concrete, paint the car wash, and add upgraded vacuums. Even with this major refurbishment, we still show a potential of half a million dollars in our cash accounts at the end of 10 years.
We found our financing rates from a local credit union and added a little bit more to the rate they quoted in order to estimate the most accurate cost of borrowing to buy the car wash. We also estimated the amount of people that would use the car wash based on its location, the amount of cars that drive the highway, and the population percentage that we estimated would use the car wash on a weekly basis. The revenues are positive, and we recommend buying this car wash, changing the name of the car wash, advertising the new car wash and the prices, and making sure the prices are competitive with other car washes in the area. Overall, we recommend buying the car wash and believe the price is a fair price.