Integrity Auto Sales
Executive Summary
Auto Sales & Parts
Problem
There is a need in Lane County for a large selection of quality used cars, and Integrity Auto Sales will sell these top-quality used vehicles at a competitive price. The owner and sales manager have over 30 years of combined experience in new and used auto sales. We will continue to develop our excellent working relationship with local dealers and auctions to bring the savings to the customer.
Solution
We will create a purchasing environment that caters to the customer’s needs. We are selling a professional service and an experience in car buying that will bring customers back again, as well as referring friends and family. We estimate an optimistic gross margin over the industry average. We will be successful because of the excellent team we have assembled and the drive and determination of the owners.
Market
Almost everyone needs a car to get from point A to B. Many families have two or more cars. Due to the recent success of the new car market, there is a large inventory of used cars available for re-sale. New car sales have enjoyed the largest single month gain in October up 24%.
Competition
Used car dealers are notorious for unethical sales practices. Customers are inherently cautious and untrusting as a result. The more we can provide a high-quality sales experience, the more successful we will be. Our salesmen will provide a friendly and personal experience for the buyer. We will follow up and ensure customer satisfaction. We will rely on these customers for an excellent reference to other car buyers. This company will build an excellent working relationship with our suppliers and customers.
Why Us?
Integrity Auto Sales provides a unique car buying experience to the customers in the Willamette Valley. One that focuses on customer satisfaction first. We understand that vehicle purchasing is a necessary, but sometimes unpleasant experience. Our goal is to provide the customer with an enjoyable, honest service by satisfying individual customers practical transportation needs with a quality product.
We also believe it is important to have quality vehicles at a low cost, and will back each vehicle with a 30 day limited warranty. Our company will make a profit by generating sales. It will provide job satisfaction and fair compensation to its employees, and a fair return to its owners. Hard work and performance is rewarded through bonuses and commissions. Job satisfaction is very important for employees and owners, we will create a work environment that is enjoyable and profitable for all.
Expectations
Forecast
- Growth will be moderate to good, cash flows steady with several months of loss in the beginning
- Marketing will remain below 10% of sales.
- The company will invest residual profits (10%) into financial markets and approximately 50% into company expansion for the first year.
Financial Highlights by Year
Financing Needed
We need $130,000 funding to start. That includes a $100,000 loan. Jonathan will invest $20,000 and Don will invest $10,000.
Opportunity
Problem & Solution
Problem Worth Solving
There is a need in Lane County for a large selection of quality used cars, and Integrity Auto Sales will sell these top-quality used vehicles at a competitive price. The owner and sales manager have over 30 years of combined experience in new and used auto sales. We will continue to develop our excellent working relationship with local dealers and auctions to bring the savings to the customer.
Our Solution
Integrity Auto Sales provides a unique car buying experience to the customers in the Willamette Valley. One that focuses on customer satisfaction first. We understand that vehicle purchasing is a necessary, but sometimes unpleasant experience. Our goal is to provide the customer with an enjoyable, honest service by satisfying individual customers practical transportation needs with a quality product.
We also believe it is important to have quality vehicles at a low cost, and will back each vehicle with a 30 day limited warranty. Our company will make a profit by generating sales. It will provide job satisfaction and fair compensation to its employees, and a fair return to its owners. Hard work and performance is rewarded through bonuses and commissions. Job satisfaction is very important for employees and owners, we will create a work environment that is enjoyable and profitable for all.
Target Market
Market Size & Segments
Almost everyone needs a car to get from point A to B. Many families have two or more cars. Due to the recent success of the new car market, there is a large inventory of used cars available for re-sale. New car sales have enjoyed the largest single month gain in October 2001, up 24%.
4.1 Market Segmentation
Our market segmentation will consist of four basic segments; students, retired, families, and singles.
