Professional Documents
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AGREEMENT OF CONFIDENTIALITY
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Signature
Date
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Name (typed or printed)
TABLE OF CONTENTS
EXECUTIVE SUMMARY
The Business Concept
The Opportunity
Operations of the Business
Product and Service Offerings
THE COMPANY
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1. Legal Status
2. Physical Location
3. Intellectual Property
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Company History
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GROWTH STRATEGY
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Business Objectives
Targeted Customers
Key Initiatives
Competition and Competitive Advantages
Size of the Market
Marketing Activities
Sales Strategy
CORPORATE MANAGEMENT
Management
Founder and Owner:
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REFERENCES
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APPENDICES
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EXECUTIVE SUMMARY
The Business Concept
Southeast Auto Care (Southeast
Southeast Auto Care or the Company) is an auto repair
shop providing old-fashioned, reliable service. The Company will be built upon a
solid foundation of honesty, reliability and quality. It is located in Huntsville,
Alabama.
The Founder, Name Removed, has built a reputation in
the area as an honest and trustworthy mechanic; he
takes time to explain what is wrong and shows the
customer what needs to be fixed as well as which parts
are wearing and may fail. Thirty-five years in the auto
motive business, he has spent 15 years building and
racing cars, 12 years of fleet maintenance, including
fabrication and redesign.
The Company will provide:
Routine Maintenance
Temperature Control
Brakes and Exhaust
Engine and Transmission
Profitable Growth
Southeast Auto Care expects to gain a profitable market share within a very short
period of time. Determinations have been made for the size of the market,
amounts of budgeted advertising and promotional dollars, the number and kinds
of distribution channels and the competitive landscape.
Projections call for the Company to generate revenues of $666,000 in its first
twelve months. Southeast Auto Care will achieve strong growth over the next
several years, reaching $1.3 million in revenues and more than $316,000 of net
income by the fifth year.
The Opportunity
U. S. Auto Industry
According to R. L. Polk, The average length of ownership of both new and used
vehicles has increased from 37.2 months in 2002 to 46.3 months in 2008, a 24%
increase. As our economy continues to deal with current issues, drivers are
expected to keep vehicle longer which is good news for auto repair businesses.
Fewer new cars and trucks are being purchased. A recent Polk study showed
64% of consumers were very or extremely likely to keep their current vehicle
longer than they normally would due to current economic conditions. Additionally,
81% of the 713 interviewed vehicle owners in this same study also said they
planned to take better care of their vehicle to keep it running longer, which could
translate to additional aftermarket revenue. 2
Aftermarket Automotive Trends
Within the aftermarket automobile segment there are several categories,
including:
Routine maintenance
Temperature control
Brakes and exhaust
Engine and transmission
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Independent garages
Full service gasoline stations
Automotive dealerships
Chain automotive centers
According to the Automobile Service Association (ASA), this market sector is high
fragmented, employing nearly 339,170 people and repairing more than 231
million motor vehicles; 88% of independent mechanical repair businesses are
family-owned. Research shows there are an estimated 81,533 U. S.
independent general mechanical repair businesses in operation.
The ASA projects total sales for general mechanical repair facilities in 2005 was
$36 billion; $49 billion if specialty repair facilities, oil change facilities and
transmission shops are included. It is important to note that these figures do not
include the $30 billion earned by approximately 21,640 auto dealerships with
service facilities.
Americans love their automobiles! Statistics reflect the median age of vehicles in
the U. S. is increasing which will encourage the growth of auto repair shops.
According to research, the median car age from 1990 to 2005 increased from 6.5
years to 9.0 years. A recent Forbes article stated, in 2004, 135,077,000 cars
were registered in the United States.
In a 2005 survey by ASA, 71% of mechanical businesses polled said they felt
positive about future growth and expected sales to increase. Integra Information
made the following forecast on growth rates: 1
General Auto Repair Shops Industry Revenues
Year
2005
2.40%
2006
3.90%
2007
3.30%
2008
3.80%
2009
3.90%
Avg.
3.46%
Source: Integra Information
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In the category of maintenance, vehicles ages 6-to-10 years are 1.3 times more
likely to need maintenance than their younger counterparts of less than 6 years
of age or with older vehicles over 10 years old. Interestingly, vehicles in this
category are predicted to increase from 2008 to 2010 by 1.2% (compound annual
basis). Polk states, During the same time period, vehicles in the 11+ age group
are projected to grow 4.6%. 2
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Routine Maintenance
Temperature Control
Brakes and Exhaust
Engine and Transmission
THE COMPANY
Mission of the Company
Southeast Auto Care will become a leading auto repair center in the Huntsville
area. We will continually provide quality repair in a timely manor at an affordable
price. Our products services will be sought after for their reliability and
excellence. We will treat each customer with respect and we will be known for
our outstanding customer service.
Company Structure
1. Legal Status
Southeast Auto Care is a Sole Proprietorship organized in the
state of Alabama in 2010. The Company is owned by Name
Removed.
2. Physical Location
The Company will lease suitable business space to support its
operations. This space will include a reception area, office,
and work/repair areas. It will provide easy access to
customers/employees with ample free parking.
