Table of contents

1. Vision & Mission Statment

1.1 Vision 1

1.2 Mission Statement 1

2. Market Research and Analysis

2.1 Socio-cultural Analysis 2

2.2 Environmental Analysis 3

2.3 Legal Analysis 3

2.4 Economical Analysis 4

2.5 Technological Analysis 4

2.6 Competitor analysis 5

3. Business Goals & Objectives

3.1 Overall Objectives 7

3.2 Marketing Objectives 7

3.3 Management Objectives 8

3.4 Operating Objectives 8

3.5 Financial Objectives 8

3.6 Business Strategy 9

4. Marketing plan

4.1 Product/Service Strategy 12

4.2 Target Market 12

4.3 Customers Motivation 12

4.4 Market Size & Trends 13

4.5 Advertising & Promotions 14

4.6 Pricing Strategy 16

4.7 Distribution Strategy 18

5. Management Plan

5.1 Management Details 19

5.2 Professionals Details 20

5.3 Organisational structure 20

5.4 Organisation chart 21

5.5 Job Profiles 21

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5.6 Staffing Strategies 22

5.7 Professional Advisers 24

5.8 Job Performance 25

5.9 Occupational Health and Safety Compliance 25

6. Operating Plan

6.1 Business Name 26

6.2 Ownership Structure 26

6.3 Business Location 26

6.4 Operational Processes 29

6.5 Legal Requirements & Regulations 32

7. Financial Plan

7.1 Establishment and Funding 34

7.2 Loan Repayment Schedule 35

7.3 Projected Income Statement -2010 36

7.4 Projected Balance Sheet -2010 37

7.5 Projected Income Statement -2011 38

7.6 Projected Balance Sheet -2011 39

7.7 Projected Income Statement - 2012 40

7.8 Projected Balance Sheet- 2012 41

7.9 Projected Cash Flow Statement 42

7.10 Ratio Analysis 43

7.11 Break-Even Analysis 43

8. Action Plan 44

9. Appendix 45

10.Reference lists

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Our Vision and Statement

1.1VisionOur over all vision is to have:

Satisfied Customers: We consider ourselves to be specialists in our field, being

licensed mechanics and technicians. As professionals we look forward to passing on

our knowledge and experience to our customers.

Happy employees: To keep employees happy, we aim to provide flexible

working hours and conditions. We also setup grievance procedures and offer bonuses

and incentives for constant excellent performance.

Satisfied Suppliers: We identified 3 keen suppliers who will be happy to work

along side our business (see operating plan). We hope to develop a strong relationship

by implementing supply management strategies. Such strategies include providing

payment for items before they are due can allow us to take advantage of discounts.

1.2 Mission Statement

Here at U-Spec Performance we aim to become the leading service provider

and workshop in the New South Wales region, and over the long term, become an

industry leader in Australia. We aim to do this by providing a high level of quality

performance modifications and general services to meet each individual customer’s

preferences at the orders.

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Research & Analysis

2.1 Socio-cultural Analysis

Since its introduction, the vehicle has evolved into something other than just a

means of transport. Car owners and enthusiasts have been searching for ways to make

there vehicles unique, and stand out from the crowd. This is particularly common

among younger drivers. Competitions such as Auto-Salon have provided a means for

car enthusiasts to show off there unique cars, with modifications done not only to the

engine, but also the interior and stereo systems. This growing culture has also lead to

the development of car forums- web sites set up where motor enthusiasts can

communicate, share and compare there vehicles.

A lot of positive aspects have risen from these forums. Many cruises have

been organised, for both fun and for charity. Most recently the 2008 cruise for kids

encouraged drivers to take there vehicles to the street in order raise money for the

children’s hospital.

Off the streets, the car culture is just as strong. The Holden v. Ford rivalry is a good

example. V8X (2007) reported that motorsports had the third highest attendance

rating, attracting 1.6 million spectators. The majority aged between 18- 45 years.

Raceways around NSW and Australia hold open events where drivers can bring there

vehicles to test their limits. Western Sydney International Drag way (WSID) holds

these events on Wednesday nights. We aim to develop a promotional vehicle in which

we can run at the track and immerse ourselves in this rapidly growing culture.

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2.2 Environmental Analysis

The two main type of environmental issues associated with this type of

industries include

Pollution from Waste: concern with the storage and disposal of waste oil,

oily wastewater, brake fluid, coolant and other liquids; the disposal of vehicles

parts; and the spillage of oils and other liquids when carrying out general

servicing and repair work.

Pollution from Emissions: impacts on both local and global levels. Locally, it

causes air pollution, whereas globally, it is a source of greenhouse gas

emission

For full detailed analysis on the issues refer to appendix 2a.

2.3 Legal Analysis

2.3.1 Regulation of the Industry

The auto mechanic industry is regulated by the Motor Vehicle Repairs Act

1980 (NSW) (Appendix 2b). The primary regulator body established by the Act is the

MVRIC which is responsible for regulating employers within the industry. This

regulation was later amended with the Motor Vehicle Legislation Amendment Act

2001 which provided a more effective enforcement regime.

2.3.2 Business Licensing Requirements

The business must be registered with the Motor Vehicle Repair Industry

Authority (MVRIA), and hold the appropriate licence for the auto mechanic repair

activities that is wished to be carried out in the business. A list of equipment permitted

to be used is also listed in the MVRIA which helps the business to meet the

requirements of environmental legislation and to minimise the risk of pollution fine.

2.3.4 Qualification and Training Requirements

Auto mechanics are required to exercise a high degree of technical skill and

knowledge in the performance of their trade. It involves a wide range of skills and

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knowledge that must be applied to effectively diagnose system faults and carry out

necessary maintenance, service and repair procedures.

2.4 Economical Analysis

2.4.1 Petrol Prices:

The most noticeable economic trend that is affecting the industry is the rising

cost of petrol. The price of petrol has increased by around 80 cents over the last 10

years, with a rapid increase over the last 4 years, which can be seen in the graph in

appendix 2c. Even though the price of petrol is starting fall, the already high cost of

petrol has significantly impacted on consumer lifestyle by forcing them to drive less,

buy fewer cars and switch to fuel efficient cars. This is a problem to our industry

since there would be less cars overall that would use our service and less need for

maintenance since people a driving less. However recently there has been a shift in

public opinion towards buying cars with figures showing a steady increase in the sale

of new cars, possibly due to the introduction of fuel saving technology, like clean

diesel, in a lot more cars.

2.4.2 Taxes on cars: refer to appendix 2d.

2.5 Technological Analysis

Technology plays an important part in the motor vehicle industry especially

due to recent concern over the environment and escalating petrol prices which meant

new technology had to be introduced to combat these issues. Hybrid technology in

cars is an example of recent developments that help sustain car sales by developing

fuel efficient cars that are friendly to the environment. Other similar technologies that

may help sustain car sales and hence our market includes ethanol-blended fuels, clean

diesel and new LPG technology. There has also been a recent push into making cars

electric motored, the idea has been around for awhile but with depleting oil reserves

and environmental concerns the idea is becoming a much more viable solution. Many

people may now want to convert their own cars to electric motors when technology

becomes more readily available and may be an opportunity for our business.

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High performance vehicles have also been known to use a lot more petrol than

normal vehicles which has deterred many people from buying them. However there

has been ongoing development to make high performance vehicles more fuel efficient

which will increase their sales hence lead to an increase in our focused market. An

example of this technology is a proposed development by Nissan to create a

hydrogen-fuelled cell high performance car which is one of the first projects to try to

make high performance vehicles more fuel efficient and environmental friendly.

2.6 Competitor analysis

Based on our research we have found a small number of direct competitors.

These include:

MRT Performance - mrtperformance.com.au/

Croydon Racing Developments (CRD) - croydonracingdevelopments.com/

Queen Street Racing (QSR) - www.queenstsmash.com.au/queenst/

Bel Garage- belgarage.com.au/

Tony Regoli Performance - tonyrigoliperformance.com.au/

All these performance mechanics sell similar products for a vehicle, including

upgrades for the engine, electronics, suspension, transmission, wheels and other

accessories. As well as providing products, they offer other services such as smash

repairs, towing services, and vehicle inspections.

Most of these companies have been around for some time, meaning they have

established a customer base and well known status among car enthusiasts. Take MRT

Performance for example, prior to opening up a store to the general public, MRT

designed and raced rally cars. They had won several NSW and ACT titles in the late

1980’s to early 90’s.

CRD has done something similar. In the early 1990’s CRD took a small 1.3L

Suzuki swift, and managed to enhance the 4 cylinder engine to pump out

approximately 400 Hp. CRD has continued its developments and now own several of

the worlds fastest production cars.

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Queen Street Racing is the biggest and most recognised business within this

market. Currently they have been invited to participate in a television show on fox8

called ‘Blood, Sweat and Gears.’ This was an invitation which they had accepted.

This provides a huge advantage as they now have the opportunity to gain free

publicity and target a larger audience, giving them the opportunity to further expand

there customer base.

Bel Garage has adopted a different approach. Unlike the previous mentioned

competitors, Bel did not begin operations with a racing background, but as a smash

repair mechanics. Soon after, it had expanded its operations into modifying vehicles,

and has had many of its vehicles in most car magazines.

Although they have strong and leading reputations among car enthusiasts,

proving to be strengths, there are weaknesses where we at U-Spec performance hope

to capitalize. This weakness is what we call car discrimination. Bel Performance for

example, only deals with late make Japanese vehicles- primarily Mitsubishi, Nissan,

Toyota and Honda. MRT also discriminates against a majority of vehicles, only

accepting certain vehicle makes to uphold its rally image. A majority of the vehicles

which they work on are the Mitsubishi Evolution series, and Subaru WRX.

Queen Street Racing caters to all vehicles, no matter the make and model.

However with there participation in the Foxtel program, they need to do considerable

work on there project vehicle to make sure it can meet the needs of the show. This

means that more staff and time will be spent on the vehicle and less on customers.

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Business Goals & Objectives

3.1 Overall Objectives

In the beginning, the business should plan on getting its feet on the ground. It

should promote its name, get its operations well established and try to invite new

customers by providing them something unique (differentiation strategy).

In the long run, the business should plan to expand the business to cover

remaining segments of market in. It should always keep trying to increase its market

share and gain an upper hand on its competitors. Management of operations also

becomes crucial, as many starting businesses tend to fail between the early and

medium phases of their life.

3.2 Marketing Objectives

3.2.1 Short-term objectives

Advertise to become well known in Parramatta and surrounding areas.

Raise awareness and reach every potential customer within the target market.

Have a web site up and running

Start promoting at events, such as Auto salon.

Making promo stickers for cars, to give to customers to display on cars.

3.2.2 Long-term objectives

Establish a track record and reputation within the industry and become well

known in NSW and to all car enthusiasts by advertising.

Get an up and running promo car and drag car.

Optimise level of awareness within the market.

Event sponsorships.

