The Used Car Dealer Financial Model, Dashboard, and Business Plan provides you with a comprehensive suite of tools for creating a capital raising document. It includes a profit and loss statement, cash flow analysis, balance sheet, and breakeven analysis. Please see the video below!
1.0 Executive Summary
The purpose of this business plan is to showcase the continued development and growth of a used car dealership based in Charlotte, North Carolina. Used Car Dealer, LLC (“the Company”) will maintain a moderate sized lot facility that will specialize in the sale of relatively new vehicles (typically five years or less). The business will offer repair services as well that will complement the vehicle sales operations. The Founder of the Company is Matthew Landers. At this time, the Company is seeking a $1.25 million private investment and $5.75 million via an SBA loan.
1.1 Operations
The business, through multiple sales channels, will sell pre-owned vehicles. The business will generally acquire vehicles that have been driven less than 12,000 per miles annum. The business will deal in vehicles that are only five years old or lower. On an average month, Management anticipates that the business will turnover 30 vehicles. The Company will directly employ staff to make sales of vehicles at its lot facility in Charlotte.
In addition to sales operations, the Company will provide a limited scope of general mechanic services. This will allow the business to provide warranties on all vehicles sold while concurrently acting as a secondary revenue center. These operations will remain in demand during all economic climates.
The business, as its tertiary revenue center, will generate income from the financing of pre-owned vehicles to the general public.
Chapter three of this document will further outline the operations of Used Car Dealer.
1.2 Financing
The Company will require a $1.25 million investment as well as a $5.75 million loan to commence operations. The terms of the equity portion of the financing will be determined during negotiation. This document assumes that the business will receive a 15 year loan carrying an 8% interest rate for the debt capital portion. The funds will be used for the following:
• Acquiring pre-owned vehicles
• Lot and location development
• Initial marketing
• Working capital
Moving forward, Used Car Dealer, LLC could easily acquire additional rounds of capital or a revolving credit facility in order to expand operations. This document assumes that the Company will finance its growth with retained earnings.
1.3 Mission Statement
Used Car Dealer, LLC’s mission is to provide high-quality pre-owned vehicles at affordable prices to the Charlotte public.
1.4 Management Team
The Company’s Founder and CEO is Matthew Landers. He has 18 years of experience in the field of pre-owned vehicle sales and financing.
1.5 Sales Forecasts
1.6 Expansion Plan
The business will continue to expand its inventories of pre-owned vehicles for sales. The Company will also maintain an expansive online presence that will allow vehicles to be sold to customers throughout the country. After the third year of operation, Management may establish additional sales facilities in the State of North Carolina.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Used Car Dealer, LLC. The business is registered as a limited lability company in the State of North Carolina.
2.2 Required Funds
The Company will acquire $5.75 million (loan) and $1.25 million (equity) in order to establish the business’ operations. The funds will be allocated as follows:
2.3 Investor and Management Equity
Tentatively, Management intends to sell a 50% interest in the business in exchange for the equity sought in this document.
2.4 Exit Strategy
Although Management has no current plans to divest the business, the Company would be most likely sold to an individual that is seeking to enter the pre-owned automotive sales business or an existing company seeking to expand. Used Car Dealer, LLC, based on its anticipated profits, could be sold for up to four times earnings by the third year of operation.
3.0 Operations
As stated in the executive summary, Used Car Dealer will be actively involved with the sale of pre-owned vehicles from its facilities in Charlotte. The business will typically generate $15,000 to $60,000 per sale. The business will only deal in relatively new vehicles since the business will be providing a full, limited-time warranty on all vehicle sales. This will further drive inventory turnover. Beyond the Company’s facilities, the Company will use multiple online channels to further facilitate sales. The business will become an authorized seller among numerous platforms. The Company, as part of its commitment to customer service, will make all necessary arrangements to have vehicles delivered to customers.
Used Car Dealer, LLC will also provide comprehensive financing solutions for car buyers. The business will coordinate with numerous automotive financing companies so that the best interest rate possible can be acquired for buyers. This business will receive a percentage of each financing transaction. In the future, the Company may develop its own in-house financing programs.
