Business Plan
Southeast Auto Care
Your Address Will Appear Here
Tel: 555-555-1212
AGREEMENT OF CONFIDENTIALITY
I agree that reading of this Business Plan is strictly limited to me as authorized by
Name Removed (the “Owner”) and Southeast Auto Care (the Company). I agree
that I shall not divulge or reproduce the content of this Business Plan without the
written consent of the Company.
I understand that any information provided in this Business Plan is in all respects
confidential in nature, other than information which is in the public domain
through other means. I agree not to disclose any information without the express
written permission of the Owner and Southeast Auto Care
Upon request, I will return this document to the Owner and Southeast Auto Care.
This Business Plan includes “forward-looking statements and projections.” All
such statements and projections within this Business Plan, other than statements
of historical fact, regarding Southeast Auto Care or its strategies, plans,
objectives and expectations, are all forward-looking statements. Although
Southeast Auto Care believes that the projections reflected in this plan are
reasonable at this time, it can give no assurance that these projections will prove
to have been correct.
This Business Plan is not a financing offer. A financing offer is only valid
with an approved Private Placement Memorandum.
___________________
___________________
Signature
Date
___________________
Name (typed or printed)
TABLE OF CONTENTS
EXECUTIVE SUMMARY
The Business Concept
The Opportunity
Operations of the Business
Product and Service Offerings
THE COMPANY
1
1
2
8
9
9
Mission of the Company
Company Structure
9
9
1. Legal Status
2. Physical Location
3. Intellectual Property
9
9
9
Company History
10
GROWTH STRATEGY
10
Business Objectives
Targeted Customers
Key Initiatives
Competition and Competitive Advantages
Size of the Market
Marketing Activities
Sales Strategy
CORPORATE MANAGEMENT
Management
Founder and Owner:
KEY FINANCIAL PROJECTIONS
Financial Needs and Use of Funds
Assumptions
Revenues
COGS
Expenses
Cash Flow
Projected Profit and Loss
Projected Balance Sheets
Projected Cash Flow
Break Even Calculation
Summary of Lender Return and Risk
10
11
11
11
11
15
16
16
16
16
16
16
17
17
17
18
18
18
20
21
22
22
REFERENCES
23
APPENDICES
24
12 Month Projected P & L
12 Month Projected Balance Sheet
12 Month Projected Cash Flow
5 Year Projected P & L
5 Year Projected Balance Sheet
5 Year Projected Cash Flow
24
25
26
27
28
29
Southeast Auto Care
EXECUTIVE SUMMARY
The Business Concept
Southeast Auto Care (S
Southeast Auto Care or the Company) is an auto repair
shop providing old-fashioned, reliable service. The Company will be built upon a
solid foundation of honesty, reliability and quality. It is located in Huntsville,
Alabama.
The Founder, Name Removed, has built a reputation in
the area as an honest and trustworthy mechanic; he
takes time to explain what is wrong and shows the
customer what needs to be fixed as well as which parts
are wearing and may fail. Thirty-five years in the auto
motive business, he has spent 15 years building and
racing cars, 12 years of fleet maintenance, including
fabrication and redesign.
The Company will provide:




Routine Maintenance
Temperature Control
Brakes and Exhaust
Engine and Transmission
It will service all makes of cars, both domestic and foreign.
Excellent Market Opportunity
Southeast Auto Care will take advantage of its
Founder’s existing reputation to attract customers.
The Founder started out helping with the car ministry
at his church. Through this ministry he has identified
the need for an honest and trustworthy mechanic
shop.
Willowbrook is one of the largest churches in the area
and single moms and widows from the church bring
their cars to Darrin after work at his home. Word of
mouth has helped him build a clientele base too large
to handle at his home. Many people are traveling over
20 miles to bring their vehicles to Darrin to repair.
Page 1
Southeast Auto Care
Profitable Growth
Southeast Auto Care expects to gain a profitable market share within a very short
period of time. Determinations have been made for the size of the market,
amounts of budgeted advertising and promotional dollars, the number and kinds
of distribution channels and the competitive landscape.
Projections call for the Company to generate revenues of $666,000 in its first
twelve months. Southeast Auto Care will achieve strong growth over the next
several years, reaching $1.3 million in revenues and more than $316,000 of net
income by the fifth year.
