CONCLUSION,

BUSINESS and
MANUFACURING

Brian Paul Wiegand, B.M.E., P.E.

This class has just about run its course. Although the class was concerned
with “Automotive Dynamics and Design”, of necessity it failed to consider
many important design details, like fasteners, hoses, couplings, belts,
actuators, materials, electronics, wiring… The list of what is not included
may exceed the list of what was. All that could be attempted in this one
short course is to touch on each of the major aspects underlying
“Automotive Dynamics and Design”, and hope the student has enough
interest to fill in the blanks with independent study on his own, possibly by
undertaking some formal study of engineering and design at an
appropriate university or college. However, automotive design is strongly
impacted by two major concerns not yet touched on, the Business and
Manufacturing concerns. In an attempt to bring a sense of completeness to
this effort, those two concerns will now be briefly considered in closing…

MATTERS NOT YET CONSIDERED

Brian Paul Wiegand, B.M.E., P.E.
Unfortunately, Business Factors tend to be even more important than
the engineering and styling factors in determining the viability of an
automotive design. If the Business Factors are not favorable, then even
the most wonderful design will not become a physical reality; any design
effort expended without consideration of the Business Factors will
merely be a wasted effort, an exercise in futility. There are many
Significant Business Factors: Marketing, Advertising, Raising Capital,
Costing, Accounting, Finance, Taxation, Sales, Customer Service,
Scheduling, Facilities, Equipment, Government Regulation, Personnel…

For the establishment of a Business these Factors must be dealt with

beforehand in a document called the “Business Plan”. This is not just
some static document to be used once for the persuasion of potential
investors to part with their money so as to raise capital for the founding
of the Business, but a “living document” to be used continuously, then
and ever afterward, for the operation of the Business…

THE BUSINESS PLAN

Brian Paul Wiegand, B.M.E., P.E.
 “He who fails to plan, plans to fail” (anon.)

The primary value of a business plan is to evaluate the economic viability

of the proposed business. If a business plan makes a convincing
argument regarding the potential profitability of a proposed business,
then it will also serve as a useful tool for convincing potential investors
(banks, venture capitalists, Small Business Administration, family
members, friends, etc.) to provide capital for the business inception
and/or expansion. A properly constructed and maintained business plan
also serves as a useful tool for the day-to-day operation of the business;
it provides a handy guide which not only facilitates the necessary
decisions regarding the operation of the business, but also makes such
decisions all the more likely to be correct. Also, a business plan can be
used to solicit opinions from those who can give valuable advice.

THE BUSINESS PLAN

Brian Paul Wiegand, B.M.E., P.E.
There are many sources from which a generic business plan may be
obtained for various general business types. However, to blindly utilize
such a “one size fits all” document negates some of the principal
advantages of creating a business plan; it is recommended that the
business founder be the sole and actual author of the business plan. This
forces the founder to think clearly about, and be familiar with, all
aspects of the proposed business. If the founder does not fully
understand all that is involved regarding the inception and operation of a
proposed business, then the chances of any success are greatly
diminished. The founder’s preparation of the plan will define and focus
the business objectives, force the use of appropriate information and
analysis, and uncover omissions and/or weaknesses in the business
concept.

THE BUSINESS PLAN

Brian Paul Wiegand, B.M.E., P.E.
It is impossible at the outset of a business to predict all of the possible
changes in conditions that will occur during the operation of that
business. Therefore, after a business has commenced operation, it is vital
that the business plan be periodically reviewed and updated; the
business plan is a “living document” the development of which should be
similar to a living organism’s evolutionary adaptation to changes in
environment. Since the plan is to be subject to ongoing revision, the
definitive plan must be stored on, and accessible by, computer; paper
copies are always to be suspect as obsolete and discarded as soon as
possible. Most other internal documents, standards, procedures,
methods, personnel rosters, etc., should be treated in the same way.

THE BUSINESS PLAN

Brian Paul Wiegand, B.M.E., P.E.
While obvious hyperbole and crude emotional appeals are generally to
be avoided, the business plan must be put into a compelling form. This
can be done by supplying supporting statistics, charts, and graphs drawn
from respected and reputable sources (with attribution provided).
The business plan should be enhanced
with graphics, photos, and illustrations
wherever and whenever appropriate.
The conclusion to the plan must
constitute a succinct and compelling
statement regarding the viability and
financial prospects of the proposed
business, summing up all that has gone
before in a few hard-hitting words.

THE BUSINESS PLAN

Brian Paul Wiegand, B.M.E., P.E.
Then there is the Manufacturing of the design itself; this is a concern
which involves Many Factors: facilities, equipment, logistics,
subcontractor use, jigs & fixtures, assembly line layout and processes,
time step minimization, part count minimization, commonality of
fasteners, key personnel (required skill sets), inventory or “JIT” (just in
time) parts. Some aspects of the Manufacturing concern have a direct
bearing on the “Business Plan”, but there is even more that is not
addressed in that document.

Manufacturing Engineering is a science unto itself, and can only begin

to be thoroughly covered in a four (BSME) or six (MSME) year course at
an appropriate school of engineering. For the purpose of this course,
for the most part only those Manufacturing Aspects which have some
direct bearing on the “Business Plan” will be considered, leaving much
for the student to discover on his own…

MANUFACTURING FACTORS
Brian Paul Wiegand, B.M.E., P.E.
“The right name is an advertisement in itself.”
(Claude Hopkins, 1866-1932, advertising pioneer, author
of Scientific Advertising published 1923 and My Life in
Advertising published 1927).

