ENTREPRENEURSHIP WRITTEN EVENT
Renewed Maintenance
Skyline DECA
Skyline High School
1122 228TH Avenue Southeast
Sammamish, WA 98075
Bill Zheng
January 2012
Table of Contents
I. EXECUTIVE SUMMARY ........................................................................................................ 1
II. INTRODUCTION ...................................................................................................................... 2
III. ANALYSIS OF THE BUSINESS SITUATION ...................................................................... 4
A.
Self-analysis ....................................................................................................................... 4
B.
Trading area analysis.......................................................................................................... 5
C.
Market Segment analysis ................................................................................................... 9
D.
Analysis of potential locations ......................................................................................... 11
IV. PLANNED OPERATION OF THE PROPOSED BUSINESS/ PRODUCT/ SERVICE ...... 12
A.
Proposed organization ...................................................................................................... 12
B.
Proposed product/service ................................................................................................. 15
C.
Proposed marketing strategies.......................................................................................... 16
V. PLANNED FINANCING ........................................................................................................ 20
A.
Projected income and expenses ....................................................................................... 20
B.
Proposed plan to meet capital needs ................................................................................ 27
VI. CONCLUSION....................................................................................................................... 28
VII. BIBLIOGRAPHY ................................................................................................................. 28
VIII. APPENDIX .......................................................................................................................... 29
I. EXECUTIVE SUMMARY
Renewed Maintenance is a mobile auto maintenance company that completes the services to the customers’ locations. Car
maintenance is a necessity that any car owner will have. However, drivers have limited time and don’t want to deal with
the unnecessary inconvenience of taking their vehicles to a dealership or maintenance shop. We provide car maintenance
at residences, businesses, and shopping centers to create the flexibility and convenience that car owners need.
Mission: Renewed Maintenance strives to provide car owners the respectable maintenance they
deserve with honesty and convenience.
Types of Services:
1. Residential: We will dispatch technicians to individual homes to complete the service on the spot. Customers can
conveniently schedule online and wait in the comfort of their homes.
2. Business: Establish contracts with local businesses to service their employees’ vehicles. Customers can now get their
car maintenance during the work day, eliminating an interruption to their busy schedules.
3. Shopping Center: Negotiate agreements with malls to set up maintenance stations in their garages. Customers can
have their vehicles fixed up and prepared while they’re having fun. With our car maintenance, this service will no
longer be associated with boring and wasted time waiting at the shop.
Target Market Analysis:
1. High income professionals in King County, Washington provide disposable incomes and more automobiles.
2. Our main target cities include Bellevue, Bothell, Issaquah, Kirkland, Mercer Island, Redmond, Sammamish, and
Seattle.
3. Headquartered in Bellevue, Washington as a central location to our target cities.
a. Surrounded by numerous highways for easy distribution
4. Nearby profiting companies with large amount of employees provide thousands of potential vehicles to service as
well as company incomes to purchase our services.
Strategic Competitive Advantage: Renewed Maintenance is the only auto maintenance service that completes services
at the customer’s location. No competitor offers our mobility and convenience; they are all confined to one location and
cannot reach out to other areas. Adding to our advantage is penetrating shopping centers and businesses for long term
customers which our competitors cannot facilitate. Our technicians are certified and trained in quality servicing as well as
customer satisfaction. The customer surveys will have a factor in technician salary ensuring that we treat each customer
with the highest respect and complete the highest quality services.
Financial Request: I will invest $300,000 personally in renewed Maintenance. I am requesting a $700,000 loan with 8%
interest that is paid in five years. This will ensure sufficient funding in order to keep positive liquidity during the first
three years of business.
1
II. INTRODUCTION
Car maintenance is a tedious and dirty inevitability. Sending your car to the maintenance shop or dealership has
always been a costly inconvenience. Cars are expensive investments with most running over $20,000; they should be
cared for in order to make that investment worth as much as possible. According to the U.S. Department of Transportation
the average life span of a vehicle is 12 years, or about 128,500 miles. This low lifespan is due to poor maintenance. If you
bought a car today, there shouldn't be any problem with that car going 200,000 miles1.
Car maintenance is a hassle whether you do it yourself or have someone else do it for you. Many of today’s
dealerships and maintenance shops are filled with profit driven personnel who try to sell unneeded service packages to the
customers. Many mechanics are rushing to get the jobs done so they can make more money; however, this leads to cut
corners and improper services. If a car owner is already paying around $70 for a service, shouldn’t he or she be respected
and appreciated for his or her business? Much of the car industry has been obsessed with profits including the service
sector. They have forgotten what it means to be the customer and how valuable the business is to the success of a
company. Mission Statement: Renewed Maintenance strives to provide car owners the respectable maintenance
they deserve with honesty and convenience.
A person’s car is a very valuable asset and has become a complete necessity. In today’s society, people are
obsessed with instant gratification. Microwaves, dishwashers, texting, and social media are all examples of how our
culture has evolved around instantly getting what you want. With Renewed Maintenance we fulfill this demand. People
will no longer have to drive out to shops or dealerships and wait inconveniently for their services to be completed. Our
company will send technicians directly to the customers’ cars. I believe these highly trained technicians are capable of
completing quality maintenance within about half an hour. One technician working on one car for one customer will
provide a more dedicated service and prevents a technician mentality of getting as many cars serviced as quickly as
possible. These attributes give us a strategic competitive advantage over our competitors as customers will enjoy the
convenience of mobility and our quality services.
Car maintenance can be done in the owner’s driveway while he or she enjoys the comfort of being at home. This
dedicated service will provide peace of mind to the owners as the technicians are only focused on their cars. Trust from
1
Solomon, Christopher. "How to Make Your Car Last a Million Miles
2
customers will be a huge goal as we try to build up our reputation. By giving them the opportunity to work one on one
with the mechanic, the customers can trust that the mechanic isn’t lying to them about extra services needed. A business
can also schedule car maintenance for all their employees’ vehicles, adding a perk for their workers. Our technicians will
service the employee’s car within his or her working hours to maximize convenience. We will also negotiate deals with
local shopping centers to set up permanent spaces to service the cars and have them ready for the customer by the time
they return. Car maintenance should not be the hassle it has become. Renewed Maintenance will save people time and
stress in taking care of their automobiles. The mobility of our services gives our customers the freedom to choose the most
convenient time and location for their services. Our friendly mechanics are sent with an arsenal of tools and supplies in
our equipped trucks.
The economy is recovering from a recession right now and demand for the industry will increase as people have
more money to spend. As people purchase more cars, the need for maintenance will also increase. It is a $133 billion
industry in the US and the target area of King County, Washington is prime for a new addition. The population of King
County is just under 2 million, making it the most populous county in Washington and 14th most populous county in the
US. In addition, King County has a work force of over a million which provides a huge target range as most of these
workers have cars for transportation. There are also over 400,000 households most of which have two or more vehicles.
The large amount of cars combined with the median family income at over $85,000 makes this a very profitable region for
car maintenance. King County is ranked in the top 100 highest-income counties in the entire nation. The disposable
incomes will allow customers to afford our services and with numerous vehicles, we have many potential customers.
Advisors/Mentors:
Yan Zheng: My father has been fixing up his cars ever since he bought his first one which was a 1986 Ford Taurus. It had
numerous problems and would always break down. He taught me everything I know about cars and is a do-it-yourself
kind of guy who has taught me the importance of quality over quantity. He has taught me you can fix your car better than
anyone else could because others will not care as much for something that’s not theirs.
Joy Chen: My mother is an accountant at an international company called Tri-Marine, based in Bellevue. She understands
the financing that goes on through a business and also brings in experience from international business. She understands
the environment the company is located in which is corresponding to my target location as well.
3
B.J. Sherman: My IB Business and Management teacher at Skyline High School has taught me every detail I know about
business. He has provided me with the guidance I need to operate a successful business as well as encouragement that
adds so much fun and excitement to business.
III. ANALYSIS OF THE BUSINESS SITUATION
A.
