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- 7.0 The Financial Plan
6.0 The Marketing Plan6.1 Competitors Saskatoon was selected for the first Revival retail location because it is an untapped market. There are currently no direct competitors operating anywhere in the greater Saskatchewan area. Table 6.1 includes all the near and far competitors that Revival will encounter in Canada. There are only two near competitors, Cars by Nibet in Alberta and Boot Hill in Ontario. The other competitors are basic dealerships located within the Saskatoon area. They are included as competitors because some of the more standardized parts that consumers will need for their classic cars could be ordered through these dealerships. However it is projected that they will take a minimal share of Revival’s potential market.
Table 6.1 - Competitors The two near competitors have been furthered analyzed. They are also not a major concern for Revival mainly due to their locations. None of these auto centers are close enough to be competing directly for the same customers. They also have very different marketing mixes. Cars by Nibet is a small operation based on an acreage in Alberta with very limited advertising that appears to only be done locally. Boot Hill is a large organization, but most of their advertising appears to be through social media techniques with their website being heavily utilized. The positioning of these organizations also differ from Revival’s. Cars by Nibet concentrates on primarily classic imports, while Boot Hill focuses on Hot Rods. To better illustrate this, a positioning map has been prepared. The axis on this map compare the year of automobiles the organization specializes in and the emphasis they put on having either original components or performance parts. After placing Revival and its main competitors on the map it became clear that competition will not be a major issue for the organization. Revival will have a first-mover advantage in Saskatchewan.
Figure 6.1 – Positioning Map 6.2 Positioning After analyzing Revival’s direct competitors, a positioning plan has been developed. The desired position for Revival is to be seen as experts on muscle cars that offer quality service. To communicate this desired position to the staff and consumers, the following positioning statement was created: “For the expert and novice car enthusiast Revival is an authority on the restoration and preservation of classic American-made automobiles.” This positioning will be achieved through the following marketing mix. 6.3 Marketing Mix 6.3.1 Product Revival will offer three different types of services: repairs, parts shipment and complete restoration projects. A few main features of the business will be the atmosphere and the quality of service. These intangible features will need to be promoted along with the actual services in order to achieve the desired positioning. Customers will purchase these offerings because the consumers in the target market are already car enthusiasts, and Revival offers a service to improve the condition and performance of their valuable automobiles. These customers want show-worthy vehicles with maximum performance and Revival has the knowledge and expertise to assist them. 6.3.2 Price The pricing for Revival is based on a competitive strategy. It was developing using a market-based approach. The price for labor will be based on billable hours, for every hour a mechanic works on a project the customer will be billed $100. Revival will also charge for parts with a mark-up starting at 30%. This mark-up will be determined by the type of the part, and will be a percentage between 30% and 100%. These prices were chosen for multiple reasons. The industry average for this type of mechanical work is between $65 to $135 [Mec11]. Revival chose to select a price-point that would allow them to be positioned as quality experts and perceived as a premium location without over charging customers. Another reason for this pricing strategy is because it allows Revival to become profitable within 2 to 3 years. It also allows Revival to operate at less than maximum capacity during the initial, awareness-building years. 6.3.3 Place Revival will sell directly to consumers. It will have two distribution channels to provide offerings to consumers. The first one is when the vehicle bodies need to be initially picked up or dropped off after completion. This will be done using the Hunter’s truck and trailer at no expense to the customer. The second distribution channel is when individual parts are ordered from the manufacturers. If the parts are being utilized by the Revival mechanics during restoration, the products will be shipped using the manufacturer’s preferred method to the Revival Auto Centre. If the part is order by a customer for their own restoration process, then the part will go from the manufacturer directly to the customer without arriving at Revival using a priority shipping method such as Fedex. These channels were selected because they ensure that the finished product is treated with due care and that the parts are delivered to the costumer in a timely manner. Even though priority shipping may incur more costs, a timely delivery is valued by the consumers in this industry, and will present Revival with an advantage over slower competitors. 6.3.4 Promotions The promotions for Revival will have the sole purpose of creating brand awareness. At this point the goal will be to increase the number of people that know about the company. In order to do this every consumer touch-point will be integrated. This includes every aspect of the business that a consumer will encounter such as the promotional items, the store front and the reception area. These touch-points were selected because it is important for Revival to have promotions with a high frequency rather than a large reach at this point. They will all be designed to move Revival closer to their desired position by utilizing a consistent red and black color scheme and featuring the campaign slogan: “No Replacement for Displacement”. This slogan was developed because it conveys the appropriate message to consumers, that Revival is an authority on classic cars, while also utilizing a common expression that will be familiar among the target market. Each touch-point and the desired timeline for utilizing them is include in Figure 6.3 below. Examples of the main promotional items are included in Appendix C.
Figure 6.2 – Marketing Time-lines 6.4 Target Market Revival chose to segment the market based on four factors. The gender will be males between the age of 25 to 65 making an income of $50,000 or more annually, and residing in the Prairie Provinces. This market is currently unsought by any competitors. It also presents a viable source of customers. According to Stats Canada there are 2, 164, 400 males in the segmented age group living in these provinces, with 355,000 of them residing directly in Saskatchewan. A large portion of these males are car enthusiasts. Auto Events is a website that compiles a list of all automotive events in the Canadian prairies and neighboring states. Its list includes over 100 car shows this year alone. Many of these car shows in Saskatchewan receive considerable attendance records; an annual event in Saskatoon attracts over 900 cars and automobiles [Tou12]. Another source of potential customers are the members of local automobile clubs. There are approximately 70 of these clubs in the prairies [Aut111]. It is not foreseen that any environmental, technological or social trends will have an impact on the availability of this target market. Regardless of advances in the automotive industries or social trends, these car enthusiasts are loyal to their favored muscle cars. Based on the demographics explained above, it is predicted that the business will attract two distinct sets of consumers, so to better understand their needs the following profiles have been developed:
6.5 Marketing Expenses Table 6.5 includes the costs of all advertising and promotional materials projected for the next 7 years of operations. A detailed explanation of each expense is included in Appendix B.
