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Mad Keen Motors is a family-owned business located in Backwater Downs, a suburb of London. It has been under the ownership of the Keen family for 35 years and has grown from a single mechanical repair shop to five locations that deal with body and mechanical repairs, vehicle storage and towing, washing and valuating and used car sales. This plan is an internal document, outlining the effects on the company of adding a website. The Mad Keen Motors website will act as an additional customer service element for all our garages, offering basic advice on car maintenance, information about our services, staff, and location, and regular discount offers for website visitors on featured repairs and maintenance. Our current phone-based and face-to-face customer service is excellent, but requires that potential customers make active contact with the company to learn about us. Most of our new business comes from referrals from current satisfied customers. We hope to make the referral process easier, by encouraging existing customers to point out our website to their friends, colleagues, neighbors and family members, building familiarity with our company long before they need emergency car care or consider buying another car. The "advice" section will be crucial in establishing customers' trust in our expertise, as will our affiliation with nationally-syndicated car experts. By helping local customers help themselves, Mad Keen hopes to build trust and relationships with existing and potential customers. 1.1 Mission Mad Keen Motors provides excellent automotive care and service to all of our customers, whether they need to buy a used car, contract major body work or get a simple wash and wax. 1.2 Keys to Success The keys to success for the company's website will be: 1. Compiling an extensive and thorough listing of questions and answers that will encourage customers to return to the site whenever they have a problem with their cars. 2. Providing additional expert advice for answers that customers don't find in the base list of questions in a timely and thorough manner. 3. Offering Web-based promotions that will encourage customers to book cars into the garage through the website. 4. Communicating the site's existence to the businesses and residents within the local area. 5. Getting existing customers to recommend the website to others. 1.3 Objectives The objectives of the Mad Keen Motors website are: 1. To drive traffic from the website to the garage. 2. To expand the community of Mad Keen Motors customers. 3. To provide customers with a substantial list of questions and answers regarding typical car repairs. 4. To allow convenient bookings for service and repairs.
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Company Summary
Mad Keen Motors is a family-owned business located in Backwater Downs, a suburb of London. It has been under the ownership of the Keen family for 35 years and has grown from a single mechanical repair shop to five locations that deal with body and mechanical repairs, vehicle storage and towing, washing and valuating and used car sales. 2.1 Company History Mad Keen Motors has done very well. Annual net profits have exceeded 30,000 for the last two years. We decreased the marketing budget last year, which led to a small decline in sales. By directing the missing amount (and a bit more) towards the creation of a website, we hope to increase overall sales and net profits. The table shows only last year's performance.
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Past Performance Sales Gross Margin Gross Margin % Operating Expenses Inventory Turnover Balance Sheet Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities (interest free) Total Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Capital and Liabilities Other Inputs Payment Days FY 2003 0 0 0.00% 0 0.00 FY 2003 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 2004 0 0 0.00% 0 0.00 FY 2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 2005 798,000 767,853 96.22% 695,820 5.01 FY 2005 203,488 12,040 70,000 285,528 1,250,000 15,000 1,235,000 1,520,528 20,000 0 0 20,000 750,000 770,000 400,000 314,488 36,040 750,528 1,520,528 30
2. Older luxury car owners: people who have either owned their high-end luxury cars for some years, or are unable to afford the expense of a brand new luxury car but want the feel of relaxed driving. Both of these groups want to keep their cars in the best shape possible. Those who have bought second-hand cars will often spend many hours in their cars and will place much importance on reliability. These owners will bring their cars in for regular services and occasional valets.
3. Sports car owners: people who are younger or middle-aged men, and will regard performance as important. They will also pride themselves on the look of their car and if involved in a minor scrape will have the body repaired very quickly, since looks are also important. These people will have regular service and tune-ups on their cars.
4. Lifetime owners: many of these people have owned their cars for more than five or six years. They are more likely to be women. They are attached to their cars as friends and though it may be more sensible for them to purchase a new car, they will continue to have repairs done on their "old faithful."
