Business Plan: First Class Automotive Repair Shop

1.0 Executive Summary

First Class Automotive Repair Shop (F-CAR) is a start-up company that provides an entirely foreign and domestic vehicle repair services along with a complete retail parts store. First Class will operate from the Bronx. 

1.1 Business Concept

The automotive repair industry has serious competition even though they all focus on priding services. First Class will be different from the competitors by providing not only a hassle-free repair service but also a store that is completely stocked with parts. This will create a wide avenue of serving broad base customers by the parts department. Moreover, this move will be a boost to the service department that will be able to turnaround jobs at a faster rate than the competitors with basically all the required parts on location and in stock. 

F-CAR will through their customer-oriented business strategy maintain and attract a loyal customer base. The entire workforce will be trained to develop a long lasting trust bond with clients and held accountable for the provision of superior service. This is critical as honesty and trust are no longer vices of the automotive repair sector. 

1.2 Mission

F-CAR Shop targets to provide auto repair service that is of high-quality accompanied with a fully stocked auto parts store. The focus will be on personalized services to its clientele by providing rapid and convenient services. Furthermore, being technologically savvy F-CAR will implement a computerized monitoring system where an inventory will be taken continuously to ensure that a balance of the inventory is achieved ( Charles Jr, Schmidheiny, & Watts, 2017) . The balance will be useful in maximizing inventory turnover rate while also taking precaution in making sure that all relevant parts are always in stock. To achieve the target of a fully stocked store, F-CAR has developed robust relationships with its service conscious vendors who when required will ship on overnight timeline major parts. 

2.0 Competitors, Customers, and Industry

2.1 The Industry

The market is saturated with exceptionally competitive suppliers who are extremely influential in negotiating and setting the costs of their services and merchandise to auto repair shops. On top of that, clients perceive the service with an undifferentiated outlook and the products in between the competitors has inconsequential value separation, hence placing the buyer power extremely elevated. Conclusively, the barriers to entry are relatively minimal, and in this field, the bigger number of competitors taking into consideration substitutes indicates that the competition is high especially in the pricing of the services ( Charles Jr, Schmidheiny, & Watts, 2017) . Thus, the aggressive application of a low-cost leadership strategy or construction of sturdy commerce to customer ties by the creation of advanced switching costs is the best way to dominate in this auto industry. 

2.2 Product and Services

First Class Automotive Repair Shop has invested heavily on its large crew that has the capacity of working on all models and makes of both foreign and domestic vehicles. With the entire workforce trained on superior customer service, the standard that has been set is aimed at the quick turnaround ( Busse, Israeli, & Zettelmeyer, 2017) . Some key areas that will assist the management in gaining customer confidence are in the honest and accurate quotation of cost estimates and the time is taken to complete repair estimates. Thus, the staff at F-CAR will be trained to work as a team and make sure to deliver what they guarantee. Hence, the team will strive to establish a robust customer base that is regular through the construction of strong client associations propelled by integrity and trust. 

F-CAR uses the best caliber of technology to manage a fully stocked inventory of automotive parts. The objective is to ensure that there is a constant stock of all automotive parts as well as maximizing the potentiality of a turnover on the inventory ( Charles Jr, Schmidheiny, & Watts, 2017) . Robust relationships have been established with the most reliable vendors who are adept at shipping the major parts at short notice. F-CAR will hire not only skilled, certified, and experienced mechanics who will demonstrate superior client interaction and awareness but also competent and proficient sales personnel who will be conversant with auto parts and specifications. 

The automotive shop aims to eventually become a one-stop auto garage where all services will be available including services like wheel alignment, brakes, transmission to name but a few. This strategy will ensure that the auto shop can provide more perceived value for the client than the competitors. Also, F-CAR will offer a variety of automotive repair services that comprise of: transmission, arranged maintenance, repair of brakes, alignments of wheels, rims, and tires, and all-inclusive repair of engines. 

