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Auto Repair Service Business Plan

Quick and Dirty Auto Repair

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Financial Plan

8.0 Financial Plan

QDAR expects to raise £250,000 of its own capital, and to borrow £250,000 guaranteed by the SBA as a ten year loan. This provides the bulk of the current financing required.

8.1 Break-even Analysis

QDAR's break-even analysis is based on the averages of the first-year figures for total sales by units, and for operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk.

Break-even Analysis



Break-even Analysis

Break-even Analysis:
Monthly Units Break-even	6,969
Monthly Revenue Break-even	£724,211
Assumptions:
Average Per-Unit Revenue	£103.92
Average Per-Unit Variable Cost	£42.81
Estimated Monthly Fixed Cost	£425,871

8.2 Projected Profit and Loss

As the profit and loss table shows, QDAR expects to continue its steady growth in profitability over the next three years of operations.

Profit and Loss

Pro Forma Profit and Loss
	2001	2002	2003
Sales	£9,540,000	£11,269,125	£13,311,654
Direct Costs of Goods	£3,930,000	£4,642,313	£5,483,732
Other	£0	£0	£0
	------------	------------	------------
Cost of Goods Sold	£3,930,000	£4,642,313	£5,483,732
Gross Margin	£5,610,000	£6,626,813	£7,827,922
Gross Margin %	58.81%	58.81%	58.81%
Expenses:
Payroll	£4,315,000	£4,530,767	£4,757,322
Sales and Marketing and Other Expenses	£27,000	£35,830	£72,122
Depreciation	£120,000	£138,000	£158,700
Utilities	£1,200	£1,260	£1,323
Payroll Taxes (National Insurance)	£647,250	£679,615	£713,598
Other	£0	£0	£0
	------------	------------	------------
Total Operating Expenses	£5,110,450	£5,385,472	£5,703,065
Profit Before Interest and Taxes	£499,550	£1,241,341	£2,124,858
Interest Expense	£26,748	£22,467	£20,217
Taxes Incurred	£120,157	£304,719	£534,930
Net Profit	£352,645	£914,156	£1,569,711
Net Profit/Sales	3.70%	8.11%	11.79%

8.3 Projected Cash Flow

The cash flow projection shows that provisions for ongoing expenses are adequate to meet QDAR's needs as the business generates cash flow sufficient to support operations.

The short-term £55,000 loan is expected to be paid out within one year, while a £250,000 SBA loan will be repaid in ten years.

Cash



Cash Flow

Pro Forma Cash Flow
	2001	2002	2003
Cash Received
Cash from Operations:
Cash Sales	£9,540,000	£11,269,125	£13,311,654
Cash from Receivables	£0	£0	£0
Subtotal Cash from Operations	£9,540,000	£11,269,125	£13,311,654
Additional Cash Received
VAT, VAT, HST/GST Received	£0	£0	£0
New Current Borrowing	£0	£0	£0
New Other Liabilities (interest-free)	£0	£0	£0
New Fixed liabilities	£0	£0	£0
Sales of Other Current Assets	£0	£0	£0
Sales of Fixed assets	£0	£0	£0
New Investment Received	£0	£0	£0
Subtotal Cash Received	£9,540,000	£11,269,125	£13,311,654
Expenditures	2001	2002	2003
Expenditures from Operations:
Cash Spending	£492,065	£572,595	£694,367
Payment of Accounts Payable	£8,516,341	£9,648,672	£10,875,732
Subtotal Spent on Operations	£9,008,405	£10,221,266	£11,570,099
Additional Cash Spent
VAT, VAT, HST/GST Paid Out	£0	£0	£0
Principal Repayment of Current Borrowing	£55,000	£0	£0
Other Liabilities Principal Repayment	£0	£0	£0
Fixed liabilities Principal Repayment	£15,335	£20,000	£25,000
Purchase Other Current Assets	£0	£0	£0
Purchase Fixed assets	£540,000	£660,000	£770,000
Dividends	£0	£0	£0
Subtotal Cash Spent	£9,618,740	£10,901,266	£12,365,099
Net Cash Flow	(£78,740)	£367,859	£946,555
Cash Balance	£21,260	£389,118	£1,335,673

8.4 Balance Sheet

QDAR's projected company balance sheet follows.

