online auction company - business plan1
TRANSCRIPT
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COMPANY Business Plan
1.0 Executive Summary1.1 Objectives1.2 Mission1.3 Keys to Success
2.0 COMPANY Summary2.1 COMPANY Ownership2.2 COMPANY Location and Facilities
3.0 Services3.1 Service Description3.2 Competitive Comparison3.3 Technology3.4 Future Services
4.0 Market Analysis Summary4.1 Market Segmentation4.2 Target Market Segment Strategy
4.2.1 Market Needs
4.2.2 Market Trend4.2.3 Market Growth
5.0 Strategy and Implementation5.1 Value Propositions5.2 Competitive Edge5.3 Marketing Strategy
5.3.1 Positioning Statement5.3.2 Pricing Strategy5.3.3 Promotion Strategy5.3.4 Distribution Strategy5.3.5 Marketing Programs
5.4 Sales Strategy
5.4.1 Sales Forecast5.4.2 Sales Programs5.5 Strategic Alliances
6.0 Management Summary6.1 Organizational Structure6.2 Management Team6.3 Management Team Gaps6.4 Personnel Plan
7.0 Financial Plans7.1 Break Even Analysis7.2 Projected Profit and Loss
7.3 Exit Plan
8.0 Appendixa. Advertisementb. Pressc. Trade Show Listd. Sales Incentive Programe. Personnel Planf. Customer Survey Resultsg. Press Kit
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1.0 ExecutiveSummaryCOMPANY is an Internet business-to-business auction site that provides insurance companies andfinancial institutionswithamoreprofitableandefficientmethodofmarketingspecialtysalvagevehiclestoanestablishedbaseoflicenseddealers,dismantlers,rebuilders,andexporters.Byuniting in-depthknowledgeoftheautosalvage industrywiththevitalityandreachoftheInternet,thesiteoffersacomprehensivepackageofe-commercesolutionstobothbuyersandsellers.COMPANY isvastlymore convenient thanusing traditional auction yards, becausesellers andbuyerssave timeand effort by participating from their offices, shops, and homes. As well, traditional auctionyardsarelimitedintheirgeographicalreachandthepricestheycanbring.COMPANY eliminates these restrictions by connecting buyers and sellers nationwide. COMPANYoffersanew,powerful,moreprofitable,vastlymoreconvenientmethodofsalvageauctioning. Througha real-time, interactive system, salvage vehicles are marketed directly to an established base ofthousandsof licenseddealers,dismantlers, rebuilders,andexportersnationwide.Thebuyerspurchasedirectly from the insurance companies and financial institutions. COMPANY acts only as a facilitator,notamiddleman.All bids are open rather than sealed, which stimulates competitive bidding, resulting in higher salesprices. Andsincevehicleswillbemarketednationwide, thepotentialnumberofbuyers ishuge, furtherresultingincompetitivebiddingandgreaterreturns.Sincevehicleswillbemarketedwithoutgeographicbarriers,thepotentialnumberofprospectivebuyersisessentiallyunlimited--furtherresultingincompetitivebiddingandincreasedreturns.The foremost advantage of the site is the state-of-the-art interactive software, encompassing servicessuchasauctionwatch,which isuseful forkeeping trackofwinningand losingbidsonaparticular item;autobid, which automatically adjusts a buyer's bid to beat previous bids, up to a confidentialpredetermined maximum set by the buyer; and categorywatch, which e-mails a user when a vehiclematchingtheuser'scriteriaisaddedtothesite.Other
attractive
merits
include
the
dynamic
close
feature.
If
bidding
occurs
within
the
last
five
minutes
ofanauction,dynamicclosewillkeep theauctionopenuntilbiddinghasceased for fiveminutes, thusmaximizingthesaleprice.Thesiteincludesphotosanddescriptionsofthevehiclesbeingoffered,andisopenforbidding24hoursaday,sevendaysaweek. Currently, there isnomembershipcharge. Buyerspaya low five-percentfeeperpurchase. Winningbiddersarecontactedbye-mail.Revenue is generated through percentage based charges to both the buyer and seller. Manyopportunitiestoexpandourrevenuepotentialexist, includingoverallsalvagemanagementforinsurancecompanies via aWeb-based system, handling of catastrophic events with an onsite response service,contingency fees for exceeding vehicle return goals, membership fees, transportation services forbuyersintheformofreversebidpricing,andmarketingGSAvehicles.1.1 Objectives
COMPANY'sobjectivesareasfollows:Three month:1. Raisecapitaltosupportgrowthandexpansion.2. LaunchregionaltestprogramsinPennsylvaniawithnewinsurancecompanies.3. ExpandexistingrelationshipwithProgressiveInsuranceintoadditionalregionaland
nationaloffices.4. UpgradeOpenSiteauctionsoftwaretoincludetheAuctionNowpackage.
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5. Increasevehicleinventorythroughexistingandexpandingnewrelationshipwithinsurancecompanies.
6. Exploreadditionalopportunitieswithbanks,leasingandrepossessioncompanies.7. Hirestaffmemberstosupportgrowth.Three -six months:1. Nationwideroll-outwith3topinsurancecompanies.2. Continuetheexpansionofsalvagevehicleinventory.3. Hirestaffmemberstofacilitatecustomeracquisition,retentionandexpansion.By yearend:1. GrossRevenuesof$4.9M.2. Sell1000vehicles.3. Experiencea220%increaseinsales.4. Own.05%ofthespecialtysalvagemarketof540,000vehicles.