2.3 Buying Patterns and Competitors

F-CAR has over 500 auto parts and auto repair shops as competitors within the Bronx. Auto parts inventory and auto repair are among the services provided by nearly a quarter of the competitors among them are a small number of key countrywide franchises. The remaining are insignificant privately-retained formations. The company will provide rivalry by concentrating on expediency and the deliverance of repair to the clients that are of high quality ( Charles Jr, Schmidheiny, & Watts, 2017) . Moreover, the main factor in developing a substantial base of regular, repeat, and loyal clients F-CAR’s focus will be on the maintenance of an honest reputation. 

Installation of auto parts, retail sale of automotive parts, accessories and tires, and auto service and maintenance are some of the principal engagements of the major competitors. The big shot competitors have embraced the “supercenter” depot version, where a standing-free, one-stop automobile spending depository that contains leading-edge service bays ( Charles Jr, Schmidheiny, & Watts, 2017) . The massive supercenters hold numerous units for stock-keeping and operate the automotive aftermarket requirements of the clients who would appreciate doing it for themselves or those that would love it done for them. However, the big shot stores tend holding a product line that is typically basic with slight differences in the type and number of vehicles registered in the various markets. Most of the inventory within the supercenters comprise items that average approximately 24,000 units. 

The product lines within the automotive industry comprise batteries, tires, remanufactured and brand new parts for imported and local vehicles. These parts consist of ignition parts, engine parts, and engines, suspension parts, exhaust systems, lighting, parts of brakes, blades for the wipers, and parts for auto’s air condition, air filters and oil, hoses, and belts. Other product lines include a selection of van sport, and van utility car attachments, chemicals such as polishes, oil, additives, paints, antifreeze, and cleansers ( Charles Jr, Schmidheiny, & Watts, 2017) . Hand tools such as body tools and paint, sockets, ratchets, wrenches, test gauges, and auto specialty tools, and lift equipment and jacks are more of the product lines. Car accessories like exterior accessories, floor mats, and seat covers, and mobile electronics comprising remote car starters, alarms, and sound systems also form the bulk of the product line. 

A point of sale within stores has been the trend adopted by many of the competitors as this system assists in gathering gross profit and sales data by units that keep the record of stocks from individual stores daily. The competitors further use the information to strategize on product sales, pricing, and marketing techniques ( Kalverkamp, & Raabe, 2018) . In many of their stores, the competition has ensured the availability of electronic parts catalog together with commercial electronic systems of invoicing that provide delivery of parts. To top up, a number of the opponents have within their different service centers installations of work order systems that are electronic. The advantage of the system is the creation of a history of services for individual cars, assists the service center in maintaining client service database, and offers clients with detailed sales records. 

3.0 Description of the Company

3.1 Summary of the Company

First Class Automotive Repair Shop is a newly established start-up enterprise directed by a quadruple associate. Out of the four partners, one is in the administration of the finance department of the enterprise while two of the remaining three, form part of a massive sales and management team. The last shareholder in the business represents the most critical part of the entire company, management of operations within the company ( Kalverkamp, & Raabe, 2018) . Therefore, the company will be a private co-ownership of a quadruple shareholder who will seek extra funding from SBA in the form of a ten-year loan. 

The United States has in the recent past years experienced an economic growth that has seen the increment of disposable income. Hence, a majority of the citizens have selected to use their part of the disposable income in the purchase or maintenance of their cars ( Charles Jr, Schmidheiny, & Watts, 2017) . The increase in automobiles has consequently led to an increased demand for convenient and reliable automotive repair shops. Therefore, F-CAR will take advantage of the prevailing market conditions to position itself in a way that it will strategically exploit the rising need of the high and middle-income earners. This market segment within the Bronx requires not only quality but prestigious automotive repair services. 