The business name should be carefully chosen so as to suggest the

nature and “attitude” (trendy, classy, exclusive, modern, advant-
guarde, economical, practical, useful, etc.) of the business. The
font, color, and special effects employed in presenting the business
name are also significant; everything about the name must be
directed toward generating a desired positive emotional
response…

THE BUSINESS PLAN, THE NAME

Brian Paul Wiegand, B.M.E., P.E.
The first thing that a business needs is an identity, which is conveyed
by the business name and its logo. Both must be carefully chosen so as
to indicate the nature of the business and to invoke a certain emotional
response…For instance, a niche automotive company might be called:

Automotive Dynamics & Design

a.k.a.:

THE BUSINESS PLAN, THE NAME

Brian Paul Wiegand, B.M.E., P.E.
For which the logo could be:

THE BUSINESS PLAN, THE LOGO

Brian Paul Wiegand, B.M.E., P.E.
The “mission” or “vision statement” is a concise statement of the
business type and its goals, but is more of an exercise in hyperbole than
the unadorned statement of fact expected of all the rest of the business
plan:
The ADD (Automotive Dynamics and Design)
corporate mission is to provide the most exciting
and desirable automotive experiences for the
discerning automotive enthusiast. To do this it will
be necessary to take the existing automotive
paradigm and ADD beauty, ADD performance, ADD
safety, and, in the words of the great Colin
Chapman, “ADD lightness”.

THE BUSINESS PLAN, THE MISSION

Brian Paul Wiegand, B.M.E., P.E.
The “Business Profile” or “Concept” is a much more lengthy exposition
of the business type and its goals, without hyperbole and as
conservatively factual as possible without scaring off the would-be
investors.

For instance, in the case of a contemplated niche automotive design

company, note might be made of the enormous role the automobile
plays in all the world’s major economies, and how the automobile
figures so strongly as not just a mere appliance for transport, but as a
means of individual expression. It is in service of this need for individual
automotive expression that a vast automotive aftermarket exists, an
aftermarket which deals in facilitating that need for individual
expression, and which makes a healthy profit in the process.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 Such companies run the gauntlet from the producers of custom wheels,
headers, engine parts, seats, roll bars, air scoops, trim pieces, et cetera, et
cetera, to those that will completely customize an existing vehicle,
restoring, redesigning, and rebuilding it from the ground up.

Notable exemplars of the first sort of enterprise would include such well
known names as Moroso, Hooker, Recardo, K&N, Borla, Flowmaster,
Brembo, Koni, Enkei, Holley, Edelbrock, Mahle, Milodon, Hurst, Eibach,
Halibrand, Momo, Nardi, MSD, Bosch, VDO, BBS, Fram, Champion…

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
The second sort of enterprise includes such notables as “Hot Rods by
Boyd” (Boyd Coddington), “Foose Design” (Chip Foose), “West Coast
Customs” (Ryan Friedlinghaus), and “Gas Monkey Garage” (Richard
Rawlings)…These firms are especially well known by virtue of having
popular television “reality” programs associated with them, but there are
literally hundreds of similar functioning firms existing in the United States
alone.

That some of this form of enterprise has television shows based on

following their activities is a testament to the public interest. Television
programs associated with the first two firms mentioned are “American Hot
Rod” (Learning, Discovery) and “Overhaulin” (TLC, Velocity, Discovery)
respectively. Friedlinghaus has had quite a few shows about his company:
“West Coast Customs” (Fox), “Street Customs” (TLC), “Inside West Coast
Customs” (Velocity), and “Pimp My Ride” (MTV). Rawlings’ Gas Monkey
Garage was the subject of the program “Fast N’ Loud” (Discovery).

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
A number of other automotive customization firms were “spun off” from
just these four firms discussed, each to join the hundreds of existing firms
dedicated to automotive customization. The total number of such firms is
not readily identifiable, but believed to be increasing yearly at a rapid rate,
possibly at the same rate as that of the automotive aftermarket industry as
a whole.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
The automotive aftermarket industry is so vast that it has spawned the
Specialty Equipment Market Association (SEMA). This automotive trade
association is representative of a diverse group of thousands of
manufacturers, distributors, retailers, publishing companies, auto
restorers, street-rod builders, customizers, car clubs, race teams, kit car
producers, and much more that defies classification. The market segment
that this trade association represents is so large (and growing) that the
association has the political strength to influence federal legislation
relevant to the industry. In fact, that is one of its stated purposes:
“…the organization performs many services for its members and for the
hobby as a whole. Perhaps most importantly, SEMA works hard to protect
consumers’ rights to drive accessorized, customized and vintage vehicles.
SEMA keeps close tabs on legislators in Washington, DC, and also in each
state within the U.S., so that SEMA members and anyone who loves cars and
trucks can protest pending legislation that might harm our hobby, as well as
endorse legislation that’s good for car lovers. ”

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
The “Low Volume Motor Vehicle Manufacturers Act” was introduced in
Congress as HR 3274 in 2011, but died in Committee. However, it was
reintroduced in 2015 as HR 2675 and presently (since 6/05/2015) resides in
the Commerce, Manufacturing, and Trade Subcommittee of the House
Energy and Commerce Committee. The text of this bill reads as follows:

114TH CONGRESS 1ST SESSION

H.R. 2675
To direct the National Highway Traffic Safety Administration to establish a program
allowing low volume motor vehicle manufacturers to produce a limited number of
vehicles annually within a regulatory system that addresses the unique safety and
financial issues associated with limited production, and to direct the Environmental
Protection Agency to allow low volume motor vehicle manufacturers to install engines
from vehicles that have been issued certificates of conformity.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 IN THE HOUSE OF REPRESENTATIVES
JUNE 4, 2015

Mr. MULLIN (for himself and Mr. GENE GREEN of Texas) introduced the following bill; which
was referred to the Committee on Energy and Commerce.

A BILL

To direct the National Highway Traffic Safety Administration to establish a program

allowing low volume motor vehicle manufacturers to produce a limited number of vehicles
annually within a regulatory system that addresses the unique safety and financial issues
associated with limited production, and to direct the Environmental Protection Agency to
allow low volume motor vehicle manufacturers to install engines from vehicles that have
been issued certificates of conformity.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
Be it enacted by the Senate and House of Representatives of the United States
of America in Congress assembled,

SEC. 1. SHORT TITLE.

