Sales Forecast and Assumptions
The total market size of classic car dealers in the U.S. industry is $2 billion with 1974 businesses in operation (IBISWorld, 2020). There is no major player with a market share of greater than 5% which is consistent with our conclusion from competitive analysis.
In the first three-year period, we plan to focus on selling rare classic cars especially from Japan and Europe. We should be in the stage of late growth phase by the end of year three. In the beginning, we are planning to attract customers by undercutting the cost of labour and investment in advertising. The vintage vehicles are strongly discretionary purchases therefore it is significantly impacted by the individual disposable income.
Over the next five years, the classic car dealer industry is expected to be supported by the growth in domestic economy. We are planning to scale our business to the annual income of $25 million by the end of this five-year period supported by a very favourable growth rate.
Classic and antique car sale is our major business line, and we plan to sell Japanese and European cars for the first three years. With an expectation of an annual revenue of $18 million by the end of year 3, we plan to expand our business and sell third-party local vehicle on consignment. We also plan on selling rare and valuable antique vehicles via auctions, which will further boost our profitability from year 4. The growth rate of revenues from year 3 to year 4 are projected to be 20% as we are entering the rapid growth stage. And the market potential will be increasing as well according to authorized market research agencies.
參照我們的運營計劃，我們的業務結構是平坦的。 在第一階段，我們計劃招募3名銷售代表，1名客戶服務人員，1名財務人員，1名汽車修理工和6名采購人員。 我們計劃派遣采購人員到日本和歐洲與供應商進行談判。 盡管有搬遷費用，第一年我們的創始團隊的總啟動費用總計為90萬美元。
我們業務的商品銷售成本（COGS）包括車輛的購買價格，銷售傭金，改裝成本和倉儲成本。 同時，與辦公室租金，職工培訓費有關的費用也計入當期費用。 在第一年，我們的業務預計COGS的銷售額為400萬美元。 隨著銷售量的逐年增長，COGS有望增長。 在第5年內，我們預計總的COGS最高金額約為1300萬美元。
Referring to our operation plan, the structure of our business is flat. In the first stage, we plan to recruit 3 sales representatives, 1 customer service staff, 1 financial staff, 1 car mechanics, and 6 purchase employees. We plan on sending our purchase staff to Japan and Europe to negotiate with our suppliers. The total start-up expenses for our founding team total to $0.9 million for the first year despite of the relocation expenses.
Cost of Goods Sold
The cost of goods sold(COGS) for our business include the purchase price of vehicles, sales commissions, modification cost, and storage costs. In the meanwhile, the expenses related to rental cost of office, training cost for employees are also included in the period cost. In the first year, our business has projected a COGS sold of $4 million. And the COGS is expected to grow as sales volume increases year by year. During the year 5, we project the total COGS to be about $13 million at maximum.
i. Capital Expenditures
To take our business off the ground, we will need to rent building as our office and warehouse. We plan to secure our warehouse with a lease agreement of 10 years. The monthly rental payment for the first three year is about $5,000 with an annual increase of 3% from the fourth year. In the meanwhile, we need slight leasehold improvements to build up show rooms to display our cars, and it will incur an outlay of 0.5 million including purchase of furniture and equipment. As we plan to recruit our members locally, the location expenses are mainly resulted from the overseas staff. As we will build local offices in Japan and Europe to carry out on-spot investigation of car conditions if necessary, the administration and location fees are expected to be $80,000 for the first year. From the second year, the related expenses will fall to $50,000.
ii. Other Start-up Expenses
Our total budget for other start-up expenses including investment in call centers, websites and advertising. As we plan on selling vintage cars to high income groups, we need a significant outlay for promotion and marketing to attract customers. Therefore, we plan to spend an annual expense of $3 million in the first three years, and gradually reduce it to $1 to $1.5 million from the year 5 when we have a solid customer base. Our marketing manager will be responsible for PR campaigns and related promotion events. Our mission is to treat both customers and employees as guests in our home. So, we put customers’ satisfaction as our priority and we want to build a life-long relationship with our customers. We plan to invest $1 million in the first year to build our customer service center and annually expense is expected to be around $0.6 million.
我們的啟動費用總計為$ 4.64。為了確保我們的運營活動，從開始的購買費用來看，我們總共需要500萬美元。我和我的合伙人將投資100萬美元作為運營現金儲備。我們預計需要400萬美元的資金來支付啟動費用和部分COGS。我們計劃通過銀行貸款為我們的業務融資200萬美元。考慮到我們是一家新興企業，我們預計年利率為7.5％。每年的利息費用將為$ 150,000。基于可獲得的結果和合理的假設，我們有很強的預計盈利能力。即使認為每年的利息支出很大，鑒于我們出售的車輛的美元價值，我們仍將支付。
According to our projections for revenues and COGS in the first three years, the profits are expected to grow to $9 million by the end of year 5. Even though the high price of our vehicles might lead to increase in accounts receivables rather than instant cash inflow, we are confident that our operation will function efficiently to manage our working capital.
Our start-up expenses total to $4.64. To secure our operation activities, we will need a total amount of 5 million given the purchase expenses in the beginning. My partner and I will be investing $1 million as a cash reserve for operations. We project our amount of funding needed to be $4 million to cover the start-up expenses and the partial COGS. And we plan to finance $2 million for our business via bank loans. Considering we are a start-up business, we will expect an annual interest rate of 7.5%. Annual interest expense will be $150,000. We have a strong projected profitability based on attainable results and reasonable assumptions. Even thought the annual interest payment is a large amount, we will cover it given the dollar value of our vehicles we sell.
IBISWorld (2020). Retrieved from: