Revolution Motorsport - School of Business Administration School of

eHYOSUNG
Revolution Motorsport
Scott Chaffee, Jonathan Jackson, Adil Nurgozhin
Jon Jackson (406) 599-3572 jacksonmontana@gmai!.colll
Scott Chaffee (253) 208-3308 Salomonsnoriderwaol.com
Adil Nurgozhin (406) 542-5292 [email protected]
Copy Number 3.0
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l.l Primary Entrepreneur
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1.2 The Business
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1.3 The Business Opportunity
1.4 Strategy
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1.5 Location Strategy
1.6 Competitive Advantage
1.7 Proposed Offering
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2.0 MANAGEMENT
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2.1 The Idea
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2.2 The Business Plan Team
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2.3 Primary Entrepreneur
3.0 OPPORTUNITY
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3.1 Revolution Motorsport. High Margins compared to Industry norm
4.0 PRODUCT PORTFOLIO
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7.1 External Threats
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7.2 External Forces
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8.0 MARKETING PLAN
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8.1 key location
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8.2 National Magazine advertising
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8.3 Guerilla Marketing
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8.4 Bar Stall Advertising
8.5 Newspaper Advertising
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8.6 Radio
8.7 Weh Presence
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8.8 Positioning Statement
9.0 LOGISTICS AND ADMINISTRATION
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9.1 Replenishing inventory and parts
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9.2 The Warehouse and Satellite business model
9.3 Business type LLC
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10.0 BUSINESS ECONOMICS
10.1 Financial Forecasts
10.2 Growth and Expansion
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11.0 OVERVIEW OF ASSUMPTIONS USED IN FINANCIAL MODEL
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APPENDIX A INTRO SLIDE
APPENDIX B RESOURCES
APPENDIX C COMPETENCIES
APPENDIX D STRATEGY
APPENDIX E INVENTORY COSTS
APPENDIX F INDUSTRY ASSUMPTIONS
APPENDIX G YEARLY SUMMARY
APPENDIX H SALES FORECAST
APPENDIX I INCOME STATEMENT
APPENDIX J CASH FLOW
APPENDIX K BALANCE SHEET
APPENDIX L FINANCIAL RATIOS
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1.0 Executive Summary
1.1 Primary Entrepreneur
Jonathan Jackson will be the primary entrepreneur for the Revolution Motorsport chain.
At age 27. Mr. Jackson has nine years of entrepreneurial experience having owned a full
service lawn care company and two live entertainment production companies. Through
his education and his entrepreneurial endeavors. Mr. Jackson has become skilled in the
fields of marketing. accounting, finance and management. He has been in contact with
the motorcycle manufacture corporate sales managers. sales representatives and has
talked with owners and employees at more than 30 different motorcycle dealerships. The
majority of the dealership owners that Mr. Jackson has spoken with during his interviews
arc owned by independent motorcycle enthusiasts. Mr. Jackson feels that he will have a
business advantage with his entrepreneurial experience and pending MBA.
1.2 The Business
Revolution Motorsport will he headquartered in Sacramento. CA. as a dealership chain
that sells new motorcycles. The three primary sources of revenue are generated by
motorized vehicle sales. service and tuning. and merchandise sales. Statistically. new
motorcycle sales consist of 64 percent of new dealership revenues; 10 percent come from
used motorcycle sales; 20 percent come from merchandise sales; and 6 percent come
from service and tuning". Motorcycle dealership growth of 7.7 percent compound per
year makes the industry attractive. The average new motorcycle dealership generated
$3.85 million in sales in 2006. In Sacramento City, the average dealership did over
$9,400.000 in sales in 2006.
1.3 The Business Opportunity
Mr. Jackson has the opportunity to exclusively sell Hyosung motorcycles and sell Lifan
motorcycles without exclusivity in Sacramento, CA, a city of 407.000 residents" (l,363,
000 in the Sacramento County. 1,900.000 in the major metropolitan area"). Motorcycle
dealerships are high barriers to entry markets and thus. have a sustainable competitive
advantage based on their state controlled monopolistic attributes. Once one owns the
right to sell a line of product. one maintains this exclusivity until the business is sold.
Mr. Jackson has the opportunity to enter this high barrier-to-entry market as a first mover,
selling Hyosung and Lifan and potentially other brands in the future.
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Answers.corn motorcycle industry analysis
Goozle Earth
3 US c~enf.;us Quick Pacts
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ln 2002, $74,631,000 in motorcycles was sold in the city of Sacramento at 11 different
dealership locations". This equates to $6,784,000 in average sales per dealership. In
2002, the average sales for a motorcycle dealership were $3,204,000 in the United States,
and $3.400,000 in California5 . From 2002-2006, the motorcycle industry has grown an
additional 39 percent in the United States". Because motorcycle dealerships are protected
by exclusivity within a 10-mile range in California, the number of dealerships in
Sacramento only changes if a new motorcycle line is introduced, or an existing branch
opens a new location. Thus, the average dealership in Sacramento did about $9,400,000
in sales in 2006. Sacramento has the best dealership sales conditions, both in labor costs
and sales of any of the 15 cities that are currently available to start a dealership.
1.4 Strategy
According to Ron Luttrel. top head of sales for Hyosung US in the headquarters in
Atlanta, GA, Hyosung plans to be the fifth largest brand of motorcycle in the United
Stages by 2009. The primary strategy for Revolution Motorsport is to establish
exclusivity in Sacramento. Revolution Motorsport wants to start small and grow fast.
The Revolution Motorsport expansion strategy begins year one with a 2,000 square foot
dealership in Sacramento. The dealership will sell Lifan and Hyosung motorcycles,
scooters, all terrain vehicles (ATV's) and dirt bikes. In May of year two, Revolution
Motorsport will open its second, third and fourth smaller dealerships in the Sacramento
major metropolitan area. The second round of dealerships will be 600-ROO square feet
retail-only locations.
1.5 Location Strategy
To be an industry leader, one must compete on price, convenience, service or product.
Revolution Motorsport, like Wal-Mart, aims to compete on price. Wal-Mart locates its
box store directly next to Kmart in every city, eliminating Kmarts ability to compete on
convenience. Like Wal-MaI1, Revolution Motorsport plans to position itself next to the
other dealerships so that if customers are shopping around on price, they will have the
opportunity to ride a Hyosung or Lifan before making their decisions. Four out of II of
Sacramento's motorcycle dealerships are located on or near Auburn Avenue. Therefore.
Revolution Motorsport must locate itself strategically near these competitors to compete
on price, and eliminate the issue of convenience.
1.6 Competitive Advantage
Revolution Motorsport will have many compeutrve advantages. First. Revolution
Motorsporl will position itself as the motorcycle price leader of Sacramento. Secondly,
Hyosung motorcycles command an average 22 percent margin and our second line, Lifan,
" United States Census 2002
5 United States Census 2002
6 DATAMONITER 2006 Motorcycles in the United Stales industry profile
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commands a 35 percent margin. The weighted-average marfin for a new motorcycle is
28.5 percent, compared to the 15 percent industry average. With these margins, our
product line remains priced well below the industry average. The barriers to entry allow
us to sell Hyosung, our signature line, in Sacramento with exclusivity. The high quality
of our product, substantial margin, and exclusivity to the product lines will increase
Revolution Motorsports chance of success.
1.7 Proposed Offering
The capital required to start the first dealership is $150.000. Mr. Jackson will raise
$50,000 equity in the company through the three "F's:" Friends, Family and Fortuitous
investors. $50.000 will be raised in the form of a SBA guaranteed Loan. Finally, Mr.
Jackson will attempt to secure a $50,000 line of credit to assure positive cash position for
the first two years, without having to pay interest for unused financing.
Equity investors will cam 25 percent on their investment per year, payable in one lump
sum 24 months after the project's induction. Mr. Jackson is giving his potential investors
the opportunity to keep a 10% stake in the company for the $50,000 investment capital.
This 10% equity in the company is projected to yield $226,000 dollars in dividends by
year 5.
Flgure l.l Thi.~ visual shows the different motorcycles offered by Hyosung by category. Please note that
Hyosung also carries a road-spurt bike that isn't pictured on this diagram. but can be seen on the cover page
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Answers.corn motorcycle industry analysis
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2.0 Management
2.1 The Idea
The idea of Revolution Motorsport was conceived during multiple conversations between
Jonathan Jackson and Scott Chaffee. Mr. Jackson was researching an idea for a business
model selling low markup cars on eBay. Mr. Chaffee liked the idea because it had low
startup costs, high growth potential and would pay itself off quickly. In college, Mr.
Chaffee wrote a business plan about a scooter rental shop to be positioned north of
Seattle. A week after the initial discussions, Mr. Chaffee came across Lifan motorcycles
while searching for a bike on the Internet for his roommate. After doing some research
on Lifan, we quickly found that these motorcycles have a high profit-margin and require
a smaller capital investment than a car dealership. Additionally, it is less complicated to
buy a motorcycle through a dealership representative than to buy a used car at an auction.
From the first week of the MBA program until now, almost everything that Mr. Jackson
and Mr. Chaffee learned in their studies was applied to the Revolution Motorsport
Business plan.
2.2 The Business Plan Team
Adil Nurgozhin, Scott Chaffee and Jonathan Jackson worked on researching the
motorcycle industry, creating the financials, and applying the applicable models, and
finally writing the business plan. Mr. Nurgozhin will be moving back to Kazakhstan
immediately after graduation, but is considering the idea of starting a motorcycle
dealership there. Mr. Chaffee is considering starting a motorcycle dealership in Seattle
using a similar business model as discussed in this text, but will not be involved with the
business venture in Sacramento. CA.
2.3 Primary Entrepreneur
Proposed business owner. Jonathan Jackson has experience in sales and nine years of
experience as a business owner. Furthermore, 'vir. Jackson is poised to graduate with a
Masters degree in Business Administration from the University of Montana in the spring
of 2007. In writing the business plan over the past six months, Mr. Jackson has become
an expert in the motorcycle industry through research and vast phone interviews with
dealership owners and manufacturing company executives. First and foremost, Mr.
Jackson has the enthusiasm, drive and proven ability to build a company from the ground
up.
Mr. Jackson has extensive trairung in marketing, accounting, human resources and in
finance. He also has ample management skills acquired during ownership of three
distinct small businesses. Mr. Jackson understands that operating a successful business
requires hiring the "right" employees and is willing to compensate these individuals at a
higher rate than the market average.
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It is important to note that the window of opportunity to start a motorcycle dealership
with the two unique and fast-growing product (Hyosung) lines is short. That is, if
Revolution Motorsport does move on its offer to exclusively sell Hyosung in Sacramento
in the summer of 2007, the product line will not be available for this opportunity.
At 10 years of age, Mr. Jackson started Jon's Lawns, which grcw to be the third largest
lawn service in Bozeman by the time he was 14. He sold the company to his brother after
six years of ownership, In college, Mr. Jackson owned Honey Hole Productions and
Colonel Jackson Productions. With no former experience in the entertainment industry.
Jackson's first production had two stages, 13 bands. and 640 guests: the largest Battle of
the Bands production in Bozeman history. During his college promoting endeavors, Mr.
Jackson was able to raise a total of $3,000 for non-profits such as the Humane Society,
Youth Imperative, and the non-profit college radio station KGLT. In graduate school,
Mr. Jackson used his production knowledge helping raise $11,000 for the Montana Meth
Project as the chairman of the Graduate Student Business Association.
Mr. Jackson spent seven months living in Argentina in 2006, traveling the country by
motorcycle with his wife, Satu. It was here that Mr. Jackson saw a huge population of
Argentineans who ride small engine motorcycles with loud after-market mufflers. He
also noticed that many of the motorcycle shops of Cordoba, Argentina (population 3
million) outsource their repair/tuning to parts of the city that have lower rent overhead.
