Sample Business Plan on Automotive Repair Business Plan
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EXECUTIVE SUMMARY
The Business Concept
YourName Auto Repair (YourName Auto Repair or the Company) is an auto repair shop providing old-fashioned, reliable service. The Company will be built upon a solid foundation of honesty, reliability and quality. It is located in Huntsville, Alabama.
The Founder, Mr. Darrin Smith, has built a reputation in the area as an honest and trustworthy mechanic; he takes time to explain what is wrong and shows the customer what needs to be fixed as well as which parts are wearing and may fail. Thirty-five years in the auto motive business, he has spent 15 years building and racing cars, 12 years of fleet maintenance, including fabrication and redesign.
The Company will provide:
Ø Routine Maintenance
Ø Temperature Control
Ø Brakes and Exhaust
Ø Engine and Transmission
It will service all makes of cars, both domestic and foreign.
Excellent Market Opportunity
YourName Auto Repair will take advantage of its Founder’s existing reputation to attract customers. The Founder started out helping with the car ministry at his church. Through this ministry he has identified the need for an honest and trustworthy mechanic shop.
XYZ is one of the largest churches in the area and single moms and widows from the church bring their cars to Darrin after work at his home. Word of mouth has helped him build a clientele base too large to handle at his home. Many people are traveling over 20 miles to bring their vehicles to Darrin to repair.
Profitable Growth
YourName Auto Repair expects to gain a profitable market share within a very short period of time. Determinations have been made for the size of the market, amounts of budgeted advertising and promotional dollars, the number and kinds of distribution channels and the competitive landscape.
Projections call for the Company to generate revenues of $666,000 in its first twelve months. YourName Auto Repair will achieve strong growth over the next several years, reaching $1.3 million in revenues and more than $316,000 of net income by the fifth year.
The Opportunity
U. S. Auto Industry
According to R. L. Polk, “The average length of ownership of both new and used vehicles has increased from 37.2 months in 2002 to 46.3 months in 2008, a 24% increase.” As our economy continues to deal with current issues, drivers are expected to keep vehicle longer, which is good news for auto repair businesses. Fewer new cars and trucks are being purchased. A recent Polk study showed “64% of consumers were ‘very or extremely likely’ to keep their current vehicle longer than they normally would due to current economic conditions. Additionally, 81% of the 713 interviewed vehicle owners in this same study also said they planned to take better care of their vehicle to keep it running longer, which could translate to additional aftermarket revenue.” 2
Aftermarket Automotive Trends
Within the aftermarket automobile segment there are several categories, including:
Ø Routine maintenance
Ø Temperature control
Ø Brakes and exhaust
Ø Engine and transmission
The current U. S. automotive aftermarket is valued at over $140 million. Where in the past the market was once dominated by small, often family-owned independent service stations, there are four business types in the U. S. automotive repair industry today:
Ø Independent garages
Ø Full service gasoline stations
Ø Automotive dealerships
Ø Chain automotive centers
According to the Automobile Service Association (ASA), this market sector is high fragmented, employing nearly 339,170 people and “repairing more than 231 million motor vehicles; 88% of independent mechanical repair businesses are family-owned.” Research shows there are an estimated 81,533 U. S. independent general mechanical repair businesses in operation.
The ASA projects “total sales for general mechanical repair facilities in 2005 was $36 billion; $49 billion if specialty repair facilities, oil change facilities and transmission shops are included. It is important to note that these figures do not include the $30 billion earned by approximately 21,640 auto dealerships with service facilities.”
Americans love their automobiles! Statistics reflect the median age of vehicles in the U. S. is increasing which will encourage the growth of auto repair shops. According to research, the median car age from 1990 to 2005 increased from 6.5 years to 9.0 years. A recent Forbes article stated, in 2004, 135,077,000 cars were registered in the United States.
In a 2005 survey by ASA, 71% of mechanical businesses polled said they felt positive about future growth and expected sales to increase. Integra Information made the following forecast on growth rates: