A complete Business Plan about a hypothetical business

TABLE OF CONTENTS 2.3.1 Regulation of the Industry.............................4 4.3 Customers Motivation............................................................................................13 4.4 Market Size and Trends..........................................................................................14 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. ..................................................................................................15 4.5.6 Cross Advertising................................................................................................16 4.5.8 Other Promotional Strategies include: ...............................................................17 4.6.2 Comparison against competitors’ prices.............................................................17 4.7.2 Business location:................................................................................................19 5.8 Job Performance........................................................................................26 5.9 Occupational Health and Safety Compliance............................................26

4d Promo sticker design.......................................54 Metal Engineering and Associated Industries (State) Award (039).............................56

State Wage Case 2007 increase to wages and allowances............................................................56

6g Common cover options for the motor trade...............................................66 References....................................................................................................................70 -----(1995) Just Just In Time (JIT) Manufacturing: Curtain university of technology http://www.academicmind.com/unpublishedpapers/business/operationsmanag ement/2005-04-000aaf-just-in-time-inventory-management.html..................73 ---, 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/IndexofNatio nalStandardsCodesofPracticeandrelatedGuidanceNotes.htm.......................................75

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Our Vision and Statement 1.1 Vision Our 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 knowledge that must be applied to effectively diagnose system faults and carry out necessary maintenance, service and repair procedures.

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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.

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 -5-

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/

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Croydon Racing Developments (CRD) - croydonracingdevelopments.com/

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

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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. 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

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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.

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

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Have a web site up and running

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Start promoting at events, such as Auto salon.

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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.

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Get an up and running promo car and drag car.

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Optimise level of awareness within the market.

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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

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More efficiency in each of the servicing jobs

3.3.2 Long-term objectives •

Establish a good reputation within the industry

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Hire more employees and take in apprentices

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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

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Create a customer database

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Establish an online ordering service

3.4.2 Long Term objectives •

Diversify inventory to include accessories such as seating and body kits

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Take on apprentice mechanics

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Introduce a customer gallery on our web page

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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

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To increase revenue every 3 months of operations for first year

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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

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•

To start generating profit within 5 years of operation

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To remain liquid and have enough capital to further grow business

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

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Highly skill/experienced staff

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Offering all the top brands in autocare

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

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Location: Parramatta is located in the centre of Sydney making it accessible to a majority of people in surrounding areas.

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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.

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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

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

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

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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.

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More services: the new hybrid car and other car services

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Car Audio and electronics: add car audio and electronics work

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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.

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New competitors: may enter the industry.

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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.

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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.

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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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Taxes: new taxes are being introduced for purchasing cars

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Pollution: environment regulations for modified cars and OH&S issues in regards to the workshop. - 11 -

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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.

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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.

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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

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Age group – the business will accommodate to ages from 16 and up, as 16 is legal age to get a learners licence.

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Income – all income ranges.

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Status – all types (single, married).

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Geography – commencing in the Western Sydney area of Parramatta and want to cater to all of Sydney.

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Buying behaviour – the customers will be in need of performance parts and accessories to enhance their cars, which will be supplied at low prices.

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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.

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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)

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Website hosting: $36.95per month (for Business)

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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.nightshift.com/)

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Auto Saloon: Free (but have to register with event organisers) (www.autosaloon.org/terams)

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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

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Full Page: $1,200 + GST per issue

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Half Page: $700 + GST per issue

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Quarter Page: $400 + GST per issue

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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 - 16 -

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.

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

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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.

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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

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10 years modified cars experience

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

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2 years experience as workshop supervisor in Midas car care centre

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Has a genuine passion for performance cars and performance parts

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

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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

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Certificate IV in Automotive Management

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6 years experience as workshop manager in MRT Performance

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2 years experience in retail and customer service

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Has high problem-solving skills

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Has knowledge in areas of management, finance, and accounting

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•

Has knowledge of OH&S principles and practices

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

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2 years experience in retail and customer service

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3 years experience as a mechanic

Name: Mr. Jack Thomas The relevant personal details and qualifications are as follows: •

Certificate II in Automotive Mechanical

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4 years experience as a mechanic

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Has great interest in performance cars

