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Southeast Auto CareSoutheast Auto Care

Business Plan

AGREEMENT OF CONFIDENTIALITY

I agree that reading of this Business Plan is strictly limited to me as authorized by Name Removed Name Removed (the “Owner” “Owner”) and Southeast Auto Care (the Company). I agree that I shall not divulge or reproduce the content of this Business Plan without the written consent of the Company.

I understand that any information provided in this Business Plan is in all respects confidential in nature, other than information which is in the public domain through other means. I agree not to disclose any information without the express written permission of the Owner Owner and Southeast Auto CareSoutheast Auto Care

Upon request, I will return this document to the Owner Owner and Southeast Auto Care.Southeast Auto Care.

This Business Plan includes “forward-looking statements and projections.” All such statements and projections within this Business Plan, other than statements of historical fact, regarding Southeast Auto Care or its strategies, plans, objectives and expectations, are all forward-looking statements. Although Southeast Auto Care Southeast Auto Care believes that the projections reflected in this plan are reasonable at this time, it can give no assurance that these projections will prove to have been correct.

This Business Plan is not a financing offer. A financing offer is only valid with an approved Private Placement Memorandum.

___________________ ___________________Signature Date

___________________Name (typed or printed)

TABLE OF CONTENTS

EXECUTIVE SUMMARY 1The Business Concept 1The Opportunity 2Operations of the Business 8Product and Service Offerings 9

THE COMPANY 9Mission of the Company 9Company Structure 9

1. Legal Status 92. Physical Location 93. Intellectual Property 9

Company History 10

GROWTH STRATEGY 10Business Objectives 10Targeted Customers 11Key Initiatives 11Competition and Competitive Advantages 11Size of the Market 11Marketing Activities 15Sales Strategy 16

CORPORATE MANAGEMENT 16Management 16

Founder and Owner: 16

KEY FINANCIAL PROJECTIONS 16Financial Needs and Use of Funds 16Assumptions 17

Revenues 17COGS 17Expenses 18Cash Flow 18

Projected Profit and Loss 18Projected Balance Sheets 20Projected Cash Flow 21Break Even Calculation 22Summary of Lender Return and Risk 22

REFERENCES 23APPENDICES 24

12 Month Projected P & L 2412 Month Projected Balance Sheet 2512 Month Projected Cash Flow 265 Year Projected P & L 275 Year Projected Balance Sheet 285 Year Projected Cash Flow 29

Southeast Auto Care

EXECUTIVE SUMMARYEXECUTIVE SUMMARY

The Business Concept

Southeast Auto Care Southeast Auto Care (Southeast Auto Care Southeast Auto Care or the Company) is an auto repair shop providing old-fashioned, reliable service. The Company will be built upon a solid foundation of honesty, reliability and quality. It is located in Huntsville, Alabama.

The Founder, Name Removed, has built a reputation in the area as an honest and trustworthy mechanic; he takes time to explain what is wrong and shows the customer what needs to be fixed as well as which parts are wearing and may fail. Thirty-five years in the auto motive business, he has spent 15 years building and racing cars, 12 years of fleet maintenance, including fabrication and redesign.

The Company will provide:

Routine Maintenance Temperature Control Brakes and Exhaust Engine and Transmission

It will service all makes of cars, both domestic and foreign.

Excellent Market Opportunity Southeast Auto Care Southeast Auto Care will take advantage of its Founder’s existing reputation to attract customers. The Founder started out helping with the car ministry at his church. Through this ministry he has identified the need for an honest and trustworthy mechanic shop.

Willowbrook is one of the largest churches in the area and single moms and widows from the church bring their cars to Darrin after work at his home. Word of mouth has helped him build a clientele base too large to handle at his home. Many people are traveling over 20 miles to bring their vehicles to Darrin to repair.

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Profitable GrowthSoutheast Auto Care Southeast Auto Care expects to gain a profitable market share within a very short period of time. Determinations have been made for the size of the market, amounts of budgeted advertising and promotional dollars, the number and kinds of distribution channels and the competitive landscape.

