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Village Auto Business Plan PLU Pacific Lutheran University .rtf

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Village Auto Business Plan  PLU  Pacific Lutheran University .rtf Powered By Docstoc
					                Village Auto



           BUSINESS PLAN




                   Prepared By
Brad Ballinger, Zach Petersen, Bach Nguyen, Dexter




                 Date Prepared
           Tuesday, November 28, 2006
                                                       Table of Contents

EXECUTIVE SUMMARY ........................................................................................................

MANAGEMENT AND ORGANIZATION .............................................................................
   Management Team........................................................................................................
   Compensation and Ownership ......................................................................................
   Board of Directors/Advisory Council ...........................................................................
   Infrastructure .................................................................................................................
   Contracts and Franchise Agreements............................................................................
   Insurance .......................................................................................................................
   Employee Stock Option Plan and Other Incentives ......................................................
   Organization Charts ......................................................................................................

PRODUCT/SERVICE ................................................................................................................
   Purpose of the Product/Service .....................................................................................
   Unique Features ............................................................................................................
   Stage of Development ...................................................................................................
   Future Research and Development ...............................................................................
   Trademarks, Patents, Copyrights, Licenses, Royalties .................................................
   Government Approvals .................................................................................................
   Product/Service Limitations..........................................................................................
   Product/Service Liability ..............................................................................................
   Related Products/Services and Spin-Offs .....................................................................
   Production .....................................................................................................................
   Facilities ........................................................................................................................
   Suppliers .......................................................................................................................
   Environmental Factors ..................................................................................................

MARKETING PLAN .................................................................................................................
   Industry Profile .............................................................................................................
       Current Size ......................................................................................................
       Growth Potential...............................................................................................
       Geographic Locations .......................................................................................
       Industry Trends .................................................................................................
       Seasonality Factors ...........................................................................................
       Profit Characteristics........................................................................................
       Distribution Channels .......................................................................................
       Basis of Competition .........................................................................................
   Competition Profile.......................................................................................................
   Customer Profile ...........................................................................................................
   Target Market Profile ....................................................................................................
   Pricing Profile ...............................................................................................................
   Gross Margin on Products/Services ..............................................................................
   Break-Even Analysis ....................................................................................................
   Market Penetration ........................................................................................................
          Distribution Channels .......................................................................................
          Sales Representatives ........................................................................................
          Direct-Sales Force ............................................................................................
          Direct Mail/Telemarketing................................................................................
       Advertising and Promotion ...........................................................................................
       Packaging and Labeling ................................................................................................
       Service and Warranties .................................................................................................
       Trade Shows..................................................................................................................
       Future Markets ..............................................................................................................

FINANCIAL PLAN ....................................................................................................................
    Sales Projections ...........................................................................................................
    Income Projections........................................................................................................
    Cash Requirements .......................................................................................................
    Sources of Financing.....................................................................................................
       Attached Financial Projections .....................................................................................
          Cash Flow for Three Years
          Income Statement for Three Years
          Balance Sheet for Three Years
          Ratio Analysis

OPERATING AND CONTROL SYSTEMS ............................................................................
   Administrative Policies, Procedures and Controls........................................................
      Receiving Orders ..............................................................................................
      Billing the Customers........................................................................................
      Paying the Suppliers .........................................................................................
      Collecting the Accounts Receivable ..................................................................
      Reporting to Management.................................................................................
      Staff Development .............................................................................................
      Inventory Control ..............................................................................................
      Handling Warranties and Returns ....................................................................
      Monitoring the Company Budgets ....................................................................
      Security Systems ................................................................................................
   Documents and Paper Flow ..........................................................................................
   Planning Chart ..............................................................................................................
      Product/Service Development ...........................................................................
      Manufacturing...................................................................................................
      Financial Requirements ....................................................................................
      Marketing Flow Chart ......................................................................................
      Market Penetration ...........................................................................................
      Management and Infrastructure .......................................................................
   Risk Analysis ................................................................................................................
   Salvaging Assets ...........................................................................................................

