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Quick and Dirty Auto Repair
1.0 Executive Summary
Quick and Dirty Auto Repair (QDAR) is a start-up organization that offers a complete domestic and foreign care repair service as well as a full-featured retail parts store. QDAR will serve the Portland, OR market with three convenient locations. QDAR will grow into a business with $13.3 million in sales by year three.
The Concept The auto repair market has a lot of competition, however, almost all only offer service. QDAR will differentiate themselves by not only offering a hassle-free repair service, but a fully stocked parts store. Not only will this serve a wide range of customers for both service and parts, but the parts department will support the service department by allowing the service department to turnaround jobs far faster than the competition with generally all of the needed parts in stock and on location. QDAR also differentiates themselves by having 10 bays at every location. This offers incredible value to customers who need their cars fixed right away. Waits for service and parts are ideas not entertained by QDAR. Lastly, QDAR offers unlimited shuttle service for repair customers making the entire service experience as painless and convenient as possible. QDAR will attract and maintain a loyal customer base through their customer-oriented focus on business. All employees are trained and held responsible for providing superior service, developing a long lasting trust bond with customers.This is very important, especially in the auto repair industry where trust and honesty are not the image of repair facilities. The Management Team QDAR has a strong management team that will allow them to execute on this exciting idea. QDAR has four partners, Jake Braques, Blair Horne, Hyugo Ford, and Gaz Môder. Jake has a background of sales, 12 years at the nation's second largest Ford dealership. He will be overseeing the sales and marketing for the organization. Blair's background is in management from Siemen's automobile division where he was a Vice President overseeing a department of 565 people.Hyugo is also a product of the auto industry, specifically the auto repair and parts sales industry. Hyugo spent six years at NAPA Auto Parts and then seven years at Repair-It, Oregon's largest independent auto repair facility. At both organizations Hyugo had multiple roles within the organization allowing him to bring to QDAR a broad skill set. Lastly, Gaz brings QDAR 10 years of finance and administration experience. Gaz was trained at GM and later in his career took a position at Delco Parts. The incredible breadth of skill sets and knowledge that the management team possesses will allow QDAR to accomplish their lofty goals of over $11 million in sales. QDAR is an exciting business opportunity that addresses the unmet need of having a full service auto repair facility that also has a complete retail parts center. These distinct but complimentary services will have benchmarked customer service, something that the industry is not known for having. QDAR will be led by a seasoned management team of four, all of whom have extensive industry experience. QDAR has forecasted sales of $9.1 million for year one, $11.3 million for year two, and $13.3 million for year three. Highlights
to ensure that parts are always in stock. and one focuses on the finance/administration section of the business. Rapid order and delivery of major auto parts items. 3. The economic growth of the last several years has resulted in increased disposable income.0 Company Summary Quick and Dirty Auto Repair is a new start-up incorporated business managed by four partners. 4. Hyugo Ford and Gaz Môder. Many people have chosen to spend part of their increased income on their automobiles. 2. The company will be privately owned by four co-owners. QDAR will position itself to capitalize on the growing need of the middle and upper class market for quality auto service in the Portland metropolitan area. Finally. Growing and maintaining a referral network of local towing service companies. the owners may consider taking QDAR public several years down the road.1 Mission Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. A wide range of auto parts inventory that is (nearly) never out of stock. QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases). with most of the additional funding coming from a ten year SBA loan.1. Blair Horne. 2. the need for reliable and convenient auto services has substantially risen as well.1 Company Ownership QDAR is incorporated in the state of Oregon.2 Company History QDAR is a new start-up company. Additionally. Three of the four partners represent sales/management. Expedient and convenient auto repair services. 1. QDAR is technologically savvy with computerized monitoring of all parts inventory. It is privately owned by Jake Braques. . while keeping a balanced level of inventory to maximize inventory turnover. QDAR focuses on personalized service to its customers by offering convenience and rapid service. 2. To attract additional financing. The company management team has strong industry experience and a clear vision of how QDAR will position itself in the local market.2 Keys To Success QDAR's keys to success will include: 1. Company Summary 2. As a result.
