Auto Parts Store Business Plan

Southeast Racing Parts (SRP) is a small automobile racing parts organization based in North Carolina. SRP aims to offer exceptional customer attention by remaining small. It will become the go-to destination for entry-level and novice racing parts.

The Market
Southeast Racing Parts will participate in the rapidly growing motorsports market. With explosive growth in the USA in the past decade, motorsports is now the fastest-growing sport. The market is valued at $1.5 billion annually. A recent survey indicates that over 385,000 people have participated in organized motorsport events. Additionally, TV coverage for motorsports has increased significantly, fueling growth. The Carolinas, experiencing record population growth of 25% within the last decade, make SRP’s chosen location attractive.

The Organization
Southeast Racing Parts believes that maintaining satisfied customers is crucial for financial health. SRP will work hard to exceed all customer expectations. To maintain a presence within the racing community and close relationships with customers, Southeast Racing Parts will actively participate and sponsor local racing events.

Products, Services, and Delivery
SRP will serve the local community as a brick and mortar store and also offer a mail order service through a four-color catalog. The cost effectiveness of publishing subsequent editions will be analyzed. SRP will offer engine and chassis parts for a wide variety of cars, as well as safety equipment and set up equipment. In addition to popular name brands, SRP will also offer a range of generic label parts. They will also provide coil rating services and scaling services for race cars.

Financials
Southeast Racing Parts anticipates profitability from the first month. Margins are expected to be respectable, with exceptional year one sales and steady growth for the first five years.

Southeast Racing Parts presents an exciting opportunity that combines a customer-centric approach with an explosive industry. With motorsports gaining popularity in the United States and more people becoming active participants, even those who are not directly involved see the appeal in customizing their cars. Investing in Southeast Racing Parts offers high growth and reasonable risk.

1.1 Objectives:

1. Make Southeast Racing Parts the top choice for entry-level/novice racing supplies in the Carolinas.

2. Achieve modest initial gross profit margins and increase them by at least 1% annually until reaching the final target.

3. Sell a substantial amount of products in the first year.

4. Maintain a solid annual growth rate for the first five years.

1.2 Mission:

Southeast Racing Parts is dedicated to providing racing products of quality performance and value pricing. We aim to establish successful partnerships with our customers, employees, and suppliers, respecting each party’s interests and goals. We continually review the marketplace to improve on existing products and provide new ones based on consumer demand. Our success depends on customers choosing us because they believe we can meet or exceed their price, service, and selection expectations.

1.3 Keys to Success:

To succeed, we must:

– Be active members of the racing community by attending local race tracks, regional/national trade shows.

– Deliver products promptly.

– Work with customers personally, rather than adopting a customer number mentality like large mail order firms.

Company Summary:

Southeast Racing Parts is a new company that offers affordable products and quality service to entry-level oval track racers.

2.1 Company Ownership:

Southeast Racing Parts is a North Carolina corporation, owned entirely by Tim and Molly Jones.

2.2 Start-up Summary:

Our start-up costs (listed on the following page) include computer hardware, software, setup support, rent, telephone system, office equipment, furniture, parts shelving, warehouse equipment, leasehold improvements, and a company pick-up truck.

We will begin with approximately three months’ worth of inventory. Hence, the majority of assets will be inventory, and the starting cash balance will not be significant.

Further funding will be required, and this plan aims to secure financing for that amount.

Debt or interest expenses are not shown in the Projected Balance Sheet, Projected Cash Flow, and Projected Profit and Loss. However, these charts indicate sufficient earnings to support a debt load. Modified charts will be provided upon request after negotiations on the debt amount and terms.