Projections call for the Company to generate revenues of $666,000 in its first twelve months. Southeast Auto Care will achieve strong growth over the next several years, reaching $1.3 million in revenues and more than $316,000 of net income by the fifth year.

The Opportunity

U. S. Auto Industry

According to R. L. Polk, “The average length of ownership of both new and used vehicles has increased from 37.2 months in 2002 to 46.3 months in 2008, a 24% increase.” As our economy continues to deal with current issues, drivers are expected to keep vehicle longer which is good news for auto repair businesses. Fewer new cars and trucks are being purchased. A recent Polk study showed “64% of consumers were ‘very or extremely likely’ to keep their current vehicle longer than they normally would due to current economic conditions. Additionally, 81% of the 713 interviewed vehicle owners in this same study also said they planned to take better care of their vehicle to keep it running longer, which could translate to additional aftermarket revenue.” 2

Aftermarket Automotive Trends

Within the aftermarket automobile segment there are several categories, including:

Routine maintenance Temperature control Brakes and exhaust Engine and transmission

The current U. S. automotive aftermarket is valued at over $140 million. Where in the past the market was once dominated by small, often family-owned independent service stations, there are four business types in the U. S. automotive repair industry today:

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Independent garages Full service gasoline stations Automotive dealerships Chain automotive centers

According to the Automobile Service Association (ASA), this market sector is high fragmented, employing nearly 339,170 people and “repairing more than 231 million motor vehicles; 88% of independent mechanical repair businesses are family-owned.” Research shows there are an estimated 81,533 U. S. independent general mechanical repair businesses in operation.

The ASA projects “total sales for general mechanical repair facilities in 2005 was $36 billion; $49 billion if specialty repair facilities, oil change facilities and transmission shops are included. It is important to note that these figures do not include the $30 billion earned by approximately 21,640 auto dealerships with service facilities.”

Americans love their automobiles! Statistics reflect the median age of vehicles in the U. S. is increasing which will encourage the growth of auto repair shops. According to research, the median car age from 1990 to 2005 increased from 6.5 years to 9.0 years. A recent Forbes article stated, in 2004, 135,077,000 cars were registered in the United States.

In a 2005 survey by ASA, 71% of mechanical businesses polled said they felt positive about future growth and expected sales to increase. Integra Information made the following forecast on growth rates: 1

General Auto Repair Shops Industry Revenues

Source:   Integra Information

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Year Forecasted Growth Rate

2005 2.40%

2006 3.90%

2007 3.30%

2008 3.80%

2009 3.90%

Avg. 3.46%

Southeast Auto Care

The automotive aftermarket services sector is affected by many contributing factors, such as median vehicle age, driven mileage, and the total number of vehicles on the road. The following charts by R. L. Polk, automotive intelligence and marketing solutions firm, shows compound annual growth rate in this market and age of vehicles from 1999 to 2013: 2

Source: IMR (AutomotiveResearch.com) and R. L. Polk & Co.

In the category of maintenance, vehicles ages 6-to-10 years are 1.3 times more likely to need maintenance than their younger counterparts of less than 6 years of age or with older vehicles over 10 years old. Interestingly, vehicles in this category are predicted to increase from 2008 to 2010 by 1.2% (compound annual basis). Polk states, “During the same time period, vehicles in the 11+ age group are projected to grow 4.6%.” 2

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Routine Maintenance

R. L. Polk reports, “The routine maintenance category encompasses oil changes, tune ups, tire replacements, wiper blade replacements and other smaller repairs that are necessary to keep a vehicle running smoothly. In 2007, there were nearly 3 billion jobs and parts attributed to routine maintenance, 84% of the total number in the aftermarket sector.” 2

Brakes and Exhaust Maintenance

In 2007 service related to the brakes and exhaust sector reported an annual growth rate of 5.9%, from 1999 to 2007, making this category the highest compound annual growth rate, mainly due to an increase in light vehicle operation and miles driven. From 2008 to 2010, due to aging vehicle population, growth rate in this market sector is expected to drop to 1.7%, as vehicle population ages. R. L. Polk states, “Growth in brakes and exhaust parts and service will come primarily from increases in the 6–10 and 11+ vehicle age groups, which are expected to grow at 1.2% and 4.6%, respectively, between 2008 and 2010. Replacement events for these two groups of older vehicles are twice as prevalent as for vehicles under 6 years old.” 2

