Quick and Dirty Auto Repair
Executive Summary
Opportunity
Problem
Between having a high level of commuting traffic, and an equally high level of tourism traffic on local highways, there is a constant significant demand for auto repair services and auto parts. Convenience is a must for most middle and upper-class consumers and travelers. Where can they go to meet their needs?
Solution
Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. QDAR focuses on personalized service to its customers by offering convenience and rapid service. Additionally, QDAR is technologically savvy with computerized monitoring of all parts inventory, to ensure that parts are always in stock while keeping a balanced level of inventory to maximize inventory turnover. Finally, QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases).
Market
The market of auto repair services and parts sales is very fragmented. The majority of auto shops usually offer either repair services or parts inventory. The niche where QDAR positions itself represents auto centers that offer both auto services and parts at one convenient location. Middle and upper class customers to whom QDAR will cater its services are less price sensitive as they value the convenience of quick turnaround (on any model/make of car) and high quality of services.
CompetitionWhy Us?
Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. QDAR focuses on personalized service to its customers by offering convenience and rapid service. Additionally, QDAR is technologically savvy with computerized monitoring of all parts inventory, to ensure that parts are always in stock, while keeping a balanced level of inventory to maximize inventory turnover. Finally, QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases).
There are over 400 auto repair and auto parts competitors in the local area. Only a quarter of these competitors offer both auto repair services and auto parts inventories. Among these, only a few are major national chains. The remainder are small privately-owned establishments. QDAR will compete well by focusing on convenience and offering a high level of customer service. Additionally, its honest reputation will be a major factor in repeat business and building a large base of regular, loyal customers.
Why Us?
Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. QDAR focuses on personalized service to its customers by offering convenience and rapid service. Additionally, QDAR is technologically savvy with computerized monitoring of all parts inventory, to ensure that parts are always in stock, while keeping a balanced level of inventory to maximize inventory turnover. Finally, QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases).
Expectations
Forecast
QDAR’s analysis is based on the averages of the first-year figures for total sales by units, and for operating expenses. These conservative assumptions make for a more accurate estimate of real risk.
Financial Highlights by Year
Financing Needed
Our investment is $250,000:
Jake Brakes $62,500
Blair Horn $62,500
Yugo Ford $62,500
Gaz Motor $62,500
Opportunity
Problem & Solution
Problem Worth Solving
Between having a high level of commuting traffic, and an equally high level of tourism traffic on local highways, there is a constant significant demand for auto repair services and auto parts. Convenience is a must for most middle and upper-class consumers and travelers. Where can they go to meet their needs
Our Solution
Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. QDAR focuses on personalized service to its customers by offering convenience and rapid service. Additionally, QDAR is technologically savvy with computerized monitoring of all parts inventory, to ensure that parts are always in stock, while keeping a balanced level of inventory to maximize inventory turnover. Finally, QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases).
Target Market
Market Size & Segments
QDAR has a focus on meeting the demand of a regular local resident customer base, as well as towed vehicle drop-ins from local and freeway traffic traveling on nearby freeways. QDAR has established relationships with a few major local tow truck companies for referral business of stalled vehicles requiring a tow to an auto repair facility.
The company estimates that about 80% of revenues will come from the established local clientele and 20% from the local and freeway traffic tow-ins. The table below further estimates the total market potential of the type of services rendered by QDAR in the Portland metropolitan area.
4.1 Market Segmentation
QDAR focuses on the middle and upper-income markets. This market looks for high quality, rapid service with as much convenience as possible. Most individuals in this market segment are willing to pay an extra premium within the pricing of auto repair services to avoid the common inconveniences of having a vehicle tied up in a repair shop.
Local residents regular customer base
QDAR wants to establish a significantly large regular customer base. This will establish a healthy, consistent revenue base to ensure the stability of the business.
Emergency towing local and freeway traffic
Emergency towing of local and freeway traffic comprises approximately 20% of revenues. Convenience, regular referrals from tow truck companies, and high quality, rapid service are critical to capturing this segment of the market.
Current Alternatives
There are over 400 auto repair and auto parts competitors in the local area. Only a quarter of these competitors offer both auto repair services and auto parts inventories. Among these, only a few are major national chains. The remainder are small privately-owned establishments. QDAR will compete well by focusing on convenience and offering a high level of customer service. Additionally, its honest reputation will be a major factor in repeat business and building a large base of regular, loyal customers.
Primary competitors are engaged principally in the retail sale of automotive parts, tires and accessories, automotive maintenance and service and the installation of parts. Larger competitors have adopted the "supercenter" store model, a freestanding, "one-stop" shopping automotive warehouse that features state-of-the-art service bays. These "supercenters" carry thousands of stock-keeping units and serve the automotive aftermarket needs of the "do-it-yourself," the "do-it-for-me" (automotive service), tire and "buy-for-resale" customer sectors.
Large competitors’ stores typically carry the same basic product line, with variations based on the number and type of cars registered in the different markets. A full complement of inventory at a typical supercenter includes an average of approximately 25,000 items.
Automotive product lines usually include:
- Tires.