Start-up Expenses:

– Decals: $725

– Rent: $1,600

– Stationery, forms, etc.: $300

– Total Start-up Expenses: $2,625

Start-up Assets:

– Cash Required: $1,000

– Start-up Inventory: $50,000

– Other Current Assets: $0

– Long-term Assets: $29,000

– Total Assets: $80,000

Total Requirements: $82,625

Start-up Funding:

– Start-up Expenses to Fund: $2,625

– Start-up Assets to Fund: $80,000

– Total Funding Required: $82,625

Assets:

– Non-cash Assets from Start-up: $79,000

– Cash Requirements from Start-up: $1,000

– Additional Cash Raised: $0

– Cash Balance on Starting Date: $1,000

– Total Assets: $80,000

Liabilities and Capital:

– Liabilities

– Current Borrowing: $0

– Long-term Liabilities: $0

– Accounts Payable (Outstanding Bills): $2,000

– Other Current Liabilities (interest-free): $0

– Total Liabilities: $2,000

– Capital

– Planned Investment

– Personal Investment: $80,625

– Other: $0

– Additional Investment Requirement: $0

– Total Planned Investment: $80,625

– Loss at Start-up (Start-up Expenses): ($2,625)

– Total Capital: $78,000

Total Capital and Liabilities: $80,000

Total Funding: $82,625

Company Locations and Facilities:

Southeast Racing Parts will be located at 123 Main Street, Anytown, North Carolina. This location provides good visibility and convenient access for traveling race teams. It is also near a go-kart/entertainment complex, which will attract potential customers. Additionally, being located near Charlotte gives us access to a large customer base due to the popularity of NASCAR Winston Cup racing.

The facility will consist of a showroom, office space, and warehousing. It will initially occupy 3,000 sq. ft. of a 10,000 sq. ft. building, with the option to expand into an additional 2,500 sq. ft. We will be sharing the facility with another racing-related business, which will help attract customers.

Products:

Southeast Racing Parts specializes in selling racing products to entry-level/novice racers. Our product range includes engine and chassis parts, safety equipment, and set-up tools. We also provide coil spring rating and scaling services for race cars.

Our goal is to assist customers in selecting the best parts for their application at an affordable price. We offer personalized advice and support to ensure their racing needs are met. We carry major racing equipment brands and also offer our own performance-oriented merchandise.

Competitive Comparison:

We face competition from various players in the racing industry, but our niche focus on entry-level racers sets us apart. Our main advantage is our ability to provide personalized service and expertise. While larger mail order firms emphasize price, we prioritize service, availability, and building long-term relationships with our customers.

Sales Literature:

We utilize an existing supply catalog customized with the Southeast Racing Parts logo and contact details. This four-color catalog showcases our product range and will be enclosed with price sheets. Additionally, we produce in-house flyers to promote new products and special sales. Catalogs and flyers are distributed in-store, with mail orders, at race tracks, trade shows, auctions, and through racing newspaper advertisements.

Sourcing:

Our extensive industry experience and relationships allow us to source products from both regional wholesalers and manufacturers. Initially, we will rely more on regional wholesalers for faster service, but as our volume increases, we will shift towards purchasing directly from manufacturers to increase profitability.

Technology:

We utilize off-the-shelf PC-based software for accounting, inventory management, purchasing, sales, and returns. This approach reduces training costs and allows for efficient order processing, sales forecasting, and customer service. Our computer systems are up-to-date, providing a higher level of service to our customers.

Future Products:

As the market evolves, we will continuously evaluate and introduce new products to meet customer needs. We plan to expand our private label brand, which offers competitive pricing and helps build brand recognition. Additionally, we may explore the possibility of implementing an e-commerce website to reach a wider customer base.

Market Analysis Summary:

The racing industry is experiencing rapid growth, with a vast number of racers participating in various forms of auto racing. The market for racing parts and accessories is estimated to be worth $1.5 billion annually and continues to grow. Our entry into the market as a specialty retailer catering to entry-level racers presents a unique opportunity. We aim to fulfill the needs for affordable parts, personalized service, and expert advice.

Market Segmentation:

Our target market consists of entry-level racers who may have varying levels of racing and automotive skills. We focus on providing parts and services tailored to their needs and offering them guidance to improve their on-track performance.

Market Needs:

Our target market values service, affordability, and availability. By understanding their needs and providing quality products and advice, we aim to build customer loyalty and word-of-mouth sales.

Industry Analysis:

Auto racing is a booming industry, fueled by increased television coverage and a growing population of race enthusiasts. Racers are passionate consumers who continually invest in new technology and parts. Local businesses play a vital role in servicing the racing community, providing immediate solutions and expertise.

Competition and Buying Patterns:

Our primary competition comes from large mail order firms, but our advantage lies in personalized service and local availability. Entry-level racers are more likely to pay slightly higher prices for quality support and advice. We aim to differentiate ourselves by prioritizing service and meeting the specific needs of our target market.