Self-analysis
My business experience is extremely diverse and abundant in many areas. I have taken two leadership
classes in middle school that have taught me crucial social skills and planning skills. I planned two school events
and managed fundraisers when I was just 13 years old. I have experience from interacting with people of all
different ages. Middle school leadership involved a lot of responsibility and working under stressful pressure of a
timeline. These skills have helped me today in my organization and management of not only fundraisers and
volunteer work but also my personal life. I am doing the IB diploma, the most rigorous curriculum offered at
Skyline High School and it requires dedication, discipline, and most importantly a positive attitude to get through
all those endless nights of homework. More recently in high school, I have become more involved in my
community through programs like the American Cancer Society Relay for Life and Athletes for Kids. I have been
participating in Relay since freshman year and am now the chair of the biggest fundraiser in King County. I
manage a committee of about twenty adults and a community of about one thousand participants. I have been a
mentor for Athletes for Kids since I was 15. The program paired me with an 11 year old boy with Downs
Syndrome and this involvement has taught me so much about communication and how to treat others that might
seem different to you. The mentorship has taught me so much about myself as well and has given me great
humility and compassion for my friends and family. These unique opportunities have helped me develop into an
outstanding leader ready to handle almost any task at hand.
Business has always been a huge part for my family and me. My mom majored in accounting at the
University of Washington and is a full time accountant. I have shadowed the CFO and the controller at Tri Marine
and had a slight interest in business. Now that I am taking IB Business and participating in DECA, I am even
more inspired and driven to pursue the fascinating interest. IB Business is a rigorous college level class that
teaches its curriculum based on accounting, business organization and environment, marketing, operations, and
human resources. I have also taken classes for Autodesk 3D Studio Max, Adobe Flash, Adobe Photoshop, Front
4
Page, Microsoft Office, and basic computer skills which will help me use computer technology to compliment my
business. I have also taken Studio Art 1 and 2 in High School that add to my artistic ability to create marketing
and advertising. I also have experience in welding, soldering, drafting, forging, and metal work and wood work.
These would help me create useful tools and could also be a great medium for artistic marketing.
Through my volunteer work and leadership classes, I have learned skills that aren’t teachable in regular
classes like physics or math. The most important skill I have learned is flexibility and how important a positive
attitude is when reality doesn’t meet one’s expectations. It rarely does and so a business owner needs to be able to
work around obstacles. My school work has taught me valuable skills that can be used for marketing and
management. Math skills will be essential to accounting and number calculations in the everyday running of the
business. Writing is crucial to solid marketing and promotions. Along with my skills learned outside of school, I
am dedicated to the success of my company. I have the intelligence to be successful and also the special
leadership to add my unique personality to my business
Efficiency and dedication are keys to any company. Despite my little experience in direct business, I have
dedicated my time to organizations I really believe in and have succeeded and taken huge roles of responsibility.
With my love of cars and my “do it yourself” hands on personality, I am sure to dedicate my heart and soul into
what I love doing.
B.
Trading area analysis
1.
General data: geographic, demographic, economic
Geographic: Renewed Maintenance will be located in downtown Bellevue, Washington. It is at the center of
King County and is surrounded by freeways I-90, I-405, and SR-520 which provide fast access to target cities
which include: Bellevue, Issaquah, Sammamish, Seattle, Kirkland, Mercer Island, Redmond, and Bothell.
These locations are all under 20 minutes from Bellevue. King County is an ideal location for a mobile
business dependent upon transportation. The weather is mild all year round and very rarely snows, allowing
for easy commuting which is crucial to customer satisfaction in timing. This allows our technicians to
complete a service with little delay. The downtown environment was also chosen because of its proximity to
potential business customers like Microsoft, Paccar, and Eddie Bauer which can provide an abundance of
vehicles to be serviced. Being right next door will cut down on transportation costs for servicing a large
business. Our location creates easy access to target the traffic in businesses and malls. The Bellevue
5
Collection includes three malls with six parking garages, adding up to over 10,000 parking spaces. The region
is very affluent with the average shopper spending over $1262. High end stores like Lacoste, Nordstrom, and
Armani bring in many shoppers who have that extra income they could spend on servicing their cars. In
addition, there are numerous restaurants and a 16 theater cinema all in the shopping mall. We will negotiate
deals with these shopping centers and provide them with a percentage of the profit. These large underground
parking garages provide many customers as they can drop off their cars and go enjoy themselves while we
service their cars in time for their return.
Demographic: Below is a table of the demographic information about the target cities in King County.
As of 2009
Bellevue
Population
121,337
Work Force
67,254
Households
Bothell
32,044
Issaquah
Kirkland
Mercer
Island
Redmond
Sammamish
Seattle
23,186
47,079
23,791
49,637
41,731
594,005
18,067
12,771
28,993
10,718
29,210
20,704
370,321
45,836
11,923
6,259
24,118
9,049
24,464
34,119
280,688
Family Income
98,192
86,025
96,584
98,354
148,750
99,930
136,689
85,432
Average family
size
Over 18 years
old
2.98
2.97
2.93
2.77
2.95
2.94
3.39
2.89
95,594
24,506
17,784
38,465
17,779
39,327
27,829
502,847
All of my target cities have large family sizes of about three which correlates to more cars. There are over
400,000 households with each about two or more cars. Six of the cities have incomes over $95,000 while
Mercer Island and Sammamish are over $130,000. These affluent communities have extra income to spend on
car maintenance as well as lots of cars to be serviced. The large work forces also means indicates more people
who depend on cars for transportation every day. The high amount of cars combined with the high incomes
results in more cars and owners with more disposable incomes.
Economic: Our nation is recovering from a recession but unemployment is still fairly high. The average
unemployment rate in Washington is 8.5% while target cities are 6%-7%. The economy is improving but
unemployment remains high. This recession has encouraged people to hold on to their cars longer and spend
money on service instead of buying new cars because they can’t afford them. The downturned economy has
also lead to the closing of many dealerships including over 7,000 for General Motors. This provides less
dealership maintenance competition and makes this the perfect time for a new maintenance company.
Americans spend 42% of the incomes on purchasing a new car so as the economy picks up, car sales will rise
2
Worthington, Richard K. "Shopping in Bellevue."
6
and so will the demand for maintenance.3 With fewer service shops available but an increasing amount of cars
and income as the economy recovers, Renewed Maintenance will be there at the right time for these
customers. To tackle the high unemployment, we will provide rebates for those who are unemployed because
we believe that car maintenance is a necessity and transportation will help people get back on their feet.
2.
Competitive data: present competitors (listed and briefly described), competitive
advantages and disadvantages of the proposed business
Competitive analysis is crucial as it allows a new business to compare itself to existing business
in the area. This will help the company plan and respond to the competition in order to make it successful.
The car maintenance industry has a lot of competitors that have been in business for years and years. We
are determined to provide customers with the most convenient and satisfactory service they deserve.
3
Oil Can Henry's - Company - Oil Change Challenge."
7
Dealership:
Many litter the area like Barrier Motors, a luxury dealership company that sells Audi, Mercedes Benz, Volvo, and
Porsche. The company provides specific maintenance to the meticulous requirements of these luxury vehicles.
Other local dealerships include Evergreen Ford and Michael’s Chevrolet in Issaquah as well as O’Brien Lexus,
Toyota and Scion in Kirkland. The numerous dealerships available to target cities have solid reputations for
specific services for their cars and genuine parts. However, the real appeal of Renewed Maintenance is its friendly
personal attention and convenient options. Instant gratification through on the spot maintenance at the availability
of the customer is a very attractive service. Renewed Maintenance will be focused on providing general car
maintenance in order to buy parts and supplies at wholesale. We will provide the option of customized parts
where the customer can order specific parts that they want for their cars and pay just for our technician’s service.
Auto Maintenance Shops: Jiffy Lube and Oil Can Henry’s
These businesses are owned by oil companies like Shell and Valvoline so they have contracts with these heavy
suppliers and are known throughout the community. Many are franchised like Jiffy Lube and are very popular in
our target region. However, with both dealerships and maintenance shops, service is spotty and inconsistent.
Technicians are paid based off of time and how fast they can finish a job4. They paid for the average time it takes
to do a job, no matter how much actual time they spend on it. Many mechanics will take shortcuts since customers
cannot detect changes on the insides of their cars. Renewed Maintenance will pay technicians annual salaries.