1.2 MissionCOMPANYstrivestohelpallsegmentsofthespecialtysalvageindustryrealizetheirfullproductivityandprofitabilitypotentialthroughtechnology,e-commerceandinformationmanagement.
1.3 Keys toSuccess1. Securingasupplyofsalvagevehiclethroughrelationshipswithnationalinsurers.1. Maintainingthefrontrunnerpositionintheracetobe"the"internetauctionsolutionforthe
insurancecompanies,dealersanddismantlers.2. Drivingdealersanddismantlerstothesitetopurchase.3. Trulyprovidinga"service"totheinsurancecompanies,dealersanddismantlers.4. Providingthespeedandreturnsfortheinsurancecompanies.5. Securingtoptalentformanagementpositions.6. Expandingproductofferingtoincludeparts,off-leasevehicle,repossessions.7. Capturingmarketsharefromexistingliveauctionmarket.
2.0 COMPANY Summary2.1 COMPANYOwnership
REMOVEDFORCONFIDENTIALITYPURPOSES2.2 COMPANY Locationand Facilities
REMOVEDFORCONFIDENTIALITYPURPOSES3.0 Services
3.1 Service DescriptionCOMPANYisanInternetbusiness-to-businessauctionsitethatprovidesinsurancecompaniesandfinancialinstitutionswithamoreprofitableandefficientmethodofmarketingspecialtysalvagevehiclestoanestablishedbaseoflicenseddealers,dismantlers,rebuilders,andexporters.
COMPANYexpandsvehicleavailabilityanddistribution,expeditesthetransactionprocess(fromthevehicledeclared"totaled"todeliverytothedealerordismantle)andincreasesthereturnsfortheinsuranceagencies. BysellingontheInternet-time,location,reachandcapacityarelimitless. Sellersandbuyerssavetimeandeffortbyparticipatingfromtheiroffices,
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shops,carsandhomeseliminatinggeographicalbarriers. Throughareal-time,interactivesystem,salvagevehiclesaremarketeddirectlytoanationwidepoolofpotentialcustomers.Allbidsareopenratherthansealed,whichstimulatescompetitivebidding,andhighersaleprices.COMPANYactsonlyasafacilitator,notamiddleman.Thebuyerspurchasedirectlyfromtheinsurancecompaniesandfinancialinstitutions.COMPANYhasthefirst-moveradvantageinonlineauctionsofspecialtyautos. Thefirmistheonlyfull-service,interactive,totallyonlineauctionvenueforspecialtysalvagevehicles. Duetoexpanding itsservices tobuyersandsellersnationwide,COMPANY ispoisedforphenomenalgrowthinthecomingmonths.
3.2 CompetitiveComparisonCurrentlytherearethreetypesofcompetitors: LiveAuctions OnlineAuctions TheInsuranceCompaniesLiveAuctions:Thereareseveralnationwideliveauctionbusinesses. ThethreelargestcompetitorsareInsuranceAutoAuctions(IAA),CoPartandSadisco. Theyrepresent36%oftheoverallsalvageauctionmarket. Theremaining64%ofthemarketconsistsofsmallregionalandlocalsalvagepools.
OnlineAuctions:Thereisahand-fullofonlineauctionsites:DirectSalvage.com,SalvageSolutions.com,IAAI.com,Coparts.comandSadisco.com.Allofthecompetitorshavedevelopedonlinepresencethatsupportstheirofflineliveauction. However,thebidsthataresubmittedonlinequalifythehighestbiddertoberepresentedattheliveauction.Noneoftheabovementionedcompetitorsaretrulyauctioningsalvagevehiclesonline.Theyhavecreatedaninfrastructurethatsupportsanddoesnotcannibalizetheirexistingliveauctionbusiness.Insurance Companies:
Thereisthepossibilitythattheinsurancecompaniesmayenterintotheauctionbusinessthemselves. However,thiswillrequirethemtotakeonthefullburdenofmanagingtheprocess. Theyarelookingforthehighestreturnpossible,intheshortestperiodoftimewiththegreatestease. IfCOMPANYcanprovidethemwiththespeed,quality,returnandservicenecessarywebelievetheywillnotassumetheburdenthemselves.COMPANYistheonly100%interactiveonlineauctionsiteontheInternet. OnlineAuctioningprovidesaconvenientandeasymethodoflocating,biddingandpurchasingasalvagevehicle.TheInternetremoveslimitationofgeographyandopenstheavailableinventoryofsalvagevehicletoanationwidelevelwhilesimultaneouslyexpandingthemarketofinterestedbuyers.Withmorevehiclesbeingviewedbymorebuyers,thereisanincreasedprobabilityofhigherandfasterreturnsfortheinsurancecompanies.
3.3 TechnologyTheforemostadvantageofthesiteisthestate-of-the-art OpenSiteinteractivesoftware,encompassingservicessuchas:Auctionwatch: usefulforkeepingtrackofwinningandlosingbidsonaparticularitem.Autobid: automaticallyadjustsabuyer'sbidtobeatpreviousbids,upto aconfidential
predeterminedmaximumsetbythebuyer.Categorywatch: e-mailsauserwhenavehiclematchingtheuser'scriteriaisaddedto thesite.