500 $62.000 $350.000 $2. The following chart and table show projected initial start-up costs for QDAR.000 and a short-term loan in the amount of $55.000 $5.000.000 $50.500 $62.500 $62.000) $245. Start-up Start-up Requirements Start-up Expenses Legal Other Total Start-up Expenses Start-up Assets Needed Cash Balance on Starting Date Start-up Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Total Requirements Funding Investment Jake Brakes Blair Horn Yugo Ford Gaz Motor Total Investment Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Current Liabilities Long-term Liabilities Total Liabilities Loss at Start-up Total Capital Total Capital and Liabilities $62.000 $550.000 $250.000 $50.000 $100.500 $250.Start-up Summary 3.000 $305.000 .000 $3.000 $0 $55.000 $550. The remainder of the required financing will come from a ten year Small Business Administration (SBA) loan in the amount of $250.0 Start-up Summary Each of the four co-owners will invest $62.000 $555.000 $200.000 ($5.000 $0 $55. Total loss at start-up is $5.500.000.
The company estimates that about 80% of revenues will come from the established local clientele and 20% from the tow-ins local and freeway traffic. The goal is to never be out of a specific part. quick turnaround is always the standard at QDAR. The table below further estimates the total market potential of type of services rendered by QDAR in Portland metropolitan area. This focus on building strong customer relationships based on trust and integrity will be the catalyst in establishing a strong regular customer base. With ten service bays at each location. QDAR utilizes the highest degree of technology in managing a full range of auto parts inventory. Strong vendor relationships have been established with the most reputable vendors in terms of shipping time of major parts.0 Market Analysis QDAR has a focus on meeting the demand of a regular local resident customer base. as well as towed vehicle drop-ins from local and freeway traffic traveling on nearby freeways. QDAR employees focus on delivering what they promise.0 Products and Services QDAR has the core competencies amongst its large crew to work on all makes and models of domestic and foreign vehicles. Market Analysis 5. QDAR strives to be accurate and honest with customers in terms of quoting cost estimates and repair completion time estimates. QDAR has established relationships with a few major local tow truck companies for referral business of stalled vehicles requiring a tow to an auto repair facility.Start-up Products and Services 4. and all employees focused on superior customer service. while maximizing inventory turnover. Market Analysis (Pie) .
This will establish a healthy.2 Market Segmentation QDAR focuses on the middle and upper income markets.000 20. Middle and upper class customers to whom QDAR will cater its services are less price sensitive as they value the convenience of quick turnaround (on any model/make of car) and high quality of services.620 0 102.64% 5.500 2003 66.00% 13. The niche where QDAR positions itself represents auto centers that offer both auto services and parts at one convenient location. and establish a reputable image from that target market's perspective.325 2004 76.664 2005 87. rapid service are critical to capture this segment of the market.3 Target Market Segment Strategy QDAR will focus on its target market. and by working with local towing companies. 5.000 2002 57.64% The market of auto repair services and parts sales is very fragmented.000 0 79. Local residents regular customer base QDAR wants to establish a significantly large regular customer base.000 0 70. by offering convenience. This market looks for high quality. expedient auto repair services.733 CAGR 15. customer service excellence. and high quality.500 22.044 26.00% 10. . Emergency towing local and freeway traffic Emergency towing of local and freeway traffic comprises approximately 20% of revenues. 5.451 29.Market Analysis Market Analysis Potential Growth Customers Local 15% Residents Freeway 10% Traffic Other 0% Total 13. Most individuals in this market segment are willing to pay an extra premium within the pricing of auto repair services to avoid the common inconveniences of having a vehicle tied up in a repair shop. The majority of auto shops usually offer either repair services or parts inventory. regular referrals from tow truck companies.1 Service Business Analysis 2001 50.282 0 116.200 0 90.00% 0. rapid service with as much convenience as possible.125 24. the middle and upper class market. Convenience. consistent revenue base to ensure stability of the business.
Many competitors have adopted point-of-sale systems in their stores. Automotive product lines usually include: • Tires. o Engines and engine parts. • New and remanufactured parts for domestic and imported cars. • Chemicals. and sport utility vehicle accessories. Larger competitors have adopted the "supercenter" store model. o Ignition parts. tire and "buy-for-resale" customer sectors. and an equally high level of tourism traffic on local highways.5 Competition and Buying Patterns QDAR faces over 400 auto repair and auto parts competitors in the local area. its honest reputation will be a major factor in repeat business and building a large base of regular. o Lighting. o Oil and air filters. Electronic parts catalogs are available in many competitor stores along electronic commercial invoicing systems that offer commercial parts delivery. • Batteries. which gathers sales and gross profit data by a stockkeeping unit from each store on a daily basis. a freestanding. alarms. polishes. including sound systems. Among these.000 items. marketing and merchandising strategies. hoses. there is a constant significant demand for auto repair services and auto parts. including oil. • Hand tools. 5. only a few are major national chains. wrenches. • Car accessories. and remote vehicle starters. o Wiper blades. and exterior accessories. Additionally. The remainder are small privately-owned establishments. Large competitors' stores typically carry the same basic product line. "one-stop" shopping automotive warehouse that features state-of-the-art service bays. • A selection of truck. automotive maintenance and service and the installation of parts. with variations based on the number and type of cars registered in the different markets. loyal customers. These "supercenters" carry thousands of stock-keeping units and serve the automotive aftermarket needs of the "do-it-yourself. paint and body tools. Only a quarter of these competitors offer both auto repair services and auto parts inventories. jacks and lift equipment. Convenience is a must for most middle and upper class consumers and travelers. including: o Suspension parts. tires and accessories. belts. van. • Mobile electronics. including seat covers." the "do-it-for-me" (automotive service). including sockets. and air conditioning parts. floor mats. A full complement of inventory at a typical supercenter includes an average of approximately 25. Primary competitors are engaged principally in the retail sale of automotive parts. o brake parts. ratchets. QDAR will compete well by focusing on convenience and offering a high level of customer service. cleansers and paints. additives.5. . antifreeze. o Exhaust systems. automotive specialty tools and test gauges.4 Market Needs Between having a high level of commuting traffic. This information is then used to help formulate pricing.
and convenient auto repair service. provides customers with a comprehensive sales document. a number of competitors have electronic work order systems available amongst their various service centers. Additionally. the company will employ direct sales staff. QDAR will succeed by ensuring a full range of auto parts inventory and rapid shipping capability of major auto parts.3M in the second year. Sales by Year . As the chart and table show. and enables the service center to maintain a service customer database. QDAR plans to deliver sales of about $9.0 Strategy and Implementation QDAR will succeed by offering its customers high-quality. Strategy and Implementation 6.Additionally. 6.1 Competitive Edge QDAR's competitive edge is the heavy focus on customer convenience by offering unlimited shuttle service. For this purposes. and $13.3M in the third year of the plan. and a referral network of a few local major tow truck companies. This type of system creates a service history for each vehicle.2 Sales Strategy QDAR will focus its sales strategy on effectively reaching the target customer segment of upper and middle class customers.5M in the first year. At the same time. rapid. $11. rapid turnaround on auto repair jobs. the company will further strengthen its relationships with the tow truck companies to capture auto repair needs of the local and highway traffic. 6.