Engine and Transmission Repair

More and more people are keeping their cars and trucks longer. From 2008 to 2010, the projected increased rate of older vehicles (11+ years) is predicted to grow by 4.6%. These vehicles are 4 times more likely to need engine and transmission repair than vehicles less than 6 years old. The charts below reflect these different categories: 2

Breakdown of Routine Maintenance Category by Sales Channel

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Breakdown of Temperature Control Category by Sales Channel

Breakdown of Brakes and Exhaust Category by Sales Channel

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Breakdown of Engine and Transmission Category by Sales Channel

Repair Shop Demand Growth

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In a new survey by Frost & Sullivan, market analysis firm, vehicle owners are saying they plan on maintaining and repairing their cars and trucks longer “ in the wake of financial uncertainties, job loss fears, and uncertain fuel prices triggered by the economic slump.” Consequently, there is a higher demand for maintenance-related jobs. 3

Parts Market

In the Frost & Sullivan report, it is reported that in 2007 there were nearly 241 million light vehicles in the United States; the repair industry represented $70 billion in parts sold that support this market. The report said, “Repair shop owners are the front line of that industry and the first place where vehicle owner behavioral changes become evident.”

There is a constant, evolving vehicle population that repair shop owners must consider when monitoring their business, original equipment (OE) parts versus private label brands. Irrespective of the parts used, they must reflect quality, function, and reasonable cost that allow profitability.

Program Manager at Frost & Sullivan Global, Mary-Beth Kellenberger said, “Gaining access to quality aftermarket import brand parts is extremely important as independents position themselves as a value alternative to dealers. Winning the job at a price that supports each enterprise's financial structure is as crucial to the survival of the industry as smart management to prevent cost cutting that undermines repair quality and industry profitability.” 3

There is a large opportunity to build a dominant and respected business in this market space.

Operations of the Business

Southeast Auto Care Southeast Auto Care will target prospective clients within the Huntsville, Madison, Harvest and Toney areas. The Company will generate revenues from its auto repair services, parts and labor.

The Company will offer convenient hours, opening M-F 7:00 AM to 6:00 PM and on Saturdays from 8:00 AM to 12:00 PM. This allows busy individuals to select a convenient time.

Marketing efforts of the Company will focus on several activities. These include print advertising, radio, signage, referrals, and its web site.

Product and Service Offerings

Southeast Auto Care Southeast Auto Care will provide a wide range of services. These include:

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Routine Maintenance Temperature Control Brakes and Exhaust Engine and Transmission

THE COMPANYTHE COMPANY

Mission of the CompanySoutheast Auto Care Southeast Auto Care will become a leading auto repair center in the Huntsville area. We will continually provide quality repair in a timely manor at an affordable price. Our products services will be sought after for their reliability and excellence. We will treat each customer with respect and we will be known for our outstanding customer service.

Company Structure

1. Legal Status

Southeast Auto CareSoutheast Auto Care is a Sole Proprietorship organized in the state of Alabama in 2010. The Company is owned by Name Removed.

2. Physical Location

The Company will lease suitable business space to support its operations. This space will include a reception area, office, and work/repair areas. It will provide easy access to customers/employees with ample free parking.

The site will be in an attractive area of town. Customers will be able to access the site easily.

A prospect site has been located and is available.

3. Intellectual Property

Southeast Auto CareSoutheast Auto Care intends on building a website at www.southeastautocare.com to market its services. There is no other proprietary intellectual property owned by the Company.

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Company History

Southeast Auto Care Southeast Auto Care is a start-up new venture. However, the founder has performed extensive research to determine the market viability and operational challenges of this type of business. Questions that were addressed include:

What is the market opportunity (Is there a need for the business)?

What type of competition is there?

Can the targeted market support the business?

What types of customers will the business attract?

Are there suitable facilities in the area?

How much funding is needed? How much monthly revenue is

needed to achieve break even?

