Small Business and New Venture Management

This document provides an executive summary of Paul Motor Garage, a start-up automotive repair company. It discusses the company's objectives, marketing strategies, competition, and financial plans. The document also includes a management summary and a human resource plan.

Running head: SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Small Business and New Venture Management
Name of the Student
Name of the University
Authors Note
Course ID

1SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Executive Summary:
Paul Motor Garage is the start-up automotive repair company where the owner has the
experience of working in the auto mechanics repair shops. The ultimate aim of the Paul
Motor Garage is to deliver the clients with the better services than those that are currently
provided in the market by the competitors. The first three year objectives of the business is to
increase the sales revenue on a steady rate. The company would aim to institute a program
with the help of superior customer evaluation experience. Considering the marketing
strategies of the Paul Motor Garage, the owner would basically remain dependent on the
word to mouth strategies to build the name and reputation of the business in the marketplace.
The company will make continuous contact with the clients in order to keep them up-to-date
regarding the development of their automobile and the repair work progress. It also aims to
hiring the well-informed mechanics that are approachable, client oriented and would take the
time of explaining the customers regarding the complicated nature of the business and work.
The business aims to attain the net profit of 8 per cent in first year of its operation and looks
forward to attain the net profit of 12 per cent in the span of three years.

2SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Table of Contents
Introduction:...............................................................................................................................5
Background:...............................................................................................................................5
Short business overview:........................................................................................................5
External Factors - Present market overview:.............................................................................5
Development Opportunity and goal(s):......................................................................................6
Company objectives:..............................................................................................................6
Keys to success:.....................................................................................................................6
Mission:..................................................................................................................................7
Development plans:....................................................................................................................7
Market Analysis Summary:....................................................................................................7
Competition and Buying Patters:...........................................................................................7
Major competitors:.................................................................................................................7
Business participants:.............................................................................................................8
Strategy implementation summary:...........................................................................................8
Competitive edge:..................................................................................................................8
Positioning Statement:...........................................................................................................9
Marketing strategy:....................................................................................................................9
Promotional strategy:...............................................................................................................10
Pricing strategy:.......................................................................................................................10
Sales forecast:...........................................................................................................................10

3SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Management summary:............................................................................................................11
Human resource plan:..............................................................................................................11
Financial plan:..........................................................................................................................11
Start up Highlights:..............................................................................................................11
Sales highlight:.....................................................................................................................13
Break-even Analysis:...........................................................................................................13
Recommendation:....................................................................................................................14
Conclusion:..............................................................................................................................14
References:...............................................................................................................................16
Appendix:.................................................................................................................................18
Profit and Loss Account:......................................................................................................18
Cash flow forecast:...............................................................................................................19
Projected balance sheet:.......................................................................................................20
Projected Financial Ratios:..................................................................................................20

4SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Introduction:
Paul Motor Garage is the start-up business that is engaged in the auto mechanics. The
owner here has the vision of opening up their own business and providing better-quality
service for their consumers than the competitors. The start-up cost for the business is
acquired with the help of exploration that is conducted in Melbourne area with the other
small mechanic’s shops that have begun their own business (Drucker 2014). Majority of the
equipment for the business is tools, air compressors etc. are at the moment under the control
of the associates. The company would be entirely a sole proprietorship business that will be
registered in Melbourne. The company will be having the facilities on the 1312 avenue in
Melbourne a neighbourhood of Ballard. The business would contain the garage, office space
and the storage space for the tools parts etc. Paul Motor Garage would be seeking loan from
the banks to finance the business operations. The owners would be putting their capital as the
equity.
Background:
Short business overview:
Paul Motor Garage would be delivering a wide variety of the auto repair shops. This
would comprise of the scheduled maintenance, alignment of the wheels, tires and rims. Other
services such as repairs of brake, transmission and comprehensive engine repair would be
provided by the company as well. Each and every job will be based on the reservation basis
even though the business will be accepting the small percentage drive in the repair works.
External Factors - Present market overview:
The present automotive repair industry appears to be tremendously competitive.
Respectively every business inside this industry has the high amount of costs, lower margins
and higher concentration of competition (Chatterji, Glaeser and Kerr 2014). The suppliers in

