"Auto Repair Service" Business Plan:
1.0 Executive Summary
2.0 Company Summary
3.0 Services
4.0 Market Analysis Summary
5.0 Strategy and Implementation Summary
6.0 Management Summary
7.0 Financial Plan
 7.1 Break-even Analysis
7.2 Projected Profit and Loss
7.3 Projected Cash Flow
7.4 Projected Balance Sheet
 7.5 Business Ratios
Business Ideas applicable for this business plan:
Wheels and Tires Hotel
Car repair
Fix your own car
This business plan was originally published
by Palo Alto Software, Inc. All rights reserved.
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7.0 Financial Plan
QDAR expects to raise $250,000 of its own capital, and to borrow
$250,000 guaranteed by the SBA as a ten year loan. This provides the bulk of the
current financing required.
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7.1 Break-even Analysis
QDAR's break-even analysis is based on the averages of the
first-year figures for total sales by units, and for operating expenses. These
are presented as per-unit revenue, per-unit cost, and fixed costs. These
conservative assumptions make for a more accurate estimate of real risk.
Break-even Analysis
|
| Break-even Analysis: |
| Monthly Units Break-even |
6,969 |
| Monthly Revenue Break-even |
$724,211 |
| |
| Assumptions: |
| Average Per-Unit Revenue |
$103.92 |
| Average Per-Unit Variable Cost |
$42.81 |
| Estimated Monthly Fixed Cost |
$425,871 |
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7.2 Projected Profit and Loss
As the profit and loss table shows, QDAR expects to continue its
steady growth in profitability over the next three years of operations.
|
| Pro Forma Profit and Loss |
| |
2001 |
2002 |
2003 |
| Sales |
$9,540,000 |
$11,269,125 |
$13,311,654 |
| Direct Cost of Goods |
$3,930,000 |
$4,642,313 |
$5,483,732 |
| Other |
$0 |
$0 |
$0 |
|
|
------------ |
------------ |
------------ |
| Cost of Goods Sold |
$3,930,000 |
$4,642,313 |
$5,483,732 |
| Gross Margin |
$5,610,000 |
$6,626,813 |
$7,827,922 |
| Gross Margin % |
58.81% |
58.81% |
58.81% |
| Expenses: |
| Payroll |
$4,315,000 |
$4,530,767 |
$4,757,322 |
| Sales and Marketing and Other Expenses |
$27,000 |
$35,830 |
$72,122 |
| Depreciation |
$120,000 |
$138,000 |
$158,700 |
| Utilities |
$1,200 |
$1,260 |
$1,323 |
| Payroll Taxes |
$647,250 |
$679,615 |
$713,598 |
| Other |
$0 |
$0 |
$0 |
| |
------------ |
------------ |
------------ |
| Total Operating Expenses |
$5,110,450 |
$5,385,472 |
$5,703,065 |
| Profit Before Interest and Taxes |
$499,550 |
$1,241,341 |
$2,124,858 |
| Interest Expense |
$26,748 |
$22,467 |
$20,217 |
| Taxes Incurred |
$120,157 |
$304,719 |
$534,930 |
| Net Profit |
$352,645 |
$914,156 |
$1,569,711 |
| Net Profit/Sales |
3.70% |
8.11% |
11.79% |
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7.3 Projected Cash Flow
The cash flow projection shows that provisions for ongoing
expenses are adequate to meet QDAR's needs as the business generates cash flow
sufficient to support operations.
The short-term $55,000 loan is expected to be paid out within
one year, while a $250,000 SBA loan will be repaid in ten years.