The site will be in an attractive area of town. Customers will
be able to access the site easily.
A prospect site has been located and is available.
3. Intellectual Property
Southeast Auto Care intends on building a website at
www.southeastautocare.com to market its services. There is
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Company History
Southeast Auto Care is a start-up new venture. However, the founder has
performed extensive research to determine the market viability and operational
challenges of this type of business. Questions that were addressed include:
What is the market opportunity (Is
there a need for the business)?
What type of competition is
there?
Can the targeted market support
the business?
What types of customers will the
business attract?
Are there suitable facilities in the
area?
How much funding is needed?
How much monthly revenue is
needed to achieve break even?
GROWTH STRATEGY
Business Objectives
The Company is planning on strong growth in the next twelve months. It plans on
achieving the following objectives:
Obtain new customers
Hire reliable and trained staff
Grow twelve month revenue in excess of $665,000
In succeeding years, Southeast Auto Care will continue to grow its business and
will achieve these objectives:
Grow the annual number of new customers each year
Develop a reputation that will exceed competitors in every area
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Targeted Customers
Southeast Auto Care has identified a clear and substantial target market.
Targeted customers will include:
Previous Customers
Friends and Family of Former Customers
Walk-in Customers from advertising
The Company will target these types of customers within the Huntsville, Madison,
Harvest and Toney, Alabama areas.
Key Initiatives
Southeast Auto Care has developed the following key initiatives to achieve its
growth goals:
Launch its marketing efforts to reach its target audience
Establish an aggressive sales program to identify and secure
customers
Provide the best services at the most competitive pricing
Provide a satisfying experience for every customer
With the proper financing and adherence to this business plans objectives, the
Company believes it can complete these initiatives and achieve success.
Experienced technician
Priority service
Best customer service
Competitive pricing
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Marketing Activities
Southeast Auto Care will implement various marketing efforts to attract
customers including:
Customer loyalty programs
The Company will develop strong customer loyalty programs.
Southeast Auto Care will implement and manage programs
that reward a customer for repeat business with the
Company.
Build and optimize its web site to describe and promote the
business
The Company will build and optimize its web site to attract
prospective customers. The web site will be attractive and
easy to navigate. It will also provide testimonials of satisfied
customers.
Print advertising
The Company will take out ads in local publications that are
matched to its targeted audiences.
TV and Radio Ads
The Company will purchase TV ads on local cable channels
and radio ads on local stations.
Signage and posters
Southeast Auto Care will utilize signage and posters that will
be displayed at local sites to promote the Company and
establish name recognition.
Search engine optimization (SEO)
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Referrals
Southeast Auto Care will develop referral programs whereby
existing customers receive incentives to refer friends or
associates as customers.
Sales Strategy
The Company will sell directly through its retail space.
CORPORATE MANAGEMENT
Management
Founder and Owner: Name Removed
Name Removed has 35 years in the Automotive Business. He has
spent 15 years building and racing cars. Darrin also has 12 years of
fleet maintenance including fabrication and redesign.
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Southeast Auto Care intends to use these funds primarily for start-up expenses
such as equipment, furniture and leasehold improvements. Remaining funds will
be used for general working capital needs.
$50,000
Equity
$10,000
Total Sources
$60,000
Equipment
$10,000
Uses
Furniture/equipment
$500
Leasehold Improvements
$2,000
Legal Startup
$200
Working Capital
$47,300
Total Uses
$60,000
Assumptions
Revenues
Revenue Assumptions
Year 1
Labor Sales
Parts Sales
Year 2
$353,600
$312,000
$442,000
$390,000
Year 3
Year 4
Year 5
$530,400
$468,000
$618,800
$546,000
$707,200
$624,000
Year 3
Year 4
Year 5
$171,600
$327,600
$192,400
$382,200
$213,200
$436,800
COGS
COGS Assumptions
Year 1
Labor Cost
Parts Cost
$130,000
$218,400
Year 2
$150,800
$273,000
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Expenses
Cash Flow
Receivables average 15 days
Payables average 30 days
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The next two graphs show Southeast Auto Cares projected annual revenues and
annual net profit over a five year period.
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REFERENCES
1
2006 The Automotive Repair Industry, (Integra Information, Forbes, April 2006)
Article Found at:
<http://www.integrainformation.com/forbes/overview.htm>
2
2009 The Changing U. S. Auto Industry: The Impact of Declining New Vehicle
Sales on the Aftermarket Business, (R. L. Polk Automotive Information,
April 2009) Article Found at:
<http://www.polk.com/TL/MS_200903_ChangingAutoIndustry_Aftermarket.
pdf>
3
2009 Changing Consumer Behavior toward Automotive Repairs and Maintenance
Keeps Repair shops on Tenterhooks, (Frost & Sullivan Report, Frost &
Sullivan Speaks Candidly with U.S. Automotive Shop Owners, July 30,
2009), Article Found at:
<http://www.prnewswire.com/news-releases/frost--sullivan-finds-changingconsumer-behavior-toward-automotive-repairs-and-maintenance-keepsrepair-shops-on-tenterhooks-62274652.html>
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APPENDICES
12 Month Projected P & L
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APPENDICES
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