This spawned the idca of the Warehouse and Satellite business model. Additionally, in
his travels, Mr. Jackson learned to speak Spanish fluently, an edge added to selling in
Sacramento, where 19 percent of the population is either Spanish or Latino",
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3.0 Opportunity
3.1 Revolution Motorsport, High Margins compared to Industry norm
Typically. motorcycle dealerships like to maintain a 15 percent margin on new
motorcycle sales". However. because Hyosung and Lifan are relatively new players in
the United States market, they offer a better margin to entice established motorcycle
dealerships to pick up their line of product. Hyosung's has a 22 percent margin and
Lifans is 35 percent. Assuming that half of our sales come from Lifan and half come
from Hyosung, our average margin will be 28.5 percent on new motorcycles. These
numbers assume historical selling costs of the units, not retail pricing. If one were to
charge the manufacturer-suggested retail for a Lifan LF200 of $2,499 on a bike that costs
the dealership $960 including shipping, the margin would be more than 150 percent.
However, having done research as to what the bikes are actually selling for nationwide,
our tinancials assume margins based on actual sales figures in the United States market.
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4.0 Product Portfolio
Revolution Motorsport will carry two unique and desirable motorcycle lines: Hyosung
and Lifan. Both product lines include motorcycles, ATV's, dirt bikes and scooters.
4.1 Litan
Lifan manufactures a line of dependable and low priced, scooters, ATV's and dirt bikes.
In 2005, Lifan made 10 percent of the small engines in the world'", The Chinese
manufacturer also produces small engines, cars, trucks and industrial equipment. In the
1990's Lifans motorcycle technology was heavily borrowed from Honda. Now, Lifan
boasts its own leading technology" in engines and fuel injection systems and has more
active patents than any other motorcycle manufacturer in the world.
Lifans is a great entry-level line of product for Revolution Motorsport for two
distinguishable reasons, price and differentiation. First, the Lifan line is revolutionary in
price. Lifan carries a complete line of over thirty products that Revolution Motorsport
can sell for $699 to $2,999. Considering the industry average price for a motorcycle.
including scooters, was $8,180 in 2003, Lifan is poised to be a price leader.
Second, Lifan motorcycles share similar looks of its high-end competitors, but can be
purchased at a fraction of the cost. For example, the most popular street bike on the
market is the Yamaha YZF R6, which retails starting at $9,299". Revolution Motorsport
can sell the same type of motorcycle for $1,499. Lifan customers can enjoy the
dependability and experience of owning a sport bike. at a fraction of the cost.
Figure 4.1 Lilan LF2UU (left) sells for 1,499 and its closest competitor the Kawasaki Ninja 250 (right)
retails for $2,1)99. Lifan has more modern looking styling and gets better gas mileage. Ninja is smaller but
overall slightly faster bike. The Kawasaki Ninja 250 (right) has 1990'<; styling. Lifan continually upgrades
the styling and comes up more modern looking models every year.
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4.2 Hyosung
Hyosung is a motorcycle manufacturing company located in South Korea, was founded
in 1978 and begun manufacturing parts and motorcycles for Suzuki. Later, Hyosung
branched off to create its own product line. In 1994, Hyosung entered the European
market and in 2005 entered the United States market. Hyosung sales in the United States
have grown 260 percent in the last year according to Ron Lutrell, Hyosung sales manager
for the US. Presently, there are over 235 U.S. dealerships that carry Hyosung.
Hyosung will allow Revolution Motorsport to carry a premium line of motorcycles,
ATV's. scooters and dirt bikes, and still remain the price leader. A Hyosung performs,
looks and rides like all of the leading brands. However, it generally costs about 35
percent less. For many young riders, the difference between a $9,299 Yamaha R6 and a
top of the line $5,899 Hyosung 650R will be the difference in owning a new sport bike or
not (see figure 1.2). We believe a 20 percent lower price will be enough for consumers to
reasonably consider purchasing an unknown brand over a well-known brand motorcycle
(this is how Hundi acquired its market share), The Hyosung has all of the performance
and options of the more reputable brands, but costs on average about 35 percent less for a
bike of similar features and performance,
Hyosung also boasts the best warranty in the industry. All new Hyosung motorcycles
come with a two-year unlimited miles, tire to tire, warranty. This is a strategy that
Hyundai used to increase its market share on sub compact cars(see section 4.4 on
precedents).
Figure 1.2 Hycsung (left) retails for $5,899 and Yamaha R6 (right) retails for $9.299. Both bikes are
similar in style and performance. The biggest difference between the two bikes IS brand recognition.
4.3 Product line Overview
The Lifan motorcycle line is highly differentiated from other products in the market.
First, the cost of a Lifan is two to four times less than the market average, depending on
the model. Secondly. the gas mileage is far superior. Unlike other small cc motorcycles
on the market. Lifans sport bike, Enduro, and cruiser are just as large in size proportions
as the large motorcycle manufacturer's bikes. Lifan's styling is similar to the
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cornpeunon. The brand has established a reputation for reliability. Overall, we feel that
the Lifan product is a greater value than anything on the market. (Sec the appendix B:
Business strategy templates.)
Hyosung is not as differentiated as the competition but has two powerful selling poinst:
price and warranty. Hyosung offers all of the options, and warranty as the established
branded competitors, but offers a price that the contenders cannot compete with. We feel
that the average 35 percent difference in price between a Hyosung and a Yamaha is
enough to make a sport bike buyer consider trying the new brand.
To gain extra
credibility, Hyosung is offering the best warranty in the motorcycle industry, a two-year
unlimited mileage tire to tire warranty':',
4.4 Precedent, the Datsun (Nissan) 240Z
In 1969, Datsun motor company (now Nissan) introduced its 240Z (later called the 280Z)
to the United States. Instead of offering the typical high displacement (V8) motor,
Datsun offered a small, light car with a 150 horse power V6. The 240Z was geared to
compete with the Corvette ($4.781 new base price) and the Mustang ($3,500 base price).
but only cost $3,526 fully equipped 14 Because it offered such a value, it went on to
become the greatest selling sports car of all time". By offering a fully loaded sports car
for the price of an entry level mustang, (with the smallest engine and no options) Datsun
was able to steal a significant piece of the market share.
In 1969, Americans were not fond of the idea of Japanese cars or engineering. However.
by offering the best value, Datsun prevailed. Datsun is like Lifan because it targets
consumers who want a sport bike (motorcycle) but cannot afford to buy one new. People
are reluctant to purchase a motorcycle from China, but, like the Datsun case, the value of
the item will be the determining factor for purchasing the product. Lifan can offer a sport
bike for a quarter of the price of the majority of the competition that serves the same
function.
4.5 Precedent, Hyundai Compared to Hyosung
In February of 1986, Hyundai introduced its first line of automobile, the Hyundai Excel,
to the United States. At the time of Hyundai's introduction, the American car market had
been focusing all of its resources on building high-priced, high-end vehicles, which left a
major gap in the market for buyers who were recent graduates, young couples, or high
school students 10. At this opportune time, Hyundai was able to gain traction offering a
low cost alternative.
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Figure 4.1 This ",how", the entry level Hyundai Excel compared to the entry level competitors in
vehicles had ,~!and:ud warranties. llyundui gaillt:lJ its market share on price ulonc.
19~7.
In 1987. none of these
At the time of its introduction, the Hyundai Excel cost about 22 percent less than its
direct competitors, the similar Toyota corolla and the Honda Civic (see figure 4.1). This
price difference was enough to establish a major market share, selling 1,431 units per
dealer in its first year in the United States, a record for a new entry to the market!'. Later,
Hyundai stepped its sales up again by offering the best warranty in the market. Basically,
Hyundai gained its market share in the United States by offering a comparable product at
a 22 percent discount and later offering the best warranty in the business. Hyosung
motorcycles entered the market in 2005 offering both of these advantages, the best
warranty on the motorcycle market (two-year, unlimited miles) and selling the bikes 35
percent discount to the competition: Yamaha, Suzuki, Honda, and Kawasaki.
Figure 4.2 This chart compares the lowest priced (600ce) sport brke From Yamaha. Honda. and Hyosung All of these hikes have
comparable -pecs engine vizes and features. Hyosung has [he be-t warranty. The prices and warranty information come directly from
[he Yamaha. Honda, and Hyosung company webvites.
5.0 Competitive Advantage
5.1 Barriers to Entry
To sell the Hyosung line in Sacramento exclusively, Revolution Motorsport must obtain a
motorcycle dealer's license. a physical retail location and a service department. To
obtain a dealership license. one must first have an agreement with a motorcycle
manufacturer. Mr. Jackson has a written agreement to carry Lifan, and a verbal
agreement to sell Hyosung with the contact pending. Mr. Jackson will sign a contract
with Hyosung when he visits with the rep in Sacramento on Tuesday, March 27'h To
maintain exclusivity, a dealership must sell a minimum number of units per year, based
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on the population and region of the country. However, if the minimum is not reached,
Revolution Motorsport will not succeed based on not covering overhead costs. As long
as RM stays in business, it will have exclusivity selling Hyosung. Establishing
exclusivity with Lifan is currently under negotiation.
The barriers to entry are more of an opportunity than a threat to RM. Because exclusivity
is granted by area (defined by a 10 mile radius in the State of California). once we obtain
the rights to sell a product, other dealers cannot cannibalize Revolution Motorsport's
sales in our market. Therefore. because of these monopolistic rights, getting the rights to
sell Lifan and Hyosung is actually a competitive advantage.
5.2 High Profit Margins as compared to industry norm
Typically, motorcycle dealerships like to maintain a 15 percent margin on new
Motorcycle sales": However, because Hyosung and Lifan are relatively new players in
the United States market, they offer a better margin to entice established motorcycle
dealerships to carry a new line. Hyosung has a 22 percent margin and Lifan's is 35
percent. Assuming that half of our sales come from Lifan and half come from Hyosung,
our average margin will be 28.5 percent on new motorcycles. If one were to charge the
manufacturer-suggested retail for a Lifan LF200 of $2,499 on a bike that costs the
dealership $960 including shipping, the margin would be more than 150 percent.
However, the price reflects what these models are actually selling for nationwide. Our
calculated margins are based on true United States market value.
Our margins are two times that of an established brand. This will help compensate for
the fact that our product is not as established in the United States market as some of our
competitors.
5.3 High Fuel Costs
All Lifan motorcycles, 200 and under, get more than 100 miles per gallon and can be
purchased for less than $2,000 19 • Hyosung motorcycles also boast incredible fuel
efficiency and are extremely price competitive with respect to the competition. The
competition - Honda, Yamaha. Suzuki, and Kawasaki - generally sell street bikes
starting at more than three times the price of a Lifan and are thirty five percent more
expensive to comparable Hyosung models. The gas mileage of the competitor
motorcycles is comparable to that of a Honda Civic. not even close to 100 miles per
gallon. RM's biggest challenge will be to locally "brand" the motorcycle as being
exciting, high quality, dependable and affordable.
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6.0 Market Research
In 2005, the motorcycle and moped market claimed $9.1 billion in sales in the United
States". ln 2005, I.t million motorcycle units were sold. The market is expected to
grow to 1.6 million units per year by 2010, an increase 0143.5 percent. Between 1985
and 1998, the median age of a motorcycle buyer rose from 27 to 41 years of age". Part
of the reason for this is that the average age in the United States has grown from 34 to 36
between 2000 and 2005 22 We believe another part the average age of motorcycle buyers
is rising is due to the increasing costs of a new motorcycle. The average cost for a new
motorcycle or scooter was $8,200 in 2003 B Revolution Motorsport is reaching for the
niche market of young men who can't afford a motorcycle this expensive.
Typically, when one thinks about a motorcycle owner, one thinks of a young man,
However, we feel that high priced motorcycles have been driving up the average age for a
motorcycle buyer. More expensive bikes have a higher markup and yield a higher return
for dealership owners. Because of the incentives for dealerships to sell expensive bikes
and the fact that young men do not, generally speaking, have as much disposable income,
there is an enormous segment of the market whose needs have not yet been satisfied or
targeted. Lifan offers a perfect value curve for these consumers given its low cost and
great econom y.
The motorcycle industry as a whole is growing at 7.7 percent a year, far faster than the
automobile industry 2.4 percenr". We are seeking to not only tap into this growing
industry, hut to grow the motorcycle industry in Sacramento as a whole. Revolution
Motorsport will do this by offering a product that is diversified enough to tap a segment
of consumers whose needs are currently not being met.
6.1 Sacramento Market
Sacramento has heavy traffic, mild winters, and high gas prices (over $3.00 per gallon"
as of March, 14 2007). These factors make Sacramento a great environment for selling
motorcycles. In 2002, the average dealership in Sacramento did $6,780,000 in sales
compared to the national average of $3,200,000 per dealership (see figure 6.2). Since
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then, the industry has grown more than 39 percent". Because the number of dealerships
has not changed, the average dealership did approximately $9,400,000 in sales in 2006.
Figure 6.1 These figures are taken from the United States Census website. The figures arc from 2002. which was last time the census
did a detailed annual report. From 200:: to 2006, the industry has grown by 39'1' in the United S(J[es.~7 ,
Although the average salary for a Sacramento motorcycle dealership employee is greater
than the average in the United States, the labor costs as a percentage of sales are less than
half of the national average (see figure 6.1). This is assumed to be attributed to volume
of sales.
6.2 Market Sustainability
Revolution Motorsport will see growth in the future as more people search for fun and
inexpensive means of transportation. The price of gas is rising and environmental
concerns are increasing. The result is that more and more people are looking for ways to
travel with less gas consumption. The forecasted market growth for the motorcycle
market in the Market Opportunity section shows that opportunity will grow from the $9.1
billion a year industry in 2005 to a projected $12.8 billion in 20 10 (40.9 percent projected
growth over five years)".
Trends are showing that United States consumers are finally looking at gas prices and
modifying their lifestyles to avoid superfluous spending (appendix a. rnicro-envirornental
forces). This can be seen in the reduction in sales of SUV's and the increase in sales for
gas-lean products such as small sedans and hybrid vehicles. To assure that our business
is sustainable, we will keep on the cutting edge of new entrants to the market. Once the
market realizes that there is money in selling smaller-engine, highly efficient motorcycles
and scooters, other brands will introduce more efficient models. To remain competitive
Revolution Motorsport will acquire the rights to sell other Motorcycle brands. Research
shows that 73 of the top 100 best performing dealerships in the United States carry
multiple product lines 29 . Revolution Motorsport will, first and foremost, be in the
business of motorcycle sales, not just selling Lifan and Hyosung.
DATAMONITER 2006 Motorcycles in the United States industry profile
DATAMONITER 2006 Motorcycles in the United States industry profile
"DATAMONITER 2006 Motorcycles in the United States industry profile
2c) Advanstar Communications What this year's top ]00 (motorcycle dealerships) look like
26
27
14
7.0 Competitors and Substitutes
Revolution Motorsport's direct competitors are inexpensive bikes and scooters.
Currently, in the United States, only one major product is positioned to compete with the
Lifan's unique value curve, the Kawasaki Ninja 250. The bike has a slightly bigger
engine and top speed. However, it costs two times more than our competing product.
There are other Chinese companies that manufacture motorcycles, but no other Chinese
"brand" is available in the United States. The other Chinese motorcycles arc basically a
commodity. They are difficult to service, find parts for, insure. register, and so on. If
another good Chinese brand makes it to the United States market, Revolution Motorsport
will be prepared to take appropriate measures, such as purchasing the dealership rights in
the cities where the proposed company has a presence. The acquisition option is better
than facing potential price competition.
In 2005, Honda controlled 30.2 percent of the United States motorcycle and moped
market, Harley Davidson controlled 23.3 percent, and Yamaha controlled 16.8 percenr'"
The remaining percentage is classified as the "other" category. Other brands in this other
category include BMW, Suzuki, Ducati, Buell Triumph, Big Dog, American Ironhorse,
and the no-name brands". The top three motorcycle companies, Honda, Harley and
Yamaha, sell high-end and quite expensive motorcycles. Revolution Mororsports Lifan
line is not poised to compete head to head with any of the above motorcycle
manufacturers. Rather, it would like to grow the pie as a whole, selling motorcycles to an
under-serviced facet of the market. However, Hyosung is capable of competing with the
major brands based a superior price and warranty.
7.1 External Threats
Revolution Motorsport's main threat would be competition from a similar product or
product line. Currently no other brands exist that offers the same value curve as Lifan in
the United States. Hyosung has many other competitors; however, none can compete on
its price.
Another company introducing a similar product line for the same or less cost is
potentially Revolution Motorsports largest threat. Until that happens. Lifan guarantees
Revolution Motorsport exclusivity. To combat this threat of new entrants, Revolution
Motorsport will follow the trends of new entrants and carry the lines that would compete
with our current line of product.
'I,
11
DATAMONITER 2006 United States motorcycle industry profile
Advan ...tar Communications What this years top 100 (motorcycle dealership") look like
15
7.2 External Forces
Revolution Motorsport must consider the power of its supplier. China has an immense
manufacturing ability. However, we depend on the right sized shipments to keep our
dealership, some 5,000 miles away. in inventory. The Lifan supplier alsu has exclusive
rights to monitor prices and is able to raise or lower prices as they see fit. Because
American Lifan keeps an inventory uf over 2,000 units on hand at any time in its
warehouse in Dallas, TX, stocking inventory is not an issue. Hyosung also keeps a large
inventory ready to ship from warehouses located in Georgia and California. Price
fluctuations will probably occur over time as a result of inflation, but will be reflected in
the selling price and are not expected to affect Revolution Motorsport's overall margin.
The government is another force that Revolution Motorsport must be cognizant of. The
United States has tariffs limiting the quantity on imported motorcycles, a law that was
designed to give Harley Davidson an edge when business was down. Although Harley is
currently a world leader again, the tariffs remain. Conversations with the head of sales at
American Lifan and Hyosung CS did not indicate any worries that the supply will ever be
over-regulated.
The buyer is a significant force. If the buyer is not interested in purchasing product from
China or South Korea, even if it is high quality. Revolution Motorsport could face
challenges. Even with this in mind, trends show that United States consumers are
generally more likely to buy a product based on value than the location in which it is
manufactured. For instance, people do nut buy a Toyota because it is Japanese - they
buy it because it offers the value that fits their preference. Therefore, as long as
Revolution Motorsport maintains a significant advantage in value, the business plan teem
feels that consumers will buy the product.
China and South Korea have advantages in labor costs and manufacturing ability and will
continue to hold these advantages. Due to China's policy of maintaining a devalued
currency. Lifan will continue to be able to produce an inexpensive product far into the
future. South Korea also has an abundance of inexpensive labor. If labor costs become
an issue, it is more than likely that Hyosung will outsource the manufacturing aspect of
its company to China or Taiwan.
8.0 Marketing Plan
Most of the Motorcycle dealers that Mr. Jackson concur that the most affective
advertising comes from the drive-by traffic that is associated with having a good retail
location. The strategic location element will be addressed in the next section. Revolution
16
Motorsport will advertise primarily through magazines, newspapers, guerrilla marketing
and radio. The entry-marketing budget is $6,700 for the first month and is calculated as a
percentage of monthly sales from then on out. The budget is approximately $2,000 per
month for the first year. In Sacramento, this won't go far with respect to newspapers, so
the majority of Revolution Motorsport's advertising will be more demographically
specific.
8. t key location
Most motorcycle dealership managers and owners that Mr. Jackson interviewed feel that
the most important advertising comes from drive-by traffic. A strategic location is
essential. To assure that Revolution Motorsport gets the right kind of drive by traffic. the
business will be located directly next to its competitors. Revolution Motorsport will be
competitive on price. Thus, like Wal-Mart, the company is trying to make convenience
or accessibility a non-issue.
By putting our motorcycle dealership close to the
competition, potential buyers will have to drive by our shop to get to the dealership that
they were thinking of purchasing a bike at. Price-minded consumers are willing to shop
around. We want to give the consumer the opportunity to find our product before they
make any purchasing decisions.
Kawasaki of Sacramento is located at 5830 Florin Rd. Locating the dealership next to
Kawasaki would put us near the only Kawasaki dealership within 10 miles. Kawasaki is
the closest competitor to our line of Hyosung. However. a Hyosung generally costs 35
percent less and comes equipped with a standard two-year unlimited warrantyi as
apposed to the one-year unlimited warranty offered by Kawasaki D
.l -' http://hyosungus,cOfIl/
B http.z/www.kawasaki.com/ka wasakiaux/rnisc/warranty .asp#Stree t
17
Ftgure 8.1 Kawasaki of Sacramento is located
strategically 11\ clove to Kawasaki "C· ;lS possible.
il.~
"C" on the Googfe Earth Map.
Revolution Mororsport plans on locating
8.2 National Magazine advertising
Hyosung US is already running a national ad campaign in Cycle Rider, Motorcycling,
Motor Cyclist, and Cycle World magazines. After seeing these ads, potential buyers in
the Sacramento area are drawn to the Web site that directs them to local Hyosung dealers.
Based on conversations with Hyosung dealers, Mr. Jackson believes up to half of
Hyosung sales will be from those customers directed to us from the Hyosung Web site.
8.3 Guerilla Marketing
Mr. Jackson intends to place motorcycles with for sale signs at the university campuses
of California State University. California State University Sacramento, UC Davis
(extension), The McGeorge School of Law, and the UC at Davis. All of these
Universities are located within 10 miles of the proposed dealership location. These
colleges will also host flyers that educate the college population about the thrills of
owning a high-value Revolution motorcycle.
18
Mr. Jackson will pay employees to shuttle to shopping malls and leave new motorcycles
in high profile parking spots close to main entrances. All for sale signs will clearly state
that all bikes are sold new at Revolution Motorsport.
Revolution Motorsport will also sponsor live entertainment. In exchange for whatever
donation that Mr. Jackson makes to a live music event, he will ask that his bikes can be
displayed at the concert in a high profile area.
8.4 Bar Stall Advertising
In recent years. advertisements above urinals and in toilet stalls have become extremely
popular and effective. They provide a captive audience. Also, bars have the advantage of
being demographically specific. Use of restroom advertising means that businesses can
specifically target men or women by placing different ads in men's and women's
hathrooms". Often times the bar stalls advertise jewelry or high-end hair parlors that
basically sell men on buying items or services that will make them more desirable to the
opposite sex. This is the perfect opportunity to sell motorcycles as "chick-magnets."
Men spend money to be more attractive to the opposite sex. Therefore, the primary
function of advertising in this environment will be to convey that young men who own a
Revolution Motorcycle are more attractive to women.
Bar stall advertising will also be more cost efficient. Prime time television (8-11 p.m.)
has a CPM of $23-$44. and a quarter-page ad in a weekly newspaper has a CPM of $1­
$7. compared with an average of $1.13 for restroom advertising, according to one study
by Audits & Surveys worldwide".
8.5 Newspaper Advertising
One point five percent of all purchases from American Lifan are given back to the dealer
to he spent on advertising. When this account grows large enough, the money will be
used to purchase a large ad in Sacramento newspapers. The ads will primarily convey the
exhilaration of riding a Revolution Motorcycle. The ads will be designed to brand
Hyosung and Lifan in the Sacramento area as being dependable, affordable and desirable.
The ads will also discuss sales, promotions, warranties and financing.