GROWTH STRATEGYGROWTH STRATEGY

Business Objectives

The Company is planning on strong growth in the next twelve months. It plans on achieving the following objectives:

Obtain new customers Hire reliable and trained staff Grow twelve month revenue in excess of $665,000

In succeeding years, Southeast Auto Care Southeast Auto Care will continue to grow its business and will achieve these objectives:

Grow the annual number of new customers each year Develop a reputation that will exceed competitors in every area Achieve excellent customer loyalty by placing strong emphasis

in the areas of outstanding service and support Maintain an experienced and professionally trained staff Attain $1.3 million in annual sales in Year 5

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Targeted Customers

Southeast Auto Care Southeast Auto Care has identified a clear and substantial target market. Targeted customers will include:

Previous Customers Friends and Family of Former Customers Walk-in Customers from advertising

The Company will target these types of customers within the Huntsville, Madison, Harvest and Toney, Alabama areas.

Key Initiatives

Southeast Auto Care Southeast Auto Care has developed the following key initiatives to achieve its growth goals:

Launch its marketing efforts to reach its target audience Establish an aggressive sales program to identify and secure

customers Provide the best services at the most competitive pricing Provide a satisfying experience for every customer

With the proper financing and adherence to this business plan’s objectives, the Company believes it can complete these initiatives and achieve success.

Competition and Competitive Advantages

Southeast Auto Care Southeast Auto Care has realizes that it will compete with other local auto repair companies. The Company believes that it can compete effectively in this market. Several factors driving its competitive advantage include:

Experienced technician Priority service Best customer service Competitive pricing

Size of the Market

Southeast Auto Care Southeast Auto Care is focused on obtaining customers in the greater Huntsville and Madison, Alabama area. This area is large enough to support the Company’s business objectives. (See charts on next pages)

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Household Income % Households # Households14,624

Less than $10,000 2.8% 409$10,000 to $14,999 2.7% 395$15,000 to $24,999 6.1% 892$25,000 to $34,999 6.1% 892$35,000 to $49,999 10.4% 1,521$50,000 to $74,999 18.6% 2,720$75,000 to $99,999 15.3% 2,237

$100,000 to $149,999 21.9% 3,203$150,000 to $199,999 10.5% 1,536

$200,000 or more 5.6% 819

US Census Bureau Economic CensusMadison City, Alabama

2006-2008 American Community Survey 3-Year Estimates

Age % Population Population38,453

Under 5 years 6.2% 2,3845 to 9 years 7.4% 2,846

10 to 14 years 8.8% 3,38415 to 19 years 8.4% 3,23020 to 24 years 6.0% 2,30725 to 29 years 5.4% 2,07630 to 34 years 4.5% 1,73035 to 39 years 6.0% 2,30740 to 44 years 10.5% 4,03845 to 49 years 10.4% 3,99950 to 54 years 7.3% 2,80755 to 59 years 6.0% 2,30760 to 64 years 5.8% 2,23065 to 69 years 2.9% 1,11570 to 74 years 1.9% 73175 to 79 years 1.4% 53880 to 84 years 0.7% 269

85 years and over 0.5% 192

US Census Bureau Population CensusMadison City, Alabama

2006-2008 American Community Survey 3-Year Estimates

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Household Income % Households # Households69,799

Less than $10,000 8.7% 6,073$10,000 to $14,999 6.4% 4,467$15,000 to $24,999 12.7% 8,864$25,000 to $34,999 11.5% 8,027$35,000 to $49,999 13.8% 9,632$50,000 to $74,999 17.1% 11,936$75,000 to $99,999 10.0% 6,980

$100,000 to $149,999 11.4% 7,957$150,000 to $199,999 4.9% 3,420

$200,000 or more 3.7% 2,583

US Census Bureau Economic CensusHuntsville City, Alabama

2006-2008 American Community Survey 3-Year Estimates

Age % Population Population168,865

Under 5 years 6.2% 10,4705 to 9 years 6.2% 10,470

10 to 14 years 6.3% 10,63815 to 19 years 7.2% 12,15820 to 24 years 8.4% 14,18525 to 29 years 7.1% 11,98930 to 34 years 5.6% 9,45635 to 39 years 6.3% 10,63840 to 44 years 6.8% 11,48345 to 49 years 7.3% 12,32750 to 54 years 6.9% 11,65255 to 59 years 6.3% 10,63860 to 64 years 4.7% 7,93765 to 69 years 4.3% 7,26170 to 74 years 3.7% 6,24875 to 79 years 3.1% 5,23580 to 84 years 1.9% 3,208