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3 years modified cars experience

Name: Mr. Tom Anders The relevant personal details and qualifications are as follows: •

Certificate II in Automotive Mechanical

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Certificate II in Automotive Sales

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3 years experience in retail and customer service

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2 years experience as a mechanic

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Has great knowledge of performance parts

5.3 Organisational structure - 21 -

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. 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 Manager/Director (Bob & John)

Mechanics (Brad Taylor) (Jack Thomas)

Service Receptionist (Tom Anders)

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

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Accounting & Finance

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Management of cash flow

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Client liaison

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New performance parts research and development

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Major vehicle modifications

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All dyno-tuning

Remuneration: $48,000 per annum + commission. Job description Position: Auto Mechanic

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Duties: •

Vehicle servicing

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All vehicle maintenance

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Performance upgrades

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Fault diagnosis

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Registrations inspections

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Customer service

Remuneration: $32,000 per annum + commission. Job description Position: Service Receptionist Duties: •

Customer care/service

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Booking in client’s cars

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Performance upgrades advice

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Performance parts support

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Transactions and cash handlings

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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

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From private employment agencies

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Advertising at educational institution

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Advertising at the workshop.

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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 - 23 -

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. 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.

- 24 -

5.7 Professional Advisers Occupation Accountant

Details Champions Level 3, 107 Phillip Street, Parramatta 2150 NSW

Bank

Ph: (02) 9635 7700 St George Bank, Parramatta Branch

Insurance Broker

126 Church Street, Parramatta 2150 NSW Security Industry Insurance Brokers 27 Fennel Street, North Parramatta 2151 NSW

Solicitor

Ph: (02) 9630 8212 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

- 25 -

5.7.4 Solicitors: •

Representation in all legal matters and negotiations

•

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.

- 26 -

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 ‘USpec’ 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)

- 27 -

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)

- 28 -

Layout

Dyno Machine car lifts/ servicing areas

Workshop Entrance

Entrance via High Street into fenced off area with gates.

Storage Unit for Environmental equipment

Engine Hoist Tool Cabinet

Customer parking Suitable for approximately 12 cars

Service Desk

Waiting Area

Staff lounge and kitchen

Display of parts and accessories

Storage Room for delivered parts

Second Floor: Office, storage.

- 29 -

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, - 30 -

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. - 31 -

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*

•

Waste tracking system*

•

Dyno Machine

•

Impervious ground mat/ drip

•

Wastewater storage container*

•

Waste liquid collection

treys* •

Spill proof oil trey and fluid container*

containers* •

Oil filter collection container*

•

Vehicle Hoist x2

•

Set of hand Tools x2-

•

ECU tuning kits

(wrenches, screw drivers, etc.)

•

Pressure Gauges and Pumps

Engine Hoists (chains and sling

•

Vehicle jacks

•

included) x2 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 - 32 -

estimated price of $2,900. Absorb Environmental Solutions will provide 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 softwarefrom 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. Utilities Telephone and Internet Other exp (Efpos & Postage) Total General Expenses

$3,960 $387 $792 $5,139

Running costs of the business: 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

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

- 33 -

gross

wages.

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)

- 34 -

•

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)

- 35 -

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: Annual interest rate: Number of years

Year 0 1 2 3

Total $78,870.1 8 $78,870.1 8 $78,870.1 8

Annual Payments To To Interest Principle $17,800.0 0 $61,070.18 $12,364.7 5 $66,505.42 $6,445.77 $72,424.40

$200,000 8.90% 3

Year-End Principle $200,000.00 $138,929.82 $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

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

Revenue Sales Revenue Services Revenue Total Revenue less Costs of Goods Sold Gross Profit Expenses Operational Expenses Marketing Rent Wages and Salaries Maintenance Insurance Legal Fees Depreciation Total Operating Expenses General Expenses Utilities Telephone and Internet Postage Total General Expenses Other Expenses Interest Expense Total Other Expenses Total Expenses Net Profit