The Opportunity
U. S. Auto Industry
According to R. L. Polk, “The average length of ownership of both new and used
vehicles has increased from 37.2 months in 2002 to 46.3 months in 2008, a 24%
increase.” As our economy continues to deal with current issues, drivers are
expected to keep vehicle longer which is good news for auto repair businesses.
Fewer new cars and trucks are being purchased. A recent Polk study showed
“64% of consumers were ‘very or extremely likely’ to keep their current vehicle
longer than they normally would due to current economic conditions. Additionally,
81% of the 713 interviewed vehicle owners in this same study also said they
planned to take better care of their vehicle to keep it running longer, which could
translate to additional aftermarket revenue.” 2
Aftermarket Automotive Trends
Within the aftermarket automobile segment there are several categories,
including:




Routine maintenance
Temperature control
Brakes and exhaust
Engine and transmission
The current U. S. automotive aftermarket is valued at over $140 million. Where in
the past the market was once dominated by small, often family-owned
independent service stations, there are four business types in the U. S.
automotive repair industry today:
Page 2
Southeast Auto Care




Independent garages
Full service gasoline stations
Automotive dealerships
Chain automotive centers
According to the Automobile Service Association (ASA), this market sector is
high fragmented, employing nearly 339,170 people and “repairing more than 231
million motor vehicles; 88% of independent mechanical repair businesses are
family-owned.” Research shows there are an estimated 81,533 U. S.
independent general mechanical repair businesses in operation.
The ASA projects “total sales for general mechanical repair facilities in 2005 was
$36 billion; $49 billion if specialty repair facilities, oil change facilities and
transmission shops are included. It is important to note that these figures do not
include the $30 billion earned by approximately 21,640 auto dealerships with
service facilities.”
Americans love their automobiles! Statistics reflect the median age of vehicles in
the U. S. is increasing which will encourage the growth of auto repair shops.
According to research, the median car age from 1990 to 2005 increased from 6.5
years to 9.0 years. A recent Forbes article stated, in 2004, 135,077,000 cars
were registered in the United States.
In a 2005 survey by ASA, 71% of mechanical businesses polled said they felt
positive about future growth and expected sales to increase. Integra Information
made the following forecast on growth rates: 1
General Auto Repair Shops Industry Revenues
Year
Forecasted Growth Rate
2005
2.40%
2006
3.90%
2007
3.30%
2008
3.80%
2009
3.90%
Avg.
3.46%
Source: Integra Information
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Southeast Auto Care
The automotive aftermarket services sector is affected by many contributing
factors, such as median vehicle age, driven mileage, and the total number of
vehicles on the road. The following charts by R. L. Polk, automotive intelligence
and marketing solutions firm, shows compound annual growth rate in this market
and age of vehicles from 1999 to 2013: 2
Source: IMR (AutomotiveResearch.com) and R. L. Polk & Co.
In the category of maintenance, vehicles ages 6-to-10 years are 1.3 times more
likely to need maintenance than their younger counterparts of less than 6 years
of age or with older vehicles over 10 years old. Interestingly, vehicles in this
category are predicted to increase from 2008 to 2010 by 1.2% (compound annual
basis). Polk states, “During the same time period, vehicles in the 11+ age group
are projected to grow 4.6%.” 2
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Southeast Auto Care
Routine Maintenance
R. L. Polk reports, “The routine maintenance category encompasses oil changes,
tune ups, tire replacements, wiper blade replacements and other smaller repairs
that are necessary to keep a vehicle running smoothly. In 2007, there were
nearly 3 billion jobs and parts attributed to routine maintenance, 84% of the total
number in the aftermarket sector.” 2
Brakes and Exhaust Maintenance
In 2007 service related to the brakes and exhaust sector reported an annual
growth rate of 5.9%, from 1999 to 2007, making this category the highest
compound annual growth rate, mainly due to an increase in light vehicle
operation and miles driven.
