Executive Summary

F & R Auto (F & R) is the desire of John Ford and Michael Ronald who together have 30
years experience as auto mechanics. Both have a dream of starting up their own company
and offering better service to their clients than competitors.
1.1 Objectives
The objectives over the next three years for F & R Auto Repair are the following:
 Sales revenues increase steadily through year three.
 Institute a program of superior customer service through rigorous evaluation of
service experience.
 Hire three more mechanics.

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1.2 Keys to Success
In the auto repair industry a company builds its client base one customer at a time and
mostly through word of mouth marketing. With this in mind, the keys to success for F &
R Auto Repair are:
 High-quality work.
 Constant contact with clients so as to keep them informed about the state of their
automobile and the repair job progress.
 Knowledgeable mechanics that are friendly, customer oriented, and will take the time
to explain to customer the intricate nature of our business and our work.
1.3 Mission
The mission of F & R Auto Repair is to provide high quality, convenient and
comprehensive auto repair at low cost. The most important aspect of our business is trust.
It is the goal of our firm to have 100% customer satisfaction in regards to quality,
friendliness, time to completion and to discover new ways to exceed the expectations of
our clients.
Company Summary
The company will be a partnership with John Ford and Michael Ronald each owning 50%
of the company. The company will be a limited liability company registered in the state
of Washington. The firm will have facilities on 1312 1st Ave NW in Ballard, a
neighborhood of Seattle. The facilities will contain a two-bay garage, office space and
storage space for tools, parts, etc.
The company is seeking a loan in order to finance the start of operations for the
company. Each of the owners will be putting up some of their own capital as equity.
2.1 Start-up Summary
The data obtained for the start-up comes from research done in the Seattle area with other
small mechanic shops who have started their own business. Inflation has been taken into
account between the estimates of these fellow business owners (and when they started)
and the current prices for expensed items.
Much of the equipment to go into the facilities such as tools, air compressors, etc., are
currently owned by the two partners.

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 START-UP REQUIREMENTS

Start-up Expenses

Legal $500

Stationery etc. $200

Advertising $600

Phone $200

Insurance $800

Rent $4,000

Utilities $200

Computer $2,000

Other $600

TOTAL START-UP EXPENSES $9,100

Start-up Assets

Cash Required $2,900

Start-up Inventory $0

Other Current Assets $0

Long-term Assets $20,000

TOTAL ASSETS $22,900

Total Requirements $32,000

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START-UP FUNDING

Start-up Expenses to Fund $9,100

Start-up Assets to Fund $22,900

TOTAL FUNDING REQUIRED $32,000

Assets

Non-cash Assets from Start-up $20,000

Cash Requirements from Start-up $2,900

Additional Cash Raised $0

Cash Balance on Starting Date $2,900

TOTAL ASSETS $22,900

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $20,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

TOTAL LIABILITIES $20,000

Capital
 Planned Investment

John Ford $6,000

Michael Ronald $6,000

Other $0

Additional Investment Requirement $0

TOTAL PLANNED INVESTMENT $12,000

Loss at Start-up (Start-up Expenses) ($9,100)