85 years and over 1.8% 3,040

Huntsville City, Alabama2006-2008 American Community Survey 3-Year Estimates

US Census Bureau Population Census

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Household Income % Households # Households123,957

Less than $10,000 6.7% 8,305$10,000 to $14,999 4.9% 6,074$15,000 to $24,999 10.2% 12,644$25,000 to $34,999 10.6% 13,139$35,000 to $49,999 13.3% 16,486$50,000 to $74,999 18.2% 22,560$75,000 to $99,999 12.2% 15,123

$100,000 to $149,999 14.8% 18,346$150,000 to $199,999 5.6% 6,942

$200,000 or more 3.5% 4,338

Madison County, Alabama2006-2008 American Community Survey 3-Year Estimates

US Census Bureau Economic Census

Age % Population Population312,658

Under 5 years 6.4% 20,0105 to 9 years 6.8% 21,261

10 to 14 years 6.8% 21,26115 to 19 years 7.4% 23,13720 to 24 years 7.0% 21,88625 to 29 years 6.7% 20,94830 to 34 years 5.7% 17,82235 to 39 years 6.7% 20,94840 to 44 years 7.9% 24,70045 to 49 years 8.3% 25,95150 to 54 years 7.0% 21,88655 to 59 years 6.0% 18,75960 to 64 years 5.0% 15,63365 to 69 years 3.9% 12,19470 to 74 years 3.3% 10,31875 to 79 years 2.4% 7,50480 to 84 years 1.4% 4,377

85 years and over 1.3% 4,065

2006-2008 American Community Survey 3-Year Estimates

US Census Bureau Population CensusMadison County, Alabama

Southeast Auto Care

Marketing Activities

Southeast Auto Care Southeast Auto Care will implement various marketing efforts to attract customers including:

Customer loyalty programsThe Company will develop strong customer loyalty programs. Southeast Auto Care Southeast Auto Care will implement and manage programs that reward a customer for repeat business with the Company.

Build and optimize its web site to describe and promote the businessThe Company will build and optimize its web site to attract prospective customers. The web site will be attractive and easy to navigate. It will also provide testimonials of satisfied customers.

Print advertisingThe Company will take out ads in local publications that are matched to its targeted audiences.

TV and Radio AdsThe Company will purchase TV ads on local cable channels and radio ads on local stations.

Signage and posters

Southeast Auto Care Southeast Auto Care will utilize signage and posters that will be displayed at local sites to promote the Company and establish name recognition.

Search engine optimization (SEO)The Company will optimize its web site so that it will in improve its yield in search engine results. Southeast AutoSoutheast Auto Care Care will continually improve its SEO scores by optimizing the search words and by establishing link programs whereby the number of sites linking to it increase.

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Referrals

Southeast Auto Care Southeast Auto Care will develop referral programs whereby existing customers receive incentives to refer friends or associates as customers.

Sales Strategy

The Company will sell directly through its retail space.

CORPORATE MANAGEMENTCORPORATE MANAGEMENT

Management

Founder and Owner: Name Removed

Name Removed has 35 years in the Automotive Business. He has spent 15 years building and racing cars. Darrin also has 12 years of fleet maintenance including fabrication and redesign.

KEY FINANCIAL PROJECTIONSKEY FINANCIAL PROJECTIONS

Financial Needs and Use of Funds

The Company is seeking a $50,000 loan to execute this business plan. Management of the Company will contribute $10,000 of their own funds in equity. Additionally, they will also contribute $150,000 worth of tools and equipment including:

AAMCO Brake lathe Miller Mig Welder Plasma Cutter Robinair A/C Recovery Machine Branick Strut Compressor Snap On Solus Diagnostic Computer Ingersol Rand Compressor

Southeast Auto Care Southeast Auto Care intends to use these funds primarily for start-up expenses such as equipment, furniture and leasehold improvements. Remaining funds will be used for general working capital needs.