52x 26x
13x
7x
Costs: Ad Size
Full Page
2775 3395 4625 5555
Island
2360 2890 3940 4725
1/4 Page
1110 1355 1850 2215
30
1/8 Page
695
850
I 160 1390
:...\ http://pubIicres trooms.Iifeti ps.comkatf644I 2/public-restroom- advertisi ng/index. htmJ
35 http://publicres.trooms.lifetips.comlC:lt/64!t I 2/pubIic -rcstroom-ad ve rti..i ng/index.htmI
16 http://sacramento.bizjournab.com/sacramento/abolltus/ratecard.html
19
8.6 Radio
First and foremost, Revolution Motorsport is to come up with a radio jingle that is
contagious. The idea is that if the jingle is catchy enough, people will remember
Revolution Motorsport the next time they consider purchasing a bike. The jingle will be
fun and memorable, but by no means annoying. To come up with the right jingle,
Revolution Motorsport plans on airing a radio contest, giving away a $1,000 prize to the
contestant that writes the best jingle.
Revolution Motorsport will experiment with many different radio stations and
demographics. By only advertising on one radio station at a time, Revolution Motorsport
will be able to get a feel for which radio stations are the most effective. One marketing
strategy involves giving away a sport bike or a scooter to the too" person who walks into
the store and mentions the ad. This technique is designed to lure at least 100 deal finders
through the door for the cost of an inexpensive scooter ($450) or sport bike ($960 cost).
Getting hundreds of people into the store will educate the right population about RM's
extremely low pricing.
Ninteen percent of the Sacramento population is Spanish or Latino:". Therefore, many of
Revolution Motorsport's radio ads will be in Spanish on Spanish stations. The jingle will
be different and aimed at a different demographic. Also, to compliment these ads, Mr.
Jackson is conversationally fluent in Spanish and will personally be able to assist any
Spanish-speaking customer who enters a Revolution Motorsport location.
Costs taken from a sports radio channel:
Standard 30 Second Ads - Your prerecorded advertisement can air during one of our commercial
breaks on all of our shows or the one of your choice at a rate of $25 per airing.'8
8.7 Web Presence
The core competency of Revolution Motorsport will be to create a friendly, courteous
environment for high-value retail sales. We will maintain a top notch Web presence to
inform people of our location, products, services and pricing. The domain name,
RevolutionMotorsport.com, is currently registered to Mr. Jackson.
A good college
friend, Ben Johns (B.S in computer science) will design the high quality web page for a
favor. The web site will be primarily designed to lure customers into the physical
location. Sacramento is the primary market that we are trying to compete for - we only
require a Web presence to compliment our physical retail location.
8.8 Positioning Statement
The Revolution Motorcycle is perfect for the thrill seeker who needs a change of pace.
Tired of driving your car to work, waiting in traffic lines and getting poor gas mileage?
Revolution Motorsport offers quicker transportation, far superior gas mileage and all of
n
wikipedia/LasVegas/Demographics
" hltp:llwww.sportsology.netJadverlising.php3
20
the fun only experienced on a two-wheeled vehicle, for a fraction of the cost of the
competition. Unlike other motorcycle dealerships. RM has a line of over 40 different
highly exciting vehicles that will not be a burden on any budget. These vehicles pay for
themselves in gas savings. Revolution Motorcycles feature the looks, performance,
reliability, and warranty of other motorcycles, at a fraction of the cost.
~<!)
9.0 Logistics and Administration
9.1 Replenishing inventory and parts
Hyosung has inventory warehouses in both California and Georgia. It will take fewer
than 48 hours from making the order to replenish inventory, such as motorcycles and
parts from the California Hyosung warehouse. It will take less than a week to receive a
part from the Hyosung warehouse in Georgia. Lifan has a distribution warehouse in
Dallas, TX. Orders made from the Dallas warehouse are guaranteed to be recei ved in
fewer than two weeks.
9.2 The Warehouse and Satellite business model
Research shows that 75 percent of new dealership revenues come from motorcycle
sales ", Therefore. the tuning. service and merchandise aspect of the business only
constitutes the remaining twenty five percent of revenue. Revolution Motorsport intends
to capitalize on this fact by having only one retail outlet that does service and tuning,
effectively eliminating: the overhead at the retail-only locations.
The first revolution Motorsport location will be a 2,000 square foot location that will
house 60 assembled units. It will also have a full service department and tuning facility.
One year after the first brick and mortar location has opened; Revolution Motorsport will
open three smaller retail-only locations. Revolution will stagger the timing opening of
the second round of dealerships by about four months each, gi ving the new locations
ample time to train highly skilled employees. These locations will stock 25 of the most
popular units available for sale in locations of only 600-800 square feet. If customers
prefer a color or model of motorcycle that is not available in the satellite locations, other
models will be readily available and delivered promptly by the "runner employee."
Runners. aside from shuffling inventory, will pick up motorcycles from each location and
bring them to the tuning and service store for convenience. The warehouse/satellite
structure will offer all the conveniences of a conventional dealership structure, but
significantly reduce overhead costs both in rent and in labor expenses.
~LJ DTM industry overview 2003
2t
9.3 Business type LLC
Revolution Motorsport will be founded in legal form of a Limited Liability Corporation.
Mr. Jackson chose this form of business entity with the purpose of protecting the
company and personal assets of the founders from any lawsuits. which may arise from
the business. For further protection of the company from lawsuits claiming compensation
for physical injuries related to the usage of Lifan motorcycles and other products, the
team is planning to purchase the appropriate business liability insurance. The insurance
will cover other types of liabilities, such as work-related injury claims, supplier-buyer
relations, and the like. Usual practices, such as responsibility-waver agreements with the
customers who purchase our products for personal usage, will be implemented as well.
10.0 Business Economics
10.1 Financial Forecasts
In the first year, Revolution Motorsport will net $321,000 (see financials)with extremely
conservative sales predictions. Profits are affected by an aggressive proposed marketing
campaign designed to put the store in the forefront of our target customer's mind. The
second year projects sales at $3.414,000 of which $768,000 will be net profit. At the end
of the first year, Revolution Motorsport will net $30.000 per month. Assuming
conservative growth and low sales expectations with respect to the market average.
Revolution Motorsport will net 30.000 per month by the end of year four. The expected
net profit for Revolution Motorsport in year five is $ 2,276,000.
10.2 Growth and Expansion
Revolution Motorsport is to be started in Sacramento. In year two. the company plans on
opening three smaller retail only locations in the Sacramento area (population 1,900.000
in the metropolitan area), opening a store in Feburary, June, and September. By opening
the first dealership with both the Lifan and Hyosung lines. Revolution Motorsport will be
able to maintain exclusivity selling these products in the Sacramento area without any
threat of cannibalization. Therefore, the company must secure the Sacramento area as
quickly as possible.
22
ll.O Overview of Assumptions used in Financial Model
The assumptions made in the financials section come from industry standards. The
percentage growth assumptions come from the Data Monitor, which is a resource to the
University of Montana Library Services. Data that pertains to 'the demographics of
Sacramento, CA and thc United States comes Irorn the United States Census (2002).
Some adjustments were made based on the 2002 Census report and the industry growth
report as of 2006.
Key Financial Assumptions:
l. Sacramento average dealership sales in 2006 were $9,400,000.
2. Revolution Motorspor expected sales will be 20% of the industry average in
month one.
3. Revolution Sales will grow by 3% per month until overall sales reach 50% of
the average sales of a Sacramento dealership.
4. Labor Costs will be 5% of Sales, which is slightly higher than the Sacramento
average according to the Census.
5. The smaller "retail only" locations will start off doing 10% of the Sacramento
average sales or, $940,000 per year.
6. Rent will increase by 5% per year.
7. For further assumptions see the assumptions page in the financials section.
23
Appendix A Intro Slide
Revolution Motosports
Strategic Analysis
Jon Jackson
Scott Chaffee
Adil Nurgozhin
University of Montana
Appendix B Resources
Current Resources
Tangible resources
Fin;Hlcial
Personal :.IHinI!lS, and
fund~ .nailabk
(rom retenves,
friends for e~('bllnge to n ~mall purtino u£equit},
or pr<1I1l shariD!! agrnment
O]'ganizutiun<.ll
:\1anagel1lent team hus:t dear vision wher-e to start,
and "'hal i" the direction [I} gr'lw.
Physical
PhVSlCal
Will need fadliTie.~ for ,howroonJS, hmiul:
furniture
none
Ott~nt
warchousinl!:.
Technological
]"echnoJogicaJ
Good product of
~hop~,
quality for nT.\
I<JVt
initial
Ct.... t
Private or arTiliated cornpcnv .. ebsite, equipped mllt:hine~
with a<Tountinl{prrlllrams. salt'S IlIId purchll~inl: soft.. are
Tool, lind equipment for t"ninl{.
Intangible resources
Intangible resources
Human
SImI' managers. salespeople, and technical st..:lff
Human r('soU!'ces
re.~ourccs
IIig.hJ~ m\>lilated team of maeeaers with aevanced
in Busines» :\dnJini~tr ..tion
Innovation resources
d~~ret'S
Iunovutiou resuurces
CHati vc marketlug and promotiou, innO>'lIthe approach
Ior prudu~l m;lrketinll. FOl1.lsed target marketing.
none
Replltational resources
the produ(\ has already eShlblished hrand name
tn related
jlldu~lr~ {nlotoTC}'cJeell~ints_)
RwuLmional rCSUUl\:CS
"'stabli~hed hrand
1:'_"'_"._'' _'_'_"
24
name, and loyal custOillen,
_
\HII_~pread
Appendix C Competencies
Competencies Today
Competencies needed in 5 or 10 years
Core Competencies
Core Competencies
J. Br.md management;
I.
2.
Marketing ~kill~;
Brand development skills;
2. Operation management;
3. Markel research and analytical skills:
4. Strategic planning and analysis skillv;
3. Growth management;
6.CRM.
Distinctive Competencies
I.
Best of the class sale, and inventory
managemem.
::!. Modern and flexible Human Resource
management vkillv;
Distinctive Competencies
1. Prior euucpreueuriul e xpcrteuce:
2. Advanced [raining ill Businesv Administration 3.
3. Good knowledge of finance and financial
analysis
Anility to develop and xustuin long-term
business relations with suppliers (mauufacrurerj;
4. Ability to adopt change." and corporate agi lity:
L
Appendix D Strategy
Generic Strategy
Products for one
Group of customers
Focused ellsl Leadership
•• • • • • • • • 0\ Strategy
1
Products for many
kinds of customers
c. ...;_••• ~
To certain uc;re<' applicable
[0 our model too.
low-priced products
for customers
-l------------j
Focused Dtlferennation
.strateg~'
Oifl"ercntiaUon Strategy
Harley. Suzuki. Yamaha
Differentiated or
Unique products
for customers
Orler rh, mn,r rll~1 cfl"'lrnl
nnucportaucn ~n,lllLn Target
prlll',:m]y yOllJlg p,,<,pie
between I"" .rge 01 ] H-25.
I
by otferlng the 'd!H( 'l'lIu,.
equal quality, and
Hpt'rieftc~ for arrord.'lble
pt"i~~~
Map your strategy in one quadrant. Map your competitors next.