GROWTH PLAN ........................................................................................................................
   New Offerings to Market ..............................................................................................
   Capital Requirements ....................................................................................................
   Personnel Requirements................................................................................................
   Exit Strategy..................................................................................................................

SUPPORTING DOCUMENTS .................................................................................................
                                   EXECUTIVE SUMMARY

Venture history


Venture description
Village Automotive is in the business of selling cars (Volvo, Saab, Cadillac, and Honda) and
providing basic vehicle servicing to any and all customers in need of it. We are in a stage of
development in which we are expanding our service department by eliminating the original
Hummer dealership and converting the building into a fully operational service center. We feel
that by expanding and putting more emphasis on the servicing aspect of our business we will, in
turn, create better relationships with old customers and attract new customers into the original
business of selling vehicles. The dealerships and the service center will be tightly linked
referring customers from one to the other, both ways, by using simple marketing tactics. We will
not have any proprietary rights.

Venture organization
Our key managers will be the 4 owners. We will have 2 managers at each location to report to
us. Apart from that we will have a marketing professonal to handle adversiting and a webmaster
to mange the web.

Venture market
The market of the industry that we are in is not on the incline. It is more like a flatline because
the need for cars is not really there, it is more of a desire for cars. We want to target the entire
market, but mainly to hone in on the youth, seeing as to how they are the future. Our penetration
plan is to hold a supply of product that moves itself. Don't hold too much of what we can't sell.
We want all of the models that we stock to fly off of the lot. In order to do that we have to offer
what customers may want. Surveys and anything along those lines will help us to do this. The
major competitors are the other local dealerships. Once someone sets a standard you have to
conform to it. We want to be able to set the standard in the area.

Venture operations
$16.2 million will be needed for product development, marketing, and operations. $10 million
will be needed to grow the business. Much of the $10 million will be spent on the conversion of
the original Hummer dealership into a fully operating service center. The rest of the money ($6.2
million) will be used in marketing for the car dealerships and the new service center.

Venture financing
We will need about 16.2 million for financing from each of the 4 owners. each owner will own
25% of the company so the profiets that are made by the company are split 4 ways to go to the
owners.
                        MANAGEMENT & ORGANIZATION PLAN

Management team
The Executive board will include: Bach Nguyen in charge of marketing, Dexter Barnett
monotring inventory and customer serviers, Zach Petersen human resoourses, and Brad
Ballinger handling finance and accounting.

Dexter- reading the market and keeping up with the current trends.
Bach- Creative background, helped in a start up of a restaurant.
Zach- People skills, high charisma.
Brad- Analytical skills, experiance in handling cash flow for start-up companies.

Compensation and ownership
Ownership:
Brad- 25%
Bach- 25%
Dexter- 25%
Zach- 25%

The company will be owned by the Management team.

Board of directors/advisory council
Village auto group will have 1 primary advisor for operations - Mr. Eli Berniker.
And will consult with Jay Ballinger for Finance.

Infrastructure
Banker-                      Bob Macky                      Bank of America
Attourney-            Mark Earl                      Earl & Earl
Insurance-            Shelly Anderson                Safeco

Contracts and franchise agreements
Agreements with the following auto makers to distribute and service their cars: Volvo, Honda,
Saab, and Cadillac.

Insurance
There will be life insurance for each of the 4 owners. In the event of a death the insurance will
go to purchase that owners share and they it will be distributed equally among the remaining
share holders.

Employee stock option plan and other incentives
There will be no stock option for employees, the company will stay in the hands of the respected
families.

Organization charts
The 4 owners form the excutive board are the top level mangement and there will only be other
one other level with 2 mangers at each location. This is our two level management system.
                                     PRODUCT/SERVICE

Purpose of the product/service
The primary purpose of Village auto will to provide service to automobiles, also Village Auto
will retail the cars with a friendly atmosphere and hassle free salesmanship.

Unique features
Focus on providing quality service in the auto maintenance and up keep. Developing a strong
communication infrastructure that will focus on a internet web space. Having a hassle free sales
force that focus on the customers needs.