They will receive training for detailed and careful maintenance as well as friendly service. Customer satisfaction
surveys of convenience and quality will also play an important influence in employee pay and training.
The Auto Parts Retailers:
These stores have fairly limited reaches in our region. They provide the tools for those who want to fix up their
own cars. However, the region has a very high average income and fairly busy families with little time. Many
people do not know how to do the maintenance themselves or do inadequate services. It is a dirty and tedious job
that few want to do themselves, but we will counter these stores by marketing our high quality services, and
convenience. More advantages and disadvantages of Renewed Maintenance are in the SWOT and PESTLE
Analysis located in the Appendix.
4
Conaway, Laura. Comp: How Mechanics Get Paid
8
C.
Market Segment analysis
Renewed Maintenance has a main target market of affluent families since they have the most cars and are
the most likely to pay for more expensive mobile services because of their busy schedules and extra disposable
income. Adding on to our residential target market are businesses, and malls around the area with the main focus
in downtown Bellevue and downtown Seattle. We can target these people through business parks, large
downtown companies, and premium shopping malls. Our region in King County provides a resource of large
businesses like Amazon, Microsoft, and Nordstrom. In King County most of the population is concentrated
around city centers and suburbs. It is a manageable region with transportation to target cities in 20 minutes or less
from our headquarters in Bellevue.
Segmentation: My target cities provide large numbers of high income careers. Here is a breakdown of the most
common occupations in King County.
About 30% of the work force in King County is involved in either high tech jobs or management
positions, both of which provide very large incomes as shown by the following table.
Occupation
Computer Specialist
Engineer
Management Occupations except Farmers and Farm Managers
Sales and Related Workers including Supervisor
Sales Representatives, Services, Wholesale and Manufacturing
Average
5
Occupational Outlook Handbook, 2010-11 Edition
9
Average Salary
$97,769
$90,670
$89,330
$96,790
$81,370
$91,186 5
These $80k plus income occupations provide Renewed Maintenance with customers that have disposable
incomes and the ability to afford our service.
In the booming Puget Sound area, there are numerous high income businesses with thousands of employees. This
following table shows some of the largest companies in the area.
Company
Costco Wholesale Corp.
Microsoft Corp.
Amazon.com Inc.
Starbucks Corp.
Nordstrom Inc.
Paccar Inc.
Expeditors International of Washington Inc.
Alaska Air Group Inc.
Expedia Inc.
Symetra Financial Corp.
Esterline Technologies Corp.
Coinstar Inc.
Washington Federal Inc.
Net Income(million)
Employees
$
1,086,000,000
79,000
$
14,569,000,000
93,000
$
902,000,000
24,300
$
390,000,000
142,000
$
441,000,000
48,000
$
111,900,000
15,200
$
240,000,000
12,010
$
121,000,000
12,440
$
299,530,000
7,960
$
128,000,000
1,100
$
119,800,000
8,901
$
53,640,000
3,400
$
48,170,000
1,105
Net Income/Employee
Location
$
13,747 Issaquah
$
156,656 Redmond
$
37,119
Seattle
$
2,746
Seattle
$
9,188
Seattle
$
7,362 Bellevue
$
19,983
Seattle
$
9,727
Seattle
$
37,629 Bellevue
$
116,364 Bellevue
$
13,459 Bellevue
$
15,776 Belleuve
$
43,593
Seattle
6
With tremendous incomes, companies like these will be willing to spend extra money for more perks for
their employees. These employee numbers are for the entire company but most have the majority at their
headquarter locations in King County. Companies like Microsoft have over 90,000 employees with over 40,000
concentrated in Redmond. They provide many cars to be serviced as 81% of workers in King County drive to
work.7 There is a market out in the Puget Sound area with large number of employees and businesses that can
afford to pay for our services.
Targeting: I can specifically target the 30% of people who have these high paying jobs as well as the businesses
themselves. The benefits are two-fold with such a large professional sector in the economy. First off, the wealthy
employees have cars and therefore a need for maintenance. With their disposable incomes, these employees will
also be able to afford our services. We will target individual customers through residential services in suburbs at
their homes. In addition, these large businesses like Microsoft have thousands of cars in their garages that provide
a great opportunity for Renewed Maintenance. We will target specific businesses with high incomes and large
number of employees.
6
7
Erb, George, ed. Puget Sound Business Journal: Book of Lists
"King County."
10
Positioning: To target these customers, Renewed Maintenance will utilize its strategic competitive advantage of
mobility and the universal need for car maintenance. The following four P’s show how we will appeal to the
customer.
1. Product: Servicing vehicles has a great demand. Every car owner needs to maintain their
automobiles. Our mobile service will greatly appeal to customers who have busy schedules.
Businesses will also appreciate car service because their employees depend on their vehicles to
get to work every day.
2. Place: Renewed Maintenance is located in Bellevue at the center of three highways and in the
middle of King County for quick access to target cities and businesses directly in the area. With
fast transportation to customers, this ensures satisfaction and timely convenience. Our services
will take place at the setting the customer requests.
3. Price: We will use competition-orientated pricing and cost-plus pricing. Our prices will be based
off of a local car maintenance shop’s figures in order to be competitive. With our Business
Subscriptions, we can charge high prices because it is a limited service. We however want to
attract as many businesses as possible so we will service the cars at a discount because of the
large quantity purchase.
4. Promotion: Our company will use above-the-line and below-the-line promotion. We will use
local media and outdoor advertising. Below-the-line promotions include direct mailings. We also
want to have good public relations in our communities by sponsoring local charities.
D.
Analysis of potential locations
We will operate from a garage located in Bellevue. The headquarters will consist of a garage for the
service trucks and for storing auto parts as well as an office above for management and training purposes. The
garage is crucial to maintaining our service trucks’ longevity and efficiency as they are the life blood of our
company. Our auto parts also need to be stored and organized so they can be loaded onto our service trucks in a
timely manner for specific services. The street front open garage location will feature a car of the month from
Barrier Motors. This will attract attention to our business and mutually benefits Barrier as well. At the top of the
garage will be our offices which are essential for financing and effective advertising. We will use the office to
schedule our trucks downstairs according to the customers’ appointments. Within the office will be a large
meeting room for technician training and contract negotiations with businesses and shopping centers.
Bellevue is in the heart of King County where all the businesses and malls collide in about four square
miles. This provides quick access to concentrated locations of customers. The numerous businesses and malls
within Bellevue provide access to huge parking garages filled with wealthy professionals and consumers. We will
negotiate contracts with the local shopping centers to pay them part of the gross profit we make from their
locations. Bellevue is also at the conjunction of three highways, leading to target cities in less than 20 minutes.
This will cut down on transportation time for our residential services. Our fast on the spot service reduces
11
customer stress and hassle. The close access to the suburbs of Sammamish and Mercer Island provides a market
of wealthy families.
IV. PLANNED OPERATION OF THE PROPOSED BUSINESS/ PRODUCT/ SERVICE
A.
Proposed organization
Renewed Maintenance will be a private limited company to maintain a more personally controlled business. This
would prevent the company from turning into a profit obsessed company like many of our competitors so we can focus on
taking care of the customer. A private limited company would give me control of my business and can only raise funds
from private individuals, not the general public which gives me greater control. The limited liability would protect me
from my business and bankruptcy. My personal assets are legally separate from the company. Another advantage of a
private limited company is the ability to raise capital for expansion.
Some disadvantages to a private limited company include the expensive and complicated process of forming the
company. There are many rules and regulations to protect the shareholders since they do not have control in the business.
Every year the company must also file a more complex tax return. Because the company is limited to only private
individuals to maintain more control, it may be more difficult to raise as much capital as public limited companies which
can sell shares to the public.
Steps to set up Renewed Maintenance as a Private Limited Company:
1. File the legal forms and register with the State of Washington Secretary of State through the Limited
Liability Company On-Line Registration Form which includes the Certificate of Formation.