July

August

Septembe r

October

November

December

January

Februar y

March

April

May

June

Total

$16,200 $10,800 $27,000 $10,800 $16,200

$16,200 $10,800 $27,000 $10,800 $16,200

$16,200 $10,800 $27,000 $10,800 $16,200

$17,400 $11,600 $29,000 $11,600 $17,400

$17,400 $11,600 $29,000 $11,600 $17,400

$17,400 $11,600 $29,000 $11,600 $17,400

$18,600 $12,400 $31,000 $12,400 $18,600

$18,600 $12,400 $31,000 $12,400 $18,600

$18,600 $12,400 $31,000 $12,400 $18,600

$19,800 $13,200 $33,000 $13,200 $19,800

$19,800 $13,200 $33,000 $13,200 $19,800

$19,800 $13,200 $33,000 $13,200 $19,800

$216,000 $144,000 $360,000 $144,000 $216,000

$3,098 $7,600 $7,707 $370 $1,965 $400 $308 $20,482

$2,017 $9,500 $7,707 $370 $1,965 $0 $308 $20,901

$2,017 $7,600 $7,707 $370 $1,965 $0 $308 $19,001

$2,017 $7,600 $7,707 $370 $1,965 $0 $308 $19,001

$2,017 $9,500 $7,707 $370 $1,965 $0 $308 $20,901

$2,017 $7,600 $7,707 $370 $1,965 $0 $308 $19,001

$1,467 $9,500 $7,707 $370 $1,965 $0 $308 $20,351

$1,467 $7,600 $7,707 $370 $1,965 $0 $308 $18,451

$1,467 $7,600 $7,707 $370 $1,965 $0 $308 $18,451

$1,467 $7,600 $7,707 $370 $1,965 $0 $308 $18,451

$1,467 $9,500 $7,707 $370 $1,965 $0 $308 $20,351

$1,467 $7,600 $7,707 $370 $1,965 $0 $308 $18,451

$21,985 $98,800 $92,480 $4,434 $23,580 $400 $3,695 $233,794

$1,000 $129 $216 $1,345

$1,000 $129 $216 $1,345

$1,000 $129 $216 $1,345

$1,000 $129 $232 $1,361

$1,000 $129 $232 $1,361

$1,000 $129 $232 $1,361

$1,000 $129 $248 $1,377

$1,000 $129 $248 $1,377

$1,000 $129 $248 $1,377

$1,000 $129 $264 $1,393

$1,000 $129 $264 $1,393

$1,000 $129 $264 $1,393

$12,000 $1,548 $2,880 $16,428

$1,483 $1,483 $23,310

$1,483 $1,483 $23,729

$1,483 $1,483 $21,829

$1,483 $1,483 $21,845

$1,483 $1,483 $23,745

$1,483 $1,483 $21,845

$1,483 $1,483 $23,211

$1,483 $1,483 $21,311

$1,483 $1,483 $21,311

$1,483 $1,483 $21,327

$1,483 $1,483 $23,227

$1,483 $1,483 $21,327

$17,800 $17,800 $268,022

($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)

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

Assets Current Assets Cash at Bank Inventory Total Current Assets Noncurrent Assets Garage Equipment Vehicle Hoists less Acc. Dep. (10% pa ) Dyno Machine less Acc. Dep. (10% pa ) Mechanic Tools Office Equipment and Supplies Computer and Cash Register System less Acc. Dep. (20% pa ) Total Noncurrent Assets Total Assets