Stage of development
Village Automotive group is in the process of reorganizing. The current CEO and founder is
leaving the company and there is a need for a new management team to establish itself.

Future research and development
Research on what the community is looking for in a car. There will need an investigation on
hybrid cars and alternative fuel sources, and the possibility that the American brands may not
have a place in the future.

Trademarks, patents, copyrights, licenses, royalties
The only licenses village automotive group needs to operate are the rights to distribute the
automobiles for the current companies. Also there will need have our mechanics certified.

Governmental approvals
Village Auto will need to follow the guidelines for the current standards of emissions set by the
EPA. Also Village Auto will require a business license.

Product/service limitations
The cost of cars and the credit needed to own one. It requires a license to operate a vehicle.
Cars can only be operated by someone who is at least 16 years of age.

Product/service liability
Liabilities for a dealership include insurance on the inventory from any damage that occurs.
Models only last a year then they are out dated. There will have to be insurance on the facilities
and all personnel. Liability insurance for accidents involving customers.

Related products/services and spin-offs
We will use horizontal integration when we provide a service shop along with optional
aftermarket upgrades.

Production
Our internal staff will handle all of the production and nothing will be subcontracted out. The
internal production staff includes managers, secretaries, dealers, and mechanics.
Facilities
The original Hummer dealership will be turned into a full time service center that will provide
service to each brand of automobile that we sell at our dealerships. The Volvo, Cadillac, Saab,
and Honda dealerships will stay as they were.

Suppliers
N/A

Environmental factors
The heaters in the service center will run off of re-used oil. We will make use of recycling bins in
the office setting by promoting the recycling of papers and plastics. The EPA will regulate our
products and services.
                                      MARKETING PLAN

Industry profile: Current size
The automobile industry was highly competitive, with more than 22,000 new car dealerships and
54,000 used car dealerships in the United States. These included small independently owned
franchises representing a single manufacturer medium-sized regional groups that sold multiple
brands within limited geographic boundaries, and large, publicly traded companies with
dealerships in many states.

Industry profile: Growth potential
The industry is stable. Cars have become a commodity, so there is no new market. Most car
purchases are replacements. The potential for growth is very minimal, however the business still
has potential for success.

Industry profile: Geographic locations
The automotive industry is centered around Detroit.

Industry profile: Industry trends
Certain trends in the industry include Hybrid cars and alternative fuel sources. Technology will
make a lot of difference in the industry at the time. We will be looking to sell more cars like
Honda because of they are always changing their automotive technology to make their vehicles
more efficient for the consumer and the environment. We will focus our marketing on efficient
vehicles and make sure that we are up to date technologically.

Industry profile: Seasonality factors
Summer is the most important season for Village Auto in that car sales increase drastically
during the summer months.

Industry profile: Profit characteristics
The profit characteristics for the industry that we are in is the mark-up that we make from selling
the cars minus the amount that we bought the car for at wholesale. From that amount we
subcontract out all expenses and salaries. In the end of things we actually only make about a
2-3% profit margin.

Industry profile: Distribution channels
The cars are manufactured and shipped by a separate company to our dealerships.

Industry profile: Basis of competition
For many car dealerships, the competition level is high. We will not focus so much on the prices
of the vehicles that we sell as on the overall quality of the service that we offer to our customers
and the excellent customer service provided through the dealers. Repeat customers is also an
advantage for our product/service

Competition profile
The profile of the competiton is simailar to the profile that we have. The competitive advantage
that we hold over our competition is that we cover all aspects of the market.

Customer profile
Honda:
-Ages 18+
-Lower-Class to Upper-Class
- Both M and F
-$25000-$50000
-City
-Enviromentally friendly
-Low Emission Enthusiasts
-Tuners Scene

(Saab,Volvo, Cadillac):
-Middle-Class to Uppper-Class
-$50000- Beyond
-Suburbs
-Ages 18+
-Families

Target market profile
We do not have a selected target, but we have more than one target market. We target both the
upper and lower-classes. We also focus our targets to the youth, middle-aged, and elderly
markets.