2. Create an operating agreement which states the rights and responsibilities of the LLC members8.
3. Obtain business licenses and permits from the state and the city of Bellevue.
4. Consult with a tax attorney about the tax implications.
5. Apply for a loan.
6. Lease a garage and office in the city of Bellevue.
7. Purchase fixed assets like trucks, shelving, and office equipment.
8. Hire technicians and other staff and train.
9. Advertise and promote.
Here are charts and tables that outline the structure of Renewed Maintenance. The first chart is the staffing outline
followed by the payroll tables.
8
"How to Form an LLC | Nolo.com."
12
Organization Chart:
Owner
Office Manager
Sales
Representative
Lead Technician
Technician(20)
Job Descriptions:
Owner: I will oversee the entire business and its management like the purchase of fixed assets and taking out
loans. The owner will take care of the company’s accounting and financial analysis. I will work directly with my
technicians through my lead technician to ensure they are happy with the business so they can be friendly and
positive towards customers. I will make sure they are trained properly in the mechanics of their profession but
also their personal interaction with customers. I will work with my Office Manager to make sure scheduling is
efficient and that our garage is well stocked with smooth transitions of loading and unloading trucks. My Sales
Representative will help me target businesses and malls by negociating and contracting with potential business
clients.
Office Manager: This person will be mainly focused on residential services. He or she will schedule the
technicians for individual services and manage advertising to residential homes. My manager will organize all the
customer surveys and help make follow up phone calls to customers thanking them for their business and for
feedback. This position needs a very welcoming personality to retain individual customers and a very
compassionate tone when dealing with customers to make them feel important. The Office Manager will provide
me with service quality reports and new marketing strategies targeted for our residential customers. He or she will
also be responsible for maintaining the website as well.
Sales Representative: He/she will be taking care of promoting our services to business around the area as well as
the local malls to establish contracts with these subscribers. This person will advertise and establish connections
with business leaders and report to me with feedback from the business about our services. He/she will present to
13
the potential businesses why Renewed Maintenance is beneficial to their company. He or she will also negotiate
appropriate profit percentages with the shopping centers. My Sales Representative will need a genuine and
energetic personality to represent the spirit of our quality service.
Lead Technician: This person will be in charge of training and retraining our technicians. This person not only
needs to understand the mechanics of the automobile but also understand customer relations and the essentials to
customer satisfaction when servicing their vehicles. The lead technician will also be in charge of managing
inventory in the garage. He/she will be responsible for loading and unloading the trucks with the correct supplies
for each job efficiently and safely. This person will also be dispatched to locations for service supervision and
training.
Technician: The workhorse of the company is made up of twenty technicians who are trained in automobile
service as well as friendly service. They will drive out to the locations and complete the service in a timely
manner to ensure optimal quality. Technicians need to be responsible and organized to do the job well and
complete it in a convenient time for the customer. All of our technicians will be ASE certified. The Auto Service
Excellence Certification is provided by a non-profit organization that has stringent testing for technicians to
ensure they are skilled in their job. They also need to have a friendly personality with positive attitude because
they are our direct representatives to the customers. We will also perform background checks and ask ethical
questions during the interview to ensure these are honest and dedicated workers.
Salary Table:
Position
Hours Per
month
Owner
Office Manager
Sales Representative
Lead Technician
Technician(20)
Technician Bonus
160
160
160
160
Monthly Payroll
Annual Payroll
Expense
Expense
$6,000
$72,000
$4,000
$48,000
$4,000
$48,000
$3,500
$42,000
$2,560
$30,720
$4,000
Instead of paying our technicians hourly, they will be paid annually. This will discourage cutting corners and low
quality services as most mechanics are paid depending on the estimated time each job should take.9 Being paid
annually reduces motivation but we want to develop greater relationships with our employees and train the most
skilled and friendly technicians possible. In order to accomplish this goal, we need long term employees. To
9
Conaway, Laura. "Comp: How Mechanics Get Paid"
14
combat the lack of motivation from annual pay, the technician with the highest customer satisfaction rating from
the surveys at the end of every six months will receive a $2000 bonus.
Payroll Taxes and Benefits Table:
Position
Owner
Office Manager
Sales Representative
Lead Technician
Technician
B.
Cumulative Payroll Tax
Cumulative Benefits
Total Salary
Rate
Rate
Burden
5.65%
20%
$18,468
5.65%
20%
$12,312
5.65%
20%
$12,312
5.65%
20%
$10,773
5.65%
10%
$4,808
Proposed product/service
Renewed Maintenance will provide three different types of services for our different targets.
Service/Product
Residential
Services
Business
Subscriptions
Shopping Center
Stations
Description
Our well trained technicians will drive out in our
service trucks to customers’ residential homes to
service their vehicles. It starts off with the “Essentials
Package” which includes the basics involved in
routine car maintenance. The customer can then add
on à la carte options to their service.
We have seven technicians dedicated to businesses.
Businesses will set up contracts with Renewed
Maintenance to come in and service employees’
vehicles during the work day so they will have it
ready by the time they’re ready to go home.
Six dedicated technicians will be stationed at local
shopping centers to service shoppers’ vehicles.
Shoppers drop them off at our service area in the
garage and we will have them serviced and ready for
the customer once they return.
Approximate Price
Our services are flexible and focused on customer
satisfaction. No other competitor in the industry
offers our mobility and. To stay competitive with
our competitors’ pricing but also taking
advantage of our strategic competitive advantage,
the average service will cost $90.
The businesses will pay monthly for their
employees. We will charge a discounted $60 per
car per service and the cost for 25 cars would be
around $1500.
We will negotiate contracts with shopping centers
for them to provide permanent spacing for
servicing. The shopping center will receive
around 50% of the gross profit from the services
completed on their property. The customers at the
malls pay a discounted $80.
Residential Services: Customers can choose to schedule an appointment online or through the phone but will
receive a $5 gift card thought online scheduling. That information will go through our Office Manager (OM) who
then assigns jobs to the specific technicians. The OM will also transfer the scheduling information to the Lead
Technician who will then load the trucks with appropriate supplies for each specific job. The service starts with
our “Essentials Package” which includes oil and oil filter changes, steering fluid, transmission fluid, washer fluid,
brake fluid checks, filter checks, light and wiper checks, battery checks, and tire pressure checks. The customer
then has the choice of adding additional options to their service that include filter replacements, engine flushes,
15
belt replacements, light and wiper replacements, and coolant flushes. Our technicians will commute to the
customer’s home and complete the service within an adequate time of about 20-40 minutes. They will be
evaluated by the customer on satisfaction and quality. Customer satisfaction surveys will be presented to the
customer once the technician has arrived and if the customer chooses to submit it, they will receive a $5 Renewed
Maintenance gift card for their next service.
Business Subscriptions: If a local business wants to subscribe to our service for their employees they can request
certain days for our technicians to service their vehicles. The employees will submit service request forms online
to the Office Manager specifying what exact service they would like ahead of time. Our seven dedicated business
technicians will be dispatched to wherever service is scheduled by the company each day. In the mornings, the
employees will drop off their keys and our technicians will have a coned off area to complete all the services. The
technician will complete the service within the employee’s work hours. To prevent overloading our technicians’
capacity, the Office Manager will ensure that only an appropriate amount of about 60 services will be scheduled
for one day at businesses. If there is higher demand from one large company, we can schedule for all 20
technicians to work at that business for certain days for a much larger capacity of around 170.
Shopping Center Stations: Local shopping centers such as the Bellevue Collection compose of 10,000 free
parking spaces for consumers. The malls would provide the spacing to Renewed Maintenance while each
customer pays a discounted $80. The shopping center would make 50% of the gross profit on the services and
therefore this would encourage them to market and to support our business within their shopping complexes. We
will have technicians stationed at appropriate locations dependent upon specific demand at each location. If
demand is low on certain days they can be redistributed to residential or business services.
C.