TOTAL CAPITAL $2,900

TOTAL CAPITAL AND LIABILITIES $22,900

Total Funding $32,000

Services
F & R Auto offers a wide range of services as outlined in the detailed sections below. It is
ultimately the goal of the company to offer a one-stop facility for all auto servicing needs,
including brakes, transmission, wheel alignment, etc. In this way the company can offer
greater perceived value for the customer than many other shops which specialize in
certain areas.
The industry is highly competitive with suppliers having a great deal of power in setting
and negotiating the prices of their products and services to repair shops. In addition,
because the customers see the service as undifferentiated and a "commodity" with little
value separation between competitors, buyer power is also very high. Finally, the barriers
to entry are moderately low, and the large number of competitors in this field, including
substitutes (such as do-it-yourself work) mean that the pricing for such services are very
competitive. The only way to have an advantage in this industry is a low cost leadership
principal applied aggressively or to create higher switching costs through the building of
strong business to customer ties.
F & R Auto will hire trained and certified mechanics who are able to prove they have
superior customer awareness and interaction. It is the company's professional people who
will fulfill the firm's contracts and goals. The largest part of the company's expenses will
be in labor costs.
3.1 Service Description
F & R Auto provides a wide range of auto repair services. These include:
 Scheduled maintenance.
 Wheel alignments, tires and rims.
 Brake repair.
 Comprehensive engine repair.
 Transmission.
Each job or project will be on a reservation basis, although we will accept a small
percentage of drive in repair work.
3.2 Competitive Comparison
The auto repair industry is highly competitive. Each company within this field has high
capital costs, low margins, and a high intensity of competition.
Suppliers have a great deal of power in setting and negotiating the prices of their
products and services to repair shops. This is due to the fact that the suppliers who absorb
the greatest amounts of cash from repair shops are large auto part companies. These
companies are more consolidated that the repair industry, have deeper pockets, an almost
limitless number of substitute customers, and finally they are the single most important
supplier to F & R's industry. Therefore, these companies can set whatever price they wish
to. Furthermore, labor is a supplier in this industry as well, and salaries for such
individuals are well known and not very flexible.
In addition, because the customers see the service as undifferentiated and a "commodity"
with little value separation between competitors (if they offer a suitable level of quality)
buyer power is also very high. Additionally, the costs of our services are not cheap, and
buyers are willing to search for the
most favorable combination of price and acceptable service.
The barriers to entry and exit are moderately low in this industry. Switching costs are
virtually non-existent and the costs to entry and exist the market are low. The large
number of competitors in this field including substitutes mean that the pricing for such
services are very competitive. The only way to have an advantage in this industry is a low
cost leadership principal applied aggressively to all aspects of the business or to build up
customer relations to a point where the switching costs are raised.
3.3 Technology
The technological revolution in computers has enhanced our abilities to diagnose and
repair our clients vehicles. F &R will remain on the cutting edge by instituting the use of
computer diagnostic equipment in its shop. The company will continue to seek new ways
to provide a better service through technology.
3.4 Future Services
The company does not have any plans to create further services at this time.
Market Analysis Summary
Since F & R will be able to service any vehicle on the road, including motorcycles and
campers, it does not make any sense to segment our market. Our potential customer
includes every household in Seattle that owns one or more vehicles. The industry does
not have any seasonality that affects it.
4.1 Market Segmentation
The following table and chart show the market analysis for F & R Auto Repair.
MARKET ANALYSIS

