Markam Driving School
Markam Driving School was started by four individuals who saw an untapped potential in the driver education industry. This potential was in creating a new low cost position while still being able to compete with the larger companies on quality. This strategy would be created through strategic alliances and partnerships of local suppliers and buyers. The company has seen steady growth in a mature market which is a sign of the firm’s viable business strategy. The company has eight investors, the majority of whom are employees of the firm. Markam Driving School is incorporated in the state of Delaware but is domiciled in Washington state. The company has achieved revenues of approximately $185,000 and a gross margin of 37%. In addition, the company has achieved a customer satisfaction rate of 92%.
2.1 Company History
The company was founded when Greg Markam, a longtime manager of driving schools and William S. Harper, a cost control manager, sought to go into business themselves. At the time, there was no low-cost leader in the industry that was providing comprehensive high-quality education with the most modern teaching techniques (including classroom computer simulations and testing equipment). The national chains were ignoring the fact that the customers could not recognize the difference in value that the various competitors provided, and therefore sought only the cheapest provider. On the other hand the vast number of smaller companies were not keeping up with the newest teaching techniques such as computer simulators. Finally, the Washington department of Transportation had recently begun to outsource many of its services such as vehicle registration to private firms. This presented a great opportunity to a company willing to take a few risks. Soon after starting Mr.’s Markam and Harper brought in Jane Wilkes, a traffic safety analyst, and Ken Thomas, an expert in the writing of training manuals and procedures.
During the past six years, MDS has shown steady growth, and built a number of crucial partnerships. The industry usually has very high capital costs due to gas, training equipment, and vehicle acquisition/repair. The key to low-cost leadership in this field is through special relationships with suppliers and buyers. In the past, the company has been able to acquire discounts with such firms as Tesoro Gasoline stations, F & F auto repair, Pullman Printers, etc. The company has achieved revenues of approximately $746,000 and a gross margin of 67%. In addition, the company has achieved a customer satisfaction rate of 92%.
|Gross Margin %||60.00%||60.00%||67.00%|
|Other Current Assets||$5,000||$5,000||$2,000|
|Total Current Assets||$12,512||$10,714||$14,938|
|Total Long-term Assets||$66,000||$60,000||$62,000|
|Other Current Liabilities (interest free)||$0||$0||$0|
|Total Current Liabilities||$9,002||$3,974||$3,716|
|Total Capital and Liabilities||$78,512||$70,714||$76,938|
2.2 Company Locations and Facilities
The company has its original facility in Seattle at 1312 1st Ave NW. This is in the Greenlake Industrial Park and consists of office space, 3 fifteen person and 4 ten person classrooms and numerous simulators, storage space, garage, and an outdoor driving course. The facilities are very modern and comfortable, making it a relaxing atmosphere for students.
The future facilities in Tacoma are at 3671 Dearborn St. a marine supply store prior to being rented. It will also contain the same equipment and layout once the renovations are complete. The third facility, in Portland, OR have not been decided yet and the company is presently assessing the merits of several different facilities.
2.3 Company Ownership
The company has eight investors, the majority of whom are employees of the the firm. Together they own 100% or 3,000 privately owned shares of the company. Markam Driving School is incorporated in the state of Delaware and obliged to perform under that state’s rules. By the rules of the company’s charter, no investor can trade, sell or dispose of any shares without first informing the board of directors.
Markam Driving School is presently seeking to find new investors to help offset the expenses of its planned expansion. The strategy entails a further issuance of 4,000 shares to these new shareholders.