Business Plan for a garage service


Research Paper (undergraduate), 2016

42 Pages, Grade: 1,0

Anonymous


Excerpt

Inhalt

1. Executive Summary

2. Description of Business Idea
2.1 The Business Idea
2.2 The Name
2.3 Legal Structure

3. Customer and Marketing
3.1 Market analysis
3.1.1 Primary research
3.1.2 Secondary research
3.1.3 Customer analysis
3.2 Competitor Analysis
3.2.1 Competitors
3.2.1.1 Direct
3.2.1.2 Indirect
3.2.2 Competitive Business Strategy
3.3 Marketing Mix 7Ps
3.3.1 Product
3.3.2 Price
3.3.3 Place/ Distribution
3.3.4 Promotion/ Communication
3.3.5 People
3.3.6 Physical Evidence
3.3.7 Processes
3.4 SWOT Analysis

4 Resources
4.1 People and Administration
4.2 Location
4.3 Equipment

5. Financials
5.1 Investment costs and funding requirements
5.2 Direct cost & overhead
5.3 Financial Statement
5.3.1 Profit and Loss
5.3.2 Cash Flow

APPENDIX 1 - REFERENCES
APPENDIX 3 – PRICING POLICY AND POSSIBLE PROFIT (Own figure)
APPENDIX 4 – PROFIT AND LOSS (Own figures)
APPENDIX 5 – CASH FLOW (Own figures)
APPENDIX 6 – BALANCE SHEET (Own figures)
APPENDIX 7 – ONLINE SURVEY (Own figures)

IMAGE 1: LOGO
IMAGE 2: BLUEPRINT ANALYSIS
IMAGE 3: LAYOUT OF THE COMPANY

GRAPH 1: ALL MOTOR VEHICLES TRAFFIC ON MAJOR ROADS, 2000 TO 2015
GRAPH 2: OPERATING PROFIT
GRAPH 3: DEGREE OF CAPACITY UTILISATION IN THE FIRST YEAR

TABLE 1: INDIRECT COMPETITORS
TABLE 2: SWOT ANALYSIS
TABLE 3: OPENING HOURS
TABLE 4: TOOLS
TABLE 5: MACHINES
TABLE 6: OFFICE EQUIPMENT
TABLE 7: BUILDING INVENTORY
TABLE 8: IT
TABLE 9: INVESTMENT
TABLE 10: DEGREE OF CAPACITY UTILISATION IN THE FIRST YEAR

1. Executive Summary

The business idea of Fixed & Tuned is based on the fact that there is a lack of working space in Edinburgh and the environment due to dense population. In order to solve this problem, the business provides working space, machines and tools for customers. Therefore, the clients are able to fix and tune their vehicles on their own. Furthermore, the company provides more services and extra offers, which will be presented later on, to satisfy the customer requirements. The most important marketing action is the spread of the new business idea, in order to gain a client base and regular visiting car clubs. This will be achieved by an excellent service and a perfect working environment. This topic will be explained more detailed in the marketing mix. The biggest advantage of the company is the unique feature of the service in the wider area. Knowing the pricing of the indirect competitor, it is possible to make adjustments to our pricing, in order to be cheaper than normal workshops. This is very important because they provide mechanical maintenance done by an employee, whereas our business only provides the working environment. The management consists of the founders of the business. All will be deployed in their own field of knowledge, which was gained from studies and apprenticeships, in order to set up and keep the business running. Further information about this is provided later on.

Talking about financials, sales are estimated to be quite low in the beginning with 4,980 £ but will rapidly increase towards December of 2017 where they reach 24,485 £. As a result of the good marketing, sales are expected to increase over the years, but get affected by seasonal factors which are explained further on. A total net profit of 28,989 £ is gained within the first year. This should expand to 122,071 £ in the second and to 126,685 £ in the third year. When it comes to funding requirements, about 50,000 £ is required to set up and start the business.

2. Description of Business Idea

2.1 The Business Idea

The core benefit of Fixed & Tuned is the provision of workspace, machines and tools in order to maintain, restore, repair or tune the own vehicle by our customer. Additionally, some parking garages are provided to give the customer the opportunity to let their cars on our site, in case they are not finished with their work yet. The customer can book the range of offers online or onsite. Once the booking is done, the customer will be introduced onsite to the tools and machines provided, depending on the booked offer. Next the customer can work by himself on his vehicle for the amount of time he had booked. Summing up, the mission is the abolishment of shortage of space and therefore bad working environment for private consumers.

2.2 The Name

IMAGE 1: LOGO (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

The logo represents the name of the company 'Fixed & Tuned'. It is built on the words 'Fixed' and 'Tuned', to underline the importance of the value proposition. The screwdriver and the screw-wrench are presenting the mechanical skills of the organisation and are the replacement for the ‘x’ in 'Fixed'. And at last the car shows the main point of Fixed & Tuned, which is providing a good service for the vehicle and its owner.