From 2008 to 2010, due to aging vehicle population, growth rate in this market
sector is expected to drop to 1.7%, as vehicle population ages. R. L. Polk states,
“Growth in brakes and exhaust parts and service will come primarily from
increases in the 6–10 and 11+ vehicle age groups, which are expected to grow at
1.2% and 4.6%, respectively, between 2008 and 2010. Replacement events for
these two groups of older vehicles are twice as prevalent as for vehicles under 6
years old.” 2
Engine and Transmission Repair
More and more people are keeping their cars and trucks longer. From 2008 to
2010, the projected increased rate of older vehicles (11+ years) is predicted to
grow by 4.6%. These vehicles are 4 times more likely to need engine and
transmission repair than vehicles less than 6 years old. The charts below reflect
these different categories: 2
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Southeast Auto Care
Breakdown of Routine Maintenance Category by Sales Channel
Breakdown of Temperature Control Category by Sales Channel
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Southeast Auto Care
Breakdown of Brakes and Exhaust Category by Sales Channel
Breakdown of Engine and Transmission Category by Sales Channel
Page 7
Southeast Auto Care
Repair Shop Demand Growth
In a new survey by Frost & Sullivan, market analysis firm, vehicle owners are
saying they plan on maintaining and repairing their cars and trucks longer “in the
wake of financial uncertainties, job loss fears, and uncertain fuel prices triggered
by the economic slump.” Consequently, there is a higher demand for
maintenance-related jobs. 3
Parts Market
In the Frost & Sullivan report, it is reported that in 2007 there were nearly 241
million light vehicles in the United States; the repair industry represented $70
billion in parts sold that support this market. The report said, “Repair shop
owners are the front line of that industry and the first place where vehicle owner
behavioral changes become evident.”
There is a constant, evolving vehicle population that repair shop owners must
consider when monitoring their business, original equipment (OE) parts versus
private label brands. Irrespective of the parts used, they must reflect quality,
function, and reasonable cost that allow profitability.
Program Manager at Frost & Sullivan Global, Mary-Beth Kellenberger said,
“Gaining access to quality aftermarket import brand parts is extremely important
as independents position themselves as a value alternative to dealers. Winning
the job at a price that supports each enterprise's financial structure is as crucial
to the survival of the industry as smart management to prevent cost cutting that
undermines repair quality and industry profitability.” 3
There is a large opportunity to build a dominant and respected business in this
market space.
Operations of the Business
Southeast Auto Care will target prospective clients within the Huntsville,
Madison, Harvest and Toney areas. The Company will generate revenues from
its auto repair services, parts and labor.
The Company will offer convenient hours, opening M-F 7:00 AM to 6:00 PM and
on Saturdays from 8:00 AM to 12:00 PM. This allows busy individuals to select a
convenient time.
Marketing efforts of the Company will focus on several activities. These include
print advertising, radio, signage, referrals, and its web site.
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Southeast Auto Care
Product and Service Offerings
Southeast Auto Care will provide a wide range of services. These include:




Routine Maintenance
Temperature Control
Brakes and Exhaust
Engine and Transmission
THE COMPANY
Mission of the Company
Southeast Auto Care will become a leading auto repair center in the Huntsville
area. We will continually provide quality repair in a timely manor at an affordable
price. Our products services will be sought after for their reliability and
excellence. We will treat each customer with respect and we will be known for
our outstanding customer service.
Company Structure
1. Legal Status
Southeast Auto Care is a Sole Proprietorship organized in the
state of Alabama in 2010. The Company is owned by Name
Removed.
2. Physical Location
The Company will lease suitable business space to support its
operations. This space will include a reception area, office,
and work/repair areas. It will provide easy access to
customers/employees with ample free parking.
The site will be in an attractive area of town. Customers will
be able to access the site easily.
A prospect site has been located and is available.
3. Intellectual Property
Southeast Auto Care intends on building a website at
www.southeastautocare.com to market its services. There is
no other proprietary intellectual property owned by the
Company.
Page 9
Southeast Auto Care
Company History
Southeast Auto Care is a start-up new venture. However, the founder has
performed extensive research to determine the market viability and operational
challenges of this type of business. Questions that were addressed include:
 What is the market opportunity (Is
there a need for the business)?
 What type of competition is
there?
 Can the targeted market support
the business?
 What types of customers will the
business attract?
 Are there suitable facilities in the
area?
 How much funding is needed?
 How much monthly revenue is
needed to achieve break even?