25
_
Appendix E Inventory Costs
Inventory
Ufan
Scooter
our cost
cash price
shipping
,
LF50QT-2A
,
480 00
N/A
LF50QT-15
$
530 DO
LF125T-6
LF150T-6
LF150T-5
s
s
NJA
N/A
NIA
N/A
s
s
s
700 00
75000
90000
Motorcycle
LF15QGY
LF150GY-3A
s
s
65000
65000
N/A
N/A
s
LF200
LF200-GY-2
$
88000
s
83000
85000
N/A
N/A
s
s
s
LF200GY-S
LF2'3D
Dirt Bike
LF70GY-B
LF70GY-4A
LF9QGY-[J
LF11OGY-D
LF100G',E·B
Mini Bike
LF500GY
LF50QGY·2
LF110GY-3
AlV
LF70ST-6
LF100ST
LF·l00ST-A
LF100ST-5
LF125ST-A
LF',1OST-3
LF150ST·3
LF150ST-5
LF25DST-2
LF250ST-5
,
s
s
N/A
N/A
$1,45000
,
s
$
s
48000
NIA
NfA
N/A
N/A
NIA
35000
35000
48000
N/A
NIA
N/A
s
s
s
65000
58000
56000
$ 70000
s 63000
s 75000
s 85000
$1,15000
$1 ,ElOO 00
$1,800 00
N/A
N/A
NIA
NfA
$
our com
cash price
s
s
s
s
,
s
s
400 00
40000
38000
40000
s
s
s
$
s
s
s
$
s
s
NJA
N/A
N/A
s
s
s
s
N/.A.
r--J/A
s
N/A
$
5000
5000
50 00
5000
SO 00
60 00
5000
GV650
GTEi50R ­ 2 tone-Graphics
GT650R - Solid color
GTh50S
G1650
GT250R - 2 tone-Graphics
GT250R - Solid color
GT250
GV250
Scooters
SD50fSense
SF50/Pnma
SF50RRaily
$5,39500
$5,14500
$4,99900
14,79900
$4,396.00
$4,19900
$3,35900
$2,99900
$2,69900
$2,79900
$
$
$
$
$
11,07500
$1,19900
$1,299,00
s
s
$1,099.00
$1,16000
s
$
s
$
$
5,31408
5,06783
4,924.02
4,72702
4,330.06
4,13602
3,30862
2,95402
2,65852
2,75702
s
s
s
$
s
53000
580,00
75000
80000
950.00
710.00
71000
$
940,00
6000
6000
6000
s
89000
910.00
s
1,51000
s
45000
4BO.OO
5000
5000
5000
5000
5000
4000
4000
4000
8000
8000
8000
8000
8000
8000
8000
3000
8000
8000
shipping
$
$
$
$
$
$
$
$
$
$
s
s
60 00
Average Lrfan Profit Margin
Hyosunq
Motorcycles
G\I650 - Two Tone
total cost
50.00
5000
50.00
50.00
5000
5000
50.00
5000
5000
5000
s
,
s
s
s
s
s
43000
45000
53000
Selling Price
s
s
s
s
s
s
s
s
s
s
s
s
s
s
s
s
rnarkup
89900
s
97500
s
1.34900
s
s
1,59900
$
1,19900
s
s
s
1,27500
1.19900
1,59900
1,49900
1,54900
2,49900
76500
76500
72900
76500
89900
s
s
s
73000 s
650.00
$
64000 s
s 780.00
s 71000
s 83000 s
s 93000
1,23000 $
s 1,88000
1,88000 s
$23.160 00 s
65%
1,168.00
1,05500
1.024.00
1,24800
1,13600
1,32800
1,48800
1,968 00
3,00800
3,00300
38,19900
s
s
s
,
s
s
s
s
s
s
s
s
total cost
$
1
$
$
s
s
$
s
$
$
s
5,36408
5,11783
4,97402
4,777 02
4,380.06
4.18602
3,35862
3,00402
2,70852
2,80702
s
s
,
$
s
s
s
s
s
Selling Price
$
$
$
$
$
$
s
$
$
$
98900
26900
26900
36500
,
s
s
65900
60900
63900
31500
65900
65900
88500
39000
39000
52000
48900
48900
s
s
s
s
s
s
$
36900
39500
52500
54900
64900
31500
29900
T,500
36900
43800
39600
38400
46800
42600
49800
55800
73800
1,12800
1,12800
markup
6,49900 $ 1,13493
6,19900 1 1,081.18
5,99900 1 1,02499
5,799 00 $ 1,021 99
5,399.00 I 1,01894
4,999 00 $ 81299
3,999.00 $ 64039
3,69900 $ 69499
3,29900 $ 59049
3,39900 $
591.99
$
1,05888 $
1,181 02 $
1,27952 $
4000 I 1,09888
4000 $ 1,221.02
40.00 $ 1,319.52
$
$
1,08252 $
1,142.60 $
70.00 $ 1,15252
$1,449 $
7000 $ 1,212.60
$1,549
146,68169 $ 56,98500
22%
11,399 $
$1,599
$1,699 $
s
300.13
377 99
379.49
AN.
TE50
TE90
average Hyosung Profit margin
26
s
29649
33640
Appendix F Industry Assumptions
Indys.'try Assurnpti<:>ns
'''''''-'';'''>'
~,,'
.. g
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,,,'--.-·'v,,,
'rc,,,,
Appendix G Yearly Summary
Yearlv Executive Summary
Sales Proiection
Year4
Year)
Ye-u 2
Yo ar 1
sales as percent
of industry average
Bales % with pod'S
0.34
0236533826
0480824500
0961649135
$ 9735.54351
YearS
U I5ti
1 36
sates
$2,223,41796
COGS
$1,517,rf64'
$3,414,15717
$2,564,75144
s
6,645,794 23
s 1 3,732,569.27
s 9,37.\ ,292 20
Gross Profit
s
s 1 ,De:l ~43 99
$
3,08':J,74!:J 28
$ 4 ,358 ,277 07
..,
4,819,45416
s
Cost of Goods Sold
GroS$ Mar in
Operat~xpenses
--
-
s
s
(;,0':;8545
$
$
1"11,17090
s
s
1,00000
$
s
I
s
Dep18Clettlv11
De orec.anon
Seroce tools
Depreciation
Rent
40000
$
$
2,00000
36,00000
3,60000
s
s
6,000 00
s
s
Bond Fee
•
tn sueanr s
Utilities
$
6,00000
erattne EXDenses­ $
$
226,75635
s
Ope,..-.tinq P,ofil
$
4/ti,88521
CiIIs.h Flow
Revenue:
Cash orIHand
s
$2,223,41796
150,000 00
_LOCl~other~";~1 InleE.~ $
Total Cash Recetute
$2,373,41796
$2,373,417 96
Total Cash Available
Cash Sales ­
Cash Poid Out
Purchases i cost of qoods t s '1 .57~ ,050 58
111,17090
Labor
Furniture
5,000,00
-computer
$
2,00000
$
"0,00000
s uppue sr s ho
R. ours and Mamtanar«-a
60,58545
Acvernsmo
IO,OOC 00
star1IJp merchandIse, helmets
$
Accounting and Leqal
36 ,DOC 00
Rent
l JlIhtles
6,00000
s
Insurance
$
6,000.00
Ta::tes - properll'
$
.3 ,600 00
Bond
I
Loan f nteresl
MiscQllaneous
Subtotal
s
s
s
s
s
s
--
Loan Pfinr:!p~1
Capital Purchases
01her Start·up Costs
Income I ax ReseN8
Owners 'I'J11hdro,we,1
486,77718
s
1,000 00
s
s
2,000 00
s
s
2,00000
$
80000
s
2,000.00
103,950 00
:=I,FiOO OJ
12,600 00
s
40000
$
? ,000 00
39,600 00
3,600 00
0,00000
6,60000
s
315,261 79
s
768,28220
s
s
s
s
s
s
800 00
s
s
2. ,000 00
99,00000
3,60000
12,000 DC
16,50000
s
$
s
s
s
$
8,00000
470,88521
169,51867
301 ,3E6 53
yeill 1
s
$
s
$
s
s
s
s
$
s
s
Non OperatmQ tnc ome/r « Rn
. Interest E:~pense
Profit Before Taxes
Incurne Taxes
Net Income
243,388 5')
s
$
8,000 00
76o,28? 2n
273,701 59
486,500.61
Year2
s
s
s
s
s
s
$
s
s
37049236
$3,414,15717
s
866,065.76
2,223,683.52
8,000 00
2,215,683.52
797,64607
1,418,03745
3
$
9,735,54351
s
s
-
I
$
I
I
$10,213,83483
85,35393
s
•
sroo
3,60000
8,00000
78,115 ClO
273,70'1 59
$
s
,
$
$
$
$
$
$
$
1 ,172,217.7J
$ 3,186,05937
$
$
s
$
J, 186 ,059 37
1,146,981 37
L ,039 ,078
no
1 594 754 94
$13,732,:56'327
s
s
s
$
2,000 DO
109,14750
$
s
3,60000
$
13,23000
18,191 25
s
s
s
1 ,287,896 25
s
s 3,531,55791
s
s
s
$ 3,~31,557 91
1.271,360 85
s 2,260,19706
s
$
s
3 4A2 429 A7
15,185,700 UIJ
s
3A3,31423
759,28500
$
379,64250
$
s
$
3,600 00
3,600 00
8.DOn r1n
$
s
s
$
$
$
I
s 10,366,245 84
s
s
10.3,91:)0.00
17,325 00
12,600 00
$
s
$
s
7,721 A33 82
100,00000
80000
s
$
9.570,49567
686,628,46
$
99,00000
16,500 00
12,000 00
s
2,000 00
s
s
s 13,732,569 27 s 15 ,18l:i ,700 00
$15 327 ,~24 21 s 18,62B,\29.47
s
243,38859
379,54250
759,28500
YearS
s
s
I
39,60000
0,600 00
6,000 00
$
s
6,845,168 Db
486,777 18
no
2,000 00
$
$
s
s
s
s
s
s
s
s
s
1732500
Year4
$3,414,15717
$3,764 ,b49 ~3
s
s
s
s
s
s
s
$ 2,634,669 04
170,707 86
s
$
s
s
s
s
s
s
478'91
31
,<
9,rlS.5A3 ;1
s
•
343,314.23
686,628.46
s
Ye~1
s
s
s
s
s
I
s
,
s
s
s
s
85,:6393
170,70786
s
_____ $
complJle_,_~
Total 0
075
~ .50
:11:;,105,700 00
$10,366,24584
y e ar 3
y e as 4
y
y ear 1
y e ar 2
5
$2,223,41796 s 3,414,157 17 s 9,735,543 5"1
s 13,732,569 27 $15,185,70000
s 1,517,77641 2.330,61318 s 6.545,794 23 s 9,374,292.20 $ 10,366,245.84
$ 705 ,b41 _-::'5 s 1 ,083,543 99 s 3,089,749 28 $ 4,358,277 07 $ 4,81945416
ncome 51 a t em en
Sales
Advel1lslng
Labor
Furniture
705,641 55
s
s
$
$10.137,91337
$
$
$
s
$
$
$
$
$
$
100,14750
18,191 25
13,230 DC
3,60000
$ 11.R.19,3.n 09
$
$
$
$ 1,271,36085
797,64607
I
Ii 1,146,981 37
I
,
Total Cash Paid
$ 8,619,07989
$11,884,89474
$12,920,70294
Cash Position
$
1 ,594).r:;4 94
S 3A4?A?947
$
28
$
5,7I]7,426:::iJ
Average dealership
AnRllal sales
$
'1.400,000
IG,11\8IlO
monthly sales
s
783,333
643,650
~ales
cllmp41 ed
to induslly average
24 Month Revolution Motorsport Sales Forecast
20%
monlhly sides
grovw1h
lor Revolution
Molol'pon
30%
o 68233~071
Cost 01 Goods <;'old
IIMnising as %
of sales
Tar; rate
Industry Growth
25%
36%
77%
June
sale,;
/!IS
August
July
September
Novembor
October
December
April
March
February
JdlllldlY
Moy
percent
of industry aver"ge 0 200
I
salu
(:OG<;'
Gross Profit
•
I
year;'
June
silies as pl'rcenl
oJ indu9try average
silles
I
COGS
s
0206
1 ~6,667
106,946
49}21
019
2~O,'j69
16 1,210
I
I
I
July
,,
0212
1(1)57 I
110: 54 s
51,113
•
105,203'
I
113,4~'j
I
52}49
August
>29
247,786
16':',14£
I
•
,
0219
171,194
116,862 I
I
54.331
Sflplernber
C225
175,330 s
120,368 I
55,961
I
October
ns
0.30
255,11 9 I
262,876
174,211
1]~,H1
•
[132
,s
]70,'62
1114,8Jl
•
I
02J2
181,6,'0
113,97g I
•
57,640 I
127,699
59,369
Decemeer
N~mber
,•
,
0.239
1CiNiE!