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Potential Growth CAGR

Customers

Number of 3% 145,833 150,208 154,714 159,355 164,136 3.00%

cars in
Seattle

Other 0% 0 0 0 0 0 0.00%

Total 3.00% 145,833 150,208 154,714 159,355 164,136 3.00%

4.2 Service Business Analysis

This section is covered in the Competitive Comparison section of the Plan.
4.2.1 Competition and Buying Patterns
While many customers looking to purchase automotive repair services are concerned
with price, the primary concern is with building a relationship of trust between
themselves and their service provider. A large number of people within the country have
experienced or heard of bad service encounters within this market. As a person's car is
usually connected in one way or another with that individual's livelihood, a dependable
automobile is crucial. Therefore, many clients are willing to pay a little more for a
mechanic they feel does a quality job and understands their needs.
An automotive repair company that can anticipate, meet, and even exceed customer's
needs can build a defensible position within the market place and acquire market share at
the expense of other rivals.
4.2.2 Main Competitors
As stated before, the automotive repair market is very fragmented. The chief competitors
in this industry for F & R are the high quality automobile dealerships and licensed service
reps. This includes Toyota, Ford, Chrysler, and other major brand names. Within F & R's
immediate service vicinity, There is Rodham's Toyota, Lester Ford and Woodmark's
Chrysler dealerships. Each of these direct competitors have a service facility. These
competitors dominate the market place, have the largest market share, and have
advantages such as specially trained personnel, access to lower priced parts and tools, and
deep pockets. The other competitors are mostly "mom & pop" style outfits that make up
the majority of the competition. For F & R this includes Dave's Auto Repair, The Taller
Mechanico, Kirkland Auto and Body, and Vancouver Auto. The advantages of these
firms is that they can seek a low cost leadership strategy due to lower personnel costs.
However, they have a much more fluid customer base and higher customer turnover.
F & R will seek to compete initially in the low cost strategy. At the same time, it will
seek to provide a higher level of customer satisfaction by having more rigorous quality
control and seeking ways to enhance the entire service experience (not just repairing a
person's car). In this way it will lock in a loyal customer base who value the client-service
provider relationship.
4.2.3 Business Participants
The auto repair industry is highly fragmented. In fact, there are so many small providers
that any company in this industry is facing a purely competitive environment. It is very
difficult to create a differentiation, or niche, strategy in this environment and until F & R
is able to establish a reputation for quality, on time, superior customer service, the
company will seek a low cost role. Once it has achieved what management believes to be
a sufficient reputation for its services along with a profitable customer base, the company
plans to leverage this advantage into a differentiation strategy that will be able to charge
more for its services.
Strategy and Implementation Summary
The following section outlines the company's strategic focus in growing the business.
5.1 Competitive Edge
F & R Auto's competitive edge lies in the vision of its partners, who understand better
than many of their rivals that a service visit does not just include repairing a client's car, it
includes the entire service experience from the first time a client talks to their mechanic
until they decide to stop driving. The long-term profitability of a service firm of this type
lies in the repeat customer that finds F & R's services an excellent experience, DESPITE
the fact that they usually have suffered a inconvenient breakdown. The company will
seek to examine ALL aspects of the service experience to seek ways to improve its
customer satisfaction. In addition, all employees will be rigorously trained and retrained
to think about customer satisfaction in order to create a self-sustaining company culture
that revolves around this issue.
5.1.1 Positioning Statement
It is the express purpose of F & R to become the local leader in quality and service
experience of all the small (non-dealerships) automotive repair firms within the Seattle
area while maintaining a low cost plan. Once a reputation for quality and service
experience is created, and an ongoing network of referrals is bringing in new business,
the company plans to re-evaluate its strategy and positioning within the market to see if a
differentiation strategy is viable. If so, this will allow the company to raise prices and
increase profit margins in relation to its rivals. This in turn is expected to leverage long-
term growth until F & R can reach a regional scope of operations.
5.2 Marketing Strategy
The company has a modest program of marketing its services that include the following:
1. Flyers.
2. Direct mailers.
 3. Discounts.
4. Newspaper ads.
5. Yellow pages.
6. Referrals through other local businesses.
Each of these marketing approaches has the advantage of being low cost and creating
service awareness. The company's long-term marketing goals are to use local radio and
TV ads similar to the Les Schwab Tire Center ads.
The company is also investigating the possibility of having a grand opening program that
would feature discounts, food, a local radio disc jockey, and other promotional ideas.
5.2.1 Promotion Strategy
The principal owners of F & R Auto expect that a significant number of their pre-existing
clients (where Ford and Ronald currently work) will desire to switch to F & R Auto to
retain the services of their personal mechanics. This will provide a sufficient income until
F & R can build up a reputation and see its marketing program take effect.
This promotion strategy will take the form of flyers, direct mailers, price discounts, and
advertisements in newspapers and yellow pages. F & R does not desire to spend a large
amount on marketing until the firm is ready to expand either into new facilities or open
up new ones. It is estimated this will occur sometime after year five.
5.2.2 Pricing Strategy
F & R Auto exists in a purely competitive environment where each firm must be a price
taker. In other words, the firm has no ability to affect the market price of its services,
regardless of how many automobiles it repairs. In this case, therefore, marginal revenue
(the revenue incurred by producing or servicing one more unit) is equal to the price
charged. Furthermore, because the demand curve is essentially horizontal, F & R can
service automobiles at total capacity without effecting the price.
What all of this means for F & R Auto is that the company must seek to charge its clients
at the market price (or lower). Research has shown that the average price is
approximately $400 per vehicle. As long as marginal costs do not exceed revenues, the
method to maximize short-run profits is to service automobiles at maximum capacity.
This means that F & R Auto can expect an ROA of approximately 4.5%
5.3 Sales Forecast
Since the automotive repair industry is, operationally, a job-shop environment, it is
somewhat difficult to estimate sales. For job-shops, each individual product or service is
tailored or unique to that job, and is only initiated once an order is made. However, the
sales forecast reflect the professional opinion of Mr. Ford in how much sales he will
make based on the following assumptions:
1. The number of clients Ford and Ronald can attract from their previous companies.
2. The effect of planned promotions and word-of-mouth marketing.
3. Current prices and costs of doing business.
4. The types of automobiles and jobs that will occur in every month.
For the most part, sales for an automobile repair firm are steady year round and reflect
little seasonality.
The table and charts below outline the sales forecast. Three years of annual sales and
costs of sales are shown. Twelve monthly tallies are included in the appendices.