GROWTH STRATEGY
Business Objectives
The Company is planning on strong growth in the next twelve months. It plans on
achieving the following objectives:
 Obtain new customers
 Hire reliable and trained staff
 Grow twelve month revenue in excess of $665,000
In succeeding years, Southeast Auto Care will continue to grow its business and
will achieve these objectives:
 Grow the annual number of new customers each year
 Develop a reputation that will exceed competitors in every area
 Achieve excellent customer loyalty by placing strong emphasis
in the areas of outstanding service and support
 Maintain an experienced and professionally trained staff
 Attain $1.3 million in annual sales in Year 5
Page 10
Southeast Auto Care
Targeted Customers
Southeast Auto Care has identified a clear and substantial target market.
Targeted customers will include:
 Previous Customers
 Friends and Family of Former Customers
 Walk-in Customers from advertising
The Company will target these types of customers within the Huntsville, Madison,
Harvest and Toney, Alabama areas.
Key Initiatives
Southeast Auto Care has developed the following key initiatives to achieve its
growth goals:
 Launch its marketing efforts to reach its target audience
 Establish an aggressive sales program to identify and secure
customers
 Provide the best services at the most competitive pricing
 Provide a satisfying experience for every customer
With the proper financing and adherence to this business plan’s objectives, the
Company believes it can complete these initiatives and achieve success.
Competition and Competitive Advantages
Southeast Auto Care has realizes that it will compete with other local auto repair
companies. The Company believes that it can compete effectively in this market.
Several factors driving its competitive advantage include:




Experienced technician
Priority service
Best customer service
Competitive pricing
Size of the Market
Southeast Auto Care is focused on obtaining customers in the greater Huntsville
and Madison, Alabama area. This area is large enough to support the
Company’s business objectives. (See charts on next pages)
Page 11
Southeast Auto Care
US Census Bureau Economic Census
Madison City, Alabama
2006-2008 American Community Survey 3-Year Estimates
Household Income
% Households # Households
14,624
Less than $10,000
2.8%
409
$10,000 to $14,999
2.7%
395
$15,000 to $24,999
6.1%
892
$25,000 to $34,999
6.1%
892
$35,000 to $49,999
10.4%
1,521
$50,000 to $74,999
18.6%
2,720
$75,000 to $99,999
15.3%
2,237
$100,000 to $149,999
21.9%
3,203
$150,000 to $199,999
10.5%
1,536
$200,000 or more
5.6%
819
US Census Bureau Population Census
Madison City, Alabama
2006-2008 American Community Survey 3-Year Estimates
Age
% Population
Population
38,453
Under 5 years
6.2%
2,384
5 to 9 years
7.4%
2,846
10 to 14 years
8.8%
3,384
15 to 19 years
8.4%
3,230
20 to 24 years
6.0%
2,307
25 to 29 years
5.4%
2,076
30 to 34 years
4.5%
1,730
35 to 39 years
6.0%
2,307
40 to 44 years
10.5%
4,038
45 to 49 years
10.4%
3,999
50 to 54 years
7.3%
2,807
55 to 59 years
6.0%
2,307
60 to 64 years
5.8%
2,230
65 to 69 years
2.9%
1,115
70 to 74 years
1.9%
731
75 to 79 years
1.4%
538
80 to 84 years
0.7%
269
85 years and over
0.5%
192
Page 12
Southeast Auto Care
US Census Bureau Economic Census
Huntsville City, Alabama
2006-2008 American Community Survey 3-Year Estimates
Household Income
% Households # Households
69,799
Less than $10,000
8.7%
6,073
$10,000 to $14,999
6.4%
4,467
$15,000 to $24,999
12.7%
8,864
$25,000 to $34,999
11.5%
8,027
$35,000 to $49,999
13.8%
9,632
$50,000 to $74,999
17.1%
11,936
$75,000 to $99,999
10.0%
6,980
$100,000 to $149,999
11.4%
7,957
$150,000 to $199,999
4.9%
3,420
$200,000 or more
3.7%
2,583
US Census Bureau Population Census
Huntsville City, Alabama
2006-2008 American Community Survey 3-Year Estimates
Age
% Population
Population
168,865
Under 5 years
6.2%
10,470
5 to 9 years
6.2%
10,470
10 to 14 years
6.3%
10,638
15 to 19 years
7.2%
12,158