OB
]78,88~
1"10,370
,•
OWl
•s
192,680
131.530
,
51,151
JilnlliUY
03'
lfH.157
' 9£,Oar
,
I
0253
100,461 s
135,476 I
201,970
035
I
•
J04,74~
208.029
•
•
,
110,~H
139,540
I
143.726 I
0261
52,9~5
I
I
FelallalY
March
035
19~,869
I
I
204,~14
~4,~7"i
•
•
•
5",821
April
037
313,>388
21 ~,no
I
0269
,
02 77
216,863
148,038
,
58,825
0::8
s
J1J,JO~
•
,
o­
Mo,
22U,&98
N
039
J]3,001
s
•
~'2?,319
78,0,9
80,9ge s
9,.eg';l
96,,11:,
9';1,618
GroS5 Profit
7~)49
I
83,413 s
135,~J1
'3e,SOg I
s 1,\6~
102,506 I
1(l~.6(15
I
Novemb,.r
D• .:nmb",r
February
June
August
seplernher
October
JOlluary
March
April
Mo,
year .3
Jut~
.,,1 ... ,n, p",c.,nt
o A065SB821
o 418755586
0431316254
o 4~~257801
0457585535
[ ~71313101
o 48::452~94
0500016069
J 515016551
0530467048
0546381059
0562772491
of indu.•try liverage
0,'313117643
09151711)7
lioles % with pods
0831511172
01£263650;'
0888515602
0942626202
0970904988
1 000032133
1 0300331)2
1 060934095
10C1:'7E2110
1 1354A962
_
sale..
7g".)AR Rfl I 819,10399 s
04J,f,]7 11 I
706,55530
727,75329 I
74959619 , 772 ,OA4 07 I
868.""87 4.::l s ~,057 05 I 921,900 75 I !'l~9,566 O~
I
585,986 ?O
~':Jb,/fj4 56
~68,)7G 52
511 69840 $ 527,04935 s
542,860 ~13 s 559,14566 s
575,921 n6
593,19859 I 610,99465
62'3,324 4J s 548,2n4 ~:
I
s ~(j2 ,37~ 52
I
~ 1":0(;<;;
,
<J
~
Gr.,.Plolil
,•
,
217,710 18 s 224,241 48
'::30,96873
I
July
AII9 11s!
Jllne
"'" '(ea,~
"al",. itS pero:-elt'
~ of IndulJll)' lIvehlgl' S
060 I
061
058
, 9
1 23
fI) s.. I"$ % with pods
I
, '6 s
1,037,61(J~3
~ ...,Ie,.
'378,05300 s 1,007,394 93
fill]
.67'3
He,
7J8,310 ":It;
061 65J 35 $
~ C.OGS
[IJ
319,714 7~
J1O,~m 66
'029,30"'8
Gros-Proflt
'(ear 5
Jllne
Jllly
,l\lIgu ...
~ sales as pl!rCttlll
c 75
075
075
01 i"dustry average
15]
150
C sales 0,;, with pods
'SO
1)6':>,475 OIJ
~ sales
$ 1.265,47500 s 1.2€ ' i.47'3m
853,85382
8638538) s Afi3,8'i382 s
~COGS
I
Q,
J01.621
1'3
~ Gross Profil
401,6;r 18 e
s 401,621 13
I
o
=
;.a
,
,•
,
,,
,
,•
,•
•
•
,••
I
23789779
Sflllt~'nbel
•s
s 245,03472
Octoh~r
003
1 27
s 1 ,068?~~ '33
7::'9.55355
$
0'55
1 30
I
$1,100,007 27
:> 7~\ .4-'11j J'=>
•
s
,
33'3,18536
September
3~9.360
92
October
,
••
s
•
I
~01
,621 13
$ 401,621 ·8
057
'"
1 ,133,831 ~'3
773,98974
35q,8~1
75
November
,
075 I
075
I
1 50 I
'SO I
s 1.255 ,475 OIJ s- ,2£6,47500 $
s ODJ,e53 El2 s ffi3,t1~3 D2 I
I
•
,
252,38577
259,:l5734
I
No",en,h",r
O.. o:-a",t,ar
I
0:'5
150
1,::·£6,47500
ffi3,85382
4J1,62118
s
I
767,75506
J~"",,,'~
an
s
s
059
1 313
I
$1,167.84644
$ 797.209 -'13
4J
, 1.7n7.RR' Wt
8"-\, \~'i 71
I
s
s
370.~37
00
December
381,7561)
Jl!IfHliU]I
•
775,78874 I 28(06740 s 292,58427 s 381,361
Ma,
F"'''''....ly
AI·rll
""'rch
I
•s
•
•
on
I
'"
$1,2C~,47"
s 1 238,96f3 .:'3
845,1594?
393.208 81)
075
I
,CO
I
00
003,85331
~
s
$
,
401,1321 18
,
075
'J 7'1 I
, <o
1 50
1,2fi5,4h OU ~I ,1135,475 DO
$ El6.~ ,a5} 8.::' 1- f63,853 10...'
s
~Ol,6)1
18
April
March
Felllilitry
,
075
I
150
,
$1)6:::,,.:7'300
I 863,135332
s
$ 1,265.47"'\IrI
863,85:82
s 1)£f:',47€ 0 0
I
863,853 S1
•
003,353 S2
s
075
50
I
$1,::'65,47,,1](]
I 853,85382
I
I
s
I
401K'118
I
401,t21 18
I
[ 75
s
073
150
I
1 50
401,621 16
401,521 18
I
s
075
1 50
$ \ ,:"6'i,47'; 00
eo
401,62118
s
Af31,621 18
May
,
I
075
, 50
:Io1,?ch,4i5\,IlJ
I
863,85382
I
401,521 '3
Income Statement
Y9<Jf 1
J
,
~~-------(;051 of Gores Sale!
GroM Mar in
Ons.aurm Esnans es
Adl'ertl$ln
L~b0'
,
_'
•
,
-- ,
,
~reCI~t10n
cern nrter
Deprecl~ _ _ _ _ _..
SeM~'" tooh
De recrat on
Re"l
Bend Fee
Insurance
_
,
I
umnes
,
--
,
Total 0 erlltin EIe I'n!U!$
Opelatlng
NOI
,
--
Pro~i'
Oper31m~ Income,'l:--;P:;;~
- ,nl~,,,~t Ex ..nse
Profit Befote fate;
,,
l
tncome Taxes
Net Income
s
'"r
I
161,36567
110,15,105
83 33
,
,
•,
3333
I
33 33
16667
300) IJI)
3[1000
500 00
500 (10
I
165 67
srm 00
30)00
9JJ 00
SOD 00
e,91667
7 ,eJ3 33
I
.
Furniture
155,56557
$ 105,g-4~ 69
49,72098
I
512~260
4,m417
8,Of:::',33
6333
I
I
I
I
21 33333
I
16,68583
28,38764
I
34,52b77
we G7 l
27,n0 98 I
66667
:n,850 10
12,18904
~1,fi7C 47
9,37955
17,74142
S
s
,
,•
,,
4,155 '9
13,:'\1038
8333
I
I
,
s
I
s
I
l
,
l
I
I
I
33 ::3
s
Gf<lssMar,i"
=
8
-~~
I:U _ D9preclatwn ~
-
~
8
o
s
17,OA891
I
54,33145
,•
4,27985
8,5SQ 69
s
8333
3333
17,422.88
bbb b.' l
350334' s
1251203 I
22,4213B
66657
36,241 91
13,04709
2J,1g402
55,931 40
4,4)8 24
8,815 A9
I
,
•
I
I
a
240,568 63
•
,
I
3333
17,800 05
38:,5333
683
37,41:6
13,495
23,991
57,640.24
,,
4,G40 ~9
I
123,'-"" sr
«ren se s
83 ::3 l
l~Oj,~tl
Ij
59,36945
467670
67
67 I
20
I
47
I
65657
38,76877
l
I
,
s
13,9567E
'lA,81! 01 I
I
E333
I
83 JJ
I
3333
I
s
:,000 00 $
155 67
3,00D00
30] 00
16667 I
3,00IJ 00 $
sec CO I
501]00 l
50000
,
,
,s
s
81 ':3
33 33
39,43543
52,93534
1jj,4itl.!:iU
4,%152
16661
18,20480
I
•
9,S/3Cl3
s
,
,
61,15053
$
3333
,
,
131 ,:>2OJ r'1
I
166 67 I
3,000 OJ s
30000
':(10 00
WOOD I
,,
I
•
,
4,81701
9,5~4 0\
9153 Al
I
16667 I
3,ClClIJ 00
300 00 I
58000 $
500 00
~.!
Sep"mb.,r
~
83 33 I
,
,
36,~58
•
,
16667 s
3,OO'J 00 $
30000 l
50000
SlIlJ 00 I
,
35,700.01
I
l""U,~tljL
300 DO
50n no
50000
•
,
,
,
3333
,
,s
,
I
SOD 00
I
s
18,613 45
,
50000
19,034. 35
s
19,45700
40,75600
s
42,11618
s
.43,5171~
66657
4000933
14,43216
2S,65717
S
\
I
666,67
41,44951
14,92182
26.s~7 69
,
I
s
I
s
I
February
~
~
304,74515
'" 2[l7,?51 53 ! 2O!"J,!:loOi ue ,
190,37583 $ 196,J8711
201,96972 " 208,02881
$'~,8993G
$
91,16442
%lH3)<
'" 88,509 I')
s )78,80480
s
s
I
,
,
,s
6666 7
4" ,85050
15.426 1R
':'.7,424'? I
NO"'8fnb~
2A7
s
s
13'.l,':,j'Y 87
s
64,87460
I
143nb,07
56,8208J
•
I
148,03785
58,82546
s
111,\343 F
,
5,11036
I
1Cl)Xl 72
I
8333
I
l:ij j j
,
333'3
I
3333
s
3333
,,
,,
3,1JOO 00
300 00
500 DC
166 67 s
3 ,om 00 l
300 00 I
500 00 I
500 DO I
5,26367
1I"I,5J
~4
15567
a.coo B\J
30000
5IJUfIO
50000
1991442
I
20,l7A 3<;
44,%0 Ie
I
45,44648
66667
44,29351
1<;84565
2834785
I
I
I
66667
.i5,77982
16,48( 73
29,29'108
S
MMkh
, 313,3A750
'" 214,26968
5,421 58
8333
I
,
,
I
s
I
s
16567
500 DC
20,848.0E
47,977 38
66667
A7,31071
17,OJ1 Of,
30,H885
....
~
33-; 003
~'5
'" 227318 7 0
$99.;1783
$
10'3,1'18A '3<;
Operating E"pens"s
Adverllsrng
Q"lL"tJ'JI
Furnoture
Q"l ~~hOn
rJ:J
o
171,l 'D90
116,86244
,7B5 E.9 S :'5S)192f $ jE.2 B7",:"I4 S 770,762 12
$lb4,21Y SI s 169,14646 ~-----.!.Z!2208"'_
s 17944748 $ 184,830.90
i 76,J4877 -'-78,63823 s 8099841 $ 83.-42836 S85,931 i1
Sal9S
Cosl cf Goods SOlid
_
s
I
,
A 1l9 u'lit
J!!lJ
,
•
165.E7 s
3,00000 s
30000 I
500 OJ s
SOD 0]
Ye"r'Z
,lytl
,
,•
s ~plelnb .. r
165,i.tJ767
113.458 GO
52.74896
'I;
!j.
