Business Plan of the Company for Automotive and Auto Repair
Management Team and Organizational Plan Automotive and Auto Repair
The startup organization has a solid management team consisting of four partners, including (Your Last Name and Name), Andy (Last Name) who majors in Marketing, Jason (Last Name) who majors in Finance, and Terry (Last Name) who majors in Automobile Engineering. The roles and functions will be subdivided between all the partners. Firstly, it will be necessary to appoint a general manager and an assisting manager whose roles and functions will be explained further in the report. Secondly, marketing and personnel managers should be assigned. Thus, one partner will be responsible for analyzing and estimating marketing and sales of the company. Finally, the last partner will be accountable for managing the personnel. It is also important to mention that managing roles and functions will be frequently combined with mechanical works at the beginning of the startup functioning. Enlargement of the personnel base will allow to shift this part of work to full-time mechanics and mechanical engineers in the future.
The startup can be viewed as a spectacular business opportunity, which actually approaches and appeals to an unfulfilled requirement of having a full service auto repair and body facility, combining car repairs, car modifications, power conversion, car waxing and polish, as well as car wash. All of the above-mentioned complimentary services are distinct and they will benchmark customer service. As this is a new business enterprise, the initial staff will incorporate four main partners who will assume functions of four management team members, encompassing one general manager, a sales executive, a finance administrator, and one member to the partnership. Generally speaking, the company will stand for a four-party partnership with each partner owning 25 percent of the startup company. This will be a limited liability organization registered in the state of Michigan. The facilities will incorporate a two-bay garage, car wash, office space, and storage space for parts, implements, tools, etc.
The startup will provide reliable and standard services, supplying different auto parts and targeting both the upper and middle class markets in order to meet all customers’ needs and requirements of all categories. Four partners will privately own the company, which means that the startup capital will be formed from members’ /partners’ contributions. The general manager will be accountable for guiding the day-to-day company’s operations, encompassing customer scheduling, appointing work to mechanics, controlling and monitoring mechanics and office personnel, guaranteeing the meeting of quality norms and standards, and marketing company’s services to new customers. Moreover, the general manager will be responsible for ensuring the company’s profitability. This has to be a person who is capable of bringing solid fiscal context and background, as well as comprehending profit margins of the company. Moreover, the person should supervise and train the personnel, reduce spending and idle time, and negotiate contracts with suppliers and vendors. In turn, the assistant manager will help the general manager with customer scheduling, controlling, monitoring, and guiding the mechanics’ operations, reviewing and revising invoices and accounts for quality, while also managing routine day-to-day company’s operations. This position can also be viewed as highly crucial for the company’s success, especially when the second shift will be added. It is also important to mention that startup organization will search for two-entry-level mechanics who will be hired within few months after the beginning of company’s operations. In addition, the company will outsource marketing, bookkeeping, and accounting services.
The current intermediary objective stands for having four full-time, experienced, and fully-trained mechanics and a full-time office manager. The company will add one mechanic position on an annual basis during the first three years of functioning in order to reach planned company’s capacity. Mechanics should have a wide range of maintenance and repair skills, encompassing motor and transmission rebuilding, doing tune-ups and brake jobs, and replacing motors on all makes and vehicle models. Requirements for the job as a mechanic are to have at minimum two years of experience working on automobiles. The company will also employ ten other full-time workers who will operate as receptionists, car washers, valet attendants, panel beaters, body technicians, paintwork technicians, and salespeople. Receptionists will be accountable for office duties and customer service, while managers will develop marketing, financial, and targeting strategies and be accountable for all facets of business operations, encompassing health and safety, personnel management, customer services, etc. Paintwork technicians will perform all necessary bodywork spraying. In turn, body technicians will be responsible for body repairs and panel beaters will operate on panel beating. Mechanics will conduct all mechanical repairs and servicing, which will be combined with change of tires.