Proposed marketing strategies
1. Proposed Product:
There is a high demand of auto maintenance in the area as well as a demand for convenience. The
professional sector of the area has most of the luxury and sporty cars in the area. They will want to
service their cars regularly to protect their expensive investments and for their cars to run smoothly. Our
mobile service will be facilitated through the use of supplied maintenance trucks that are equipped with
service ramps that allow the technician to work at any regular parking space in the area. They will have
16
all the auto supplies so the technicians are self-sufficient once they leave the headquarters. Online
scheduling is flexible and allows the customer to choose a time up to one month in advance as well as
specific services. These fast and flexible services will fit the busy schedules of our target customers. Our
quality motivated technicians provide people with reliable and honest service. Their pay can change based
on the customer satisfaction surveys. Our unique mobility also attracts businesses, some of which have
thousands of employees that are dependent upon their auto vehicles. The services are flexible with the
businesses to prevent interferences. By servicing employees’ vehicles during working hours, it gives them
more time to focus on work instead of taking time out to get their vehicles serviced. Shoppers at the
shopping center locations will also be able to get their car maintenance completed at the same time they
are having fun. Businesses enjoy the productivity while individuals enjoy less hassle and no waste of
time.
2. Proposed Pricing Policy:
Setting the price for our residential services will use competition-orientated pricing and cost-plus
pricing. We will base our prices and costs off of an established local auto maintenance business in
Sammamish, Washington. On every service they make about $80 with each service costing about $30.
Their profit margin is about 160%. Our cost will be about $10 more for each service because of gas costs
and our service trucks. Our company has a competitive advantage in our mobility, giving us the
opportunity to charge more money. However, we would like to maintain the same profit margins as the
local auto maintenance shop in order to remain competitive. To encourage long term customers, Renewed
Maintenance will also offer annual memberships at a 20% discounted price of $288 for four services. For
customers who submit surveys, we will give them $5 gift cards that they can use towards their next
service.
For business subscriptions we will charge for each car serviced at a discount. With our normal
pricing of $90, 25 cars would cost $2250 but we will discount it to $1500 because the businesses are
purchasing a large quantity. These discounts will lower our profit margin but will encourage more
businesses to purchase our services for their employees.
17
For the Shopping Center Stations, we will use similar pricing but lower our pricing margin in
order to attract more customers. We will charge $80 for each service and give 50% of the gross profit to
the shopping centers in order to promote business.
Many of our competitors are less costly than Renewed Maintenance; however, no other company
provides our unique mobility. The specialty puts us above the competition as well as our trained
technicians who are motivated to complete a quality service to keep the customer happy. In our special
region, most people will not mind paying ten dollars more for their service to have the luxury of that
convenience and quality.
Here is a more detailed list of specific services.
Service
Residential
Business
Shopping Center
Cost per Service
$
90
$
60
$
80
Cost for 25 Services
$
2,250
$
1,500
$
2,000
Additional Services
Tire Rotation
Filter Replacement
Light Bulb Replacement
Wiper Replacement
Belt Replacement
Coolant Flush
Cost per Service
$
15
$
10
$
10
$
10
$
30
$
20
Cost for 25 Services
$
375
$
250
$
250
$
250
$
750
$
500
These are options that will be available for selection during online scheduling. Customers must
select the main service before adding the additional. The “Cost for 25 Services” column is specified for
Businesses to estimate costs.
18
3. Proposed Place
Our location in Bellevue is a hub for shoppers, business employees, and families. We can attract
much traffic just through our signage at our garage location. The technicians will complete services at all
different locations around the area. Our distribution will take place in the form of highways that surround
our location into neighborhoods and businesses. This will ensure reliable on-time service to residents,
businesses, and shoppers. With the close proximity to nearby businesses our commute time to Bellevue
locations will be negligible. This on-demand servicing will take place within coned off areas to ensure
safety of the customer and other people around the area. They will be performed on flat surfaces to avoid
an unstable vehicle. The trained technicians will drive the cars on to service ramps made of steel to create
a stable working platform. Our effort to create a safe environment for our services is a high priority to
keep our technicians and customers safe.
Renewed Maintenance will feature high quality synthetic oil from suppliers such as Castrol, and
Mobile 1. The customer also has the option to supply their own choice of auto parts and oil. Our trucks
will be new, clean, and maintained Ford F-350’s. They represent an image of Renewed Maintenance and
our desire for well running cars. Our technicians will also wear clean uniforms to put on a sharp
appearance that will not turn away customers. Dirty appearances can lead to immediate judgments of
distrust and disrespect. Our well-groomed technicians and specialized trucks add to our professional
reputation.
4. Proposed Promotion:
Our advertising will target our three different types of services. The Office Manager will be
actively developing our customers in the residential areas while our Sales Representative will be
developing relationships with businesses and malls for long term subscriptions. We will use above-theline and below-the-line advertising.
Element
Cost
Target
Direct
Mail/Email
$1,500
Residential/Shopping
Local Newspaper
Advertisements
$3000
Residential/Shopping
Open House
$700
Residential/Shopping
Description
Send new customers $15 gift cars for their first
service to attract individual customers.
Create a presence in our communities by
spreading knowledge of our services. Specify
services and pricing.
To create interest in cars and quality
maintenance to ensure their performance
19
Implementation
dates in 2012
March
June-September
July 5th
November 25th
Website
$2100
Business/Residential/
Shopping
Sponsor Local
Charities
$2,500
Residential/Business/
Shopping
Element
Cost
Create an online presence in the high tech
modern society. Provide easy access to
information and scheduling.
Promote a healthy presence in our
communities. Establish our reputation for
customer oriented and caring business.
Target
Seattle Auto
Show
$3000
Residential/Business/
Shopping
Labeled Service
Trucks
$2000
Residential
Posters in
Shopping
Centers
$2000
Shopping
Total
$17500
Description
Set up an exhibit at the auto show with a
service truck to market our services. Many car
enthusiasts who care about cars attend.
Our trucks driving around on the road and in
communities get will create attention with
creative designs. They represent the
company’s mission.
We will design the posters and as part of the
contract with the shopping centers, they will
help us promote in their locations
January
February –
October
Implementation
dates in 2012
November 6th -10th
January
February
The above-the-line advertising is paid for media. Newspapers like the Issaquah Press and Seattle Times
are expensive to advertise in but have large audiences and can be referred to more than once. Posters in the
shopping centers and designs on our trucks will reach high amounts of traffic. Our trucks travel directly into our
target locations. The below-the-line advertising is cheap and intended to create publicity in the community
through means other than traditional media. Direct Mailings in homes along with sales promotions will attract will
establish a good connection with residential areas which have appropriate audiences since many people own cars.
Our website will provide the opportunity for anyone including large organizations to learn more about what we
are all about. Sponsoring charities and having open houses will create a welcoming image to the community.
Through the word of mouth and our promotion in these public places, we want to create a presence in the wealthy
community of King County as the friendly and convenient auto maintenance company.
V. PLANNED FINANCING
A.
Projected income and expenses
1.
Revenue Model and Fixed Asset Model
Here are the financial models and statements for Renewed Maintenance in a three year period. The
revenue models show the estimated revenue and cost of goods sold while the fixed asset and depreciation model
shows the startup purchases and expenses from depreciation.
20
Renewed Maintenance
Revenue Model
For the Year 2012
Revenue Stream
Conservative
Residential Service
Business Subscriptions
Shopping Center Stations
Totals
14,000
500
11,000
Units Sold
Likely
18,000
720
16,000
Average
Sales
Price
Aggressive
20,000
800
17,000
$
90.00
1,500.00
80.00
Budgeted Revenue
Conservative
Likely
Aggressive
$
$
1,260,000
750,000
880,000
2,890,000
$
$
1,620,000
1,080,000
1,280,000
3,980,000
$
$
1,800,000
1,200,000
1,360,000
4,360,000
Renewed Maintenance
Cost Model
For the Year 2012
Revenue Stream
Conservative
Residential Service
Business Subscriptions
Shopping Center Stations
Totals
14,000
500
11,000
Units Sold
Likely
18,000
720
16,000
Average
Cost
Per Unit
Aggressive
20,000
800
17,000
$
40.00
1,000.00
60.00
Conservative
$
$
560,000
500,000
660,000
1,720,000
Budgeted Cost
Likely
$
$
720,000
720,000
960,000
2,400,000
Aggressive
$
$
800,000
800,000
1,020,000
2,620,000
Renewed Maintenance
Gross Profit Model
For the Year 2012
Revenue Stream
Conservative
Residential Service
Business Subscriptions
Shopping Center Stations
Totals
Percentages
14,000
500
11,000
Units Sold
Likely
18,000
720
16,000
Aggressive
20,000
800
17,000
Average
Gross Profit
Per Unit
Budgeted Gross Profit
Conservative
Likely
Aggressive
$
$
50.00
500.00
20.00
$
700,000 $
250,000
220,000
1,170,000 $
40%
900,000 $
360,000
320,000
1,580,000 $
40%
1,000,000
400,000
340,000
1,740,000
40%
Our revenue model for residential services will be based on the sales figures of a car maintenance shop in
Sammamish for 2011. They serviced about 20,000 cars by the end of year. Compare that to the number of households in
Sammamish and considering each house hold has an average of two cars, this shop serviced about 30% of the vehicles in
the city. My target cities’ households total to about 450,000 which equates to about 900,000 vehicles. If I can get just 2%
of all those vehicles, it would be about 18,000 services per year. This is well within our capacity of about 20,000
residential services per year. Our 20 technicians are allocated with seven dedicated to residential services, seven doing
business services and six at shopping centers.
