CSU Business Plan Presentation

XYZ CAR RENTALCOMPANY
Business Plan
700 S ISIS
AVENUE,
INGELWOOD CA
90301
p. (424)386-1148
f. (424)415-2744
XYZ@carrental.com
Table of Contents
I.
Executive Summary …………………………………………………………………………………….. 2
Highlights
Objectives
Mission Statement
Keys to Success
II.
Description of Business………………………………………………………………………………… 3
Company Ownership/Legal Entity
Location
Interior
Hours of Operation
Products and Services
Suppliers
Service
Manufacturing
Management
Financial Management
Start-Up/Acquisition Summary
III.
Marketing …………………………………………………………………………………………………… 6
Market Analysis
Market Segmentation
Competition
Pricing
IV.
Appendix …………………………………………………………………………………………………….. 9
Start-Up Expenses
Determining Start-Up Capital
Cash Flow
Income Projection Statement
Profit and Loss Statement
Balance Sheet
Sales Forecast
Milestones
Break-Even Analysis
Miscellaneous Documents
Executive Summary
Highlights
The organization aims at providing quality car rental services to the customers in Los
Angeles. The goal of the company is to balance the different startup costs and the earned
profits by the end of the first financial year.
Within the first year of operation, there is an expectation of high sales amounting to $1,624,700.
Despite this being a startup company, the Los Angeles car rental market is unexplored. This will
pave the way for making high sales. However, there is also an expectation of a low net profit as
compared to the next two years. The projected net profit is $82,986. The variation between the total
sales and the net profit is as a result of the high startup costs. In the second year of operation, there
is an expectation of an increase in the number of sales. The projected amount is $1,822,550. The
increase is attributed to the consolidation of the company in the market. In addition, the net profit is
expected to increase to $120,842 as a result of the elimination of costs of operation. In the third
year, there is an expectation of an increase in the number of sales. The expected revenue from the
sales is $2,390,190. By the third year, there is an expectation that the company will be in a stable
position. The expected net profit is $232,029. Based on these projections, the company is expected
to have a positive growth as a result of the gradual increase in the number of customers.
Objectives
The focus of XYZ rental company is to provide quality services to the customers and achieve
profits in return. The main objective of the company is to provide a reliable and friendly
customer base so as to establish a loyal customer base. The sub-objectives of the company
are:
• Make customers understand that hiring a car is better as compared to buying
• Provide transport solution that is cost effective
• Provide quality services ensuring reliable, safe, timely, and comfortable service
• Effectively ensuring ethical business practices
Mission Statement
A customer experience that is driven by value and defines the company’s character through
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quality and friendly service
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Keys to Success
• Optimum car fleet utilization
• Satisfaction of the customer
• Quality services
Description of Business
XYZ car rental company is an electric car rental company that focuses on quality and reliable car
rental services. The company was set up in 2022 by three entrepreneurs who have experience in car
rental business. The focus of the entrepreneurs is on the following areas:
•
Customer satisfaction
•
Quality service
•
On time departure and arrival
•
Regular audits to ensure statutory compliance.
The company is focused on the provision of the following services; long term car rentals, airport
transfers, car rentals, event transportation, fleet management, and luxury cars. The requirements of
the customers are fulfilled by providing dedicated, committed, and experienced resources. The
business will have an online management system for the customers to access different services. The
cars will be insured and fully licensed. The intention of the business is to operate with a fleet of 25
cars which include executive and luxury electric cars.
Company Ownership/Legal Entity
XYZ Car rental company is a partnership owned by two individuals. In the business, there
is an agreement to share the risks, profits, and responsibility that arise as a result of
carrying out the day-to-day operations. There is one investor who is the majority
shareholder of the organization. There is one investor who is a silent partner with limited
liability.
A contractual agreement will be adopted in this company to form specific processes that
will be followed by the management, owners, employees, and the investors. As this is a
new company is a highly competitive market, a partnership is idea as it has a simple
operating structure. The simple structure involves easiness during the establishment, and
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no legal forms are required. Flexibility will also characterize this partnership. The
company intends to ensure there is flexibility in management hence the focus on making
the company a partnership.
