Sample Business Plan paper on Motor Wiring Shop

Business Plan: Motor Wiring Shop

Executive Summary

The Motor Shop business is to be set on the outskirts of town, following the realization that the town has no motor wiring and repair shop. It will be the first of its kind, a factor that places it above the other motor wiring shop businesses in the surrounding towns. This new entrance into the market is a great opportunity that will enable the business to attract many customers. Besides entering into a new market, another strength demonstrated by the business is its effective management and skilled employees. The projected cost requirement is approximately 2,800,000 USD to cater for the purchase of equipment as well as operating costs in the first one year. This amount is intended to be achieved mainly through loans, grants and personal equity although this is significantly less. To attract more customers, the business intends to use strategies such as use of posters, flyers and brochures, and electronic media.

Business Description

The Motor shop is a motor wiring business on the outskirts of the town. In this town, there are no other businesses aimed at repairing motors hence this is a business of its own kind. Due to the absence of other motor wiring workshops, the managers of the Motor shop decided to engage in this business, as it would definitely meet the needs for motor repairers. Besides repairing damaged motors, the business also aims at providing other services associated with vehicle maintenance such as change of engine oil, wheel alignment and car wash services. The lack of readily available motor wiring workshops sees individuals in need of the services associated with motor workshops travelling to other towns, a fete that at times proves difficult, particularly when the motor in need of repair is within the town and cannot move. This has forced people at times to invite mechanics from other towns, an event that results in high consumption of funding.

The business targets various potential customers who include but are not limited to: individuals in need of motor care services, institutions, and transport organizations, which possess several vehicles. In terms of car types, the business is set to work on any type of vehicle, ranging from small personal locomotives to heavy commercial haulers. Being the first of its kind in this town, the business has the advantage of getting into an unexplored market. This is an advantage as it gets all the opportunities available in the new market. The business founder intends to capitalize on this fact as a way of gaining customers, retaining them and growing them for the benefit of the business.

Market Analysis

Industry Outlook

The motor wiring business in the US is a flourishing industry. This is because most motor owners as well as sellers rely on the wiring workshops to provide the services required for their motors after the expiry of the after sale service agreement with the sellers and assemblers respectively. The owners therefore tend to find places close to their residences where they can get services associated with the proper performance of vehicles and other locomotives. Despite the presence of many manufacturers, this industry is highly profitable, particularly in places with little or no competition.

Using the PEST analysis, the industry can be described as follows:

Political – The host town as well as the state enjoys constant political stability devoid of any potential dangers such as terrorist attacks. Consequently, it provides an environment conducive for the type of business I intend to operate. I believe the stability will also ensure that operations run smoothly and that the service pricing is not affected by factors such as the political climate at any given time. This factor had to be addressed in the industry description as it plays a major role in the stability of currency and subsequently in the success of the business.

Economic factors – The economic situation of the town depends on various factors and is tied to the national economy. With the current stabilization of the currency, it is possible to operate profitably while achieving economic viability too.

Socio-cultural factors – The market targeted by the business has a culture controlled by availability of funds as well as access to required services. It is believed that with the provision of needed services closer to the people coupled with adequate marketing, it will be possible to reach out to and attract many consumers.

Technological factors – Rising technologies for use in the motor vehicle repair industry makes the initial investment cost higher. However, we are determined to provide the best technologies in order to give the best service to our customers. For instance, we have to use advanced technologies in wheel alignment will enable us to attract more customers as well as to give them the best services.

Target Market

The business targets mainly individual motor owners, transport companies and institutions with vehicles that require frequent maintenance. This is because all these groups of potential customers frequently require services associated with a motor wiring workshop yet have to go to distant places for the services that we intend to offer.

Distinguishing characteristics

The intended business will be different from other businesses offering similar services in two main ways. First, the business location is such that there is no other business in competition. This means that it is possible for the new business to attract all customers who reside both within and around the town. Second, the business will also offer retail services for lubricating oil as well as other routine maintenance services such as oil change. Most companies that offer repair services only specialize in the repair business. We also intend to collaborate with various manufacturers after some time to enable manufacturing companies to refer clients who reside or work in the proximity of this business. In this way, we will be able to obtain customers who desire after sale services from the car companies as well as those whose tenure of receiving after sale services has expired. For the former, the services will be provided at a fee payable by the manufacturing companies.

