Outline of the Report

Situation Analysis

Colin’s Car detailing was founded by Colin Ford is an auto-detailing business. It was going well because of its lower

prices ($80- $120) and loyal customer base. In just four years, he could manage to get 150 customers and $5,000

profit per year. Mr. Ford was planning to go for college education in September, so he was considering the future

course for his business. His profit margin was 35% which was higher than others because he was running CCD from

home and getting discounts on materials. But because of high demand and less availability, backlogs were getting

created which could result in customer loss. There were three other competitors in the area but the CCD’s major

competitor was Blitz Auto Spa as its prices ($295 to $395 + 25% discount) were closed to CCD’s. Because of its

lower prices, CCD could tempt new category of customers in addition to resale customers who were not able to

afford higher prices for vehicle-detailing. So for CCD’s future, Mr. Ford was considering whether to sell/wind up

the business, expand the services, become the mobile-detailing company, go with a partnership with a golf-course or

franchise the business.

Problem Statement

What Mr. Ford should do with his business in the light to his college education at University of British Columbia?

Options

Sell/Wind up his business and pursue summer internship

Expand the services and include cut polishing

Purchase a truck and convert CCD into a mobile detailing company

Engage in a partnership with a near-by golf course

Franchise the business

Criteria

Entrepreneurial spirit of Colin Ford

Funding of college education

Evaluation of Options

After evaluating all the options, going with the franchising looks to be the best keeping Mr. Ford’s entrepreneurial

spirit in mind and he could earn an extra income as royalty which may help him in funding college expenses.

Recommendation

Mr. Ford should go with franchising his business as he does not need to give up his business to which he is

passionate about and earning extra income would be helpful for college’s tuition fees and personal expense.

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Situation Analysis

Car detailing industry in Canada was likely to strengthen in future as country’s economy was growing and

municipalities had begun to regulate environment-friendly policies to curb pollution and considering banning home

car washing to save water.

Colin Ford started Colin’s Car Detailing (CCD) in West Vancouver, British Columbia. He was passionate about his

work and believed that attention to detail and work ethics is critical to the success of CCD. Began with the vehicle

washing, vacuuming and waxing at just $15 (85% less than others) but customer response was not very encouraging.

After doing some more research and rising prices to a reasonable level, his customer base got increased. During his

schooling, Mr. Ford handled the business by working on the weekends due to decreased demand and full time when

demand was high. Promotional activities and word of mouth helped CCD to have 150 customers and annual profits

of approximately $5,000 at the end of fourth year. 1-3 vehicles could be detailed per day and it took 3-5 hours per

person. The charges were between $80 and $120 with 35% profit margin. CCD’s margins were higher than

competitors as business was running from owner’s home and he was getting discounts on detailing materials. Due to

high demand and fewer timeslots, the backlogs were getting created, so CCD had to turn some customers away. Mr.

Ford was worried as this could lead in permanent customer loss.

There were three major competitors in car detailing service industry- Rod’s Exotic Auto Spa that had strong

reputation for providing excellence quality detailing services with free pick-up and delivery. Full detailing was

priced between $350 and $450 and not all could afford it. Rod’s also had additional services apart from full

detailing. Second was Blitz Auto Spa with more than a decade experience. Full detailing prices were affordable from

$295 to $395 along with discount coupons of up to 25%. Because of the pricing, this could be major competitor for

CCD. Third was Park Royal hand Wash that offered good quality cleaning services (priced at $29.95) but not full

detailing. These services took only 20-30 minutes, so customers did not mind waiting.

There were typically two types of consumers- affluent owners who did not mind in paying higher price for reliable

service and had their vehicles detailed several times in a year and others were consumers who were looking for

resale of their old vehicles and wanted to improve them at minimal cost to get the higher resale price. Because of

lower price, CCD has enticed a new category of consumers who did not want to resale and spend higher price. These

became the loyal customers for CCD and get their cars serviced 2-3 times in a year.