Our closest, similar competitors are AA Auto Sales, Big Apple Car Sales, Frank’s Auto Place, Guaranty, R & L Motors, and Sierra Truck, all on Hwy 99 between Eugene and Junction City. Used car dealers are notorious for unethical sales practices. Customers are inherently cautious and untrusting as a result. The more we can provide a high-quality sales experience, the more successful we will be. Our salesmen will provide a friendly and personal experience for the buyer. We will follow up and ensure customer satisfaction. We will rely on these customers for an excellent reference to other car buyers. This company will build an excellent working relationship with our suppliers and customers. To succeed in this business we must: Our marketing strategy will focus on four segments. Those segments are described in the following subtopics. We will implement a strategy that treats customers as a community. This means our marketing resources will be centered around advertising both sales promotions (events) and personal sales (customer service, friendly atmosphere). Students will include high school and college age students who need a safe and economical car. This group is concerned with price, flashy looks, and being cool. These drivers tend to be less educated and will buy on impulse paying more for less car. They will also buy cars more often than others, on average every two to three years. The retired group will focus on practicality. Cost may be less important than quality and features. This group wants comfortable, nicely equipped vehicles at a reasonable price. They will want a vehicle that will last for years. Families will focus on safe, practical vehicles. Something that will last for years, can fetch groceries, carry the kids, and perform long trips. Many will be on a budget, and price may be a big factor. They will shop around and educate themselves on vehicles, shopping for a specific make or model. The last group is the singles. They are similar to the students in that they want flashly cool cars, but may be a working professional who can afford to pay more for a higher-quality vehicle. Sales compensation is based on a percent of profits. We will invest adequate time and resources into training each member of the sales team and into good customer relations. Salesmen will be paid a portion of their salary based on commission. Good performance is rewarded with increased commission and bonuses. However integrity will not be sacrificed for sales. Customer satisfaction will continue to be a top priority. All potential sales will be attended to in a timely fashion and long-term salesperson-customer relationships will take precedence over sales closure. Integrity Auto Sales sells top-quality used vehicles at a competitive price. Integrity buys pre-inspected vehicles wholesale from well known local car dealers, and auto auctions. Integrity continually maintains a diverse stock of vehicles, providing the widest selection for individual needs. Vehicles are purchased weekly, to add to the current stock on hand. Each vehicle is thoroughly inspected by an ASE mechanic with over 25 years of experience. Only vehicles that pass this critical 26 point inspection are sold on-site. Integrity Auto Sales sells all types of used vehicles, from sports cars to RVs. We cater to each customer individually, to satisfy their own practical needs. We buy only the best used vehicles at or below wholesale in order to bring the savings to the customers. Each vehicle is thoroughly inspected by an ASE mechanic with over 25 years of experience. We also offer an auto finding service to customers. If we do not have the vehicle they want in stock, we will find one for them. Our key metrics are: Integrity Auto Sales is a privately held corporation. It will be registered as a Subchapter S, with ownership 60%-Jonathan Dinsmore, 40%-Don Mazzioti. Integrity will start with four initial employees. The owner will manage over all operations and the sales manager will manage all buying and selling of inventory. A records clerk and lot attendant will also be hired initially. Once the gross margin and cash flow will support it, we will hire an additional salesman and lot attendants (tentatively four to six months). 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. 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: 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. Competition
Current Alternatives
Our Advantages
Keys to Success
Keys to Success
Execution
Marketing & Sales
Marketing Plan
Sales Plan
Operations
Locations & Facilities
Technology
Milestones & Metrics
Milestones Table
Milestone
Due Date
Mar 06, 2020
June 08, 2020
June 11, 2020
Dec 13, 2020
Key Metrics
Company
Overview
Ownership & Structure
Team
Management Team
Personnel Table
2020
2021
2022
Sales Associates (1.33)
$42,840
$131,091
Owner/Manager
$45,600
$46,512
$47,442
Sales
$42,000
$42,840
$43,697
Records Admin
$36,000
$36,720
$37,454
Lot Attendant
$31,200
$31,824
$32,460
Accountant
$36,000
$36,720
$37,454
Totals
$190,800
$237,456
$329,598
Financial Plan
Forecast
Key Assumptions
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
Sources of Funds
Statements
Projected Profit & Loss
2020
2021
2022
Revenue
$6,625,500
$9,913,500
$13,275,900
Direct Costs
$5,113,150
$7,702,390
$10,407,481
Gross Margin
$1,512,350
$2,211,110
$2,868,419
Gross Margin %
23%
22%
22%
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
Total Operating Expenses
$288,960
$293,539
$298,209
Operating Income
$1,223,390
$1,917,571
$2,570,210
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
Net Profit/Sales
16%
16%
16%
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
Total Assets
$117,800
$1,616,485
$3,367,519
$5,614,448
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
Total Liabilities
$100,000
$563,019
$686,332
$748,898
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
Total Owner’s Equity
$17,800
$1,053,466
$2,681,187
$4,865,550
Total Liabilities & Equity
$117,800
$1,616,485
$3,367,519
$5,614,448
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
Net Cash Flow from Operations
$958,050
$1,555,537
$2,268,140
Investing & Financing
Assets Purchased or Sold
Net Cash from Investing
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
Net Cash from Financing
($38,216)
($40,573)
($21,212)
Cash at Beginning of Period
$67,800
$987,635
$2,502,599
Net Change in Cash
$919,835
$1,514,965
$2,246,929
Cash at End of Period
$987,635
$2,502,599
$4,749,528