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3.3 Management Objectives

3.3.1 Short-term objectives

Better training for all employees for better customer service/care

More efficiency in each of the servicing jobs

3.3.2 Long-term objectives

Establish a good reputation within the industry

Hire more employees and take in apprentices

Expanding the professional team to include other line of work

3.4 Operating Objectives

3.4.1 Short Term objectives

Establish a strong relationship with suppliers

Create a customer database

Establish an online ordering service

3.4.2 Long Term objectives

Diversify inventory to include accessories such as seating and body kits

Take on apprentice mechanics

Introduce a customer gallery on our web page

Increase Employees as customer base grows

3.5 Financial Objectives

3.5.1 Short-Term Objectives

To be able to generate a revenue of approximately $360,000 for the first year

To increase revenue every 3 months of operations for first year

To have working capital available by the end of fist year

3.5.2 Long-Term Objectives

To increase revenue by $60,000 for every year after

To start generating profit within 5 years of operation

To remain liquid and have enough capital to further grow business

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3.6 Business Strategy

3.6.1 SWOT ANALYSIS

Major strengths, weaknesses, opportunities and threats identified are as

follows:

Strengths

Large number of car enthusiasts: as there are a large number of car

enthusiasts around and who want their car to be properly looked after.

Providing more then one service: not just a servicing centre but also a retail

outlet for all the best performance parts

Highly skill/experienced staff

Offering all the top brands in autocare

Cater to customers orders: We also any performance part requested by out

customers.

Location: Parramatta is located in the centre of Sydney making it accessible

to a majority of people in surrounding areas.

Management: Both Bob and John possess all the necessary skills needed to

manage the business successfully. They have both previously worked for

other mechanics, gaining valuable experience.

Latest technology infrastructure: Since the business is relatively new, it has

purchased all the latest equipment. This is not only beneficial to the

customers, but will also benefit the company in terms of keeping track of

inventories.

Weaknesses

Catering to only a limited number of people.

Un-expectance: Newly running company which has been established as well

as their competitors who are already established. New management may incur

problems that they might not have thought of when preparing the business

plan.

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New staff required: Recruit and training staff to meet the required level of

service.

Limited funding: There is a certain amount of capital available to purchase

the company as well as investing within to improve its status.

Opportunities

Expansion: expand into other types of services, eg. Mobile mechanic, panel

beating, spray painting/ air brushing.

More services: the new hybrid car and other car services

Car Audio and electronics: add car audio and electronics work

Apprentice: take on some apprentices can help us in gaining some benefits

such as governments grants.

Threats

Petrol prices: is the biggest treat as people are using more public transport

more and more these days, as petrol prices keep increasing.

New competitors: may enter the industry.

Existing Competitors: Currently there a number of existing competitors in the

market. Most of which have obtained sponsorship from part manufacturers,

allowing them to obtain parts at lower cost.

Price war from major competitors: Large competition means that there will

always be price wars. This will have a dramatic effect on revenue.

Management will need to be concentrating on keeping costs low so that the

expenses don’t eat away at the profit.

More legal regulation: There needs to be a sense of discipline in the

workplace. If somebody gets hurt due to negligence, then there will be a large

compensation payout which could skyrocket insurance premiums and destroy

the company.

Taxes: new taxes are being introduced for purchasing cars

Pollution: environment regulations for modified cars and OH&S issues in

regards to the workshop.

P-Plate regulations: the laws stopping P-platers from driving high

performance cars.

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Price war from major competitors: Large competition means that there will

always be price wars. This will have a dramatic effect on revenue.

Management will need to be concentrating on keeping costs low so that the

expenses don’t eat away at the profit.

Technology advances from competitors: there will be new equipment that

will be constantly available, and a well managed gym should keep up to date

with technology. New equipment may be required, and it will require a fair bit

of capital to purchase.

More legal regulation: There needs to be a sense of discipline in the

workplace. If somebody gets hurt due to negligence, then there will be a large

compensation payout which could skyrocket insurance premiums and destroy

the company.

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Marketing Plan

4.1 Product /Service Strategy

We are going to provide auto mechanic services for car enthusiasts also offer

the best and low price car performance parts and accessories. The business is trying to

differentiate by providing excellent customer service and support for our clients.

Keeping the best performance parts and services is also a key strategy. We also offer a

part ordering service where customers can get the exact brand and part they desire at

low prices.

4.2 Target Market

The general public will be the target market and that can be further broken down into:

Catering more to car enthusiasts

Age group – the business will accommodate to ages from 16 and up, as 16 is

legal age to get a learners licence.

Income – all income ranges.

Status – all types (single, married).

Geography – commencing in the Western Sydney area of Parramatta and want

to cater to all of Sydney.

Buying behaviour – the customers will be in need of performance parts and

accessories to enhance their cars, which will be supplied at low prices.

Backgrounds –There is no prejudice or discrimination. Anyone regardless of

their race, colour, religion, culture, physical appearance or background will be

welcome to use our services.

What are they looking for in the service – Something that is unique and that

will assist them in making their car what they want it to be.

4.3 Customers Motivation

The fact that we are only one of a few places that caters professionally to the

need and wants of the car enthusiasts all in one place, people need repairs and

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maintenance done to their cars on a regular basis and continues improvements such as

modifications. Since we know all about modification customers won’t hesitate to let

us work on their cars. The location is a major factor as well, as Parramatta is located

in the centre of Sydney

.

4.4 Market Size and Trends

4.4.1 Potential Market:

There is a very large potential for this kind of specialised service as the

customers will know that they are getting one of a kind service, as not all mechanics

specialise in this type of service. We offer all-in-one service where they can also

purchase top brand parts and accessories at lower prices then competitors. So it is

where car enthusiasts can do and get there car worked on and know its done by the

best who specialise in this type of service, also can get all the top brand parts from

one place at very competitive prices which makes it hassle free.

4.4.2 Trends:

People will argue that the trends are changing and that now people are not

after high performance cars as petrol prices are so high and the P-Plate restrictions in

place, but research shows that car enthusiasts will still spend money on their cars (as

shown in the surveys conducted and interviews also conducted, refer to appendix 5a)

that sales of sports cars is still stable and that business is good for them, “it is because

most car enthusiasts either have more then one car so they will have one as a project

and one run around car, or young people just want looks and performance and they

will spend money to do so” said Garry from Top Secret Imports Blacktown.

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4.5 Advertising & Promotions

From the research and the interviews conducted (see Appendix4a, 4b) we have

found that these are the most affective ways of advertising for this type of business.

4.5.1 Own Website: U-Spec Performance will have is own website

explaining every thing about the company including mission statement and future

goals. It will have all the services and products they offer, also prices and contract

numbers, bios on the mechanics and what they are qualified to do etc.

Costs involved from www.mdwebhosting.com.au

Domain name: U-Specperformace.com.au-$21.18 for 2years (after researching

cheapest found)

Website hosting: $36.95per month (for Business)

Search engine submission: $59once off (adds website to search engines

4.5.2 Other Websites: Advertising is other websites by putting banners and

links to our website. The websites will be car forums for enthusiasts such as

www.rexnet.com, www.skylinesausttralia.com etc, or magazine websites such as

www.hot4s.com.au,

Cost: depending on each site/forum.

For hot4s website which has and “Avg. Page Impressions per month: 99,000” (Mark

Cutajar, Markting, Hot4s)- email appendix 4c

Monthly Banner costs on Website (unlimited page impressions):

Large island banner: $600 + GST per month.

Sky Scraper: $1000 + GST per month

4.5.3 Directories: Advertise in the Yellow pages will help the business to start

off as a mechanic service also promote the niche side of the business. This was

considered but taken out as the costs of the advertising is very costly (around $20000)

and we are only targeting a certain type of people, so it would be more affective to do

something else with those funds.

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4.5.4 Events: Hand out brochures at events such as

Nightshift: Free (but have to register with event organisers) (www.night-

shift.com/)

Auto Saloon: Free (but have to register with event organisers)

(www.autosaloon.org/terams)

Drag day Eastern Creek:

4.5.5 Magazines: Placing a ad in an car enthusiast magazine such as, Fast Fours, Hot4s, Etc, is said to be great for business from interview with Top Secret Imports (Appendix 4a) as they advertise in the High Performance Imports Magazine, -Costs: for Hot 4s magazine who have a readership of 174,000

“Double Page Spread: $2,200 + GST per issue

Full Page: $1,200 + GST per issue

Half Page: $700 + GST per issue

Quarter Page: $400 + GST per issue

Business Card Size: $200 + GST per issue”

(Mark Cutajar, Markting, Hot4s)- email appendix 5c

So to start of with we will be for the fist 6 months (6issues) do full page then after maybe drop down to half page depending on exposure.

4.5.6 Cross Advertising

This involves using the advertising mediums of other business and promoting

U-Spec Performance within theses channels. For example, car accessories shops,

panel beating and audio systems shops. The company can easily design some sort of

agreement where those other businesses could promote U-Spec Performance only to

its customers. This favour could also be returned in the same way.

4.5.7 Other Advertising:

Selling parts from our retail shop to and offering them cheaper prices, so for

buying products valued more then $500 customers get a 10% discount.

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Have free stickers for customer cars and encourage them to display them

Size: 45cm x 10cm from http://www.stickerart.com.au/- saying U-Spec

Performance (appendix 4d for design) as used and recommended by Top Secret

Imports and MRT Performance

Cost: $5 each for 200 stickers to start with.

Word of mouth- by offering the best service possible, Recommended by

Top Secret Imports and MRT Performance

4.5.8 Other Promotional Strategies include:

Measuring success of selling not just by sales volume but also by customer

satisfaction.

When selling, emphasise customer’s benefits, not just the product features.

Following up customer service should be a part of every sale such as keeping

customer informed of the progress of their order.

4.6 Pricing strategy

4.6.1 Desired image in market

For U-Spec Performance, it needs to make a unique and excellent reputation

by providing a high quality service at reasonable pricing strategy to attract customers

from all income levels from low income earners to high income earners as Parramatta

is considered the centre of Sydney it as access to all people of every income level.

4.6.2 Comparison against competitors’ prices

There is a bit of competition within Sydney for this kind of service. Therefore,

U-Spec Performance will need to lower its prices in comparison to its rivals in order

to attract the customers. This business is fairly new and people are generally more

attracted to already establish companies who have proven success in the past. It needs

its low cost policies in order to attract revenue. This will have to be the case for the

first few years, until the business’s credibility is developed. U-Spec Performance will

need to charge its customers roughly 5% less than its competitors in order for them to

gain revenue.

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4.6.3 Prancing strategy to be used

U-Spec Performance will be using to start of with a combination of Skimming

and Market Penetration pricing as to get an advantage over its competitors.

Market Penetration pricing will be used for general mechanic services such

as general repairs and servicing etc as there are so many workshops/

mechanics offering these services. (refer to Appendix 4e for General Service

Prices)

Skimming pricing will be used for the “performance” repairs and upgrades as

we are only one of a few who do these. There is no prices pre-determined as it

depends on a variety of variable for example type of car, part, brad, amount of

work to be done etc. (refer to Appendix 4e for modification install estimate

prices-BYO parts)

4.6.4 Once Established

U-Spec Performance is planning to use a rage of pricing method which

includes:

Odd pricing- for the parts and accessories to be sold in the shop we will be using odd

pricing as it creates a psychological imprison of low prices.

