Sample Business Plan - Car Hire

I-Drive Stoke Ltd.

Business Plan & Cash Flow Projections

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I-Drive Stoke Ltd. – Car & Van Rental

CONTENTS The Owner Objectives Market Research Staff Funding Projections for the three accounting years to October 2006, 2007 and 2008, including: -

-

Highlights Survival Ratio Cash Flow Forecasts Profit and Loss Forecasts Balance Sheet Projection Analyses of Operational Expenditure Sales Analysis

Conclusion

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I-Drive Stoke Ltd. – Car & Van Rental THE OWNER The proposed venture is organised by Mr. Mark Smith who is at present the owner of the successful Property managed business “I-PROPERTIES LTD.”. With a substantial experience in the area of business management and a very well established client base Mr. Smith is ideally positioned to undertake this venture. OBJECTIVES Our aim is to provide a local Car and Van Rental Service in Stoke at a completive market rates. In addition to the core business of car rental we are also planning to provide Caravan Storage Facility. We believe that this service will be particular popular as it will provide caravan owners with a very cost effective (£15 pounds per week) and totally secure way of storing their caravans. As well as the above we are also planning to create the facility to store Damaged Vehicles. This facility can be used by individuals as well as other businesses. Finally we also will be offering a Damaged Vehicles Recovery service. Based on such a diversified structure of the proposed business we believe that it will be a very stable and profitable venture. MARKET RESEARCH We envisage that the following points will be our keys to successfully establishing the new business: − Our large client database already includes many addresses of satisfied customers from the Stoke area and beyond. − Many of these customers have asked us when we will open a car rental business. − We have already established a partnership arrangement for the Damaged Vehicle Storage facility with another local business. − At present there are no available Caravan storage facilities available in the local area. − Based on our market research the prices for Car & Van rental are very completive comparing to the competition.

I-Drive Stoke Ltd. – Car & Van Rental STAFF Mr. Smith will be managing this business directly eliminating the need for an additional managerial post. In addition to the manager two support staff will be employed to ensure that the business runs smoothly. FUNDING

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In the initial setup process it is intended to purchase the following types of vehicles: Vehicle Type

Quantity

Large Van

4

Small Van

3

Medium Car Large Car TOTAL

4 4

Type of Purchase Finance Lease (Capital) Finance Lease (Capital) Cash Purchase Cash Purchase

Initial Cost (Incl. VAT) £8,400 £5,250 £24,000 £28,000 £65,650

The estimated setup costs per the cash flow statement are summarised in the table below. Item Cost of Vehicles Legal fees Initial advertising Refurbishment Computers & Furniture CCTV & Security Car Insurance Road Tax Rent & Rate TOTAL Capital introduced by directors Bank loan

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Cost (Incl. VAT) £65,650 £500 £4,000 £3,500 £2,000 £1,500 £2,100 £2,850 £2,500 £84,600 £ 35,000 £ 50,000

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I-Drive Stoke Ltd. – Car & Van Rental PROJECTIONS The attached cash flow, profit and loss and balance sheet projections are based on the following assumptions and estimates: -

−

The business will have the capacity to rent out: 4 Medium Cars

- at the rate of £35 per day

4 Large Cars

- at the rate of £50 per day

3 Small Vans

- at the rate of £35 per day

4 Large Vans

- at the rate of £45 per day

We estimate for the vehicle to be initially occupied 10 days per month with the growth up-to 20 days per month by November.

− −

− −

The business will be able to store up-to 20 caravans at the rate of £15 per week. The business will store on average 5 damaged vehicles at the rate of £12 per week. Initial sales in the first month are estimated at £8,300. An estimated £20,000 sales per month is envisaged from December 2006 once the business has reached its full capacity.

Running cash outflow is estimated to be approximately £19,000 per month once the initial setup process is completed. Item Vehicles – Finance Lease Repayments Advertising Car Insurance Vehicle Service & Maintenance Rent & Rate Staff Cost Loan Repayment & Interest Capital Lease - Interest TOTAL

Cost £1,481 £400 £2,100 £750 £2,500 £3,000 £400 £121 £10,752

− Depreciation on vehicles over 5 years on a straight line basis − Interest on the loan of £50,000 repayable over 15 years has been calculated at 5.5% p.a.