3.2 Company Ownership

F-CAR is a registered company within the state of New York and shall operate from its facility located in 1332 Metropolitan Avenue in Park Chester. The facility will house office space, storage space for the parts and tools, two-car garage, and a front store for the sale of the auto parts. The limited company is owned by James Hall, John Smith, Charlie Blair, and Gomez Hernández. The partners plan to raise additional funds by taking First Class Automotive Repair Shop public in a few years to come ( Charles Jr, Schmidheiny, & Watts, 2017) . The partners agree to contribute equal amounts to the investment of the business. The balance in the capital will be raised through a short term loan and a decade long loan from Small Business Administration and will be used in the purchase of the auto parts that will be on sale. 

3.3 Start-up Summary

The research was conducted within the Bronx region prior to the establishment of the start-up. Data generated from the study includes results from insignificant shops owned by mechanics to big shot shops that run nationally. In the determination of partner estimates, inflation was taken into consideration between the time they ventured into the initiative and the present costs of expensed commodities ( Cho et al., 2017) . Moreover, some of the proprietors contributed their personal equipment such as the air compressor and some tools within the facility. 

4.0 Marketing Plan

4.1 Market Analysis

First Class Automotive Repair Shop has plans to fulfill the requirements of the regular domestic client within the resident base, together with towed car drop-ins from the freeway and local traffic conveyed at the adjacent interstate. In order to achieve these requirements, the company has developed an association with several prime tow truck companies operating locally for recommendation business of stuck cars in need of towing to an automotive repair center. From the company estimates, 82% of revenue will be generated from the close ties the business will establish with the local customers and 18% from the recommendations of tow-in services. 

4.2 Market Segmentation

First Class Automotive Repair Shop targets the high and middle-income earners. This market is associated with the taste for high quality, prestigious and rapid services that are of utmost convenience to their personal benefit. Therefore, these clients are willing to go out of the way and pay an extra dollar for premium services. They will cough the additional amount to avoid common untimeliness of having their vehicles holed up in the auto shops provided the pricing is within the automotive repair shops. 

F-CAR has strategized a marketing plan that targets a customer base composed of residents as regulars. The plan involves establishing a considerably huge consistent customer base that will foster a healthy and constant income base that will guarantee the stability of the enterprise. Since the company is already planning to raise 18% of its revenue from emergency towing of interstate and local vehicles, close associations with the towing companies will be maintained to constant referrals from the companies operating the towing business ( Pred, 2017 ) . Thus, F-CAR will ensure that it engages in business with only the companies that provide rapid and high-quality services to strategically secure this market segment. 

4.3 Target Market Segment Strategy

The business has been located strategically within the avenues of Metropolitan, Parkchester, Bronx to take advantage of the high and middle-income earners from this area. Therefore, the enterprise will provide expedient automotive restoration services, convenient and rapid services, collaboration with reputable towing companies, and excellent client services to establish an image of trustworthiness before the eyes of the target market ( Cho et al., 2017) . There is a high demand for auto parts and automotive restoration services on the high level of shuttling vehicles in the interstate, and similarly, the local highways boast a high level of tourism vehicles. Hence, to exploit this market wholly, it is imperative that the company ensure that the upper and middle classes, as well as the tourists, avoid inconveniences at all costs. 

4.3 Business Service Analysis

There is an extremely high fragmentation in the market of the sales of auto parts and automotive restoration services. Most of the automotive centers provide either the parts inventory or the repair services. Hence, they unknowingly create a niche for auto shops that provide both parts sales and auto restoration services within a single location ( Karadag, 2015) . F-CAR intends to position itself within this niche by taking advantage of its convenient and strategic location. The intended target market is insensitive to price quotations so much as the services are value added. Therefore, the company will adopt the quick turnaround business model where a car of any make or model will be provided with convenient and high-quality service. 