The 450,000 employees from the large businesses listed in section B.2.C. are an example of the vast quantity of
potential customers for our business. King County has about 900,000 employees and over 58,000 businesses.10 That
equates to an average of about 16 employees per business. My target goal is to reach out to 1% of these businesses which
is about 580. If the average is 16 per company, that results to 9000 employee customers. Each customer is estimated to
10
“King County”
21
require services at least twice a year so that is about 18000 services for each business every year. That is well within our
capacity of about 20,000 business services per year. This is also considering that of the 580 target businesses many
companies have well over 16 employees so the actual number of businesses we reach will be much lower but still result in
similar amount of services.
Large shopping centers around the area include the Bellevue Collection, Northgate Mall, Downtown Seattle, and
Redmond Town Center. Our main focus will be on Bellevue Square which has over 16million shoppers every year. If we
can get just a tenth of a percent of all those shoppers for our discounted service, it would equate to about 16,000 services
per year. This is within our 17,000 capacity for shopping centers.
All these capacities are based off of eight services per day per technician for 350 days. The second revenue model
will use only capacity. Our capacity each year is about 56,000 services with each about $90 brings in $5,040,000 in sales.
The cost of each service is about $40 so total cost is about $2,240,000. This brings us to a gross profit of $2,800,000. This
number is less accurate than our first revenue model because our business depends on demand more than our capacity.
Our estimated demands are lower than our capacity so the first model is a more accurate representation of the different
services we offer. It takes into consideration the different targets and discounted wholesale pricing to business subscribers.
Our income statement and cash flow will use the conservative models because we are still recovering from a recession.
The following table shows the fixed assets we will purchase for the running of our business.
Renewed Maintenance
Fixed Asset and Depreciation Schedule
For the Period Beginning January 2012
Fixed Asset
Class
Number
20
Truck
20
20
3
20
5
Fixtures
Tools
Furniture
Tools
Furniture
1
20
5
Office equipment
Telephones
Office equipment
Description
Acquisition
Date
Cost
Life
in Years
Salvage
Value
Annual Straight Line
Depreciation
Value
Expense
2011 Ford F-350
Total Automobile
12/12/2011
600,000
600,000
5
200,000
400,000
400,000
80,000
80,000
Shelves
Maintenance Tools
4 8' X 3' office tables
Cameras
Chairs/Lamps
Total Furniture and Fixtures
12/15/2011
12/28/2011
12/27/2011
12/28/2011
12/27/2011
8,000
14,000
1,000
2,000
2,000
27,000
7
7
7
5
7
1,000
1,000
200
100
100
7,000
13,000
800
1,900
1,900
24,600
1,000
1,857
114
380
271
3,623
Cannon copier
iPhones and land line
HP Laptops
Total Office Equipment
12/29/2011
12/10/2011
12/11/2011
4,315
3,000
5,275
12,590
5
3
3
500
200
500
3,815
2,800
4,775
11,390
763
933
1,592
3,288
Total All Fixed Assets
639,590
86,911
The biggest assets in our company are the 20 service trucks. They are about $30,000 each and they’re the
backbone of this mobile company. They will run about 30,000 miles each year so we plan on using them for five years.
22
The average resale value on autotrader.com for a five year old basic F-350 pickup truck with 150,000 miles is about
$10,000.
2. Projected income statement by month for the first three year
23
24
(24,162)
(4,832)
(19,329) $
-8%
Income/ Loss before tax
Tax Expense
Net Income [Loss]
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
69,033
12,502
14,400
4,667
4,817
7,243
2,000
200
400
4,100
2,000
200
100
121,662
$
$
Operating Expenses
Payroll
Payroll taxes and benefits
Lease/ Triple net fees
Interest Expense
Taxes and Lincensing
Depreciation
Insurance
Office Supplies
Utilities
Advertising
Repairs
Professional Fees
Miscellaneous
Total Operating Expenses
Gross Profit
Residential Service
Business Subscriptions
Shopping Center Stations
Total Gross Profit
Cost of Goods Sold:
Residential Service
Business Subscriptions
Shopping Center Stations
Total Cost of Goods Sold
Operating Revenue
Residential Service
Business Subscriptions
Shopping Center Stations
Total Operating Revenue
Jan
(17,820) $
-7%
(4,455)
(22,275)
69,033
12,502
14,400
4,603
4,817
7,243
2,000
200
400
2,278
2,000
200
100
119,775
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Feb
(17,369) $
-7%
(4,342)
(21,711)
69,033
12,502
14,400
4,539
4,817
7,243
2,000
200
400
1,778
2,000
200
100
119,211
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Mar
(16,118) $
-7%
(4,029)
(20,147)
69,033
12,502
14,400
4,475
4,817
7,243
2,000
200
400
278
2,000
200
100
117,647
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Apr
(16,066) $
-7%
(4,016)
(20,082)
69,033
12,502
14,400
4,410
4,817
7,243
2,000
200
400
278
2,000
200
100
117,582
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
May
(16,614) $
-7%
(4,153)
(20,767)
69,033
12,502
14,400
4,345
4,817
7,243
2,000
200
400
1,028
2,000
200
100
118,267
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Jun
(17,121) $
-7%
(4,280)
(21,401)
69,033
12,502
14,400
4,279
4,817
7,243
2,000
200
400
1,728
2,000
200
100
118,901
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Jul
(16,508) $
-7%
(4,127)
(20,635)
69,033
12,502
14,400
4,213
4,817
7,243
2,000
200
400
1,028
2,000
200
100
118,135
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Aug
(16,455) $
-7%
(4,114)
(20,568)
69,033
12,502
14,400
4,146
4,817
7,243
2,000
200
400
1,028
2,000
200
100
118,068
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Sep
(15,801) $
-7%
(3,950)
(19,751)
69,033
12,502
14,400
4,079
4,817
7,243
2,000
200
400
278
2,000
200
100
117,251
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Oct
(18,485) $
-8%
(4,621)
(23,107)
69,033
12,502
14,400
4,012
4,817
7,243
2,000
200
400
3,700
2,000
200
100
120,607
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
105,000 $
62,500
73,333
240,833
Nov
2012
Totals
2013
2014
(15,472) $
-6%
(3,868)
(19,340)
69,033
12,502
14,400
3,945
4,817
7,243
2,000
200
400
2,000
200
100
116,840
58,333
20,833
18,333
97,500
40%
46,667
41,667
55,000
143,333
(203,159) $
-7%
(50,790)
(253,949)
828,400
150,025
172,800
51,713
57,800
86,911
24,000
2,400
4,800
17,500
24,000
2,400
1,200
1,423,949
700,000
250,000
220,000
1,170,000
40%
(33,538) $
-1%
(8,385)
(41,923)
836,684
154,526
177,984
41,869
69,360
86,911
24,720
2,472
4,944
18,025
24,720
2,472
1,236
1,445,923
840,000
300,000
264,000
1,404,000
40%
278,769
6%
69,692
348,461
845,051
159,162
183,324
31,178
90,168
86,911
25,462
2,546
5,092
18,566
25,462
2,546
1,273
1,476,740
1,092,000
390,000
343,200
1,825,200
40%
