Define a Budget
A budget refers to a financial plan with well broken down details for a defined time period. A budget constitutes elements such as costs and expenses, liabilities and cash flows, assets, sales volumes, revenue among others. A budget is also summary of intended expenditure showing costs allocated for a particular venture. The project at hand is car wash service that will provide premier services such as exterior car washing, interior cleaning among many others. The Car spa service budget will cover projected revenue and their sources as well as estimated expenses.
Estimated Revenues for the Period
The following services are forecasted to provide estimated revenue flow as is indicated in the below table. Charges for the three months will be varied as a financial strategy to lure customers with low service charges during the first month which will be increased at an increasing rate up to the third month
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Figure 1.1. Revenue Budget
| Service Name | January | February | March | |
| Exterior car washing | $1300 | $1550 | $2500 | |
| Interior cleaning | $600 | $1500 | $2300 | |
| Rugs Washing | $400 | $450 | $850 | |
| Waxing services | $350 | $500 | $900 | |
| Sale of vehicle automobile accessories | $1500 | $2500 | $3500 | |
| Home service | $400 | $600 | $800 | |
| Cigar Lounge | $250 | $450 | $720 | |
| Bar | $400 | $550 | $850 | |
| Vehicle detailing | $500 | $800 | $1200 | |
| Totals | $5700 | $8900 | $13,6200 | |
The budget breakdown presents approximated revenue for a three month period that is, January to March. For the first month, services to be offered at the car spa service will generate a projected revenue stream totalling to $5700. The second and the third months are predicted to earn the car wash a revenue totalling to $8900 and $13,620 respectively.
Estimated Expenses
The below presents a budget breakdown detailing both variable and fixed expenditures that the car spa service projects to incur for a three months period starting January to March.
Figure 1.3 Expenses Budget
| Expenses |
January |
February |
March |
| Pressure washing machine (3) | $1500 |
— |
— |
| Detergents | $700 |
$900 |
$1200 |
| Water supply | $400 |
$550 |
$600 |
| Employee Salary (3 workers) | $700 |
700 |
800 |
| Business licensing (Annual) | $500 |
— |
— |
| Vacuum cleaner | $450 |
— |
— |
| Buckets, Brushes, Squeezer and towels | $350 |
— |
— |
| Electricity | $200 |
$300 |
$350 |
| Leasing car wash bay (Annual) | $1500 |
— |
— |
| Water tank | $500 |
— |
— |
| Totals | $6800 |
$2450 |
$2950 |
Several indicated expenses will be expended on an annual basis which include, pressure washing machine, business licensing, vacuum cleaner, buckets, brushes and squeezer. The rest will be incurred on monthly basis. During the first month, the car spa service projects to have expenses totalling $6800. The second and third months totals include $2450 and $2950 respectively.
Mitigating or Eliminating those Habitual Costs
Although adding value to the car spa service end goal, the two habitual costs that the venture will strive to mitigate include monthly water usage and electricity expenses. Water is a critical component in car wash service. High costs would thus result once cars are washed using running water. I will mitigate on water usage costs by using spray bottles which will imply less water usage per car. I will also invest in micro-fiber cloths or chamois which is an alternative car washing technology that can substitute or be used complementarily with water. Less water will be used hence mitigating on the water overhead costs per month.
To mitigate on electricity costs, the car spa service will install solar panels to run the pressure washing machine and vacuum cleaner instead of relying on electricity solely. Solar energy will be alternated with electricity to run machines as a mitigative strategy towards reducing the habitual cost.
