Car Rental Business plan Essay
Car Rental Business plan
The purpose of this business plan is to raise $300,000 for the development of a car rental agency while showcasing the expected financials and operations over the next three years. The Car Rental Agency Inc. (“the Company”) is a New York based corporation that will provide the rental of economy, standard, and luxury automobiles in its targeted market. The Company was founded in 2009 by John Doe.
1.1 Products and Services
As mentioned above, the Car Rental Agency will be actively engaged in the rental of economy class, standard, and luxury vehicles for tourists and vacationers within its targeted market. A bulk of the Company’s revenues will come from the daily rental charges for vehicle usage. The business will also recognize revenues from the sale of insurance services and gasoline charges to customers. At the onset of operations, the Company intends to have a leased fleet of 30 vehicles. The third section of the business plan will further describe the services offered by the Car Rental Agency.
1.2 The Financing
Mr. Doe is seeking to raise $300,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate.
1.3 Mission Statement
The Car Rental Agency’s mission is to become the recognized leader in its targeted market for renting affordable vehicles to the general public on a daily basis.
1.4 Mangement Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the automotive industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target individuals, tourists, and business travelers within the target market.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
The Car Rental Agency, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Car Rental Agency requires $300,000 of debt funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of the Car Rental Agency, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Car Rental Agency. Based on historical numbers, the business could fetch a sales premium of up to 4 times earnings.
3.0 Products and Services
Below is a description of the car rental services offered by the Car Rental
3.1 Daily Car Rentals
The primary source of revenue for the business will come from the direct daily rental of the Company’s fleet of approximately 30 vehicles. The Company will have three tiers of rentals including economy, standard, and luxury. Management expects that 75% of all rentals will fall into the economy or standard class. A limited number of luxury vehicles will be held on the lot for wealthy tourists and business travelers. Daily charges to clients will range from $49 to $99 per day depending on the type of vehicle they intend to rent.
3.2 Insurance Fees and Ancillary Services
In addition to daily charges made to vehicle renters, the Company will earn secondary streams of revenue from the sale of additional insurance. This is an important secondary steam of revenue for the business as sales of additional car insurance will generate substantial gross margins for the Car Rental Agency. Additionally, the Company will charge substantial fees to customers that do not return the vehicles with full gas tanks. Approximately 25% of the Company’s aggregate revenues will come from the sale of insurance and gas fees.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the car rental industry, the customer profile, and the competition that the business will face as it progresses through its business operations. Currently, the economic market condition in the United States is in recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many economists expect that this recession will continue until mid-2009, at which point the economy will begin a prolonged recovery period. However, Car Rental Agencies typically operate with a strong degree of economic stability as business travelers will continue to need vehicles for their business trip needs.
4.2 Industry Analysis
Within the United States, there are more than 5,000 companies (that operate one or more locations) that provide daily car rental services to the general public. Each year, these businesses aggregately generate more than $20 billion dollars of revenue and provide jobs to more than 120,000 people. Aggregate payrolls in each of the last five years have exceeded $3.1 billion. This is a mature industry, and the future expected growth rate is expected to equal that of the general economy. As mentioned above, despite the currently high gasoline prices, the industry will continue to remain profitable as business travelers will continue to require rented vehicles during their business trips.
4.3 Customer Profile
In this section of the analysis, you should describe the type of customer you are seeking to acquire. These traits include income size, type of business/occupation; how far away from your business is to your customer, and what the customer is looking for. In this section, you can also put demographic information about your target market including population size, income demographics, level of education, etc.
4.4 Competitive Analysis
This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.
5.0 Marketing Plan
The Car Rental Agency intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Car Rental Agency.
5.1 Marketing Objectives
• Establish relationships with airports and travel agents surrounding the target market.
• Implement a local campaign with the Company’s targeted market via the use of flyers, local newspaper advertisements, and word of mouth advertising.
• Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
5.2 Marketing Strategies
Mr. Doe intends on using a number of marketing strategies that will allow the Car Rental Agency to easily target tourists and business travelers coming to the target market. These strategies include traditional print advertisements and ads placed on search engines on the Internet. Below is a description of how the business intends to market its services to the general public. The Car Rental Agency will also use an internet based strategy. This is very important as many people seeking local services, such as car rental agencies, now the Internet to conduct their preliminary searches. Mr. Doe will register the Car Rental Agency with online portals so that potential customers can easily reach the business.
The Company will also develop its own online website, which will include functionality for people to book and pay for vehicle rentals directly through the Company’s online platform. This marketing feature is common to most companies that rent cars to the general public. The Company will also place advertisements on major travel portals such as Expedia, Orbitz, and Travelocity. Mr. Doe will also develop relationships with local travel agents that will make arrangements for rentals among people that are traveling through the target market.
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page. 6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
6.3 Management Biographies
In this section of the business plan, you should write a two to four paragraph biography about your work experience, your education, and your skill set. For each owner or key employee, you should provide a brief
biography in this section.
7.0 Financial Plan
7.1 Underlying Assumptions
• The Car Rental Agency will have an annual revenue growth rate of 16% per year.
• The loan will have a 10 year term with a 9% interest rate.
• The Owner will acquire $300,000 of debt funds to develop the business.
7.2 Sensitivity Analysis
In the event of an economic downturn, the business may have a decline in its revenues. However, among business travelers, renting a car is a necessity. As such, the Car Rental Agency will be able remain profitable despite a drop off in tourist activity. 7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statements
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 General Assumptions
7.9 Business Ratios
Expanded Profit and Loss Statements
Expanded Cash Flow Analysis