Integrity Auto Sales

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Used Auto Sales Business Plan

Strategy and Implementation Summary

Our location is a very important competitive edge. We are in Junction City because people travel from all over the area to buy vehicles there.

The other competitive edge we need to develop is the buying experience and reputation as a local leader in customer satisfaction. This advantage is important to us because we rely on word of mouth to generate additional customers. Integrity is our difference.

5.1 Marketing Strategy

Our marketing strategy will focus on two 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).

  • The marketing budget will not exceed $6,000 per year.
  • Marketing promotions will be consistent with the Mission Statement and support the following objectives:
    1. 100% customer satisfaction, measured through repeat customers, referrals and surveys.
    2. To achieve a respectable profit margin within the first three-years.
    3. To achieve a healthy net profit by year two.

5.1.1 Pricing Strategy

Our pricing strategy will be based on competitive Blue Book values (wholesale and retail) plus vehicle handling fees. We will not exceed competitive retail prices, and will attempt to sell at wholesale plus a fair profit, generally 15-25%. Quality and price say a lot about our vehicles. The vehicles that are rare or not readily available to meet demand will be priced accordingly. The average industry mark-up for similar vehicles is 20-30%.

5.2 Sales Strategy

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.

5.2.1 Sales Forecast

The following table and charts give a run-down on forecasted sales. We expect sales to increase at a slow rate per month for each product in the first year. From June through September we expect minimal growth during our start-up period. October through December we expect decreased sales due to historical trends, and a depreciation in value based on less demand. February through August we expect increased sales growth again. In 2004 and 2005, we expect solid steady sales growth as Integrity Auto Sales claims a larger market share. We expect increased sales in lower-priced vehicles, and this will be our primary product that yields the highest margin. We feel this sales forecast is realistic based on the market analysis of similar businesses performance. The opportunities for used car sales has increased with the high sales of new vehicles, increasing the number of quality late model used vehicles in the market. More new car buyers directly effect the number of used cars available. The current low interest rates also have a positive impact on the high-end vehicle purchases. The population growth in the area creates a need for more vehicles as well.

The risks involved with this forecast include technology and the need for low impact environment friendly transportation. Older used cars tend to be less efficient, and will become less popular. Current hybrid vehicles are priced extremely high, and car makers have not found an economical answer for consumers. We estimate conservative earnings from selling extended warranties and from selling loans (we will sell the loan for the lender).

Note: For vehicle purchases, the per-unit price of inventory purchases includes the cost of detailing vehicles.

Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Low-end vehicles 298 320 345
Average vehicles 154 162 170
High-end vehicles 79 85 90
Loan sales 166 175 200
Warranty sales 136 140 150
Other/consignments 49 50 50
Total Unit Sales 882 932 1,005
Unit Prices Year 1 Year 2 Year 3
Low-end vehicles $2,000.00 $2,200.00 $2,400.00
Average vehicles $4,979.87 $5,100.00 $5,200.00
High-end vehicles $9,958.23 $10,200.00 $10,500.00
Loan sales $400.00 $400.00 $400.00
Warranty sales $200.00 $200.00 $200.00
Other/consignments $5,000.00 $5,100.00 $5,200.00
Low-end vehicles $596,000 $704,000 $828,000
Average vehicles $766,900 $826,200 $884,000
High-end vehicles $786,700 $867,000 $945,000
Loan sales $66,400 $70,000 $80,000
Warranty sales $27,200 $28,000 $30,000
Other/consignments $245,000 $255,000 $260,000
Total Sales $2,488,200 $2,750,200 $3,027,000
Direct Unit Costs Year 1 Year 2 Year 3
Low-end vehicles $1,200.00 $1,100.00 $1,000.00
Average vehicles $3,500.00 $3,500.00 $3,500.00
High-end vehicles $8,000.00 $7,900.00 $7,800.00
Loan sales $0.00 $0.00 $0.00
Warranty sales $0.00 $0.00 $0.00
Other/consignments $4,500.00 $4,500.00 $4,500.00
Direct Cost of Sales
Low-end vehicles $357,600 $352,000 $345,000
Average vehicles $539,000 $567,000 $595,000
High-end vehicles $632,000 $671,500 $702,000
Loan sales $0 $0 $0
Warranty sales $0 $0 $0
Other/consignments $220,500 $225,000 $225,000
Subtotal Direct Cost of Sales $1,749,100 $1,815,500 $1,867,000

5.2.2 Sales Programs

Sales programs will include sales awards for the highest sales, bonuses, and customer service awards for those employees who best exemplify Integrity's commitment to customers.

We will provide quarterly training and educational opportunities by sending employees to professional development training for their respective area.

5.3 Strategic Alliances

We depend on our alliance with local new car dealers and auction houses to maintain our inventory. This relationship is crucial to our success and will be placed ahead of petty differences. Our financial relations with these groups will be handled in a timely and accurate manner. We need to make sure that the personnel, and especially the ownership, of our allies are aware of our support and reciprocation. We will also depend on outside sources for professional development of our sales staff.

5.4 Milestones

The accompanying table lists important program milestones, with dates, managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

The milestone table shows purchasing, and marketing goals. What the table doesn't show is the commitment behind it. Our business plan includes complete provisions for plan-vs.-actual analysis, and we will hold follow-up meetings every month to discuss the variance and course corrections, and a final plan review on 5/1/02.

Milestone Start Date End Date Budget Manager Department
Business Plan 10/15/2001 11/19/2001 $0 Owner Marketing
Purchase Lot 1/1/2002 5/1/2002 $0 Owner Marketing
Complete Legal 1/1/2002 1/1/2002 $500 Owners Management
Establish Suppliers 1/1/2002 6/1/2002 $0 Sales Mgr Sales
Establish Acctg Books 1/1/2002 5/1/2002 $500 Owner, admin Records
Final Plan Review 5/1/2002 5/1/2002 $0 Owner ALL
Purchase Office Supplies/Equip 5/1/2002 5/15/2002 $4,700 Owner Administrative
Purchase Inventory 5/1/2002 6/1/2002 $50,000 Sales MGR Sales
Grand Opening Advertisement 5/1/2002 6/1/2002 $500 Sales MGR Administrative
Hire Employees 5/15/2002 5/20/2002 $0 Owner Management
Company Party 7/1/2002 7/1/2002 $200 Owner Administrative
Totals $56,400

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