1 Executive Summary

Kathmandu Automart is a start-up organization that offers a complete domestic and foreign
automobile care, repair service as well as a full-featured retail parts store. This business plan
will show how a total investment of only Rs.20,00,000 could yield cumulative net profits in
excess of Rs……… over a five-year period, and average monthly sales of Rs.20,00,000 while
maintaining adequate levels of liquidity. The purpose of this plan is to secure additional
funding from an investor and a bank to cover the start-up costs.

Kathmandu Automart will be private partnership business start-up dedicated to provide high
quality repair and services to all variety of vehicle including two wheeler, four wheeler, earth
movers, tractor etc at optimum time in reasonable price. The auto repair market has a lot of
competition, however, almost all only offer service. We are opening a brand new company
that will focus on Kathmandu area because Kathmandu is the main automobile hub of Nepal.
Thus we can attract more customer in fewer days.

Kathmandu Automart 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.

1.1 Objectives

1. To offer the high quality repair and service to our customer in minimum time at
reasonable price and provide outstanding customer experience, measured by
minimum 5 percent yearly sales growth, and customer complaints less than 1 percent.
2. Sales revenues increase steadily through year three.
3. Institute a program of superior customer service through rigorous evaluation of
service experience.

1.2 Mission

The mission Kathmandu Automart is to provide high quality, convenient and comprehensive
auto repair at low cost. The most important aspect of our business is trust. It is the goal of our
firm to have 100% customer satisfaction in regards to quality, friendliness, time to
completion and to discover new ways to exceed the expectations of our clients.
Our values are critical to our success. They are the strong foundation of Kathmandu
Automart, define who we are, and set us apart from our competitors.

They underlie our vision of the future. These values include:

Performance excellence. We act like responsible owners, always seeking to meet or exceed
expectations.

Quality. Our dedication to undisputable quality and service.

Teamwork. We act as a team, committed to each other, and bound by trust and loyalty.
Integrity. We treat one another, and all our stakeholders with dignity and respect. Honesty,
ethical behaviour, and integrity are fundamental characteristics of our business conduct.

1.3 Keys to Success

Our Keys to success are:

1. High-quality work.
2. Constant contact with clients so as to keep them informed about the state of their
automobile and the repair job progress.
3. Knowledgeable mechanics that are friendly, customer oriented, and will take the time
to explain to customer the intricate nature of our business and our work.
4. Commitment on continuous improvement and total quality services.

1.4 Company Ownership

Kathmandu Automart will be partnership by six members. A new investor will be invited to
participate in company’s capital. The facilities will contain a garage, office space and storage
space for tools, parts, etc.

The company is seeking a loan in order to finance the start of operations for the company.
Each of the owners will be putting up some of their own capital as equity.

2 Company Summary
Kathmandu Automart is a partnership firm owned by six partners and will be located at
Banepa, Kavre. The company will be a limited liability company registered in province 3.
2.1 Startup cost and funding

After spending several months researching for various elements, we plan to lease a land space
in a densely populated area of Kathmandu. The start-up capital will be used for legal
expenses, registrations, factory setups, rent, promotion, installations, and inventory on hand at
start-up, as detailed in the company summary section of this plan. We have estimated total
start-up costs of around Nrs.20,00,000. The numbers in the startup and the start-up funding
tables are meant to reflect these estimates. Each of the six business members will be
contributing equal sum of money to build up the capital of 20 lakhs. The purpose of this
business plan is to secure financing for that amount.

An investor and co-owner is welcome to participate in the company's capital for the portion
of 20 percent ownership of the company capital. The funds provided by the investor will be
used to buy equipment, and to cover part of the start-up expenses. More details about the
investor's potential interest in the company are provided in the important assumptions section
of this plan. For the alternative financing needed to cover the start-up costs, the company
plans to receive a five-year term commercial loan facility which will meet the cash flow
requirements. The borrowed funds will be used exclusively to buy equipment, based on the
list that will be made available to the lending institution. The loan could be repaid in equal
monthly instalments over a five-year period. Our cash-flow analysis demonstrates the
company's ability to repay the loan and meet the interest payment obligations, while
maintaining adequate liquidity and generating positive cash flow, and sufficient cash reserves
for unforeseen future events.

2.1.1 Start-up requirements

Start-up Expenses

Legal
Stationery etc
Advertisement
Phone
Insurance
Rent
Utilities
Computer
other
 Total start-up expenses

Start-up Assets

Cash Requirred
Start-up inventory
Other current assets
Long term assets
Total assests

3 Services
Kathmandu Automart offers a wide range of services as outlined in the detailed sections
below. It is ultimately the goal of the company to offer a one-stop facility for all auto
servicing needs, including brakes, transmission, wheel alignment, etc. In this way the
company can offer greater perceived value for the customer than many other shops which
specialize in certain areas.