Table 6.2 – Marketing Budget 6.6 Projections Sales and profit projections for a five year period have been developed. These projections are estimates for the billable hours that will be worked and the mark-up that will be gained from the sale of parts. Figure 6.6 illustrates the sales that Revival has developed after reviewing marketing expenses and market place demographics. A more detailed description of these projections can be found in schedule 2 of appendix A. 
Figure 6.3 – Sale Projections 6.7 Objectives Two initial objectives have been set for Revival. After completion of each objective, another will be added so Revival becomes an organization continually working towards growth and innovation. To achieve market share of 20% within year 1 • To achieve financial stability by year 3 7.0 The Financial Plan7.1 Financial Structure To finance the $756,244 required in initial capital costs, Revival will use a combination of debt and equity financing. A loan of $158,811 will be obtained from the Conexus Credit Union, the land and equipment purchased by Revival will be used as collateral for this loan. The remaining $597,433 will be financed through the selling of common shares. There are other sources for financing that will be explored. Specifically there are two grant programs provided by the federal government. Program W02-B offers $150,000 for women entrepreneurs, and program C04-B offers up to $45,000 for young entrepreneurs [Cen11]. These programs will be used as additional financing to supplement the debt and equity; they have not been included in the financial statements because there is no guarantee of procuring these grants due to the number of people competing for them. An expansion is planned for 2016 which will require an additional $373,822. This will be financed through additional bank debt secured once again from the Conexus Credit Union under the same contract clauses. Any necessary asset replacement has been accounted for in the operation expenses each year and will be financed by profits reinvested in the company. 7.1.1 Debt Clauses Revival will sign a debt contract with Conexus Credit Union to receive the necessary $158,811. A summary of the most important clauses in this contracts are included in Table 7.1. Other clauses will be negotiated prior to receiving the loan.
Table 7.1 – Contract Clauses 7.1.2 Depreciation The assets purchased through these financing sources will be depreciated through a declining balance approach based on the federal CCA rate, as seen in schedule 8 of Appendix A. Revival has three different classes of debt amortization. The first class is buildings.It will be depreciated by a rate of 4% , which assumes a lifetime of approximately 30 years. The other two classes are furniture and equipment, which are both depreciated at a rate of 4%, with a lifetime of 5 years. 7.2 Dividend Policy For the five years of operation, Revival will re-invest any profits to assist the company in the next year’s performance. If Revival continues to see future success, $150,000 will continue to be reinvested in the operation of the business. Any excess profits that are generated will be paid out in the form of dividends to common shareholders. 7.3 Financial Analysis The projected profits and cashflows indicate both long and short term feasibility. The income is large enough to make investing worthwhile and enough cashflow will be generated to satisfy investors.
7.4 Ratio Analyses The management information system will include the following financial ratios calculated monthly. For the purpose of decision making and monitoring, these ratios will be kept above the provided targets.
Table 7.4 – Liquidity Ratios
Table 7.5 – Investment Utilization Ratios
Table 7.6 – Solvency Ratios
Table 7.7 – Profitability Ratios 7.5 Sensitivity Analysis To identify which variables are critical for Revival, several values were changed to observe their affect on NPV and IRR. As the following table indicates, the only variable that had a significant effect was billable hours.
Table 7.8 – Sensitivity Analysis 7.6 Break-Even Analysis Revival’s break-even level was calculated using the critical value, billable hours, it can be seen that the company needs a considerable number of hours in order to break-even. 
Table 7.9 – Break-Even Analysis 7.7 Contingency Plan If Revival makes less than seven sales a day it will run out of money in five years. If this happens Revival has prepared an exit plan to sell all assets in order to pay back debt collectors. If any additional money is made from the sale of assets Revival will distribute it among common shareholders and equity investors. If Revival experiences unprecedented increases in sales, two strategies will be used to accommodate this extensive growth. The first one will be to schedule projects considerably in advance to accommodate as many customers as possible. The second strategy is to expand the business before initially planned if sales have grown enough to warrant the additional costs. This will double Revival’s capacity limits. Directory: faculty -> Marv%20Painter -> businessplans -> plans2010 faculty -> Course overview faculty -> Curriculum vitae wei chen professor faculty -> Digital image warping faculty -> Samples of Elements Exam Question III contains All Prior Exam Qs III except faculty -> 【Education&Working Experience】 faculty -> References Abe, M., A. Kitoh and T. Yasunari, 2003: An evolution of the Asian summer monsoon associated with mountain uplift —Simulation with the mri atmosphere-ocean coupled gcm. J. Meteor. Soc. Japan, 81 faculty -> Ralph R. Ferraro Chief, Satellite Climate Studies Branch, noaa/nesdis faculty -> Unit IV text: Types of Oil, Types of Prices Grammar: that/those of, with revision plans2010 -> Residents and their tastebuds plans2010 -> Table of Contents Executive Summary 5 Download 2.14 Mb. Share with your friends:
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