The business will also provide general maintenance and repair of vehicles. This is an important revenue center for the business as it will provide ongoing, high margin revenues for the Company even during difficult economic climates. This department will also provide repairs for any vehicle that is under warranty.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
The economy is doing reasonably well. Interest rates and well as the rate of inflation are returning to more normalized levels. The Federal Reserve as well as global central banks have taken appropriate measures to ensure the stability of the economy. It is expected that this monetary policy will continue to address economic issues as they are incurred.
Any issues with the economy will only have a modest impact on Used Car Dealer, LLC’s to divest its inventories of pre-owned vehicles. Many buyers cannot afford a brand-new car, and they often turn to pre-owned vehicles. The Company’s ability to generate income from automotive repair and mechanic services will further ensure the continued economic stability of the business.
4.2 Industry Analysis
There are 22,000 companies that own or more locations that divest pre-owned vehicles. Each year, these entities generate $145 billion of revenue. This industry has experienced strong growth as a result of supply chain issues. The continued growth rate of the industry will be similar to that of the economy as a whole.
One of the major trends among pre-owned vehicle dealers is to use multiple forms of advertising, primarily online, in order to further drive inventory turnover. The Company, as discussed earlier, will leverage the power of the internet in order to provide its inventories on a nationwide basis.
4.3 Customer Profile
Among people that will come to the location to acquire a pre-owned vehicle, the Company will use the following profile:
• Household income of $65,000 to $175,000
• Will spend $15,000 to $60,000 on a pre-owned vehicle
• Will require financing for their purchase
Management has specifically chosen the Charlotte market given its population. This area is home to numerous major corporations. This will reduce the potential economic risks to the business. As the Company expands the number of locations that it operates, the business will conduct in-depth demographic analysis for each potential market.
4.4 Competition
As with all companies in this industry, Used Car Dealer, LLC will face ongoing competition from vehicle dealers that specialize in pre-owned cars as well as affiliated dealerships that provide used cars as well as new vehicles. The Company, through its controllable operating cost infrastructure, will ensure that all pre-owned vehicles will be affordably priced. The business will also maintain a differentiating factor given that the business will specialize in relatively new cars.
5.0 Marketing Plan
The Company will use a number of marketing strategies that will drive substantial interest in the wide range of pre-owned vehicles offered. A major component of Used Car Dealer’s operations will center on using numerous online marketing strategies to further drive inventory turnover. The business will also maintain a massive regionally focused marketing campaign.
5.1 Marketing Objectives
• Source a high visibility location that will showcase the pre-owned vehicles and general repair services offered by the Company.
• Use social media to create interest and brand name awareness for Used Car Dealer, LLC.
• Maintain ongoing relationships with automotive financing companies to provide clients with competitive interest rates.
5.2 Marketing Strategies
Foremost, Used Car Dealer will leverage its high visibility location in Charlotte. This location will have numerous vehicles outside along with the initially offered pricing within the windows of each vehicle. The Company is sourcing a location on a highly trafficked road within this market. The facilities will be seen by tens of thousands of people on a daily basis.
In regards to online marketing, the Company will have a state-of-the-art platform developed that showcases all pre-owned inventories. This platform will feature integrated ecommerce functionality so that individuals can make purchases of vehicles while concurrently making financing arrangements. This website will be usable on mobile devices, and it will be regionally search engine optimized for the Charlotte market area. In order to further increase the Company’s online visibility, the business will list the website among platforms that showcase pre-owned vehicle dealers.
In addition to the website, the business will use all social media platforms to promote sales of used vehicles. The Company will promote the brand name of the business while concurrently showcasing individual vehicles. Used Car Dealer, LLC’s in-house marketing manager will engage daily posts.
The Company will also use traditional marketing strategies specific to the Charlotte region. This will include circulars that showcase the entire inventory of the business. These circulars will be distributed on a monthly basis. The Company will coordinate these efforts with a regional marketing firm.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• Used Car Dealer, LLC will acquire $5.75 million via a loan carrying a 15-year term and an 8% interest rate.
• Investors will contribute $1.25 million towards the business.
7.2 Sensitivity Analysis
The Company’s revenues are moderately sensitive to an economic recession. In this event, the demand for pre-owned vehicles may decline. However, Used Car Dealer, LLC will generate ongoing revenues from its general repair services. These high margins coupled with the substantial gross profits from vehicle sales will ensure that the business is able to remain cash flow positive while servicing its financial obligations.
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