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Assumptions

Revenues

COGS

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SourcesFirst Loan $50,000

Equity $10,000

Total Sources $60,000Uses

Equipment $10,000

Furniture/equipment $500

Leasehold Improvements $2,000

Legal Startup $200

Working Capital $47,300

Total Uses $60,000

Sources and Uses of Proceeds

Year 1 Year 2 Year 3 Year 4 Year 5Labor Sales $353,600 $442,000 $530,400 $618,800 $707,200Parts Sales $312,000 $390,000 $468,000 $546,000 $624,000

Revenue Assumptions

Year 1 Year 2 Year 3 Year 4 Year 5Labor Cost $130,000 $150,800 $171,600 $192,400 $213,200Parts Cost $218,400 $273,000 $327,600 $382,200 $436,800

COGS Assumptions

Southeast Auto Care

Expenses

Cash Flow

Receivables average 15 daysPayables average 30 days

Projected Profit and Loss

Southeast Auto Care’sSoutheast Auto Care’s revenues are projected to grow significantly in the next twelve months. Monthly revenue will increase to $66,000. For the 12-month period, revenues will total $666,000 and this will yield an operating profit of $171,000 and a net income of $100,000. The monthly projections are illustrated in the following graph:

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The next two graphs show Southeast Auto Care’s Southeast Auto Care’s projected annual revenues and annual net profit over a five year period.

Detailed profit and loss projections are presented in the Appendix.

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Projected Balance Sheets

Based on projected revenues and expenses, the Company anticipates maintaining a strong balance sheet.

Complete projected balance sheet details are shown in the Appendix.

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Projected Cash Flow

The Company’s cash flow projections show that Southeast Auto Care Southeast Auto Care will have sufficient cash to support the business. The following graphs present a view of projected cash flow of the business.

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Break Even Calculation

Southeast Auto Care Southeast Auto Care achieves break even with about $26,600 in monthly revenues. This is shown in the following graph.

Summary of Lender Return and Risk

Southeast Auto Care Southeast Auto Care is requesting a $50,000 loan to execute this business plan. Management will contribute $10,000 in equity. These funds are sufficient to allow the Company to achieve its business goals and they provide a satisfactory cash safety cushion for the Company.

The Company will make both interest and principle payments monthly to the lender. Projections in this plan assume a 7.0% interest rate on the loan with a five year amortization period. Cash flow projections support the Company’s ability to meet monthly payments.

Management believes the business plan and projections presented in this plan show that the lender has minimal risk with this loan.

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REFERENCESREFERENCES

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1 2006 “The Automotive Repair Industry”, (Integra Information, Forbes, April 2006) Article Found at: <http://www.integrainformation.com/forbes/overview.htm>

2 2009 “The Changing U. S. Auto Industry: The Impact of Declining New VehicleSales on the Aftermarket Business”, (R. L. Polk Automotive Information,April 2009) Article Found at: <http://www.polk.com/TL/MS_200903_ChangingAutoIndustry_Aftermarket.pdf>

3 2009 “Changing Consumer Behavior toward Automotive Repairs and MaintenanceKeeps Repair shops on Tenterhooks”, (Frost & Sullivan Report, Frost & Sullivan Speaks Candidly with U.S. Automotive Shop Owners, July 30, 2009), Article Found at: <http://www.prnewswire.com/news-releases/frost--sullivan-finds-changing-consumer-behavior-toward-automotive-repairs-and-maintenance-keeps-repair-shops-on-tenterhooks-62274652.html>

Southeast Auto Care

APPENDICESAPPENDICES

12 Month Projected P & L

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Remove Second Loan Interest from all three charts

12 Month Projected Balance Sheet

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12 Month Projected Cash Flow

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5 Year Projected P & L

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5 Year Projected Balance Sheet

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APPENDICES5- Year Balance Sheet

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5 Year Projected Cash Flow

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