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SALES FORECAST

YEAR 1 YEAR 2 YEAR 3

Sales

Routine maintenance $51,000 $57,120 $62,261

Small repair jobs $60,000 $67,200 $71,904

Large repair jobs $67,800 $75,936 $81,252

TOTAL SALES $178,800 $200,256 $215,417

Direct Cost of Sales Year 1 Year 2 Year 3

Routine maintenance $5,100 $5,712 $6,226

Small repair jobs $6,000 $6,720 $7,190

Large repair jobs $6,780 $7,594 $8,125

Subtotal Direct Cost of Sales $17,880 $20,026 $21,542

Management Summary
John Ford began working as an apprentice mechanic in his father's shop in 1984. Since
that time, he has worked for a variety of automotive shops and dealerships and has
numerous certificates in automobile repair. During the past two years Mr. Ford has
attended Bellevue Community College where he received an Associates degree in
business administration in June of 2000.
Michael Ronald attended ITT Technical Institute where he received a certificate in
electronics repair in 1980. In 1983 Mr. Ronald went to work for Jim Click Ford
Dealership in Tucson AZ, where he worked on automotive electrical and electronic
systems. Desiring to expand his skills, Mr. Ronald received a mechanic's certificate in
1988 and since then has become certified in various automotive fields. In anticipation of
F & R's business needs, Mr. Ronald is taking night classes at Seattle University in
marketing.
6.1 Personnel Plan
F & R's initial staffing will consist of Ford and Ronald, plus Ronald's wife who will act
as a part-time office manager. The company will seek two entry level mechanics to be
hired within a few months after the company is operating. Accounting, bookkeeping, and
marketing services will be outsourced. The company's intermediate goal is to have four
full time, fully trained mechanics at the original facility, plus a full-time office manager.
However, management has decided to await future developments before determining the
best time to bring on such personnel.

PERSONNEL PLAN

YEAR 1 YEAR 2 YEAR 3

Mr. Ford $36,000 $36,000 $36,000

Mr. Ronald $36,000 $36,000 $36,000

Office manager (part time) $14,400 $15,000 $15,000

Apprentice mechanic (part time) $6,900 $15,000 $15,000

Apprentice mechanic (part time) $0 $0 $15,000

Apprentice mechanic (part time) $0 $0 $0

TOTAL PEOPLE 4 4 5

Total Payroll $93,300 $102,000 $117,000

Financial Plan
The following sections outline the financial plan for F & R Auto Repair.
7.1 Break-even Analysis
The company's Break-even Analysis is based on an average company's running costs
within this industry, including payroll, and its fixed costs for such things as rent, utilities,
etc.
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BREAK-EVEN ANALYSIS

Monthly Revenue Break-even $14,564

Assumptions:

Average Percent Variable Cost 10%

Estimated Monthly Fixed Cost $13,107

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7.2 Projected Profit and Loss
The following table and chart show the projected profit and loss for F & R Auto Repair.
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PRO FORMA PROFIT AND LOSS

YEAR 1 YEAR 2 YEAR 3

Sales $178,800 $200,256 $215,417

Direct Cost of Sales $17,880 $20,026 $21,542

Other Production Expenses $0 $0 $0

TOTAL COST OF SALES $17,880 $20,026 $21,542

Gross Margin $160,920 $180,230 $193,875

Gross Margin % 90.00% 90.00% 90.00%

Expenses

Payroll $93,300 $102,000 $117,000

Sales and Marketing and Other $6,000 $7,200 $7,400

Expenses

Depreciation $1,992 $2,000 $2,000

Leased Equipment $6,000 $1,000 $1,000

Utilities $4,800 $5,000 $5,000

Insurance $7,200 $7,400 $7,400

Rent $24,000 $24,000 $24,000

Payroll Taxes $13,995 $15,300 $17,550

Other $0 $0 $0

Total Operating Expenses $157,287 $163,900 $181,350

 Profit Before Interest and Taxes $3,633 $16,330 $12,525

EBITDA $5,625 $18,330 $14,525

Interest Expense $1,892 $1,700 $1,500

Taxes Incurred $522 $4,389 $3,308

Net Profit $1,219 $10,241 $7,718

Net Profit/Sales 0.68% 5.11% 3.58%

7.3 Projected Cash Flow

The following table and chart are the projected cash flow figures for F & R.

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PRO FORMA CASH FLOW

YEAR 1 YEAR 2 YEAR 3

Cash Received

Cash from Operations

Cash Sales $160,920 $180,230 $193,875

Cash from Receivables $14,635 $19,636 $21,267

SUBTOTAL CASH FROM OPERATIONS $175,555 $199,867 $215,142

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

SUBTOTAL CASH RECEIVED $175,555 $199,867 $215,142

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $93,300 $102,000 $117,000

Bill Payments $77,017 $86,232 $88,638

SUBTOTAL SPENT ON OPERATIONS $170,317 $188,232 $205,638

Additional Cash Spent

 Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current $0 $0 $0

Borrowing

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal $2,000 $2,000 $2,000

Repayment

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

SUBTOTAL CASH SPENT $172,317 $190,232 $207,638

Net Cash Flow $3,238 $9,634 $7,504

Cash Balance $6,138 $15,773 $23,277

7.4 Projected Balance Sheet

The following table shows the projected balance sheet.

PRO FORMA BALANCE SHEET

YEAR 1 YEAR 2 YEAR 3

Assets

Current Assets

Cash $6,138 $15,773 $23,277

Accounts Receivable $3,245 $3,634 $3,910

Inventory $1,815 $2,033 $2,187

Other Current Assets $0 $0 $0

TOTAL CURRENT ASSETS $11,198 $21,440 $29,373

Long-term Assets

Long-term Assets $20,000 $20,000 $20,000

Accumulated Depreciation $1,992 $3,992 $5,992

TOTAL LONG-TERM ASSETS $18,008 $16,008 $14,008

TOTAL ASSETS $29,206 $37,448 $43,381

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $7,088 $7,088 $7,303

Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

SUBTOTAL CURRENT LIABILITIES $7,088 $7,088 $7,303

Long-term Liabilities $18,000 $16,000 $14,000

TOTAL LIABILITIES $25,088 $23,088 $21,303

Paid-in Capital $12,000 $12,000 $12,000

Retained Earnings ($9,100) ($7,881) $2,360

Earnings $1,219 $10,241 $7,718

TOTAL CAPITAL $4,119 $14,360 $22,078

TOTAL LIABILITIES AND CAPITAL $29,206 $37,448 $43,381

 Net Worth $4,119 $14,360 $22,078

7.5 Business Ratios

The Business ratios give an overall idea of how profitable and at what risk level F & R
Auto will operate at. The ratio table gives both time series analysis and cross-sectional
analysis by including industry average ratios. As can be seen from the comparison
between industry standards and F&R's own ratios, there is some differences. Most of
these are due to the fact that there is a very large variance in assets, liabilities, financing,
and net income between companies in this industry due to the vast differences in
company size.
Overall the company's projections show a company that faces the usual risks of
companies in this industry and one that will be profitable in the long-run. The company
shows that it has higher SG&A costs than other competitors, however management has
deliberately overstated costs and minimized profits in order to create a "safe" or "buffer"
zone in case of hard times or other unforeseeable problems. Pre-tax return on net worth
and pre-tax return on assets appears to be very high, especially within the first two years,
however this is due to the fact that the company will be operating with fewer assets than
most companies in the first few years until it can build up enough cash to acquire the
tools and facilities that are desired and go beyond the "adequate" level.

RATIO ANALYSIS

YEAR 1 YEAR 2 YEAR 3 INDUSTRY

PROFILE

Sales Growth 0.00% 12.00% 7.57% 7.00%

Percent of Total Assets

Accounts Receivable 11.11% 9.71% 9.01% 8.80%

Inventory 6.21% 5.43% 5.04% 9.60%

Other Current Assets 0.00% 0.00% 0.00% 23.80%

Total Current Assets 38.34% 57.25% 67.71% 42.20%

Long-term Assets 61.66% 42.75% 32.29% 57.80%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%

Current Liabilities 24.27% 18.93% 16.83% 34.80%

Long-term Liabilities 61.63% 42.73% 32.27% 24.70%

Total Liabilities 85.90% 61.65% 49.11% 59.50%

NET WORTH 14.10% 38.35% 50.89% 40.50%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 90.00% 90.00% 90.00% n.a.

