1.0 Executive Summary
The purpose of this business plan is to secure $400,000, via an SBA loan, for the development of an automotive repair shop based in Austin, Texas. M&D Automotive LLC (“the Company”) was founded by Matthew Deutsch. The business intends to develop a stand-alone location, which is expected to launch in the fall of this year. The business will provide the full range of automotive services specific for the needs of individuals and fleet operators.
The Services
The primary revenue center for the business will come from the ongoing repairs of any make or model of vehicle among its clients. Through its state-of-the-art facilities, M&D Automotive will use the latest in diagnostic and repair equipment to provide seamless repairs. The Company will maintain a lean operating infrastructure so that all repair services can be provided on an affordable basis. Management is committed to providing complete transparency regarding all needed repairs.
Prior to the onset of operations, the Company will recruit numerous qualified mechanics that will work at the facilities. The business will source candidates from technical schools throughout the greater Austin area.
The business, when requested, will also be able to provide automotive performance enhancements. This will be a high margin revenue center for M&D Automotive.
The services offered by the Company will be further examined in the third section of the business plan.
The Financing
As noted above, M&D Automotive is currently seeking $400,000 to establish its operations. Matthew Deutsch will provide $100,000 towards the venture. The funds will be used for real estate, furniture, fixtures, and equipment. The working capital needs of the business will be provided through Mr. Deutsch’s investment.
If needed, the Company could secure additional capital to expand operations. As this is a highly economically secure enterprise, the business could acquire a revolving credit facility. This document assumes that additional capital will not be acquired during the first five years.
The Future
M&D Automotive will continually expand the scope of its market reach over the next five years through ongoing increases for its annual marketing budget. Given the size of the greater Austin area, there is an immense opportunity to develop additional locations as well. However, an additional location would not be developed until after the fifth year of operation. The business may also integrate mobile repairs services and roadside assistance. If it is feasible to do so, an existing vehicle repair shop may be acquired and rebranded under the M&D Automotive name.
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
A $400,000 SBA loan is sought for to develop M&D Automotive. Matthew Deutsch will provide an investment of $100,000. The funds are to be used as follows:
2.2 Management Equity
Matthew Deutsch is the 100% owner of the business.
2.3 Exit Strategies
If it is financially prudent to do so or if Mr. Deutsch intends to retire, a qualified business broker will be hired to manage the sale of the business to a third party. A formal valuation regarding the business and real estate will be conducted prior to sale. Based on the anticipated profitability of the business, the Company could have a value of $900,000 by the fifth year of operation (including the value of real estate).
3.0 Operations
M&D Automotive will be actively engaged in providing a wide range of vehicle repair services from its location in Austin. The business will principally focus on providing services for individuals. The Company will have the ability to service any make or model of vehicle. The business will maintain a wide inventory of automotive parts so that repairs can be made within a 24-to-48-hour period based on their complexity. Through the Company’s state-of-the-art equipment – the business will be able to complete engine overhauls and extremely complex repairs when needed.
Most importantly, the Company intends to onboard numerous mechanics that will render services at the M&D Automotive location. These individuals will be required to have undergone substantial formal training at a technical school so that they can operate in a mechanic capacity. Generally, at least three years of prior experience will be required.
M&D Automotive intends to operate as a licensed inspection station for the State of Texas. This state requires that all vehicles undergo a yearly inspection. This will further increase revenue while driving additional traffic to the location.
Moving forward, Management intends to integrate mobile and roadside assistance into its operations. These services will be offered 24/7, which will provide M&D Automotive with a substantial differentiating factor. This will also expand the market reach of the business throughout the greater Austin metropolitan area.
4.0 Overview of the Organization
4.1 Registered Name
M&D Automotive LLC. The business is registered as a limited liability company in the State of Texas.
4.2 Commencement of Operations
Full scale operations will start in the fall of this year.
4.3 Mission Statement
The Company’s mission is to provide seamless vehicle repairs that are provided transparently and at an affordable cost.
4.4 Vision Statement
M&D Automotive’s mission is to become a widely recognized and respected automotive repair shop in Austin.