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Otherattractivemeritsincludethedynamicclosefeature. Ifbiddingoccurswithinthelastfiveminutesofanauction,dynamicclosewillkeeptheauctionopenuntilbiddinghasceasedforfiveminutes,thusmaximizingthesaleprice.Thesiteincludesphotosanddescriptionsofthevehiclesbeingoffered,andisopenforbidding24hoursaday,sevendaysaweek.OpenSite:
Opensiteistheleaderinonlineauctionsoftware.Theybringtogetherbuyersandsellers,helpingbusinessesdynamicallymanageinventory,createsaleschannels,attractcustomers,andtestmarketnewproductstocreateefficientmarketsforgoodsandservices.Foundedin1996,OpenSitewasthefirstCOMPANY toofferpackagedonlineauctionapplications.TheCOMPANYisanaward-winning,dynamiccommercepioneerwithpartnersworldwidededicatedtosellingandsupportingOpenSitesolutions. Theyhaveover600licensedandoutsourcedauctionsolutionstocustomerssuchasTheSharperImage,CNET,JohnDeere,CaseCapital,andVerticalNet,OpenSiteissupportingthedynamiccommerceinitiativesofleadingcorporationsinarangeofindustries.
3.4 Future ServicesCOMPANYisplanningtoexpanditsservicesbeyondauctionsandcreateatruecentralmarketplacebyofferingavarietyofvalue-addedbenefitstobuyersandsellers. Thefirmwillfunctionasaverticalauctionhubandeasilymoveintoadjacentverticalmarkets.Manyopportunitiestoexpandtherevenuepotentialexist,includingoverallsalvagemanagementforinsurancecompaniesviaaWeb-basedsystem,handlingofcatastrophiceventswithanonsiteresponseservice,transportationservicesforbuyersintheformofreversebidpricing.Stillfurther,thefirmcouldbeginauctioningsalvageboats,parts,heavyequipment,etc.
COMPANYcouldalsoexpandbeyondthesalvageauctioningintheareaofoff-leaseandrepossessedvehiclesforleasingcompanies,banks,institutionsandthegovernment.AnotheropportunityforCOMPANYisintheareaofbrandedauctionsitesfortheinsurancecompanies.
For
example,
if
an
insurance
COMPANY
was
interested
in
auctioning
vehicles
on
theirwebsite,COMPANYwouldprovidethetechnologyandbackshop. Theconceptwouldbe"PoweredbyCOMPANY."ThetransactionandprocessingoftheauctionwouldbemanagedbyCOMPANY,seamlessly. Thiswouldallowtheinsurancecompaniestohavetheirownbrandedauctionsitewithoutthecostandlearningcurveassociatedwithdoingitthemselves. TheSalvageDirect.comsitewouldbethehubconnectingtheinsuranceCOMPANY'sinventoriestogetherforthedealersanddismantlers. Findingthevehicletheyneededwouldbesimpleandeasy. LogontoCOMPANYandwewilltakeyoutothesitethathasthevehicleyouarelookingfor.
COMPANYstrivestobetheproviderofthetechnology,systemsandrelationshipstoassisttheinsurancecompaniesastheyinevitablyentertheworldononlineauctioning.SalvageDirect.comwillbethehubbringingthelargestinventoryandselection.COMPANYwillbeprovidingtheinsurancecompanieswiththetoolsnecessarytoexpeditetheposting,auctioninganddeliveringofsalvagespecialtyvehicles. Withlaptopcomputers,digitalcamerasandwirelesscommunicationsinsuranceadjusterswillbeabletopostavehicleforauctionanddetermineabuyerwithinhoursofposting.Thefirmwillcontinuetopursueaggressive,innovativegrowthintheonlinespecialtysalvagevehicleindustry,sothatitcanalwaysprovidecutting-edgeservicesandthebestvalueavailable.
4.0 MarketAnalysisSummary
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4.1 Market SegmentationCOMPANYisservingtwodistinctmarkets: InsuranceCompanies:Providingtheinventory. Dealers,dismantlers,rebuildersandexporters:Purchasingthevehiclesforthepurposesof
dismantling,repairingorselling.4.2 Target Market Segment Strategy
4.2.1 Market NeedsCurrently"totaled"vehiclesareturnedovertoaliveauctionsalvagenetwork.Dealersanddismantlerstraveltoattendliveauctionstosometimesreturnemptyhanded. Theinsurancecompaniesreceivethe"marketvalue"forthevehicleasdeterminedbytheparticipantsattendingtheliveauctionatthattime. Inventoryislimitedtothelocationandcapacityoftheliveauctiononthatday. Vehiclesaresoldtoalimitedpoolofdealerswhoarewillingorabletoattendtheauction. Thus,thebuyerisnotreceivingthebestselectionorconvenienceandthesellerisnotreceivingthebestreturn.InsuranceCompaniesarelookingforhigherreturns,fasterturns,easierprocessing.Underthetraditionalsalvageprocess,fromthedaythecarisdeemedtotaledandthesalesofthesalvagevehiclecanbeupwardsof90days. Thefastertheyturnthecarthefastertheycangettheirmoneyback.Competitionintheautomotiveinsuranceindustryhasresultedinaracetolowerpremiums. Toremaincompetitiveinthemarket,insurancecompaniesmustnotonlyfocusoncuttingcosts,butalsoonincreasingreturns.Dealersarelookingforgreaterselection,easeofpurchasing,higherqualitycars.