The industry is highly competitive with suppliers having a great deal of power in setting and
negotiating the prices of their products and services to repair shops. In addition, because the
customers see the service as undifferentiated and a "commodity" with little value separation
between competitors, buyer power is also very high. Finally, the barriers to entry are
moderately low, and the large number of competitors in this field, including substitutes (such
as do-it-yourself work) mean that the pricing for such services are very competitive. The only
way to have an advantage in this industry is a low cost leadership principal applied
aggressively or to create higher switching costs through the building of strong business to
customer ties.

We will hire trained and certified mechanics who are able to prove they have superior
customer awareness and interaction. It is the company's professional people who will fulfill
the firm's contracts and goals. The largest part of the company's expenses will be in labour
costs.

3.1 Service Description

Kathmandu Automart will be providing following services:

1. Routine maintenance.
2. Wheel alignments, tires and rims.
3. Brake repair.
 4. Comprehensive engine repair.
5. Transmission.
6. Dents repair.

4 Market Analysis Summary

Since Kathmandu Automart will be able to service any vehicle on the road, including
motorcycles and campers, it does not make any sense to segment our market. Our potential
customer includes every household in Banepa, Dhulikhel and Panauti areas that owns one or
more vehicles. The industry does not have any seasonality that affects it.

4.1 Service Business Analysis

This section is covered in the Competitive Comparison section of the Plan.

4.1.1 Competition and Buying Patterns

While many customers looking to purchase automotive repair services are concerned with
price, the primary concern is with building a relationship of trust between themselves and
their service provider. A large number of people within the country have experienced or
heard of bad service encounters within this market. As a person's car is usually connected in
one way or another with that individual's livelihood, a dependable automobile is crucial.
Therefore, many clients are willing to pay a little more for a mechanic they feel does a quality
job and understands their needs.

An automotive repair company that can anticipate, meet, and even exceed customer's needs
can build a defensible position within the market place and acquire market share at the
expense of other rivals.

4.1.2 Competitive Comparison

The auto repair industry is highly competitive. Each company within this field has high
capital costs, low margins, and a high intensity of competition. Suppliers have a great deal of
power in setting and negotiating the prices of their products and services to repair shops. This
is due to the fact that the suppliers who absorb the greatest amounts of cash from repair shops
are large auto part companies. These companies are more consolidated that the repair
industry, have deeper pockets, an almost limitless number of substitute customers, and finally
they are the single most important supplier to our industry. Therefore, these companies can
set whatever
price they wish to. Furthermore, labour is a supplier in this industry as well, and salaries for
such individuals are well known and not very flexible.

In addition, because the customers see the service as undifferentiated and a "commodity"
with little value separation between competitors (if they offer a suitable level of quality)
buyer power is also very high. Additionally, the costs of our services are not cheap, and
buyers are willing to search for the most favourable combination of price and acceptable
service.

The barriers to entry and exit are moderately low in this industry. Switching costs are
virtually non-existent and the costs to entry and exist the market are low. The large number of
competitors in this field including substitutes mean that the pricing for such services are very
competitive. The only way to have an advantage in this industry is a low cost leadership
principal applied aggressively to all aspects of the business.

4.1.3 Main Competitors

As stated before, the automotive repair market is very fragmented. The chief competitors in
this industry for our company are the high quality automobile dealerships and licensed
service reps. This includes Toyota, Ford, Mahindra, Suzuki and other major brand names.
Within our company’s immediate service vicinity, There are Hyundai, TATA, Suzuki
dealerships. Each of these direct competitors have a service facility. These competitors
dominate the market place, have the largest market share, and have advantages such as
specially trained personnel, access to lower priced parts and tools, and deep pockets.

Kathmandu Auto Engineering will seek to compete initially in the low cost strategy. At the
same time, it will seek to provide a higher level of customer satisfaction by having more
rigorous quality control and seeking ways to enhance the entire service experience (not just
repairing a person's car). In this way it will lock in a loyal customer base who value the
client- service provider relationship.

4.1.4 Business Participants

The auto repair industry is highly fragmented. In fact, there are so many small providers that
any company in this industry is facing a purely competitive environment. It is very difficult to
create a differentiation, or niche, strategy in this environment and until our company will able
to establish a reputation for quality, on time, superior customer service, the company will
seek a low cost role. Once it has achieved what management believes to be a sufficient
reputation
for its services along with a profitable customer base, the company plans to leverage this
advantage into a differentiation strategy that will be able to charge more for its services.