Septembe r

October

November

December

January

Februar y

March

April

May

June

$312,600 $1,080 $313,680

$302,279 $1,080 $303,359

$293,143 $1,160 $294,303

$282,107 $1,160 $283,267

$272,971 $1,160 $274,131

$263,669 $1,240 $264,909

$256,266 $1,240 $257,506

$248,864 $1,240 $250,104

$242,646 $1,320 $243,966

$234,528 $1,320 $235,848

$228,310 $1,320 $229,630

$7,000 ($58) $29,950 ($250) $20,000 $1,000 $5,429 ($90) $62,981 $388,880

$7,000 ($117) $29,950 ($499) $20,000 $1,000 $5,429 ($181) $62,582 $376,262

$7,000 ($175) $29,950 ($749) $20,000 $1,000 $5,429 ($271) $62,184 $365,543

$7,000 ($233) $29,950 ($998) $20,000 $1,000 $5,429 ($362) $61,785 $356,089

$7,000 ($292) $29,950 ($1,248) $20,000 $1,000 $5,429 ($452) $61,387 $344,654

$7,000 ($350) $29,950 ($1,498) $20,000 $1,000 $5,429 ($543) $60,989 $335,119

$7,000 ($408) $29,950 ($1,747) $20,000 $1,000 $5,429 ($633) $60,590 $325,499

$7,000 ($467) $29,950 ($1,997) $20,000 $1,000 $5,429 ($724) $60,192 $317,698

$7,000 ($525) $29,950 ($2,246) $20,000 $1,000 $5,429 ($814) $59,793 $309,898

$7,000 ($583) $29,950 ($2,496) $20,000 $1,000 $5,429 ($905) $59,395 $303,361

$7,000 ($642) $29,950 ($2,745) $20,000 $1,000 $5,429 ($995) $58,997 $294,844

$7,000 ($700) $29,950 ($2,995) $20,000 $1,000 $5,429 ($1,086) $58,598 $288,228

July

August

$324,820 $1,080 $325,900

Liabilities Current Liabilities Accounts Payable Total Current Liabilities Noncurrent Liabilities Loan Payable Total Noncurrent Liabilities Total Liabilities

$1,080 $1,080

$1,080 $1,080

$1,080 $1,080

$1,160 $1,160

$1,160 $1,160

$1,160 $1,160

$1,240 $1,240

$1,240 $1,240

$1,240 $1,240

$1,320 $1,320

$1,320 $1,320

$1,320 $1,320

$194,911 $194,911 $195,991

$189,822 $189,822 $190,902

$184,732 $184,732 $185,812

$179,643 $179,643 $180,803

$174,554 $174,554 $175,714

$169,465 $169,465 $170,625

$164,376 $164,376 $165,616

$159,287 $159,287 $160,527

$154,197 $154,197 $155,437

$149,108 $149,108 $150,428

$144,019 $144,019 $145,339

$138,930 $138,930 $140,250

Owner's Equity Bob Smith Equity John Smith Equity Retained Earnings/(Losses) Total Owner's Equity Total Liabilities and Owner's Equity

$100,000 $100,000 ($7,110) $192,890 $388,880

$100,000 $100,000 ($14,640) $185,360 $376,262

$100,000 $100,000 ($20,269) $179,731 $365,543

$100,000 $100,000 ($24,715) $175,285 $356,089

$100,000 $100,000 ($31,060) $168,940 $344,654

$100,000 $100,000 ($35,506) $164,495 $335,119

$100,000 $100,000 ($40,117) $159,883 $325,499

$100,000 $100,000 ($42,828) $157,172 $317,698

$100,000 $100,000 ($45,540) $154,460 $309,898

$100,000 $100,000 ($47,067) $152,933 $303,361

$100,000 $100,000 ($50,495) $149,505 $294,844

$100,000 $100,000 ($52,022) $147,978 $288,228

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

Revenue Sales Revenue Services Revenue Total Revenue less Costs of Goods Sold Gross Profit Expenses Operational Expenses Marketing Rent Wages and Salaries Maintenance Insurance Depreciation Total Operating Expenses General Expenses Utilities Telephone and Internet Efpos & Postage Total General Expenses Other Expenses Interest Expense Total Other Expenses Total Expenses Net Profit