Selling, General & 89.32% 84.89% 86.42% 75.20%

Administrative Expenses

Advertising Expenses 1.34% 1.50% 1.39% 1.30%

Profit Before Interest and 2.03% 8.15% 5.81% 1.70%

Taxes

Main Ratios

Current 1.58 3.02 4.02 1.17

Quick 1.32 2.74 3.72 0.65

Total Debt to Total Assets 85.90% 61.65% 49.11% 59.50%

Pre-tax Return on Net Worth 42.28% 101.88% 49.94% 1.80%

Pre-tax Return on Assets 5.96% 39.07% 25.41% 4.60%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 0.68% 5.11% 3.58% n.a

Return on Equity 29.59% 71.32% 34.96% n.a

Activity Ratios

Accounts Receivable Turnover 5.51 5.51 5.51 n.a

Collection Days 57 63 64 n.a

Inventory Turnover 10.91 10.41 10.21 n.a

Accounts Payable Turnover 11.87 12.17 12.17 n.a

Payment Days 27 30 30 n.a

Total Asset Turnover 6.12 5.35 4.97 n.a

Debt Ratios

Debt to Net Worth 6.09 1.61 0.96 n.a

Current Liab. to Liab. 0.28 0.31 0.34 n.a

Liquidity Ratios

Net Working Capital $4,111 $14,352 $22,070 n.a

Interest Coverage 1.92 9.61 8.35 n.a

Additional Ratios

Assets to Sales 0.16 0.19 0.20 n.a

Current Debt/Total Assets 24% 19% 17% n.a

Acid Test 0.87 2.23 3.19 n.a

Sales/Net Worth 43.41 13.95 9.76 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

SALES FORECAST

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Sales

Routine 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500
maintenance

Small repair 0% $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500
jobs

Large repair 0% $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $6,500 $6,500 $6,500 $6,500 $6,500 $6,500
jobs

TOTAL $13,300 $13,300 $13,300 $13,300 $13,300 $13,300 $16,500 $16,500 $16,500 $16,500 $16,500 $16,500
SALES

Direct Cost Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
of Sales 10 11 12

Routine $400 $400 $400 $400 $400 $400 $450 $450 $450 $450 $450 $450
maintenance

Small repair $450 $450 $450 $450 $450 $450 $550 $550 $550 $550 $550 $550
jobs

Large repair $480 $480 $480 $480 $480 $480 $650 $650 $650 $650 $650 $650
jobs

Subtotal $1,330 $1,330 $1,330 $1,330 $1,330 $1,330 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650
Direct Cost
of Sales
PERSONNEL PLAN

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Mr. Ford 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Mr. 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Ronald

Office 0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
manager
(part
time)

Apprentice 0% $0 $0 $0 $0 $0 $0 $1,150 $1,150 $1,150 $1,150 $1,150 $1,150

mechanic
(part
time)

Apprentice 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
mechanic
(part
time)

Apprentice 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
mechanic
(part
time)

TOTAL 3 3 3 3 3 3 4 4 4 4 4 4
PEOPLE

Total $7,200 $7,200 $7,200 $7,200 $7,200 $7,200 $8,350 $8,350 $8,350 $8,350 $8,350 $8,350
Payroll

GENERAL ASSUMPTIONS
 MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Plan 1 2 3 4 5 6 7 8 9 10 11 12
Month

Current 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Interest
Rate

Long- 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
term
Interest
Rate

Tax 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Rate

Other 0 0 0 0 0 0 0 0 0 0 0 0

PRO FORMA PROFIT AND LOSS

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Sales $13,300 $13,300 $13,300 $13,300 $13,300 $13,300 $16,500 $16,500 $16,500 $16,500 $16,500 $16,500

Direct Cost of $1,330 $1,330 $1,330 $1,330 $1,330 $1,330 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650
Sales

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Production
Expenses

TOTAL COST $1,330 $1,330 $1,330 $1,330 $1,330 $1,330 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650
OF SALES

Gross Margin $11,970 $11,970 $11,970 $11,970 $11,970 $11,970 $14,850 $14,850 $14,850 $14,850 $14,850 $14,850
Gross Margin % 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%

Expenses

Payroll $7,200 $7,200 $7,200 $7,200 $7,200 $7,200 $8,350 $8,350 $8,350 $8,350 $8,350 $8,350

Sales and $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Marketing and
Other Expenses

Depreciation $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166

Leased $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Equipment

Utilities $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Insurance $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Payroll Taxes 15% $1,080 $1,080 $1,080 $1,080 $1,080 $1,080 $1,253 $1,253 $1,253 $1,253 $1,253 $1,253

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating $12,446 $12,446 $12,446 $12,446 $12,446 $12,446 $13,769 $13,769 $13,769 $13,769 $13,769 $13,769
Expenses