4.2.2 Market TrendThe Internet:COMPANYisoneofthenewbreedsofintermediariesemerginginthebusinesstobusinessspace.ParallelingsomeofthehottestInternetdarlingssuchasE-Steel.comandCyberstockyard.com,eachsuccessfullyownsaparticularverticalniche.COMPANYisplayingtheroleofbusinesstobusinessfacilitator,similartothelikesofFreemarkets.com,bringingtogetherbuyersandsellerswithouttheresponsibilityofinventoriesanddeliveries.Theseintermediariesserveaselectronichubsintheirrespectivemarkets. Theyarecreatingvaluebyaggregatingbuyersandsellers,creatingmarketplaceliquidityandreducingtransactioncosts. COMPANYhasanopportunitytocaptureanddominatetheonlinespecialtysalvageauctioningmarket.TheMarket:Currentlytheonlinesalvageauctioningmarketisfragmented. Thereisnotonedominantplayercapitalizingontheopportunityandsupplyingthedealerswithanonlinedestinationtoassistwithlocatingtheneededvehicles. Someonewillfillthisvoid.TheCompetition:Offlinesalvageauctioncompaniesaremovingtotheinternet. Theircurrentinfrastructureislimitingtheirabilitytocapitalizeontheopportunity.TheDealers:Dealersarediscontentwiththecurrentoff-lineauctionprocess. Withincreasingtravelcostsandincreasedcompetitiontheyarelookingforanedge.TheInsuranceCompanies:
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Theinsurancecompaniesarelookingforafastermethodofdisposingoftheirsalvagevehicles. Profitmarginsareshrinkingandcompetitionisgettingtougher. Consumersaredemandinglowerinsurancerates. Theinsurancecompaniesneedafaster,cheaper,easierandmoreprofitablemethodofprocessingtheirsalvagevehicles.Theymayenterthismarketthemselvesbuttheyareslowtorespond.
4.2.3 Market GrowthThesalvageautoauctioningindustryisa$3billionindustryintheU.S.Thereisanestimated205millionvehiclestravelingontheroadsintheUS.Some10percentofallcollisionclaimsresultinthevehiclesbeingtotaled,andabout80percentofthesegotoauction.
The540,000specialtyautosthataretotaledintheU.S.everyyearincludevehiclesfrompremiumautomakerssuchasBMW,Porsche,Mercedes,Jaguar,andLexus,aswellasotherlatemodelcars,trucks,SUVs,motorcycles,andmore.TheUSAutoindustryreportsthatin1999theyexperiencedalltimerecordsalesof16.9millioncarsandlighttrucks. BMWrecordedrecordsaleswithan18%increaseoverlastyear. Mercedes-Benzrecordedrecordsaleswithan11%increase. LandRoversaleswereup37%overlastyear.Withmorenewcarsontheroadandspecialtyautomanufacturersrecordingrecordsalesthereisboundtobeanincreaseinspecialtysalvagevehicles. Plustheweatherinthenortheasthasbeenonourside.Legislationwillaffecttheavailabilityofspecialtysalvagevehicles.TheNationalSalvageMotorVehicleConsumerProtectionAct,S.655isinfrontoftheUSSenate. Ifpassed,itwilllowertherequirementsthatdeemacar"totaled." Thislegislationwillresultinanincreaseinthetotalnumberofcarsthatwillbecomesalvagevehiclesandavailabletobeauctioned.
5.0 Strategy and Implementation5.1 Value Propositions
COMPANYwillbeabletosupplythedealersandinsuranceindustrywithspeed,quality,convenience,returnoninvestmentandselection.
5.2 CompetitiveEdgeOtherInternetautosalvageauctionscombinesealed-bidonlineserviceswithlivebiddingatauctionyards,butCOMPANYacceptsinteractive,online,openbiddingonly,sothatpricesaremaximizedandbuyersandsellersknowthestatusofthesaleatalltimes. COMPANYistheonlyfull-serviceonlineauctioneerthatkeepsthebiddingprocesstotallyonline,withnooff-lineauction.
Becausetraditionalauctionyardsarelimitedbygeography,thepricestheybringarenotfullymaximized. COMPANY,however,opensthemarketplacetobuyersandsellersthroughouttheUnitedStatesandtheglobe.
5.3 MarketingStrategy
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COMPANY'smultifacetedsalesandmarketingstrategiesincludetradepublicationadvertising,tradeshowsandconferences,telemarketing,directmail,in-personpresentations,billboardsnearlargeauctionyards,andInternetadvertisingincludingbanneradsandtargetede-mail.TheInsurerswehavechosenasourcurrenttopcustomersareProgressive,Allstate,Farmers,GEICO,Nationwide,andStateFarm. Throughpartnershipswiththesecompanies,COMPANYwillbeabletoexponentiallyincreaseitsinventoryofspecialtysalvagevehiclesandestablishnationalinventorysites.5.3.1 PositioningStatement
COMPANYistheonly100%interactiveonlineauctionsiteontheInternet.Itoffersanew,powerful,moreprofitable,vastlymoreconvenientmethodofspecialtysalvageauctioning.DealerPositioningCOMPANYwillbepositionedasthenumberoneinteractivespecialtysalvagevehiclesite,convenient,open24hoursaday,and7daysaweekwiththebestselection.InsurancePositioningCOMPANYwillbepositionedastheeasy,effortless,totallyinteractivesitethatprovidethefastestturnwiththehighestreturn.
5.3.2 PricingStrategyTheinsurancecompanieswillnotbechargedafeeforparticipatinginourprogram.Thebuyerischargeda5%feeinadditiontotheagreeduponauctionprice.