Discounts (multiple-unit pricing) - offer discounts for buying for then one

service and/or product or example buy a performance part from us and also get

us to install it which inturn will work out cheaper for the customers.

Bundling- offer such deals like “2 for 1” (buy 2 for the price of 1) also for the

services bundle deals for example you get more then one service from us offer

discounts or free extras such as with any major wheel or suspension work get

free alignment and balancing etc.

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4.7 Distribution Strategy

4.7.1 Channels of Distribution

For the shop front we will be using the “Wholesaler to Retailer to Consumer”

approach as we will be getting products direct from the manufacturers/suppliers of the

brands, this way we will be able to offer them at a lower price.

For the mechanic service we will be using the “Manufacture to Consumer”

approach as there is not middle man involved in the transactions.

There are no major products being sold in this business therefore distribution

and logistics are not of a huge concern. The accessories and parts will be delivered to

the business via logistics companies such as Toll every week or when ordered as we

are using Just-in-Time (JIT) and based on customer order as we wont be stocking

much stock on location due to a extensive range to products and that we are not only a

sales shop . For supplies needed for the shop there will be deliveries each week based

on need using JIT. Just-in-Time manufacturing has been chosen as it is a systems

approach to developing and operating a manufacturing system as it aims to eliminate

waste as it requires equipment, resources and labour are made available only in the

amount required and at the time required to do the job. In short, JIT means making

what the market wants, when it wants it (eg. customer orders). JIT has been found to

be so effective that it increases productivity, work performance and product quality,

while saving costs. JIT is also used by Top Secret Imports Blacktown (Appendix 5a)

Initially, we will be focused on providing a convenient location for the

customer. Parking will be provided on site for customers.

4.7.2 Business location:

The business location is ideal in terms of accessibility as Parramatta is in the

“centre of Sydney”. There will be a lot of revenue once the business is established.

However, there are already established mechanics and dealer workshops in

Parramatta, but as the business is mostly catering to a specific group mostly this

should not be a problem.

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Management Plan

5.1 Management Details

This is a small proprietary company owned by the Smith brothers, Bob and

John, both of which are experienced mechanics themselves. As they both have equal

share ratio of 50% each, their responsibilities for the business will be equal. They will

both be directors of the company and manage the daily operations of the business and

on-hand mechanical work at the workshop. They will work full time and be paid a

salary of $48,000 per annum and three extra employees will be hired. There will also

be external part-time staff including a bank, an accountant, a solicitor and an

insurance broker; whose roles will be to help provide aid to certain areas of the

company. The profit and loss will be shared equally between them both.

Name: Mr. Bob Smith

The relevant personal details and qualifications are as followed:

Advanced Diploma of Engineering – Mechanical

10 years modified cars experience

4 years experience as an all-rounder mechanic in Five Star Auto

2 years experience as workshop supervisor in Midas car care centre

Has a genuine passion for performance cars and performance parts

Has slight knowledge in areas of management, finance, and accounting

Has knowledge of OH&S principles and practices

Name: Mr. John Smith

The relevant personal details and qualifications are as followed:

Diploma of Engineering – Mechanical

Certificate IV in Automotive Management

6 years experience as workshop manager in MRT Performance

2 years experience in retail and customer service

Has high problem-solving skills

Has knowledge in areas of management, finance, and accounting

Has knowledge of OH&S principles and practices

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5.2 Professionals Details

There will be two full time mechanics and a part time service receptionist

hired. The mechanics will all be highly trained in all areas of servicing for

automobiles and will be working in the workshops. Whereas, the service receptionist

will focus on the sales of the performance parts and various other duties.

5.2.1 Description of Professionals team

Name: Mr. Brad Taylor

The relevant personal details and qualifications are as follows:

Certificate II in Automotive Vehicle Servicing

2 years experience in retail and customer service

3 years experience as a mechanic

Name: Mr. Jack Thomas

The relevant personal details and qualifications are as follows:

Certificate II in Automotive Mechanical

4 years experience as a mechanic

Has great interest in performance cars

3 years modified cars experience

Name: Mr. Tom Anders

The relevant personal details and qualifications are as follows:

Certificate II in Automotive Mechanical

Certificate II in Automotive Sales

3 years experience in retail and customer service

2 years experience as a mechanic

Has great knowledge of performance parts

5.3 Organisational structure

It has been decided that both owners will be working full time fulfilling their

roles as the managers, as mechanics, and as service receptionists when required.

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Manager/Director(Bob & John)

Mechanics(Brad Taylor)(Jack Thomas)

Service Receptionist(Tom Anders)

There will be three extra employees, two of which are highly skilled and trained

mechanics, and the other is highly knowledgeable on performance parts and will be

the service receptionist.

5.4 Organisation chart

5.5 Job Profiles

The job profiles include both owners, and the three employees. (For wages

rates summary see appendix 5a)

Job description

Position: Director

Duties:

Administration & Management

Accounting & Finance

Management of cash flow

Client liaison

New performance parts research and development

Major vehicle modifications

All dyno-tuning

Remuneration: $48,000 per annum + commission.

Job description

Position: Auto Mechanic

Duties:

Vehicle servicing

All vehicle maintenance

- 24 -

Performance upgrades

Fault diagnosis

Registrations inspections

Customer service

Remuneration: $32,000 per annum + commission.

Job description

Position: Service Receptionist

Duties:

Customer care/service

Booking in client’s cars

Performance upgrades advice

Performance parts support

Transactions and cash handlings

Data entry

Remuneration: $15 - $17 per hour.

5.6 Staffing Strategies

5.6.1 Recruitment

Employees will be recruited, if required, in the following ways:

Advertising in the newspaper

From private employment agencies

Advertising at educational institution

Advertising at the workshop.

Referral from existing employee and friends

5.6.2 Probation period

New employees will be on probation period. For full time and permanent

employees the probation period will be three months, as they will be evaluated and

tested over a long time to show their skills and abilities. New employees can be

terminated at any time based within the period mention above if they are not

performing up to the required standards.

- 25 -

5.6.3 Remuneration

Both owners are going to work full time and will receive share profit equally,

and will receive same salary of $48,000. While employees, when recruited their

salaries/wages will be decided based on their work and will be paid at market rate.

5.6.4 Incentive schemes

1% commission based on productivity and on time saved in working on each

servicing job.

Each employee will be given annual holiday pay, and superannuation.

5.6.5 Work environment

The workshop is designed to properly accommodate workers, and they are

required to wear protective clothing. There is proper ventilation to accommodate air

flow inside the workshop as there are fans installed on the roof. There will be a large

area of car space to sit vehicles. There are lunch and rest room facilities provided. The

workshop is cleaned every day to remove any waste or parts that are dangerous to

workers. Chemicals are used to clean the machines to make sure that they function to

their fullest potential.

5.6.6 Training and development

All employees will be required to continuously undertake training and

education in order to maintain the level of skill in the trade which enables them to

perform the service more effectively and more efficiently. Upon hiring, the mechanics

are required to perform various tasks to show their skill and knowledge in auto

mechanic servicing. All employees are also trained for Operational Health & Safety

procedures.

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5.7 Professional Advisers

Occupation Details

Accountant Champions

Level 3, 107 Phillip Street, Parramatta 2150 NSW

Ph: (02) 9635 7700

Bank St George Bank, Parramatta Branch

126 Church Street, Parramatta 2150 NSW

Insurance Broker Security Industry Insurance Brokers

27 Fennel Street, North Parramatta 2151 NSW

Ph: (02) 9630 8212

Solicitor Baldock Stacy & Niven Solicitors

Level 4, 91 George Street, Parramatta 2150 NSW

Ph: (02) 9891 6444

5.7.1 Accountant:

Preparation of the annual reports and tax returns

Provide financial information

Assessment in the fair price of the business

5.7.2 Bank:

Provide account service

Provide loan products

Provide banking of cheques, money orders and cash

5.7.3 Insurance Broker:

Determination of the required insurance for business

Arrangement for the relevant insurance cover

Process of any insurance claims

Analyse any business risks of operation

5.7.4 Solicitors:

Representation in all legal matters and negotiations

- 27 -

Advice on general legal matters

Preparation of contract and legal documents

5.8 Job Performance

The performance of the employees will be measured every month for both the

existing and new employees. Existing employees will be evaluated on their

performance, and new employees will be evaluated for a permanent position. Poor

performance by existing employees will be given three warnings to improve,

otherwise they will be dismissed.

5.9 Occupational Health and Safety Compliance

Under OH&S legislation, we are obligated to provide the following for our employee

safe premises for work

safe machinery and substances

safe systems of work

information, instruction,

training and supervision

A suitable working

environment and facilities.

These requirements are legally enforceable and carry heavy penalties in failing

to comply with such regulations. To ensure that the business complies with such

regulations, we will adopt codes of practice. Such codes to be adopted include regular

consultations with OH&S officers, risk assessments, preparation of Material Data

Safety Sheets (MSDS), working in confined spaces (AS2865-1995), licensing and

qualification, noise and workplace injury and disease recording.

- 28 -

Operation Plan

6.1 Business Name

The business will trade under the registered name of “U-Spec Performance

Pty. Ltd.”.

The benefit of using a trading name includes:

Helping the business to project the desired outcomes for customers as ‘U-

Spec’ is an abbreviation for Unique Specifications

It is a easy and catchy business name

It can describe the business activity and it can give the business a professional

and credible appearance.

6.2 Ownership Structure

The business will be operated as a small propriety company by Bob and John

Smith; they will be the main shareholders of the company owning it by 50% each

share ratio. A company structure is chosen because the brother’s personal assets will

be kept separate from the business asset and they will not become personally liable if

the company goes bankrupt. The company will come into legal existence at the date

of its registration. We choose the company structure because it offers legitimate tax

minimising possibilities due to the set tax rate and also because it is a separate legal

entity. A company can, in its own name and rights, own assets and property as well as

enter into contracts.

6.3 Business Location

6.3.1 Location

U- Spec Performance will be located at 69 High Street, Parramatta. This

location is convenient for customers who are required to leave there vehicles

overnight, as it located minutes away from Parramatta station. (Refer to Appendix 6a

for site map)

- 29 -

6.3.2 Transportation Networks:

Parramatta is located in the centre of Sydney, making it very accessible to

people located all over Sydney. Parramatta is connected with major high ways and

motorways i.e. The M4, M7 and Great western Highway. These networks are vitally

important for the trade of goods and services. Parramatta is surrounded by a number

of car dealerships, making it a convenient location in terms of raising awareness of

our business.

6.3.3 Building and Layout

Lease Terms:

The property will be built for 5 year term with 2*5 year option and it has been leased

at the first annum for $98,800 (1900 per week Avg. rent for Parramatta according to

LJ Hooker Parramatta www.ljhooker.com.au/compare.php?comparetype=Industrial).