Product/Service Development Plan
The company will be competent in provision and supply of all auto repair materials for all vehicle models and makes. The company will provide such products and services as automotive and auto repair, parts replacement, marketing of auto parts from new and used automobiles, paint services, tire services, bodywork, glass replacement and repair, upholstery, car modifications, power conversion, car waxing and polish, as well as car wash. Thus, the company will be offering and providing two major products. The first stands for automotive services, which will generate a gross profit margin of 50 percent on average. These services will incorporate bumper-to-bumper services on cars and light trucks, for instance, brakes services, computer diagnosis, electrical services, suspension, and exhaust services. In addition, the company will also market tires, which will help in generating 15 percent of profit margin, while also assisting the company with marketing such services as front-end parts and alignments if required. However, it is important to mention that company’s services will be executed and performed only when they are required or appear to be recommended on the original equipment manufacturer’s maintenance schedule. Generally speaking, all services, including car repairs, maintenances, and washing, are supposed to equip 80 percent of total sales, while auto parts and tires sales should make up the remaining twenty percent. Products and parts will help the company to appeal to all groups of customers. However, it is important to mention that the company will utilize only top of the line name brand parts, including Reman, Auto-X, and Xilco, due to the fact that clients are interested in well-known dependable brands. Moreover, any counterfeit or possibly counterfeit parts will never be utilized or marketed by the company. In addition, warranties also appear to be a factor, which helps customers to decide where to take their car for repairs and maintenance. This is a main reason why the company will provide warranties, which will meet or exceed industry norms and standards. The company will provide a number of labor warranties, which will look in the following manner: standard brake job will have a 12-month or 12,000 miles warranty; alternator will have 6-months or 6,000 miles warranty, etc. In fact, each project or job will appear on a reservation ground even despite the fact that the company will accept a minor percentage of drive in repair works.
Thus, the current company will have a standard automotive product line, encompassing tires, batteries, new and remanufactured constituents and parts for imported and domestic cars, chemicals, mobiles electronics, car accessories, hand tools, and an assortment of van, sport utility, and truck vehicle accessories. Under the section of new and remanufactured parts, the company will provide brake parts, suspension parts, wiper blades, ignitions elements, lighting, exhaust systems, air and oil filters, engines and engine constituents, air conditioning parts, belts, etc. In regard to chemicals, the company will market and provide paint, cleansers, polishes, oil, and antifreeze. The category of mobile electronics will allow provision of sound systems and remove vehicle starters. The category of car accessories will be rich in the assortment of various floor mats, seat covers, and numerous exterior accessories. Finally, lift and jack equipment, test gauges, ratchets, paint and body implements, sockets, and wrenches will be marketed and provisioned among different hand tools.
Therefore, the product and services plan demonstrates that the company will provide auto-body, mechanical and electrical repairs, numerous services, and ‘modern test’ inspections for all models and makes of vehicles. The work concerns mechanical, electrical, and body parts and elements of vehicles. The company will use the latest equipment, meeting the industry standards for all business operations and activities. Electrical and mechanical repairs will incorporate utilization of industry-bespoke technologies via the usage of diagnostic software in order to find any pinpoint faults. The system will equip necessary repairs data and estimated labor time necessary for all repairs, providing the company with a capability of informing customers about reliable estimates and costs. Nevertheless, the system will not be viewed as helpful regarding more complicated and complex issues, presupposing that mechanics and technicians will have to estimate time and cost for solving these issues. The service of auto-body repairs, which generally appear because of accidents, corrosions, or general wear-and-tear, will envision dealing with exterior elements and vehicle body, involving vehicle renovation, parts replacement, panel beating, and painting of replaced panels in order to match the overall vehicle color. In addition, the company will provide paintwork repairs for scratches, scuffs, and dents as vehicle damages caused by accidents or collisions. Moreover, the company will also work on cases that require paintless dent repair, which will be performed by pushing the dents out from the inside. It is also important to mention that the company will provide other services as well. These will encompass vehicle recovery, ‘fast-tires’ changes, along with periphery services for VIP clients.
All of these products and services will allow the company to maximize the overall inventory turnover, while providing the possibility to build solid and strong relationships with established suppliers in order to elude any shortages of auto constituents and components. This will help the company to ensure a timely and professional delivery.