5.3.3 PromotionStrategyCOMPANYstrivestohelpallsegmentsofthespecialtysalvageindustryrealizetheirfullproductivityandprofitabilitypotentialthroughtechnology,ecommerceandinformationmanagement.
5.3.4
DistributionStrategy
COMPANYaspirestoestablishanationwidepoolofsalvagevehiclesthroughpartnershipswiththetopnationalinsurancecompanies. VehiclescanbeviewedandpurchasedfromlocalitiesthroughouttheUSandtransportedtodesireddestinationviaaffiliationswithnationalautocarriers.
5.3.5 MarketingProgramsCOMPANY'sgoalistolockupsupplyoftotaledspecialtyvehiclesfromInsuranceCompanies(supply). Createawareness,preferenceandactionbydealersanddismantlers(buyers). TheCOMPANYisprojectingtosecure2000registereddealersanddismantlersbyJune2000.
Advertising:COMPANYwillcreatebrandrecognitionthroughaggressiveadvertisingintradepublicationssuchastheLocator(dealersanddismantlers)andClaimsinsurancecompanies).
Thisisaveryfinitemarket. Theinsurancecompaniesanddealerhaveonlyahandfullof"bibles"theydependuponforinformationrelatingtoindustrynewsandavailableinventories. Thisallowsforaminimaladvertisingexpenditurewithaneffectivereach.Outdooradvertisinginselectmarketsaroundliveauctionlocations.
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SeeAppendixAforsampleofadvertisements.Promotions:COMPANYwilldependuponpersonalsellingasamethodofpromotion. Facetofaceinteractionandtelemarketingwiththeinsurancecompaniesandthedealersanddismantlers. Hightouchandhighcustomerservicetodevelopthecreditability,loyalty,recognitionandrelationships.
Instituteafour-stepsalescallprogram:1. Directmailpostcard/flyers/pressreleases2. Telemarketingtoschedulethesalescall3. SalesCall4. Follow-upcall
Incentiveprogramswillbeinitiatedtoencouragedealersanddismantlerstoregisteronthesite. Wewilldistributetshirts,coffeemugs,mousepads,etc.tothosethatregister.Thebenefitofthisprogramistwofold:1)wegivethedealersanddismantlersanextrareasontotakethetimetoregister,2)COMPANYwillbeontopoftheirmindsastheydrinktheircoffee,surfthenet,getdressedinthemorning. ConstantremindersandreinforcementthatCOMPANYistheplacetolocatespecialtysalvagevehiclesontheInternet.
Public Relations:PromoteCOMPANY asthe dominateplayer, profitable,firstmover,leader,innovatorandthedestinationforonlinespecialtysalvage auctioning.RecruitanInternetexperiencedPRfirmtoaggressivelyattackthetradepressonlineandoff-linerelatingtoventurecapital,insurancecompaniesandthedismantlers,dealertrade.
AggressivePRpushtocreateawarenessandcreditabilitywithminimalcost.Focusonlocalizednewspaperandindustrypublications.PromotetheCOMPANYconceptoverthenext6monthsasCOMPANYgainsmomentuminnationalpublicationssuchasUSAToday,WallStreetJournal,andonlinethroughtheAPwire.TargetselectTradeAssociationssuchasAmericanSalvagePoolAssociationCertifiedAutomotivePartsAssociation,AmericanInsuranceServicesGroup,ClaimsandAllianceofAmericanInsurers.SeeAppendixBforsampleeditorial.Direct Mail:Mailbrochures,flyers,postcards,presskitstoinsurancecompanies,registeredcustomers,prospectivedealersanddismantlers,tradeassociationsandtradepublications.
InsuranceCompanies:Sendflyersandpostcardstogainrecognition,driveinterestandtraffic. Promotesuccessstoriesthroughpostcards:"SoldXcarwith$XreturnoverXtimeperiod." Partofthefour-stepsalescall.Dealers:Sendpostcardspromotingspecificspecialtyvehiclethatareavailable.Frequentmailingstoourcurrentaccountlistaswellasprospects. Promotethesuccessesaswellasparticularvehiclesofinterest. Encourageregistration.
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Direct Email:InsuranceCompanies:Promotethesuccesswehaveexperiencedwithexistinginsurancecompaniesbyprovidinghigherreturnsandfasterturns.AffirmtheirdecisionstohaveutilizedCOMPANYortopromotewhytheyaremissingoutontheopportunity.
Dealers:Pushavailableproducttoregisteredusersbasedontheirpreferencesascapturedatthepointofregistration. Proactivelyinformthemofwhatisavailableonthesite.
TradeShows and LiveAuctions:AttendRegionalandNationalshowssuchas:
AmericanSalvagePoolAssociation April26-30FourStatesRecyclersExpo July27-29AutomotiveRecyclersAssociationConvention November8-11Nace December7-10
InfiltratethelocalandnationalliveauctionstopromoteCOMPANY.Distributestickers,mugs,t-shirts,brochuresandpresskits.Telemarketing:Thesalesforcewillnothaveachancetovisiteverycustomerandprospect.COMPANYwillutilizeateamoftelemarketersfromMarketInsights,aprestigioustelemarketingfirm,tolaunchanaggressivecampaignstartingonMarch1.Insurance Companies:Pre-salescalls for thesale representatives. InformcompaniesofthebenefitsofusingCOMPANYasamethodofdisposingoftheirsalvagevehicles.Higherreturns,fasterturnsandeaseofoperation.Dealers: Encouragedealerstoregisteronthesite. Promotethevehicleswehaveavailable.