Building Contents

Description Strata Factory Unit Total NLA: 415 m2

Building Area: 415 m2

Property Type: Strata Factory Unit

Zoning 4(b) Light Industrial

Uncovered Parking: 12

Total Parking: 12

(search-www.ljhooker.com.au)

(See appendix 6b….for images)

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Layout

- 31 -

Workshop E

ntrance

Service

DeskWaiting Area

Customer parkingSuitable for approximately 12 cars

Engine HoistTool Cabinet

car lifts/ servicing areas

Dyno Machine

Storage Unit for Environmental equipment

Entrance via High Street into fenced off area with gates.

Display of parts and accessories

Staff lounge and kitchen

Second Floor: Office, storage.

Storage Room for delivered parts

6.4 Operational Process

6.4.1 Operating Hours

U-Spec Performance will operate in Parramatta, where we will set up both a

workshop, and retail outlet (see appendix for layout). Operating hours will range from

9am – 6pm, Monday to Friday, and 9am to 2pm on Saturday.

6.4.2 Operating Activities (Products and Services)

U-Spec performance will operate on a “wholesaler to retailer to customer”

basis as well as providing mechanical services. In terms of products we offer a wide

range grouped into categories such as exhaust systems and tips, engine cooling

systems, drive-train accessories, ECU’s, engine upgrades, boost control, down pipes

and turbo & supercharge kits and various gauges. To remain competitive, we also

offer general mechanic services.

Certain vehicle parts may require a modification permit. If any alteration made

to a vehicle requires such a permit, we will have the vehicle inspected by the relevant

authority (see appendix 6c). Any costs associated with this will be passed on to the

customer.

It is expected that once customers purchase the item from us, we will be the

entity which will install the part/s. As a result we will also be providing mechanical

services, with the aim of getting the optimal performance out of your vehicle. We can

do a range of tasks such as dyno tuning, ECU tuning and installation, engine building

and repairs, suspension upgrades, transmission and drive-train upgrades, forced

induction conversions and turbo and supercharge installations.

6.4.3 Customer Purchases System

An online catalogue will be set up on our website, detailing the brands and

parts on offer. Once the customer has identified there needs and wants, they fill out a

request for parts form, detailing the parts and any previous modifications done to the

vehicle. The owners or staff will then review and evaluate the request, determine

whether the job is plausible, and then reply to the customer. If the job is not plausible,

- 32 -

our mechanics will suggest an alternative. Once the customer agrees with the

purchase, the item will be ordered. Insurance is automatically charged on the item,

unless specified by the customer. Once the part is received, the customer will be

notified to bring their vehicle to our location.

The customer will be charged for the cost of the item (including delivery and

insurance) as well as labour. If necessary, he/she will also be given a separate bill (as

required by ATO Law) for obtaining a vehicle modification permit.

(Refer to appendix 6d for flow chart and appendix 6e sample order form)

6.4.4 Quality Control

To reduce any unnecessary purchase of supplies, we will implement three

main measures. The first measure is restricting access to the computer system via

password protection. The second measure involves payment to suppliers. Any

payments made to suppliers will require multiple signatures on cheques (i.e. the

owners’ signatures’). Where an owner is absent, this authority is delegated to the

receptionist. As the business grows, more internal control measures will be

implemented based on the contingencies faced. The third and final measure is an

identification policy. Customers must provide identification before claiming there

order.

6.4.5 Suppliers

In terms of providing the inventory, we will employ the services of 3 different

suppliers: Automotive Components Limited, TurboWhole-salers.com, and

Performance Wholesale Australia Pty Ltd. All three businesses are located with in

Australia improving delivery time and the distribution channels.

These three wholesalers also provide the range of products we aim to sell in

our retail department. Together they also cover parts for all vehicles (Nissan, Toyota,

and Honda etc.) made within the last 10- 15 years.

For more information on our suppliers refer to appendix 6f

6.4.6 Inventory System

Purchases will be made based on a just-in-time system approach (JIT). There

is no need to purchase inventory in advance, eliminating the need for storage.

- 33 -

Supplies will be purchased based on the demands from customers. Using JIT will

mean frequent purchases and deliveries. This means that communication both up and

down the supply chain is crucial (Broyles et al 2005).

One method to achieve a good communication system is to create a schedule

for deliveries and ordering. For example the company may only decide to purchase

from suppliers 3 times a week- Monday, Wednesday & Friday. By sticking to this

schedule we can become more responsive to our customer needs. The end result is

better relationship with not only our suppliers, but also with our customer.

Although our main form of inventory management is based on JIT systems,

we at U-Spec Performance will order inventory for display purposes.

6.4.7 Tools and Equipment

For the workshop, there is a number of specialist equipment needed in order to

perform our day to day operations. In addition to the equipment provided under the

environmental regulations, the following will be required but not limited to:

Spill kit for emergencies*

Dyno Machine

Wastewater storage container*

Waste liquid collection

containers*

Oil filter collection container*

Set of hand Tools x2-

(wrenches, screw drivers, etc.)

Engine Hoists (chains and sling

included) x2

Waste tracking system*

Impervious ground mat/ drip

treys*

Spill proof oil trey and fluid

container*

Vehicle Hoist x2

ECU tuning kits

Pressure Gauges and Pumps

Vehicle jacks

Note: Environmental tools are those indicated by a *

All tools and equipment are purchased from different suppliers at varied costs.

Hand tools, jacks, and gauges are purchased from Transquip Direct at a total

estimated price of $2,900. Absorb Environmental Solutions will provide

- 34 -

environmental equipment and storage cabinet for approximately $7,000. Dyno

machine has a value of $29, 950, and will be leased at $669 per month. Vehicle hoists

provided by Lift King Australia holds a maximum of 4.5 tonnes, and cost $3,500

each. Hoists are portable and do not need council approval for use.

6.4.8 Office Equipment and running Cost

The following will be required for IT and Software:

Lenovo POS Bundle - Touch Screen purchased from hotpos.com.au -$2,729

Dell laptop computers(x2) with basic Microsoft access database software-

from dell.com.au $1,700

Desks and Furniture -$1000 from Officeworks

Eftpos Machine (in running costs)

Other office supplies will consist of kitchen items such as food, coffee

machine etc. We have set a budget of $1,000 per month.

Running costs of the business:

Utilities $3,960 Telephone and Internet $387 Other exp (Efpos & Postage) $792 Total General Expenses $5,139

6.4.9 Insurance:

U-Spec Performance will take out insurance cover from Capricorn Mutual

(http://capricornmutual.millstream.com.au/); a subsidiary of Capricorn Society Ltd.

Capricorn Society has been known to provide assistance to automotive businesses

from auto electricians and mechanical workshops.

Insurance will be taken out to provide cover for the building and it contents, personal

accident and illness, and liability insurance (product and public). The insurance cover

will total $1750 per month. Workers compensation figures will be based on the

industrial relations guideline (being 2.787% ) of gross wages.

(www.industrialrelations.nsw.gov.au) (appendix 6g cover options)

- 35 -

6.5 Legal Requirements & Regulations

Before attaining any of our goals, legal requirements need to be met before the

business commences. These requirements will continue to be met during the course of

the operations. These requirements are as follows:

Registering the business with the NSW Department of Fair Trading

Applying for, and obtaining a tax file number with the Australian Tax Office

Obtain council approval for the site we intend to use for operations.

Waste Permit from the Parramatta Council

Australian Business Number (ABN) and Business Activity Statement (BAS)

Operating Permit from Work Cover NSW

Occupational Health and Safety (OH&S) assessment on the site. Also obtain a

safety permit from the National Occupational Health and Safety Commission.

Public Liability/ professional indemnity/ product liability insurance

Insurance for building and contents

Insurance cover for employees- workers compensation and superannuation.

6.5.1 Occupational Health & Safety Regulations

Refer to section 5.9

6.5.2 Environmental Regulations

Today, more than ever people are looking towards businesses that are

environmentally friendly. Environmental issues raised have forced councils to

develop regulations for businesses. To minimize pollution, the workshop will be

required to carry a number of items (refer to section: tools and equipment).

6.5.3 Other Regulations

We at U-Spec Performance will be providing a specialist service, meaning any

modifications we make must comply with RTA Vehicle Standards Information sheets

(VSI). More specifically, the guidelines we must conform to are as follows:

VSI 02- Restricted engineering Signatories (Sept 2008)

VSI 06- Guidelines for light vehicle modifications (Nov 2007)

VSI 07- Australian Design Rules (Nov 2007) and

VSI 37- Reporting of Vehicle Defects (Nov 2007)

- 36 -

Financial Plan

7.1 Establishment and Funding

There are several options to finance the initial costs of the business, approximately

$400000, which will be operated as a small proprietary company with the whole or a majority

share of the company owned by Bob and John Smith. The recommended strategy for

financing the business is detailed below along with an alternative option that the business

may consider.

7.1.1 Recommended Strategy:

The owners, Bob and John Smith, should invest at least $200000 in total then finance

the remaining $300000 through debt financing or bank loan. We recommend that you try to

invest as much as possible into the business so that the debt can remain as low as possible

which will reduce interest expenses and financial pressure for the business. We also believe

that a residential property should be used as security since it will generally produce better

terms and rates. We recommend you shop around for the best deal for your business loan

since you may find a better loan deal by negotiating, however we have provided details for a

fully drawn advance loan with Westpac that we feel is suitable for your situation.

Advantages:

Owners do not have to give up equity

Is generally more readily available

Disadvantages:

Interest expenses

May require collateral like residential properties

Details: (further details can be viewed in the appendix 7a)

Institution: Westpac Banking Corporation

Loan Amount $200000

Loan Period: 3 years

Interest Rate: Fixed rate at 8.90% pa

Annual Repayment $78,870.18

7.2 Loan Repayment Schedule

Loan Repayment Schedule  Loan principle: $200,000  Annual interest rate: 8.90%  Number of years 3     Annual Payments

Year TotalTo

InterestTo

PrincipleYear-End Principle

0     $200,000.001 $78,870.18 $17,800.00 $61,070.18 $138,929.822 $78,870.18 $12,364.75 $66,505.42 $72,424.403 $78,870.18 $6,445.77 $72,424.40 $0.00

7.2.1 Alternative Strategy:

Another option to help finance the initial costs of your business is through equity financing.

This means offering part ownership of the business to other people, which could include your

friends and other members of your family.

