Used Auto Sales Business Plan

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Integrity Auto Sales

Financial Plan

Forecast

Key Assumptions

We will accept credit cards and trade-ins of any value. Credit cards will have a negative affect on cash flow in that we may not be paid for several days. Trade-ins will also impact cash flow in that they are an asset and have no real value until sold. We will have to limit the number of credit transactions, and only take in quality trades at a wholesale price to facilitate turning a quick profit. The personnel burden is very low because benefits are not paid to part-timers. And the short-term interest rate is extraordinarily low because of current market rates.

We also assume conservative earnings from selling loans and extended warranties will be made.

The other assumption is that current market conditions will remain for the next two to three years. Low rates will have a positive impact on sales and lending for the short term.

Our cash forecast is extremely unrealistic at the far end of the forecast. We leave it like that knowing that we will revise over time. We call it a cushion, and reassurance, not an accurate forecast. 

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of Funds

Almost 90% of start-up costs will go to assets. Start-up costs will be financed through a combination of owner’s investment, short-term loans (VA business loan), and long-term borrowing. The start-up chart shows the distribution of financing.

Other miscellaneous expenses include:

  • Legal fees for business establishment (ownership, and no sell agreement).
  • Stationary, office supplies.
  • Marketing/advertising fees.
  • Initial consultation to establish records with an accountant.
  • Rent for lot and office.
  • Establish a Web page for advertising.
  • Expensed equipment (two computers, two desk, Fax/copier, phone lines, and office furniture).
  • One month initial start-up investment in vehicles.

Sources of Funds

We will be needing $130,000 to start. $100,000 will be a long term business loan. Jonathan will give $20,000 and Don will give $10,000. 

Statements

Projected Profit & Loss

2020 2021 2022
Gross Margin $1,512,350 $2,211,110 $2,868,419
Operating Expenses
Salaries & Wages $190,800 $194,616 $198,507
Employee Related Expenses $38,160 $38,923 $39,702
Leased equipment $1,200 $1,200 $1,200
Utilities $6,000 $6,000 $6,000
Insurance $4,800 $4,800 $4,800
Rent $48,000 $48,000 $48,000
Interest Incurred $4,960 $2,604 $373
Depreciation and Amortization
Gain or Loss from Sale of Assets
Income Taxes $182,764 $287,246 $385,475
Total Expenses $5,589,834 $8,285,779 $11,091,537
Net Profit $1,035,666 $1,627,721 $2,184,363

Projected Balance Sheet

Starting Balances 2020 2021 2022
Cash $67,800 $987,635 $2,502,599 $4,749,528
Accounts Receivable $0 $0 $0
Inventory $50,000 $628,850 $864,920 $864,920
Other Current Assets
Total Current Assets $117,800 $1,616,485 $3,367,519 $5,614,448
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Accounts Payable $447,538 $593,423 $652,440
Income Taxes Payable $53,697 $71,698 $96,458
Sales Taxes Payable $0 $0 $0
Short-Term Debt $38,216 $40,573 $21,212
Prepaid Revenue
Total Current Liabilities $38,216 $541,807 $686,332 $748,898
Long-Term Debt $61,784 $21,212 $0 $0
Long-Term Liabilities $61,784 $21,212 $0 $0
Paid-In Capital $30,000 $30,000 $30,000 $30,000
Retained Earnings ($12,200) ($12,200) $1,023,466 $2,651,187
Earnings $1,035,666 $1,627,721 $2,184,363

Projected Cash Flow Statement

2020 2021 2022
Net Cash Flow from Operations
Net Profit $1,035,666 $1,627,721 $2,184,363
Depreciation & Amortization
Change in Accounts Receivable $0 $0 $0
Change in Inventory ($578,850) ($236,070) $0
Change in Accounts Payable $447,538 $145,885 $59,018
Change in Income Tax Payable $53,697 $18,001 $24,760
Change in Sales Tax Payable $0 $0 $0
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received
Dividends & Distributions
Change in Short-Term Debt $2,357 ($19,361) ($21,212)
Change in Long-Term Debt ($40,573) ($21,212) $0
Cash at Beginning of Period $67,800 $987,635 $2,502,599
Net Change in Cash $919,835 $1,514,965 $2,246,929
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