This Act may be cited as the “Low Volume Motor Vehicle Manufacturers Act of 2015”.

SEC. 2. EXEMPTION FROM VEHICLE SAFETY STANDARDS FOR LOW VOLUME

MANUFACTURERS.
Section 30114 of title 49, United States Code, is amended—
(1) by striking “The” and inserting “(a) VEHICLES USED FOR PARTICULAR PURPOSES.—
The”; and
(2) by adding at the end the following new subsection:
“(b) EXEMPTION FOR LOW VOLUME MANUFACTURERS.—
“(1) IN GENERAL.—The Secretary shall—
“(A) exempt from section 30112(a) of this title not more than 500 replica motor
vehicles per year that are manufactured or imported by a low volume manufacturer; and
“(B) except as provided in paragraph (5) of this subsection, limit any such exemption
to the Federal Motor Vehicle Safety Standards applicable to motor vehicles and not motor
vehicle equipment.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
“(2) REGISTRATION REQUIREMENT.—
To qualify for an exemption under paragraph (1), a low volume manufacturer shall
register with the Secretary at such time, in such manner, and under such terms that the
Secretary determines appropriate. The Secretary shall establish terms that ensure that no
person may register as a low volume manufacturer if the person is registered as an importer
under section 30141 of this title.

“(3) PERMANENT LABEL REQUIREMENT.—

“(A) IN GENERAL.—The Secretary shall require a low volume manufacturer to affix a

permanent label to a motor vehicle exempted under paragraph (1) that identifies the specified
standards and regulations for which such vehicle is exempt from section 30112(a) and
designates the model year such vehicle replicates.

“(B) WRITTEN NOTICE.—The Secretary may require a low volume manufacturer of a

motor vehicle exempted under paragraph (1) to deliver written notice of the exemption to—
“(i) the dealer; and
“(ii) the first purchaser of the motor vehicle, if the first purchaser is not an
individual that purchases the motor vehicle for resale.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 “(C) REPORTING REQUIREMENT.— A low volume manufacturer shall annually
submit a report to the Secretary including the number and description of the motor vehicles
exempted under paragraph (1) and a list of the exemptions described on the label affixed under
subparagraph (A).

“(4) DEFINITIONS.—In this subsection:

“(A) LOW VOLUME MANUFACTURER.—The term ‘low volume manufacturer’ means

a motor vehicle manufacturer, other than a person who is registered as an importer under
section 30141 of this title, whose annual worldwide production is not more than 5,000 motor
vehicles.
“(B) REPLICA MOTOR VEHICLE.—The term ‘replica motor vehicle’ means a motor
vehicle produced by a low volume manufacturer and that—
“(i) is intended to resemble the body of another motor vehicle that was
manufactured not less than 25 years before the manufacture of the replica motor vehicle; and
“(ii) is manufactured under a license for the product configuration, trade
dress, trademark or patent for the motor vehicle that is intended to be replicated from the
original manufacturer, its successors or assignees, or current owner of such rights, unless there
is a preponderance of evidence that such rights have been abandoned for at least three years.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
“(5) CONFORMING AMENDMENT.—
Any motor vehicle exempted under this subsection shall also be exempted from
sections 32304, 32502, and 32902 of this title, and from section 1232 of title 15 of the United
States Code.

“(6) LIMITATION AND PUBLIC NOTICE.—

The Secretary shall have 60 days to review and approve a registration submitted
under paragraph (2). Any registration not approved or denied within 60 days shall be deemed
approved. The Secretary shall have the authority to revoke an existing registration based on a
failure to comply with requirements set forth in this subsection. The registrant shall be
provided a reasonable opportunity to correct all deficiencies, if such are correctable based on
the sole discretion of the Secretary. An exemption granted by the Secretary to a low volume
manufacturer under this subsection may not be transferred to any other person, and any
unused allotment of vehicles authorized to be manufactured or imported on an annual basis by
a low volume manufacturer shall not carry forward to another calendar year. The Secretary
shall maintain and update the list of current registrants on an annual basis and publish such list
in the Federal Register or on a Web page operated by the Secretary.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
“(7) LIMITATION OF LIABILITY FOR ORIGINAL MANUFACTURERS, LICENSORS, OR OWNERS
OF PRODUCT CONFIGURATION, TRADE DRESS OR DESIGN PATENTS.—
The original manufacturer, its successor or assignee, or current owner who grants a
license or otherwise transfers rights to a low volume manufacturer as defined in this section
shall incur no liability to any person or entity under Federal or State statute, regulation, local
ordinance, or under any Federal or State common law for such license or assignment to a low
volume manufacturer.”

SEC. 3. VEHICLE EMISSION COMPLIANCE STANDARDS FOR LOW VOLUME MOTOR

VEHICLE MANUFACTURERS.
Part A of title II of the Clean Air Act (42 U.S.C. 7521 et seq.) is amended—
(1) in section 206(a) by adding at the end the following new paragraph:
“(5) (A) A motor vehicle engine (including all engine emission controls) from a motor
vehicle that has been granted a certificate of conformity by the Administrator for the model
year in which the motor vehicle is assembled, or an engine that has been granted an Executive
order for the model year in which the motor vehicle is assembled subject to regulations
promulgated by the California Air Resources Board, may be installed in an exempted specially
produced motor vehicle, if—

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 “(i) the manufacturer of the engine supplies written instructions explaining how to
install the engine and maintain functionality of the engine’s emission control system and the
on-board diagnostic system (commonly known as ‘OBD II’), except with respect to evaporative
emissions diagnostics;
“(ii) the producer of the exempted specially produced motor vehicle installs the
engine in accordance with such instructions; and
“(iii) the installation instructions include emission control warranty information from
the engine manufacturer in compliance with section 207, including where warranty repairs can
be made, emission control labels to be affixed to the vehicle, and the certificate of conformity
number for the applicable vehicle in which the engine was originally intended or the applicable
Executive order number for the engine.