Advantages:

Can be convenient and available quickly

Other owners can contribute to help the business

Disadvantages:

Can limit the control you have over your business and profits you receive

Extra pressure on business and yourself since it is not just your own money

Projected Income Statement for U-Spec Performance Pty. Ltd.for the year ended 30 June 2010

July AugustSeptembe

r October November December January February March April May June TotalRevenue Sales Revenue $16,200 $16,200 $16,200 $17,400 $17,400 $17,400 $18,600 $18,600 $18,600 $19,800 $19,800 $19,800 $216,000 Services Revenue $10,800 $10,800 $10,800 $11,600 $11,600 $11,600 $12,400 $12,400 $12,400 $13,200 $13,200 $13,200 $144,000 Total Revenue $27,000 $27,000 $27,000 $29,000 $29,000 $29,000 $31,000 $31,000 $31,000 $33,000 $33,000 $33,000 $360,000 less Costs of Goods Sold $10,800 $10,800 $10,800 $11,600 $11,600 $11,600 $12,400 $12,400 $12,400 $13,200 $13,200 $13,200 $144,000 Gross Profit $16,200 $16,200 $16,200 $17,400 $17,400 $17,400 $18,600 $18,600 $18,600 $19,800 $19,800 $19,800 $216,000

Expenses Operational Expenses Marketing $3,098 $2,017 $2,017 $2,017 $2,017 $2,017 $1,467 $1,467 $1,467 $1,467 $1,467 $1,467 $21,985 Rent $7,600 $9,500 $7,600 $7,600 $9,500 $7,600 $9,500 $7,600 $7,600 $7,600 $9,500 $7,600 $98,800 Wages and Salaries $7,707 $7,707 $7,707 $7,707 $7,707 $7,707 $7,707 $7,707 $7,707 $7,707 $7,707 $7,707 $92,480 Maintenance $370 $370 $370 $370 $370 $370 $370 $370 $370 $370 $370 $370 $4,434 Insurance $1,965 $1,965 $1,965 $1,965 $1,965 $1,965 $1,965 $1,965 $1,965 $1,965 $1,965 $1,965 $23,580 Legal Fees $400 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $400 Depreciation $308 $308 $308 $308 $308 $308 $308 $308 $308 $308 $308 $308 $3,695 Total Operating Expenses $20,482 $20,901 $19,001 $19,001 $20,901 $19,001 $20,351 $18,451 $18,451 $18,451 $20,351 $18,451 $233,794 General Expenses Utilities $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000 Telephone and Internet $129 $129 $129 $129 $129 $129 $129 $129 $129 $129 $129 $129 $1,548 Postage $216 $216 $216 $232 $232 $232 $248 $248 $248 $264 $264 $264 $2,880 Total General Expenses $1,345 $1,345 $1,345 $1,361 $1,361 $1,361 $1,377 $1,377 $1,377 $1,393 $1,393 $1,393 $16,428 Other Expenses Interest Expense $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $17,800 Total Other Expenses $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $1,483 $17,800 Total Expenses $23,310 $23,729 $21,829 $21,845 $23,745 $21,845 $23,211 $21,311 $21,311 $21,327 $23,227 $21,327 $268,022

Net Profit ($7,110) ($7,529) ($5,629) ($4,445) ($6,345) ($4,445) ($4,611) ($2,711) ($2,711) ($1,527) ($3,427) ($1,527) ($52,022)

7.3 Projected Income Statement- Year 2010

Projected Balance Sheet for U-Spec Performance Pty. Ltd.as of 30 June 2010

July AugustSeptembe

r October November December January February March April May JuneAssets Current Assets Cash at Bank $324,820 $312,600 $302,279 $293,143 $282,107 $272,971 $263,669 $256,266 $248,864 $242,646 $234,528 $228,310 Inventory $1,080 $1,080 $1,080 $1,160 $1,160 $1,160 $1,240 $1,240 $1,240 $1,320 $1,320 $1,320 Total Current Assets $325,900 $313,680 $303,359 $294,303 $283,267 $274,131 $264,909 $257,506 $250,104 $243,966 $235,848 $229,630 Noncurrent Assets Garage Equipment Vehicle Hoists $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 less Acc. Dep. (10% pa ) ($58) ($117) ($175) ($233) ($292) ($350) ($408) ($467) ($525) ($583) ($642) ($700) Dyno Machine $29,950 $29,950 $29,950 $29,950 $29,950 $29,950 $29,950 $29,950 $29,950 $29,950 $29,950 $29,950 less Acc. Dep. (10% pa ) ($250) ($499) ($749) ($998) ($1,248) ($1,498) ($1,747) ($1,997) ($2,246) ($2,496) ($2,745) ($2,995) Mechanic Tools $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 Office Equipment and Supplies $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 Computer and Cash Register System $5,429 $5,429 $5,429 $5,429 $5,429 $5,429 $5,429 $5,429 $5,429 $5,429 $5,429 $5,429 less Acc. Dep. (20% pa ) ($90) ($181) ($271) ($362) ($452) ($543) ($633) ($724) ($814) ($905) ($995) ($1,086) Total Noncurrent Assets $62,981 $62,582 $62,184 $61,785 $61,387 $60,989 $60,590 $60,192 $59,793 $59,395 $58,997 $58,598 Total Assets $388,880 $376,262 $365,543 $356,089 $344,654 $335,119 $325,499 $317,698 $309,898 $303,361 $294,844 $288,228

Liabilities Current Liabilities Accounts Payable $1,080 $1,080 $1,080 $1,160 $1,160 $1,160 $1,240 $1,240 $1,240 $1,320 $1,320 $1,320 Total Current Liabilities $1,080 $1,080 $1,080 $1,160 $1,160 $1,160 $1,240 $1,240 $1,240 $1,320 $1,320 $1,320 Noncurrent Liabilities Loan Payable $194,911 $189,822 $184,732 $179,643 $174,554 $169,465 $164,376 $159,287 $154,197 $149,108 $144,019 $138,930 Total Noncurrent Liabilities $194,911 $189,822 $184,732 $179,643 $174,554 $169,465 $164,376 $159,287 $154,197 $149,108 $144,019 $138,930 Total Liabilities $195,991 $190,902 $185,812 $180,803 $175,714 $170,625 $165,616 $160,527 $155,437 $150,428 $145,339 $140,250

Owner's Equity Bob Smith Equity $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 John Smith Equity $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 Retained Earnings/(Losses) ($7,110) ($14,640) ($20,269) ($24,715) ($31,060) ($35,506) ($40,117) ($42,828) ($45,540) ($47,067) ($50,495) ($52,022) Total Owner's Equity $192,890 $185,360 $179,731 $175,285 $168,940 $164,495 $159,883 $157,172 $154,460 $152,933 $149,505 $147,978Total Liabilities and Owner's Equity $388,880 $376,262 $365,543 $356,089 $344,654 $335,119 $325,499 $317,698 $309,898 $303,361 $294,844 $288,228

7.4 Projected Balance Sheet – Year 2010

7.5 Projected Income Statement –Year 2011

Projected Income Statement for U-Spec Performance Pty. Ltd.For the year ended 30 June 2011

1st 2nd 3rd 4th TotalRevenue Sales Revenue $59,400 $59,400 $66,600 $66,600 $252,000 Services Revenue $39,600 $39,600 $44,400 $44,400 $168,000 Total Revenue $99,000 $99,000 $111,000 $111,000 $420,000 less Costs of Goods Sold $39,600 $39,600 $44,400 $44,400 $168,000 Gross Profit $59,400 $59,400 $66,600 $66,600 $252,000

Expenses Operational Expenses Marketing $4,401 $4,401 $4,401 $4,401 $17,604 Rent $25,935 $25,935 $25,935 $25,935 $103,740 Wages and Salaries $23,120 $23,120 $23,120 $23,120 $92,480 Maintenance $1,109 $1,109 $1,109 $1,109 $4,434 Insurance $3,960 $3,960 $4,440 $4,440 $16,800 Depreciation $924 $924 $924 $924 $3,695 Total Operating Expenses $59,448 $59,448 $59,928 $59,928 $238,753 General Expenses Utilities $3,960 $3,960 $4,440 $4,440 $16,800 Telephone and Internet $387 $387 $387 $387 $1,548 Efpos & Postage $792 $792 $888 $888 $3,360 Total General Expenses $5,139 $5,139 $5,715 $5,715 $21,708 Other Expenses Interest Expense $3,091 $3,091 $3,091 $3,091 $12,365 Total Other Expenses $3,091 $3,091 $3,091 $3,091 $12,365 Total Expenses $67,678 $67,678 $68,734 $68,734 $272,826

Net Profit ($8,278) ($8,278) ($2,134) ($2,134) ($20,826)

7.6 Projected Balance Sheet- Year 2011

Projected Balance Sheet for U-Spec Performance Pty. Ltd.As of 30 June 2011

1st 2nd 3rd 4th

Assets Current Assets Cash at Bank $204,600 $180,890 $163,325 $145,759 Inventory $3,960 $3,960 $4,440 $4,440 Total Current Assets $208,560 $184,850 $167,765 $150,199 Noncurrent Assets Garage Equipment Vehicle Hoists $7,000 $7,000 $7,000 $7,000 less Accumulated Depreciation (10% pa ) ($875) ($1,050) ($1,225) ($1,400) Dyno Machine $29,950 $29,950 $29,950 $29,950 less Accumulated Depreciation (10% pa ) ($3,744) ($4,493) ($5,241) ($5,990) Mechanic Tools $20,000 $20,000 $20,000 $20,000 Office Equipment and Supplies $1,000 $1,000 $1,000 $1,000 Computer and Cash Register System $5,429 $5,429 $5,429 $5,429 less Accumulated Depreciation (20% pa) ($1,357) ($1,629) ($1,900) ($2,172) Total Noncurrent Assets $57,403 $56,208 $55,013 $53,817 Total Assets $265,963 $241,058 $222,777 $204,017

Liabilities Current Liabilities Accounts Payable $3,960 $3,960 $4,440 $4,440 Total Current Liabilities $3,960 $3,960 $4,440 $4,440 Noncurrent Liabilities Loan Payable $122,303 $105,677 $89,051 $72,424 Total Noncurrent Liabilities $122,303 $105,677 $89,051 $72,424 Total Liabilities $126,263 $109,637 $93,491 $76,864

Owner’s Equity Bob Smith Equity $100,000 $100,000 $100,000 $100,000 John Smith Equity $100,000 $100,000 $100,000 $100,000 Retained Earnings/(Losses) ($60,300) ($68,579) ($70,713) ($72,848) Total Owner’s Equity $139,700 $131,421 $129,287 $127,152Total Liabilities and Owner’s Equity $265,963 $241,058 $222,777 $204,017

7.7 Projected Income Statement- Year 2012

Projected Income Statement for U-Spec Performance Pty. Ltd.For the year ended 30 June 2012

2012 2013 2014Revenue Sales Revenue $288,000 $324,000 $360,000 Services Revenue $192,000 $216,000 $240,000 Total Revenue $480,000 $540,000 $600,000 less Costs of Goods Sold $192,000 $216,000 $240,000 Gross Profit $288,000 $324,000 $360,000

Expenses Operational Expenses Marketing $13,665 $13,644 $13,665 Rent $108,927 $114,373 $120,092 Wages and Salaries $124,480 $124,480 $124,480 Maintenance $4,434 $4,434 $4,434 Insurance $23,580 $25,600 $27,000 Depreciation $3,695 $3,695 $3,695 Total Operating Expenses $274,401 $282,226 $290,366 General Expenses Utilities $19,200 $21,600 $24,000 Telephone and Internet $1,548 $1,548 $1,548 Postage $3,840 $4,320 $4,800 Total General Expenses $24,588 $27,468 $30,348 Other Expenses Interest Expense $6,446 $0 $0 Total Other Expenses $6,446 $0 $0 Total Expenses $305,435 $309,694 $320,714