Industry/ Market Analysis
Approximately 140,000 enterprises in the U.S. are incorporated in the auto repair with estimated annual revenue of $65 billion (Statista, 2016). Nevertheless, there are only ten facilities whose revenue surpasses the level of $100 million, including Muffler Brake, Diamond Triumph, Auto Glass, Midas, etc. (Statista, 2016). The current startup organization will be a constituent of the after-market vehicle services industry, which appears to be a $240 billion industry in the U.S. alone (Duffy, 2016). This industry has expanded and enlarged by approximately 4 percent during the last years and it is projected that it will only continue growing (Statista, 2016). The auto body and repair industry can be viewed as greatly competitive since suppliers appear to have a huge power in establishing and arranging the cost and prices of their services and products to the repair and body shops. This is caused by the fact that suppliers, which absorb the biggest quantities of cash from repair shops, stand for the giant auto part companies. In fact, the above-mentioned companies appear to be more amalgamated and integrated contrary to the entire repair industry and they also have deeper pockets, a practically unlimited quantity of substitute customers, as well as seeming to be the single most significant supplier for the analyzed company’s industry. This is a main reason why these companies are capable of setting whatever price they desire or believe to be appropriate. In addition, it is also important to mention that labor is a supplier in this industry, which means that salaries for labor workers are well-known and cannot be highly flexible. Moreover, customers observe the service as undifferentiated and a “commodity” with minor value separation between competitors. Therefore, the overall buyer power appears to be very high as well. In turn, barriers to entry appear to be comparatively low, which means that there are a lot of competitors operating in the industry, encompassing substitutes (for instance, do-it-yourself work). It means that pricing in the industry appears to be highly competitive as well. It presupposes that the only two ways of having an advantage in this industry include either low-cost leadership strategies, which should be applied aggressively, or creation of higher switching costs via the establishment of solid customer connections.
Due to the fact that auto repair industry is so competitive, each company operating within this sphere has elevated capital costs, decreased margins, and elevated competition intensity. In addition, the costs of body and repair services cannot be regarded as cheap, which means that buyers will search for the most conducive and advantageous conjugation of acceptable service and price. Both barriers and costs to entry and exit seem to be comparatively low in this industry. Moreover, there are practically no switching costs.
The company can amplify and enlarge its competitive advantage within the vehicle maintenance and repair market by targeting all possible customer segments and rendering superb and outstanding customer-oriented services. The market incorporates a number of major competitor groups, including other body and repair shops, mere repair shops and stations, independent shops, and specialty shops. Generally speaking, there are approximately 370 auto body and auto repair competitors in the selected area. However, less than a quarter of them provide both services. Major national chains are the most solid competitors as they already have solid reputations and recognition. Nevertheless, the fact that they do not combine both services, their high concentration on sales when compared to services, and their elevated prices gives the current startup with a huge advantage in the industry, especially with respect to customers who reside in nearby locations. Other industry competitors mainly incorporate small privately-owned facilities and establishments. The current startup organization can easily compete with them, providing a high level of client service and convenience. These companies might also have a number of weaknesses, including the shortage of specialization, narrow focus, and issues with meeting regulatory requirements. The current company might take all of these weaknesses into account in order to demonstrate their customers understanding of the market, provide point-of-sale contacts, set pricing, ensure convenience, and guarantee high quality. The analysis of the market demonstrates that it is highly necessary to build a reputation as it appears to be the main factor concerning repeat business and creation of a large base of loyal and regular customers. As the company focuses mainly on upper and middle income markets, the targeted customers typically require rapid service, high caliber, and the highest level of convenience. This targeted market can actually be subdivided into two major groups, including regular customer base (local) and emergency customer base. It is important to formulate a comparatively large regular customer basis due to the fact that it will help in establishing a healthy and consistent revenue foundation, while ensuring business stability. The second group of customers typically consists of 15-20 percent of the repair and body shops revenue. These are customers who require rapid service and high quality and this will help in capturing a freeway traffic segment of the targeted market.
The company’s primary competitors appear to be involved in auto services and maintenance, retail marketing of auto parts, installation of auto parts, and marketing of auto accessories and parts. They typically adopt the shop model known as ‘super-center’, which can be outlined as a ‘one-stop’ shopping auto warehouse (Duffy, 2016). They typically help in dealing with automotive and vehicle aftermarket requirements and needs, which can be subdivided into two major categories, including ‘do-it-for-me’ and ‘do-it-yourself’ (Duffy 2016).
It is also important to mention that any auto dealer, repair facilities owner, and mechanic should be familiar with laws, which regulate the industry in the state of Michigan. All of them are outlined in the second chapter of the Michigan Vehicle Code, Motor Vehicle Service and Repair Act, and administrative rules. Moreover, with respect to body shops, they have to comply with state and federal environmental regulations. In addition, all motor vehicle repair facilities should be regulated and licensed by the Michigan Department of State’s BLRD (Business Licensing and Regulation Division).