Pricing profile
55% Mark up for cars

Gross margin on products/services
We do not differ from the industry's pricing policies in any way.

Break-even analysis
The break even point will be at about 23 million.

Market penetration: Distribution channels
James & James Shipping Co. 18753 W. Bernard Pl. New York, NY, Jim James, the east coast.

Market penetration: Sales representatives
Sales representatives will sell the product to the customers, so they are a very important people
in terms of the service that is provided.

Market penetration: Direct-sales force
The sales people is the direct sales force. The dealers will walk the customer through the entire
process of purchasing a vehicle; from searching and finding the right vehicle for someone to
making the sale of a vehicle final.
Market penetration: Direct mail/telemarketing
We will hire some one to design the promotions for $2000. Our cost of resources for direct mail
would be $1200: $500 for the cost of paper, and $750 for the cost of ink. It won't cost us
anything to send out the mail because we have free business postmarkings. We will do no
telemarketing and focus the rest of our marketing efforts on commercials ($300 per air) and
billboards ($15000 per bilboard per month).

Advertising and promotion
We will publish our car dealership website on the internet for $20 per year. Brad Balllinger
will design and publish the website so we wont have to spend fundings on designers; and Brad's
assisntant/ secretary will do maitenance on the website as part of his/ her salary. TV
commercials will also be aired during primetime for ($300 per air). And we will also publish
newspaper adds for 1 grand per Sunday add.

Packaging and labeling
N/A

Service and warranties
We will have manufacture warrenties and power train warrenties for new cars, and extended
warranties on preowed and certified vehicles.

Trade shows
General auto shows in the city of Boston will be of great benefit to the marketing of our cars and
services.

Future markets
When the customer is on sales floor they will interact with our car dealers to get them there we
will:
1. Will run Bill boards along busy highways.
2. Post advertising at recycling centers for new hybrids.
3. Have the auto group prepare cars for shows and enter the shows. The display will contain
advertisements for the dealership and we will be able to pass our brochures. Then there can be
sales people on hand along with a with a aftermarket mechanic.
4. Make arrangements with local store like Wall-mart and Costco to move some of our inventory
there to show to shoppers. Some shoppers may have some extra time to stop and look at our
cars if they have time to shop. These will be over a weekend.
                                       FINANCIAL PLAN

Sales Projections
 08-09 Sales Projection- $109,000,000
09-10 Sales Projection- $112,000,000
10-11 Sales Projection- $115,000,000

Income Projections
Our net income projections are:

08-09 Income Projection- $9,000,000
09-10 Income Projection- $12,000,000
10-11 Income Projection- $15,000,000

Yes, our company is currently profitable,and as far as we know will remain profitable.

Cash Requirements
There will be no start-up costs, because the business is already fully functional. The cost that will
need to be covered is the transformation of the Hummer dealership into a full-time service
center.

We will spend $1.3 million on the creation of the service center.

Sources of Financing
We will not finance, we will pay for things out of pocket.
                         OPERATING CONTROL SYSTEMS PLAN

Administrative policies, procedures, and controls: Receiving orders
The administrative policies, procedures, and controls that we will use when recieving orders is to
send them to inventory, or contact the customer that placed an order for that particular shipment.

Administrative policies, procedures, and controls: Billing the customers
The administrative policies, procedures, and controls that we will use when billing the customers
is the standard method for selling cars. We will gather all of the necessary information, and fill
out the required paper work for the sale. Depending on if the customer finances we will keep
record with the customer and the bank.

Administrative policies, procedures, and controls: Paying the suppliers
The administrative policies, procedures, and controls that we will use when paying the suppliers
is that we will transfer the money into a personal transaction account in which it can be taken out
by the company.

Administrative policies, procedures, and controls: Collecting the accounts receivable
Our customers pay on a monthly payment; they have one week upon due date to pay, or higher
intrest shall be charged. The First Bank of Massachusetts will be our collection agency.

Administrative policies, procedures, and controls: Reporting to management
Our excutive mangement team will meet with the head of the sales and office departments from
each dealership and the head of the service center every firday to discuss what heppened that
week and goals or objectivies in the comming weeks. Also there will be indivdual meetings
with members of management as we feel neccary.