Industry Participants:

The Performance Racing Industry consists of speed shops, engine and chassis builders, mail order firms, and other variations. Southeast Racing Parts specializes in parts and services for entry-level racers, catering to a specific segment within the racing industry.

Strategy and Implementation Summary:

Our strategy is centered around serving entry-level racers effectively. We focus on personalized service, affordability, and expertise in our niche. By utilizing existing resources, such as catalogs and flyers, and leveraging our industry contacts, we aim to establish a strong presence in the market and build long-term customer relationships.

What begins as a customized version of a standard product can eventually become a niche product that will fill the needs of racers across the country. We plan our marketing strategy to reach specific kinds of racers across broad geographic lines. Our focus is on satisfying the needs of entry-level race teams, and we prioritize follow-on technology rather than leading edge technology for professional race teams.

Our retail marketing strategy centers on creating a corporate identity that clearly defines our market niche. Our specific strategies include:

1. Print Ads – We will run limited space ads in local racing newspapers to keep our name and phone number in front of the consumer. We may showcase a single product to generate revenue from the ad. In the future, we plan on utilizing national magazines such as Stock Car Racing and Circle Track to increase our sales revenue.

2. Press Releases – Local racing papers and national magazines have offered to run releases and stories concerning the opening of Southeast Racing Parts. We will also use these media outlets to run new product releases.

3. Race Car Sponsorship – Entry-level racers will run the Southeast Racing Parts logo on their race cars in exchange for a token discount on purchases and/or technical support.

4. Decals – We will include Southeast Racing Parts decals with all orders. Entry-level racers enjoy displaying decals on their race cars, haulers, and tool boxes.

5. Apparel – We have connections to NASCAR apparel producers in the area. We can design and produce a line of premium Southeast Racing Parts apparel in short runs to reduce inventory costs. These can be sold or given away with qualifying purchases to expose the Southeast Racing Parts name.

6. Grand Opening – With manufacturer support, we will have a Grand Opening event with a large number of door prizes, attracting potential customers and building a mailing list. Loss leader pricing on high volume consumable products will drive in-store traffic. Local racing celebrities will make appearances to further expose potential customers to Southeast Racing Parts.

7. Trade Shows – We will exhibit at approximately four local trade shows annually. The revenue we generate at these shows will outweigh our expenses for attending.

8. Word of Mouth – By providing great service and a fair price to first-time customers, positive word-of-mouth will spread. Our industry and racer contacts in the area will also help spread the word.

All marketing decisions regarding media choices, frequency, size, and expenditures will be made on an ongoing basis, considering the returns generated.

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Our catalog will be our most important sales promotion tool.

Our customers can buy our products at our location, and we also anticipate a significant amount of mail order sales. We will receive orders by mail, phone, or fax, process them immediately, and ship the goods via United Parcel Service. In case we are out of stock, our vendors offer drop shipping as a service to us.

In the future, we will thoroughly investigate the feasibility of electronic commerce with a secure website.

Our pricing strategy is to be competitive within the various product categories, but not solely depend on low prices. We will sell ourselves on a diverse line of quality products that are readily available, reasonably priced, and backed up by extraordinary customer service. The products will be checked prior to shipment, and all promised shipping dates will be met. Our gross profit margin will be modest, increasing steadily by year four.

Since Southeast Racing Parts is a new entity, we understand the need to prove our company’s worth to earn racers’ respect and business. We will focus on selling our company and showcasing our service and support capabilities.

The sales forecast for Southeast Racing Parts is shown in the following table and related charts. Sales are projected to steadily grow for the next three years. In the racing industry, we tend to sell better from January to June, with sales tapering off in late summer and fall.

According to a survey by Performance Racing Industry, there are a total of 385,000 racers, with 150,000 of them being oval track racers. The survey also shows $1.5 billion in annual retail sales, with $720 million coming from the oval track segment. From our past experience, we estimate that each customer would spend on average 25% of the average annual retail purchases of oval track racers ($4,800), which is $1,200. By dividing our first year sales forecast ($350,000) by $1,200, we estimate that we will need 292 customers to support the sales forecast, which we believe is a realistic and attainable number.

