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1.0 Executive Summary
The purpose of this business plan is to showcase the development of an automotive repair shop based in Phoenix, Arizona. Automotive Repair Shop, LLC (“the Company”) will provide automotive repairs for any make or model of car. The business will earn secondary revenues from the sale of cars that have been purchased and repaired by the business. The Founder of the Company is Trevor Rodgers. A loan of $900,000 is sought to launch operations.
1.1 The Services
The primary revenue center for the Company will come from the ongoing repair of vehicles for clients within Phoenix. The location will feature six repair bays that will each feature state-of-the-art repair and diagnostic equipment. The Company will earn its revenue from mechanic fees as well as through the sale of parts.
The second primary revenue center will come from the sale of vehicles that were acquired by Automotive Repair Shop with the intent to repair and sell them for a significant profit. The business will use multiple channels in order to make sales of repair/restored vehicles.
The third section of this business plan will further document the operations of the business.
1.2 Financing
Trevor Rodgers is seeking an SBA loan of $900,000 in order to carry out the development of the location. This document assumes that the Company will receive a 20-year loan carrying an 8.25% interest rate. Primarily, the funding will be used for the following:
• Real estate acquisition
• Automotive repair equipment
• Working capital
• Initial marketing
• General furniture, fixtures, and equipment
Moving forward, Automotive Repair Shop, LLC could acquire additional capital on an as needed basis given the highly predictable income generated from vehicle repairs and sales. The only instance where additional financing would be required is if Management intends on developing additional automotive repair shop locations.
1.3 Mission Statement
The Company’s mission is to provide cost effective and honest automotive repair services to the Phoenix public while concurrently providing high quality vehicles.
1.4 Management Team
Trevor Rodgers is a highly talented automotive mechanic and entrepreneur. He will be able to establish the operations of the Automotive Repair Shop with a focus on expanding profitability in each year.
1.5 Sales Forecasts
1.6 Expansion Plan
Through the first three years of operation, Automotive Repair Shop will expand its marketing operations until the business reaches 100% capacity. At this time, the Company may establish new locations that are at least 25 miles from the initial location. The business will also continually expand its operations as it relates to the ongoing acquisition of vehicles that are in need of major repair, which can then be resold for significant profits.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Automotive Repair Shop, LLC. The business is registered as a limited liability company in the State of Arizona.
2.2 Required Funds
Management will need a $900,000 SBA loan in order to establish the automotive repair operations in Phoenix. The funds (both debt and equity) will be used as follows:
Trevor Rodgers will contribute $100,000 towards the development of the business.
2.3 Management Equity
Trevor Rodgers currently and for the foreseeable future will remain as the 100% owner of Automotive Repair Shop, LLC.
2.4 Exit Strategy
Automotive repair shops are highly stable and scalable businesses that are able to remain profitable at all times as they provide a needed service to the general public. Although the Founder has no intention of divesting the business for a significant period of time, the Company could be sold for up to six times earnings (including real estate).
3.0 Operations
The primary revenue center for Automotive Repair Shop, LLC will be the continued repair of vehicles for customers within Phoenix and its surrounding market areas. The location, as discussed in the executive summary, will feature six bays. Through these operations, the Company will repair any type of vehicle or light-duty truck. The Company will use state-of-the-art diagnostic equipment to more quickly complete repairs. The types of services offered by the Company will include:
• Air Conditioning Repairs
• Brake Repairs
• Computer and Electronic Repairs
• Tire Replacement
• Transmission Repairs
• Tune-Ups
The business will charge $75 per hour for labor. Parts will produce gross margins of 45%.
It should be noted that the business will also provide repairs to electric vehicles. As more people purchase EVs, Management will have its staff take courses and receive certification as to the proper repair of electric motors and onboard control electronics.
As it relates to the repair and sale of vehicles, the Company will typically acquire cars that are between three to seven years old and have no more than 12,000 miles per year driven. These vehicles will be in need of major repairs, which will be completed by the Company’s staff of mechanics. The business will then sell these vehicles for $10,000 to $40,000 depending on the make and model. The business will recognize gross profits of 50% on each vehicle (on average).
4.0 Strategic and Market Analysis
4.1 Economic Outlook
Automotive repair shops enjoy substantial economic stability. Given the complexity of vehicles and their onboard electronics, there are very few people that can complete vehicle repairs at their homes. As such, even during difficult economic climates, the demand for automotive repair remains highly stable.