560,000 $ 672,000 $ 873,600
500,000
600,000
780,000
660,000
792,000
1,029,600
1,720,000
2,064,000
2,683,200
105,000 $ 1,260,000 $ 1,512,000 $ 1,965,600
62,500
750,000
900,000
1,170,000
73,333
880,000
1,056,000
1,372,800
240,833
2,890,000
3,468,000
4,508,400
Dec
3. Projected cash flow for the first three years
25
Cash Outflows:
Equipment Purchases
Furnature and Fixtures
Inventory Purchases
Payroll
Payroll taxes and benefits
Lease/Triple net fees
Taxes and Licenses
Insurance
Office Supplies
Utilities
Advertising
Repairs
Professional Fees
Miscellaneous
Tax Expense
Subtotal
$
$
338,796 $
902,037
Total Cash Outflows
Ending Cash Balance
14,194
9,527
4,667
Subtotal
Other Cash Outflows:
Loan Principal
Loan Interest
612,590
27,000
143,333
69,033
12,502
14,400
4,817
2,000
200
400
4,100
2,000
200
100
(4,832)
887,843
1,240,833
Available Cash Balance
-
300,000
700,000
240,833
1,240,833
$
Jan
Cash Inflows:
Owner Funds
Loan Proceeds
Sales
Total Cash Inflows
Beginning Cash Balance
26
318,629 $
261,001
14,193
9,590
4,603
143,333
69,033
12,502
14,400
4,817
2,000
200
400
2,278
2,000
200
100
(4,455)
246,808
579,630
240,833
240,833
338,796 $
Feb
298,848 $
260,614
14,193
9,654
4,539
143,333
69,033
12,502
14,400
4,817
2,000
200
400
1,778
2,000
200
100
(4,342)
246,421
559,462
240,833
240,833
318,629 $
Mar
280,255 $
259,427
14,193
9,718
4,475
143,333
69,033
12,502
14,400
4,817
2,000
200
400
278
2,000
200
100
(4,029)
245,234
539,681
240,833
240,833
298,848 $
Apr
261,648 $
259,440
14,193
9,783
4,410
143,333
69,033
12,502
14,400
4,817
2,000
200
400
278
2,000
200
100
(4,016)
245,247
521,088
240,833
240,833
280,255 $
May
2012
242,429 $
260,053
14,193
9,848
4,345
143,333
69,033
12,502
14,400
4,817
2,000
200
400
1,028
2,000
200
100
(4,153)
245,860
502,482
240,833
240,833
261,648 $
Jun
222,636 $
260,626
14,193
9,914
4,279
143,333
69,033
12,502
14,400
4,817
2,000
200
400
1,728
2,000
200
100
(4,280)
246,433
483,262
240,833
240,833
242,429 $
Jul
203,391 $
260,079
14,193
9,980
4,213
143,333
69,033
12,502
14,400
4,817
2,000
200
400
1,028
2,000
200
100
(4,127)
245,886
463,470
240,833
240,833
222,636 $
Aug
For the years ended December 31, 2012, 2013 & 2014
184,133 $
260,091
14,192
10,046
4,146
143,333
69,033
12,502
14,400
4,817
2,000
200
400
1,028
2,000
200
100
(4,114)
245,899
444,224
240,833
240,833
203,391 $
Sep
165,461 $
259,505
14,192
10,113
4,079
143,333
69,033
12,502
14,400
4,817
2,000
200
400
278
2,000
200
100
(3,950)
245,313
424,966
240,833
240,833
184,133 $
Oct
144,037 $
262,257
14,193
10,181
4,012
143,333
69,033
12,502
14,400
4,817
2,000
200
400
3,700
2,000
200
100
(4,621)
248,064
406,294
240,833
240,833
165,461 $
Nov
125,559 $
259,311
14,194
10,249
3,945
143,333
69,033
12,502
14,400
4,817
2,000
200
400
2,000
200
100
(3,868)
245,117
384,871
240,833
240,833
144,037 $
Dec
Annual
50,480 $
3,543,079
170,321
128,452
41,869
2,064,000
836,684
154,526
177,984
69,360
24,720
2,472
4,944
18,025
24,720
2,472
1,236
(8,385)
3,372,758
3,593,559
3,468,000
3,468,000
125,559 $
2013
277,046
4,281,834
170,292
139,114
31,178
2,683,200
845,051
159,162
183,324
90,168
25,462
2,546
5,092
18,566
25,462
2,546
1,273
69,692
4,111,542
4,558,880
4,508,400
4,508,400
50,480
2014
The forecasted income statement shows that Renewed Maintenance breaks even in 2013, the 2nd year of operation
which is very common for a small business. The forecasted model shows 20% increase each year in gross profit due to
publicity and established positioning in the target markets. There is also 3% inflation taken into account for operating
expenses. The Cash Flow forecast shows that we are at the lowest liquidity in 2013 so in order to maintain positive cash
flow during the first three years I will need to personally contribute and take out a loan to cover the expenses.
B.
Proposed plan to meet capital needs
1.
Personal and internal/exter1nal sources of financing
I will invest $300,000 in my businesses and I am requesting a $700,000 loan which will help with
the purchases of fixed assets in the first year. The loan will also help to absorb the first and second years’
losses until we can make profits starting in 2014.
The loan will be repaid in five years with an 8% interest rate. The following outlines the repay
schedule.
2.
Plan to repay borrowed funds
Amortization Schedule
Renewed Maintenance
Loan Amount
Interest Rate
Term
Start Date
$ 700,000
8%
5 years
Dec 2011
Summary of Payments & Interest
Monthly Payment will be
$ 14,193
Total Interest Paid over Life of Loan $151,608
Interest Paid in 2012
$ 51,713
Interest Paid in 2013
$41,869
Interest Paid in 2014
$31,178
Interest Paid in 2015
$19,661
Interest Paid in 2016
$7,156
Payment Schedule for Renewed Maintenance
Year Principal Paid Interest Paid Loan Balance
Begin
$0
$0
$700,000
2012
$118,608
$51,713
$581,391
27
2013
2014
2015
2016
Totals
$128,452
$139,114
$150,660
$163,166
$700,000
$41,869
$31,178
$19,661
$7,156
$151,609
$452,939
$313,825
$163,165
$0
$0
Through loans and personal contribution, Renewed Maintenance will have enough funds to meet
liquidity demands.
VI. CONCLUSION
Renewed Maintenance’s unique selling point of flexible quality service is something very rarely seen in today’s
high paced society. Companies are all about their bottom lines and making it as high as possible; they sometimes forget
that their customers are more than just numbers. King County is full of opportunity for our business which will be
successful because:








Our technicians are highly trained, friendly, and motivated
Our flexible scheduling is fitted to the customer
Our special subscriptions and mobility are not seen in our competitors
The target cities have a great number of wealthy families willing to spend a little extra on taking care of
their vehicles
We are located in a hub of businesses and highways conveniently connecting us to our target suburban
locations
Shopping centers will be able to use our service as a tool for them to entice more shoppers and more
profit
Businesses will be able to use our service as a perk for their employees
Car sales are increasing as we recover from our recession and with it comes the inevitable demand for
maintenance
VII. BIBLIOGRAPHY
"Automotive Industry Trends - Business Report II | Franchise Direct.com." The Best Franchise Opportunities & Franchises for Sale |
FranchiseDirect.com. 2011. Web. 12 Nov. 2011.
<http://www.franchisedirect.com/automotivefranchises/automotiveindustrytrendsbusinessreportii/7/249>.
"The Bellevue Collection » Parking." The Bellevue Collection. Web. 12 Nov. 2011. <http://www.bellevuesquare.com/Parking.php>.
"Cars For Sale: Car Details - AutoTrader.com." New Cars, Used Cars - Find Cars at AutoTrader.com. AutoTrader.com, 2011. Web.
19 Dec. 2011. <http://www.autotrader.com/fyc/vdp.jsp?ct=u>.
"Car Repair Laws." Office of Attorney General Rob McKenna. Washington Attorney General. Web. 19 Nov. 2011.