4.5 Organizational Objectives
• Implement numerous marketing strategies that will create significant brand name visibility from the onset if operations (including a massive pre-launch campaign).
• Properly onboard mechanics that will work on behalf of M&D Automotive.
• Implement fiscally sound procedures to ensure the profitability of the business.
• Remain within the letter of the law regarding all facets of operation.
• Maintain an expansive online presence (including on all social media platforms).
• Use state-of-the-art vehicle diagnostic and repair technology.
• Establish relationships with fleet operators to provide ongoing service for corporations.
• Potentially include mobile services and roadside assistance to further boost revenue.
• Potentially establish additional locations (after the fifth year of operation).
5.0 Strategic Analysis
5.1 External Environment Analysis
This section of analysis will detail the overall economic climate, the industry, the Company’s customer profile, and the competition that the business will face as it expands it operations.
At this time, the economic climate is moderate. As a result of changing trade policies – volatility has been introduced into the economy. However, the Federal Reserve as global central banks have taken proactive measures to reduce inflation while concurrently ensuring economic growth.
Even during challenging economic climates, the demand for automotive repair services will remain strong. The vast majority of vehicle owners cannot safely complete their own vehicle repairs. As such, M&D Automotive will have a continued influx of clients that need repairs for their vehicles. It is an absolute necessity.
5.2 Industry Analysis
There are 100,000 companies that operate one or more automotive repair shops in the United States. These businesses generate $90 billion of revenue per annum while providing jobs for 800,000 people.
While this is a mature industry, one of the trends will be the need to provide services for the greater number of electric vehicles in the market. M&D Automotive will remain in line with this market trend to ensure that as more owners operate EVs – the Company will be able to provide comprehensive services for cars that do not operate via an internal combustion engine.
5.3 Customer Profile and Target Market Analysis
Management has developed the following demographic profile of customers that is be used in conjunction with marketing operations:
• Household income of $75,000 to $150,000
• Lives or works within 10 miles of the Company’s Austin location.
• Will spend $100 to $2,000 per engagement with M&D Automotive.
As of this year, the Austin area has a population base of 2.2 million people. The median household income is $85,000. The median home value is $600,000. Approximately 75% of the population is over the age of 18 (which indicates that there are approximately 1.5 million number of drivers in the target market).
5.4 Competitive Analysis
This business plan is being presented as a sample. If this was a business plan for an actual automotive repair shop, a full competitive analysis would be developed. This includes an overview of all competitors in the effective target market radius, how long they have been in operation, and the ways in which the Company will maintain a competitive advantage.
6.0 Key Strategic Issues
6.1 Sustainable Operations
M&D Automotive will thrive in the Austin market as a result of the following:
• The ability to provide automotive services affordably will drive a large customer based.
• The operations are scalable, and the Company can seamlessly develop new automotive repair locations.
• The Company will remain profitable even during challenging business climates.
• M&D Automotive can service any make or model of vehicle.
• The business has an extensive recruitment apparatus in place for onboarding mechanics as the Company expands.
• Pre-launch marketing will ensure that the M&D Automotive brand name is well established during the development period.
• An experienced Owner (Matthew Deutsch) who will be able to develop and expand the operations of the Company in the coming years.
6.2 Basis for Growth
M&D Automotive LLC will grow through three main avenues:
• Continued expansion of the Company’s marketing operations.
• Integration of mobile, towing, and roadside repair services.
• Potential development of additional locations.
7.0 Marketing Plan
7.1 Marketing Objectives
• Engage in a wide range of pre-launch marketing strategies to create brand name awareness prior to the launch of the business.
• Maintain an expansive online presence including a proprietary website and use of social media.
• Operate as a community minded business by supporting local civic organizations through co-branding opportunities.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• Management will launch the operations its new location in the fall of this year.
• Revenue will reach $838,000.
• Gross profits will reach $584,000.
Year 2
• During this time, the Company will expand the scope of its marketing operations to include direct outreach with referring partners in Austin.
• Revenues are expected to increase by 12%.
• The business will achieve revenue of $938,000.
Years 3-5
• By the fifth year of operation, the Company will achieve $1.3 million of revenue.