“(B) A motor vehicle containing an engine compliant with the requirements of subparagraph
(A) shall be treated as meeting the requirements of section 202 applicable to new vehicles
manufactured or imported in the model year in which the exempted specially produced motor
vehicle is assembled.
“(C) Engine installations that are not performed in accordance with installation instructions
provided by the manufacturer and alterations to the engine not in accordance with the
installation instructions shall be treated as prohibited acts by the installer under section 203
and subject to penalties under section 205.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 “(D) The producer of an exempted specially produced motor vehicle that has an engine
compliant with the requirements of subparagraph (A) shall provide to the purchaser of such
vehicle all information received by the producer from the engine manufacturer, including
information regarding emissions warranties from the engine manufacturer and all emissions-
related recalls by the engine manufacturer.

“(E) To qualify to install an engine under this paragraph, a producer of exempted specially
produced motor vehicles shall register with the Administrator at such time and in such manner
as the Administrator determines appropriate. The producer shall submit an annual report to the
Administrator that includes—

“(i) a description of the exempted specially produced motor vehicles produced and
engines installed in such vehicles; and

“(ii) the certificate of conformity number issued to the motor vehicle in which the
engine was originally intended or the applicable Executive order number for the engine.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
“(F) Exempted specially produced motor vehicles compliant with this paragraph shall be
exempted from—

“(i) motor vehicle certification testing that might otherwise be required under
section 206; and
“(ii) vehicle emission control inspection and maintenance programs required under
section 110.

“(G) A producer of exempted specially produced motor vehicles that is compliant with
subparagraphs (A) through (E) of this paragraph is not considered a manufacturer for the
purposes of this Act.”; and

(2) in section 216 by adding at the end the following new paragraph:

“(12) EXEMPTED SPECIALLY PRODUCED MOTOR VEHICLE.—The term ‘exempted specially

produced motor vehicle’ means a replica motor vehicle that is exempt from specified standards
as defined in section 30114(b) of title 49, United States Code.”.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 SEC. 4. IMPLEMENTATION.
Not later than 12 months after the date of the enactment of this Act, the Secretary of
Transportation and the Administrator of the Environmental Protection Agency shall issue such
regulations as may be necessary to implement sections 2 and 3 of this Act, respectively.

So, if HR 2675 passes, then “low volume” (less than 5,000 vehicles per annum)
motor vehicle manufacturers may produce up to 500 “exempted specially produced motor
vehicles” per year if those vehicles are replicas, made under license, of vehicles originally
produced 25 or more years prior the date of replica manufacture. All equipment, including
engine, must comply with applicable standards, including emissions, in effect at time of
replica manufacture. However, the replica is exempted from safety standards applicable to
the total vehicle such as, supposedly, FMVSS 208, which requires at least four different
crash tests (1 front, 3 side), and FMVSS 216 which requires a roof crush test. The value of at
least five prototype vehicles, plus the expense of testing at a certified test facility (such as
the Transportation Research Center, Inc., of East Liberty, Ohio) can easily reach $1,500,000
or more, so the value of HR 2675 to a low volume replica manufacturer is clear (although
incurred at the expense of some more onerous paperwork, reporting, labeling, etc.).

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 Low volume producers in the U.S. have traditionally relied on such ploys as the
manufacture of “3-Wheel Cars”, which are subject to only those legal requirements as
pertain to motorcycles, or “Kit Cars”, which come under the same requirements as
“Homebuilt Cars”. However, these ploys are rather restrictive as to the product design and
the business paradigm. The enactment of HR 2675 or equivalent law would considerably
free up the legal restrictions on new vehicle manufacturers, as long as those new vehicles
are “Replica Cars”.

Of course, those producers whose vehicular product reside in the

“Restored/Customized Car” category have traditionally avoided being subject to much
emissions and safety regulation as their output vehicles tend to be subject to only such
regulations as was in effect at the time of the base vehicle’s original manufacture. The word
“tend” is used advisedly because there are those manufacturers who push their luck in this
regard.

For instance, in his later days, Boyd Coddington began registering cars that were
essentially completely new as classic automobiles, thereby avoiding emissions, safety, and
tax liabilities. California officials considered this a “Ship of Theseus” fraud, claiming so
many major components were replaced that the cars ceased to be the original entity.
Coddington was charged with a misdemeanor and pleaded guilty on April 7, 2005.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
 Anyway, say that the ADD Business Concept is the production of
vehicles in the “Restored/Customized” category which is a well established and
successful business paradigm. Say also that there would be some unique
aspects to the ADD adaptation of this business model which would significantly
enhance the probability of success and the profitability of the operation, while
countering and/or avoiding some possible adverse business trends.