2.3 Legal Structure

Fixed & Tuned will be a limited liability company and will be led by ourselves. This kind of legal structure is most appropriate for small business and it provides the opportunity that three persons are responsible for the business. This offers the benefit of separation between personal and legal assets and liabilities. Annually the revenues and the earnings must be reported. Another important advantage is that owners are protected from financial liability.

3. Customer and Marketing

3.1 Market analysis

3.1.1 Primary research

Within the primary research we made a free online survey, which is included in the appendix. The link with the survey was posted on Facebook and spread to study colleagues, friends and relatives. General questions were asked regarding the topic cars to identify the typical customer and his behaviour. Within 15 questions we gained 62 responses and evaluated them in the following parts.

3.1.2 Secondary research

The secondary research deals with the available information on the Internet. One important source is the Scottish Transport Statistic, which additionally underlines the primary research.

According to the global recession in 2007/2008, which is visible in the following graph, the economic power decreased. The automotive industry was also affected by this, which explains the drop of the total motor vehicles in the years from 2007 to 2012. Now the economy has recovered, so the total amount of vehicles is skyrocketing again. This affects our business as well, because the number of potential customers is rising and with this their willingness for spending money in this area.

GRAPH 1: ALL MOTOR VEHICLES TRAFFIC ON MAJOR ROADS, 2000 TO 2015 (Source: www.dft.gov.uk)

Abbildung in dieser Leseprobe nicht enthalten

3.1.3 Customer analysis

Due to the primary research we found out that 66% from the surveyed people are male and the most frequent customer is aged between 18 to 60 years, which is stated in the survey with 68%. This is also proven by the secondary research which gives evidence for 130,000 people in this demographic area. Statistics say that 70% of all adult males in Scotland have a driving license. People are mostly employed or are students, regarding their field of activity. The third big party of this area are housewives and househusbands. This leads us to the result that most of the potential customers have the money to afford the service of the business, in which students might struggle.

The potential customer of the business is resided in Edinburgh, and the closer area around the city up to Glasgow. The questionnaire made clear that almost half (48%) of the consulted persons are living in Edinburgh, which means that this city is the perfect location. Scottish statistics show that in 40% of all travels a car was used. 52% are living more than 15 miles away from Edinburgh and 34% are happy to travel this distance or even further for a garage, this proves that not only people direct from the city can be seen as potential customers, but also from further away.

The survey also exemplifies that 57% own a car and 56% would be willing to repair their vehicle by themselves. Furthermore 50% said that they are able to do manual work regarding mechanics, ranging from "absolutely" able to "bit of". More than a half of the people had the wish to tune their vehicles by themselves, but more important is that almost the same amount has already worked on their car before. Moreover 52% have the willingness to spend free time for working on a vehicle. Another fact is that the majority does not have a private parking space at their homes, so the parking becomes very attractive at the site.

Another finding of the survey is that 8 out of 62 asked people are members of a car club and 19% know somebody who is participating in a car club. This makes clear that the opportunity for renting the whole site will also be used frequently, because there is definitely a market for it.

Summing up, for the business the most important finding is that 35% are spending between 101£ to 500£ for maintenance on their vehicles per year, and even 23% are spending more than 500£. This illustrates that people are spending much money for their vehicles, which leads to the fact that there is a huge market for the business and the possibility for gaining profit. In conclusion with the primary and secondary research we can estimate that there are about 270,000 cars in Edinburgh. Knowing this fact, we can say that the amount of customers who have the knowledge and the ability to work on a car will be around a few thousands.

3.2 Competitor Analysis

3.2.1 Competitors

3.2.1.1 Direct

In Glasgow was one do-it-your-self garage, which was called Auto-DIY. Their business was similar to Fixed and Tuned but the business was shut down. One main reason was their poor marketing in the social media like Facebook and the poor structured website, which could not convince. Due to this they could not reach enough customers in order to turn the business profitable.

3.2.1.2 Indirect

Fixed and Tuned has several indirect competitors in Edinburgh, which are mostly located in the area of Portobello. Indirect Competitors are workshops which are providing services for customers' vehicles. Those are performed by professional mechanics, which leads to payments for the working hours of the mechanic, the service provided and the ordered spare parts. The table below shows some of the indirect competitors of the business and their field of service.