5.0 Operations Plan

F-CAR has a plan to succeed, and it involves providing clients with rapid, convenient, high-quality automotive restoration services. Moreover, the company plans to stock its inventories with full range auto parts that are guaranteed by reliable shipping from reputable suppliers of spare parts for automotive. F-CAR’s competitive advantage is the attention centered on client expediency by speedy dispatch on auto restoration work, a recommendation network of selected tow companies, and provision of unlimited shuttle service. The company will employ sales staff to ensure that the higher and middle-income clientele are reached. It will further use its online presence to keep the clients engaged and use their recommendations to modify the services provided. 

6.0 Development Plan

F-CAR will develop a criterion for selecting future auto shop locations as part of its expansion policy. This criterion is founded on the comprehension that the success of auto shops is not based on the delivery of quality services only but also on the selection of sites that are convenient to the clients. The company will also provide through its online presence motoring tips as a way to engage with its clientele. In the future, the company will initiate a mobile app that will guarantee all clients are getting important updates and promotions. The mobile app will come in handy as it will assist in increasing the market share of the company as well as promoting and building its brand to stand out from the competitors. Developers will be contracted to ensure that there is an online payment mechanism not only on the website but also in the mobile phone application. This technique will help the company in its struggle to position itself as well as enhancing the clients' experience in the interaction with the company. 

7.0 Growth Plan

The auto shop building is leased on a 5,200 square foot space located at the intersection of Metropolitan Avenue and as a quick way to leverage on the clientele once served by Mr. Gomez Hernandez. This will be a quick way to penetrate the competitive market with a projection for aggressive growth, setting the intervals for inaugural of a new auto shop annually. The company also intends to initiate a website that will be used to engage its clients and introduce some of its products that the clients might not be familiar with. Social media platforms are expected to engage the clients and also to generate new prospective clients. From the online engagements with its clients, the shop will modify its services based on customer’s recommendations. 

8.0 Management Team

The combined experience of Charlie Blair and John Smith lead the marketing, sales, and management of the automotive parts and repair services with 40 years works on experience in the industry. James Hall brags of a decades experience in the same industry in the docket of finance and administration. Gomez Hernandez started in the industry as an apprentice mechanic in his uncle’s auto shop in 1984. Ever since Gomez has worked in numerous dealerships and auto repair shops and has in his possession several credentials in the industry. Mr. Hernandez graduated in July 2004 from Nassau Community College with an associate's degree in management of the business. 

8.1 Personnel Plan

F-CAR's initial staffing will comprise 40 personnel inclusive of the owners. The company will seek a competent, qualified, and experienced workforce due to the sensitivity of the target market ( Cho et al., 2017) . First Class Automotive Repair Shop will hire three managers who will be in charge of the auto parts store, auto repairs shop, and office management respectively. Under the auto parts store, the company will hire eight customer service associates and five sales and administrative personnel. The bulk of the staff will be under the automotive repair shop where twenty experienced, qualified, and competent mechanics will be employed to ensure that the mission of the company is achieved and client satisfaction realized. 

9.0 Financial Plan

9.1 Anticipated Loss and Profit

The income and deficit accounts illustrate that F-CAR has an expectation of making continuous profits for the first five years of its operations. 

Sales	300,000	370,000	464,500	592,075	764,301
Cost of goods
Fixed	70,000	70,000	85,000	90,000	110,000
Variable	55,000	72,500	96,125	128,019	171,075
Gross profit	175,000	227,500	283,375	374,019	483,226
Operating expenses
Variable	40,000	54,000	72,900	98,415	132,860
Fixed	45,000	45,000	55,000	70,000	70,000
Depreciation	14,000	16,000	18,000	20,000	22,000
Interest	9,312	8,000	5,379	4,240	4,135
Earnings Before Interest & Tax	-9,000	27,500	52,475	100,641	173,366
Tax	0	357	14,129	28,920	50,769
Earnings Before Tax	-18,312	19,500	47,096	96,401	169,230
Earnings After Tax	-18,312	19,144	32,967	67,481	118,461
NPM	-9.20%	7.10%	9.00%	13.70%	17.80%

9.2 Projected Cash Flow

The projections of the cash flow illustrate that currently, the business can accommodate its expenditure as it generates cash flow adequate to sustain its operations. 