Location
Business is located in Los Angeles near LAX. The specific location will be 700 S Isis
Avenue. in this location, there is a charging point for the company’s vehicles. This ensures
convenience. This location is ideal as the market in Los Angeles is not adequately explored.
Currently, the number of companies offering electric rental cars are in low numbers. The car
hire companies in Los Angeles tend to charge high prices as a result of the use of fuel
vehicles. The provision of cheap rental cars will contribute to the increased attraction of
passengers from Los Angeles International Airport. In addition, the location will allow the
acquisition of potential student customers from West Los Angeles College.
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Interior
The interior of XYZ car rental company will be design such that it is attractive to the
current and potential customers. The front section of the office will sit on a 900 sq. ft.
space. The space will comprise of a reception, the finance office, managers, office, and an
open plan office section in charge of processing the different requests by the customers.
The office space provides space for customers to interact with the employees and also
access different offices of the company. The office compound will have a compound with
a width of 50 yards and 100 yards in length. The space will accommodate the number of
cars for the company.
Hours of Operation
Every day from 8am to 5pm, and from 6pm to 3am. The working hours are aimed at
maximizing the sales of the company by targeting passengers from the airport.
Products and Services
The services to be provided by the company are determined so as the primary permits can
be acquired and employees hired. We will be having electric standard and luxury cars.
These cars will be given on set packages as brought out below:
• 1 day car rental service- customers will be offered cars for one day in exchange for
$25 for standard cars, and $30 for luxury cars.
• 1 week car rental service- the cars will be provided to the clients based on a five days
charge as compared to a 7 days charge. There will be an option to select the pickup
location for the customers
• 1 month car rental service- the cars for one month will be available for the customers
on a 25 days charge. The customers will be required to avail themselves at the office
locations. The rental service for one month will not be provided online.
• Car drivers- this service will differentiate the company from others in Los Angeles.
Car drivers will be offered to the customers considering the three different services.
Regular clients will benefit from discounts and packages. However, in the case of an emergency,
there is no customer who will be exempted from the recovery charges except for those who have
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acquired the company’s driver services.
Suppliers
The main type of suppliers for the company will be electric car suppliers. The company
intends to partner with the suppliers of electric cars in an effort to eliminate the costs arise
with the use of middle men. With the direct contact with the manufacturers of electric cars,
it is possible for the company to benefit from discounts and after sale services. To prevent
the possible failure of cars from one company, there electric car companies will be used as
suppliers. The main suppliers will be Lucid Motors and Rivian. These companies provide
both regular and luxury electric cars. The initial cars will be supplied by these two
companies on a pay before delivery basis. There is an expectation that Lucid Motors will
deliver 8 regular and 7 luxury vehicles. Rivian, on the other hand will deliver 7 regular and
3 luxury vehicles. The variation in the number of regular and luxury cars is as a result of the
increased preference of regular electric cars in the market. An agreement will be reached
with Lucid Motors and Rivian so that they can handle the servicing. After the first five
years, the Lucid Motors and Rivian will supply additional cars on a trade in basis.
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Service
The main service provided by the company is offering car rentals to the customers.
However, the company will be involved in the provision of other services for the returning
and potential customers. Other services by XYZ Car Rental company include:
•
Membership services-just like other car hire organizations in Los Angeles, XYZ Car
Rental Company will offer a membership service. The main benefit of this service is
to ensure customer can make quick reservations and also access discounts. Upgrades
to luxury cars is also enjoyed under membership services.
• Insurance-XYZ Car Rental Company will offer the customers car insurance upon
renting a car. By making sure the customers are all covered, they are bound to choose
the company again
• Rental of car equipment- this service will be provided to customers on varying
pricing. Some of the equipment available for hire by the customers include additional
seats, GPS systems, special seats, and different adventuring equipment.
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Management
XYZ Car Rental Company will have substantial personnel to provide customers with
important services. The owner will be in-charge of supervising the operations of the
company. Additional employees will still be hired including IT experts, customer service
assistants, receptionists, and general workers. This will ensure the smooth running of the
organization. The organizational chart of XYZ Car Rental Company is brought out below.
Owner
Supervisor
Marketing
Department
Fleet management
department
Finance
department
Customer service
department
Financial Management
The financial management aspect will be handled by the finance department. Al l the
expenses related to the business will be approved by the owner. The major financial
assumptions of the company are provided in the appendix.
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Start-Up/Acquisition Summary
After the selection of a location for the business, it was found viable to lease a commercial
property located in 700 S Isis Avenue. The startup capital for the company will be used for
car purchase, legal expenses, insurance, property purchase, promotion, and miscellaneous
expenses. The decision to lease a property as compared to purchasing was arrived at as a
result of the high expenses that arise with purchasing. It is estimated that the startup
capital required is $4,000,000. The startup financing will be provided by the owner and
one investor. The owner is the majority shareholder with the initial capital of $3,300,000.
The startup costs will be adequately covered by the initial capital invested. The company
does not require any commercial loan hence the increased focus on the investors who
provide all the capital. The investor finances will be used to purchase cars, equipment,
property and employment of personnel. The cashflow analysis brought out in the appendix
section indicates the ability of the company to handle additional costs that arise during
startup.
Marketing
Market Analysis
There are more than 25 car rental companies in Los Angeles. These companies have
consolidated their position in the market by acquiring a large number of customers. Despite
the existence of other players in the market, the company is expected to expand within the
first three years of operation. In U.S.A, the car rental business is expected to grow by 2.4%
in the coming years. Based on this, there is potential for XYZ Car Rental company to be
productive. In 2021, a revenue of approximately $50 billion was generated which is an
increase from the previous years. The market has also proved to be a source of employment
having employed more than 150,000 people.
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Market Segmentation
Before the creation of this business plan, a detailed survey was carried out to analyze the market
gap that exists in relation to car rental business. Based on the response of selected people in Los
Angeles, it is clear that there are multiple situations that make people hire a car. Students and
tourists tend to comprise a high percentage of the overall market. Based on this, the target
market can be divided into: students, residents, and tourists. The segmentation of the Los
Angeles car rental market is brought out in the pie chart below.
Tourists and students will form a high percentage of the overall customers of the company. A
high number of tourists prefer to hire cars as compared to the use of public transport in Los
Angeles. By the provision of our services, the acquisition of rental cars will be simplified as
cars will be dropped at the agreed location. Students from around schools are significant target
for the company. Majority of students do not own cars which results in great opportunities for
the company. The residents and senior citizens in Los Angeles are also targeted by the
company. The residents will choose electric rental cars due to their cheap nature.
Competition
The biggest competitor in Los Angeles is Enterprise Car Rental. This company is highly
rated and has a high number of customers. It provides customers will electric car rental
options. The company is strategically located around Los Angeles Airport. In addition to
the existence of Enterprise Car Rental as the main competitor, other competitors who deal
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with electric cars are; National Car Rental, Alamo Car Rental, Aco Car Rental, and Addcar
Car Rental. To handle the competition, the focus will be on the provision of convenience to
the customers through an online platform. Driving services will also be provided to the
customers who do not want to drive the cars. The crew and policies of the company are
meant to comfort the customers. This will contribute to the attraction of new customers.
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Pricing
As XYZ Car Rental Company will enter the market with certain aspects that are
competitive, there is a need to set a price that is competitive. The prices of the company
will be low as compared to those of established companies. For regular cars, the price will
be $25 whereas for luxury cars, the price will start at $30. However, the price will be
specific based on the number of passengers carried by the cars.
Advertising and Promotion
The advertisement and promotion of XYZ Car rental Company will be done by use of print
media. In addition, influencers will be used to market the services of the company. Billboards
will also be erected around the airport area to further target the tourists. The aim of the process
of advertising and promotion is simplicity. Based on this, the company will also invest in
social media advertising. On social media advertising, the focus will be on the use of
Facebook and Instagram as the main platforms.
Strategy and Implementation
The main strategy for XYZ Car Rental Company is market penetration. In the adoption of this
strategy, the focus will be on tapping on the existing services in the market. The implementation
of the market penetration strategy will involve adopting new services that are currently not in
the market. These services include the provision of equipment services for the customers.
Market penetration strategy will be adopted in the first three years of operation.