OnlineAdvertising and Promotion:CrosspromotethroughlinksandbannersonotherrelatedInternetsitesuchasSalvageAuto.com. SecureourpositioninkeyworksearchesinYahoo,Dogpile,Excite,Iwonetc.
5.4 Sales StrategyThesalesstrategyforCOMPANYisbaseduponsecuringinventoryfromtheparticipatingInsurancecompaniesanddrivingqualifiedbuyerstothewebsite.AllforecastsarebaseduponmarketsizeandCOMPANY'sabilitytopenetratethemarket.Annualprojectedfeerevenues(gross)areillustratedintheSalesForecast.Note: Over30insuranceofficesinPennsylvaniaarecurrentlyactivewithCOMPANY. Initialmonthlyrevenuesarebaseduponcurrentandhistoricauctionrevenues.Onanaveragebasis,therevenueprojectionsforspecialtysalvagearebasedupona$5,000sellingpricepervehicle.AdditionalrevenueswillbegeneratedbyAdvertisingsalesandreferralfeesfromstrategicpartnershipswithtransportcompanies.Advertisingsaleswillbeexecutedbyanoutsourced
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advertisingsellingfirm. Transportationrevenuesarebasedona5%referralfee. RevenuesbaseduponadvertisingandtransportationwillshowupinMarchof2000.5.4.1 Sales Forecast
Thefollowingsalesforecastsarebaseduponthepremisespreviouslypresented.Managementfeelstheseforecastsarehighlyattainable.
350,000,000
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
-560,353 4,990,875
293,134,774
57,772,771
FY1999 FY2000 FY2001 FY2002700,000
600,000576,000
500,000
400,000
300,000
200,000
100,000
82,500
288,000
-
FY2000 FY2001 FY2002
900,000
800,000762,150
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
6,488
112,657
FY2000 FY2001 FY2002
5.4.2.1 SalesProgramsCOMPANYwillimplementanincentiveprogramforitssalesrepresentatives.Withtheprogram,repswillencourageInsuranceCompaniestolisttheirsalvageinventorywithCOMPANY,andkeeptheinventorypreviouslysecuredonthewebsite.Therepswillreceive$20(2000),$10(2001)and$5(2002)foreveryspecialtycarlistedonthesite.
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5.5 StrategicAlliancesCOMPANYwillcontinuetoformanddevelopstrategicallianceswithestablishedSalvageIndustry,MarketingandTechnologyorganizationstostrengthentheorganizationalinfrastructureandbetterservethecustomers.Salvage IndustryWithinthesalvageindustry,COMPANYhasidentifiedtheneedtoactivelypursuestrategicpartnershipsintheareasofTowingandTransport. Partnersbeingpursuedinclude:
Towing:
AAA RegionalTowingNetworks
Transportation:
SchultzInternational/AcceleratedExpress(www.transportautos.com).AleadingglobalvehicletransportCOMPANY. Clientsincludeprivateindividuals,fleets,moviestudios,dealerships,banks,fortune500companies,exporters,city,stateandfederalgov'ts,military,leasingcompaniesandequipmentmanufacturers.TNT(www.tnt-inc.com). Leadingspecialistsinautomotivetransport. TNThasnationwideservice,withover80servicelocationsacrosstheUnitedStateswithmostinmajorcities,andcomputerizedvehicletracking.CentralDispatch.com.CentralDispatchisarevolutionaryonlinetransportCOMPANYwithadatabasethatredefinesthewayautotransportersdobusinesswithcarcarriersnationwide.ItsdatabaseofAutoTransportloadshelpscarriersfindloadsenteredbybrokers,dealers,autoauctions,manufacturersandrentalagenciesacrosstheU.S.andCanada.
MoveCars.com. MoveCars.comistheInternetDirectoryofAutoTransportCompanies,linkingbuyerstovehicleshippingcompaniesthroughouttheU.S.andCanada.Technology:
COMPANYiscurrentlyutilizingOpenSiteTechnologies,Inc.foritsauctionfunctionality.OpenSiteistheleaderinonlineauctionsdrivingthedynamiccommercerevolution.OpenSite'spowerfulsuiteofproducts,andhostingandprofessionalservicesenablesCOMPANYtocreateitsbranded,Internet-baseddynamiccommercesite. OpenSitebringstogetherbuyersandsellers,helpingbusinessesdynamicallymanageinventory,createsaleschannels,attractcustomers,andtestmarketnewproductstocreateefficientmarketsforgoodsandservices.COMPANY'sInformationTechnologypartnerisaleadingproviderofinnovativetechnology-basedsolutions. Micros&MorewillfullycustomizeeveryproductandservicetomeetCOMPANY'sInformationTechnologyrequirements,automatingthecriticalfunctionstoreducecostsandincreaseefficiencies. Utilizingtheskillsandexperienceofitsworldclasstechnologypartners,COMPANYisdevelopingantechnologyinfrastructurethatwillsupportthegrowthandvolumethattheCOMPANYexpects.
6.0 Management Summary6.1 OrganizationalStructureREMOVEDFORCONFIDENTIALITYPURPOSES
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6.2 Management TeamREMOVEDFORCONFIDENTIALITYPURPOSES6.3 Management TeamGaps
COMPANYhassecuredkeymanagementpersonneltoreach theCOMPANY'sgoals in themarketing,legalandInformationTechnologyarenas. GapsinthemanagementteamwillbefilledbyMayof2000. Thescheduleforsecuringthoseindividualsisasfollows:Position Name Start DateCEO TBA May,2000VPSales TBA March,2000VPOperations TBA May,2000VPFinance/CFO TBA May,2000Webmaster TBA March,2000SalesManager TBA March,2000CustomerServiceManager TBA April,2001
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7.0 FinancialPlans7.1 Break-EvenAnalysis
Break-EvenAnalysisNumber of Months 36Projected Sales $375,666,012Less Variable Expenses
CostofVehicles $356,024,508SalesIncentives $504,287AdCommissions $189,300
WebsiteDevelopmentandMaintenance $82,400Labor $2,082,332
InternetService $25,270ContributionMargin $19,344,535ContributionMargin RatioFixed Expenses
5%
Salariesandwages $1,701,910Employeebenefits $260,461Payrolltaxes $297,939Rent $42,500
Utilities $19,251
Insurance-Other $19,000
Travel $127,000
Meals&Entertainment $134,724AutoExpense $30,019Telephone $69,317
Postage $85,564
Officesupplies $34,350Marketing/promotion $2,655,069
Professionalfees $315,165
LicenseandFees $3,400Bankcharges $50,400Hardware $96,000
Software $117,250
Depreciation $57,528
Miscellaneous $35,500
Total Fixed Expenses $6,152,348Break-Even Sales $119,477,046Monthly Break-Even Sales $3,318,807Profit During Period $13,192,187
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7.2
Projected
Profit
&Loss
Income Statement - FY2000
Period Starting: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Totals
Sales
Sales
Vehicles 86,255 51,365 175,000 175,000 210,000 252,000 327,600 425,880 553,644 719,737 935,658 1,216,356 5,128
Auction Fees 0 0 8,750 8,750 10,500 12,600 16,380 21,294 27,682 35,987 46,783 60,818 249
Advertising 0 0 450 1,050 2,550 6,450 12,000 12,000 12,000 12,000 12,000 12,000 82
Transportation 0 0 228 228 273 328 426 554 720 936 1,216 1,581 6
Miscellaneous Income 1,755 500 500 500 500 500 500 500 500 500 500 500 7
TotalSales 88,010 51,865 184,928 185,528 223,823 271,878 356,906 460,228 594,546 769,160 996,158 1,291,255 5,474
Less CostofGoods SoldCostof Vehicles 79,127 46,960 175,000 175,000 210,000 252,000 327,600 425,880 553,644 719,737 935,658 1,216,356 5,116
Sales Incentives 0 0 824 824 988 1,186 1,542 2,004 2,605 3,387 4,403 5,724 23
AdCommissions 0 0 90 210 510 1,290 2,400 2,400 2,400 2,400 2,400 2,400 16
Website Development and Maintenance 200 200 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 10
Labor 582 500 1,667 1,667 35,000 35,000 35,000 35,000 35,000 35,000 36,667 36,667 287
InternetService 170 0 200 200 200 500 500 500 500 500 500 500 4
TotalCostofGoods Sold 80,079 47,660 178,780 178,900 247,698 290,976 368,042 466,784 595,149 762,024 980,628 1,262,647 5,459
Gross Profit 7,931 4,205 6,147 6,627 (23,875) (19,098) (11,136) (6,556) (603) 7,136 15,530 28,608 14
OperatingExpenses
Salaries and wages 2,538 2,538 27,333 27,333 35,667 35,667 35,667 35,667 35,667 35,667 37,750 37,750 349
Employee benefits 231 231 3,500 3,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 83
Payroll taxes 215 215 5,500 5,500 10,708 10,708 10,708 10,708 10,708 10,708 11,177 11,177 98
Rent 500 500 550 550 550 550 550 550 550 550 550 550 6
Utilities 125 126 100 100 100 100 100 100 100 100 100 100 1
Insurance-Other 0 0 100 100 100 100 100 100 100 100 100 100 1
Travel 0 0 1,500 1,500 2,000 2,000 4,000 4,000 4,000 4,000 4,000 4,000 31
Meals & Entertainment 223 0 250 250 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 8
AutoExpense 119 200 100 100 275 275 275 275 275 275 275 275 2
Telephone 117 200 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 15
Postage 264 300 1,000 1,000 1,000 1,000 1,500 1,500 1,500 1,500 1,500 1,500 13
Office supplies 175 175 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 10
Marketing/promotion 618 8,700 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 259
Professional fees 65 100 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 75
License and Fees 0 0 100 100 100 100 100 100 100 100 100 100 1
Bank charges 200 200 200 200 200 200 200 200 200 200 200 200 2
Hardware 0 0 12,000 0 6,000 0 0 0 0 0 6,000 0 24Software 0 0 100,000 250 250 250 250 250 250 250 250 250 102
Depreciation 0 0 3,111 1,028 1,028 1,028 1,028 1,028 1,028 1,028 1,194 1,194 12
Miscellaneous 0 500 500 500 500 500 500 500 500 500 500 500 5
TotalOperatingExpenses 5,390 13,985 190,844 77,011 103,978 97,978 100,478 100,478 100,478 100,478 109,197 103,197 1,103
OperatingIncome 2,541 (9,780) (184,697) (70,384) (127,853) (117,076) (111,614) (107,034) (101,081) (93,342) (93,667) (74,588) (1,088
InterestIncome 397 210 307 331 (1,194) (955) (557) (328) (30) 357 776 1,430
InterestExpense (139) (74) (108) (116) 418 334 195 115 11 (125) (272) (501)
Total NonoperatingIncome (Expense) 258 137 200 215 (776) (621) (362) (213) (20) 232 505 930
Income (Loss) Before Taxes 2,799 (9,643) (184,497) (70,168) (128,629) (117,697) (111,975) (107,247) (101,101) (93,110) (93,162) (73,658) (1,088
Income Taxes 1,176 (4,050) (77,489) (29,471) (54,024) (49,433) (47,030) (45,044) (42,462) (39,106) (39,128) (30,937) (456
NetIncome (Loss) 1,623 (5,593) (107,008) (40,698) (74,605) (68,264) (64,946) (62,203) (58,638) (54,004) (54,034) (42,722) (631
Cumulative NetIncome (Loss) 1,623 (3,969) (110,978) (151,676) (226,280) (294,545) (359,490) (421,694) (480,332) (534,336) (588,370) (631,092) (631
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IncomeStatement FY2000 FY2001 FY2002
Sales
Vehicles 5,128,495 57,772,771
AuctionFees 249,544 2,888,639 293,134,774Advertising 82,500 288,000 14,656,739
Transportation 6,488 112,657 576,000
Miscellaneous Income 7,255 762,150TotalSales 5,474,282 61,062,067 309,129,663CostofGoodsSold
Costof Vehicles 5,116,962 57,772,771 293,134,774SalesIncentives 23,486 135,936 344,864AdCommissions 16,500 57,600 115,200WebsiteDevelopment and Maintenance 10,400 24,000 48,000Labor 287,748 559,583 1,235,000
InternetService 4,270 9,000 12,000TotalCostofGoodsSold 5,459,367 58,558,891 294,889,839GrossProfit 14,915 2,503,176 14,239,825OperatingExpenses
Salariesand wages 349,244 539,667 813,000Employee benefits 83,461 157,000 20,000Payroll taxes 98,033 159,906 40,000Rent 6,500 12,000 24,000
Utilities 1,251 6,000 12,000
Insurance-Other 1,000 6,000 12,000
Travel 31,000 48,000 48,000
Meals& Entertainment 8,724 30,000 96,000AutoExpense 2,719 3,300 24,000Telephone 15,317 18,000 36,000
Postage 13,564 24,000 48,000
Office supplies 10,350 12,000 12,000Marketing/promotion 259,318 627,782 1,767,969
Professional fees 75,165 120,000 120,000Licenseand Fees 1,000 1,200 1,200Bankcharges 2,400 12,000 36,000Hardware 24,000 45,000 27,000
Software 102,250 3,000 12,000
Depreciation 12,694 18,917 25,917
Miscellaneous 5,500 6,000 24,000
TotalOperatingExpenses 1,103,490 1,849,772 3,199,086OperatingIncome (1,088,575) 653,404 11,040,739
InterestIncome 746 32,670 552,037InterestExpense (261) (11,435) (193,213)
TotalNonoperatingIncome(Expense) 485 21,236 358,824Income(Loss)BeforeTaxes (1,088,090) 674,640 11,399,563IncomeTaxes (456,998) 283,349 4,787,816NetIncome(Loss) (631,092) 391,291 6,611,747CumulativeNetIncome(Loss) (631,092) (239,801) 6,371,946
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7.3 Exit PlanCOMPANYwilllikelygothroughtworoundsoffunding.Thefirstwillbebetween$1and$2million.ThisstagewillinvolvebuildingtheCOMPANY'sinfrastructurewithkeypersonnelandtechnology,securingrelationshipswithinsurancecompaniesandtowingnetworks,andrampingupmarketingefforts.Atthispoint,asecondstageoffundingintherangeof$5-$10millionwillbesought.ThisfundingwillcompletethenationwiderolloutofCOMPANY,expandthemarketingandadvertisingcampaignsforboththeinsurancecompaniesanddealers/dismantlers,andexpandintotheRepossessedandOff-leasemarkets.IndustrytrendscontinuallychangeandCOMPANY'sstrengthliesintheabilitytoprovidefullserviceneedstotheinsurancecompanies.COMPANYintendstobecometheonestopshopwiththeabilitytoprovidethehighlevelofpersonalcustomerservicethathasbecomeitsmantra.
Currentindustrytrendsillustratethatthegreatestthreatfacingtraditionalauctionsisthethreatoftheinsurancecompaniesmarketingsalvagedvehiclesdirectlytothebuyers. Suchinsurancecompanies,desiringtheuniquecharacteristicsandcustomerbaseofCOMPANY,arealllikelycandidatestomergerwithoracquireCOMPANY.AsecondandalsolikelyexitplanwouldbetheoptiontoconstructaninitialpublicofferingoncetheCOMPANYhassuccessfullylaunchedandbecomeestablishedinthesalvagemarket.ThethirdoptionforCOMPANYwouldbetoinstitutearoll-upwithrelatedcompanieswithinthesalvageindustry,partsindustry,andverticalauctioningorebusinesssolutions.Dependingoninvestmentmarkettrendsatanytimeinthefuture,eitheroneoftheseexitplanscouldbeimplementedatanyphaseinthedevelopmentoftheCOMPANY.