“4 Wheels” – Automobile Repair &

Maintenance
Business Plan
American University of Science and Technology
Spring 2018/2019
Prepared by: Ali Tahtah Date: May 29, 2019
 Introduction

Environmental Analysis

Start-Up Cost Analysis

Presentation
Overview Marketing Analysis

Financial Plan

Conclusion & Recommendation

 Business Overview

Need for the Study

Introduction
Mission Statement

“4 Wheels” Goals and Objectives

Business Overview
• "4 Wheels" is an organization that will offer automobile
repairs inside garage and outside trough its tracks

• Due to the satisfactory service price, the organization will

consider individuals from various social classes.

• The earnings potential for “4 Wheels” is great. With a

forecasting revenue model based on the demand and call
rate
 Need for the Project

Automobile workshops are misusing the residents.

Prices asked for the towing vehicle is high

Growing Market and high NPMs

Lack of Competitors as a movable workshop

 Mission Statement

"4 Wheels" mission is to serve as many individuals as

would be prudent, through giving a definitive vehicle
fix
experience that the company can handle, and to have
the option to give the client some assistance on the
spot. The company serve its clients with
trustworthiness, honesty and quality.
 Operational Goals

• Build CRM
• Product Positioning

Tactical Goals

Goals • Increase Awareness

• Gain 12% of Market share

Strategic

• Expand Geographically
• Stretch Service-line
 Objectives

1 2 3 4
To create brand To maintain To analyze data Staff Training and
awareness through service positioning and to improve Development in
intensive in the minds of the performance to
marketing efforts, customers in the live up with the yearly basis
and intensive ads. first year. customers’
expectations.
 The Specific
Audience

Room for Business

Business Model Innovation Processes

Key Key
Business Business
Partners Resources

The Value
Proposition
 Environmental Analysis - Internal

Employees Suppliers Competitors Customers

 Environmental Analysis - External

LEGAL ISSUES POLITICAL AND NATURAL EFFECTS DEMOGRAPHIC TECHNOLOGICAL

ECONOMIC CONCERNS DEVELOPMENTS
INSTABILITY
 Strengths Opportunities

 One of a kind services.  Automobile service sector provides opportunities for growth.

 Highly Qualified Mechanics.  Yearly increase of the number of cars imported to Lebanon.

 Low Service Cost.  Extremely demanded service.

 Large geographical distribution of the service.  Decrease the cost for the customer in case his car was broke in a far

 A to Z car fixing service. place and won’t have to call a pick-up.

Weaknesses Threats

 High debt burden. • High traffic in Lebanon.

 High pressure on the employees to be able to produce quality  Political instability .

service.  Intense competition.

 Lack of trust from our target audience, because they didn’t try

our service yet.

Questionnaire Analysis
Qu
Ti
alit
me Ho
y
for use
or
Importantfix
Criteria
pro
ser
ing xi
vic
it mit
e
12 y
28
% 2%
% Pri
ce
27
Co %
nfi
de
nc
Time for fixing it e House proximity Price
Confidence 32 Quality or service Other
%
 Questionnaire Analysis
Expense Level