The typical business paradigm in this area involves the restoration

and/or customization of just about any old, long out of production automobile,
van, or truck, although the focus is on the more desirable cars of the 1950’s to
the 1980’s, which mainly constitutes what are called “Muscle Cars”. Of course, if
a would-be customer wants to customize a late model car, perhaps a high value
brand new one, such business is usually undertaken as well. This business
paradigm incurs certain drawbacks which the ADD Business Concept seeks to
avoid by specializing in the restoration and/or customization of just a single
desirable make/model of vehicle that is of relatively “recent” manufacture.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
One of the advantages of such a “unique” approach can be seen by observing how the
value of a certain vehicle may vary over time as illustrated in the figure on the left. Note
that there is a rapid decline in value for the first few years after purchase, which “bottoms
out” at around 15 years or so and then starts to climb back upward. If an old vehicle is very
desirable and rare enough, it may be expensive and difficult to obtain even if in very poor
condition. And, if such a vehicle is obtained, then a major restoration effort must be
undertaken before it can be resold for a premium price. Such efforts are fraught with risk.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
However, a desirable mass produced vehicle that is chronologically just at the
bottom of its value fluctuation will, while not considered a true “classic” or
collectable, has the advantages of:

1) Being easier to find, and more numerous, ensuring longevity of business

operation.
2) Cheaper to obtain, requiring and risking less operating capital.
3) Easier to restore and modify, reducing time between purchase and resale.
4) Parts are less expensive, easier to obtain, again reducing time between
purchase and resale.
5) Still desirable and profitable to resell, if the base vehicle is desirable and any
modifications chosen wisely.
6) Concentration on just one such vehicle allows for an attainment of expertise
and simplification of tool outlay that also translates into speedy processing and
less expense.

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
For instance, the 4th Generation Pontiac Firebird might constitute such a desirable
mass produced vehicle that is chronologically just at the bottom of its value
fluctuation. While not considered a true “classic” or collectable, such a car if modified
appropriately to distinguish it from mere survivor examples, would be salable for a
considerable profit. The production numbers for this vehicle ensure the availability of
numerous examples for restoration and modification:

THE BUSINESS PLAN, THE CONCEPT

Brian Paul Wiegand, B.M.E., P.E.
“The aim of marketing is to know and understand
the customer so well that the product or service
fits him or her and sells itself.”
(Peter Drucker, 1909-2005, writer, professor, management consultant).

The potential customer(s) for a business service and/or product constitutes “the
market” for that business service and/or product. The market may be a certain
class or group of individuals, or in the case of “B-to-B” (business to business)
dealings it may be a certain type of enterprise. It is usually more certain and
profitable in the long term to deal with other businesses than with the fickle
public, but the public market is more susceptible to emotional appeals.
Reaching the targeted market and getting its attention so as to obtain the
desired response, the purchasing of the offered product or service, is called
“marketing”…

THE BUSINESS PLAN, THE MARKET

Brian Paul Wiegand, B.M.E., P.E.
There are four elements or aspects to marketing, the…

“4 P’s of Marketing”

(1) Product, identify a product/service that will interest

the targeted market.
(2) Price, determine the price range for the product/service that the
market will tolerate and which will provide a healthy profit.
(3) Place, select a means of distribution to reach the market place
(ex.: establish a showroom location, use existing retail outlets, and/or
create a “mail order” operation).
(4) Promotion, develop and implement a promotional strategy to
stimulate the market (ex.: engaging in competitions, generation of
news stories, product placement at public events and high-visibility
locations and in movies/television shows).

THE BUSINESS PLAN, MARKETING

Brian Paul Wiegand, B.M.E., P.E.
 The marketing of an automotive aftermarket product may be
accomplished through trade shows, street fairs, special interest
magazines, news stories, press releases, and various other means.
The most modern of means, on-line marketing, should be
exploited to the maximum extent possible given that it may
represent the most efficient response/cost ratio.

Trends in an industry may be monitored through online trade

magazines, newsletters, blogs, and websites. However, Market
Research must not only be conducted online, but through surveys
and test marketing via the display of physical (3-D) prototypes and
mock-ups at public events. Reading the literature (magazines,
newsletters, blogs) directed at the target market is also a good
idea.

BUSINESS PLAN, MARKET RESEARCH

Brian Paul Wiegand, B.M.E., P.E.
“He who has a thing to sell, and goes and whispers in a well, is not so apt
to get the dollars, as he who climbs a tree and hollers.” (anon.)

“If you don’t get noticed, you don’t have anything.” (Leo Burnett, 1891-1971, advertising
pioneer, founder of “Leo Burnett Company, Inc.”)

“Everyone – no exceptions – responds to well-written, persuasive,

emotionally based copy.” (Joe Vitale, 1953- , author of “The Attractor Factor”, “Life's Missing Instruction
Manual”, “Hypnotic Writing”, and “The Power of Outrageous Marketing”)

Advertising is a specialized marketing process of bringing the business

service/product to the attention of the targeted market; if the market is
unaware of the offered service/product then it can hardly be expected to
buy the service/product. Advertising is therefore a matter of providing
information, but in a persuasive manner. The means by which this
advertising is to be accomplished must be considered, along with the
attendant costs. Some of the best and most effective advertising is
advertising that is free, or where the business is the payee and not the
payer (news stories, public displays and contrived “events”, magazine
articles, interviews, etc.).

THE BUSINESS PLAN, ADVERTISING

Brian Paul Wiegand, B.M.E., P.E.
 Damage Control/Contingency Plans
(Plan to Survive at Least 1 Year of Adversity)
This portion of the business plan is where the strategies are presented for taking corrective
action in the event of business adversities.

Potential problems such as a general economic downturn causing a 35% reduction in

demand, or possible business disasters such as a fire wiping out all the business records
and/or the manufacturing facility. The first possibility might be dealt with by maintaining a
reasonably sized cash cushion and having alternate business operations to “fall back” on,
while the second possibility can be countered by keeping a second set of records at a remote
location and having adequate hazard insurance.

Possible trends in the society at large may have adverse effects on the proposed business;
to the greatest extent possible these trends must be identified and the possible effects
evaluated. For the example automotive after-market business of restoring/customizing
cars such adverse trends might include:

THE BUSINESS PLAN, CONTINGENCY

Brian Paul Wiegand, B.M.E., P.E.
 Damage Control/Contingency Plans
(Plan to Counter Adverse Trends)
Increasing use of automotive leasing instead of purchasing. This trend means that
there will be fewer people seeking customization of their new vehicles as they usually turn
them in at end of lease. For the unique type of the example restoration/ customization
service proposed, there would be no working with new cars, so this trend is not relevant.

“The further down the road we get from the muscle car era, the fewer examples (of
suitable older vehicles) that remain for us to find and restore.” (Ehlen, Mark; “Doorpost
Replacement”, Mopar Muscle, Vol. 29, No. 6, June 2016, pg. 12.)
This trend is also not relevant due to the unique nature of the example
restoration/customization service as proposed: the restoration and customization of only
one specific make and model that is not so old as to be considered part of the classic
muscle car era. This would be a vehicle costing less to purchase, needing less restoration,
and for which repair and upgrade parts cost would be cheaper and easier to obtain.

THE BUSINESS PLAN, CONTINGENCY

Brian Paul Wiegand, B.M.E., P.E.
 Expansion Plans
A business that experiences static growth, like a living organism, is near the end of
its “life cycle”. The ability to conduct a prudent expansion whenever possible
ensures the continued survival of many a business. In accordance with this fact,
some consideration must be given to the possibilities of successive future
expansions even before the initial business is actually functioning. If there is no
possibility for expansion then perhaps the business is ultimately not truly viable.

For the example unique automotive restoration/customization business, expansion

could mean the eventual use of other make/model vehicles to restore/customize
rather than just the one initial make/model. Also the design/construction of
automotive art work, static non-functioning models (various types and scales) of
advanced automotive concepts, and associated automotive items (toys, T-shirts,
etc.) may be engaged in. Ultimately, the construction of functional prototype and
limited production vehicles of advanced design is a possible area of expansion.

THE BUSINESS PLAN, EXPANSION

Brian Paul Wiegand, B.M.E., P.E.
 Personnel

THE BUSINESS PLAN, PERSONNEL

Brian Paul Wiegand, B.M.E., P.E.
 Facilities/Equipment
The size, type, and cost of the facilities/equipment that will be necessary for
the carrying out of the anticipated business functions must be thoroughly
identified; the cost of such will figure prominently in the determination of the
potential profitability of the proposed business and its successful operation.

For the example proposed automotive restoration/customization business, a

large open area structure of adequate square footage to conduct the type and
anticipated volume of business must be obtained. This structure must be in
an appropriately zoned industrial area, and near appropriate logistical supply
routes and the intended market. The structure must have adequate HVAC,
light, and electrical power service (110 & 220 volt). It must provide protection
from rain water intrusion and a certain level of security. The cost/month of
this facility will be an important factor with regard to cost analysis and
profitability.

THE BUSINESS PLAN, FACILITIES/EQUIP

Brian Paul Wiegand, B.M.E., P.E.
 Manufacturing
If a proposed business involves manufacturing, then exactly what is to be
manufactured in-house and what is to be “farmed out” must be considered;
decisions thereon must be made on the basis of the anticipated available in-
house skills and facilities, along with considerations of efficiency (cost) and
preservation of trade secrets. Compliance with all local zoning and federal
OSHA requirements in the manufacturing operation is extremely important; all
such rules and regulations as effect manufacturing operations must be
identified and dealt with well in advance of start-up.

Also, in the case of, say, automotive manufacturing, all applicable FMVSS,
EPA, and State DMV regulations must complied with in the design of the
product (laws regarding kit cars, home builds, 3-wheelers, and proposed laws
easing the burden of compliance on small manufacturers, would all be highly
relevant).

THE BUSINESS PLAN, MANUFACTURING

Brian Paul Wiegand, B.M.E., P.E.
 Costing/Pricing
“Break-Even Analysis” is a very useful pricing technique. It is part of a
larger analytical model called cost-volume-profit (CVP) analysis, and it
consists of determining how many product units a business needs to
sell to recover all the costs and start realizing a profit. Conducting
such a break-even analysis is just a matter of following a few steps:

o Determine the “fixed costs” of the business; fixed costs are

costs that don’t vary with volume of production or services (rent,
utilities, property taxes, and loan payments are examples of fixed
costs).
o Determine the “variable costs” of the business; variable costs
are costs do vary in direct proportion to volume of production or
services (a business that manufactures automobiles will have to
purchase more tires if more automobiles are made, so tires are an
example of variable costs).

THE BUSINESS PLAN, COST/PRICE

Brian Paul Wiegand, B.M.E., P.E.
 Costing/Pricing
o Determine the “minimum price” for which the product or service
can be sold; this price must be as least as much as all the production
costs, fixed and variable, per unit production.

o Determine the “price sensitivity” of the target market (change in

sales/change in price); how many sales can likely be made at the
minimum price and how many as the price gets ratcheted
incrementally upward (keeping in mind that price by itself does not
necessarily completely determine sales; people pay for exclusivity,
so the price sensitivity may change over large intervals of
production variation).

o Determine the “unit contribution margin”. The unit contribution

margin represents how much money each unit of product/service
remains after recovery of unit variable costs; it is determined by
subtracting the unit variable cost from the unit sales price.

THE BUSINESS PLAN, COST/PRICE

Brian Paul Wiegand, B.M.E., P.E.
 Costing/Pricing
o Determine the “contribution margin ratio”; this results in a fraction
that can be used to determine the profits resulting from various sales
volumes. To determine the contribution margin ratio divide the unit
contribution margin by the unit sales price.

o Determine the business “break-even point”; this is the sales volume

that will cover all the costs of operation. The break-even point is
determined by dividing all the fixed costs by the “unit contribution
margin”.

o Determine the “projected profit or loss”; each additional unit sold

after the break-even point will generate revenue equal to the unit
contribution margin, or each unit not sold under the break-even point
will generate loss equal to the unit contribution margin.

THE BUSINESS PLAN, COST/PRICE

Brian Paul Wiegand, B.M.E., P.E.
 Costing/Pricing
 Increasing the unit price will
allow reaching break-even point at a
lower sales volume, but that may
also reduce sales volume.

