Custom Truck and Auto Accessories

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Custom Truck and Auto Accessories
Custom Truck and Auto Accessories
Brad Himes
Table of Contents
SECTION I: BUSINESS DESCRIPTION
A. Business Concept… … … … … … … … … … … … … … … … … … … … … … … ...1
B. Business Name… … … … … … … … … … … … … … … … … … … … … … … … ...1
C. Goals… … … … … … … … … … … … … … … … … … … … … … … … … … … … ..1
D. Industry Analysis… … … … … … … … … … … … … … … … … … … … … … … ...1
E. Form of Ownership… … … … … … … … … … … … … … … … … … … … … … … 2
F. Facility Requirements… … … … … … … … … … … … … … … … … … … … … … 2
G. Opening Date… … … … … … … … … … … … … … … … … … … … … … … … … .3
H. Legal Requirements… … … … … … … … … … … … … … … … … … … … … … ...3
SECTION II: MARKETING PLAN
A.
B.
C.
D.
E.
F.
G.
Geographic Market… … … … … … … … … … … … … … … … … … … … … … … 4
Customer Profile… … … … … … … … … … … … … … … … … … … … … … … … 4
Potential Customers… … … … … … … … … … … … … … … … … … … … … … ...4
Market Penetration… … … … … … … … … … … … … … … … … … … … … … … .4
Competitive Analysis… … … … … … … … … … … … … … … … … … … … … ..4,5
Pricing… … … … … … … … … … … … … … … … … … … … … … … … … … … … 6
Promotion… … … … … … … … … … … … … … … … … … … … … … … … … … ...6
SECTION III: MANAGEMENT PLAN
A. Employees… … … … … … … … … … … … … … … … … … … … … … … … … … ..7
B. Organizational Chart… … … … … … … … … … … … … … … … … … … … … … ..7
C. Business Expertise… … … … … … … … … … … … … … … … … … … … … … … .8
SECTION IV: FINANCIAL PLAN
A. Initial Capitalization… … … … … … … … … … … … … … … … … … … … … … ...9
B. Cash Flow Projection… … … … … … … … … … … … … … … … … … … … … ...10
APPENDICES… … … … … … … … … … … … … … … … … … … … … … … … … … … …
Executive Summary
Have you ever wondered how many new vehicles are purchased each year in the
United States? In 1996 there were 4.09 million new automobiles, both domestic and
foreign, sold in the United States. In the past, this number has grown at an average rate
of 15.2% each year, meaning more and more new cars and trucks will be packing the
highways and city streets. Is this increasing number of new cars and trucks a bad thing?
Not if your plan is to sell car and truck accessories.
With this growing number of vehicles in the United States there is also a growing
demand for parts and accessories to customize each car or truck. My plan is to open a
retail store that would sell automotive accessories to the public; the nameof my business
is Custom Truck and Auto Accessories. My business carries a wide variety of
automotive accessories for both personal and commercial cars/trucks. By starting this
business, I seek to achieve a profit from sale of my products within 14 months. In
addition to receiving profit, I would also like to create a substantial, loyal customer base
through top quality products, customer-first service and overall satisfaction of the
customer.
With a total of 34,070 males between the ages of 16 and 64, predicting a market
penetration percentage of 2% reflects a total of 680 customers, each spending an average
of $500 per year. Annual cash sales for the first year are estimated at $340,500, with a
cash position at the end of the year of $42, 110.
My business is located in a heavy traffic area and is positioned close to other
businesses in the automotive industry (auto parts, car dealerships, service stations, etc.).
The facility will be equipped with all the necessary tools and supplies for the job, nad
will also have a 12,000lb. Vehicle lift.
The opening day for my business is in the early spring, when the weather is
beginning to warm and car enthusiasts are beginning to spend more time outdoors with
their automobiles. While this business will be hi
gh in the spring/summer months, it will
begin to slow down in the winter months, creating a seasonality effect on monthly sales.
Operation of the business will require two full time persons and I; one for sales
and one for installations. Both positions will be salary positions with each one having its
own unique job description.