I would like to
I would like to know
know; 20.00%

I do not know;
I do not know
18.33%

Not Expensive;
Not Expensive
28.33%

Expensive;
Expensive
33.33%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

 Start-Up Cost

Wok Item Total

Construction Cost $400,170.00

Land $467,797.00

Management Building Components Cost $152,011.11

Warehouse and Repair Shop Components Cost $1,301,201.94

Vehicles Cost $111,937.18

Total Start-Up Cost $2,433,117.23

 “4 Wheels” Organization Values
Value Number Value
Working as a team.
1
Act with integrity and honesty.
2
Supporting exceptional service.
3
Celebrate Success
4
Encourage creativity and innovation.
5
 Space Matrix
Internal Analysis   External Analysis  
Financial Position (FP)   Stability Position (SP)  
Return on investment (ROI)  4 Rate of inflation -2
Leverage  3 Technological Changes -6
Liquidity  4 Price Elasticity of Demand  -6
Working Capital  4 Competitive Pressure  -6
Cash Flow  5 Barriers to entry into market  -7
Financial Position (FP) Average 4 Stability Position (SP) AVERAGE  -5.4
Internal Analysis   External Analysis  
Competitive Position (CP)   Industry Position(IP)  
Market Share  -6 Growth potential  3
Product Quality  -2 Financial stability  5
Customer Loyalty   -3 Ease of entry into market 7
Technological Know-How  -2 Resource Utilization  4
Control over suppliers/Distributers  -3 Profit Potential  4
Competitive Position (CP) Average  -3.2 Industry Position (IP) Average  4.6
 Segmentation Targeting
Marketin
g Analysis

Positioning Marketing
Mix
• BMW friends, BMW club, and FaF techno Psychographic
group,
• Regular/Occasional
Behavioral
• Beirut city to Tyre City
Geographic
• Age: Above 18 Years
Demographic
Segmentation
 Positioning
In the case of “4 Wheels”, different competitive

advantages exist such as, distinctive image,

prices,

and the unique customer service.

 Marketing Mix
Product Pricing Place and
Promotion
Strategy Strategy Time
TV, Radio,
Core
Penetration Automobile and Social
Product
Media

Additional
Services

Benefits
 Target Market Size
According to (BankMed), despite political uncertainty and economic
slowdown,
the automobile sector in Lebanon experienced a remarkable growth in 2015.
Furthermore, as a latest study, the number of road motor vehicles per 1000
inhabitants in Lebanon resulted in a ratio of 58.2%. As a conclusion, the
target
market size is acceptable, and is experiencing a growth (BankMed).
 Target Market Size

Number of
Number of Cars Ratio
Citizens

1,000.00 582.00 58%

6,039,277.00 3,514,859.21 58%

 Sales Assumption
Sales forecasting is one of the toughest processes that a financial analyst can
encounter due to the fierce competition and the lack of effective information.
For that reason, “4 Wheels” will be using the population volume of the
Lebanese society, by which, according to the statistical analysis of car
ownership in Lebanon; the result was that each 1000 citizens own at least
582
cars.
 Sales Assumption
Taking the entire population and by calculating the number of cars that exist,
it
totaled 3,514,859.21 when the population of Lebanon is equal to
6,039,277.00
citizens. “4 Wheels” will be estimating that out of the 3.514M cars in
Lebanon
62% out of them are between the area of Beirut city and South Lebanon
according to the statistics of BankMed. Smoothed by 7% Being 71%
(BankMed)
 Sales Assumption
Out of those 62% the company will be estimating that 0.3% only need

different repairs that will be shown in the following table in term of sales
and

proportion.
 Financial Study - Sales
Sales
Year % 2019 C 2020 F 2021 F 2022 F 2023 F
Growth Rate N/A E 1.05 1.05 1.05 1.05
Type of Repair N/A AP AP AP AP AP
Repairs Using Hand Tools Only 62% $912,001 $957,601 $1,005,481 $1,055,755 $1,108,542
Maintenance and Light Repair 32% $1,638,071 $1,719,974 $1,805,973 $1,896,271 $1,991,085
Automobile Service Technology 4% $588,387 $617,807 $648,697 $681,132 $715,189

Master Automobile Service

Technology 2% $544,847 $572,089 $600,694 $630,728 $662,265
Total Sales 100% $3,683,305 $3,867,471 $4,060,844 $4,263,886 $4,477,081
 Break-Even Point in Sales
Break-Even Point in Sales
$2,800,000 $2,000,000
$1,800,000
$2,700,000
$1,600,000
$2,600,000 $1,400,000
$2,500,000 $1,200,000
$1,000,000
$2,400,000 $800,000
$2,300,000 $600,000
$400,000
$2,200,000
$200,000
$2,100,000 $0
1 2 3 4 5 6 7

BEP Total Variable Cost

 Income Statement - Forecasted
Income St. 2019 F 2020 F 2021 F 2022 F 2023 F 2024 F 2025 F