5SMALL BUSINESS AND NEW VENTURE MANAGEMENT
the market has the greater ability of setting price and discussing the charges relating their
goods and services for repairing their workshops. This is because of dealers that earn the
highest amount of cash from repairs shops that are big auto part businesses. These businesses
are considered to be more combined than the automotive repair industry and invest huge
amount of money with limitless number of clients.
Development Opportunity and goal(s):
Company objectives:
The objective of the company over the next three years are given below;
a. Increasing the sales revenue progressively over the three years
b. Introducing the program of the higher customers through the provision laborious
assessment of the service knowledge.
c. Hiring four additional mechanics
Keys to success:
In the automotive repair industry, the business constructs its client’s base by one
consumer at a time and mostly with the help of word of mouth marketing (Galindo and
Méndez 2014). As a result of this, the significance for attaining business success for Paul
Motor Garage is given below;
a. Higher quality work
b. Continuous contact with the clients helps in making them well-versed regarding the
progress of their vehicle and the repair work progress.
c. Hiring the conversant mechanics that are welcoming, client oriented and would take
the time of clarifying the consumers regarding the complicated nature of the business
(Sahut and Peris-Ortiz 2014).

6SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Mission:
The mission of the Paul Motor Garage is offer higher quality, convenient as well as
complete motorized repair at the lower cost. An imperative part of the company is the trust in
the business (McDaniel 2014). The aim of the business to provide full satisfaction to its
customer in respect to the quality, openness, time towards the conclusion as well as
discovering the new ways of exceeding the anticipation of the clients.
Development plans:
Market Analysis Summary:
Paul Motor Garage will be having the capacity of servicing any type of vehicles on
the road that includes the motorcycles and campers. The probable customers of the company
include each and every household in the Melbourne that are having one of more vehicles
(Piperopoulos 2016). The industry would not have the seasonality which will be effecting its
business.
Competition and Buying Patters:
While majority of the customers would look forward to purchase the automotive
repair services the main concern will be forming an association of trust among themselves
and the service supplier. There are several people inside the country that have experienced or
have suffered bad services in the market (Wu and Huarng 2015). However, as several clients
are looking forward to pay high money for the mechanic they require the quality job and
understand their needs.
Major competitors:
The main participants in the business for Paul Motor Garage is the higher quality
automobile franchise and registered service repair station. This comprises of the Toyota,
Chrysler and other well-known brands. These rivals have service capacity and the have

7SMALL BUSINESS AND NEW VENTURE MANAGEMENT
dominating market position (Phillips et al. 2015). These competitors have greater market
share and have the advantage of individually skilled workers, access to the lower valued parts
and tools and deeper finance. For Paul Motor Garage other competitors include the Dave
repair, Mechanic Auto, and Auto Kirkland. The advantage of this shop is that provide cost
leadership strategy because of low personnel costs. Paul Motor Garage would initially look
forward to compete with the lower cost strategy. Similarly, it would look to forward to
provide a higher level client satisfaction by having laborious customer quality control.
Business participants:
The industry of automotive repair is considered to be very much competitive. There
are several small suppliers which any business in this business is facing a completely
competitive environment. It is very much challenging to form a distinguishing or niche, plan
in this surroundings (Karlsson and Warda 2014). Paul Motor Garage would look to seek a
lower cost role. When it is attained the organization have faith in that it is sufficient to build
reputation for its services and profit making customer base.
Strategy implementation summary:
Competitive edge:
The competitive edge of the automotive remains in the objective of its associates that
better understanding of the situation than majority of the competitors that when a customer
comes for service visit it simply does not implies repairing the car of clients (Matthews and
Brueggemann 2015). It rather involves the complete service experience from conversation
with mechanics to first time driving. The long term profitability of the Paul Motor Garage is
the repeat customers that would find the company’s service as the excellent experience. Paul
Motor Garage would look forward to assess every aspect of the services in order to seek
greater ways of improving the customer contentment. All the staffs would be thoroughly