20 to 24 years
8.4%
14,185
25 to 29 years
7.1%
11,989
30 to 34 years
5.6%
9,456
35 to 39 years
6.3%
10,638
40 to 44 years
6.8%
11,483
45 to 49 years
7.3%
12,327
50 to 54 years
6.9%
11,652
55 to 59 years
6.3%
10,638
60 to 64 years
4.7%
7,937
65 to 69 years
4.3%
7,261
70 to 74 years
3.7%
6,248
75 to 79 years
3.1%
5,235
80 to 84 years
1.9%
3,208
85 years and over
1.8%
3,040
Page 13
Southeast Auto Care
US Census Bureau Economic Census
Madison County, Alabama
2006-2008 American Community Survey 3-Year Estimates
Household Income
% Households # Households
123,957
Less than $10,000
6.7%
8,305
$10,000 to $14,999
4.9%
6,074
$15,000 to $24,999
10.2%
12,644
$25,000 to $34,999
10.6%
13,139
$35,000 to $49,999
13.3%
16,486
$50,000 to $74,999
18.2%
22,560
$75,000 to $99,999
12.2%
15,123
$100,000 to $149,999
14.8%
18,346
$150,000 to $199,999
5.6%
6,942
$200,000 or more
3.5%
4,338
US Census Bureau Population Census
Madison County, Alabama
2006-2008 American Community Survey 3-Year Estimates
Age
% Population
Population
312,658
Under 5 years
6.4%
20,010
5 to 9 years
6.8%
21,261
10 to 14 years
6.8%
21,261
15 to 19 years
7.4%
23,137
20 to 24 years
7.0%
21,886
25 to 29 years
6.7%
20,948
30 to 34 years
5.7%
17,822
35 to 39 years
6.7%
20,948
40 to 44 years
7.9%
24,700
45 to 49 years
8.3%
25,951
50 to 54 years
7.0%
21,886
55 to 59 years
6.0%
18,759
60 to 64 years
5.0%
15,633
65 to 69 years
3.9%
12,194
70 to 74 years
3.3%
10,318
75 to 79 years
2.4%
7,504
80 to 84 years
1.4%
4,377
85 years and over
1.3%
4,065
Page 14
Southeast Auto Care
Marketing Activities
Southeast Auto Care will implement various marketing efforts to attract
customers including:
 Customer loyalty programs
The Company will develop strong customer loyalty programs.
Southeast Auto Care will implement and manage programs
that reward a customer for repeat business with the
Company.
 Build and optimize its web site to describe and promote the
business
The Company will build and optimize its web site to attract
prospective customers. The web site will be attractive and
easy to navigate. It will also provide testimonials of satisfied
customers.
 Print advertising
The Company will take out ads in local publications that are
matched to its targeted audiences.
 TV and Radio Ads
The Company will purchase TV ads on local cable channels
and radio ads on local stations.
 Signage and posters
Southeast Auto Care will utilize signage and posters that will
be displayed at local sites to promote the Company and
establish name recognition.
 Search engine optimization (SEO)
The Company will optimize its web site so that it will in
improve its yield in search engine results. Southeast Auto
Care will continually improve its SEO scores by optimizing
the search words and by establishing link programs whereby
the number of sites linking to it increase.
Page 15
Southeast Auto Care
 Referrals
Southeast Auto Care will develop referral programs whereby
existing customers receive incentives to refer friends or
associates as customers.
Sales Strategy
The Company will sell directly through its retail space.
CORPORATE MANAGEMENT
Management
Founder and Owner: Name Removed
Name Removed has 35 years in the Automotive Business. He has
spent 15 years building and racing cars. Darrin also has 12 years of
fleet maintenance including fabrication and redesign.
KEY FINANCIAL PROJECTIONS
Financial Needs and Use of Funds
The Company is seeking a $50,000 loan to execute this business plan.
Management of the Company will contribute $10,000 of their own funds in equity.
Additionally, they will also contribute $150,000 worth of tools and equipment
including:







AAMCO Brake lathe
Miller Mig Welder
Plasma Cutter
Robinair A/C Recovery Machine
Branick Strut Compressor
Snap On Solus Diagnostic Computer
Ingersol Rand Compressor
Southeast Auto Care intends to use these funds primarily for start-up expenses
such as equipment, furniture and leasehold improvements. Remaining funds will
be used for general working capital needs.