Sales $3,683,305 $3,867,471 $4,060,844 $4,263,886 $4,477,081 $4,700,935 $4,935,981

Gross
$2,176,833 $2,285,675 $2,399,959 $2,519,957 $2,645,955 $2,778,252 $2,917,165
Profit

EBITDA $959,504 $1,032,670 $1,098,158 $1,160,686 $1,219,139 $1,280,515 $1,344,960

EBIT $711,948 $785,113 $850,601 $913,129 $971,582 $1,032,959 $1,097,403

EBT $616,734 $698,988 $776,709 $852,211 $924,425 $1,000,396 $1,080,321

Net
$524,224 $594,140 $660,202 $724,379 $785,761 $850,337 $918,273
Earnings
 Liquidity Ratio

Year 2019 C 2020 F 2021 F 2022 F 2023 F

Cash Ratio $1.60 $2.30 $3.56 $4.49 $5.67
Current Ratio 1.675443934 2.397020733 3.685490881 4.66126216 5.903355162
Absolute Liquid Ratio 7.037389047 8.344521439 10.27467267 11.85952108 13.45190176
Current Assets $682,921 $781,074 $945,509 $934,350 $934,814
Current Liabilities $407,606 $325,852 $256,549 $200,450 $158,353
Total Assets $2,868,482 $2,719,079 $2,635,957 $2,377,241 $2,130,149
Cash $652,933 $749,587 $912,447 $899,635 $898,363
 Profitability Ratio
Year 2019 C 2020 F 2021 F 2022 F 2022 F
Sales $3,683,305 $3,867,471 $4,060,844 $4,263,886 $4,477,081

Gross Profit $2,176,833 $2,285,675 $2,399,959 $2,519,957 $2,645,955

EBIT $711,948 $785,113 $850,601 $913,129 $971,582

Net Income $524,224 $594,140 $660,202 $724,379 $785,761

GPM 59.10% 59.10% 59.10% 59.10% 59.10%

OPM 19.33% 20.30% 20.95% 21.42% 21.70%
NPM 14.23% 15.36% 16.26% 16.99% 17.55%
ROA $ 1.28 $ 1.42 $ 1.54 $ 1.79 $ 2.10
ROE $ 4.05 $ 3.71 $ 3.26 $ 3.36 $ 3.43
Total Assets $2,868,482 $2,719,079 $2,635,957 $2,377,241 $2,130,149

Total Equity $909,618 $1,043,758 $1,243,960 $1,268,340 $1,304,101

 WACC

In the case of “4 Wheels”, the cost of debt is equal to the annual interest of
the loan which is 5.9%, and the cost of equity is equal to the cost of debt and
the Lebanese country risk premium which equal to 13.51%. The weight of
debt
is equal to the amount of debt over the start-up cost equaling 65% and the
weight of equity equal to 35%. Thus, the WACC equal to 10%.
 Free Cash Flow to Firm
Year 2019 C 2020 F 2021 F 2022 F 2023 F 2024 F 2025 F
Net Income $524,224 $594,140 $660,202 $724,379 $785,761 $850,337 $918,273
Dep. Expense $247,556 $247,556 $247,556 $247,556 $247,556 $247,556 $247,556
Fin Cost AT $80,931.83 $73,206.63 $62,808.75 $51,780.53 $40,083.76 $27,677.91 $14,519.99
CAPEX - 0 0 0 0 0 0
NWC Change - ($16,399) ($95,132) $67,258 $41,633 ($8,043) $194,887
FCF $852,712 $898,504 $875,435 $1,090,974 $1,115,034 $1,117,528 $1,375,236

Terminal Value $15,280,399.89            

Terminal
Growth 1.00%            
 NPV and IRR Interpretation

NPV is positive for the first six IRR is greater than the WACC
years.

NPV is equal to $1,810,681 IRR is equal to 31%

 Recommendations
To be able to witness an uninterrupted success, “4 Wheels” must maintain the

organizational values and philosophies first agreed upon and implement them

in their daily routine business days. This will imprint an ongoing positive image

towards the car service in the minds of consumers.