The financing for my business is separated into two categories; building/land and
initial capitalization. My initial capitalization includes everything I will need to open the
doors of my business. Included in this figure is three months of operating expenses,
equivalent to the cash on hand the first day of business.
With a growing automobile industry, there will be a growing need for car and
truck accessories for each individual to customize their vehicle, leading to a successful
business opportunity selling and installing accessories for cars, trucks and SUVs.
SECTION I: BUSINESS DESCRIPTION
A. Business Concept
My business is a retail store. We sell a wide variety of automotive
accessories, both car and truck, for personal and commercial vehicles. My business
also manufactures custom items such as toolboxes and fuel tanks for special
applications. In addition to selling the merchandise, we also install the products that
we carry.
B. Business Name
The name of my business is Custom Truck and Auto Accessories. I will
register my business name with the Department of Revenue in Colorado with the
appropriate form. Please see Appendix A for a copy of this form.
C. Goals
By starting this business, I seek to achieve a profit from sale of my products
within 14 months. I hope to create a substantial, loyal customer base through top
quality products, customer-first service and overall satisfaction of the customer. In
addition to observing a profit and creating a loyal customer base, I also hope to
receive personal gratification from doing work that I personally enjoy very much.
D. Industry Analysis
According to The University of MichiganTransportation Research Institute, in
the United States the motor vehicle industry is constantly growing and remains the
largest manufacturing industry in the United States. From 1982 to 1996,the industry
has experienced an average growth rate of 15.2% in American automotive
production, from 90,000 vehicles in 1982, to 2.37 million in 1996. This figure
2
however, only includes those automobiles manufactured in the United States,
excluding all vehicle imports. In 1996, imported vehicle sales totaled 1.72 million,
creating a total of 4.09 million automobiles sold in America.
E. Form of Ownership
My business will run under the ownership of Sole Proprietorship. I choose
this ownership because I am the only one involved in the start of the business and the
business does not possess the need for a corporate structure.
F. Facility Requirements
The company building will be 5,120 square feet with a sales floor and a
service area with vehicle lift for installations. This building is located on 1.9 acres
and is at the corner of Independent and 25½ Road. This building resides in a heavy
traffic area and is positioned close to other businesses in the same industry (auto parts
stores, car dealerships, service stations, etc… ). The property is for sale for $595,000.
Improvements to the building/property are estimated at $10,000.
My business sign will be a freestanding, roadside, illuminated sign consisting
of two parts. The first part is the company name and picture in large, attractive font.
The lower portion of the sign is a place for advertisement (promotions, sales, specials,
etc… ). In addition to my freestanding sign, my business will have a simpler,
building-mount sign above the business entrance, with the company name displayed
in large font. In addition to my signs, I will have lettering on my door entrance and
have business advertising/lettering for one vehicle. Please see Appendix B for color
photo of business location and illustration of mybusiness sign.
G. Opening Date
I choose to open my business on March 1, 2002. I chose this date particularly
because it is in early spring, where our climate is warming and people begin to
heavily participate in outdoor activities. This is the busiesttime of year for this
particular type of business because people are going to start there outdoor activities,
requiring such items as trailer hitches and all types of towing accessories, and also
with better weather, people can begin to take better care of their vehicle, adding
accessories and custom parts, after the long winter period of dirty roads and dirty
vehicles.
H. Legal Requirements
My business will need to satisfy the following legal requirements. A retail sales
tax will be imposed on all retail goods in my business. I will need to collect Colorado
state sales tax, Mesa county sales tax and the city of Grand Junction sales tax. I will
also withhold an individual income tax from each employee’s wages and pay proper
taxes on my property. As an employer, I will pay federal and state unemployment
insurance and Colorado Worker’s Compensation. To cover any accidents in my
business, I will carry proper insurance for both the building and the personnel inside.