1=',36928
8333
'I;
83.B
aa33
_
SenrlEe tools
--D~~-~--
5
16667
Rer>1
s
J,mOO
Bonj ~ e_e~
~_
~~
s
--' '
!;J \JtIIJ11~~
'"
619464
5,nl422
12,0:Jfl43
300 00
500 00
s
s
,
33 ]]
s
s
'"
s
657190
",769 1)5
13,538 11
6,'112 12
1,181 .oJ
n,143/9
13,94425
14 ,j!)2 53
7,396 73
1.4,79,.45
:13 JJ
83 33
83 33
83 CO
83 ]]
8J 31
83],
]13,
333,
]233
3313
3333
3313
33.,3
'6657
1,300 (IJ
300 00
50000
~50 00
IS667
],]0000
30000
3 ,30n OIJ
no
3DO 00
SOD00
55800
50000
.;i<;n on
16657
s
16667
1.JOOIln
~
C:,JOOOO
300 DO'
300 00
500 00
5'50 00
s
500 00
~50 00
56.92363
s
58,7793A
66667 s
510)55% $
58,11267
IJIJ S
50000
550 00
s
55,12137
66667 s
52,7[{,12 $
18,87420:li
33,7J192 s
66667
s
54,45531
$
19,60331
3485\40
s
~,50
e lfln 4fl
1: ,71;,095
$
'\;
$
s
s
s
166.57
16£ 67
lS567
3,30000
),JOO 00
3,.:JW 00
100
on
S
]OC' 00
5OCOO
'5'30 00
30000
50000
60,69072
62,6594A
s
5SO 00
7,61863
'''',237
7,8A719
1S,39.4 3J-~
ze
,
s
1333
16S 67
300
R,1':
3,08260
8,32508
16,t/OO 16
11'>,1S'i~1
833J '\.
m.rr
3313
331"'1
15667
HiS 57
s
3,3RO 00
30000
oaoo 00
SOO 00
'i'i0 O'J
5000[1
SIJOoo
s
'J50 JO
550
71,14:2G3
s
7:J,4:2e; 72
~
i5,nS:Jti
6GB 67
7:',10'131
10067
3,100[11)
So
'I;
s
~iOO
DO
co
5~'~.~"~I~O;'P;'.;'~.';'.;'~E;.;pe;.;.;.;.=.=~I$~7598_'_21,51~~,07478_'_2J,64~~,240.J~~4971_'_26,A77~~mS1_'_~7,7~8,m~~~_'_;9,9~
:;
~
~
~
~O~p;;.~,.~'ili;.',iI";;";;'' ;,
53,3 72 79
Non Operallrlq Income/Expenses
- Inl<lrest EJ<pensl'
ProfIt AeforE' T.~~ _ _
c..Income
~ Net
T~Kec;
Income
.
~_
$
2ll.Lj2b1
-3lO,004JE,
s
$
54,E8723
s
66,n58A
s
'iR.CJ?7 11
s
66667
s
66667
s
606,,7
s
66667
s
656 67
s
£6667
s
100,02405
$
61,99276
$
70,416,[,
'"
21,60866
~2,31740
s
;'[;,10918
23,7>J93D
A2,30987
68X,0-45"
s
"
So
20,!:-2056 s
37,1':1211 $
54.020 'if,
56667
72 ,':'l:' So,-
$
$
66667'
~~4153~1
$
,03,61538:1i
23,047-40
s
41]::'173113
$
~
s
)4,57376
s
25,37146
s
2619308
s
27,03935
$
0,68569
10
45,10461
'"
46,56547
$
43,06991:,
o
~.
Year)
__
-1--­
~mes
~_
,!y.!y,
August
September
Qt10ber
January
December
Feblllal)'
~
~1~%ro$~~~\ 7NM~$!~~19
48 7,32482
Fi77F.4Q 3'5 s 542,86083
468,276 52
496,79456
51169840
oes.tae ee I 57':>,92106 $ 593,19859
$ '::17,71010 I
224,24148 l
2::''0,%8/3 s 237,59! 79
245.03472 s 252038577
259,95734 s 267.15506 l
275,788 74
,
l:li
Cost of Goods Sold
GloftMargin
Op~ratl'1q Expe1ses
,:l.d'..'~_ _ _ _ _
$
Labor
s
--.,•
Furniture
- De Tec,aloon
•
u jmput er
~eclatl(Jn
Service tool"
Ij eprerrahcn
R~"t
Bend Fee
:•
17,'364 16
35,328 32 I
18.1gl1 ra
::-:6,383 16
16S 57
I
IF;f,67
s
166 £;7
6657
I
se 57
16667
8,250 IJCl
300 00
I
,,
I
I
62,77400
l
'54936 ',8
Nen 0p",ratIn9 Income/Exfl~
-Jertere s: E. ence
$
66667
154,26951
Profit Before Taxes­
tncoroe T~~"s
s ~5,5J7 0:­
Net lucerne
98,732119
,
,•
-­
Total Openltin
Ex en$e5
OP....f1"9 Plofll
1.iJOOOO
1,37500
,
,
¥1!;l14
Sal"3-~-----
Co~l
of Gcods S"ld
~l)S5 MlloI9_"_'~_ _ _ _ _
Op€rallf"19 ExpensesAdvertlSong
Labor .
-Furnrtu;:e-----­
- D"! ,,=CI11<0r1
com "ter
I
•
•
R""I
~oncl
I
._ _ _ _ _
Service 10015
[Ie reCl<!tron
Fee
los1)'<loc&
Utlli1l8S
----~-
Tot.al Operating b:~s~s
24,1151 33
48,90255
lfi667
6667
I
156 E7
ti,56260
300m
\ ,05000
1,114] 75
$
8'1,71023
I
-----­
l
16667
3,15000
:::0000
1,000 OD
1 ,~7'5 no
64.317117
159,9~4
01
56657
159,25734
'57.;:Ul b4
•
,
,•
•
,
$
I
•
I
25,13486
50,359 !3
18F 67
b5'67
15567
8,66150
300 00
\,n;::nm
~ ,442' 75
Non CJpE'ratlng IncomE'/Ex[Ems€'s
- InlerW3t ExpenSE
!'rofll D",fur~ r"xes­
hlC\Jr'\8 Ta)\~'5'
Net Income
I
,
s
•e
,•
I
I
I
5567
16567
13.251)00
300 00
1,000 00
1,175 no
s
,
•
•
,•
•
•
I
I
6& 67
I
65 f,7
16667
,
166 67
I
R.Js] 00
s
13.~5-I)OO
•s
300 00
1,000 00
1,37'500
s
JOO 00
1.000 00
1,37500
I
70.9684'3
8,~5000
300,00
1 ,OOO.DO
1.37<;00
•
I
•
•
I
I
••
•
166 57
6567
~
FiFi e,7
13,56250
30000
1 ,(}so iJG
l,l4375
I
•
••
••
I
$ 225,19243
$
232,30J 89
•
239,62870
I
$
•,
I:
I
SepT,mbel
I
$
I
56.67
66667
169,58541
£.1,087 \1
108,59930
•
232,30389
83,62940
148,67449
16557
••
•
•
•
$
$
$
•
26,71862
53,43725
1665'
6661
1S6 57
8,65250
300 00
1,050 00
1,4437!
•
l
$
I
e
20,477 60
"0,955 :'0
I
16561
I
666 7
•
,
•
,s
l
,•
,
I
I
•
,
,
I
I
I
27,520 18
55,04036
16667
5667
1EJG 67
8,662 ~
300 00
1 ,U5\J IJO
1,44375
247,173 24
$
7,:;".g4413
24/,17324
•,
•
I
s
4"
77398974
359,841 15
I
79
'36.n"157
I
1E867
~I,'33,t;I]'
s
,
•
,
I
I
••
•
OJ;
28,3~5
6567
262.94814
,
254,94413
31,77989
163,1642A
•
I
94 6G1 33
\68,28681
rasro
••
•
I
~
,
~
$
!8
s
~
I
I
29,1?6 16
I
'i8,J'J=' 32
s
30,072 05
lJO,14409
I
lFi657
s
1613 57
I
,
•
•
I
•
6857
16567
8H:;250
300 00
\ ,[50.00
1,44375
••
•
•
•
6667
I
I
15567
1:,65250
10000
I
1,05000
I
1,44175
-.I
I
•
•
I
I
I
••
•
99,44473
,
102,072 39
271,1'1227
I
27::J.lj8J /3
271,1£12.27
,
,
279,68373 I
100,680 14
178,39759 I
Cl7,f',;q 22
173,55305
$
I
I
1';48,20422
301,::61 80
,
•
23,04772 s
45m:; 44 l
23,73915
47,47330
,
5657
I
5667
I
I
15R R7 I
5,25000
JOO00
1,00000 I
I,J7500
16r: 6;­
'eo,250 00
30000
1,0000G
1,3750[1
I
m,tS42<::< I
t\U,4Ol\ 16
s
8:::' ,5":::' 45
199.269 58
1 :;'[l5,&OO 12 " 21211512
s
21B,819::\"',
68667
198,52302
71.50429
1)7,11873
I
s 1 ,::'38,968 28
s
2237643
44,75235
,,
I
Db 67
UhI.!!.i!O'
,
1 -167 J3"6 4" $' ,202,33183
797,20943
821,12571
I 371]oJ7 0[1 s 3R1,7% 12
,
•
Mir<
529,32449
$ 292,584)J
1566'
75,493 06
•,
s
510,99465
" 284,05240
I
I
,
Ailtl!
s
1f,657
I
s
M.ruh
I
15657
16667
f.,25lJ 00
300 00
1 om on
1,37500
I
56667
t92,4t1t11:1
E9,295 9D
123,19271 I
$
$ 262,94E 14
•
30000
1,000 )0
1 ,'i7500
•s
•
I
lbb G7
!:J,66250 I
30000
1,050 00 S
1.44J 75
96,89361
$
16667
b,bl1 )lJ
66667
10G,5J287
137.15183
1193810.4
•
~
I
I
600 67
I
$ 180,750 GO
$ £6,070 22
{; 115,68039
s , ,100,007 27
751 ,44E 35
349,350 92
I
21,724 69
43."4937
s
s
666 67
175,131:1 75
~
,
300 00
',0000[1
1,J?5 00
6667
s
,••
53,OA923
,
16667
193,155 H
27
112,08752
$
,
•
•
s
I
s
IJ[I
•
21,091 93
42,11:'0386
7::/5700
l
\JiL~\7
165 fir
8,='50
,
187.193.5~
69,231 31
17'5,803 42
34,416 ·30
0098237
158 l'j() I:jl;:l
,
s
16667
I
I
':l:':,UI21:;; $
,
23962870
BE. ,200 33
15J,J82 37
l!;!,titil 16
39762 33
s
:0.7.5"" 71
25,311041
51,830 82
I
156 R7
ilm761f:;41 $1 ,Oti67·t4 93
779,55956
s 70831025
32'3,305 18 $ 333,185 3i
I
,
19,.3)2 to
J8,50" 20
l
FO,353,08
,
I
s
16667
I
89 E77 48
2~5,192 43
81.06928
144,1?311';
18,73S 90
37,47981
s
1366.137
1611,391181
50,18213 $
105,21268
•,
•
6'5,9073
$
!"
,
1135,061 45
87,41eS4
-~-
Opera1ing Profll
•
- 101,92470
Jyne
s 91f] ,053 JO $ 1,007 )94 59
, bb/ ,66035 s 687,67985
s 3\0,40135 $ 319,71474
•
,
~r"rla:l"r,
,
,
,
17,111957
J4,2';l933
••
,•
insurance
Utrhnas
,
845.1'5949
3'33,20\3 I3IJ
,
I
s
see 67
204,941 45
73,77892
s 131,162 OJ3
~
•
MAlk.!!