TABLE 1: INDIRECT COMPETITORS (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

3.2.2 Competitive Business Strategy

Caused by the effect of not having direct competitors, the business is able to enforce an own pricing strategy, but it is setting up their prices on the basis of the indirect competitors. Steins Garage offers for example front brake changes for 72 £, which takes a mechanic half an hour. Tyne castle garage charges minimal 60 £ for minor services and 120 £ for major services. The scope of the business is to be cheaper than the competitors, because Fixed and Tuned just provides the working space and tools and NOT the mechanic. This leads to our prices which are essentially cheaper than those from the competitors. (Appendix 3)

3.3 Marketing Mix 7Ps

3.3.1 Product

Fixed and Tuned is a high qualitative service, because it offers workspace for the maintenance of cars and other small vehicles like motorcycles. The business provides an excellent equipped environment with all tools that are needed by the customers. In order to keep the high quality, regular maintenance for the machines is planned and galled tools will be replaced immediately. The most important concern is the satisfaction of the customer needs. This is ensured through the included extra offers, which are the welding area and spare part ordering. Offers like special tools, the paint shop, parking space and also the vending machines can be used for an extra payment. This results in long-term binding of the customers which enables regular visits at our location.

3.3.2 Price

The different types of workspaces are offered for an hourly tariff according to the opening hours. The business has two different pricing strategies. There is a cheaper price for the customers from Tuesday to Thursday in order to reach a high level of booking. At the weekends, including Friday to Saturday, the hourly prices are increased because of the higher demand. This is due to the fact, that most of the people do not have to work on weekends and therefore have time to fix and tune their vehicles. The most important key point regarding the pricing policy is to be cheaper as the indirect competitors, as mentioned above. It is possible to pay in advance via online transfer or on-site before the customer begins the work.

3.3.3 Place/ Distribution

The company will be located near to Portobello in Edinburgh, which is a well-chosen place, because in this area are a lot of industrial facilities situated. Hence there are a lot of people and the company gains a high visibility and attention for new customers. The distribution of the service will be made via the internet, especially over our website. The big advantage of this is the overview over the available capacity of the working spaces.

3.3.4 Promotion/ Communication

Fixed and Tuned will set up two promotion policies. On the one hand, flyers will be printed and spread in the city. On the other hand, will be the social media presence and the website. Additionally, the business will promote itself at the local and national car clubs via telephone or per letter. Car clubs are very important for the business, because it is possible to reach very much potential customers. Regarding the fact, that there are no direct competitors, the most important point is gaining attention to the new kind of business, in order to create a client base. Therefore marketing costs are higher at the launch, but will be lowered during the next few months, because clients are visiting the business regularly. Additionally, there will be a word-of-mouth advertising through the existing customers, who are telling their family and friends about the service.

3.3.5 People

As a start-up company, Fixed and Tuned will be launched and ran by ourselves. The key factor is to establish long-term relationships with our customers and the car clubs. This is the reason, why we will be the employees, everybody with different focus, which will be mentioned later. This concentrated knowledge and enthusiasm will be an additional factor for the customer to choose the company. This results in an independently working atmosphere and it would be difficult to find trustful, engaged and educated staff.

3.3.6 Physical Evidence

The whole equipment of the workshop, including machines and tools, are bought brand new with high quality standards in an average price class or may be bought reconditioned. With this quality it is possible to persuade the customers of the business and that they will come back more often. Additionally, the vending machines serve the basic requirements of the customers.

3.3.7 Processes

IMAGE 2: BLUEPRINT ANALYSIS (Own Figure)

Abbildung in dieser Leseprobe nicht enthalten

The chart above shows the process of our main services, from the booking until leaving the workshop. First of all, the customer makes a booking request for the working space including standard tools, the paint shop or the parking space. The system checks the availability of the request. If it is available, the customer has to do the payment. When the customer arrives at the workshop, the car mechanic will introduce the client into the equipment and the site safety, after that the booked space will be handed over. At the end of the booked time, the tools will be handed over backwards and the car mechanic will investigate the workplace and the used equipment for damages.

3.4 SWOT Analysis

TABLE 2: SWOT ANALYSIS (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

4 Resources

4.1 People and Administration

The following table shows the opening hours of Fixed & Tuned.

TABLE 3: OPENING HOURS (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

The company will be led by ourselves. Due to the opening hours we have an amount of 66 hours when Fixed & Tuned is open for their customers. Per day an employee has the claim for 1 hour break during the work. This results in 60 workhours per week. For this amount, one fulltime worker (40 hours/ week) and one part-time worker (20 hours/ week) are needed. Everybody has his own field of knowledge. (Appendix 2 – Curriculum Vitae) One will be responsible for the customers as a car mechanic including the spare part ordering, advice, safety, maintenance, tidiness and the instructions. He will be full time employed. The second one will also be employed as a car mechanic, but just in part-time. In addition, he is responsible for the IT and the website of the company, due to his graduation as an IT-specialist. The third founder will be the administrator and accountant of the company, in order to gain new customers and keep the business running.