Road Side Sign
(1) 5’x 10’Double Sided Pole Sign
(1) 4’x 8’Double Sided Letter Board
$3,750.00
1,920.00
(1) Set of 8” letters
218.00
Pole and Cover
800.00
Installation
500.00
Store Front Sign
(1) 3’x 12’Single Sided Sign
$1,980.00
Lettering
Door Lettering
50.00
Truck Lettering
Total
125.00
$ 9, 408.00
Section II. Marketing Plan
A. Geographic Market
My geographic market for this business is Mesa County. My potential
customer base extends from Fruita to Palisade, encompassing the entire valley.
Over the past ten years, Mesa County has experienced an average growth rate of
2.4%, with a current population of 115, 783 persons. Last year, 111,124 vehicles
were registered in Mesa County, creating an average of almost 2.6 vehicles per
household in Mesa County.
B. Customer Profile
According to Truck Stuff and Hitches, the target market in this business is
the male population in Mesa County exceeding the age of 16, with a main sector
being ages 16-64. The male population in Mesa County is 49% of the total
population.
C. Potential Customers
The population of males in Mesa County older than 16 is 43,485, and the
number of males between the ages of 16 and 64 in Mesa County is 34,070.
D. Market Penetration
My market penetration is 2.0%. This percentage gives me 680 customers
who spend an average of $500 annually, totaling $340,500 in annual sales.
E. Competitive Analysis
My three main competitors in Mesa County are Truck Stuff and Hitches, D
& M Truck Accessories, and Pine Country Truck Accessories. The most
significant of my competition isTruck Stuff and Hitches because, until recently,
they have been operating in this particular market without any competition,
creating a large customer base and very good name recognition. After visiting
this business, I have determined that their weakness is customer relations. The
persons in this business are not friendly. I find this to be a very critical
disadvantage when dealing with customers, and especially older customers.
The second company I have listed is D & M Truck Accessories. I find that
this businesses main strength is in the custom fabrication of special order items.
They are able to manufacture toolboxes, hitches, bumpers, and other special order
accessories. The main disadvantage concerning this business is location. They
are located on Orchard Mesa, on the side of a busy highway; however, the
entrance/exit to the store is very poor. Entrance is only allowed from the
eastbound lanes of the highway and customers can only exit the location via the
eastbound lanes.
Another competitor in the market is Pine County Truck Accessories. This
business is an indirect competitor. This business is primarily a used truck dealer,
however they do carry some accessories and parts on a customer order basis.
Their main strength is their name recognition, and custom
er base in the used car
and truck market. Resulting in them not having to attract customers because they
are already at the business looking at the vehicles. Their main disadvantage is
also their presence in the used truck market because they are not driven by truck
accessories, resulting in a very minimal inventory of items in stock.
The following table illustrates my competitors and my businesses
strengths and weaknesses.
Strengths
Truck Stuff
Name recognition and
Weaknesses
Customer relations
customer base
D&M
Custom manufacturing
Location
Pine Country
Name recognition and
Indirectly involved in market
Custom Truck
Customer Relations,
Name recognition, finances
manufacturing, experience
F. Pricing
I will begin my business with a market penetration pricing strategy to
attract customers to my store and gain their loyalty. Approximately three months
after opening my business, I will move to a Status Quo pricing strategy, having
already built a substantial, loyal customer base.
G. Promotion
For the promotion of my business, I will start by promoting my grand
opening. One month prior to my grand opening, I will begin advertising on local
radio stations that reach my target market, and will continue to advertise on the
radio for two months after my grand opening.
In addition to radio advertisement, I will place a half-page advertisement
in the Daily Sentinel one week before my grand opening. Please see appendix C
for an illustration of my advertisement.
SECTION III: MANAGEMENT PLAN
A. Employees
In addition to myself, I will need to hire two more full time personnel for
my business. I will have one full time employee for installation of
products, and one full time employee for customer assistance on the sales
floor.
Job Descriptions are as follows:
Installations – Potential applicant must possess mechanical knowledge of
automobiles including both cars and trucks in general areas (electrical,
technical). Must be very detailed and experienced inthe automotive
industry, with possible ASE certification.
