Automotive Repair Service

BUSINESS PLAN

LR AUTOMOTIVE

6890 Ranch Drive
Traverse City, MI 48963

LR Automotive presents up-to-date financial information, helpful to anyone considering starting an automotive repair service.

• executive summary
• parts & labor
• warranties
• community activity
• organization
• company philosophy
• job descriptions

EXECUTIVE SUMMARY

The need for a full service automotive center with competent and trusting mechanics is always there. Chuck Liepshur and Rich Rudy have built, and are still accumulating, a clientele that has followed them from location to location through promotions and careers. These clients are loyal and will continue to follow LR Automotive, when we move to our new location.

With advertising in local newspapers, mailers and handbills, business should increase by a margin of 10% annually. People are always looking for an honest auto repair facility which is committed to customer service, reliability and promptness. By being fully committed to our clients, our customer base will increase and will provide a stable ground for our business to grow.

Our company will be offering two products: the first being automotive service which will generate a gross profit margin of 60% on average. This will include bumper-to-bumper service on cars and light trucks, i.e. brakes, computer diagnosis, suspension, exhaust and electrical. The sale of tires will provide a 20% profit margin, but will also help us sell service such as front-end parts and front-end alignments as needed. The only time our services will be performed is when and if they are needed or they are recommended on the O.E. manufacturer's maintenance schedule. Service should provide 90% of the total sales with tire sales making up the remaining 10%.

The parts and products we will use will also help in our appeal to customers. We will use top of the line, name brand parts such as Auto-X, Reman, and Xilco. Customers always look for a well-known brand name when deciding where to take their vehicle.

Counterfeit parts will never be used at LR Automotive.

Last, but not least, warranties also help when customers are deciding where to get their work done. Our warranties will meet or exceed industry standards.

Our target customers are the owners of auto and light trucks. This area of service is always growing. Automobiles are being kept an average of 3-5 years and each vehicle requires servicing an average of 2.7 times per year.

As new vehicle prices increase, consumers are inclined to maintain and service their vehicles for longer periods of time. As a result of this trend, the service business will continue to grow.

Our competition will consist of auto dealerships, larger tire and service chains and gas stations with service departments. These are very successful because they are well-known and offer a wide variety of services. The weakness of these companies will be our advantage. These weaknesses include the need to keep the cars several days to finish work. LR Automotive will make every effort to finish jobs the same day. Also, dealerships tend to distance themselves from their clients, refusing to take the time to educate the customer about their problems. Our employees will take the time to point out our customers' vehicle problems and discuss all the possible solutions explaining the advantages and disadvantages of each. We are also going to treat our customers as we would like to be treated, spending time with each one so they know they're not just a number to our business. Follow-up calls to ensure satisfaction will also be made after we have completed the work.

Our customers will be made up of our existing clientele, along with a new customer base which we will gain through advertising. Through our satisfied customers, word will spread that LR is the automotive repair shop that customers can trust, which will increase our customer base. These customers will remain satisfied because they will be happy with our service, prices and the atmosphere we provide.

PARTS & LABOR

We will use only quality parts, which will be readily available in our stock or via our local parts supplier. When we service autos, we will never take short cuts and will never substitute quality in order to obtain a lower price. Our parts warranties will reflect those of the manufacturer.

WARRANTIES

Our labor warranties will be as follows:

• Brakes - Standard brake job -1 year or 12,000 miles - Brake overhaul - 2 years or 24,000 miles
• Shocks - 1 year or 12,000 miles
• Struts - 3 years or 36,000 miles
• Suspension parts - 1 year or 12,000 miles
• Belts - 1 year or 12,000 miles
• Exhaust - 1 year or 12,000 miles
• Alternator/Starter - 6 months or 6,000 miles
• Alignment - 6 months or 6,000 miles
• Water pump -1 year or 12,000 miles
• All other warranties - 90 days or 4,000 miles

COMMUNITY ACTIVITY

We plan on being a visible part of the community in which we are based. We will join community groups and participate in local activities in order to understand community needs. As a result of our visibility, we will get to know the local patrons and that will help LR's business to grow within the community.

ORGANIZATION

We plan on working on 6 cars per day when LR first opens. Our labor force will include two certified technicians and one salesperson. Every employee in our establishment will be knowledgeable in the auto service area. As our business grows and becomes more profitable, we will add trained personnel to ensure the best service available.

COMPANY PHILOSOPHY

1. To provide an atmosphere where the consumer feels confident about his/her purchase(s) and relationships with LR's service employees.
2. Being honest and sincere with the clientele.
3. Being community oriented.
4. To create a place where customers feel good about recommending LR to friends or relatives for their auto concerns.
5. To provide a comfortable living for ourselves and our employees.
6. To provide a healthy work environment where our employees enjoy coming to work each day.
7. To provide benefits for ourselves, our employees and families (i.e. 401K plans, health and dental plans).
8. Our goal is to keep our employees long term by treating them as we would wish to be treated ourselves.

JOB DESCRIPTIONS

Co-President

Objective

To ensure survival and growth of LR Automotive Service and control the operation.

Functions

1. Act as a team leader, making sure that LR team stays on track.
2. Establish and implement company policy, performance standards, policy and procedures.
3. Establish and implement employee controls - feedback based on performance standards, indicators, goals, etc.
4. Financial planning and controls
   1. Paying invoices
   2. Banking
   3. Accounting systems
   4. Sales and expenses
   5. Assets and liabilities
5. Buying and inventory control
6. Advertising and promotion
7. Reconcile statements
8. Planning (long and short range)
9. Answer customer complaints
10. Maintain:
    1. The spark to imagine
    2. The daring to innovate
    3. The discipline to plan
    4. The skill to do
    5. The will to achieve
    6. The commitment to be responsible
    7. The leadership to motivate
11. Scheduling, merchandise store, maintain paper flow, housekeeping and equipment maintenance.
12. Parts room and warehouse organization.
13. Business development, fleet accounts and national accounts.

Salesperson

Objective

Take care of customers that come in the door, and relieve Co-Presidents of detail work.

Functions

1. Completing work orders and calling customers when job is done.
2. All other paper work, i.e. filing work orders daily, inventory management, mailing invoices, PIPT's filing emissions certificates, getting invoice numbers on parts bills and clear pending documents.
3. Housekeeping - keeping counters clean, displays and vending machines dusted, customer waiting area clean daily, empty waste baskets, rest room detail.
4. Supplies - invoices, sales slips, cash receipts, paper towels, keep sufficient change in cash drawer.
5. Special assignments as directed by Co-Presidents.
6. Keep all display materials current, window signs, ad boards, manufacturer rebates and promotions.

Mechanic

Objective

Meet or exceed assigned daily objective. Maximize productivity per hour worked. Get quality work done in the shortest amount of time possible.

Function

1. Get quality work done, fast.
2. Safety check all cars worked on.
3. Add-on sales, direct contact with customer, both face to face and on the phone.
4. Housekeeping.
5. Equipment maintenance.
6. Assist in organizing warehouse and parts room.

Operating Expenses

Start-Up Cost

THIS PAGE INTENTIONALLY LEFT BLANK SEE NEXT PAGE FOR SALES PROJECTION & CASH FLOW TABLE

Assumptions

Sales

Average 6 vehicles per day @ $175.00 per vehicle

In 2nd 12 months, average per vehicle increases 10% to $192.50

Inventory Expenses

40% of sales

Operating Expenses

Average expenses per month