 The areas between the total

cost line and the revenue line on
the break-even chart represents the
profit and loss.

 To determine the profit (or loss)

at particular volume, take the
revenue at that volume and subtract
the total cost at that volume .

THE BUSINESS PLAN, COST/PRICE

Brian Paul Wiegand, B.M.E., P.E.
 Projected Cash Flow / P&L (First Year)
“Cash Flow Analysis” used to be done by hand, but the modern
approach is to do such analysis by computer spreadsheet.

All cash flow projections should be updated frequently to ensure

ongoing liquidity (not running out of cash, although short term business
loans can be used if necessary to cover temporary shortages, but such
use indicates a lapse in management). It is important to avoid undue
optimism; be extremely conservative in predicting capital requirements
over time. Sales, expenses, profits, taxes, all must be estimated; and the
estimation methodology must be identified.

From the “Projected Cash Flow” may be obtained “Projected Profit &
Loss Statements”, which are merely financial “snapshots” of where the
business might stand at any particular moment (usually at the end of each
month, and especially at end of the financial year).

THE BUSINESS PLAN, CASH FLOW/P&L

Brian Paul Wiegand, B.M.E., P.E.
 Projected Cash Flow / P&L (First Year)
An example projected cash flow might look as follows:

THE BUSINESS PLAN, CASH FLOW/P&L

Brian Paul Wiegand, B.M.E., P.E.
 Return on Investment (ROI)
There is more than one type of ROI. There is the “inside” ROI that evaluates
the performance of a business by dividing net profit by net worth, and then
there is the “outside” ROI that determines the efficiency of investment by an
“outside financier”.

The latter ROI constitutes the pay back rate the business can afford to give
the investor per the amount of capital provided (ex: 10% APR for $250k, etc.),
and is often a matter for negotiation. Regarding this latter type, a high projected
ROI is an inducement for potential investors to provide capital, but beware that
major investors often want a piece of the business operational authority,
and maybe other concessions, as well as pure cash return.

The particular formula used for calculating the ROI is dependent on what type
of ROI is wanted, and on how exactly are revenue, profits and expenses are
tracked.

THE BUSINESS PLAN, ROI

Brian Paul Wiegand, B.M.E., P.E.
 Financial Control
Just as an individual must maintain financial control by limiting access to
his bank account, so too it is absolutely imperative that a business
maintain financial control, although for a business the matter is a bit more
complicated. For instance, business bank accounts can be of two types.

The primary or strategic account must require the signature/approval of

the President/CEO for withdrawals. The secondary or tactical account
may only require the signature/approval of the CFO for withdrawals. A small
number of petty cash accounts may be maintained under the control of
various other corporate officers from time to time as circumstances may
require. All financial transactions must be recorded as incurred and made
available for instantaneous electronic monitoring by all appropriate corporate
officers. Payments to the business should be collectable only by specified
personnel (accounts receivable) and deposited in the primary corporate
account ASAP. The transfer of funds between corporate accounts can
only be affected by the President/CEO.

BUSINESS PLAN, FINANCIAL CONTROL

Brian Paul Wiegand, B.M.E., P.E.
 Information Control
“Information is power”
(Francis Bacon, 1561-1626)

Just as a business must maintain financial control by limiting access and

protecting its bank accounts, so too it is absolutely imperative that a
business maintain control of the flow of corporate information.

This may be accomplished by requiring passwords to access all internal

documents, classification of documents, maintaining two distinct and
separate computer systems (an “open” system with outside internet
connection, and a “closed” system with no external access of any kind);
controlling physical access to, and appropriate RF shielding of, key computer
locations . Access to all information should be on a “need to know”
basis.

BUSINESS PLAN, INFO CONTROL

Brian Paul Wiegand, B.M.E., P.E.
 Scheduling
“Time is money” (Benjamin Franklin 1706-1790)

A schedule must be maintained for all activities, whether recurring or

singular. Among the recurring activities must be included frequent periodic
update of the cash flow projection, an “as needed” review and update of
the business plan, a status update of all ongoing projects, and various
coordination meetings. All new business efforts will require time/man-power
estimates input from all affected departments and subsequent addition to
the activity schedule by anticipated completion date of key milestones. A
concerted effort must be made to maintain the schedule as posted for all
activities, with emergency re-planning in advent of unforeseen difficulties
(although a moderate amount of re-scheduling is always to be anticipated,
and built-in allowances made for, during even a normal course of operation).

THE BUSINESS PLAN, SCHEDULING

Brian Paul Wiegand, B.M.E., P.E.
 Conclusion
The conclusion to a business plan must constitute a succinct and
compelling statement regarding the viability and financial prospects of
the proposed business, summing up all that has gone before in a few
hard-hitting words.

For the example automotive restoration/customization business the

“conclusion” to the business plan might read as follows:

The rapidly growing number of successful automotive restoration

/ customization businesses in the United States is a testament to
the viability of such as a business paradigm but, when combined
with the unique aspects of operating such a business as proposed
within this document, promises to not just be successful but
extremely profitable. As such it represents an awesome
opportunity for the astute investor…

THE BUSINESS PLAN, CONCLUSION

Brian Paul Wiegand, B.M.E., P.E.
 Appendices/Supplemental Data
Resumes of Key Personnel (with emphasis on the experience/skills
relevant to the business function of each individual).

Organizational Chart (with emphasis on hierarchy of authority and chain

of command, individual areas of responsibility).

Manufacturing Facility Layout (with emphasis on efficient work flow,

minimum work stations/operations).

Proposed Product Samples (for the example proposed automotive

restoration/customization business this would consist of a number of design
concept renderings).

THE BUSINESS PLAN, APPENDICES

Brian Paul Wiegand, B.M.E., P.E.
 The Business of Manufacturing
When a business involves the design and manufacture of a product matters are a lot
more complicated than for a business that just buys and then distributes a product.