Sales Forecast:

Sales

Year 1 Year 2 Year 3

$350,219 $455,285 $591,870

Inventory Sales

$350,219 $455,285 $591,870

Internet Marketing

$16,800 $16,800 $16,800

Total Sales

$367,019 $472,085 $608,670

Direct Cost of Sales

Year 1 Year 2 Year 3

Inventory

$245,154 $314,147 $402,472

Internet Marketing

$0 $0 $0

Subtotal Direct Cost of Sales

$245,154 $314,147 $402,472

5.3 Strategic Alliances:

We have the ability to build strong strategic alliances with our suppliers, some of which are listed below.

– (omitted to protect confidentiality). They will set us up as a Warehouse Distributor (W.D.) without the buy-in requirement.

– (omitted to protect confidentiality). They will do “whatever they can” to help us succeed. Possibly supply us with a show car to display in our showroom.

– (omitted to protect confidentiality). They will set us up as a W.D. without the buy-in requirement.

– (omitted to protect confidentiality). They will set us up as a W.D. and could also be persuaded into extending us special terms.

– (omitted to protect confidentiality). They will set us up as a W.D. and help out as needed with additional terms.

– (omitted to protect confidentiality). They have set us up as a dealer and will drop ship when needed.

– (omitted to protect confidentiality). They will set us up as a W.D. without the buy-in requirement.

– (omitted to protect confidentiality). They will work with us by drop shipping direct to our customers and also by acting as a “paper” warehouse so that we may order direct from the manufacturer for a nominal billing fee.

– (omitted to protect confidentiality). Could be persuaded into giving us extended dating on our initial stocking order.

– (omitted to protect confidentiality). They will supply us with used testing equipment at no charge. They have indicated that they would also extend special terms and/or dating on initial stocking order.

– (omitted to protect confidentiality). They will supply us with their 94-page 4-color catalog at no charge.

– (omitted to protect confidentiality). They will set us up as a direct W.D. without the buy-in requirement. Will also assist us in marketing their products in this area.

The following two local warehouses will help us immensely in keeping our inventory levels in check, while still giving our customers fast service:

– (omitted to protect confidentiality).

– (omitted to protect confidentiality).

Approached properly, these vendors and many others will assist Southeast Racing Parts in becoming a force in the marketplace.

5.4 Milestones:

Sample Milestones topic text.

The milestones table and chart show the specific details about actual program activities that should be taking place during the year. Each one has its manager, starting date, ending date, and budget. During the year we will keep track of implementation against plan, with reports on the timely completion of these activities as planned.

Review: Milestones

Management Summary

We are a small company owned and operated by Tim and Molly Jones, a husband and wife team, as a Subchapter S corporation.

Tim Jones – President
Tim will be the main salesperson. He will also be responsible for shipping and receiving, inventory management, and marketing and promoting products. Tim will assist with record keeping and cost containment.

Molly Jones – Corporate Secretary
Molly will maintain company records and be in direct communication with the accountant and other advisors. She will also be in charge of the computer system and perform all desktop publishing for the company. Additionally, she will assist with sales, shipping and receiving, and customer service. Molly will be dedicated to Internet marketing for 20 hours per week from her office at Southeast Racing Parts. The revenue generated from this is reflected in the Sales Forecast.

The initial management team relies heavily on the founders themselves, with little backup. We plan to hire additional personnel as needed and as our financial capabilities permit.

6.1 Management Team

Tim and Molly not only have the desire to succeed but also bring a wealth of knowledge and experience to the Southeast Racing Parts team. They have nearly thirty years of combined experience in the racing industry and have performed various daily operations for a racing business. Here is a summary of their abilities and accomplishments:

Tim Jones (40) – President

Molly Jones (29) – Corporate Secretary

6.2 Management Team Gaps

We rely on professionals, particularly our CPA, for key management assistance. We have retained a local CPA to help us with financial and business management questions since we don’t have a strong background in those areas. Additionally, we lack experience in human resource issues, but we plan to seek advice from our network of business associates when the need arises.

6.3 Personnel Plan

The main objective of the personnel plan is to maximize productivity and minimize labor costs. As we grow, we anticipate increasing our personnel to align with the growth in sales.

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