• At this time, the Company may develop additional locations within the Western Texas market area.
7.4 Marketing Strategies
Most importantly, the Company will lay the groundwork for its marketing operations during the development period. This will include establishing an online presence via both a proprietary website and through social media marketing. This will allow Austin residents to become aware of the wide range of automotive repair services that the Company will offer from the onset of operations. Management will coordinate these efforts with a third party digitally focused marketing firm.
Once the operations have commenced, the Company will distribute mailed advertisements within a 10-mile radius of Austin location. These mailers will have magnetic backings so that they can be affixed to metal surfaces (such as refrigerators). This type of marketing will occur twice per year. Specialized discounts on inspections and oil changes will be offered on a regular basis to drive traffic to the location.
The business will also conduct direct outreach within the Austin market. This will include establishing referral relationships with real estate brokerages as many people ask for recommendations when they move to new locations. The Company will also establish relationships with operators of vehicle fleets including limousine/livery businesses, taxi companies, and shuttle companies. As these businesses have ongoing needs for vehicle repair – this will be a major source of income in the coming years.
The Company will frequently post images of repaired vehicles among all social media platforms. This will assist with creating greater brand name visibility in the Austin area. Videos of the location will also be posted on a regular basis as will discounts on oil changes and general maintenance.
8.0 Organizational Plan
8.1 Corporate Organization
8.2 Organizational Budget
9.0 Financial Plan
9.1 Underlying Assumptions
The Company has based its proforma financial statements on the following:
• M&D Automotive will have a compounded annual growth rate of 12%.
• Management will acquire $400,000 to establish the Company’s operations (carrying a 20-year term and a 9% interest rate).
• John doe will contribute $100,000 toward the venture.
9.2 Financial Highlights
• M&D Automotive will achieve profitability in the first year of operation.
• Integration of mobile services will drastically boost revenue and profit.
• The operations of this auto repair shop are highly scalable.
9.3 Sensitivity Analysis
M&D Automotive will enjoy substantial economic stability given that automotive repairs need to be completed by competent professionals. The Company will generate substantial contribution margins from mechanic labor as well as the sale of automotive parts. Furthermore, the business will be based in the population dense market area of Austin. This will ensure a continued influx of clients throughout the life of the business.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• The business, through its lean operating infrastructure, will affordably provide auto repair to the Austin public.
• M&D Automotive will be able to remain profitable at all times given the ongoing demand for comprehensive repairs.
• The business can easily scale its operations to include roadside assistance, mobile services, and new locations.
• The Company is prepared to make repairs for electric vehicle as they become more popular.
• The population density of the Austin market will further contribute to the stability of the business.
• An experienced Owner, Matthew Deutsch, who will be able to operate this business on a daily basis.
Weaknesses
• Competition from more established automotive repair shops in the market.
Opportunities
• Integrate mobile services and roadside assistance.
• Develop additional locations (after year five).
• Expand marketing operations through numerous channels.
• Provide services to a greater number of fleet operators.
Threats
• Inflation could cause the operating costs of the business to increase.
Appendix B – Risk Analysis
Development Risk – Low
Management has sourced the location that will house the operations of M&D Automotive. At this time, Matthew Deutsch is seeking the necessary funding to acquire the facilities, equipment, and conduct its launch operations. As noted earlier, the Company’s marketing campaigns will launch during the development period.
Financing Risk – Low/Moderate
The $400,000 sought in this document will be primarily used to acquire the Company’s real estate while also purchasing equipment. The risks related to this financing are reduced by the fact that automotive repair is a highly stable enterprise and the business will generate substantial contribution margins from its operations.
Marketing Risk – Low
The Company will use and expand upon the marketing strategies discussed earlier in this document. Most importantly, M&D Automotive will engage in a wide spread pre-launch marketing campaign that will ensure that the business’ SEO campaigns and related online marketing strategies are active at the time of launch. There is an immense demand for affordable automotive repair in the Austin market.
Management Risk – Low
Matthew Deutsch is a highly experienced automotive mechanic. He was previously a manager for a similar enterprise in Texas. Mr. Deutsch will be able to bring the operations of M&D Automotive to profitability.