The business operates on a cash basis; as such there are not debtors or creditors

I-Drive Stoke Ltd. – Car & Van Rental HIGHLIGHTS Prepared By Rosetta IT Solutions Ltd. www.rosetta-it.com

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2006/07

Revenue s 211,545

Net Profit 79,570

Net Profit (%) 37.61

Jul-6

8,300

-13,822

Aug-06

12,130

Sep-06

14,870

Period

Operating Profit

Closing Bank Balance

83,636

101,253

-166.52

-13,594

4,537

3,012

24.83

3,365

11,974

6,532

43.93

6,884

18,787

Oct-06

16,600

6,492

39.11

6,843

25,132

Nov-06

19,890

9,762

49.08

10,112

35,171

Dec-06

19,965

9,817

49.17

10,166

44,723

Jan-07

19,965

9,796

49.07

10,145

54,261

Feb-07

19,965

9,776

48.97

10,124

63,800

Mar-07

19,965

9,756

48.87

10,103

73,338

Apr-07

19,965

9,036

45.26

9,382

82,054

May-07

19,965

9,716

48.66

10,061

91,715

Jun-07

19,965

9,696

48.56

10,040

101,253

2007/08

215,622

84,377

39.13

88,444

186,278

2008/09

239,580

105,181

43.90

109,116

295,768

HIGHLIGHTS 250,000 200,000 150,000

Revenue Profit

100,000 50,000 0

2006/07

2007/08

2008/09

I-Drive Stoke Ltd. – Car & Van Rental SURVIVAL RATIO Description Operating Profit / Assets (%) Acc. Profit / Assets (%) Equity / Debt (%) Working Capital / Assets (%)

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2006/0 7 50.80 48.30 228.90 60.10

2007/08 35.90 66.60 420.60 74.90

2008/0 9 31.20 77.00 673.20 84.00

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6

Revenues / Assets (%) Survival Ratio

128.50

87.60

68.60

4.66

4.86

5.74

Survival Ratio

6.00 5.00 4.00

2006/07

3.00

2007/08 2008/09

2.00 1.00 0.00

2006/07

2007/08

2008/09

I-Drive Stoke Ltd. – Car & Van Rental

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CASH FLOW (PART 1)

Description

Jul-06

Cash flow provided/used by operating activities Net Income

-13,822

Depreciation

Aug06

Nov06

Dec-06

Jan07

Sep-06

Oct-06

3,012

6,532

6,492

9,762

9,817

9,796

1,060

1,081

1,102

1,123

1,144

1,165

1,186

-12,761

4,094

7,634

7,615

10,906

10,982

10,983

-3,905

3,905 879

620

172

576

13

-16,667

8,878

8,254

7,787

11,482

10,995

10,983

-63,617

-1,260

-1,260

-1,260

-1,260

-1,260

-1,260

-63,617

-1,260

-1,260

-1,260

-1,260

-1,260

-1,260

Amortization of Goodwill Change in long term provisions Cash Earnings Change in Accounts Receivable Change in Inventory Change in Accounts Payable Change in Accrued Expenses Cash flow provided/used by operating activities Cash Flows from Investing Activities Purchase of property, plant, and equipment Disposal of property, plant and equipment Investments in Goodwill Cash flow provided/used by investing activities Cash Flow from Financing Activities Owners' Equity

35,000

Change of long term debt

49,821

-180

-181

-182

-183

-184

-184

84,821

-180

-181

-182

-183

-184

-184

4,537

7,437

6,813

6,345

10,039

9,552

9,538

4,537

11,974

18,787

25,132

35,171

44,723

11,974

18,787

25,132

35,171

44,723

54,261

Change in short term debt Payment of Dividend Cash flow provided/used by financing activities Change in cash and cash equivalents Net Cash in the beginning of the year Net Cash at the end of the year

4,537

I-Drive Stoke Ltd. – Car & Van Rental CASH FLOW (PART 2)