- Batteries.
- New and remanufactured parts for domestic and imported cars, including:
- Suspension parts.
- Ignition parts.
- Exhaust systems.
- Engines and engine parts.
- Oil and air filters, belts, hoses, and air conditioning parts.
- Lighting.
- Wiper blades.
- brake parts.
- Chemicals, including oil, antifreeze, polishes, additives, cleansers and paints.
- Mobile electronics, including sound systems, alarms, and remote vehicle starters.
- Car accessories, including seat covers, floor mats, and exterior accessories.
- Hand tools, including sockets, wrenches, ratchets, paint and body tools, jacks and lift equipment, automotive specialty tools and test gauges.
- A selection of truck, van, and sport utility vehicle accessories.
Many competitors have adopted point-of-sale systems in their stores, which gathers sales and gross profit data by a stock-keeping unit from each store on a daily basis. This information is then used to help formulate pricing, marketing, and merchandising strategies. Electronic parts catalogs are available in many competitor stores along electronic commercial invoicing systems that offer commercial parts delivery.
Additionally, a number of competitors have electronic work order systems available amongst their various service centers. This type of system creates a service history for each vehicle, provides customers with a comprehensive sales document, and enables the service center to maintain a service customer database.
Our Advantages
QDAR’s competitive edge is the heavy focus on customer convenience by offering unlimited shuttle service, rapid turnaround on auto repair jobs, and a referral network of a few local major tow truck companies.
Keys to Success
Keys to Success
Our keys to success will include:
- Expedient and convenient auto repair services.
- Growing and maintaining a referral network of local towing service companies.
- A wide range of auto parts inventory that is (nearly) never out of stock.
- Rapid order and delivery of major auto parts items.
Execution
Marketing & Sales
Marketing Plan
QDAR will focus on its target market, the middle and upper-class market, and establish a reputable image from that target market’s perspective, by offering convenience, expedient auto repair services, customer service excellence, and by working with local towing companies.
Sales Plan
QDAR will focus its sales strategy on effectively reaching the target customer segment of upper and middle-class customers. For this purposes, the company will employ direct sales staff. At the same time, the company will further strengthen its relationships with the tow truck companies to capture auto repair needs of the local and highway traffic.
Operations
Technology
QDAR has the core competencies amongst its large crew to work on all makes and models of domestic and foreign vehicles. With ten service bays at each location and all employees focused on superior customer service, a quick turnaround is always the standard at QDAR. QDAR strives to be accurate and honest with customers in terms of quoting cost estimates and repair completion time estimates. QDAR employees focus on delivering what they promise. This focus on building strong customer relationships based on trust and integrity will be the catalyst in establishing a strong regular customer base.
QDAR utilizes the highest degree of technology in managing a full range of auto parts inventory. The goal is to never be out of a specific part while maximizing inventory turnover. Strong vendor relationships have been established with the most reputable vendors in terms of shipping time of major parts.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | |
|---|---|---|
|
Q1 Review
|
Mar 08, 2018 | |
|
Q2 Review
|
June 14, 2018 | |
|
Q3 Review
|
Sept 14, 2018 | |
|
Q4 Review
|
Dec 17, 2018 |
Key Metrics
Our Key metrics are:
- Average gross margin
- Average revenue per engagement
- Repeat business
- cost of inventory and training
- # of tweets and retweets which tell us which customers are saying what
- # of return customers
- # of business relationships
Company
Overview
Ownership & Structure
QDAR is incorporated in the state of Oregon. It is privately owned by Jake Braques, Blair Horne, Hyugo Ford and Gaz Môder. To attract additional financing, the owners may consider taking QDAR public several years down the road.
Team
Management Team
QDAR has a strong management team that will allow them to execute on this exciting idea. QDAR has four partners, Jake Braques, Blair Horne, Hyugo Ford, and Gaz Môder. Jake has a background of sales, 12 years at the nation’s second largest Ford dealership. He will be overseeing the sales and marketing for the organization. Blair’s background is in management from Siemen’s automobile division where he was a Vice President overseeing a department of 565 people. Hyugo is also a product of the auto industry, specifically the auto repair and parts sales industry. Hyugo spent six years at NAPA Auto Parts and then seven years at Repair-It, Oregon’s largest independent auto repair facility. At both organizations Hyugo had multiple roles within the organization allowing him to bring to QDAR a broad skill set. Lastly, Gaz brings QDAR 10 years of finance and administration experience. Gaz was trained at GM and later in his career took a position at Delco Parts. The incredible breadth of skill sets and knowledge that the management team possesses will allow QDAR to accomplish their lofty sales goals.
QDAR is an exciting business opportunity that addresses the unmet need of having a full service auto repair facility that also has a complete retail parts center. These distinct but complimentary services will have benchmarked customer service, something that the industry is not known for having. QDAR will be led by a seasoned management team of four, all of whom have extensive industry experience.