Net Profit ($21,815) $10,306 $36,286

7.8 Projected Balance Sheet- Year 2012

Projected Balance Sheet for U-Spec Performance Pty. Ltd.As of 30 June 2012

2012 2013 2014Assets Current Assets Cash at Bank $60,681 $79,767 $123,834 Inventory $19,200 $21,600 $24,000 Total Current Assets $79,881 $101,367 $147,834 Noncurrent Assets Garage Equipment Vehicle Hoists $7,000 $7,000 $7,000 less Accumalated Depreciation (10% pa ) ($2,100) ($2,800) ($3,500) Dyno Machine $29,950 $29,950 $29,950 less Accumalated Depreciation (10% pa ) ($8,985) ($11,980) ($14,975) Mechanic Tools $20,000 $20,000 $20,000 Office Equipment and Supplies $1,000 $1,000 $1,000 Computer and Cash Register System $5,429 $5,429 $5,429 less Accumalated Depreciation (20% pa) ($3,257) ($4,343) ($5,429) Total Noncurrent Assets $49,037 $44,256 $39,475 Total Assets $128,917 $145,623 $187,309

Liabilities Current Liabilities Accounts Payable $19,200 $21,600 $24,000 Total Current Liabilities $19,200 $21,600 $24,000 Noncurrent Liabilites Loan Payable $0 $0 $0 Total Noncurrent Liabilities $0 $0 $0 Total Liabilities $19,200 $21,600 $24,000

Owner’s Equity Bob Smith Equity $100,000 $100,000 $100,000 John Smith Equity $100,000 $100,000 $100,000 Retained Earning/(Losses) ($90,283) ($75,977) ($36,691) Total Owner’s Equity $109,717 $124,023 $163,309Total Liabilities and Owner’s Equity $128,917 $145,623 $187,309

Projected Cash Flow Statement for U-Spec Performance Pty. Ltd.For the year ended 30 June

  2010 2011 2012 2013 2014Cash Flow from Operating Activities                     Cash Receipts from Customers $360,000   $420,000   $480,000   $540,000   $600,000   Cash Paid to Suppliers ($144,000)   ($168,000)   ($192,000)   ($216,000)   ($240,000)   Cash Paid to Employees ($92,480)   ($92,480)   ($124,480)   ($124,480)   ($124,480)   Cash Generated from Operations $123,520   $159,520   $163,520   $199,520   $235,520   Cash Paid for Services ($152,961)   ($163,200)   ($169,728)   ($180,434)   ($191,453)   Interest Paid ($17,800)   ($12,365)   ($6,446)   $0   $0   Net Cash Used in Operating Activities   ($47,241)   ($16,045)   ($12,654)   $19,086   $44,067                     Cash Flow from Investing Activities                     Purchase of Equipment ($63,379)   $0   $0   $0   $0   Proceeds from Sale of Equipment $0   $0   $0   $0   $0   Net Cash Used in Investing Activities   ($63,379)   $0   $0   $0   $0                     Cash Flow from Financing Activities                     Proceeds from Issue of Share Capital $200,000   $0   $0   $0   $0   Proceeds from Long-Term Borrowings $200,000   $0   $0   $0   $0   Repayments of Borrowings ($61,070)   ($66,505)   ($72,424)   $0   $0   Dividends Paid $0   $0   $0   $0   $0   Net Cash Used in Financing Activities   $338,930   ($66,505)   ($72,424)   $0   $0                     Net Increase (Decrease) in Cash   $228,310   ($82,550)   ($85,078)   $19,086   $44,067Cash at Beginning of Period   $0   $228,310   $145,759   $60,681   $79,767Cash at End of Period   $228,310   $145,759   $60,681   $79,767   $123,834                     

7.9 Projected Cash Flow Statement

Ratio AnalysisU-Spec Performance Pty. Ltd.

Ratio 2010 2011 2012 2013 2014           Liquidity    Current Ratio 173.96:1 33.83:1 4.16:1 4.69:1 6.16:1Quick Ratio 172.96:1 32.83:1 3.16:1 3.69:1 5.16:1     Leverage    Debt Ratio 0.49:1 0.38:1 0.15:1 0.15:1 0.13:1     Operating    Net Sales to Total Assets Ratios 1.25:1 2.06:1 3.72:1 3.71:1 3.20:1     Profitability    Net Profit on Sales Ratio -14.45% -4.96% -3.63% 2.65% 6.55%

Net Profit to Assets Ratios -18.05%-

10.21%-

13.52% 9.82% 20.97%

Net Profit to Equity Ratios -35.16%-

16.38%-

15.89% 11.53% 24.06%           

Break-Even AnalysisU-Spec Performance Pty. Ltd.

  2010 2011 2012 2013 2014     Net Revenue $360,000 $420,000 $480,000 $540,000 $600,000Total Expenses $412,022 $440,826 $497,435 $525,694 $560,714Total Fixed Expenses $156,228 $155,752 $277,961 $279,340 $287,480Total Variable Expenses $163,314 $192,594 $219,474 $246,354 $273,234Contribution Margin (1- [VE / NR]) 0.54635 0.541443 0.542763 0.543789 0.54461     Break-Even Point (FE / CM) $285,949 $287,661 $512,122 $513,693 $527,864           

7.10 Ratio Analysis

7.11 Break-Even Analysis

- 46 -

- 47 -

Appendix

2a Environmental Issues

Pollution from Waste

There have always been issues of particular concern with the storage and disposal of

waste oil, oily wastewater, brake fluid, coolant and other liquids; the disposal of

vehicles parts; and the spillage of oils and other liquids when carrying out general

servicing and repair work. So mechanics must have access to a garbage base to meet

waste tracking and disposal requirements. Some methods to reduce the risk of

pollution include:

A spill kit for emergencies

Wastewater storage container

Waste liquid collection containers

Oil filter collection containers

Waste tracking system

Impervious ground sheet

Drip trays

A properly equipped garage base

Pollution from Emissions

Motor vehicles are to be maintained properly as to ensure they are as efficient as

possible which would minimize emissions. This is so because the emission from

brings severe impacts on both local and global levels. Locally, it causes air pollution,

whereas globally, it is a source of greenhouse gas emission.

2b. Motor Vehicle Repairs Act 1980 (NSW)

s.15 – States that:

On or after the relevant day, no person (other than an exempted person) shall:

a. carry on or advertise that the person carries on or is willing to carry on the business of

a repairer in respect of any repair work unless the person is the holder of a licence in

respect of a class of repair work that includes that repair work; or

b. Carry on the business of a repairer at any place of business unless the person is the

holder of a licence granted in respect of that place of business.

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s.4 – Defines "repair work" as the work of: an automotive electrician, a body maker, a brake

mechanic, a front end specialist, a motor cycle mechanic, a motor mechanic, a painter

tradesman, a panel beater, a transmission specialist, a liquefied petroleum gas mechanic, a

natural gas mechanic, and a prescribed tradesman; but does not include work that is

prescribed as exempt for the purpose of this definition.

s.18 (1) - In order to be able to grant a licence the MVIRC must be satisfied that the applicant

is a "fit and proper person" and has "sufficient material, manpower and financial resources to

carry on the business of a repairer in respect of that class of repair work.

s.19 - Specifies that a licence granted by the MVIRC must:

a. (Repealed)

b. specify the class or classes of repair work in respect of which the licence is granted;

c. specify the place of business in respect of which the licence is granted;

d. specify the name of the person or, in the case of a joint licence the names of the

persons, to whom the licence is granted; and

e. where the licence (including a joint licence) is granted to a corporation, specify the

names of the directors of the corporation.

s.15 (1) - Maximum penalty for a breach is 20 penalty units (currently $2200)

(Source Office of Fair Trading – Review of Motor Vehicle Repairs Act 1980,

http://www.fairtrading.nsw.gov.au/pdfs/About_us/mvrareport.pdf)

2c Regression Model of Sydney Petrol Prices (unleaded)

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(Source http://www.stubbornmule.net/2008/06/sydney-petrol-prices/)

2d Economic Issues- Petrol Prices

Another economical issue that may affect the industry is current and possible taxes on

cars. The current tax on luxury cars is currently 25% and there has been proposed

increase to 33% in the near future. One would assume that this increase will decrease

the sale of luxury cars, including a lot of high performance vehicles which is the main

concern of the business, however experts suggests that most buyers of high

performance vehicles, like Ford Performance Vehicles, are less sensitive to price

increases compared to ordinary car buyers. This means the possible tax increase will

have little or no impact on high performance car sales and therefore our market. There

has also been discussion over the introduction of a congestion tax, which charges

drives for every kilometer they use in congested areas like the city, to decrease the

congestion and pollution in Sydney. Like high petrol prices this proposed tax may

decrease car sales and car usage, which will affect our market.

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4a Interview – Top Secret Imports Blacktown

Gary Shander- owner ManagerForge St, BlacktownPh: 9676 1023www.topsecretimports.com.au/ 1. What type of business do you operate and what are the main products/

service offered as part of operations?

The type of business we offer sales of imported cars from Japan, mostly deal with

sports cars but also some luxury family, commercial and hybrids.

Also we now offer a mechanic service and auto electrician all in one place. We

also offer sales of parts and accessories on order.

2. How did you start of?

We started of pretty much in our back yard for a part time business where we

would import cars and sell them on the trading post and Carsales.com.au etc then

when we sow that there was a demand for this so we started a full proper business,

where we had the grand opening in Dec 2007.

3. How have external forces such and petrol Prices and P-Plate regulations

affected your business as you deal with mostly sports cars.

Surprisingly it has not really affected us as much as we thought, I mean we have

had a few sales drops but we have combated that by the sales of hybrid imports

which are cheap to buy compared to the ones already sold in Australia. Also

it is because most car enthusiasts either have more then one car so they will have

one as a project and one run around car, or young people just want looks and

performance and they will spend money to do so and we offer a lot of non-turbo

cars also which P-plates.

4. As you said earlier for parts and accessories you only sell on order, is that

beneficial?

Yes, it is as there are a wast range of for parts and accessories on offer we would

just be tying up our operating cash flows because we are not only a business that

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sells for parts and accessories so this way also people can order exactly what they

want from type and brand etc.

5. What ways of advertising to you find affective for this type of business?

Well mostly Word of mouth, also we sell on Carsales.com.au and trading post and

we have a website and advertise on car enthusiasts sites and events such as Night

Shirt and also advertise in the High Performance Imports magazine which gets us

quite a few customers. But we have found that word of moth as been really

affective as for example one person bought a $42000 car from us from South

Australia without even looking at it, he only sow the pictures that’s it. It was from

the reputation built up in the forums of car enthusiasts and general people who

have used our business. We also have stickers for customers who have bought our

cars to display on them which I think is very affective .

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4b Interview- MRT Performance

1. What type of business do you operate and what are the main products/ service offered as part of operations?

The business we had chosen is part Retail, part Service Company operating the

automotive industry. Some of the main products sold in its retail department are

categorized as follows: power kits, suspension, transmission, engine and electronics.