Valuation Risk – Low
The valuation risk is offset by:
• Automotive repair remains in demand at all times.
• Substantial contribution margins on mechanic labor and part sales.
• The integration of mobile services can further expand revenue and profitability.
Exit Risk – Low
As noted in the second section of this document, these businesses are highly in demand given their economically secure nature. A qualified business broker would be hired to market M&D Automotive to a potential buyer. This event is not expected to occur for at least ten years.
The Auto Repair Shop Business Planning Process
Since the invention of the automobile, there has been an ongoing need for their repair. It is no secret that the use of a proper functioning car is an absolute imperative for day-to-day life. One of the best things that operating an automotive repair shop is that the revenue of these businesses remains relatively stable even during a time of economic recession. People are willing to spend the necessary capital to bring their car back to fully operational status. Whenever we create an auto repair shop business plan, this is one of the overarching themes that we apply to the entirety of the document. In regards to the development of this document, we take a multi-phase approach in order to ensure that each aspect of the plan meets the necessary requirement.
We always take market research driven approach throughout the course of the development of an auto repair shop business plan. First, for this type of business, we examine the number of competitors in the market. In any area, there are always going to be a number of automotive repair shops that are already an operation. As part of our analysis, we ensure that the target market area is appropriate for a new market entrant. Once this determination is made, we focus on analyzing the metrics of the area including population, age demographics, median income, median household value (as a measure of area wealth), as well as other attributes that allow us to understand the economic stability of market. We also determine the size of the market as a function of the population, the number of people that are adults, and the median income. This further discusses the viability of the auto repair shop while addressing appropriate pricing for services rendered.
Once this portion is completed, we then move on to developing the auto repair shop financial plan. Based on the service obtainable market that we determined from our market analysis, we then create the profit and loss statement, cash analysis, and balance sheet. We also include a use of funds table that showcases how the capital injection will be used in order to launch the operations of the business. On a secondary basis, we include a breakeven analysis, business ratios overview that is in line with industry standards, DSCR analysis, asset analysis, and liability analysis.
Now that these two very important chapters are completed, we then developed the marketing plan which always serves as the heart of the document. Here, we discussed the marketing messages that are used in order to differentiate the auto repair shop from. Multiple marketing strategies are also included which spans regional SEO, establishing ongoing relationships with fleet operators, establishing relationship with rideshare drivers, geotargeted social media ads, geotargeted search engine ads, as well as traditional print advertisements. The use of flyers and mailed advertisements is an important aspect of developing a client base in any given market.
From here, we work on the auto repair shop operations plan. This includes a discussion of the human resources matters that need to be addressed, especially as it relates to the recruitment of qualified mechanics that can render surfaces on site. The anticipated headcount and personal expenditures are discussed in this aspect of the document. We also discussed the types of equipment that will be used as well as the size of the facility and how many cars can be serviced at any given time.
We then work on the appendices of the business plan, which include a SWOT analysis and risk analysis. For the SWOT analysis, we address all of the strengths, weaknesses, opportunities, and threats that are common to automotive repair shops. When we discuss the strengths, we focus very heavily on the predictable nature of revenue as well as the economic stability of these enterprises. For weaknesses, these businesses do tend to have very high payroll expenditures, and it is somewhat of a commoditized market. As it relates to opportunities, here we discuss the ability to establish additional locations as well as integrating different types of services into the existing operations of the auto repair shop. For threats, we address matters related to inflation and the potential for an economic recession.
Now we reach the risk analysis section. Here, we discussed the pre-launch and ongoing operating risk of these businesses. Once established, an automotive repair shop has a relatively low risk profile. This is something that we hone in on in order to showcase the economic stability of these businesses as well as substantial opportunities for growth.
Now that the eight primary chapters and five appendices have been developed, we write the executive summary. Although it seems counterintuitive, writing the executive summary last provides us with the opportunity to provide a substantial degree of insight. We try to keep the executive summary no more than three pages in order to keep the reader engaged. Through this section, we provide specialized snapshots regarding each aspect of the auto repair shop.