Profit Before ($476) ($476) ($476) ($476) ($476) ($476) $1,082 $1,082 $1,082 $1,082 $1,082 $1,082
Interest and
Taxes

EBITDA ($310) ($310) ($310) ($310) ($310) ($310) $1,248 $1,248 $1,248 $1,248 $1,248 $1,248

Interest $165 $164 $162 $161 $160 $158 $157 $156 $154 $153 $151 $150
Expense

Taxes Incurred ($192) ($192) ($192) ($191) ($191) ($190) $277 $278 $278 $279 $279 $279
Net Profit ($449) ($448) ($447) ($446) ($445) ($444) $647 $648 $649 $650 $651 $652

Net Profit/Sales -3.38% -3.37% -3.36% -3.35% -3.35% -3.34% 3.92% 3.93% 3.93% 3.94% 3.95% 3.95%

PRO FORMA CASH FLOW

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Cash Received

Cash from
Operations

Cash Sales $11,970 $11,970 $11,970 $11,970 $11,970 $11,970 $14,850 $14,850 $14,850 $14,850 $14,850 $14,850

Cash from $0 $44 $1,330 $1,330 $1,330 $1,330 $1,330 $1,341 $1,650 $1,650 $1,650 $1,650
Receivables

SUBTOTAL $11,970 $12,014 $13,300 $13,300 $13,300 $13,300 $16,180 $16,191 $16,500 $16,500 $16,500 $16,500
CASH FROM
OPERATIONS

Additional
Cash Received

Sales Tax, 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

VAT, HST/GST
Received

New Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing

New Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
(interest-free)

New Long- $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
term Liabilities
Sales of Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Assets

Sales of Long- $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
term Assets

New $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment
Received

SUBTOTAL $11,970 $12,014 $13,300 $13,300 $13,300 $13,300 $16,180 $16,191 $16,500 $16,500 $16,500 $16,500
CASH
RECEIVED

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
10 11 12

Expenditures
from
Operations

Cash $7,200 $7,200 $7,200 $7,200 $7,200 $7,200 $8,350 $8,350 $8,350 $8,350 $8,350 $8,350
Spending

Bill Payments $262 $7,797 $6,382 $6,381 $6,380 $6,379 $6,422 $7,677 $7,336 $7,335 $7,334 $7,333

SUBTOTAL $7,462 $14,997 $13,582 $13,581 $13,580 $13,579 $14,772 $16,027 $15,686 $15,685 $15,684 $15,683
SPENT ON
OPERATIONS

Additional
Cash Spent

Sales Tax, $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
VAT, HST/GST
Paid Out

Principal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment of
Current
Borrowing
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Principal
Repayment

Long-term $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167
Liabilities
Principal
Repayment

Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current
Assets

Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term
Assets

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SUBTOTAL $7,628 $15,164 $13,749 $13,748 $13,747 $13,746 $14,938 $16,194 $15,852 $15,852 $15,851 $15,850
CASH SPENT

Net Cash Flow $4,342 ($3,149) ($449) ($448) ($447) ($446) $1,242 ($3) $648 $648 $649 $650

Cash Balance $7,242 $4,092 $3,644 $3,196 $2,750 $2,304 $3,546 $3,543 $4,190 $4,839 $5,488 $6,138

PERSONNEL PLAN

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Mr. Ford 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Mr. 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Ronald

Office 0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
manager
(part
time)
Apprentice 0% $0 $0 $0 $0 $0 $0 $1,150 $1,150 $1,150 $1,150 $1,150 $1,150
mechanic
(part
time)

Apprentice 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
mechanic
(part
time)

Apprentice 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
mechanic
(part
time)

TOTAL 3 3 3 3 3 3 4 4 4 4 4 4
PEOPLE

Total $7,200 $7,200 $7,200 $7,200 $7,200 $7,200 $8,350 $8,350 $8,350 $8,350 $8,350 $8,350
Payroll

GENERAL ASSUMPTIONS

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Plan 1 2 3 4 5 6 7 8 9 10 11 12
Month

Current 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Interest
Rate

Long- 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
term
Interest
Rate

Tax 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Rate
Other 0 0 0 0 0 0 0 0 0 0 0 0

PRO FORMA PROFIT AND LOSS

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Sales $13,300 $13,300 $13,300 $13,300 $13,300 $13,300 $16,500 $16,500 $16,500 $16,500 $16,500 $16,500