8SMALL BUSINESS AND NEW VENTURE MANAGEMENT
skilled and retrained to think regarding the customer satisfaction for creating a self-sustaining
company.
Positioning Statement:
Paul Motor Garage aim is to be the quality leader in the service involvement among
the all the automotive repair companies that are operating in the market with the low cost
plan. Once the company is successful in creating its reputation by bringing new network of
referrals at business the company would plan to reassess its plan and positioning inside the
market to understand if there are any difference plan is feasible (Kuratko 2016). If it is so
then this would enable Paul Motor Garage to increase the prices and upsurge the profit
margins in respect to its competitors. This would in turn help in leveraging the long term
growth until Paul Motor Garage reaches the local possibility of operations.
Marketing strategy:
The business current has the modest advertising programs. This includes the following;
a. Flyers
b. Direct mailing
c. Advertisement in the newspaper
d. Yellow pages
e. Referrals with the help of other local business
Each of the market approach that has been taken is considered advantageous because
of the lower cost and creating services relating to the awareness. The long run marketing
goals of Paul Motor Garage is to make use of local radio and television advertisements for
promoting its awareness among the customers.

9SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Promotional strategy:
The main owners of Paul Motor Garage are anticipating that large number of pre-
existing customers may have the desire of switching to Paul Motor Garage in order to keep
the services of their private mechanics (Nielsen et al. 2017). This will help in offering
adequate amount of income till Paul Motor Garage can create its market reputation and
witness its marketing program attaining success. To meet this promotional strategy it would
take the shape of flyers, direct mailers, price discounts and ads in the paper and.
Pricing strategy:
Paul Motor Garage operates in the entirely modest atmosphere where every company
should be a price taker. The business does not have any ability of influencing the price in the
market of its services (Carayannis, Samara and Bakouros 2015). Irrespective of how many
vehicles are repaired. In this situation, the marginal income is equivalent to the value
charged. As the demand curve is fundamentally flat, Paul Motor Garage can service the
vehicles at the overall capability without causing an effect on the price.
Sales forecast:
As the automotive repair industry is entirely the work-shop oriented atmosphere, it is
difficult to make an exact projection of sales. For work-shops every product and service is
designed to suit that unique job and it is only introduced once the order is made.
Nevertheless, a sales forecast is made based on the number of clients the owner of Paul
Motor Garage can attract from his previous experience (Morgan et al. 2019). The sales
forecast is made on the basis of present market price and the cost of conducting business. For
major part of the season, sales for the automobile repair companies is considered steady all
through the year and portray little seasonality.

10SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Management summary:
The owner here of Paul Motor Garage commended working as the trainee mechanic
in a local shop. From that time onwards the owner here has worked in numerous motorized
shops and franchises and has many credentials in the vehicle repair shops. The owner here
also attended the ITT technical institute from there he has received a certificate in the
electronic repairs. The owner have also worked in the Ford Dealership as the automotive
electrical and electronic system (Fahy and Jobber 2015). With the objective of expanding the
skills the owner here has the certificate of mechanics and ever since then the owner have
become a certified mechanic in several automotive fields.
Human resource plan:
Paul Motor Garage initial human resource requirement would be comprising of the
four full time mechanics. The company would look forward to hire the part time office
manager to look after the administrative work. In addition to this, Paul Motor Garage would
look forward to hire two entry level mechanics inside the span of two months following the
commencement of the business operations. Paul Motor Garage would hire the accounting and
bookkeeping staffs as well as marketing staff would also be hired. The ultimate goal of the
company is to have its five full time completely proficient mechanics at the new facility
along with this a full time office manager (Baker and Saren 2016). However, the owner of
Paul Motor Garage have presently decided to wait for the future development before
ascertaining the correct time of bringing additional staffs.

11SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Financial plan:
Start up Highlights:

12SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Sales highlight:
Sales Profit Before tax Pretax Net Margin
Year 1 1,75,000 14,750 8%
Year 2 1,92,500 22,475 12%
Year 3 2,11,750 19,260 9%
Year 1 Year 2 Year 3
0
5,000
10,000
15,000
20,000
25,000
0%
2%
4%
6%
8%
10%
12%
14%
Profit Before tax
Pretax Net Margin
Figure 1: Figure representing profit before tax and net margin
(Source: As Created by Author)

13SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Break-even Analysis:
Paul Motor Garage break-even analysis is completely based on the normal organization’s
running expenses inside the manufacturing which contains the payroll and the fixed costs that
would be incurred on the rent, utilities etc.
80000 100000 120000 140000 160000 180000 200000
0
20000
40000
60000
80000
100000
120000
48924.5
57674.5
9643.875
19287.75
38575.5 38575.538575.5 38575.5
87500
96250
48219.375
57863.25
Contribution Fixed Cost Profit
Figure 2: Break-even point
(Source: As Created by Author)
The following are the assumptions relating to the financial plan of Paul Motor Garage;
a. The sales revenue are anticipated to increase by 15 per cent in the span of three years
b. The company would aim for the 10 per cent return on capital employment in the span
of three years.
c. The company aims to attain the net profit of 8 per cent in first year of its operation
and looks forward to attain the net profit of 12 per cent in the span of three years.
Recommendation:
Paul Motor Garage is recommended to make use of the technological revolution in the
computers which will help in improving the capabilities of diagnosing and repairing the

14SMALL BUSINESS AND NEW VENTURE MANAGEMENT
vehicles of clients. By adopting the cutting edge of technology the business would be better
able to offer to new service through improved technology.
Conclusion:
The analysis can be concluded by stating that the only way to have a successful
business in the automotive industry is to offer customers with the low cost leadership services
to aggressively apply in all aspects of the business. This would help in building customer
relations in those circumstances where the substituting cost is raised.

15SMALL BUSINESS AND NEW VENTURE MANAGEMENT
References:
Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
Carayannis, E.G., Samara, E.T. and Bakouros, Y.L., 2015. Innovation and entrepreneurship:
theory, policy and practice. Springer.
Chatterji, A., Glaeser, E. and Kerr, W., 2014. Clusters of entrepreneurship and
innovation. Innovation Policy and the Economy, 14(1), pp.129-166.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Fahy, J. and Jobber, D., 2015. Foundations of marketing.
Galindo, M.Á. and Méndez, M.T., 2014. Entrepreneurship, economic growth, and innovation:
Are feedback effects at work?. Journal of Business Research, 67(5), pp.825-829.
Karlsson, C. and Warda, P., 2014. Entrepreneurship and innovation networks. Small Business
Economics, 43(2), pp.393-398.
Kuratko, D.F., 2016. Entrepreneurship: Theory, process, and practice. Cengage Learning.
Matthews, C.H. and Brueggemann, R., 2015. Innovation and entrepreneurship: A
competency framework. Routledge.
McDaniel, B.A., 2014. Entrepreneurship and Innovation: An Economic Approach: An
Economic Approach. Routledge.
Morgan, N.A., Whitler, K.A., Feng, H. and Chari, S., 2019. Research in marketing
strategy. Journal of the Academy of Marketing Science, 47(1), pp.4-29.
Nielsen, S.L., Klyver, K., Evald, M.R. and Bager, T., 2017. Entrepreneurship in theory and
practice: paradoxes in play. Edward Elgar Publishing.

16SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Phillips, W., Lee, H., Ghobadian, A., O’Regan, N. and James, P., 2015. Social innovation and
social entrepreneurship: A systematic review. Group & Organization Management, 40(3),
pp.428-461.
Piperopoulos, P.G., 2016. Entrepreneurship, innovation and business clusters. Routledge.
Sahut, J.M. and Peris-Ortiz, M., 2014. Small business, innovation, and
entrepreneurship. Small Business Economics, 42(4), pp.663-668.
Wu, C.W. and Huarng, K.H., 2015. Global entrepreneurship and innovation in management.

17SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Appendix:
Profit and Loss Account:
(4) PROFIT AND LOSS FORECAST
Preop
Year 0 1 2 3
Revenue 0 1,75,000 1,92,500 2,11,750
Cost of sales 0 95,000 1,09,250 1,25,638
Gross profit 0 80,000 83,250 86,113
Gross Margin 1,64,675 1,76,768 1,98,268
Expenses/overheads
Business Insurance 7,500 8,250 9,075
Wages and salaries 8,000 8,800 9,680
General expenses 6,500 7,150 7,865
Accountant Fees 6,500 7,150 7,865
Payroll Tax 2,750 3,025 3,328
Utilities 15,000 16,500 18,150
Sales and Marketing 4,500 4,950 5,445
Postage & Telephone 1,000 1,100 1,210
Repairs and Maintainance 1,250 1,375 1,513
Preliminary expenses 2,250 2,475 2,723
Capital Improvement Cost 10,000 11,000 12,100
Total expenses/overheads 65,250 60,775 66,853
Profit before tax 14,750 22,475 19,260
Tax @ 30% 4,425 6,743 5,778
Before tax net margin 8% 12% 9%
Profit after tax 10,325 15,733 13,482
Transfer to reserves 14,750 22,475 19,260
ROC 10% 16% 13%

18SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Cash flow forecast:
(2) CASHFLOW FORECAST
Preop
Year 0 1 2 3
CASH INFLOWS
Cash from Sales 1,75,000 1,92,500 2,11,750
Directors loans 50,000 50,000 50,000 50,000
Capital Employed 1,00,000 1,00,000 1,00,000 1,00,000
Other cash inflows
TOTAL CASH INFLOW 1,50,000 3,25,000 3,42,500 3,61,750
CASH OUTFLOWS
Payments for materials 95,000 1,09,250 1,25,638
operating expenses ( ) 0
Business Insurance 0 7,500 8,250 9,075
Salaries 0 8,000 8,800 9,680
Accountant Fees 0 6,500 7,150 7,865
Payroll Tax 0 2,750 3,025 3,328
Supplier contracts 0 15,000 16,500 18,150
Sales and Marketing 4,500 4,950 5,445
Postage & Telephone 1,000 1,100 1,210
Brouchers 1,250 1,375 1,513
Logo Designs 2,000 2,200 2,420
Interest on loan 10% 5,000 5,000 5,000
General and Admin Expenses 1,750 1,925 2,118
Preliminary expenses 2,250 2,475 2,723
Capital Improvement Cost 10,000 11,000 12,100
Corporation Tax 4,425 6,743 5,778
Loan repayments 5,000 5,000
TOTAL CASH OUTFLOWS 0 1,66,925 1,94,743 2,17,041
Cash flow summary
NET CASHFLOW FOR PERIOD 1,50,000 1,58,075 1,47,758 1,44,710
OPENING CASH BALANCE 0 1,50,000 3,08,075 4,55,833
CLOSING CASH BALANCE 1,50,000 3,08,075 4,55,833 6,00,542

19SMALL BUSINESS AND NEW VENTURE MANAGEMENT
Projected balance sheet:
Assets FY-1 FY-2 FY-3
Current Assets
Cash $19,750 $4,200 $5,085
Accounts receivable $1,75,000 $1,92,500 $2,11,750
Total current assets $1,94,750 $1,96,700 $2,16,835
Fixed (Long-Term) Assets
Equipments $15,000 $16,500 $18,150
Mechanical Tools $20,000 $22,000 $24,200
Overhead Sheds $7,500 $8,250 $9,075
Furnitures $5,000 $5,500 $6,050
(Less accumulated depreciation) $7,250 $6,450 $5,985
Total fixed assets $27,750 $32,050 $36,365
Total Assets $2,22,500 $2,28,750 $2,53,200
Liabilities and Owner's Equity
Current Liabilities
Bank Charges Payable $5,000 $5,000 $5,000
Short-term loans $30,000 $30,000 $65,000
Income taxes payable $4,425 $6,743 $5,778
Accrued salaries and wages $8,000 $8,800 $9,680
Total current liabilities $47,425 $50,543 $85,458
Long-Term Liabilities
Long-term debt $50,000 $45,000 $40,000
Less: Loan Repayment $5,000 $5,000
Total long-term liabilities $50,000 $40,000 $35,000
Owner's Equity
Owner's investment $1,00,000 $1,00,000 $1,00,000
Net Profits $10,325 $15,733 $13,482
Reserve and Surplus $14,750 $22,475 $19,260
Total owner's equity $1,25,075 $1,38,208 $1,32,742
Total Liabilities and Owner's Equity $2,22,500 $2,28,750 $2,53,200
Balance Sheet
Projected Financial Ratios:
Common Financial Ratios Year 1 Year 2 Year 3
Debt Ratio (Total Liabilities / Total Assets) 0.44 0.40 0.48
Current Ratio (Current Assets / Current Liabilities) 4.11 3.89 2.54
Working Capital (Current Assets - Current Liabilities) 1,47,325 1,46,158 1,31,377
Assets-to-Equity Ratio (Total Assets / Owner's Equity) 1.78 1.66 1.91
Debt-to-Equity Ratio (Total Liabilities / Owner's Equity) 0.78 0.66 0.91

20SMALL BUSINESS AND NEW VENTURE MANAGEMENT