5. Buyers: the site will provide links to information on new and used car prices and include tips on what to look for when buying a car.
Market Analysis
2005 Potential Growth Customers New Car 2% Owners Sports Car 5% Owner Older 10% luxury car owner Lifetime 2% Owners Used Car 12% Buyers Total 5.40% Need real financials? 2006 2007 2008 2009 CAGR 52,000 25,000 30,000 53,040 26,250 33,000 54,101 27,563 36,300 55,183 28,941 39,930 56,287 30,388 43,923 2.00% 5.00% 10.00%
80,000 40,000
81,600 44,800
83,232 50,176
84,897 56,197
86,595 62,941
2.00% 12.00%
We recommend using Business Plan Pro as the easiest way to create automatic financials for your own business plan. 4.2 Target Market Segment Strategy Aside from the washing and valet services, we are currently targeting owners of older cars or cars in need of much maintenance, since that will provide us the greatest revenue.
4.3 Service Business Analysis The garage repair business as a whole is fragmented. There are a few major dealerships in each area, with a larger number of small garage repair shops, like Mad Keen Motors. Dealers target customers who buy new and used cars from them. Small garages rely on word of mouth and get most new customers because of emergency car care needs. 4.3.1 Competition and Buying Patterns Word of mouth is important in the car repair business, since people are very wary of garages, due to their lack of knowledge of cars and engines. Mad Keen Motors leads the local competition in regards to word of mouth, having been in business for over three decades under the same ownership. Competition from dealerships is becoming stiffer. Car design is becoming more and more specialized, as car manufacturers aim to encourage owners of their vehicles to have services carried out at their franchised dealerships. However, small garages like Mad Keen have a price advantage over dealership, usually charging 50-70% less per hour for repair work.
Mad Keen closes the sale by always putting our best face forward. Employees are thoroughly trained in customer service, the facilities are attractive and clean, and estimates for repair work are prepared promptly. A customer who is not suffering an immediate emergency will "shop around" until he finds a shop that feels trustworthy - it is our job to earn that trust in every encounter and contract. 5.3.1 Sales Forecast "Standard revenues" represents projections of existing revenue streams over the next three years. The second line shows projections for additional sales and costs directly related to the new website, either from increased visibility or online coupons. By the end of the 2006, we expect almost 2.5% of monthly sales to be directly traceable to the website, rising to 4% by the end of 2008.
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Sales Forecast FY 2006 Sales Revenue from all Standard Streams Increased Sales through website Other Total Sales Direct Cost of Sales Direct Costs Other Subtotal Direct Cost of Sales Need real financials? 804,000 18,360 0 822,360 FY 2006 32,894 0 32,894 FY 2007 820,080 23,000 0 843,080 FY 2007 33,723 0 33,723 FY 2008 836,482 35,000 0 871,482 FY 2008 34,859 0 34,859
We recommend using Business Plan Pro as the easiest way to create automatic financials for your own business plan. Edit this sample plan 5.4 Milestones The following milestones illustrate the timeline for the development and implementation of our website.