At this time, the current economic climate is strong. Unemployment rates continue to remain low and interest rates are declining as a result of proper fiscal policy. Inflation is expected to continue to decline as a result of the efforts of the Federal Reserve. Again, any potential issues with the economy in the future would have a negligible impact on Automotive Repair Shop’s ability to remain profitable.
4.2 Industry Analysis
Currently, there are over 250,000 businesses that provide automotive repair services to the general public. Each year, these businesses aggregately generate $71 billion per annum. Approximately 550,000 people are employed in this industry.
This industry will undergo significant changes over the next ten years as electric vehicles become more prevalent. As discussed earlier, the Company will have numerous training programs available so that the business’ mechanics can understand how to properly repair EVs, especially as it relates to electric motors.
4.3 Customer Profile
As Automotive Repair Shop, LLC will be able to repair any vehicle, the business will attract a broad range of people within the Phoenix market area. The Company has developed the following demographic profile, which will be used in conjunction with marketing operations:
• Annual household income of $75,000 to $150,000
• Lives within six miles of the Automotive Repair Shop location
• Will spend $200 to $2,500 per repair
In addition to targeted individuals for the Company’s services, the business will work with companies that operate large fleets of vehicles including taxi companies and car rental agencies. This will be a major methodology of expanding revenues over the first three years of operation.
Here, you can further expand upon the reasons why you have selected your market for establishing an automotive repair shop. In this section, you can also discuss specific attributes of your target market. A major focus of this discussion should center on population, population density, and median household income.
4.4 Competition
In any market area, there are a number of automotive repair businesses. Given the economic stability of these enterprises, many entrepreneurially minded mechanics establish these companies on a regular basis. Automotive Repair Shop, LLC will maintain a number of competitive advantages. Foremost, the Company will have highly controllable operating costs that will allow the business to remain pricing competitive. Additionally, the business’ ability to repair and sell vehicles will provide a strong differentiating factor for the business.
5.0 Marketing Plan
Given the level of competition that automotive repair businesses face, Management will enact a number of marketing strategies that will create substantial visibility in the Phoenix market. The Company intends to develop a standalone location on a highly trafficked road in this market. The business will have substantial exterior signage. The vehicles that have been repaired and are available for sale will be showcased in the front of the facility.
5.1 Marketing Objectives
• Develop an expansive online presence that will showcase the repair services and vehicles for sale.
• Maintain referral relationships with gas stations and real estate brokerages.
• Support local organizations in order to foster the Company’s image as a community minded business.
5.2 Marketing Strategies
Management will use a diverse array of marketing tactics that will allow the business to generate substantial revenues from the onset of operations. As stated above, the Company is souring a standalone location that will feature six bays and a reception area. The business’ commercial real estate brokerage is currently sourcing an appropriate location for this purpose. The exterior signage will indicate the numerous repair services available.
The Company’s website will be a state-of-the-art platform that is both search engine and mobile device friendly. The site will showcase all services offered by the business as well as repaired vehicles that are for sale. The website will be search engine optimized specifically for the Phoenix market. The business will frequently add content to the platform so that it will retain its standing within search engine results.
The business will support local civics organizations that will provide co-branding opportunities for Automotive Repair Shop. The business, through these operations, will offer discounted tire rotations, oil changes, and other basic maintenance in order to promote traffic to the location. The business will also create ongoing referral relationships with real estate brokerages/agents that will let people that have recently moved to the area about the Company’s operations.
Beyond these marketing strategies, the business will maintain an immense presence among all social media channels. Primarily, the business will use Facebook and Instagram in order to showcase the repair services as well as the vehicles for sale.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• Automotive Repair Shop, LLC will acquire a $900,000 loan in order to develop the location in Phoenix.
• Management will contribute $100,000, as a equity, for the downpayment.
• The business will have a CAGR of 15% during the first three years of operation.
7.2 Sensitivity Analysis
Automotive Repair Shop’s revenues are nearly wholly immune from negative changes in the economy. People will continue to need repairs to their vehicles in any economic climate. The business will maintain strict cost controls in order to ensure that the business can remain profitable and satisfy its underlying financial obligations at all times.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