<http://www.atg.wa.gov/teenconsumer/transportation/car_repair_laws.htm>.
Conaway, Laura. "Comp: How Mechanics Get Paid : Planet Money : NPR." NPR : National Public Radio : News & Analysis, World,
US, Music & Arts : NPR. NPR, 8 July 2009. Web. 19 Nov. 2011.
<http://www.npr.org/blogs/money/2009/07/comp_how_mechanics_get_paid.html>.
Erb, George, ed. Puget Sound Business Journal: Book of Lists. Seattle: Puget Sound Business, 2010. Print.
Fonda, ByDAREN. "The Great Car Maintenance Upsell - SmartMoney.com." Online Investing: Stocks, Personal Finance & Mutual
Funds at SmartMoney.com - SmartMoney.com. The Wall Street Journal, 29 July 2009. Web. 12 Nov. 2011.
<http://www.smartmoney.com/spend/autos/the-great-car-maintenance-upsell/>.
Grover, Joel, and Matt Goldberg. "Is Your Mechanic Cheating? | NBC Los Angeles." NBC Los Angeles - Local News, Weather,
Traffic, Entertainment, Events, Breaking News Los Angeles News, Sports, Weather, and Traffic. NBC Los Angeles, May
2006. Web. 12 Nov. 2011. <http://www.nbclosangeles.com/Is_Your_Mechanic_Cheating.html>.
"How to Form an LLC | Nolo.com." Lawyers, Legal Forms, Law Books & Software, Free Information - Nolo. 2011. Web. 19 Nov.
2011. <http://www.nolo.com/legal-encyclopedia/form-llc-how-to-organize-llc-30287.html>.
28
Jackson, Salvatore. "How to Form an LLC in Washington State." LegalZoom: Legal Info. Demand Media. Web. 19 Nov. 2011.
<http://info.legalzoom.com/form-llc-washington-state-3395.html>.
"King County." City-Data. Advameg, 2010. Web. 19 Dec. 2011. <http://www.city-data.com/county/King_County-WA.html>.
"Number of Firms in King County." King County, Washington. King County, 7 Nov. 2011. Web. 19 Dec. 2011.
<http://www.kingcounty.gov/exec/PSB/BenchmarkProgram/Economy/EC04_NewBusinesses/FirmsTable.aspx>.
"Occupational Outlook Handbook, 2010-11 Edition." U.S. Bureau of Labor Statistics. United States Department of Labor, 2010. Web.
11 Dec. 2011. <http://www.bls.gov/oco/>.
"Oil Can Henry's - Company - Oil Change Challenge." Oil Can Henry's - Oil Change Coupons, Automotive Maintenance, Convenient
Locations. 2011. Web. 19 Nov. 2011. <http://www.oilcanhenrys.com/company/oil_change_challenge>.
"Oil Change Services in the US Market Research | IBISWorld." Market Research Reports & Analysis | IBISWorld US. May 2011.
Web. 12 Nov. 2011. <http://www.ibisworld.com/industry/default.aspx?indid=1696>.
"Sales Representative Salary | Glassdoor." Glassdoor – an inside Look at Jobs & Companies. 20 Nov. 2011. Web. 27 Nov. 2011.
<http://www.glassdoor.com/Salaries/sales-representative-salary-SRCH_KO0,20.htm>.
Solomon, Christopher. "How to Make Your Car Last a Million Miles - MSN Money." Commentary Index - MSN Money. 22 Mar.
2010. Web. 12 Nov. 2011.
<http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/CarsThatLastAMillionMiles.aspx>.
"State Requirements of Auto Repair Businesses." Washington State Department of Revenue. Apr. 2002. Web. 19 Nov. 2011.
<http://dor.wa.gov/Docs/Pubs/SpecialNotices/1996/sn_96_auto.pdf>.
"Unemployment in the U.S.-Google Public Data Explorer." Google. U.S. Bureau of Labor Statistics, 23 Nov. 2011. Web. 27 Nov.
2011. <http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_>.
"United States - Fact Sheet." American FactFinder. U.S. Census Bureau, 2009. Web. 12 Nov. 2011.
<http://factfinder.census.gov/servlet/ACSSAFFFacts?_event=Search>.
Worthington, Richard K. "Shopping in Bellevue." Bellevue Real Estate - Bellevue Homes and Condos For Sale. Bellevue Real Estate,
2009. Web. 12 Nov. 2011. <http://www.bellevuerealestate.com/community/shopping.php>.
VIII. APPENDIX
Appendix A: PESTLE/SWOT Analysis: The table includes PESTLE (Political, Economic, Social, Technological,
Legal, and Environmental) analysis to determine advantages and disadvantages in external factors of Renewed
Maintenance. The SWOT (Strengths, Weaknesses, Opportunities, and Threats) analyzes internal factors and external
factors to assess the environment regarding Renewed Maintenance.
SWOT Analysis for Renewed Maintenance
December 28th, 2011
Analysis for internal and external factors including PESTLE
Strengths
Weaknesses


People
Friendly and trained technicians are skilled in
their field.



People
Technicians need constant training
Difficult to find qualified mechanics



Resources
Not limited to shops
Service trucks make it easy to reach customers
around the region
Easy transportations through freeways


Resources
No connections with huge oil makers.
Innovation and Ideas
Mobile company reaches customers at their
schedules without the inconveniences.
Target large businesses and malls that have a lot
of car flow.




Marketing
New revolutionary way to maintain cars.
Appeals through quality of services and peace of



Innovation and Ideas
Mobility costs money to maintain.
Time is a factor to the service quality.
Puts a lot of responsibility and trust into the
technicians.
Marketing
Difficulty marketing an ugly and dirty service.
No fancy shop to provide advertising.







29






mind.
Rising economy creates a prime time to service
cars.
Many businesses in the area.

Lack of advertising in target audience as most
people who care about their cars go to our
competitors already.
Operations
Mobile company requires little office space and
shop space
Technology allows efficient communications
through the internet and cellphones.
Headquarters in Bellevue allows for quick
commute to customers.





Operations
Traffic could slow down service and quality.
Limited supplies in service trucks.
Need to service the trucks themselves
Costs for new training in customer relations.



Finance
 Finance
Use of others’ facilities for services.
 Costly maintenance of vehicles.
Able to buy trucks at fleet pricing instead of
 Lack of substantial funding for a new company.
buildings and spaces.
Opportunities
Threats
Political
Political
 Emphasis on reducing dependency on foreign oil and  Tax incentives for plug in electric vehicles which
more fuel efficiency
don’t have as many serviceable parts as a gas
powered car.
 Many states have laws to limit car emissions and
 Local government is considering expanding the light
required emissions testing.
rail.
Economic
Economic
 Target cities were not as severely affected by the
 People have learned to be careful about their money.
recession as the rest of the state.
 Less emphasis on buying, more on enjoying life and
 Companies and business in Bellevue and Redmond
giving back to help out in these struggling times.
are fostering local economic health.
Social
Social
 Population is educated and affluent.
 Increasing population that takes public
transportation and biking.
 Many liberal businesses that support the green
movement.
 The Big Three are recovering from their slumps and
getting more Americans to purchase new cars.
Technological
Technological
 More manufacturers are using new technologies that
 Electrical cars need less traditional services.
require more maintenance.
 Newer tire rubber compounds can run longer.
 New synthetic oils can last longer.
Legal
Legal
 Under the Magnuson-Moss Warranty Act
 Background checks are required of workers
manufacturers cannot require maintenance to be
 Documentation and contracts are required12.
performed at a dealership to maintain a
warranty.11
Environmental/Ethical
Environmental/Ethical
 Emphasis on clean air and fuel efficiency.
 More people using public transportation and
electric cars.
 Safe cars have always been a focus for owners.
 Gas prices are rising and demand is growing for
foreign oil from the Middle East.
11
12
"Oil Can Henry's - Company - Oil Change Challenge."
"Car Repair Laws." Office of Attorney General Rob McKenna
30
31