4.2 Location

The company will be located outside of the city centre of Edinburgh. As the best suitable place for the organisation, it will be located at A1 Business Park, Sir Harry Lauder Road, EDINBURGH, EH15 2QA. This industrial park is near Portobello and has perfect conditions and a payable price for the company. Due to the nearness to the city and the environment, especially Glasgow, it is a very advantageous location. Also the unit is available for an annual rateable value of 73,700 pounds. It fits perfectly for the demand of about 10,000 square feet. Also an important factor is the presence of 'Euro Car Parts' as very suitable supplier for spare parts. The first intention was to buy a land and build up a new building, but the before mentioned advantages of the industrial park are predominating.

4.3 Equipment

IMAGE 3: LAYOUT OF THE COMPANY (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

The image above shows the layout of the new building, which includes the new rooms as well as the rentable working spaces. Those can be linked to the following tables of the equipment requirements, which are summarised in five main groups, which are: tools, machines, office equipment, building inventory and IT.

TABLE 4: TOOLS (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

TABLE 5: MACHINES (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

TABLE 6: OFFICE EQUIPMENT (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

TABLE 7: BUILDING INVENTORY (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

TABLE 8: IT (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

5. Financials

5.1 Investment costs and funding requirements

TABLE 9: INVESTMENT (Own figure)

Abbildung in dieser Leseprobe nicht enthalten

Referencing to equipment above, a total investment of 50,000 £ is needed in order to buy and set up the required facility. Furthermore, this capital is needed to pay the rent for the building and the staff at the beginning, but also to bring the business to a level where it generates profit. The founders will put 20,000 £ in June 2017 into the business and 15,000 £ will be loaned by the bank. Further money in the amount of 10,000 £ from the founders will help to cover the running costs like building rent and salaries in July 2017. A last loan worth 5,000 £ from the bank is introduced in September 2017.

5.2 Direct cost & overhead

The company is not excessive affected by direct costs because only in terms of the vending machines some occur. Snacks and drinks will be bought for 1.50 £ and 0.5 £ each. Regarding overheads, the rent for the building is the lion´s share with 6,175 £ per month, followed by the salaries and wages, which add up to 3,523 £ in the first 4 months. This value is increased step by step in the following months as a result of more customers. At first, the site will only be opened when a customer has booked the service in order to reduce costs. In October 2017 the responsible staff for accounting and finance is hired to prepare the annual financial statement. An additional mechanic will start to work for the business in November 2017 to meet the rising customer demand towards winter and therefore holidays. Summing up, this leads to a total of 6,103 £ from November ongoing, caused by employees. Depreciation is planned to be 95 £ per month for tools and 240 £ for machines, equipment, inventory and IT. These figures were calculated with an average use of 5 years for tools and 8 years for the rest. After this individual amount of time new equipment is bought, due to wastage. Maintenance for machines is not scheduled in the first 3 months due to new but also reconditioned machines, as well as cost reductions. Spending for marketing are high at the launch to make the company popular, but are slowly lowered during the first year by reason of client base development. Electricity, water and gas expenditures are met due to the individual demand along the year. The numbers were estimated with the use of an Excel-sheet stating the average prices per kWh from the government and with the help of a research which examines the average energy consumption of a garage per square feet. Internet, Telephone and website costs are constant.

5.3 Financial Statement

5.3.1 Profit and Loss

Like in the research mentioned, the company has a few thousands potential customers. In the first six months since the launch in June, Fixed and Tuned is not generating profit. Starting with just a few customers, caused by the fact that the company is not known, the loss in this period is 20,129 £ and the only possibility is to cover those with the investment costs from the founders and the bank. The loss will be compensated later on, through the good marketing strategy, which results in a rising degree of local popularity.

The seasonal fluctuation can be explained by the higher demand for the service of the business during the winter month which is caused through reasons like holidays, vacation and the resulting high spare time. Another reason is that motorcycle owners, car tuner and old-timer owner do not drive their vehicles during the winter season, so they will work on it while they are not in use. During the winter season we are gaining the highest net profit, which is 74,656 £ from December to February. After this period, the profit is slowly shrinking caused by the effect of the start of the new driving season. (Appendix 4) The seasonal fluctuations have to be faced every year, but also produce a decent amount of money like in December 2018 where a net profit of 16,692 £ is estimated. A similar profit with 17,150 £ is expected in the same month in 2019. Generally, the business will operate good profits, even with fluctuations which can easily be compensated with the surplus from the winter months.

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Excerpt out of 42 pages

Details

Title
Business Plan for a garage service
College
Edinburgh Napier University
Course
Starting a new business
Grade
1,0
Year
2016
Pages
42
Catalog Number
V507353
ISBN (eBook)
9783346082152
ISBN (Book)
9783346082169
Language
English
Tags
business, plan
Quote paper
Anonymous, 2016, Business Plan for a garage service, Munich, GRIN Verlag, https://www.grin.com/document/507353

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