,
16667
•
6567
16567
8,66250
30000
•s
•
l
656 fi?
211,44945
7512180
135.32755
lull!.!
51 ,J85 ,4:5 0(1 $1.255,47500
$ 8&3,85382 s 863,853 82
s 401,5~\1l:, s 401,1':02118
21
61.';l"B 41
30,97~
,•
,
I
•
11',657
I
6657
s
8,3000
,
18G 57
,
I
30000
1 ,uuu
•
,•
,s
au
1,37500
6GE;
rr
218YJ268
13,53497
LJ!:-I,517 7~
....
$1.265.475 oc
$ 863,8':;;3 8:'
40' ,132 \ 16
•
I
31 es, AR
53:273 75
I
3" ,63!:; 88
63,:::'7J 75
1Ft" t'i7 S
'6667
$
16667
31 ,6J5 88
63,27375
66 57
S
,
5657
s
•,
•••
5567
I
I
16657
13,E6250
::00 00
1,1:'£/0. 00
1,""-175
I
1G657
3,66250
30000
1,OlJO 00
1 ,44.17~
I
105.7·3588
I
105165.88
288.429 '13 $ 294,854 30
$ 29" ,854 30
I
294,854 30
288,42993
$ 294,854 30
I 105,10 "'~
$ 188.70675
,
I
294,'354 311
106,lM 55
188,70675
1,05000
1,44375
104,77897
I
•
I
•
I
lE6 57
8,56250
30J 00
1.05000
1,44375
s
$ 105,76688
,
I
I
•
103.634 ;T
1811,595 '5
$ 294.85L 30
i llJb.1A/55
I 188,70E 76
I
r-,
YearS
Sales
Cosl of Goods Sold
Gross Margin
Operatln~ E,penses
AdvertlSinq
Labor
June
August
Sen'ember
JJ!b'
11 ~65,475 00
;,47500 11,265.475.00
\863,85382 • ~W,ONO
~3,85382 I 863,85382
$ 401,62118 $ 401,62118 $ 411,52118 I 401,52118
••
I 31,63600 I 31 ss88 I
I 63,27375 I 63,273.75 I
October
-
December J,nuary
Februa,!
M'rth
AR!i!
-November
M.!l'
11,265,475.00 11,.
I 863,85382 $ (__ ,_____ •.._,__. __ • "',"' __ • "',_' __ • _',""_ • "',"'" ••••,•••••
I 401,6;118 $ 401,62118 I 401,52118 I 401,62118 I 401 ,021 18 I 4,31,621 18 I 401.62112 I 401 ,62118
31,63688 I 31 ss 86 I 31,63588 I 31 ,6li 88 I 31,63688 I 31,63688 I
63.27375 I 63,273.75 I 63,27375 I 53,27375 I 63,27375 I 63,273 75 I
31,63688 I 31,53688 I 31,636.88 I 31,63688
53,27375 I 63,27375 I 63.27375 I 63~7375
FlJmitlJle
-Oepr",atl8n
computer
DepreCIatIOn
3,mce \ools
Deprec;atlon
Rent
Bond Fe'
I
1666! I
166 67 I
16667 I
t66 67 I
16667 I
16667 I
16567 I
16W I
'6667 I
15667 I
16667 I
15667
I
6667 I
6667 I
6667 I
6667 I
00 67 I
6667 I
6667 I
6667 I
6667 I
6667 I
6567 I
6567
I
I
I
I
I
I
I
I
I
I
I
I
I
16667 I
9,[8553 I
300001
1,1U250 I
1,51594 I
I
I
I
I
I
16667
9,09563
30000
1,102.50
151594
$
I
166.67
9,095.63
30000
1,102.50
1,51594
I
I
I
I
I
1E657
9,(135 63
3[0.00
1,102.50
1,51594
I
I
I
I
I
166.67
9,09563
31JO 00
1,102.50
1,51594
I
I
I
I
I
166 67
9,095 63
30000
1,102.50
1,51594
I
I
I
I
I
166 67
9,09563
30000
1,10,.50
1,51594
16667
9,19563
30000
1,102.50
$ 1,51594
166 67
9,095.63
30000
1,10250
1,51594
I
I
I
16667
9,09563
300 00
1.102 50
1,515.94
16667
909563
30000
1.10250
1,51594
I
I
I
I
I
166 67
9,095.63
30000
1,10250
1,51594
Uillilies
I
I
I
Total Operatinq Expenses
I 107,32459 I 107,324.69 I 107,32459 I 107,324.69 I 107,324.69 I 107,32469 I 107,32469 I 107,32469 I 107.32469 I 107,32469 $ 10732469 I 107,324,9
Operating Profit
I 294,296 49 I 294,2% 49 I 294,296 49 I 294,296 49 I 294,296 49 I 294,296 49 $ 294,296 49 I 294,296.49 $ 294,296 49 I 294,2% 49 I 294.29649 I 294,29649
Insurance
$
$
I
Non Operalinq Income/Expenses
-Interesl Expense
Profit Before Taxes
Income Taxgs
Kelllltome
I
I
I 294,29649 I 294,29E 49
I 105,94674 I 105,94674
I 183,34976 I 18334976
I
I 294)96 49
I \05,94674
I 183,34976
I
I 294,296 49
I 105,946.74
I 183)4976
I
I
I 294,29649 I 294 }36 49
I \05,94674 I 105,94674
I 183,349 '6 I 188,34976
I
I 294,296 49
$ 105,94674
I 188,34976
I
I
I
I 294,296 49 I 294,296 49 I 294,296 49
I 105,94674 I 105,94674 I 1O~,94674
I 188,349.76 I 183,34376 $ 188,34976
I
I 294,296 49
I 105,94674
I 183.34976
I
I 294,296 49
I 105,94574
I 188.34976
0'
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YearS
"lonth\Yeor
Revenue:
June
.My
September
Mg!J!!
October
November
Decembel
feb,o'N
J'OUON
March
%ill
!lID
Cash on Hand
Cast Sales ­
loan or other Cash Imectlcm
13.442,423 47 I 3,631179.22 13,819,52898 I ((1IE,57873 I 4,197,428 49 14,385,17824 I 4,574,92800 14,763,677 75 14,951,427.51 15,141,17726 15,329,92702 15,518,67577
11,26547500 11,25517500 11,255,47500 11265,47500 11,255,47500 11,265,47500 11,265,47500 11,255,47500 11,255,47500 11,265,47500 II,m5,47500 11)[6,47500
Toial Cash Receipts
Totol Cosh Avoiloble
Cosh Peid Gut
11 ,265,47.5 00 I 1,265,175 OJ 11 ,265,475 00 \ 1,265,47500 I 1,2135,475 00 \1 ,2135 ,475 00 I 1,265,4i5 00 II ,265,475 00 11,265,47500 11,265,475 80 11)55,475 DO II ,255,475DO
14,707,904 47 I 4,896,65422 15,085,40398 I 5,274,15373 15,462,903 49 15651,653 24 I 5,840,4000 16,029,15275 16,217,90251 WOO ,652 ;S 16,595,402m 16,784,15177
Purchases (cosl ofgoods)
Labor
Furniture
I 863,85J62
I 63,27375
863,85J82 I 863,85382
63)7375 $ 63,27375
863,85382
63,27375
863,853 82
63)7375
863,85382
63,27175
863,853 82 I 863,85382
63)7375 I 63)7375
863,85392 I 863,85382 1 863,85382 I 863,£5382
63,273 75 I 63273 75 I 63,273 75 I 63,27375
~ljtf'1
suoolies!shoo
Rellalrs and Namsnsnce
AdvertlSln,
Car, Delivery, and Tral,'21
AccountmQ and Leoal
Rent
Utllltl28
Insurance
Taxes - property
Bond
or,
r.
I 31,53686 S 31,53686 I 31,53588 I
!
31,53688 I
31,6li88 I 31,63688 I
31,63686 I 31,636.88 I
31,63686 I 31,63688 I
31,63688 I 31,636.88
9,095 63 I
\,5\594 I
1,10250 I
9,1J9563 I
1,5594 I
1,IQ250 I
9,09563 I
1,51594 I
1,10250 1
9,095 63 I
1.51594 I
1,10250 I
9,095 63 I
1,51594 I
1,102 50 I
9,095 63 I
1,51594 I
1,10250 I
9,09563 I
1,51594 I
1,10260 I
9,03553 I
1,51594 I
1,10250 I
9,09553 I
1,51594 I
1,10253 I
9,09563 I
1,51594 I
1,10250 I
9,095 63 I
1,51594 I
:,10250 I
909563
151594
J(l)1JJ1
3[0.00 I
30[ 00 I
300.00 I
30: 00 I
30000 I
30000 I
JOOOOI
300 00 I
300.00 I
300001
})OOO
1,102.50
Loan ,Interest
MISCEllaneous
Subtot,l
\ 970,77851 I 970)7351 1970,77851 I 970,77251 I 970,77851 I 970,77851 I 970,778.51 I 970,77851 I 970,77861 I 970,77851 I 970,77851 I 970':7851
Loan p,locl.va!
Capital Purcha;es
Other Slart-up cnsts
I_~._~- T 6)': ReseN8
Uwnef5 Wlthdl'1wo.l
Totol Cosh Poid
11,076,72524 11,076,72524 11076,72524 I 1,076,72524 11,876,725 24 11,076,72524 I 1,076,72524 11,076,72524 11,076,72524 11 ,07E,725 24 11,076.725.24 11,076,72524
Cash Position
13,631,17922 13,819,92E98 14008,67873 I 4,197,428 49 14)86,17824 14,574,928 00 I 4,763,67775 14,952,4275
'
15141,17726 15329,92702 15.518,57677 15,707,426 53
Appendix K Balance Sheet
Pro-Forma Balance Sheet· End of First Year
Pro-Forma Balance Sheet· At Startup
l~i\ititl
Lllbilibn
(untlll Ass,!!;
Casn
{~\ftnH iDbUittl:
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Pro-Forma Balance Sheet - End of Second Year
Pro-Forma Balance Sheet - End of Third Year
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Pro-Forma Balance Sheet· End of Fourth Year
.\-:;10011 R,;,,"abl~
Lia~i'ilils
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CUfI..lI1liabiHtin:
(urrerllA.ets:
I"n
Pro-Forma Balance Sheet - End of Fifth Year
Liabiltiu
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~
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Appendix L Financial Ratios
Financial Ratios
Current Ratio
Year
Year
Year
Year
Year
1
2
3
4
5
Cash Rati 0
Year 1
Year 2
Year 3
Year 4
Year5
3.0873306
2.474677
3.3180382
4.766057
7.3884382
• start with high current ratio due
to the loan and investor investments
giving current assets cash from
long term liabilities loan and
note payable
2.1129508 • cash starts high from the
1.5227049 infusion from the loans and
2.3298787 Investors
3.766057
63884382
Acid Test
Year
Year
Year
Year
Year
1
2
3
4
5
2.11 • start with high acid test due
1.52 to the roan and investor investrnents
233 giving current assets cash from
3.77 long term liabilities loan and
6.39 note payable
Profit Ma..-gin
Year 1
0.135542 "*" steadily rrsing profit margin
Year 2
01425185
Year 3
0.1456557
Year4
0.1484848
Year 5
0.1488372
Gross Margin
Year
Year
Year
Year
Year
1
2
3
4
5
0.3173679
0.3173679
03173679
0.3173679
0.3173679
Debt to Equity
Year 1
Year2
Year3
Year4
Year 5
1 4788599
1.0961511
0.5217671
0.2645215
n 1563628
Return on Assets
0.5644286
Year 1
Year2
Year 3
Year 4
Year 5
0.3964005
06268307
0.4937741
03537898
Net Sales/Inventory
Year
Year
Year
Year
Year
1
2
3
4
5
1.4116486
1.2958577
'1.4222505
1.4348859
1 464918
37