Mr. Ford set to join University of British Columbia in September and his top priority was ensuring enough funds to

pay first year’s tuition and personal expenses. He was also eager to grow his company. So he was considering some

future plans for CCD like expansion of services, becoming a mobile auto detailer, establishing a partnership,

franchising the business and even selling the business and pursuing internship for the summer.

Problem Statement

What Mr. Ford should do with his business in the light to his college education at University of British Columbia?

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Options

Mr. Ford has following options:

1. Sell/Wind up his business and pursue summer internship.

2. Consider following options for future:

2.1 Expand the services and include cut polishing.

2.2 Purchase a truck and convert CCD into a mobile detailing company.

2.3 Engage in a partnership with a near-by golf course.

2.4 Franchise the business.

Criteria

The priority wise arrangement of different criteria is as follows:

1. Entrepreneurship spirit: Mr. Ford enjoyed running his business and was passionate about it.

2. Funding the college education: Mr. Ford wanted to have enough funds for his college’s first year’s tuition

and personal expenses.

Evaluation of Options

1. Internship work is less flexible & more tedious than CCD’s and he may not like working there as he likes it in

CCD. So if Mr. Ford sells CCD and pursue the internship, then the first criterion will not be fulfilled as He will

be earning the same money as he had earned running CCD in summers, so the second criterion is partially

getting fulfilled.

2. If he considers future options for CCD, then first criterion will be fulfilled completely as he does not have to

give up his business and:

2.1 If he includes the cut polishing in the services, the price would be higher and a mistake in cut

polishing could damage the vehicle’s finish, so there may be chance to lose some loyal customers. He

also needs to spend some extra money for insurance and rotary buffer. In that case, his income would

be lesser than earlier (exhibit 1).So he will be having lesser money for the college education. Thus

second criterion is not fulfilled.

2.2 If he purchases a truck and converts CCD into mobile detailing company, he needs to buy additional

equipment and increase the price; therefore chance of losing loyal customers. Hence income could be

reduced. In addition, he had no experience of any such work. So the second criterion is not fulfilled.

2.3 If he engages in a partnership with a near-by golf course, there will be operational challenges like

double booking and to handling the payments from golf course clients. Moreover, golf course would

take 10% of the sales booked in exchange for CCD’s advertisements. Thus pricing would be higher to

offset the commission. Also service might not be completed by the end of the customer’s round i.e. in

2 hours and 20 minutes.

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2.4 If he franchises the business, he may tap the new market of North Vancouver with population of

130,000. He will earn monthly royalty in exchange of CCD’s name. Thus he could earn extra income

to fund his education without increasing the price and reducing customer base. So second criterion is

fulfilled.

Recommendation

Mr. Ford should go with franchising his business. His entrepreneurship spirit will be maintained as he does not have

to give up his business. Also he could earn additional income as royalty to support the funding of his college

education.

Action Plan

1. Contact career services departments of North Vancouver’s seven secondary schools.

2. Visit there, propose the idea of franchising CCD and select the students who will implement it.

3. Give them training of complete detailing of vehicles on weekdays.

4. Open the franchise there and help the students in running it for a month.

Word Count: 1093

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Exhibits

EXHIBIT 1: Impact of including cut polishingComponents Normal Operation Operation with Cut PolishingPrice of complete detailing/car (in $) 100 125Profit % 35 35No. of customers in a year 150 120Customer visits/year per customer 3 3Time taken/vehicle (in Hours) 4 4Income of Ford/hour (in $) 15 15Total profit per year (in $) (Price*Profit*Customers*visits/100)

15,750 15,750

Total income per year (in $) (Income/hour*time*Customers*visits)

27,000 21,600

Assumptions:

Customer base would reduce 20% to 120 if price is increased as many customers will not pay higher prices.

Price of complete car detailing per car currently under normal operation is $100.

Time taken for complete detailing by a car is 4 hours.

There would be 3 visits per customer in a year.

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