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Description

May07

Jun-07

2006/0 7

2007/0 8

Feb-07

Mar-07

Apr-07

2008/09

Cash flow provided/used by operating activities Net Income

9,776

9,756

9,036

9,716

9,696

79,570

84,377

105,181

Depreciation

1,207

1,228

1,249

1,270

1,291

14,109

18,518

21,541

10,984

10,984

10,285

10,986

10,987

93,679

102,895

126,722

-123

123

2,258

-423

346

Amortization of Goodwill Change in long term provisions Cash Earnings Change in Accounts Receivable Change in Inventory Change in Accounts Payable Change in Accrued Expenses Cash flow provided/used by operating activities Cash Flows from Investing Activities Purchase of property, plant, and equipment Disposal of property, plant and equipment Investments in Goodwill Cash flow provided/used by investing activities Cash Flow from Financing Activities

10,984

10,984

10,163

11,109

10,987

95,938

102,472

127,068

-1,260

-1,260

-1,260

-1,260

-1,260

-77,477

-15,115

-15,115

-1,260

-1,260

-1,260

-1,260

-1,260

-77,477

-15,115

-15,115

Owners' Equity

35,000

Change of long term debt

-185

-186

-187

-188

-189

47,792

-2,332

-2,464

Change in short term debt Payment of Dividend Cash flow provided/used by financing activities Change in cash and cash equivalents

-185

-186

-187

-188

-189

82,792

-2,332

-2,464

9,538

9,538

8,716

9,661

9,538

101,253

85,025

109,489

Net Cash in the beginning of the year

54,261

63,800

73,338

82,054

101,253

186,278

Net Cash at the end of the year

63,800

73,338

82,054

91,715

91,715 101,25 3

186,278

295,768

101,253

I-Drive Stoke Ltd. – Car & Van Rental PROFIT & LOSS (PART 1) Description Revenues

Jul-06 8,300

Aug06

Sep06

Oct06

Nov06

Dec06

Jan07

12,130

14,870

16,600

19,890

19,965

19,965

Other Operating Income Direct Cost Production Depreciation

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Gross Profit Main

8,300

12,130

14,870

16,600

19,890

19,965

19,965

20,833

7,683

6,883

8,633

8,633

8,633

8,633

1,060

1,081

1,102

1,123

1,144

1,165

1,186

21,894

8,765

7,986

9,757

9,778

9,799

9,820

-13,594

3,365

6,884

6,843

10,112

10,166

10,145

Unrecoverable Debts Depreciation Warranty Provisions Amortization of Goodwill Total Operation Expenses Operating Profit Interest Income Interest Expenses Total Finance

228

353

352

351

351

350

349

-228

-353

-352

-351

-351

-350

-349

-13,822

3,012

6,532

6,492

9,762

9,817

9,796

-13,822

3,012

6,532

6,492

9,762

9,817

9,796

Other Income Other Expenses Total Others Income before Tax Income Tax Net Profit

I-Drive Stoke Ltd. – Car & Van Rental PROFIT & LOSS (PART 2) Description Revenues

Feb07

Mar07

Apr07

May07

Jun07

2006/0 7

2007/0 8

2008/0 9

19,965

19,965

19,965

19,965

19,96 5

211,545

215,622

239,580

19,965

19,965

19,965

19,965

211,545

215,622

239,580

8,633

8,633

9,333

8,633

19,96 5 8,633

113,800

108,660

108,922

1,207

1,228

1,249

1,270

1,291

14,109

18,518

21,541

Other Operating Income Direct Cost Production Depreciation Gross Profit Main Unrecoverable Debts Depreciation Warranty Provisions Amortization of Goodwill

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Total Operation Expenses Operating Profit

9,841

9,862

10,583

9,904

9,925

127,909

127,178

130,464

83,636

88,444

109,116

10,124

10,103

9,382

10,061

10,04 0

348

347

346

346

345

4,066

4,067

3,935

-348

-347

-346

-346

-345

-4,066

-4,067

-3,935

9,776

9,756

9,036

9,716

9,696

79,570

84,377

105,181

9,776

9,756

9,036

9,716

9,696

79,570

84,377

105,181

Interest Income Interest Expenses Total Finance Other Income Other Expenses Total Others Income before Tax Income Tax Net Profit