CASH FLOW STATEMENT
	1 st Year	2 nd Year	3 rd Year	4 th Year	5 th Year
Cash Inflows
Net sales		280,000	464,500	531,075	596,301
Less change		-11,500	-13,175	-20,136	-22,834
Cash inflows from customers		268,500	451,325	510,939	573,467
Cash paid to suppliers.
COGS		127,500	166,125	203,019	266,075
Add Inventory change		14,000	18,900	25,515	34,445
Less Accounts Payable		-7,000	-9,450	-12,758	-17,223
Suppliers’ pay		134,500	175,575	215,776	283,298
Other operating cash outflows
Operating expenses		99,000	127,900	168,415	202,860
Less change in accrued expenses		-3,500	-4,725	-6,379	-8,611
Other operating cash outflows		95,500	123,175	162,036	194,249
Cash tax payments
Provision for taxes		357	14,129	28,920	50,769
Cash flows from operations		29,143	37,446	66,206	110,151

9.3 Projected Balance Sheet

The First Class Automotive Repair Shop’s balance sheet is as portrayed: 

BALANCE SHEET
Current Assets			1 st Year	2 nd Year	3 rd Year	4 th Year	5 th Year
Cash			$ 10,000	$ 10,000	$ 10,000	$ 52,219	$ 147,084
Inventories			40,000	54,000	72,900	98,415	132,860
Accounts receivable			30,000	40,500	54,675	73,811	99,645
Total current assets			80,000	104,500	137,575	224,445	379,590
Building			90,000	90,000	90,000	90,000	90,000
Equipment			40,000	50,000	60,000	70,000	80,000
Depreciation for building			(6,000)	(12,000)	(18,000)	(24,000)	(30,000)
Depreciation for equipment			(8,000)	(18,000)	(30,000)	(44,000)	(60,000)
Total fixed assets			121,000	117,000	113,000	96,000	83,000
Total Assets			186,000	224,500	249,575	326,445	479,590
Equity and Debt
Accruals			10,000	13,500	18,225	24,604	33,215
Accounts Payable			20,000	27,000	36,450	49,208	66,430
Line of credit			15,718	19,218	8,701	0	0
Current liabilities			45,718	59,718	63,376	73,811	99,645
Long Term debt			24,380	10,600	0	0	0
Mortgage			44,214	43,350	42,399	41,354	40,203
Total debt			114,312	113,668	105,776	115,165	139,849
Equity
Retained earnings			(18,312)	832	33,799	101,280	219,741
Ordinary stock			100,000	100,000	100,000	100,000	100,000
Total debt and equity			196,000	214,500	239,575	316,445	459,590
Total equity			81,688	100,832	133,799	201,280	319,741

10.0 References

Charles Jr, O. H., Schmidheiny, S., & Watts, P. (2017).  Walking the talk: The business case for sustainable development . New York: Routledge. 

Cho, M., Kim, K. H., Szulejko, J. E., Dutta, T., Jo, S. H., Lee, M. H., & Lee, S. H. (2017). Paint booth volatile organic compounds emissions in an urban auto-repair center.  분석과학 ,  30 (6), 329-337. 

Busse, M. R., Israeli, A., & Zettelmeyer, F. (2017). Repairing the damage: The effect of price knowledge and gender on auto repair price quotes.  Journal of Marketing Research ,  54 (1), 75-95. 

Kalverkamp, M., & Raabe, T. (2018). Automotive remanufacturing in the circular economy in Europe: marketing system challenges.  Journal of Macromarketing ,  38 (1), 112-130. 

Karadag, H. (2015). Financial management challenges in small and medium-sized enterprises: A strategic management approach.  EMAJ: Emerging Markets Journal ,  5 (1), 26-40. 

Pred, A. (2017).  City-systems in advanced economies: past growth, present processes and future development options . New York: Routledge.