Size of the Primary Market

Following the current vehicle population in this town, it is predicted that we will be servicing around 3500 to 5000 vehicles per year. This number is however most likely to increase considering the growth in vehicle population by 6-11 percent per year. We predict that the size of the market will expand with similar percentages hence the need for a large space for future expansion.

Market share

Considering that this business will be the first of its kind in this town, it is projected that in approximately 3 months, it will have gained up to 98 percent of the currently available market share. However, this depends heavily on the strategy of marketing that may be employed for promoting the business. This may also reduce once new entrants come into the host location. Nonetheless, we intend to offer quality services and to engage in exceptional customer service operations for the growth of the acquired customers.

Pricing and Gross Margin Targets

In offering our services, we intend to base our pricing strategies on the materials in use. For every service, the labor cost will be charged at a percentage of up to 40 percent of the total material cost. The total cost of the service will then include the cost of purchased equipment or parts, labor cost and the profit charged at 10 percent of the overall cost. This will enable the pricing to be reasonable as well as affordable hence helping in retaining customers. Apart from using percentages, we may also compare prices with the potential competitor, which is inclusive of transport costs since most of the competitors are based in other towns.

Competitive Analysis

Currently, the main competitors that we potentially have are located in other towns. Although we are not targeting a market spread across a vast geographical area, these businesses offer competition as they have been used by our target market for years. It would therefore take time and immense advertising to divert customer attention from their current service providers to us. However, we have the advantage of being in proximity to our target market compared to the competitors.

In analyzing the internal and external factors that may contribute to business success, the following SWOT characteristics were observed:

Strengths Weaknesses
  • The company will have skilled employees capable of providing the best quality of services
  • A strong and well organized management team will be in charge of operations
  • The ability to assign duties where applicable will enable the company to tackle varied responsibilities
  • Strong interactions between the operations personnel also offers an advantage due to the potential for consultation and information sharing

 

  • Low funding which may affect the adequacy of marketing

 

Opportunities Threats
  • The business enjoys entry into new market opportunities.
  • The pricing strategy is dependent only on the business itself
  • No competition currently
  • The main threat is the potential for new entrants into the market.

The main barrier to entering this market segment is the high investment cost. Observing that an initial capital investment of up to 2. 8 million USD may be required, this is a substantially large amount and the business will be forced to take a loan for investment.

Regulatory Restrictions

It is a federal requirement that any motor vehicle repair shop be registered with the commissioner. To accomplish this and to ensure that we operate legally, a fee has to be paid to the commissioner’s office. This fee will be paid in a timely manner to ensure operation takes off only after registration. In addition to this, the business must also put up a sign indoors or outdoors where clients are likely to see it. The sign must indicate the services that the business is mandated to provide, as well as the fact that it is registered. The shop is further required to notify any customer in writing prior to charging extra storage costs. The financial implications of complying with these regulations are insignificant, compared to the overall investment costs and will be catered for by the business management.

Apart from the registration and signature regulations, it is also expected that the business adhere to environmental regulations. This is of particular concern due to the potential of the business to result in pollution during the oil exchange processes. Structures will be put in place for the management of wastes from the business site, which will ensure that oil wastes are separated from the normal wastes. The cost of disposal of the oil wastes may be high but will be catered for by the business profits.

Organization and Management

The business is intended to run under the overall management of the founder. However, onsite complex manager whose role will be to oversee the business related operations shall be present. Other employees will include 2 female accountants, 3 supervisors, 3 electrical engineers, 3 electrical technicians, 3 drivers, 2 wiremen and 4 female customer service personnel. The organizational structure of the business is presented in the appendix. The responsibilities associated with each position will be as described below:

Complex Manager – He will report to the founder of the business. He is tasked with the overall management of the business complex including all major decision making requirements. His role includes collaboration with the supervisors and the engineers in ensuring that there is profitable business. He also gives directives to the supervisors and on site engineers.

Supervisors – They work directly with the technicians, overseeing the operations of various sections of the business complex. They are also tasked with assigning duties and acting as communication media between the central management and the other employees.

Engineers – Their main role is to give directives to the technicians on how to carry out their roles. In other words, they impart technical skills to the key operators.

Accountants – Their role is to ensure that the business account books are up to date and to advice on the best course of action in case of any desired guidance on making financial decisions.

Customer Service Personnel – They interact directly with customers, communicating customer requirements to the relevant individuals.