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Milestones Milestone Start Date Draft 2/1/2006 layout to owners Website 2/1/2006 Content Developed Initial UI 2/10/2006 Completed Back End 3/1/2006 Developed Design 3/16/2006 Approved Graphics 3/20/2006 & Logos Completed BETA 3/20/2006 Complete User 4/1/2006 Testing Necessary 4/7/2006 Changes Site 4/12/2006 Launch Totals
End Date
Department Consultant
2/10/2006 250
3/1/2006
Mark/Barry Owners
3/1/2006
500
Adrian Adrian
Consultant Consultant
Traffic Forecast The following traffic forecast has been created after researching other small local service websites, and based on the size of the potential market with Internet presence in the Backwater Downs area. It is a conservative estimate of monthly page views and unique user sessions. Feb Unique Users Page Views 100 500 Mar 175 800 Apr 250 1250 May 450 2200 Jun 600 2900 Jul 400 2000 Aug 400 2000 Sep 600 2900 Oct 600 2900 Nov 500 2400 Dec 400 2000 Jan 600 2900
Total
600
975
1500
2650
3500
2400
2400
3500
3500
2900
2400
3500
6.1 Website Marketing Strategy The website will have two main goals: 1. To provide potential and existing customers with information about their cars through the provision of a typical problems area, plus an Ask the Mechanic Question and Answer section, where they can have specific questions about their cars answered. 2. To ease the service experience and improve customer service through online booking database section that will allow them to review their cars service and repair records. Key sections of the website will be:
Question and Answer section. Ask the Mechanic section. Buyers guide--how to look for a new car. Links to information on car reviews--new and used. Strategic Internet Alliances Mad Keen Motors will rely on its alliance with Web consultant Adrian Monkey to ensure that the site is maintained and regularly updated. Business Model The aim of this site is not to earn direct sales, but to increase customer satisfaction rates, and therefore increase retention levels by 10%. In addition, the goal will be to encourage other customers in the Backwater Downs area to choose Mad Keen Motors over other service and repair facilities. The overall goal of the site in terms of increased sales is 7-10% over the next year. Site Positioning For sports car owners who value the importance of their car's performance Mad Keen Motors website will give them tips
on how to keep their car in tip-top running condition, with things that they can do themselves, as well as solutions that their local garage can provide. Unlike the local quick stop garages, it will provide part of the full-service solution for sports car owners. Unlike dealerships, prices will be competitive. For older luxury car owners who value personal service, Mad Keen Motors website will provide another way for them to interact with the garage and provide excellent customer service. Unlike dealerships websites, it will not simply focus on new cars; it will provide them valuable information on their make and model of older luxury car as well as a full database of information on their car that they will be able to access at any time. For buyers who require an abundance of information when making a purchase, Mad Keen Motors website will provide an extensive list of online resources, so will act as a starting point for their search for information each time they access the Web. Unlike other online sites it will also give customers information about what to look for in a used car that may save them the time and money of a mechanics inspection. 6.2 Development Requirements Website Outline The site will be designed with the following technology: ColdFusion, SQL and HTML. Home Page: explains the website's relation to the company, with visible links to the other sections of the site. Section 1 - Q&A: begins with search. Visible links will go off to the subsections below.
Ask the Mechanic: simple form that sends directly to the head mechanic. Q&A Browse: users will be able to browse through other customer's Q&A sessions. Section 2 - Booking
Page 1: first page will display available dates, customer clicks on preferred available time, and proceeds to the next page. Page 2: customer fills out name, phone number, and car problem. Page 3: confirmation page for customer to print off as a reminder. User Car Information: first page has two links: "Buying a car" and "Selling a car." Buying a car: first half of page with summary information, bottom half contains links to helpful sites. Selling a car: first half of page with summary information, bottom half contains links to helpful sites. 6.2.1 Technical Specifications Front End Because most people in the UK currently access the Web from their homes at 56.6k or less, the user interface will be a simple as possible, though still looking professional. Graphics will be kept to a minimum in order to keep download times short. Though pictures of cars for sale will take up room, thumbnail views with access to larger views will be used. Information will be organized in buckets listed on front of each page so navigation will be as simple as possible for users. The Objectives of the User Interface will be: 1. to allow easy and fast navigation for the users. 2. To create interest so that people will use and return to the site. 3. Display a lot of content information in a simple a manner as possible. 4. To encourage user interaction, i.e. bookings online and questions to the mechanics.
Back End The back end of the site will be very simple, since it is really an information only website. There will be a number of areas where a visitor can send an email to request an answer to an expert question, to get information about a used car for sale or to book in their car for service. Visitors will be able to interact with the site in two ways: 1. Send an email requesting an appointment to have their car cleaned, valuated or repaired. 2. To ask questions about problems they may be having with their car, for example "I had new brake pads fitted on my car approximately eight months ago and they have started squeaking. Is it possible that they are worn out already?" We will be hiring a Web engineer, Adrian Monkey, to build the website, so he will build this functionality into the site. We will rely on Adrian to give us recommendations for the database we will use to support the site. Resource Requirements Mad Keen Motors will hire the services of a consultant, Adrian Monkey, to build the website. Both the back end and the front end will be outsourced. The contents of the Website will be developed by the company owners, who between them have over 60 years of automobile repair experience, and the secretary who has excellent writing skills. Future Development Future development will be assessed after the website has been launched and user tested. It is hoped that the site will be popular enough to include an area for online repair bookings.