Sales Floor – Potential applicant must possess exceptional customer
relation skills, with experience in business transactions. Must also include
experience in automotive parts industry and knowledge of general automotive
mechanics.
B. Organizational Chart
As owner of the business, I will reside over both employees, each being
responsible for a different section of the business.
Owner
Installations
Sales
C. Business Expertise
I have been working with cars/trucks for the past six years. During this time, I
have read literature on numerous products and methods of automotive mechanics,
acquainting myself with their design and operations. Working at Himes Drilling in
fleet maintenance has given me the opportunity not only to become familiar with cars
and trucks, but also tractor-trailers, and other heavy equipment. Although there is a
large difference between large trucks, pickups and cars, they share many similarities
in the basics of automotive mechanics. I have also invested a lot of time and effort
into my own personal truck, outfitting it with numerous accessoriesfrom front to rear,
exterior accessories to performance parts/accessories. It is through these functions
that I have gained a broad, thorough understanding of cars/trucks and their
mechanics. Please see Appendix D for a personal resume.
APPENDICES
APPENDIX : PERSONAL RESUME
Brad J. Himes
244 W. Mango Ave, Grand Junction, CO 81503
(970) 123-4567
OBJECTIVE
By starting this business, I seek to achieve a profit from sale of my products within 14
months. I hope to create a substantial, loyal customer base through top quality
products, customer-first service and overall satisfaction of the customer. In addition
to observing a profit and creating a loyal customer base, I also hope to receive
personal gratification from doing work that I personally enjoy very much.
SKILLS AND CAPABILITIES
Organizational/Management
• Demonstrated leadership capabilities by conceptualizing, organizing, and
teaching members involved in the Mesa County 4-H junior leadership
program.
• Trained and supervised two employees at Himes Drilling.
Accounting
• Ability to journalize entries accurately in general and specialized journals.
• Proficient in posting to general ledger, preparing trial balance, and
detecting discrepancies.
• Trained in preparing andanalyzing balance sheet and other financial
statements
Computer
• Experienced in using Windows, Office Suite, dBASE.
• Advanced knowledge of networks, Internet, web pages.
• Ability to learn new computer programs and applications with little
instruction
EDUCATION
Mesa State College, Grand Junction. B.B.A degree expected May 2002
Major: Computer Information Systems for Business
GPA: 3.3 (A = 4.0)
EMPLOYMENT
1997-present, Himes Drilling Company, Inc, Grand Junction, Colorado
Initial Capitalization
Land/Building
Price
Building and Lot
$595,000
less down payment (20%)
($119,000)
Required Mortgage
$476,000
terms: 20 years, 9% interest
Equipment/Supplies
Building Improvements
painting, carpet, clean-up
$10,000
Retail Equipment
desks, racks, file cabinets, cash box, shelving, etc
$10,000
Office Supplies
letterheads, envelopes, pens, paper
$1,000
Electronics
computer, phones, software, printer
$3,500
Shop Tools
hand tools, power tools - Snap-On
$22,000
Shop Equipment
air compressor, vehicle lift, welder, etc - Snap-On
$14,500
Shop Supplies
nuts, bolts, screws, electrical hardware - KAR products
$5,000
Signage
(2) signs, message board, pole, letters, changing arm
$9,400
door lettering, automotive lettering
Total Equipment/Supplies
$75,400
Beginning Inventory
Grill Gaurds
$9,000
Tool Boxes
$10,000
Running Boards/Steps
$15,000
Hood Shields
$8,000
Hitches and Wiring
$22,000
Headlight/Taillight Covers
$3,500
Lighting (driving lights, fog lights)
$2,000
Interior (floor mats, dash mats, interior accessories)
Bed Liners, Protectors, and Accessories
$7,000
$10,000
Mud Flaps/Splash Gaurds
$4,000
Miscellaneous
$9,500
Total Beginning Inventory
$100,000
Other Associated Costs
Advertising
intial promotional campaign
$2,998
Legal Fees
accountant/attourney for start up
$1,500
Utilities Hook-up and Initial Costs
Insurance Policy deposit/initial cost
$2,000
$500
Miscellaneous
$1,000
Total Associated Costs
$7,998
3-months Operating Expenses
$29,181
Total Initial Capitalization Costs (less building/land)
Less: Principles Portion
Required Financing
terms: 5 years, 9% interest
20% of Total Costs
$212,579
($42,516)
$170,063
10
12 MONTH CASH FLOW CYCLE
MARCH
estimate
1
CASH ON HAND
2
CASH RECEIPTS
a
3
Cash Sales*
TOTAL CASH RECPTS
actual
APRIL
estimate
actual
MAY
estimate
JUNE
actual
estimate
JULY
actual
estimate
AUGUST
actual estimate
$41,790
$52,625
$63,460
$76,295
$75,830
$74,265
$28,375
$28,375
$30,375
$32,375
$32,375
$30,375
$28,375
$28,375
$30,375
$32,375
$32,375
$30,375
$70,165
$81,000
$93,835
$108,670
$108,205
$104,640
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
(2a+2b+2c=3)
4
TOTAL CASH AVAIL.