Wiremen and Drivers – They will carry out responsibilities requiring the skills they possess.

Service

The shop will be able to provide a range of services associated with motor vehicle maintenance and repair. These services include repair of damaged motor vehicles including replacement of damaged parts, wheel alignment services, maintenance services such as oil change, retail of vehicular lubricating oil to potential customers. Employees possessing excellent skills relevant to each service will offer these services. It is thus predictable that the services will be of high quality and at par with the regulatory requirements, which outline the essence of providing high quality services.

Marketing and Sales

In order to service the targeted vehicle population, it will be necessary that effective marketing strategies be laid down in place to ensure that information reaches a large target market population. The concept of marketing will require high levels of organization as well as the support of all the team members. This will be achieved through the engagement of a part time marketing consultant who will be able to use the businesses’ strengths to highlight its effectiveness in service delivery. It is intended that several methods will be used to reach out to potential clients. For marketing to be effective, it is necessary that the target market should be reached. In order to achieve this, several methods have to be used in advertisement, the advertisements should be made professional and the company has to bargain for editorial coverage. Some of the methods we intend to use include:

Use of posters and bulletin boards for marketing – Posters will be used to reach out to potential clients. The benefit of using posters in advertising is that it is versatile. It can depict both text and pictures and is therefore visually appealing. In addition to this, posters can be placed in

Use of electronic media for advertising – Electronic media such as televisions can form an impressive platform for advertisement. We intend to bargain for coverage by various television networks and urban radio stations. By outlining our strengths and focusing on the prevalent need for a motor wiring shop business in the town, we believe we will be able to reach a wide market base.

Customer Incentives – The business intends to offer incentives to customers to increase their retention ability and thus grow the business. The incentives we intend to offer include free lubricating oils for frequent customers and subsidized maintenance services to repair customers. In so doing, we hope to attract more customers and to retain the ones already gained.

Employee Motivation – The business founder believes that motivated employees provide best customer services. Consequently, we will try to employ the method of employee motivation to ensure they provide good services to the customers. In so doing, it is believed that the customers will be pleased with our services hence it will be easy to retain them as well as to be recommended by them. The clients are the key to business growth and pleasing them is a major objective of the business. The business intends to use presents to motivate employees. The presents will be awarded based on performance measured by customer feedback and performance reviews. Any employee who performs exceptionally will be awarded through recognition and material items.

Flyers and brochures – These will be issued to clients as well as employees to assist in marketing the company services. The advantage of using flyers and brochures is that they can be used to reach potential clients who could not have known about the business by using people close to them. For instance, it may be easier for a client to convince his/ her friend of the strengths of the business using a flyer that it would be for the company to reach the same client’s friend using various other advertisement media.

Funding Request

In view of the intended service deliveries, the business will require several items for it to commence and thrive. First, a 10,000 square meter piece of land will be required to accommodate the workshop. The workshop once started will also require 2 trucks, 2 forklifts of 5 and 10 tons, one 30 ton overhead crane, a led machine, lathe machine, and two welding machines. Apart from this, a given sum of funds is required for operations in the first year when the business is still in its infancy stage. To acquire all these necessities, the business owner needs 2,800,000 USD. This amount will be distributed adequately to cater for the various outlined needs.

The business owner currently has funds sufficient only for the operations for the first five months of the business. However, the intention is to acquire the remaining funds through loans and grants from friends and family. The objective of issuing this report is to reach out to government agencies and banks mandated with the ability to issue business and asset financing loans to both individuals and corporate.

The projected income statement confirms that the business will be capable of repaying the loans if granted and that, the source of loan repayment funds will be solely the business profits. This income statement is attached as an appendix to this business plan. The founder appeals to financial institutions to offer support to this business to see it grow. Any assistance accorded will be highly appreciated.

 

APPENDICES

Appendix A: Projected Income Statement for year 1

Net Sales   $3,200,000
Cost of Land -$160,000  
Cost of Equipment -$2,460,000  
Cost of Construction -$180,000  
Gross Margin   $400,000
Administrative Expenses    
Salaries and wages -$240,000  
Light, Power and Heat -$800  
Depreciation costs -$3000  
Local Government taxes -$1500  
Other Expenses -$1000  
Net Profit Before Taxes   $153,700
Provision for income Tax -$49,184  
Net Profit after Tax   $104,516

 

Appendix B: Organizational Structure