Management Summary
Mad Keen Motors is a family business, in which each employed family member oversees the area of operations best suited to his or her talents.
Mark Keen is in charge of marketing and advertising, and non-mechanic employee training and personnel issues. Mark will oversee the company's new website Barry Keen is head mechanic, and supervises all the mechanics working for Mad Keen Motors. Elisabeth Keen oversees the financial aspects of the business, including billing, accounting, and taxes. In weekly meetings, these managers follow up on planned goals and deadlines and plan for the ongoing operations of the business. 7.1 Personnel Plan Mad Keen employees ten full-time mechanics, as well as eight other full-time workers who serve as receptionists, car wash and valet attendants, and salespeople.
Personnel Plan Mark Keen, Co-Owner Barry Keen, Co-Owner Mechanics Other Staff Elisabeth Keen, Admin Total People Total Payroll FY 2006 24,000 18,000 240,000 102,000 18,000 17 402,000 FY 2007 20,000 20,000 242,000 103,000 20,000 17 405,000 FY 2008 20,000 20,000 243,000 104,000 20,000 19 407,000
Financial Plan
Website Expenses and Costs: We expect to spend 6,200 over the next year on developing and then maintaining the website, with regular updates. We project another 6,200 will be needed for the same areas over the following two years. In addition, we will have a slightly lower price/cost spread for website-related sales, once online coupons and other discounts are included. These have been factored in to the cost of sales. We will track this amount with a special record for "website coupons" in our sales and customer database. Website Revenues: We anticipate an additional 18,360 of sales in the next year directly related to the development of the website. This is based on reports from other locally focused service businesses which implemented websites to enhance visibility and promote sales through online discounts. 8.2 Break-even Analysis The following table and chart show our break-even analysis with the website in place.
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Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost Need real financials?
40,547 4% 38,925
We recommend using Business Plan Pro as the easiest way to create automatic financials for your own business plan. 8.3 Projected Profit and Loss This table outlines additions to the standard operating expenses for developing and maintaining the website. Detailed monthly numbers can be found in the appendix.
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Pro Forma Profit and Loss Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Other Expense Account Name Depreciation Standard Operating Expenses Website Infrastructure Website Development Website Maintenance Expensed Equipment Payroll Taxes (National Insurance, etc.) Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales 8.4 Projected Cash Flow FY 2006 822,360 32,894 0 32,894 789,466 96.00% 402,000 0 4,800 0 0 0 0 0 60,300 0 467,100 322,366 327,166 74,800 74,270 173,296 21.07% FY 2007 843,080 33,723 0 33,723 809,357 96.00% 405,000 0 4,800 190,000 0 0 1,500 2,000 60,750 0 470,550 338,807 343,607 73,600 79,562 185,645 22.02% FY 2008 871,482 34,859 0 34,859 836,622 96.00% 407,000 0 4,800 196,000 0 0 1,500 1,200 61,050 0 472,850 363,772 368,572 71,200 87,772 204,801 23.50%
Mad Keen Motors is in a strong cash position right now, and can afford the relatively small expenses to start up the website. The following table and chart show our projected cash flow and cash balance.
Pro Forma Cash Flow FY 2006 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interestfree) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance FY 2007 FY 2008
822,360 822,360 0 0 0 0 0 0 0 822,360 FY 2006 402,000 233,402 635,402 0 0 0 2,000 0 0 0 637,402 184,958 388,446
843,080 843,080 0 0 0 0 0 0 0 843,080 FY 2007 405,000 246,915 651,915 0 0 0 24,000 0 0 0 675,915 167,165 555,611
871,482 871,482 0 0 0 0 0 0 0 871,482 FY 2008 407,000 254,378 661,378 0 0 0 24,000 0 0 0 685,378 186,103 741,714
8.5 Projected Balance Sheet Our Net Worth will continue to grow as we pay off the mortgage for the two newest Mad Keen Motors locations.