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Appendix
Start-Up Expenses
Legal
$160,000
Insurance
$75,000
rent
$70,000
equipment
$130,000
consultants
$0
Interior Modifications
$20,000
Startup assets
$850,000
Start-up inventory
$60,000
signs
$3,300
Advertisement
$10,000
employees
$75,000
TOTAL STARTUP EXPENSES
$1,453,300
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Determining Start-Up Capital
Startup funding
Start-up expenses
Start-up assets
TOTAL FUNDING NEEDED
Assets
Non-cash Assets
Cash Requirement
Additional Cash Raised
Cash Balance
Total Assets
Liability and Capital
Liabilities
Accounts Payable
TOTAL LIABILITIES
Capital
Planned investment
Investor
Total Planned Investment
Total Funding
[BUSINESS PLAN TITLE] – [SELECT DATE]
$613,000
$540,000
$1,153,000
$850,000
$700,000
$50,000
$70,000
$1,670,000
$70,000
$40,000
$110,000
$3,300,000
$700,000
$4,000,000
$4,000,000
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Cash Flow
Cash Received
Cash from company operations
Cash Sales
Cash from Receivables
TOTAL CASH FROM OPERATIONS
Additional Cash
TOTAL CASH RECEIVED
Expenditures
Cash Spending
Payments
TOTAL ON OPERATIONS
TOTAL CASH SPENT
Net Cash Flow
Cash balance
[BUSINESS PLAN TITLE] – [SELECT DATE]
1st Year
2nd Year
3rd year
$56,000
$3,000
$53,000
$0
$53,000
$58,000
$8,000
$50,000
$0
$50,000
$62,500
$8,500
$54,000
$0
$54,000
$23,000
$13,500
$36,500
$36,500
$17,000
$19,500
$25,000
$15,500
$40,500
$40,500
$18,300
$22,200
$20,000
$21,000
$41,000
$41,000
$19,200
$21,800
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Profit and Loss Statement
Sales
COST OF SALES
Gross Profit
Gross Margin
Expenses
Payroll
Marketing
Depreciation
Utilities
Insurance
Rent
Taxes
Total Expenses
Profit before taxes
Taxes incurred
Net profit
[BUSINESS PLAN TITLE] – [SELECT DATE]
1st year
$995,000
$995,000
$630,000
37.5%
2nd year
$1,120,000
$1,120,000
$715,000
36.3%
3rd year
$1,425,000
$1,425,000
$915,000
35.7%
$350,000
$3,300
$2,010
$4,500
$1,500
$7,500
$52,300
$421,110
$309,624
$28,500
$82,986
$375,000
$3,500
$2,115
$4,950
$1,500
$7,500
$53,250
$447,815
$295,842
$31,200
$120,842
$415,000
$3,500
$2,011
$5,230
$1,500
$8,000
$55,450
$490,691
$226,362
$32,300
$232 029
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Balance Sheet
Assets
Current Assets
Cash
Accounts Receivable
Inventory
TOTAL CURRENT ASSETS
Long-term Assets
Depreciation
TOTAL ASSETS
Accounts Payable
Current Borrowing
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
Paid-in Capital
Retained Earnings
Earnings
TOTAL CAPITAL
TOTAL LIABILITIES AND CAPITAL
Net Worth
[BUSINESS PLAN TITLE] – [SELECT DATE]
1st Year
2nd Year
3rd year
$286,000
$18,200
$4,350
$308,550
$310,500
$19,100
$4,800
$334,400
$363,000
$21,500
$5,100
$389,600
$13,300
$321,850
$10,200
$0
$10,200
$10,200
$28,000
$47,000
$112,020
$189,000
$199,200
$198,600
$14,500
$348,900
$11,300
$0
$11,300
$11,300
$28,000
$51,000
$$156,000
$222,100
$233,400
$232,000
$15,100
$404,700
$12,050
$0
$12,050
$12,050
$28,000
$62,000
$178,000
$270,500
$282,550
$281,050
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Sales Forecast
The sales forecast for the company are brought out below.
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Break-Even Analysis
Break-even of monthly units: 4330
Break-even of monthly revenue: $124,000
Assumptions:
Average revenue per unit: 278.43
Average variable cost per unit: $0.77
Estimated monthly fixed cost: $198,463
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