In terms of providing a service, the business offers the following, but is not limited to:

Dyno tuning, Engine building and repairs, regular servicing of motor vehicles, vehicle

inspections and wheel alignments.

2. How many employees currently work within the chosen entity?

Every business, whether small or large, needs to make sure the right people and

equipment are available to do the job. Why? So a business can develop the best way

to fill customer orders and at the same, provide some value (Bozath et al 2006).

Currently, the workshop employs 8 workers, each with different qualifications for

different tasks. Titles held include technician (junior and senior), technical director,

manager and general assistant.

3. Has your chosen company incorporated E-Business into its operations?

Our chosen entity has incorporated e-business into its retail department, setting up an

online catalogue for its market. This enables our customers to browse through a

number of categories from ranging from wheels to turbo kits and accessories. Once

they found what their after they place an order in one of three ways – through email,

setting up an online account, or through fax/ post.

Payment can be made via money order/cheque, direct bank deposit into the company

account and credit card. For the full details you can visit our website. Customers are

also automatically charged for insurance, on delivery. However customers can notify

the company if they refuse insurance.

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4. The external environment refers to the forces and institutions outside an organization that potentially can affect the organizations performance. The external environment is divided into 2 components- specific and general. The general environment consists of economic conditions, legal forces, socio-cultural conditions and demographics. Select one of these and explain the effect on your chosen business.

The most recent changes affecting drivers, particularly those with provisional

licenses, have come from legal forces. The NSW Government has implemented

restrictions on a large number of performance vehicles. As a result provisional license

holders are prohibited from driving certain cars.

This has had a minimal impact on our business of choice. The reason for this is the

companies target market. Our chosen entity’s market is more up-market to the P-Plate

market, consisting of those aged between 30- 35 yrs and up. Ten per cent of which use

their vehicle in racing events; the other ninety percent for on road use.

5. What ways of advertising to you find affective for this type of business?

Well mostly Word of moth among the car enthusiasts, also website and advertise on

car enthusiasts sites and magazines but I think the main one would be from the

reputation built the by the car enthusiasts and general people who have used our

business. We also have stickers for customers who have bought our cars to display on

them which I think are very affective.

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4c Advertising Rates Email from Hot4s magazine

Advertising Rates:

HOT 4S:

Monthly Readership: 174,000

 Double Page Spread: $2,200 + GST per issue

Full Page: $1,200 + GST per issue

Half Page: $700 + GST per issue

Quarter Page: $400 + GST per issue

Business Card Size: $200 + GST per issue

 

Web Packages:

Avg Page Impressions per month: 99,000

 Monthly Banner costs on Website (unlimited page impressions)

 Large island banner: $600 + GST per month

Sky Scraper: $1000 + GST per month

 

Regards

 Mark Cutajar

 Senior National Advertising & Marketing Manager

Express Motoring Group Pty Ltd

 Phone: (02) 9741 3942

Email:  mcutajar@expresspublications.com

Mobile: 0423 595 65

(Source email from mcutajar@expresspublications.com)

4d Promo sticker design

- 55 -

4e Service Charges (General Services):

- 56 -

Service Starting Cost*

Full Car Service (oil change (std), spark plugs (std), coolant

flush (with new coolant))*

$290

Mufflers Service $95

Clutch and Brakes $320

Written Inspection Test $50

Transmission check $100

Carburettors Check $50

Electronic Tune Up (dyno)* $400-800

Safety Service $97.40

Electronic Pink Slip $35

Clutch Repair $550

Service Charges Modifications (Install/Labour Prices-BYO Parts):

Service Starting Cost*

Turbo install- direct bolt on- others (depending on car, type,

alterations needed)

$500

Exhaust-Cat back/turbo back (depending on any alterations

needed)*

$300/$500

Exhaust tip only (depending on car, type, alterations needed)*

Clutch and Brakes $400

- 57 -

Intercooler (depending on car, type, alterations needed)* $500

Blow off valve (depending type)* $150

Suspension (depending on car and type)* includes alignment

and balance

$250

Electronic Tune Up/dyno (depending on car and mods)* $400-$800

Turbo Timer (depending on car and type)* $150

Boost Controller (depending on car and type)* $250

Injectors (depending on car)* $150

* Prices subject to change

5a RATES SUMMARY

Metal Engineering and Associated Industries (State) Award (039)

State Wage Case 2007 increase to wages and allowances

From the beginning of the first full pay period on or after 11 October 2007

ClassificationsFull Time($ per week)

Part Time($ per hour)

Casual($ per hour)

Casual Holiday Pay ($ per hour)

Level C 14 531.40 13.98 16.09 1.35Level C 13 541.10 14.24 16.38 1.37Level C 12 563.60 14.83 17.06 1.43Level C 11 584.50 15.38 17.69 1.48Level C 10 618.20 16.27 18.71 1.56Level C 9 639.10 16.82 19.35 1.62Level C 8 659.90 17.37 19.98 1.67Level C 7 678.80 17.86 20.55 1.72Level C 6 720.50 18.96 21.81 1.82Level C 5 741.40 19.51 22.44 1.87Level C 4 762.20 20.06 23.07 1.93Level C 3 803.90 21.16 24.33 2.03Level C 2(a) 824.80 21.71 24.97 2.09Level C 2(b) 862.50 22.70 26.11 2.18Level C 1(a) 946.00 24.89 28.63 2.39Level C 1(b) 1071.10 28.19 32.42 2.71

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Some Examples of the Old Task Based classifications compared to the current Skills Based Structure:

C10 - Tradespersons - Fitter, Mechanic (Motor, Marine, Plant, Refrigeration), Turner, Shipwright-boatbuilder, all Smiths, Boilermaker, 1st Class (Machinist, Sheetmetal Worker, Welder, Metal Ceiling Fixer). C11 - Motor Cycle Mechanic. C12 - 2nd Class (Machinist, Sheetmetal Worker, Welder, Metal Ceiling Fixer, Spray Painter,Silk Screen Maker, Storeman, Packer or Dispatcher. C13 - 3rd Class (Machinist, etc), Process Worker, Dry Enamelling Painter (brush or spray)Source (Industrial Relations - http://www.industrialrelations.nsw.gov.au/)

6a Location site Map

- 59 -

(Source www.whereis.com)

6b Site Example

- 60 -

- 61 -

Shop

Office (Source www.Ljhooker.com.au)

6c Modification Permit engineers

- 62 -

Name & Company Address Telephone and FaxBANCROFT, PeterBancroft Engineering

Unit 3, 16/18 Stanley StreetPEAKHURSTNSW 2210

P: (02) 9584 3290F: (02) 9584 0374

CROZIER AnthonyPakmor WasteEquipment Aust. Pty Ltd

35 Walker StreetWINDSORNSW 2155

P: (02) 4577 3099F: (02) 4577 3022

DALTON Ron 5-7 Frank StreetWETHERILL PARKNSW 2164

P: (02) 9725 4905F: (02) 9725 4946

FAKES RobertFakes Engineering

Armidale RoadGLEN INNESNSW 2370

P: (02) 6732 1755F: (02) 6732 1755

GAL AnthonyArlow Engineering

1 Dinah PlaceBALGOWNIENSW 2565

P: (02) 4283 4365F: N/A

GEORGAS WilliamProblem ManagementEngineering

6 Kookaburra RoadHORNSBY HEIGHTSNSW 2077

P: (02) 9482 2808F: (02) 9476 6046

BARRETT KimBelconnen AutomotiveRepair Services Pty Ltd

76 Grimwade StreetMITCHELLACT 2911

P: (02) 6241 4888F: (02) 6241 4365

BARRETT StewartBelconnen AutomotiveRepair Services Pty Ltd

76 Grimwade StreetMITCHELLACT 2911

P: (02) 6241 4888F: (02) 6241 4365

(Source: RTA VSI2, Restricted Engineering Signatories p.3)

- 63 -

Receive customer Request for Parts

Evaluate the request

CustomerMakes request

Is the job Possible

YesIdentify product from range of suppliers & place an order

Decide on an alternative and contact customer.

Notify customer that the part has arrived

No

Yes

Does the customer agree with the recommendation?

Place an order and make it clear that the company is not liable for any damages to vehicle engine.

No

6d Purchase System flow chart

6e Sample order form

- 64 -

U-Spec Performance Parts Request Form

Customer Name: Adam Smith

Contact Number: 0421 161 834

Email:

Vehicle: make & model: 1998 Subaru Impreza WRX (MY99)

Previous Modifications (If any)

Part/s Requested:

Note: In this example, the customer is currently driving with cast pistons. If the turbo and injectors are purchased and installed, it will increase the pressure throughout the engine. Increased pressure will mean higher temperatures. Cast pistons have been known to strain, and some cases erode, damaging the engine. In this scenario the owners would contact the customer and recommend forged pistons should be installed prior to running the new turbo. It would also be recommended that the top mount be replaced with a front mount cooler to improve the airflow in the engine.

6f Supplier information

- 65 -

Top mount intercoolerCatback exhaustPod FilterTurbo-smart boost control Suspension upgradesUpgraded gearbox

Fuel injectors High flow Turbo

Turbo Wholesale Distribution (TWD)

Turbo Wholesale Distribution is an online wholesaler of performance parts and

accessories. Currently the store provides parts for most vehicle import shops. It

performance parts cover almost every vehicle, ranging from Acura- VW and

everything in between. Setting up an account with this supplier is done online and

takes 3-5 days.

There product range from boost controllers, blow off valves, performance gauges,

turbo kits and exhaust/muffler systems. By associating our business with TWD we

expect to obtain the following benefits:

Large selection of performance parts and brands.

Order online, check prices, print receipts and more online.

Drop Ship directly to customers location –if necessary.

NO Credit Card Surcharge Fee's.

Volume Based Discount Structure.

All products carry manufacturer warranty.

Automotive Components Ltd (ACL)

ACL was formed in 1922, developing and manufacturing engine parts for

Australia’s newly emerging automotive industry. Today ACL is a combination of 27

companies, acquired over a period of 86 years. It has a strong market share and

‘proven product quality’ and has a sales average of approximately $65 million per

year. U-Spec performance will set up and account with ACL for the following engine

components:

Pistons and Rings

Engine Bearings

Transmission components

Gaskets

- 66 -

Performance Wholesale Australia

Performance Wholesale Australia has over 30 years experience in building racing

engines, and has built up a reputation in supplying performance parts for not only road

vehicles, but also for all forms of motor racing. In 2008 the company has become an

authorized dealer of leading brands in performance components- HKS.

These three wholesalers provide the range of products we aim to sell in our retail

department. Together, they also cover parts for all vehicles (Nissan, Toyota, and

Honda etc.) made within the last 10- 15 years.

6g Common cover options for the motor trade

We cover the typical risks that motor trade business owners face every day and we allow you to choose the cover you need. Some of these cover options include:

 

Personal injury and property damage – this covers you if someone sues you for personal injury or damage to their property that occurs in connection with your business. For example, you could be sued if someone is injured in your workshop.