500 $2.930.191 $3.00 $0.032.800 2001 $300.313 2003 21.540.572 $6.15 $0.00 2003 $2.00 $30.50 $0.000 2001 $100.00 2002 $1.00 $63.00 $5.125 2002 $105.00 $0.813 $0 $4.250.922 0 116.139.00 $5.279.275 2002 $315.800 75.500 $5.082 $0 $13.000 $0 $3.984.00 $60.654 2003 $110.311.040.375 0 103.00 $7.541 $0 $5.00 $0.184 2003 $330.Sales Forecast Sales Forecast Unit Sales Auto Repair Jobs Auto Parts Other Total Unit Sales Unit Prices Auto Repair Jobs Auto Parts Other Sales Auto Repair Jobs Auto Parts Other Total Sales Direct Unit Costs Auto Repair Jobs Auto Parts Other Direct Cost of Sales Auto Repair Jobs Auto Parts Other Subtotal Direct Cost of Sales 2001 16.000 $4.000 $0 $9.625 $0 $11.315.500.25 $33.08 $0.732 .657.344.269.75 $66.263 94.00 2001 $1.000 2002 18.642.483.000 $2.680.00 $31.900 84.000 0 91.953.
472.106 152 $4. QDAR expects to make gradual investments in staffing as several new facilities are opened over the next ten years.Management Summary 7.000 $3. .000 $135.800 $148.838 $3.0 Financial Plan QDAR expects to raise $250.750 $3. These conservative assumptions make for a more accurate estimate of real risk.897 $297. marketing.1 Break-even Analysis QDAR's break-even analysis is based on the averages of the first-year figures for total sales by units. These are presented as per-unit revenue. and management within the auto repair and auto parts industries.757.767 2003 $352. per-unit cost.681 $485. and fixed costs.322 Financial Plan 8.530. and to borrow $250.1 Personnel Plan As the personnel plan shows.000 2002 $336.0 Management Summary Jake Braques. 7.000 $440.315. 8.503 $462.000 of its own capital. This provides the bulk of the current financing required. and Hyugo Ford have 40 years of combined experience in sales.000 $141.003 136 $4.150.511 $283.000 guaranteed by the SBA as a ten year loan. Blair Horne. and for operating expenses.000 $270. Personnel Personnel Plan Owners Managers Mechanics Customer Service Associates Sales & Administrative Total People Total Payroll 2001 $320.307. also within the auto repair and auto parts industries.000 120 $4. Gaz Môder has ten years of experience in the arena of finance and administration.
311.000 $0 -----------$3.000 58.813 58.757.125 $4.732 $0 -----------$5.000 2002 $11.81% $4.81% $4.Break-even Analysis Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 8.642.540.626.315.92 $42.922 58.2 Projected Profit and Loss 6.313 $0 -----------$4. QDAR expects to continue its steady growth in profitability over the next three years of operations.313 $6.322 .000 $5.530.827.483.483.732 $7.930.000 $3.269.81 $425.871 As the profit and loss table shows.610.642.211 $103.654 $5.767 2003 $13.81% $4. Profit and Loss Pro Forma Profit and Loss Sales Direct Costs of Goods Other Cost of Goods Sold Gross Margin Gross Margin % Expenses: Payroll 2001 $9.930.969 $724.
000 $0 $9.000 $1.719 $914.269.3 Projected Cash Flow $27.450 $499.550 $26.000 $1.250 $0 -----------$5.385.703.125 $13.569. Cash Cash Flow Pro Forma Cash Flow 2001 Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received 2002 2003 $9.200 $647.700 $1.79% The cash flow projection shows that provisions for ongoing expenses are adequate to meet QDAR's needs as the business generates cash flow sufficient to support operations.540.000 loan is expected to be paid out within one year.156 8.930 $1.124. The short-term $55.269.Sales and Marketing and Other Expenses Depreciation Utilities Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales 8.311.540.125 $0 $11.711 11.472 $1.311.217 $534.122 $158.000 SBA loan will be repaid in ten years.11% $72.157 $352.000 $120.341 $22.830 $138.000 $11.241.598 $0 -----------$5.645 3.110.323 $713.260 $679.858 $20.467 $304.654 .748 $120.654 $0 $13.70% $35.065 $2.615 $0 -----------$5. while a $250.