5 Strategy and Implementation Strategy

5.1 SWOT Analysis

The SWOT analysis provides us with an excellent opportunity to examine and evaluate the
internal strengths and weaknesses of Kathmandu Automart. It also allows us to focus on the
external opportunities presented by the business environment as well as potential threats.
Next sections explain major strengths, weaknesses, opportunities, and threats that we should
be aware of.

5.1.1 Strength

 Attract wide variety of customer.

 Can provide best service, maintenance and overhauling of any vehicle.
 Create employment opportunity.
 Highly employment opportunity.
 Highly experienced owner/team/Qualified mechanics.
 Limited start-up risk.

5.1.2 Weakness

 High Investment
 More human resources and large platform resulting high negative revenue.
 Difficult to manage inventory.

5.1.3 Opportunities

 Continued expansion of company all over Nepal.

 Servicing of any vehicle under same roof can change the servicing trend.
 New concept might create more brand value
 Service providers can influence and gain market values.

5.1.4 Threats

 Labor and overhead costs.

 Financial Stability.
  Competitiveness in automotive industry.

5.2 Competitive Edge

Our company’s competitive edge lies in the vision of its partners, who understand better than
many of their rivals that a service visit does not just include repairing a client's car, it includes
the entire service experience from the first time a client talks to their mechanic until they
decide to stop driving. The long-term profitability of a service firm of this type lies in the
repeat customer that finds our company services an excellent experience, despite the fact that
they usually have suffered an inconvenient breakdown. The company will seek to examine all
aspects of the service experience to seek ways to improve its customer satisfaction. In
addition, all employees will be rigorously trained and retrained to think about customer
satisfaction in order to create a self-sustaining company culture that revolves around this
issue.

5.3 Positioning Statement

It is the express purpose of our company to become the local leader in quality and service
experience of all the small (non-dealerships) automotive repair firms within the kavre area
while maintaining a low cost plan. Once a reputation for quality and service experience is
created, and an ongoing network of referrals is bringing in new business, the company plans
to re-evaluate its strategy and positioning within the market to see if a differentiation strategy
is viable. If so, this will allow the company to raise prices and increase profit margins in
relation to its rivals. This in turn is expected to leverage long-term growth until our company
can reach a regional scope of operations.

5.4 Marketing Strategy

The company has a modest program of marketing its services that include the following:

1. Flyers.
2. Direct mailers.
3. Discounts.
4. Newspaper ads.
5. Referrals through other local businesses.

Each of these marketing approaches has the advantage of being low cost and creating service
awareness. The company's long-term marketing goals are to use local radio and TV ads
similar to tyre adds on TV.
The company is also investigating the possibility of having a grand opening program that
would feature discounts in servicing cost as well as parts.

5.4.1 Promotion Strategy

The principal owners of our company expect that a significant number of their pre-existing
clients (Clients of Kathmandu Automart) will desire to switch to our company to retain the
services of their personal mechanics. This will provide a sufficient income until our company
can build up a reputation and see its marketing program take effect.

This promotion strategy will take the form of flyers, direct mailers, price discounts, and
advertisements in newspapers. Our company does not desire to spend a large amount on
marketing until the firm is ready to expand either into new facilities or open up new ones. It
is estimated this will occur sometime after year five.

5.4.2 Pricing Strategy

Our company exists in a purely competitive environment where each firm must be a price
taker. In other words, the firm has no ability to affect the market price of its services,
regardless of how many automobiles it repairs. In this case, therefore, marginal revenue (the
revenue incurred by producing or servicing one more unit) is equal to the price charged.
Furthermore, because the demand curve is essentially horizontal, our company can service
automobiles at total capacity without affecting the price.

What all of this means for our company is that the company must seek to charge its clients at
the market price (or lower). Research has shown that the average price is approximately
11,000 rupees per vehicle. As long as marginal costs do not exceed revenues, the method to
maximize short-run profits is to service automobiles at maximum capacity. This means that
our company can expect an ROA of approximately 4.5%

5.5 Sales Forecast

Since the automotive repair industry is, operationally, a job-shop environment, it is somewhat
difficult to estimate sales. For job-shops, each individual product or service is tailored or
unique to that job, and is only initiated once an order is made. However, the sales forecast
reflect the professional opinion of Mr. Lakshman Lama in how much sales he will make
based on the following assumptions:
 1. The number of clients Lakshman Lama and Ram Lama can attract from their previous
companies.
2. The effect of planned promotions and word-of-mouth marketing.
3. Current prices and costs of doing business.
4. The types of automobiles and jobs that will occur in every month.

For the most part, sales for an automobile repair firm are steady year round and reflect little
seasonality.