Personnel Table
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Manager – Mechanics | $54,000 | $55,080 | $56,182 |
| Mechanics (4) | $154,800 | $210,528 | $268,425 |
| Customer Service (3.33) | $136,800 | $139,536 | $189,768 |
| Inventory | $43,200 | $44,064 | $44,945 |
| Manager – Customer Service | $48,000 | $48,960 | $49,939 |
| Owners (4) | $240,000 | $244,800 | $249,696 |
| Totals | $676,800 | $742,968 | $858,955 |
Financial Plan
Forecast
Key Assumptions
Our key assumptions are:
- People need cars to get to their jobs on time and make money.
- Cars break down
- Not everyone has the ability to pay for new parts and expensive service.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
We will be buying $350K long term assets mainly shop equipment. The rest of the money will be spent on legal fees.
Sources of Funds
Each of the founders will contribute a fourth of the initial investment of $250K. We are also taking on a long-term loan and some credit card debt.
Statements
Projected Profit & Loss
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Revenue | $5,308,400 | $5,500,000 | $5,990,000 |
| Direct Costs | $2,441,864 | $2,530,000 | $2,755,400 |
| Gross Margin | $2,866,536 | $2,970,000 | $3,234,600 |
| Gross Margin % | 54% | 54% | 54% |
| Operating Expenses | |||
| Salaries & Wages | $676,800 | $742,968 | $858,955 |
| Employee Related Expenses | $135,360 | $148,594 | $171,791 |
| Sales | $16,800 | $16,800 | $16,800 |
| Marketing | $16,200 | $16,200 | $16,200 |
| Rent | $30,000 | $30,000 | $30,000 |
| Amortization of Other Current Assets | $0 | $0 | $0 |
| Total Operating Expenses | $875,160 | $954,562 | $1,093,746 |
| Operating Income | $1,991,376 | $2,015,438 | $2,140,854 |
| Interest Incurred | $14,080 | $9,793 | $7,822 |
| Depreciation and Amortization | $16,667 | $16,666 | $16,667 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $0 | $0 |
| Total Expenses | $3,347,771 | $3,511,021 | $3,873,635 |
| Net Profit | $1,960,629 | $1,988,979 | $2,116,365 |
| Net Profit/Sales | 37% | 36% | 35% |
Projected Balance Sheet
| Starting Balances | 2018 | 2019 | 2020 | |
|---|---|---|---|---|
| Cash | $100,000 | $1,985,651 | $3,952,778 | $6,045,320 |
| Accounts Receivable | $0 | $0 | $0 | |
| Inventory | $50,000 | $50,000 | $50,000 | $50,000 |
| Other Current Assets | $50,000 | $50,000 | $50,000 | $50,000 |
| Total Current Assets | $200,000 | $2,085,651 | $4,052,778 | $6,145,320 |
| Long-Term Assets | $350,000 | $350,000 | $350,000 | $350,000 |
| Accumulated Depreciation | ($16,667) | ($33,333) | ($50,000) | |
| Total Long-Term Assets | $350,000 | $333,333 | $316,667 | $300,000 |
| Total Assets | $550,000 | $2,418,985 | $4,369,445 | $6,445,320 |
| Accounts Payable | $0 | $0 | $0 | |
| Income Taxes Payable | $0 | $0 | $0 | |
| Sales Taxes Payable | $0 | $0 | $0 | |
| Short-Term Debt | $91,644 | $38,519 | $40,490 | $42,561 |
| Prepaid Revenue | ||||
| Total Current Liabilities | $91,644 | $38,519 | $40,490 | $42,561 |
| Long-Term Debt | $213,356 | $174,837 | $134,347 | $91,786 |
| Long-Term Liabilities | $213,356 | $174,837 | $134,347 | $91,786 |
| Total Liabilities | $305,000 | $213,356 | $174,837 | $134,347 |
| Paid-In Capital | $250,000 | $250,000 | $250,000 | $250,000 |
| Retained Earnings | ($5,000) | ($5,000) | $1,955,629 | $3,944,608 |
| Earnings | $1,960,629 | $1,988,979 | $2,116,365 | |
| Total Owner’s Equity | $245,000 | $2,205,629 | $4,194,608 | $6,310,973 |
| Total Liabilities & Equity | $550,000 | $2,418,985 | $4,369,445 | $6,445,320 |
Projected Cash Flow Statement
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $1,960,629 | $1,988,979 | $2,116,365 |
| Depreciation & Amortization | $16,667 | $16,667 | $16,667 |
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | $0 | $0 | $0 |
| Change in Accounts Payable | $0 | $0 | $0 |
| Change in Income Tax Payable | $0 | $0 | $0 |
| Change in Sales Tax Payable | $0 | $0 | $0 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $1,977,296 | $2,005,645 | $2,133,032 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | ($53,125) | $1,971 | $2,072 |
| Change in Long-Term Debt | ($38,519) | ($40,490) | ($42,561) |
| Net Cash from Financing | ($91,644) | ($38,519) | ($40,490) |
| Cash at Beginning of Period | $100,000 | $1,985,651 | $3,952,778 |
| Net Change in Cash | $1,885,651 | $1,967,126 | $2,092,542 |
| Cash at End of Period | $1,985,651 | $3,952,778 | $6,045,320 |
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