Cash
|
| Pro Forma Cash Flow |
| |
2001 |
2002 |
2003 |
| |
| Cash from Operations: |
| Cash Sales |
$9,540,000 |
$11,269,125 |
$13,311,654 |
| Cash from Receivables |
$0 |
$0 |
$0 |
| Subtotal Cash from Operations |
$9,540,000 |
$11,269,125 |
$13,311,654 |
| |
| Additional Cash Received |
| Sales Tax, VAT, HST/GST Received |
$0 |
$0 |
$0 |
| New Current Borrowing |
$0 |
$0 |
$0 |
| New Other Liabilities (interest-free) |
$0 |
$0 |
$0 |
| New Long-term Liabilities |
$0 |
$0 |
$0 |
| Sales of Other Current Assets |
$0 |
$0 |
$0 |
| Sales of Long-term Assets |
$0 |
$0 |
$0 |
| New Investment Received |
$0 |
$0 |
$0 |
| Subtotal Cash Received |
$9,540,000 |
$11,269,125 |
$13,311,654 |
| Expenditures |
2001 |
2002 |
2003 |
| Expenditures from Operations: |
| Cash Spending |
$492,065 |
$572,595 |
$694,367 |
| Payment of Accounts Payable |
$8,516,341 |
$9,648,672 |
$10,875,732 |
| Subtotal Spent on Operations |
$9,008,405 |
$10,221,266 |
$11,570,099 |
| |
| Additional Cash Spent |
| Sales Tax, VAT, HST/GST Paid Out |
$0 |
$0 |
$0 |
| Principal Repayment of Current Borrowing |
$0 |
$0 |
$0 |
| Other Liabilities Principal Repayment |
$0 |
$55,000 |
$0 |
| Long-term Liabilities Principal Repayment |
$15,335 |
$20,000 |
$25,000 |
| Purchase Other Current Assets |
$0 |
$0 |
$0 |
| Purchase Long-term Assets |
$540,000 |
$660,000 |
$770,000 |
| Dividends |
$0 |
$0 |
$0 |
| Subtotal Cash Spent |
$9,618,740 |
$10,901,266 |
$12,365,099 |
| |
| Net Cash Flow |
($78,740) |
$389,118 |
$1,335,673 |
| Cash Balance |
$86,120 |
$140,910 |
$203,881 |
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7.4 Projected Balance Sheet
QDAR's projected company balance sheet follows.
|
| Pro Forma Balance Sheet |
| |
| Assets |
| Current Assets |
2001 |
2002 |
2003 |
| Cash |
$21,260 |
$389,118 |
$1,335,673 |
| Inventory |
$327,500 |
$386,859 |
$456,978 |
| Other Current Assets |
$50,000 |
$50,000 |
$50,000 |
| Total Current Assets |
$398,760 |
$825,978 |
$1,842,651 |
| Long-term Assets |
| Long-term Assets |
$890,000 |
$1,550,000 |
$2,320,000 |
| Accumulated Depreciation |
$120,000 |
$258,000 |
$416,700 |
| Total Long-term Assets |
$770,000 |
$1,292,000 |
$1,903,300 |
| Total Assets |
$1,168,760 |
$2,117,978 |
$3,745,951 |
| |
| Liabilities and Capital |
| Current Liabilities |
2001 |
2002 |
2003 |
| Accounts Payable |
$336,450 |
$391,512 |
$474,774 |
| Current Borrowing |
$0 |
$0 |
$0 |
| Other Current Liabilities |
$0 |
$0 |
$0 |
| Subtotal Current Liabilities |
$336,450 |
$391,512 |
$474,774 |
| |
Long-term Liabilities |
$234,665 |
$214,665 |
$189,665 |
| Total Liabilities |
$571,115 |
$606,177 |
$664,439 |
| |
| Paid-in Capital |
$250,000 |
$250,000 |
$250,000 |
| Retained Earnings |
($5,000) |
$347,645 |
$1,261,800 |
| Earnings |
$352,645 |
$914,156 |
$1,569,711 |
| Total Capital |
$597,645 |
$1,511,800 |
$3,081,512 |
| Total Liabilities and Capital |
$1,168,760 |
$2,117,978 |
$3,745,951 |
| Net Worth |
$597,645 |
$1,511,800 |
$3,081,512 |
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7.5 Business Ratios
The following table outlines some of the more important business
ratios for the auto repair industry, as described by the Standard Industry
Classifications (SIC) Index code 7538, General Automotive Repair Shops.