Page 16
Southeast Auto Care
Sources and Uses of Proceeds
Sources
First Loan
$50,000
Equity
$10,000
Total Sources
$60,000
Equipment
$10,000
Uses
Furniture/equipment
$500
Leasehold Improvements
$2,000
Legal Startup
$200
Working Capital
$47,300
Total Uses
$60,000
Assumptions
Revenues
Revenue Assumptions
Year 1
Labor Sales
Parts Sales
Year 2
$353,600
$312,000
$442,000
$390,000
Year 3
Year 4
Year 5
$530,400
$468,000
$618,800
$546,000
$707,200
$624,000
Year 3
Year 4
Year 5
$171,600
$327,600
$192,400
$382,200
$213,200
$436,800
COGS
COGS Assumptions
Year 1
Labor Cost
Parts Cost
$130,000
$218,400
Year 2
$150,800
$273,000
Page 17
Southeast Auto Care
Expenses
Cash Flow
Receivables average 15 days
Payables average 30 days
Projected Profit and Loss
Southeast Auto Care’s revenues are projected to grow significantly in the next
twelve months. Monthly revenue will increase to $66,000. For the 12-month
period, revenues will total $666,000 and this will yield an operating profit of
$171,000 and a net income of $100,000. The monthly projections are illustrated
in the following graph:
Page 18
Southeast Auto Care
The next two graphs show Southeast Auto Care’s projected annual revenues and
annual net profit over a five year period.
Detailed profit and loss projections are presented in the Appendix.
Page 19
Southeast Auto Care
Projected Balance Sheets
Based on projected revenues and expenses, the Company anticipates
maintaining a strong balance sheet.
Complete projected balance sheet details are shown in the Appendix.
Page 20
Southeast Auto Care
Projected Cash Flow
The Company’s cash flow projections show that Southeast Auto Care will have
sufficient cash to support the business. The following graphs present a view of
projected cash flow of the business.
Page 21
Southeast Auto Care
Break Even Calculation
Southeast Auto Care achieves break even with about $26,600 in monthly
revenues. This is shown in the following graph.
Summary of Lender Return and Risk
Southeast Auto Care is requesting a $50,000 loan to execute this business plan.
Management will contribute $10,000 in equity. These funds are sufficient to allow
the Company to achieve its business goals and they provide a satisfactory cash
safety cushion for the Company.
The Company will make both interest and principle payments monthly to the
lender. Projections in this plan assume a 7.0% interest rate on the loan with a
five year amortization period. Cash flow projections support the Company’s
ability to meet monthly payments.
Management believes the business plan and projections presented in this plan
show that the lender has minimal risk with this loan.
Page 22
Southeast Auto Care
REFERENCES
2006 “The Automotive Repair Industry”, (Integra Information, Forbes, April 2006)
Article Found at:
<http://www.integrainformation.com/forbes/overview.htm>
2
2009 “The Changing U. S. Auto Industry: The Impact of Declining New Vehicle
Sales on the Aftermarket Business”, (R. L. Polk Automotive Information,
April 2009) Article Found at:
<http://www.polk.com/TL/MS_200903_ChangingAutoIndustry_Aftermarket
.pdf>
3
2009 “Changing Consumer Behavior toward Automotive Repairs and Maintenance
Keeps Repair shops on Tenterhooks”, (Frost & Sullivan Report, Frost &
Sullivan Speaks Candidly with U.S. Automotive Shop Owners, July 30,
2009), Article Found at:
<http://www.prnewswire.com/news-releases/frost--sullivan-finds-changingconsumer-behavior-toward-automotive-repairs-and-maintenance-keepsrepair-shops-on-tenterhooks-62274652.html>
1
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Southeast Auto Care
APPENDICES
12 Month Projected P & L
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Southeast Auto Care
Remove Second Loan Interest from all three charts
12 Month Projected Balance Sheet
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Southeast Auto Care
12 Month Projected Cash Flow
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Southeast Auto Care
5 Year Projected P & L
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Southeast Auto Care
5 Year Projected Balance Sheet
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Southeast Auto Care
5 Year Projected Cash Flow
Page 29