In the context of Nepal

Routine maintenances includes:

1. Oil and Coolant Levels

2. Air Filter
3. Tire Pressure and Tread Depth. ...
4. Headlights, Turn Signals, Brake, and Parking Lights. ...
5. Oil & Filter
6. Rotate Tires
7. Wax Vehicle
8. Transmission Fluid

Routine maintenance (time to time maintenance) for a light vehicle= Rs.4, 000

Routine maintenance (time to time maintenance) for a heavy vehicle= Rs.10, 000

Small repair includes:

1. Replace air filter.

2. Scheduled maintenance.
3. New tires.
4. Battery replacement.
5. Brake work.
6. Antifreeze added.
7. Engine tune-up.
8. Wheels aligned/balanced

Large repair jobs include maintain ace of engine block and engine head
The table and charts below outline the sales forecast. Three years of annual sales and costs of
sales are shown. Twelve monthly tallies are included.

SALES YEARLY

1800000
1600000
1400000
1200000
1000000 ROUTINE MAINTAINANCE
800000 SMALL REPAIR JOBS BIG
600000 REPAIR JOBS
400000
200000
0
YEAR 1YEAR2YEAR3

Sales Year1 Year2 Year3

Routine maintenance 15,00,000 16,00,000 17,00,000

Small repair jobs 40,000 50,000 60,000

Large repair jobs 12,00,000 13,00,000 14,00,000

Total sales 27,40,000 29,50,000 31,60,000
As the year passes by the no or vehicles increases and thus the revenue also increases

6 Management Summary
Our management is expected to use resources wisely, operate profitably, pay debts, and abide
by laws and regulations. Our management philosophy is based on team work, responsibility,
and mutual respect.

6.1 Personnel Plan

Our company initial staffing will consist of twin brother Ram Lama and Lakshman Lama as
the managing director. The company will have five expert level mechanics within a few
months after the company is operating. Accounting, bookkeeping, and marketing services
will be outsourced. The company's intermediate goal is to have five full time, fully trained
mechanics at the original facility, plus a full-time office manager. However, management has
decided to await future developments before determining the best time to bring on such
personnel.
In our experience, a team of five multi-skilled employees works best for our kind of business.
Working as a team is critical to our success. We recognize that human resources are our most
valuable asset. Our personnel strategy focuses on selecting, training, rewarding, and
stimulating all employees in order to build employee loyalty, and increase performance. The
cornerstone of our personnel plan is to maximize productivity and minimize labor burden of
the company's operating expenses, while maintaining strong employee commitment to the
success of operations. Trying to appropriate compensation incentives to our company's
performance targets, increases the likelihood that these goals will be achieved. Our
performance-based pay strategy takes into consideration the linking of employee
compensation to the achievement of measurable business targets. Employees that perform
well are eligible for various types of performance-based pay, such as cash bonuses, awards,
profit sharing plan, and stock option program. The ultimate goal of all our employees is to
meet or exceed our customers' expectations. They are all empowered to take any reasonable
action to avoid a customer leaving our premises dissatisfied. Our continuous improvement
policy encourages all employees to continually look for ways to keep updated with the latest
technology, to improve processes, reduce costs and save time. This approach serves the goal
of reducing costs and delivery times, and increasing the service quality and customer
satisfaction

6.1.1 Monthly salary

1. Manager = Rs.20,000
2. Receptionist = Rs.12,000
3. Experienced mechanics/head mechanics = Rs.15,000
4. Helper mechanics = Rs.8,000

As per the year increases the salary also increases so that the staff fell more secure and work
with great passion in the company. Firstly, we take 1 manager ,1 receptionist ,4 head
mechanics and 4 helper mechanics and we take the salary of 12 month in the table below.

Year1 Year2 Year3

Manager 2,40,000 25,000*12*1 30,000*12*1
Receptionist/Accountant 1,44,000 15,000*12*4 18,000*12*4
Experienced mechanics 5,40,000 15,000*12*5 15,000*12*5
Helper mechanics 3,84,000 9,000*12*8 10,000*12*8
Others (guard ,cleaner) 1,00,000 1,00,000 1,00,000
 Total people 10 10 10
Total payroll 12,64,000

7 Financial Plan
According to our conservative estimates, Our company is expected to maintain a healthy
financial position over the next five years. The following plan outlines the financial
development of our company. The source to repay the loan will be the cash flow generated
from operations. The company will also finance growth through cash flow. After an initial
period of five years, the company will be able to make a further expansion. At that time, it is
envisioned that a bank loan or equity funding will be sought to finance the new development,
in addition to retained earnings.

The following sections outline the financial plan for our company repair.

7.1 Break-even Analysis

The company's Break-even Analysis is based on an average company's running costs within
this industry, including payroll, and its fixed costs for such things as rent, utilities, etc.

yearly revenue break even 14,76,000

Assumption
Estimated yearly fixed cost(location rent) 12,00000