Pro Forma Balance Sheet FY 2006 Assets Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth FY 2007 FY 2008
388,446 2,748 70,000 461,194 1,250,000 19,800 1,230,200 1,691,394 FY 2006 19,570 0 0 19,570 748,000 767,570 400,000 350,528 173,296 923,824 1,691,394 923,824
555,611 2,817 70,000 628,428 1,250,000 24,600 1,225,400 1,853,828 FY 2007 20,359 0 0 20,359 724,000 744,359 400,000 523,824 185,645 1,109,469 1,853,828 1,109,469
741,714 2,912 70,000 814,626 1,250,000 29,400 1,220,600 2,035,226 FY 2008 20,957 0 0 20,957 700,000 720,957 400,000 709,469 204,801 1,314,269 2,035,226 1,314,269
8.6 Business Ratios The following table outlines some of the more important ratios from the General Automotive Repair Shop industry. The final column, Industry Profile, details specific ratios based on the industry.
Ratio Analysis FY 2006 Sales Growth Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios 3.05% 0.16% 4.14% 27.27% 72.73% 100.00% 1.16% 44.22% 45.38% 54.62% 100.00% 96.00% 74.93% 0.00% 39.20% FY 2007 2.52% 0.15% 3.78% 33.90% 66.10% 100.00% 1.10% 39.05% 40.15% 59.85% 100.00% 96.00% 73.98% 0.00% 40.19% FY 2008 3.37% 0.14% 3.44% 40.03% 59.97% 100.00% 1.03% 34.39% 35.42% 64.58% 100.00% 96.00% 72.50% 0.00% 41.74% Industry Profile 5.37% 8.50% 24.67% 45.07% 54.93% 100.00% 22.43% 26.48% 48.91% 51.09% 100.00% 100.00% 71.18% 1.75% 2.37%
23.57 23.43 45.38% 26.80% 14.64% FY 2006 21.07% 18.76% 8.86 11.90 30 0.49 0.83 0.03
30.87 30.73 40.15% 23.90% 14.31% FY 2007 22.02% 16.73% 12.12 12.17 29 0.45 0.67 0.03
38.87 38.73 35.42% 22.26% 14.38% FY 2008 23.50% 15.58% 12.17 12.17 30 0.43 0.55 0.03
1.48 0.91 54.67% 3.63% 8.00% n.a n.a n.a n.a n.a n.a n.a n.a
Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout Need real financials?
441,624 608,069 793,669 n.a 4.31 4.60 5.11 n.a 2.06 1% 23.43 0.89 0.00 2.20 1% 30.73 0.76 0.00 2.34 1% 38.73 0.66 0.00 n.a n.a n.a n.a n.a
8.7 Financial Risks and Contingencies-2 Risks and Assumptions The key risk with this website for Mad Keen Motors is that people will get information on their cars from other places. Since it is not typical for small garages to have this much content on their sites, Backwater Downs locals may not think to search for car and garage information on the Web. As cars and components become more specialized and car owners may tend to trust dealerships more, they will be less likely to use their local garage. This is a risk to the business as a whole, though we hope that the website will help to reduce Mad Keen Motors' exposure to this risk. If the site is not supported properly and people do not get quick answers to their questions, they may assume that service from the garage itself is lacking too. Therefore, emails must be answered promptly, the site must be updated regularly and the garage workers should also be aware of information and features on the website, and be educated about it when they speak to customers. Contingency Plan Since there will be minimal integration between the website and Mad Keen Motors' core business, a contingency plan is not a huge concern. If use of the site falls well below forecasted levels and it proves not to be cost effective to continue the site in its current format, the site will be changed to essentially a business card site, where people can get information about the garage, location, hours, ownership information, etc.