Balance Sheet

Pro Forma Balance Sheet
Assets
Current Assets	2001	2002	2003
Cash	£21,260	£389,118	£1,335,673
Stock	£327,500	£386,859	£456,978
Other Current Assets	£50,000	£50,000	£50,000
Total Current Assets	£398,760	£825,978	£1,842,651
Fixed assets
Fixed assets	£890,000	£1,550,000	£2,320,000
Accumulated Depreciation	£120,000	£258,000	£416,700
Total Fixed assets	£770,000	£1,292,000	£1,903,300
Total Assets	£1,168,760	£2,117,978	£3,745,951
Liabilities and Capital
Current Liabilities	2001	2002	2003
Accounts Payable	£336,450	£391,512	£474,774
Current Borrowing	£0	£0	£0
Other Current Liabilities	£0	£0	£0
Subtotal Current Liabilities	£336,450	£391,512	£474,774
Fixed liabilities	£234,665	£214,665	£189,665
Total Liabilities	£571,115	£606,177	£664,439
Paid-in Capital	£250,000	£250,000	£250,000
Retained Earnings	(£5,000)	£347,645	£1,261,800
Earnings	£352,645	£914,156	£1,569,711
Total Capital	£597,645	£1,511,800	£3,081,512
Total Liabilities and Capital	£1,168,760	£2,117,978	£3,745,951
Net Worth	£597,645	£1,511,800	£3,081,512

8.5 Business Ratios

The following table outlines some of the more important business ratios for the auto repair industry, as described by the Standard Industry Classifications (SIC) Index code 7538, General Automotive Repair Shops.

Ratios

Ratio Analysis
	2001	2002	2003	Industry Profile
Sales Growth	0.00%	18.13%	18.13%	7.00%
Percent of Total Assets
Accounts Receivable	0.00%	0.00%	0.00%	8.80%
Stock	28.02%	18.27%	12.20%	9.60%
Other Current Assets	4.28%	2.36%	1.33%	23.80%
Total Current Assets	34.12%	39.00%	49.19%	42.20%
Fixed assets	65.88%	61.00%	50.81%	57.80%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	28.79%	18.49%	12.67%	34.80%
Fixed liabilities	20.08%	10.14%	5.06%	24.70%
Total Liabilities	48.87%	28.62%	17.74%	59.50%
Net Worth	51.13%	71.38%	82.26%	40.50%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	58.81%	58.81%	58.81%	0.00%
Selling, General & Administrative Expenses	55.09%	50.69%	46.95%	75.20%
Advertising Expenses	0.03%	0.09%	0.34%	1.30%
Profit Before Interest and Taxes	5.24%	11.02%	15.96%	1.70%
Main Ratios
Current	1.19	2.11	3.88	1.17
Quick	0.21	1.12	2.92	0.65
Total Debt to Total Assets	48.87%	28.62%	17.74%	59.50%
Pre-tax Return on Net Worth	79.11%	80.62%	68.30%	1.80%
Pre-tax Return on Assets	40.45%	57.55%	56.18%	4.60%
Additional Ratios	2001	2002	2003
Net Profit Margin	3.70%	8.11%	11.79%	n.a
Return on Equity	59.01%	60.47%	50.94%	n.a
Activity Ratios
Accounts Receivable Turnover	0.00	0.00	0.00	n.a
Collection Days	0	0	0	n.a
Stock Turnover	12.00	13.00	13.00	n.a
Accounts Payable Turnover	26.31	24.79	23.08	n.a
Payment Days	14	14	14	n.a
Total Asset Turnover	8.16	5.32	3.55	n.a
Debt Ratios
Debt to Net Worth	0.96	0.40	0.22	n.a
Current Liab. to Liab.	0.59	0.65	0.71	n.a
Liquidity Ratios
Net Working Capital	£62,310	£434,465	£1,367,877	n.a
Interest Coverage	18.68	55.25	105.11	n.a
Additional Ratios
Assets to Sales	0.12	0.19	0.28	n.a
Current Debt/Total Assets	29%	18%	13%	n.a
Acid Test	0.21	1.12	2.92	n.a
Sales/Net Worth	15.96	7.45	4.32	n.a
Dividend Payout	0.00	0.00	0.00	n.a