1.0 Executive Summary
The purpose of this business plan is to showcase the continued development of a car rental agency based in Phoenix, Arizona. Phoenix Premium Automotive Rentals LLC (“the Company”) was founded by Matthew Deutsch. At this time, the Founder is seeking $300,000, via an SBA loan, for the development of the business. Full scale revenue generating operations will commence in the third quarter of this year.
Operations
From its expansive location in Phoenix, the Company will offer a number of different types of vehicles spanning a wide range of pricing points. This will include economy vehicles, standard vehicles, as well as luxury cars. The business will generate substantial per diem fees from the rental of these cars on an ongoing basis. As a secondary revenue center, the Company will produce income from insurance sales as well as from refueling fees.
To ensure that there is near 100% accurate occupancy for the fleet, the Company will use a number of marketing strategies to promote Phoenix Premium Automotive Rentals. This will include a proprietary website, a presence on major booking agency websites, as well as use of Turo.
The third section of this document will further discuss the operations of the business.
The Financing
As noted above, the business is seeking $300,000 via an SBA loan. Matthew Deutsch will contribute $100,000 towards a venture. The funds we principle use for the following:
• Lot development near Phoenix Sky Harbor International Airport
• Vehicles
• Working capital
Moving forward, the business could easily secure additional financing given the large number of vehicles that will be owned by the business. From time to time, the Company may lease vehicles that will be used within the fleet over a two-year period. The business could easily secure a revolving credit facility that would allow for the ongoing acquisition of vehicles on it as needed basis.
The Future
Once the business reaches 100% capacity for its lot in Phoenix, a second location may be developed. The Company intends to operate near airport locations in order to provide customers with a substantial degree of convenience. To create a significant differentiating factor, the Company will directly bring cars to airports while also picking up vehicle returns. This added a degree of convenience will onboard a number of renters in the coming years.
Market Overview
The current population of the greater Phoenix metropolitan area is approximately five million people. Annually, there are 21 million people that visit Phoenix as a tourist or for business travel. Service related to out-of-town travelers generate $5 billion per annum for the city and its surrounding areas. The Company will be able to capitalize on this ongoing demand.
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The funding discussed in the executive summary will be allocated as follows:
2.2 Management and Investor Equity
Matthew Deutsch pertains to 100% ownership interest in the business.
2.3 Exit Strategies
In the event of business is to be sold, a qualified business broker that specializes in automotive businesses will be hired. Prior to this hiring, the Company will have a formal valuation completed. Historically, car rental agencies typically have a price of earnings multiple of three times EBITDA. Based on this, Phoenix Premium Automotive Rentals could have a sales price of almost $700,000 by the fifth year of operation.
3.0 Operations
As discussed in the executive summary, Phoenix Premium Automotive Rentals will be actively involved with providing a number of vehicles to the general public. The vast majority of renters are expected to be tourist and business travelers that are staying for period ranging from two days to one week. The Company, as part of its overall marketing campaign, will conduct direct outreach with numerous travel agencies within the United States that frequently have their clients come to the Phoenix metropolitan area.
As it relates to the revenues, the Company will typically produce $50 to $150 per day for vehicle rentals. The fees will be dependent on a type of vehicle rented. The Company will also produce income from insurance as well as refueling fees from time to time.
As it relates to the use of Turo, the business will incur a fee of 10% on all transactions that occurred to this platform. This is expected to draw a number of regional clients that need a temporary car from time to time.
4.0 Overview of the Organization
4.1 Registered Name
Phoenix Premium Automotive Rentals LLC. The business is registered as a limited liability company in the State of Arizona.
4.2 Commencement of Operations
Revenue generating operations will commence in the third quarter of this year.
4.3 Mission Statement
Provide exceptional service and exceptional vehicles at a reasonable rate to the Phoenix metropolitan area.
4.4 Vision Statement
To become the preeminent car rental agency within Phoenix.
4.5 Organizational Objectives
• Once the capital in this document has been secured, properly acquire a number of vehicles that can be rented to the journal public.
• Adhere to all laws and regulations regarding the rental vehicles in Arizona.
• Use multiple forms of advertising in order to drive substantial occupancy.
• Continue to expand the scope of the Company’s fleet as Phoenix Premium Automotive Rentals expands.
• Establish ongoing relationships with travel agent agencies within Arizona and on a national basis among entities that have clients that frequently traveled to Phoenix.
• Offer a superior level of service to the Company’s clients including pick up and drop off services that will create a strong differentiating factor.
• Leverage third-party platforms in order to further car rental engagements.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the business plan will discuss the car rental agency industry, the current economic climate, and the ongoing competition that Phoenix Premium Automotive Rentals will face moving forward.
At this time, the economic climate within the United States is moderate. Due to continually changing trade policies as well adjustments in fiscal policy, there has been a moderate degree of volatility introduced to the market. It should be noted that the federal government is taking appropriate measures to reduce these matters related to inflation while ensuring ongoing economic growth.
