Sales Forecast and Assumptions
The total market size of classic car dealers in the U.S. industry is $2 billion with 1974 businesses in operation (IBISWorld, 2020). There is no major player with a market share of greater than 5% which is consistent with our conclusion from competitive analysis.
In the first three-year period, we plan to focus on selling rare classic cars especially from Japan and Europe. We should be in the stage of late growth phase by the end of year three. In the beginning, we are planning to attract customers by undercutting the cost of labour and investment in advertising. The vintage vehicles are strongly discretionary purchases therefore it is significantly impacted by the individual disposable income.
Over the next five years, the classic car dealer industry is expected to be supported by the growth in domestic economy. We are planning to scale our business to the annual income of $25 million by the end of this five-year period supported by a very favourable growth rate.
Classic and antique car sale is our major business line, and we plan to sell Japanese and European cars for the first three years. With an expectation of an annual revenue of $18 million by the end of year 3, we plan to expand our business and sell third-party local vehicle on consignment. We also plan on selling rare and valuable antique vehicles via auctions, which will further boost our profitability from year 4. The growth rate of revenues from year 3 to year 4 are projected to be 20% as we are entering the rapid growth stage. And the market potential will be increasing as well according to authorized market research agencies.
参照我们的运营计划，我们的业务结构是平坦的。 在第一阶段，我们计划招募3名销售代表，1名客户服务人员，1名财务人员，1名汽车修理工和6名采购人员。 我们计划派遣采购人员到日本和欧洲与我们的供应商进行谈判。 尽管有搬迁费用，但第一年我们的创始团队的总启动费用总计为90万美元。
Referring to our operation plan, the structure of our business is flat. In the first stage, we plan to recruit 3 sales representatives, 1 customer service staff, 1 financial staff, 1 car mechanics, and 6 purchase employees. We plan on sending our purchase staff to Japan and Europe to negotiate with our suppliers. The total start-up expenses for our founding team total to $0.9 million for the first year despite of the relocation expenses.
我们业务的售出商品成本（COGS）包括车辆的购买价格，销售佣金，修改成本和仓储成本。 同时，与办公室租金，职工培训费有关的费用也计入当期费用。 在第一年，我们的业务预计销售的COGS为400万美元。 随着销售量的逐年增长，COGS有望增长。 在第5年内，我们预计总的COGS最高金额约为1300万美元。
Cost of Goods Sold
The cost of goods sold(COGS) for our business include the purchase price of vehicles, sales commissions, modification cost, and storage costs. In the meanwhile, the expenses related to rental cost of office, training cost for employees are also included in the period cost. In the first year, our business has projected a COGS sold of $4 million. And the COGS is expected to grow as sales volume increases year by year. During the year 5, we project the total COGS to be about $13 million at maximum.
i. Capital Expenditures
To take our business off the ground, we will need to rent building as our office and warehouse. We plan to secure our warehouse with a lease agreement of 10 years. The monthly rental payment for the first three year is about $5,000 with an annual increase of 3% from the fourth year. In the meanwhile, we need slight leasehold improvements to build up show rooms to display our cars, and it will incur an outlay of 0.5 million including purchase of furniture and equipment. As we plan to recruit our members locally, the location expenses are mainly resulted from the overseas staff. As we will build local offices in Japan and Europe to carry out on-spot investigation of car conditions if necessary, the administration and location fees are expected to be $80,000 for the first year. From the second year, the related expenses will fall to $50,000.
ii. Other Start-up Expenses
Our total budget for other start-up expenses including investment in call centers, websites and advertising. As we plan on selling vintage cars to high income groups, we need a significant outlay for promotion and marketing to attract customers. Therefore, we plan to spend an annual expense of $3 million in the first three years, and gradually reduce it to $1 to $1.5 million from the year 5 when we have a solid customer base. Our marketing manager will be responsible for PR campaigns and related promotion events. Our mission is to treat both customers and employees as guests in our home. So, we put customers’ satisfaction as our priority and we want to build a life-long relationship with our customers. We plan to invest $1 million in the first year to build our customer service center and annually expense is expected to be around $0.6 million.
我们的启动费用总计为$ 4.64。为了确保我们的运营活动，考虑到开始的购买费用，我们总共需要500万美元。我和我的合伙人将投资100万美元作为运营现金储备。我们预计需要400万美元的资金来支付启动费用和部分COGS。我们计划通过银行贷款为我们的业务融资200万美元。考虑到我们是一家新兴企业，我们预计年利率为7.5％。每年的利息支出将为$ 150,000。基于可获得的结果和合理的假设，我们有很强的预计盈利能力。即使以每年支付的利息很高，鉴于我们所售车辆的美元价值，我们也将支付这笔利息。
According to our projections for revenues and COGS in the first three years, the profits are expected to grow to $9 million by the end of year 5. Even though the high price of our vehicles might lead to increase in accounts receivables rather than instant cash inflow, we are confident that our operation will function efficiently to manage our working capital.
Our start-up expenses total to $4.64. To secure our operation activities, we will need a total amount of 5 million given the purchase expenses in the beginning. My partner and I will be investing $1 million as a cash reserve for operations. We project our amount of funding needed to be $4 million to cover the start-up expenses and the partial COGS. And we plan to finance $2 million for our business via bank loans. Considering we are a start-up business, we will expect an annual interest rate of 7.5%. Annual interest expense will be $150,000. We have a strong projected profitability based on attainable results and reasonable assumptions. Even thought the annual interest payment is a large amount, we will cover it given the dollar value of our vehicles we sell.
IBISWorld (2020). Retrieved from: https://www.ibisworld.com/united-states/market-research-reports/classic-car-dealers-industry/