 

Fire, storm and other defined events (including malicious damage) – you are covered for damage to your buildings, contents, customers’ vehicles, machinery and stock in trade.

 

Liability for rectifying faulty workmanship – this is an extra option that you can take as part of your liability insurance.

 

Business interruption – you are covered for loss of profits if your business is disrupted by damage to your business property caused by specified events.

- 67 -

 

Personal accident and illness – this covers you for loss of income as a result of a defined accident or illness. We cover individuals which is useful for sole traders or partnerships that need both partners working.

 

Professional indemnity – you are covered for breach of professional duty through negligence, error or omission.

 

7a Product Details for Westpac Business Loan

- 68 -

- 69 -

Source(http://www.infochoice.com.au/Home/BankingSmallBusiness/BusinessLoans/Compare/tabid/

274/Default.aspx?mode=3&field1=Availability&value1=OO&field2=LoanType&value2=fully

%20drawn

%20advance&field3=inview&value3=&field4=extralink&value4=false&pagename=default.aspx&orde

r=descending&sortfield=InstitutionTitle&sorttype=text&state=NSW&value5=Residentially&value6=

&pid=561)

7b Survey Results from MAUS – Business Benchmarking Guide for Automotive-

Motor Mechanics

Source (http://www.ebc.com.au/product/product.asp?loc=4.3.222)

- 70 -

7c Assumptions and Calculations of Pro Forma Financial Statements, Ratio and

Break-Even Analysis

Sales will make up 60% of total revenue and includes parts used in services

Services will make up remaining 40% of total revenue

Business will make $360,000 in the first year (which is below industry average)

and will increase by $60,000 for each upcoming year (which means making

$420,000 for the second year which is slightly above industry average)

Costs of goods will be 40% of total revenue which is approximately industry

average

Marketing costs is made up of website costs, advertising costs and other

promotions as advised in the marketing plan

Rent is recorded as advised in the business profile

Wages and salaries is made up of:

▬ $48,000 for two owners

▬ $32,000 for two mechanics for first two years and then $64,000 for 4

mechanics for following years

▬ $12,480 for one part time receptionist/salesperson

Maintenance is calculated as 12% of the original costs of the Dyno and Lifts

annually

Insurance and Utilities is calculated as 4% of total revenue will is slightly above

industry average

Legal fees include costs to register a company through ASIC

Postage costs amount to 2% of costs of goods sold

Inventory kept on site will only be 10% of actual total of goods sold and will paid

using credit, since the business operates by ordering in stock when requested

Office equipment and supplies would be approximately $1000 and be restocked

by the end of each month to that amount

Variable expenses consists of costs of goods sold, maintenance, utilities and

postage costs

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References

Research & Analysis part

Socio-cultural analysis

V8x. (2007) ‘Australian Bureau of Statistics confirms V8 Supercars and motorsport as Australia's third most attended sport’ V8x maganize Issue 37 :http://www.v8x.com.au/cms/A_108259/article.html

Economical analysis

Garnaut, J. & Baker, B.,2006, ‘Petrol prices hits car sales’, Sydney Morning Herald, http://www.smh.com.au/news/national/petrol-prices-hit-car-sales/2006/05/22/1148150189141.html#

Blackburn, R., 2008, ‘Petrol price fails to dent car sales’, drive.com.au, http://www.drive.com.au/Editorial/ArticleDetail.aspx?ArticleID=54467&vf=16

---, 2008, ‘New car sales surviving petrol prices, rates rises’, ABC news, http://www.abc.net.au/news/stories/2008/04/03/2207188.htm

Brinsden, C., 2008, ‘Petrol prices falling at a snail's pace’, drive.com.au, http://www.drive.com.au/Editorial/ArticleDetail.aspx?ArticleId=56275

---, 2008, ‘Luxury car tax: delay in proposed increase’, Australian Taxation Office, http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00144892.htm

Spink, J., 2008, ‘High-performance Falcons outsprint budget tax hike’, drive.com.au, http://www.drive.com.au/Editorial/ArticleDetail.aspx?ArticleId=52519

Dibson, J., 2008, ‘Sydney considers congestion tax’, Brisbane Times, http://www.brisbanetimes.com.au/articles/2008/06/23/1214073184781.html?feed=fairfaxdigitalxml

Technological analysis

Dowling, J., 2008, ‘Power Up’, Sydney Morning Herald, http://www.smh.com.au/news/innovations/power-up/2008/08/19/1218911693359.html

O’Kane, T., 2008, ‘Nissan Considering Fuel Cell Powered High-Performance Sports Car’, The Motor Report,

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http://www.themotorreport.com.au/6781/nissan-considering-fuel-cell-powered-high-performance-sports-car/

Environmental analysis

---, 2008, ‘DECC – Mechanics’, NSW Dep. Of Environment and change,http://www.environment.nsw.gov.au/sustainbus/mobilemechanics.htm

---, 2008, ‘Clean cars for NSW, Environment Protection Authority,http://www.epa.nsw.gov.au

Legal Analysis

---, 1980, Review of Motor Vehicle Repairs Act 1980, Office of Fair Trading –

http://www.fairtrading.nsw.gov.au/pdfs/About_us/mvrareport.pdf

Competitor Analysis

MRT Performancewww.mrtperformance .com.au/

Croydon Racing Developments (CRD)http://www.croydonracingdevelopments.com/

Queen Street Racinghttp://www.queenstsmash.com.au/queenst/

Bel Garagehttp://www.belgarage.com.au/Tony Regoli Performacehttp://www.tonyrigoliperformance.com.au/

Marketing plan

Books:

Hansen, D and Mowen, M, 2006 Cost Management Accounting and Control, 5th Ed., Thomson South-Western, USA

Zimmerer T W, Scarborough N M, 2008 Essentials of Entrepreneurship and Small Business Management, 5th Ed. Parson New Jersey USA.

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Email

Advertising costs with hot4s magazine Cutajar, M 2008, email, 22 September, < mcutajar@expresspublications.com >

Websites:

Web hosting & serviceshttp://www.mdwebhosting.com.au/searchactivator.html

http://www.mdwebhosting.com.au/businesshosting.html

http://www.mdwebhosting.com.au/myaccount/domainchecker.php

http://theconsole.netregistry.com.au/order/execute/domainSearch

JITBroyles, D. Beirns, J. Franko, J. & Bergman M. (2005) Just-In-Time Inventory

Management Strategy & Lean Manufacturing: Overview of Just-in-TimeInventory Management,

http://www.academicmind.com/unpublishedpapers/business/operationsmanagement/2005-04-000aaf-just-in-time-inventory-management.html

-----(1995) Just Just In Time (JIT) Manufacturing: Curtain university of technology http://www.academicmind.com/unpublishedpapers/business/operationsmanagement/2005-04-000aaf-just-in-time-inventory-management.html

Sticker orders:http://www.stickerart.com.au/

MagazinesHot4s- www.hot4s.com.auFastfours –www.fastfours.com.auHigh Performance Imports- www.highperformanceimports.com.au

Events Night-shift- www.night-shift.com/Auto saloon- www.autosaloon.org/terams

Management Plan

MRT Performance

www.mrtperformance.com.au/

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---, 2004, ‘Motor Mechanics, NSW Office of Industrial Relations,http://www.industrialrelations.nsw.gov.au/workandfamily/payequity/report/

industries/motor%2Bmechanics.html

---, 2007, ‘Awards Information, NSW Office of Industrial Relations,http://www.industrialrelations.nsw.gov.au/awards/controller.jsp?

awardCode=039&view=currentRates

---, 2007, ‘Occupation Information - Light Vehicle Motor Mechanic, My Futurehttp://www.myfuture.edu.au/services/default.asp?

FunctionID=5050&ASCO=421111F

Operations Plan

Modification Permit laws---, 2001, ‘GST and amount for a vehicle modification permit included in price charged to customer for vehicle modifications, Australia Tax Office,http://law.ato.gov.au/atolaw/print.htm?DocID=AID%2FAID2002877%2F00001&PiT=20060426000001&Life=10010101000001-99991231235959

Location and site:www.ljhooker.com.au/parramatta

Search for location and mapswww.whereis.com

Pricing and lease terms for Dyno machinehttp://www.land-and-sea.com/chassis-dyno/chassis-dyno-price.htm

Car Lifts from Lift king Australia- Priceshttp://liftking.ca/index.php?page=pro-king-8-xxl

Required Tools & Costshttp://www.transquip.com.au/categoryview.aspx?ID=185http://www.absorbenviro.com.au/profile.php

Suppliers of partshttp://www.turbowholesale.com/catalog/index.html

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http://www.acl.com.au/http://www.performancewholesale.com.au/ LEGAL REQUIREMENTS:Environmental concerns https://www.dec.nsw.gov.au/resources/mechanics.pdf

---, 2007, ‘oilcode’ ACCChttp://www.accc.gov.au/content/index.phtml/itemId/783104

INSURANCEWorkers compensationwww.industrialrelations.nsw.gov.au

Insurance cover optionshttp://www.nrma.com.au/business-insurance/motor-trade.shtml

Insurancehttp://capricornmutual.millstream.com.au/

OHS

---, 2008, ‘Index of National Standards Codes of Practice and related Guidance Notes, Australian Safety and Compensation Council lhttp://www.ascc.gov.au/ascc/AboutUs/Publications/NationalStandards/IndexofNationalStandardsCodesofPracticeandrelatedGuidanceNotes.htm

RTA Guidelines---, 2008, ‘Occupation Vehicle standards information sheets, RTA NSWhttp://www.rta.nsw.gov.au/registration/downloads/vsi/vsi_dl1.html

JITBroyles, D. Beirns, J. Franko, J. & Bergman M. (2005) Just-In-Time Inventory

Management Strategy & Lean Manufacturing: Overview of Just-in-TimeInventory Management, Retrieved: 10/10/2008 Retrieved from:

http://www.academicmind.com/unpublishedpapers/business/operationsmanagement/2005-04-000aaf-just-in-time-inventory-management.html

Format/Structure of the operations plan was taken from the following sites:http://entrepreneurs.suite101.com/article.cfm/business_plan_operationshttp://sbinfocanada.about.com/cs/businessplans/a/bizplanoperplan.htmRTA, 2008, Vehicle Standards Information 2: Restricted Engineering Signatories, Rev. 5 Published 10/10/2008.Retrieved 15/10/2008. Retrieved from:

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http://www.rta.nsw.gov.au/registration/downloads/vsi/vsi_2_september2008.pdf

Financial Plan

---, 2008, ‘Form-Application for registration as an Australian company, ASIChttp://asic.gov.au/asic/asic.nsf/asic+formsdisplayW?readform&code=201

Equipment orders

http://www.hotpos.com.au/supplies/lenovo-pos-bundle-touch-screen.html

Internet & phone

http://personal.optus.com.au/web/ocaportal.portal?

_nfpb=true&_pageLabel=Template_woRHS&FP=/personal/bundles/

fusion&site=personal

Office Equipment costs

http://www.officeworks.com.au/owbd/b2c/init.do

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