Administrative policies, procedures, and controls: Staff development
We will have a mandatory company training video on workplacve behavior. We will also stress
computer literacy. We will offer oppurtunities to our entire staff to attend sales workshops and
car conventions on the company's expense.

Administrative policies, procedures, and controls: Inventory control
We will implement a computer system that will keep inventory updated, also it will moniter what
type of cars are sold and look for patterns in the months.

Administrative policies, procedures, and controls: Handling warranties and returns
Defer all warranties to the repested car manufacturer. We will handle returns as a trade in value
65% of the kelly blue book.

Administrative policies, procedures, and controls: Monitoring the company budgets
We will implement a form of devine intervention accounting.

Administrative policies, procedures, and controls: Security systems
We will use a commerical security system implemented on all the of our locations. Also our
lots will me well litted. Our computer infomation will be stored off site and we will make a
backup that will be stored in a seperate location.

Documents and paper flow
The flow of information throughout the system will be the input of the customers basic
information. The documents that are needed to prepare this transaction is the agreement for
payment or the financing papers, depending on the customers method of pay.
Other documents that may need to be dug up is the credit report and history of the customer that
is making the purchase, so that we can decide if they qualify to pay the vehicle off. By doing this
we protect our investment(the cars).

Planning chart: Product/service development
The product/service will be ready to market once we recieve it back from the EPA. Once the
EPA has approved the vehicles we can then move forward to the marketing and selling of the
vehicles.

Planning chart: Manufacturing
We do not have a production schedule due to the fact that we do not produce anything.

Planning chart: Financial requirements
An ample supply of money will be required to finance the project. We will have our accountants
and consultants give us an update on when the money is needed and other details that would
effect our dividends.

Planning chart: Marketing flow chart
The advertising will be planned at the end of each month, and then placed at the beginning of
each following month. Brochures will be stocked in our show room, as well as dispersed
throughout the community. The developing of the brochures will be planned at least a month in
advance to give us a cushion to work with if something were to go wrong.

Planning chart: Market penetration
1. Will run Bill boards along busy highways.
2. Post advertising at recycling centers for new hybrids.
3. Have the auto group prepare cars for shows and enter the shows. The display will contain
advertisements for the dealership and we will be able to pass our brochures. Then there can be
sales people on hand along with a with a aftermarket mechanic.
4. Make arrangements with local store like Wall-mart and Costco to move some of our inventory
there to show to shoppers. Some shoppers may have some extra time to stop and look at our
cars if they have time to shop. These will be over a weekend.

We will use a brute force attack by trying to accomplish all parts as fast as we can.

Planning chart: Management and infrastructure
We will keep our 4 member executive board and our infrastructurer will include a manger in
each department (ie. sales, office, service mechanic) that will all be on the same level. So we
can keep a simple 2 level mangement system.
Risk analysis
Storm/hurricane destroys our inventory. Gas prices encourages people to use public
transportation. Inventory is big and may be hard to move. Vandalism to our inventory.

Salvaging assets
Pretty much all we could do is salvage the properity and the buildings and sell them off after
liqidatioin the automobiles.
                                       GROWTH PLAN

New offerings to market
We will expand more onto the internet and try to incrause interent sales. Also we will look into
alternative fuel cars.

Capital requirements
The financail requiremtns for the web system is very low. We will just get all the capital form
revenue generated from the sales.

Personnel requirements
Project growth will be lead by our IT staff and manged by a member of the excutive board.

Exit strategy
Sale off the web divsion to a huge web based company like yahoo or google.
                                  FINANCIAL PLAN

Attached Financial Projections
 Cash Flow for Three Years
 Income Statement for Three Years
 Balance Sheet for Three Years
 Ratio Analysis
                                 SUPPORTING DOCUMENTS

   Financial Worksheets
   Historical Financial Statements
   Resumes of Key Personnel
   Legal Agreements
   Marketing Materials
   Insurance Documents
   Press Releases or Articles
   Market or Industry Studies

				
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