1st

2nd

3rd

4th

Total

$59,400 $39,600 $99,000 $39,600 $59,400

$59,400 $39,600 $99,000 $39,600 $59,400

$66,600 $44,400 $111,000 $44,400 $66,600

$66,600 $44,400 $111,000 $44,400 $66,600

$252,000 $168,000 $420,000 $168,000 $252,000

$4,401 $25,935 $23,120 $1,109 $3,960 $924 $59,448

$4,401 $25,935 $23,120 $1,109 $3,960 $924 $59,448

$4,401 $25,935 $23,120 $1,109 $4,440 $924 $59,928

$4,401 $25,935 $23,120 $1,109 $4,440 $924 $59,928

$17,604 $103,740 $92,480 $4,434 $16,800 $3,695 $238,753

$3,960 $387 $792 $5,139

$3,960 $387 $792 $5,139

$4,440 $387 $888 $5,715

$4,440 $387 $888 $5,715

$16,800 $1,548 $3,360 $21,708

$3,091 $3,091 $67,678

$3,091 $3,091 $67,678

$3,091 $3,091 $68,734

$3,091 $3,091 $68,734

$12,365 $12,365 $272,826

($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

Assets Current Assets Cash at Bank Inventory Total Current Assets Noncurrent Assets Garage Equipment Vehicle Hoists less Accumulated Depreciation (10% pa ) Dyno Machine less Accumulated Depreciation (10% pa ) Mechanic Tools Office Equipment and Supplies Computer and Cash Register System less Accumulated Depreciation (20% pa) Total Noncurrent Assets Total Assets Liabilities Current Liabilities Accounts Payable Total Current Liabilities Noncurrent Liabilities Loan Payable Total Noncurrent Liabilities Total Liabilities Owner’s Equity Bob Smith Equity John Smith Equity Retained Earnings/(Losses) Total Owner’s Equity Total Liabilities and Owner’s Equity

1st

2nd

3rd

4th

$204,600 $3,960 $208,560

$180,890 $3,960 $184,850

$163,325 $4,440 $167,765

$145,759 $4,440 $150,199

$7,000 ($875) $29,950 ($3,744) $20,000 $1,000 $5,429 ($1,357) $57,403 $265,963

$7,000 ($1,050) $29,950 ($4,493) $20,000 $1,000 $5,429 ($1,629) $56,208 $241,058

$7,000 ($1,225) $29,950 ($5,241) $20,000 $1,000 $5,429 ($1,900) $55,013 $222,777

$7,000 ($1,400) $29,950 ($5,990) $20,000 $1,000 $5,429 ($2,172) $53,817 $204,017

$3,960 $3,960

$3,960 $3,960

$4,440 $4,440

$4,440 $4,440

$122,303 $122,303 $126,263

$105,677 $105,677 $109,637

$89,051 $89,051 $93,491

$72,424 $72,424 $76,864

$100,000 $100,000 ($60,300 ) $139,700 $265,963

$100,000 $100,000 ($68,579 ) $131,421 $241,058

$100,000 $100,000 ($70,713 ) $129,287 $222,777

$100,000 $100,000 ($72,848 ) $127,152 $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

Revenue Sales Revenue Services Revenue Total Revenue less Costs of Goods Sold Gross Profit Expenses Operational Expenses Marketing Rent Wages and Salaries Maintenance Insurance Depreciation Total Operating Expenses General Expenses Utilities Telephone and Internet Postage Total General Expenses Other Expenses Interest Expense Total Other Expenses Total Expenses Net Profit

2012

2013

2014

$288,000 $192,000 $480,000 $192,000 $288,000

$324,000 $216,000 $540,000 $216,000 $324,000

$360,000 $240,000 $600,000 $240,000 $360,000

$13,665 $108,927 $124,480 $4,434 $23,580 $3,695 $274,401

$13,644 $114,373 $124,480 $4,434 $25,600 $3,695 $282,226

$13,665 $120,092 $124,480 $4,434 $27,000 $3,695 $290,366

$19,200 $1,548 $3,840 $24,588

$21,600 $1,548 $4,320 $27,468

$24,000 $1,548 $4,800 $30,348

$6,446 $6,446 $305,435

$0 $0 $309,694

$0 $0 $320,714

($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

2014

Assets Current Assets Cash at Bank Inventory Total Current Assets Noncurrent Assets Garage Equipment Vehicle Hoists less Accumalated Depreciation (10% pa ) Dyno Machine

$60,681 $19,200 $79,881

$79,767 $21,600 $101,367

$123,834 $24,000 $147,834

$7,000 ($2,100) $29,950

less Accumalated Depreciation (10% pa ) Mechanic Tools Office Equipment and Supplies Computer and Cash Register System less Accumalated Depreciation (20% pa) Total Noncurrent Assets Total Assets