For one thing, a business that just distributes a product doesn’t bear the same liability
risk if a product should prove defective. Also the business of distribution involves a
simpler physical operation resulting in less entanglement with government rules and
regulations. And , of course, if a product goes out of favor in the marketplace, the
distributorship need only switch to some other product.

Yet both types of business require a facility from which to operate. For a distributor
the facility need merely be a warehouse, with some office space and maybe a
showroom. For a manufacturer the facility is a factory, with a lot of office space and
maybe a showroom. In either case, the type of facility and equipment needed for
the operation of the business impacts upon the business plan through the
expenses incurred. The following exposition is biased toward a manufacturing
business, but there are some similarities with all businesses…

BUSINESS, MANUFACTURING
Brian Paul Wiegand, B.M.E., P.E.
 The Three L’s of Manufacturing Facility

Location – A manufacturing facility has to be

located in an appropriately zoned area.

Logistics – Road and rail routes for supply and

shipping-out must be nearby.

Layout - The facility must be of a configuration

and size appropriate for the manufacturing
activity.

MANUFACTURING, FACILITY
Brian Paul Wiegand, B.M.E., P.E.
 Manufacturing Facility,
Some Considerations
 Plan to keep the distances for transfer of materials between plant
locations to a minimum for cost and risk reduction.
 Plan for adequate sewer, water, gas, and electric service lines.
 Plan for safe storage and transport of hazardous materials in accord
with local zoning and fire, and federal OSHA regulations.
 Plan for emergency services (eye wash, decontamination, first aid).
 Plan for emergency escape from premises in case of fire, flood, etc.
 Plan for appropriate fire extinguisher systems for each particular area.
 Plan for comfortable and safe working conditions, especially with
regard to heat, ventilation, air conditioning, noise, and lighting.
 Plan for access control to keep unauthorized persons from restricted
areas for safety and security, and for the posting of all hazardous areas.
 Plan for adequate parking and outside storage.
 Plan for suitable floor and overhead reinforcement for lifts, hoists, and
heavy equipment.

MANUFACTURING, FACILITY
Brian Paul Wiegand, B.M.E., P.E.
 Jigs & Fixtures
The use of jigs and fixtures is vital for any manufacturing
operation. Jigs and fixtures position components for easy
alignment facilitating accurate inspection and joining
operations. The improvement in quality of work and speed of
operation through use of well designed jigs and fixtures
more than compensates for the time and effort involved in
constructing them.

For an automotive operation such as used as the

business example for this class among the jigs and
fixtures required for operation there might be included
such things as rotisserie rigs for the inspection and repair
of body/chassis units, surface plates for precision
component inspection, welding jigs for part joining,
molds for component casting…

MANUFACTURING, JIGS & FIXTURES

Brian Paul Wiegand, B.M.E., P.E.
 Jigs & Fixtures
One of the most often overlooked members of
the jigs and fixtures group is the “wiring board”.
Wiring boards are absolutely essential for any
operation wherein large complex wiring
harnesses must be constructed.
Such boards establish the point-to-point run length, the wire type and gauge, the
color coding, the labeling, and the termination type of each conductor. Once
assembled on the board, but before being bound into a harness by appropriate flex
conduit or tape, the specified connectors are added to the wire ends and a
conductivity inspection is conducted. Only after the wiring is certified as being
unbroken, without shorts, and of appropriate electrical resistance for each
conductor, can it be removed from the board and passed on to the next stage in
assembly (protective caps must be used to seal the connectors for the time spent
before use).

MANUFACTURING, JIGS & FIXTURES

Brian Paul Wiegand, B.M.E., P.E.
 Equipment
The type of equipment required varies depending on the particular business
operation. For a distributorship business the equipment investment is
relatively modest, lots of shelving and storage units along with some fork lifts,
hand trucks, and push carts is generally all that is needed. For an operation
such as the example automotive restoration/customization business all that
(although not necessarily in the same amounts) is required plus engine
hoists, automobile lifts, welders, grinders, torque wrenches, rotary cutters,
parts cleaners, computer workstations, air compressors, reciprocating saws,
power hacksaws, shop lights, floor jacks, dollies, jack stands, gloves, shop
aprons, welder’s helmets, work benches, drills, hydraulic presses, lathes, drill
presses, sanders, polishers, power washers, sand blasters, heat guns,
torches, soldering guns, socket wrench sets, trailers and transport vehicles,
volt/ohm meters, micrometers, shop fans, shop vacuums, goggles, service
carts, tire mount/wheel balancer, rivet guns, etc., etc. The equipment
investment is much more significant, and anything that can be done to
reduce that burden should be considered.

MANUFACTURING, EQUIPMENT
Brian Paul Wiegand, B.M.E., P.E.
 Design to Manufacture
As one last note regarding the manufacturing business operation, it is of
great benefit to the speed and efficiency of that operation if there is a concerted
effort beforehand to “design to manufacture” (DFM). Researching the conventional
wisdom on this matter results in finding statements like:
“Design for manufacturability (DFM) is the process
of proactively designing products to (1) optimize all the manufacturing
functions: fabrication, assembly, test, procurement, shipping, delivery,
service, and repair, and (2) assure the best cost, quality, reliability,
regulatory compliance, safety, time-to-market, and customer
satisfaction.” (Anderson, David M.; “Design for Manufacturability: How to Use Concurrent
Engineering to Rapidly Develop Low-Cost, High-Quality Products for Lean Production”,
Productivity Press, Copyright © 2016)

To strip this matter to its essentials, just remember to minimize the number
of parts involved, minimize the number of manufacturing operations needed,
standardize the types of fasteners required, and maximize the use of existing “off
the shelf” parts.

MANUFACTURING, DESIGN FOR

Brian Paul Wiegand, B.M.E., P.E.