I-Drive Stoke Ltd. – Car & Van Rental BALANCE SHEET (PART 1) Aug-06

Sep06

Oct06

Nov06

11,974

18,787

25,132

35,171

44,723

54,261

8,442

11,974

18,787

25,132

35,171

44,723

54,261

Fixed Assets

63,617

64,877

66,137

67,397

68,657

69,917

71,177

Acc. Depreciation

-1,060

-2,142

-3,244

-4,367

-5,511

-6,677

-7,863

62,557

62,735

62,893

63,030

63,146

63,240

63,314 117,575

Description Cash

Jul-06 4,537

Dec-06

Jan-07

Accounts Receivable Inventory Other Accounts Receivable Total Current Assets

3,905

Goodwill Total Fixed Assets Total Assets

70,999

74,710

81,680

88,162

98,317

107,96 3

879

1,498

1,670

2,245

2,258

2,258

879

1,498

1,670

2,245

2,258

2,258

Accounts Payable Other Payables Bank and S.T. Liabilities Tax Due VAT Payable Salary & Benefits Payable Total Current Liabilities

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L.T. Liabilities

49,821

49,640

49,459

49,278

49,095

48,911

48,727

Total L.T. Liabilities

49,821

49,640

49,459

49,278

49,095

48,911

48,727

Total Liabilities

49,821

50,519

50,957

50,947

51,340

51,170

50,985

Owners Equity

35,000

35,000

35,000

35,000

35,000

35,000

35,000

-13,822

-10,809

-4,277

2,215

11,977

21,793

31,590

21,178

24,191

30,723

37,215

46,977

66,590

70,999

74,710

81,680

88,162

98,317

56,793 107,96 3

Other Provisions Pension Provision

Profit Provision Retained Earnings Total Equity Total Equity and Liabilities

117,575

I-Drive Stoke Ltd. – Car & Van Rental BALANCE SHEET (PART 2)

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Description Cash

Feb-07

Mar-07

Apr-07

May-07

Jun-07

2006/0 7

2007/0 8

2008/09

63,800

73,338

82,054

91,715

101,253

101,253

186,278

295,768

Total Current Assets

63,800

73,338

82,054

91,715

101,253

101,253

186,278

295,768

Fixed Assets

72,437

73,697

74,957

76,217

77,477

77,477

92,592

107,707

Acc. Depreciation

-9,070

-10,299

-11,548

-12,818

-14,109

-14,109

-32,628

-54,169

63,367

63,398

63,409

63,399

63,368

63,368

59,964

53,538

127,166

136,736

145,463

155,114

164,621

164,621

246,243

349,305

2,258

2,258

2,136

2,258

2,258

2,258

1,835

2,181

Accounts Receivable Inventory Other Accounts Receivable

Goodwill Total Fixed Assets Total Assets Accounts Payable Other Payables Bank and S.T. Liabilities Tax Due VAT Payable Salary & Benefits Payable Total Current Liabilities

2,258

2,258

2,136

2,258

2,258

2,258

1,835

2,181

48,542

48,356

48,169

47,981

47,792

47,792

45,460

42,997

Total L.T. Liabilities

48,542

48,356

48,169

47,981

47,792

47,792

45,460

42,997

Total Liabilities

50,800

50,614

50,305

50,239

50,051

50,051

47,296

45,177

Owners Equity

35,000

35,000

35,000

35,000

35,000

35,000

35,000

35,000

41,366

51,122

60,158

69,874

79,570

79,570

163,947

269,128

L.T. Liabilities Other Provisions Pension Provision

Profit Provision Retained Earnings Total Equity Total Equity and Liabilities

76,366

86,122

95,158

104,874

114,570

114,570

198,947

304,128

127,166

136,736

145,463

155,114

164,621

164,621

246,243

349,305

I-Drive Stoke Ltd. – Car & Van Rental ANALYSIS OF OPERATIONAL EXPNDITURE (PART 1) Description

Jul-06

Aug06

Sep06

Oct06

Nov06

Dec06

Jan07

Fixed Expenses Rates Rent

417

417

417

417

417

417

417

2,083

2,083

2,083

2,083

2,083

2,083

2,083

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Building Insurance Advertising

50

50

50

50

50

50

50

4,000

1,200

400

400

400

400

400

2,100

2,100

2,100

2,100

2,100

2,100

750

750

750

750

5,800

5,800

5,800

5,800

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

Accountancy Fees Legal Fees

500

Building Work

3,500

Computers & Furniture

2,000

CCTV & Security

1,500

Car Insurance

2,100

Road Tax (Van & Minibus) Service & Maint. (Van & Minibus)

2,850

Total Fixed Expenses

19,00 0

5,850

5,050

1,000

1,000

1,000

Personnel Cost Managing Director Company Secretary Car Cleaner Total Personnel Cost Total

833

833

833

833

833

833

833

1,833 20,83 3

1,833

1,833

2,833

2,833

2,833

2,833

7,683

6,883

8,633

8,633

8,633

8,633

I-Drive Stoke Ltd. – Car & Van Rental ANALYSIS OF OPERATIONAL EXPNDITURE (PART 2) Description

Feb07

Mar07

Apr07

May07

Jun07

2006/0 7

2007/0 8

2008/0 9

Fixed Expenses Rates Rent Building Insurance Advertising

417

417

417

417

417

5,000

5,250

5,513

2,083

2,083

2,083

2,083

2,083

25,000

25,000

25,000

50

50

50

50

50

600

600

600

400

400

400

400

400

9,200

4,800

4,800

700

1,200

1,200

Accountancy Fees Legal Fees

700

500

Building Work

3,500

Computers & Furniture

2,000

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CCTV & Security

1,500

Car Insurance

2,100

Road Tax (Van & Minibus) Service & Maint. (Van & Minibus) Total Fixed Expenses

2,100

2,100

2,100

2,100

25,200

25,200

25,200

2,850

3,610

3,610

750

750

750

750

750

6,750

9,000

9,000

5,800

5,800

6,500

5,800

5,800

82,800

74,660

74,922

Managing Director

1,000

1,000

1,000

1,000

1,000

9,000

12,000

12,000

Company Secretary

1,000

1,000

1,000

1,000

1,000

12,000

12,000

12,000

833

833

833

833

833

10,000

10,000

10,000

Total Personnel Cost

2,833

2,833

2,833

2,833

2,833

31,000

34,000

34,000

Total

8,633

8,633

9,333

8,633

8,633

113,800

108,660

108,922

Personnel Cost

Car Cleaner

I-Drive Stoke Ltd. – Car & Van Rental SALES ANALYSIS Jul06

Aug06

Sep06

Oct06

Nov06

Dec06

Revenues

8,300

12,130

14,870

16,600

19,890

19,965

Medium Car Rental

1,400

1,960

2,520

2,800

3,500

3,500

19,96 5 3,500

Large Car Rental

2,000

2,800

3,600

4,000

5,000

5,000

5,000

5,000

Small Van Rental

1,050

1,470

1,890

2,100

2,625

2,625

2,625

2,625

Large Van Rental

1,800

2,520

3,240

3,600

4,500

4,500

4,500

4,500

120

240

480

960

1,125

1,200

1,200

1,200

1,800

2,880

2,880

2,880

2,880

2,880

2,880

2,880

130

260

260

260

260

260

260

260

Description

Caravan Storage Damaged Vehicles Storage Damaged Vehicles Recovery

Description Revenues

Mar07

Apr-07

May07

Jun-07

Jan07

2006/07

Feb07 19,965 3,500

2007/08

2008/09

19,965

19,965

19,965

19,965

211,545

215,622

239,580

Medium Car Rental

3,500

3,500

3,500

3,500

36,680

37,800

42,000

Large Car Rental

5,000

5,000

5,000

5,000

52,400

54,000

60,000

Small Van Rental

2,625

2,625

2,625

2,625

27,510

28,350

31,500

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Large Van Rental

4,500

4,500

4,500

4,500

47,160

48,600

54,000

Caravan Storage

1,200

1,200

1,200

1,200

11,325

12,960

14,400

Damaged Vehicles Storage

2,880

2,880

2,880

2,880

33,480

31,104

34,560

260

260

260

260

2,990

2,808

3,120

Damaged Vehicles Recovery

I-Drive Stoke Ltd. – Car & Van Rental CONCLUSION From a detailed review of the enclosed projections, it is to be concluded that the expected profits are comfortably sufficient to justify the pursuing of the objectives detailed at the beginning of this business plan.

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