($8,985) $20,000 $1,000 $5,429 ($3,257) $49,037 $128,917

$7,000 ($2,800) $29,950 ($11,980 ) $20,000 $1,000 $5,429 ($4,343) $44,256 $145,623

$7,000 ($3,500) $29,950 ($14,975 ) $20,000 $1,000 $5,429 ($5,429) $39,475 $187,309

$19,200 $19,200

$21,600 $21,600

$24,000 $24,000

$0 $0 $19,200

$0 $0 $21,600

$0 $0 $24,000

$100,000 $100,000 ($90,283 ) $109,717 $128,917

$100,000 $100,000 ($75,977 ) $124,023 $145,623

$100,000 $100,000 ($36,691 ) $163,309 $187,309

Liabilities Current Liabilities Accounts Payable Total Current Liabilities Noncurrent Liabilites Loan Payable Total Noncurrent Liabilities Total Liabilities Owner’s Equity Bob Smith Equity John Smith Equity Retained Earning/(Losses) Total Owner’s Equity Total Liabilities and Owner’s Equity

7.9 Projected Cash Flow Statement Projected Cash Flow Statement for U-Spec Performance Pty. Ltd. For the year ended 30 June 2010 2011 2012 Cash Flow from Operating Activities Cash Receipts from Customers Cash Paid to Suppliers Cash Paid to Employees Cash Generated from Operations Cash Paid for Services Interest Paid

$360,000 ($144,000 )

$420,000 ($168,000 )

($92,480) $123,520 ($152,961 ) ($17,800)

($92,480) $159,520 ($163,200 ) ($12,365) ($47,241 )

Net Cash Used in Operating Activities Cash Flow from Investing Activities Purchase of Equipment Proceeds from Sale of Equipment

($63,379) $0

Cash Flow from Financing Activities Proceeds from Issue of Share Capital Proceeds from Long-Term Borrowings Repayments of Borrowings Dividends Paid Net Cash Used in Financing Activities

Net Increase (Decrease) in Cash Cash at Beginning of Period Cash at End of Period

($16,045 )

$0 $0 ($63,379 )

Net Cash Used in Investing Activities

$480,000 ($192,000 ) ($124,480 ) $163,520 ($169,728 ) ($6,446)

$200,000 $200,000 ($61,070) $0

($12,654 )

$0

2014

$540,000 ($216,000 ) ($124,480 ) $199,520 ($180,434 ) $0

$0 $0

$0 $0 ($66,505) $0

2013

$600,000 ($240,000 ) ($124,480 ) $235,520 ($191,453 ) $0 $19,086

$0 $0 $0

$0 $0 ($72,424) $0

$44,067

$0 $0 $0

$0 $0 $0 $0

$0

$0 $0 $0 $0

$338,930

($66,505 )

($72,424 )

$0

$0

$228,310 $0 $228,310

($82,550 ) $228,310 $145,759

($85,078 ) $145,759 $60,681

$19,086 $60,681 $79,767

$44,067 $79,767 $123,834

7.10 Ratio Analysis

Ratio

Ratio Analysis U-Spec Performance Pty. Ltd. 2010 2011

Liquidity Current Ratio Quick Ratio

2012

2013

2014

173.96:1 172.96:1

33.83:1 32.83:1

4.16:1 3.16:1

4.69:1 3.69:1

6.16:1 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%

6.55%

-18.05%

Net Profit to Equity Ratios

-35.16%

-3.63% 13.52% 15.89%

2.65%

Net Profit to Assets Ratios

-4.96% 10.21% 16.38%

9.82% 20.97% 11.53 % 24.06%

7.11 Break-Even Analysis Break-Even Analysis U-Spec Performance Pty. Ltd. 2010 2011

2013

2014

$480,000 $497,435 $277,961 $219,474 0.542763

$540,000 $525,694 $279,340 $246,354 0.543789

$600,000 $560,714 $287,480 $273,234 0.54461

Net Revenue Total Expenses Total Fixed Expenses Total Variable Expenses Contribution Margin (1- [VE / NR])

$360,000 $412,022 $156,228 $163,314 0.54635

Break-Even Point (FE / CM)

$285,949 $287,661 $512,122 $513,693 $527,864

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$420,000 $440,826 $155,752 $192,594 0.541443