| |
| Ratio Analysis |
| |
2001 |
2002 |
2003 |
Industry Profile |
| Sales Growth |
0.00% |
18.13% |
18.13% |
7.00% |
| |
| Percent of Total Assets |
| Accounts Receivable |
0.0% |
0.0% |
0.0% |
8.80% |
| Inventory |
28.02% |
18.27% |
12.20% |
9.60% |
| Other Current Assets |
4.28% |
2.26% |
1.33% |
23.80% |
| Total Current Assets |
34.12% |
39.00% |
49.19% |
42.20% |
| Long-term Assets |
65.88% |
61.00% |
50.81% |
57.80% |
| Total Assets |
100.00% |
100.00% |
100.00% |
100.00% |
| |
| Current Liabilities |
28.79% |
18.49% |
12.67% |
34.80% |
| Long-term Liabilities |
20.08% |
10.14% |
5.06 |
24.70% |
| Total Liabilities |
48.87% |
28.62% |
17.74% |
59.50% |
| Net Worth |
51.13% |
71.38% |
82.26% |
40.50% |
| |
| Percent of Sales |
| Sales |
100.00% |
100.00% |
100.00% |
100.00% |
| Gross Margin |
58.81% |
58.81% |
58.81% |
0.00% |
| Selling, General & Administrative Expenses |
55.09% |
50.69% |
46.95% |
75.20% |
| Advertising Expenses |
0.03% |
0.09% |
0.34% |
1.30% |
| Profit Before Interest and Taxes |
5.24% |
11.02% |
15.96% |
1.70% |
| |
| Main Ratios |
| Current |
1.19 |
2.11 |
3.88 |
1.17 |
| Quick |
0.21 |
1.12 |
2.92 |
0.65 |
| Total Debt to Total Assets |
48.87% |
28.62% |
17.74% |
59.50% |
| Pre-tax Return on Net Worth |
79.11% |
80.62% |
68.30% |
1.80% |
| Pre-tax Return on Assets |
40.45% |
57.55% |
56.18% |
4.60% |
| |
| Additional Ratios |
2001 |
2002 |
2003 |
|
| Net Profit Margin |
3.70% |
8.11% |
11.79% |
n.a |
| Return on Equity |
59.01% |
60.47% |
50.94% |
n.a |
| |
| Activity Ratios |
| Accounts Receivable Turnover |
0.00 |
0.00 |
0.00 |
n.a |
| Collection Days |
0 |
0 |
0 |
n.a |
| Inventory Turnover |
12.00 |
13.00 |
13.00 |
n.a |
| Accounts Payable Turnover |
26.31 |
24.79 |
23.08 |
n.a |
| Payment Days |
14 |
14 |
14 |
n.a |
| Total Asset Turnover |
8.16 |
5.32 |
3.55 |
n.a |
| |
| Debt Ratios |
| Debt to Net Worth |
0.96 |
0.40 |
0.22 |
n.a |
| Current Liab. to Liab. |
0.59 |
0.65 |
0.71 |
n.a |
| |
| Liquidity Ratios |
| Net Working Capital |
$62,310 |
$434,465 |
$1,367,877 |
n.a |
| Interest Coverage |
18.68 |
55.25 |
105.11 |
n.a |
| |
| Additional Ratios |
| Assets to Sales |
0.12 |
0.19 |
0.28 |
n.a |
| Current Debt/Total Assets |
29% |
18% |
13% |
n.a |
| Acid Test |
0.21 |
1.12 |
2.92 |
n.a |
| Sales/Net Worth |
15.96 |
7.45 |
4.32 |
n.a |
| Dividend Payout |
0.00 |
0.00 |
0.00 |
n.a |
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