In regard to parts and auto elements supplies, the main responsibility of the company’s general manager will include maintaining a relationship with a broad assortment of vendors, including Boyer Ford Parts, Tires Plus, Factory Motor Parts, Bumper to Bumper, etc. With the growth and development of the startup company’s maintenance business, it is projected that the company will be capable of acquiring parts and required accessories at prices, which will be close to wholesale ones. When the amount of purchases will grow, the delivery time of parts and accessories will decrease, presupposing that they will be delivered in the range between several hours and 24-hours period (regarding shipped parts necessary for imported vehicles), providing a possibility to conduct timely emergency repairs. Due to the fact that turnaround time appears to be highly important for the company and its regular or traffic customers, these changes will help in making turnaround time relating to automotive parts suppliers a pivotal constituent of the company-customer rapport. In addition, suppliers will also be accountable for stocking common parts requested by the company to assure that the company has all necessary parts on hand and ready for delivery when required and requested.
Moreover, the assistant manager will be accountable for stocking a restricted parts inventory, which typically concerns the most regularly serviced parts, encompassing tires, lights, belts, etc. It will also require utilizing numerous vendors to preserve a reiterative inventory of frequently utilized parts and accessories. The company will have to sustain inventory as flat even when the business size will double. This is highly important as, on the one hand, the company might alter frequency of inventory restocking. On the other hand, as it has been mentioned previously, development of the company will allow decreasing the delivery time. It is estimated that the company’s inventory will amount to roughly $15,000.
Furthermore, the company will have to organize specific payment agreements with practically all its suppliers. In turn, the company’s mechanics will be accountable for recording their time and parts in the process of work. All information will have to be entered into a specific maintenance tracking software system. This will help to incorporate analytics into the working company’s system and decision-making as the tracking and monitoring system will help the company in generating a review invoice, thus providing completeness and accuracy. Moreover, it will help to analyze the working schedule, allowing to estimate and project expenses and costs. This information can be later used to inform customers regarding time and cost of the provided body and repairing labor. In addition, the information will be shown to the general manager, allowing him to make any necessary settling or adaptations in the mechanics’ labor if necessary.
Besides, the company sets the objective of running the facility regularly at full capacity in regard to scheduling. This is a main reason why the full capacity has to be subdivided into two fully staffed shifts, while work of all mechanics should be scheduled as effectively as possible to make their work productive. Analysis of the target market demonstrates that customers address and utilize such facilities most heavily in the ranges between 8:00 am and10:00 am, between 3:00 pm and 4:00 pm, and after 7 pm, which stand for typical rush hours in the current industry. This is a main reason why the company has to establish a sufficiently and highly operating daily schedule to be capable of dealing with the incoming work. Thus, the startup company will have to organize two shifts. The first shift will start at 6:00 am, while the second one will start at 6:00 pm. Generally speaking, the morning shift will be accountable for repairing vehicles, which appear to be unfinished by the previous shift, and then they will start working on vehicles brought in the morning. They will be also responsible for servicing vehicles, which require minor service and urgent work or are ‘waited for’ by customers. The second shift will work on vehicles, which have been brought in during the day shift and be accountable for working on vehicles, which require minor service and urgent work or are ‘waited for’ by customers as well. The general and assistant managers will be responsible for monitoring and supervising the shifts and the working schedule.
The company will also have to dedicate a lot of attention to quality control of their operations. In fact, it has to be startup’s primary concern for building appropriate customer relations, reputation, positive image, and recognition. Firstly, this is a reason why the company should not compromise the quality personnel to meet sales projections. Secondly, it is necessary to provide a specific unexpected control of employees’ and mechanics’ work on a daily basis. The general or assistant manager will be accountable for regular checking and controlling of the personnel’s work on a random basis. This will help in ensuring that high quality work is accomplished. Thirdly, the company will offer inside or outside training programs for both new and existing employees, especially mechanics. It will be highly significant to help mechanics with certifications as well.
Finally, the company will have to develop a typical labor time plan. Thus, it is suggested that mechanical repairs will require a range of time between 30 minutes and 1 week (for example, when reconditioning of an engine or a gear box is required). Electrical repairs will also fall in the time range mentioned previously. The modern test will require 1 hour. Servicing requires the range between 1 and 6 hours. The service of body repairs will take at least 1 day and up to several weeks and this issue has to be discussed with the customer in case of complicated situations. Finally, tires change requires the range between 10 minutes and 1 hour. Such plan is necessary for company’s operations as it will help to estimate and analyze the facility’s capacity, which is essential for future forecasts of sales levels. This will provide the company with a possibility to develop and increase its operations exponentially.