2012

- 46 -

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

•

Waste tracking system

•

Wastewater storage container

•

Impervious ground sheet

•

Waste liquid collection containers

•

Drip trays

•

Oil filter collection containers

•

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 Manager Forge St, Blacktown Ph: 9676 1023 www.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: [email protected] Mobile: 0423 595 65 (Source email from [email protected])

4d Promo sticker design

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4e Service Charges (General Services):

- 55 -

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

Starting Cost* $290

flush (with new coolant))* Mufflers Service Clutch and Brakes Written Inspection Test Transmission check Carburettors Check Electronic Tune Up (dyno)* Safety Service Electronic Pink Slip Clutch Repair

$95 $320 $50 $100 $50 $400-800 $97.40 $35 $550

Service Charges Modifications (Install/Labour Prices-BYO Parts): Service Turbo install- direct bolt on- others (depending on car, type,

Starting Cost* $500

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

$300/$500

needed)* Exhaust tip only (depending on car, type, alterations needed)* Clutch and Brakes Intercooler (depending on car, type, alterations needed)* Blow off valve (depending type)* Suspension (depending on car and type)* includes alignment

$400 $500 $150 $250

and balance Electronic Tune Up/dyno (depending on car and mods)* Turbo Timer (depending on car and type)* Boost Controller (depending on car and type)* Injectors (depending on car)* * Prices subject to change

$400-$800 $150 $250 $150

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

Level C 14

Full Time ($ per week) 531.40

Classifications Part Time Casual ($ per hour) ($ per hour) 13.98 16.09

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Casual Holiday Pay ($ per hour) 1.35

Level C 13 Level C 12 Level C 11 Level C 10 Level C 9 Level C 8 Level C 7 Level C 6 Level C 5 Level C 4 Level C 3 Level C 2(a) Level C 2(b) Level C 1(a) Level C 1(b)

541.10 563.60 584.50 618.20 639.10 659.90 678.80 720.50 741.40 762.20 803.90 824.80 862.50 946.00 1071.10

14.24 14.83 15.38 16.27 16.82 17.37 17.86 18.96 19.51 20.06 21.16 21.71 22.70 24.89 28.19

16.38 17.06 17.69 18.71 19.35 19.98 20.55 21.81 22.44 23.07 24.33 24.97 26.11 28.63 32.42

1.37 1.43 1.48 1.56 1.62 1.67 1.72 1.82 1.87 1.93 2.03 2.09 2.18 2.39 2.71

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

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(Source www.whereis.com)

- 58 -

6b Site Example

- 59 -

Shop

- 60 -

Office (Source www.Ljhooker.com.au)

6c Modification Permit engineers Name & Company BANCROFT, Peter Bancroft Engineering

Address Unit 3, 16/18 Stanley Street PEAKHURST NSW 2210 35 Walker Street WINDSOR NSW 2155

Telephone and Fax P: (02) 9584 3290 F: (02) 9584 0374

DALTON Ron

5-7 Frank Street WETHERILL PARK NSW 2164

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

FAKES Robert Fakes Engineering

Armidale Road GLEN INNES NSW 2370 1 Dinah Place BALGOWNIE NSW 2565 6 Kookaburra Road HORNSBY HEIGHTS NSW 2077

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

CROZIER Anthony Pakmor Waste Equipment Aust. Pty Ltd

GAL Anthony Arlow Engineering GEORGAS William Problem Management Engineering

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

P: (02) 4283 4365 F: N/A P: (02) 9482 2808 F: (02) 9476 6046

BARRETT Kim Belconnen Automotive Repair Services Pty Ltd

76 Grimwade Street MITCHELL ACT 2911

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

BARRETT Stewart Belconnen Automotive Repair Services Pty Ltd

76 Grimwade Street MITCHELL ACT 2911

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

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

6d Purchase System flow chart Makes request

Receive customer Request for Parts

Customer

Decide on an alternative and contact customer.

Evaluate the request

Identify product from range of suppliers & place an order

Does the customer agree with the recommendation?

