Environmental Engines Toyota Honda GM is expected to grow in sales at a rate of 20% per month, starting from the conservative estimate of six cars sold. The financing will come initially from the executive board, allowing plenty of opportunity for credit to cover unforeseen expenses, if necessary. Growth will be rapid and produce profits almost immediately.
Profits will initially be repaid to the business to finance any overhead costs related to purchasing inventory and to pay down the principal on outstanding debt, then to the rapidly expanding photovoltaic recharging station and mechanic's garage, then to pay off the initial investments.
Inventory will be purchased in advance to stock the showroom floor and to outfit every executive, sales person, and mechanic with a zero emissions vehicle to drive around town at their own cost. Their savings earned by investing in a zero emissions vehicle will spread by word-of-mouth, attract more customers, and bolster future growth at the same high rate of 20%.
Environmental Engines Toyota Honda GM has made some important assumptions about the costs of building business capacity and acquiring inventory. We will build our business capacity steadily based on the assumption of roughly $175,000 in annual payroll, 10% current and long-term interest rates, a 30% tax rate, and an available inventory totaling $9,616,733. Assuming demand does not outstrip supply, these conservative assumptions project immediate success for Environmental Engines Toyota Honda GM.
While we are prepared for our manufacturers to release new products during the next 12 months, drastic increases in the price of inventory could threaten the stability of our business. Such fluctuations would only be threatening if they were industry-wide (i.e., Toyota, Honda and GM all doubled the dealer's wholesale cost of purchasing inventory.) Barring monopolistic manipulations of the supply of inventory, success is just around the corner.
For our break-even analysis, we assume normal monthly running costs per month, as shown below, which include our full payroll, lease, marketing, utilities, and an estimation of other running expences. Payroll alone, at our present run rate, is only about $48,000 for two mechanics while all sales staff operate on commission.
Margins are harder to assume as the average per unit costs do not include marketing costs, promotions, or salesman commissions. Our overall average per unit revenue over per unit costs is based on past sales from other dealerships. We hope to attain a margin that high in the future.
The chart shows what we need to sell per month to break-even, according to these assumptions. This is less than one percent of our planned 2003 sales level, and significantly below last year's average dealership sales level, so we believe we can maintain it.
Environmental Engines Toyota Honda GM anticipates a heady monthly increase in sales starting small (selling 6 cars in the first month). The gross margin within the first year will be modest, rising in the second and third year.
Key budget items will include salary, rent, sales and marketing expenses, utilities (including costs of photovoltaic cell maintenance), insurance, taxes and licensing.
Net profits will reach outstanding levels in the first year, escalating in the second and the third year! All of these profits can then be fed back into research and development opening the doorway to a secondary market role for Environmental Engines Toyota Honda GM as a patent holding company and clearing house.
This table and chart show our exciting month-by-month cash flow for the next three years.
The Balance Sheet includes all assets, liabilities, and capital of Environmental Engines Toyota Honda GM.
The business ratios table is based on accurate research of a collection of standard business ratios for a zero emissions car dealership specializing in hybrid and electric vehicles. Our projections for this niche market are compared to a collection of standard business ratios for other auto sales industries.
The variance between our ratios and those of other auto sales industries is a function of the exact nature of Environmental Engines Toyota Honda GM.
Each of these values are acceptable, and in fact, preferable to the ratios demonstrated by industry competitors.