E-LEM N-ATOR

Feasibility Plan

Mark Gershfeld
Cathy Badell
Daniel Wallace
July 30, 2003 www.mylemon.com
 Opportunity / Need
Market Demand
Prior to purchasing a used car, many people seek the advice of an impartial auto mechanic
for a professional evaluation, or request guidance from friends or family who are
knowledgeable about cars.
There is inconsistent quality of mechanical checks and the evaluation may not be
comprehensive.
Buyers face general risk in dealing with unscrupulous or uninformed private sellers, and in
general, buyers distrust used car dealers.
The opportunity is growing for companies to offer time saving services.
Market Accessibility
Fragmented market is composed of mechanics and car dealers who do not offer impartial,
comprehensive mobile evaluation and diagnostic services to potential used car buyers, as
well as buyers who conduct title research themselves.
Barriers to entry include the cost of capital equipment and upgrades, insurance, labor, and
appropriate trade certifications.
Compelling Need
Physiological: Increases operational safety for driver, passengers, and occupants of other
vehicles.
Emotional: Certification by a professional auto mechanic offers some degree of peace of
mind. Reduces stress related to car purchase decision.
Social: Promotes honesty, fairness, and integrity of car dealers and private sellers.
Economic: Identifies the current and anticipated repairs that the vehicle would need post-
purchase and provides buyers with a cost estimate. Saves time for buyers by providing
mobile on-site inspection and diagnostic services. May provide buyer and seller with a
negotiating tool.
Intellectual: Enables more informed decision-making for the buyer.
 Service Description
A professional, experienced auto mechanic that offers
on-site evaluations of used cars prior to purchase.
Range of Services
Diagnostic engine and emissions analysis.
Visual inspection of major components.
Test drive with buyer
Cost estimate of current and anticipated repairs.
Information packet containing useful websites and legal information.

Service Attributes
Performance: Advertised accuracy level which adheres to industry standards (to
be researched).
Availability: Within 24 hours of requested evaluation. Evaluation would take
approximately 1 hour.
Service: Early and late hours of operation to accommodate busy schedules.
Services initially available only in the Denver metro area.
Limitations: Do not perform repairs. No advice on whether the customer should
purchase car. Scheduling conflicts and staffing to meet demand for services.
Environment: Honda Elements driven to sites by mechanic. Elements equipped
with laptop & wireless internet access. Highly professional, uniformed mechanic
staff with strong customer service skills.
 Features & Benefits
Feature Benefit Need addressed
Mobile on-site Time savings, convenience. Intellectual,
service economic.
Cost estimate of Knowledge of anticipated post- Economic,
current and purchase costs so they can intellectual
anticipated repairs make better purchase decision.
Accompanied test- Qualified opinion provides Emotional,
drive peace of mind. intellectual.

Extended hours Convenience for buyers Economic.

Bundling of services All critical information for buying Economic,

decision is available from one intellectual.
source.
 Target Market
Demographics
– Male or female adults working in all occupations, except auto
repair, who have low to medium income levels and live in metro
areas (consolidated population centers).
Buying Decision
– Individuals who seek to purchase used cars and base decision on
total value offered by the vehicle.
Psychographics
– Risk averse, value peace of mind, distrustful of used car dealers
and private sellers, values safety as a fundamental need,
unsatisfied with existing resources to evaluate mechanical
condition of used cars.

Value Proposition
“E-Lemon-ator is a mobile vehicle analysis service.
Offering on-site analyses and repair cost estimates, E-
Lemon-ator provides convenience, time savings, peace
of mind, and cost-effective professional assistance for
purchasers of used vehicles.”
 Competitive Analysis
Competitor Unique Feature Target Negative Strengths Limitations
Market Perceptions
E-Lem n-ator Mobile service, Used car Mobile Mobile, Diagnostic
Test drive, buyers services are flexible capability,
emissions, less thorough scheduling unable to lift
diagnosis ability vehicle

AAA Diagnostic Mobile service Used car Mobile Mobile Limited

buyers services are diagnostic services,
less thorough equipment Scheduling
(one vehicle
only)
Independent Complete repair Repairs, Looking for Fully Stationary
Mechanic capability, test Used car problems to equipped business,
drive performed, inspection fix and shop, loyal schedule is
emissions charge customer less flexible
diagnosis money base
Car Dealer Complete repair Target Car dealers Fully Not
Service Dept. capability, market of will sell equipped independent,
checks each car dealer lemons shop, schedule is
sold advertising not flexible
capability
 Sustainable Competitive Advantage
Market Opportunity
– Independent = credibility (intellectual)
– Comprehensive = peace of mind (emotional)
– Mobile = convenience (economic)
Competitive Analysis
One direct competitor in Denver metro area
 Major weakness is limited service offering
 No evidence of strong market presence
Resources & Capabilities
Virtual office model saves operating expenses &
improves mobility
Simple, agile, scalable business model
 Flexibility to expand services to meet new market challenges
Fully loaded vehicle allows rapid & thorough service
Price setting ability – no corporate control
 Risk Factors
Legal
Errors and Omissions
 Missing a problem – customer may sue
 Diagnosing a problem that doesn’t exist – seller may sue
Accidents
 During test drive - our insurance must cover any costs
 Liability for accidents after service is performed
Financial
– ROI – uncertainty of recovering our investment
– Long term profitability – uncertainty of sustainability, competition
from large players
Business
– Reputation
– Worker risk – injury and related compensation, and loss of resource
Competition Response
AAA Diagnostic – No action, likely to maintain current capacity
Car dealers – Most welcome a second opinion for the customer,
may result in more car sales
Mechanics – No action, will continue to rely on local word of mouth
and customer loyalty
 Investment, Breakeven, & Profitability

Operating Income Year 1 Year 2 Year 3

Revenues $258,000 $475,200 $633,600
Sales Volume & Price 2,000 @ $129 4,800 @ $99 6,400 @ $99
Cost of Revenues 271,056 432,420 466,177
Gross Profit (13,056) 42,780 167,423
% Gross Profit -5.06% 9.00% 26.42%
Operating Expenses 83,907 107,636 127,862
Operating Income (Loss) ($96,963) ($64,856) $39,561

Breakeven Revenue $355,260 $515,242 $534,530

Investment Required $174,500 $57,500 $57,500

 Feasibility Conclusions
Compelling emotional, financial, intellectual needs
satisfied
 Convenient evaluation process
 Reduces risk in purchase process
Unique combination of features creates a
sustainable competitive advantage
 Mobility of the service
 Flexibility for additional services
 Scalable business model
The market is accessible
 No major barriers
 No inhibitive competition
Risks can be controlled by taking the proper legal and
insurance precaution, and of course with thorough and
accurate service
This venture is profitable after 3 years with an initial
investment of $175,000
 Recommendations
 Prepare business plan
 Initiate a 5 year expansion plan
Used motorcycles
Further market coverage
Examine potential for lending institution partnerships

 Develop marketing strategy

Need to make our services known
Feasibility dependent on ability to maximize capacity

 Hire mechanics
 Begin the design process for the E-lem n-ator
Honda Elements