No

Yes Is the job Possible

Yes

No

Notify customer that the part has arrived

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

6e Sample order form

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) Top mount intercooler Catback exhaust Pod Filter Turbo-smart boost control Suspension upgrades Upgraded gearbox

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Part/s Requested:

Fuel injectors High flow Turbo

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 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.

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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

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.

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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.

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.

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7a Product Details for Westpac Business Loan

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Source(http://www.infochoice.com.au/Home/BankingSmallBusiness/BusinessLoans/Compare/tabid/27 4/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 AutomotiveMotor Mechanics

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

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

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

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

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-carsales/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

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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/powerup/2008/08/19/1218911693359.html O’Kane, T., 2008, ‘Nissan Considering Fuel Cell Powered High-Performance Sports Car’, The Motor Report, http://www.themotorreport.com.au/6781/nissan-considering-fuel-cell-powered-highperformance-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 Performance www.mrtperformance.com.au/ Croydon Racing Developments (CRD) - 71 -

http://www.croydonracingdevelopments.com/ Queen Street Racing http://www.queenstsmash.com.au/queenst/ Bel Garage http://www.belgarage.com.au/ Tony Regoli Performace http://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.

Email Advertising costs with hot4s magazine Cutajar, M 2008, email, 22 September, < [email protected]> Websites: Web hosting & services http://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 JIT Broyles, D. Beirns, J. Franko, J. & Bergman M. (2005) Just-In-Time Inventory Management Strategy & Lean Manufacturing: Overview of Just-in-Time Inventory Management, http://www.academicmind.com/unpublishedpapers/business/operationsmanagement/2 005-04-000aaf-just-in-time-inventory-management.html

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-----(1995) Just Just In Time (JIT) Manufacturing: Curtain university of technology http://www.academicmind.com/unpublishedpapers/business/operationsmanag ement/2005-04-000aaf-just-in-time-inventory-management.html Sticker orders: http://www.stickerart.com.au/ Magazines Hot4s- www.hot4s.com.au Fastfours –www.fastfours.com.au High 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/ ---, 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 Future http://www.myfuture.edu.au/services/default.asp? FunctionID=5050&ASCO=421111F

Operations Plan Modification Permit laws

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---, 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=1001010100000199991231235959 Location and site: www.ljhooker.com.au/parramatta Search for location and maps www.whereis.com Pricing and lease terms for Dyno machine http://www.land-and-sea.com/chassis-dyno/chassis-dyno-price.htm Car Lifts from Lift king Australia- Prices http://liftking.ca/index.php?page=pro-king-8-xxl Required Tools & Costs http://www.transquip.com.au/categoryview.aspx?ID=185 http://www.absorbenviro.com.au/profile.php Suppliers of parts http://www.turbowholesale.com/catalog/index.html 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’ ACCC http://www.accc.gov.au/content/index.phtml/itemId/783104 INSURANCE Workers compensation www.industrialrelations.nsw.gov.au Insurance cover options http://www.nrma.com.au/business-insurance/motor-trade.shtml Insurance http://capricornmutual.millstream.com.au/ OHS

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---, 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/NationalStandar ds/IndexofNationalStandardsCodesofPracticeandrelatedGuidanceNo tes.htm RTA Guidelines ---, 2008, ‘Occupation Vehicle standards information sheets, RTA NSW http://www.rta.nsw.gov.au/registration/downloads/vsi/vsi_dl1.html

JIT Broyles, D. Beirns, J. Franko, J. & Bergman M. (2005) Just-In-Time Inventory Management Strategy & Lean Manufacturing: Overview of Just-in-Time Inventory Management, Retrieved: 10/10/2008 Retrieved from: http://www.academicmind.com/unpublishedpapers/business/operationsmanagem ent/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_operations http://sbinfocanada.about.com/cs/businessplans/a/bizplanoperplan.htm RTA, 2008, Vehicle Standards Information 2: Restricted Engineering Signatories, Rev. 5 Published 10/10/2008.Retrieved 15/10/2008. Retrieved from: http://www.rta.nsw.gov.au/registration/downloads/vsi/vsi_2_september2008.pdf

Financial Plan ---, 2008, ‘Form-Application for registration as an Australian company, ASIC http://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=pers onal Office Equipment costs - 75 -

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

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