260 $327.260 $0 $0 $0 $20.500 $50.125 2002 $572.595 $9.367 $10.618.221.341 $9.859 $389.000 2001 $492.570.Sales Tax.651 . HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Sales Tax.269.118 $386.266 $0 $0 $0 $0 $0 $0 $0 $13.555 $1.760 2002 $389.875.405 $0 $0 $0 $0 $0 $0 $0 $11.118 $0 $0 $0 $25.673 $456.000 $1.000 $0 $15.648.978 2003 $1.540.000 $0 $9.008. VAT. Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Inventory Other Current Assets Total Current Assets 2001 $21.732 $11.740) $21.673 QDAR's projected company balance sheet follows.859 $50.000 $0 $10.065 $8.000 $0 $12.335 $0 $540.266 $367.099 $0 $55.740 ($78. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance 8.4 Balance Sheet $0 $0 $0 $0 $0 $0 $0 $9.654 2003 $694.335.842.000 $0 $660.099 $946.978 $50.000 $0 $770.000 $825.335. VAT.311.672 $10.000 $398.901.365.516.
as described by the Standard Industry Classifications (SIC) Index code 7538.115 $250.903.02% 4.00% 12.13% 2003 18.000 $258.261.000 $347.512 The following table outlines some of the more important business ratios for the auto repair industry. General & Administrative 2001 0.36% 39.19% 50.665 $664.800 $2.168.00% 18.645 $914.800 $1. Ratios Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling.00% 12.81% 46.000 $770.774 $0 $0 $474.50% 100.20% 1.645 $1.439 $250.800 $2.60% 23.06% 17.50% 40.300 $3.14% 28.27% 2.665 $571.00% 2002 18.550.000 $1.67% 5.00% 61.00% 18.511.000 $1.177 $250.117.760 $597.081.28% 34.80% 24.645 $597.292.80% 42.81% 100.13% 100.512 $3. General Automotive Repair Shops.569.000 $2.70% 59.5 Business Ratios $890.000) $352.000 ($5.33% 49.700 $1.13% Industry Profile 7.745.512 $0 $0 $391.12% 65.Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth 8.00% 58.00% 75.450 $0 $0 $336.512 $214.09% 0.978 2002 $391.511.000 $416.00% 34.000 $1.80% 9.645 $1.951 2003 $474.951 $3.978 $1.665 $606.450 $234.00% 58.168.79% 20.117.760 2001 $336.00% 0.000 $120.62% 71.88% 100.81% 55.20% .745.156 $1.08% 48.69% 0.81% 50.774 $189.49% 10.081.00% 58.00% 28.74% 82.00% 100.38% 100.320.20% 57.26% 100.00% 28.00% 0.80% 100.95% 8.711 $3.87% 51.
22 0.70% 1.a n.31 14 8.70% 59.a n.a .00 0.a n.a n.a n.96 0.a n.59 $62.00 0 13.19 0.80% 4.00 24.a n.Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab.a n.00 23.19 18% 1.60% n.12 29% 0.00 0.47% 3.a n.25 0.62% 80.09% 11.03% 5.00 0 12. to Liab.30% 56.32 0.11% 60.32 0.94% 1.a n.a 0.71 $1.88 2.30% 1.12 7.79% 50. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.65 59.92 17.17 0.367.96 0.21 48.18% 2003 11.00 26.12 28.68 0.96% 1.877 105.34% 15.310 18.11% 40.45% 2001 3.a n.24% 0.55% 2002 8.16 0.50% 1.55 0.01% 2.65 $434.465 55.28 13% 2.00 n.62% 57.11 0.74% 68.a n.92 4.00 0 13.a n.79 14 5.11 1.02% 0.08 14 3.a n.21 15.40 0.87% 79.45 0.a n.