Direct Cost of $1,330 $1,330 $1,330 $1,330 $1,330 $1,330 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650
Sales

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Production
Expenses

TOTAL COST $1,330 $1,330 $1,330 $1,330 $1,330 $1,330 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650
OF SALES

Gross Margin $11,970 $11,970 $11,970 $11,970 $11,970 $11,970 $14,850 $14,850 $14,850 $14,850 $14,850 $14,850

Gross Margin % 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%

Expenses

Payroll $7,200 $7,200 $7,200 $7,200 $7,200 $7,200 $8,350 $8,350 $8,350 $8,350 $8,350 $8,350

Sales and $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Marketing and
Other Expenses

Depreciation $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166

Leased $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Equipment

Utilities $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Insurance $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Payroll Taxes 15% $1,080 $1,080 $1,080 $1,080 $1,080 $1,080 $1,253 $1,253 $1,253 $1,253 $1,253 $1,253

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating $12,446 $12,446 $12,446 $12,446 $12,446 $12,446 $13,769 $13,769 $13,769 $13,769 $13,769 $13,769
Expenses

Profit Before ($476) ($476) ($476) ($476) ($476) ($476) $1,082 $1,082 $1,082 $1,082 $1,082 $1,082
Interest and
Taxes

EBITDA ($310) ($310) ($310) ($310) ($310) ($310) $1,248 $1,248 $1,248 $1,248 $1,248 $1,248

Interest $165 $164 $162 $161 $160 $158 $157 $156 $154 $153 $151 $150
Expense

Taxes Incurred ($192) ($192) ($192) ($191) ($191) ($190) $277 $278 $278 $279 $279 $279

Net Profit ($449) ($448) ($447) ($446) ($445) ($444) $647 $648 $649 $650 $651 $652

Net Profit/Sales -3.38% -3.37% -3.36% -3.35% -3.35% -3.34% 3.92% 3.93% 3.93% 3.94% 3.95% 3.95%

PRO FORMA CASH FLOW

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11 12

Cash Received

Cash from
Operations

Cash Sales $11,970 $11,970 $11,970 $11,970 $11,970 $11,970 $14,850 $14,850 $14,850 $14,850 $14,850 $14,850
Cash from $0 $44 $1,330 $1,330 $1,330 $1,330 $1,330 $1,341 $1,650 $1,650 $1,650 $1,650
Receivables

SUBTOTAL $11,970 $12,014 $13,300 $13,300 $13,300 $13,300 $16,180 $16,191 $16,500 $16,500 $16,500 $16,500
CASH FROM
OPERATIONS

Additional
Cash Received

Sales Tax, 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

VAT, HST/GST
Received

New Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing

New Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
(interest-free)

New Long- $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
term Liabilities

Sales of Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Assets

Sales of Long- $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
term Assets

New $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment
Received

SUBTOTAL $11,970 $12,014 $13,300 $13,300 $13,300 $13,300 $16,180 $16,191 $16,500 $16,500 $16,500 $16,500
CASH
RECEIVED

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
10 11 12
Expenditures
from
Operations

Cash $7,200 $7,200 $7,200 $7,200 $7,200 $7,200 $8,350 $8,350 $8,350 $8,350 $8,350 $8,350
Spending

Bill Payments $262 $7,797 $6,382 $6,381 $6,380 $6,379 $6,422 $7,677 $7,336 $7,335 $7,334 $7,333

SUBTOTAL $7,462 $14,997 $13,582 $13,581 $13,580 $13,579 $14,772 $16,027 $15,686 $15,685 $15,684 $15,683
SPENT ON
OPERATIONS

Additional
Cash Spent

Sales Tax, $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
VAT, HST/GST
Paid Out

Principal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment of
Current
Borrowing

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Principal
Repayment

Long-term $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167
Liabilities
Principal
Repayment

Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current
Assets

Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term
Assets
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SUBTOTAL $7,628 $15,164 $13,749 $13,748 $13,747 $13,746 $14,938 $16,194 $15,852 $15,852 $15,851 $15,850
CASH SPENT

Net Cash Flow $4,342 ($3,149) ($449) ($448) ($447) ($446) $1,242 ($3) $648 $648 $649 $650

Cash Balance $7,242 $4,092 $3,644 $3,196 $2,750 $2,304 $3,546 $3,543 $4,190 $4,839 $5,488 $6,138