(1+3)
5
CASH PAID OUT
a
Wages
b
FICA
$612
$612
$612
$612
$612
$612
c
Utilities
$365
$365
$365
$365
$365
$365
d
Business Insurance
$100
$100
$100
$100
$100
$100
e
Inventory
$15,000
$16,000
$16,000
f
Truck Payment
$350
$350
$350
$350
$350
$350
g
Gas Expense
$100
$100
$100
$100
$100
$100
h
Auto Insurance
$200
$200
$200
$200
$200
$200
i
Shop Supplies
$300
$400
$400
f
Subtotal
$9,727
$9,727
$9,727
$25,027
$26,127
$26,127
g
Loan Principal
$4,283
$4,283
$4,283
$4,283
$4,283
$4,283
h
Short Term Loan
$3,530
$3,530
$3,530
$3,530
$3,530
$3,530
$17,540
$17,540
$17,540
$32,840
$33,940
$33,940
$52,625
$63,460
$76,295
$75,830
$74,265
$70,700
6
TOTAL CASH PD. OUT
7
CASH POSITION
(5a thru 5p)
* Monthly Cash Sales = (680 customers * $500 annual expenditures)/12 months
Figure is adjusted for seasonality
actual
12 MONTH CASH FLOW CYCLE
SEPTEMBER
estimate
actual
OCTOBER
estimate
actual
NOVEMBER
estimate
DECEMBER
actual estimate
actual
JANUARY
estimate
actual
FEBRUARY
estimate
actual
TOTAL
estimate
$70,700
$66,185
$60,720
$54,305
$52,940
$45,475
$28,375
$26,375
$24,375
$28,375
$24,375
$26,375
$340,500
$28,375
$26,375
$24,375
$28,375
$24,375
$26,375
$340,500
$99,075
$92,560
$85,095
$82,680
$77,315
$71,850
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$96,000
$612
$612
$612
$612
$612
$612
$7,344
$365
$365
$365
$365
$365
$365
$4,380
$100
$100
$100
$100
$100
$100
$1,200
$15,000
$14,000
$13,000
$12,000
$14,000
$12,000
$127,000
$350
$350
$350
$350
$350
$350
$4,200
$100
$100
$100
$100
$100
$100
$1,200
$200
$200
$200
$200
$200
$200
$2,400
$350
$300
$250
$200
$300
$200
$2,700
$25,077
$24,027
$22,977
$21,927
$24,027
$21,927
$243,724
$4,283
$4,283
$4,283
$4,283
$4,283
$4,283
$51,396
$3,530
$3,530
$3,530
$3,530
$3,530
$3,530
$42,360
$32,890
$31,840
$30,790
$29,740
$31,840
$29,740
$340,180
$66,185
$60,720
$54,305
$52,940
$45,475
$42,110
actual
Saturday, March 1
Specials All Day Long
On All Your Truck &
Automotive Accessories
COME CHECK US OUT!!!
8:30-6:00
6&50
N
Independent
Ave.