It should be noted that the revenue of Phoenix Premium Automotive Rentals will remain stable even during challenging business climates. This is principally due to the fact that Phoenix is a major market area that receives millions of travelers on an ongoing basis. Furthermore, the Company will produce substantial profits from the ongoing rental of vehicles across a number of pricing spectrums.
5.2 Industry Analysis
Car rental agencies produce $60 billion of year of revenue. The industry consists of 7,000 companies that owner and operate one or more locations that provides short-term vehicle rentals short-term vehicle leases. As a hole, the industry employees 100,000 people.
The ongoing growth for the car rental agency industry is expected to be similar to that at the economy as a whole. One of the major trends within this industry is to use multiple platforms in order to ensure substantial occupancy, especially for independent agencies like Phoenix Premium Automotive Rentals. As will be noted later in this document, the company will use multiple forms of advertising to ensure a significant occupancy rate.
5.3 Customer Profile
The following demographic profile will be used during the course of marketing operations:
• Household income of $75,000+
• Will spend $100 per diem for a rental vehicle
• Will rent a vehicle from four to seven days
5.4 Competitive Analysis
This car rental agency business plan has been written specifically as a sample. If this document was specifically designed for a client engagement, then a full analysis of all other car rental agencies within the target market would have been included. This would have addressed the number of years they have been in business, their competitive advantages, and how Phoenix Premium Automotive Rentals would be able to effectively differentiate itself within this competitive market.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Phoenix Premium Automotive Rentals will have sustainable operations as a result of the following:
• The Company will offer a number of vehicles across a wide range of pricing so that people of all socioeconomic levels can have access to the fleet.
• The use of multiple online channels will create significant brand-name awareness within the Phoenix metropolitan area.
• The Company can easily access additional capital as needed, given that the primary asset of the business are vehicles.
• A highly experienced owner, Matthew Deutsch, who will be able to effectively launch the operation with a business while bringing the company to significant profitability
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued expansion of the company fleet in order to accommodate ever increasing demand.
• Established ongoing relationships with travel agencies regionally and on a national basis.
• Expansion of the number of locations at the company operates within the Phoenix metropolitan area.
7.0 Marketing Plan
7.1 Marketing Objectives
• Implement wide ranging marketing campaigns that will create significant brand invisibility among the targets.
• Maintain an expansive online presence that encompasses a proprietary website and a presence on third-party booking channels.
• Established direct relationships with companies that have ongoing car rental agency needs.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• First year revenue will be $398,000.
• Gross profits will reach $347,000.
Year 2
• Through greater marketing efforts, revenue will reach $434,000.
• Gross profits will reach $378,000.
• Total income will increase by 9%.
Years 3-5
• By the fifth year of operation, total revenue will reach $562,000.
• Gross profits will reach $490,000.
7.4 Marketing Strategies
Management will implement a number of marketing campaigns that will drive significant interest in the Company’s operations in the coming months and years. Most importantly, the Company intends to use multiple online marketing strategies that will ensure that when searches for car rental agencies in the Phoenix market are completed – the Company’s website will appear in the search results.
As it relates to third-party platforms, the Company will use multiple booking agencies, as well as Turo, in order to ensure a significant amount of occupancy for the fleet. Although these agencies do take a moderate commission for each successful placement, this will substantially reduce the ongoing marketing costs in the long run.
The Company will also conduct extensive direct outreach with travel agencies within Phoenix, as well as on a national basis among entities that have clients that frequently send their employees to this market area. Over time, this will create a highly predictable stream of revenue as these will be ongoing users of the Company’s car rental services.
To promote social signaling for the website, the Company will maintain a presence among all social media platforms. This will include uploading images and videos of all cars that are currently in the Company’s inventory. Additionally, specialized deals during holidays will be offered in order further increased brand visibility while ensuring significant occupancy at all times.
As earlier, one of the ways that the businesses differentiating itself within this market is providing vehicle drop off and pick up directly at airports throughout the greater Phoenix area. This will ultimately lead to a rapid on boarding of ongoing clients that will use the Company’s services whenever they are traveling to Phoenix.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• Matthew Deutsch will contribute $100,000 towards venture.
• A $300,000 SBA loan will be secured carrying a 10-year term and a 7% interest rate.
• Phoenix Premium Automotive Rentals will have an annual growth rate of 9% per annum.
9.2 Financial Highlights
• Nearly all debt capital will be used for the acquisition of tangible vehicle inventories.
• High gross profits on all service centers outlined in this document.
• The operations of the Company are highly scalable.
9.3 Sensitivity Analysis
The businesses revenues may face a modest amount of downward pressure in the event of a very severe economic procession. However, these risks are elevated by the fact that the Company is operating in the Phoenix Metropolitan area, which is a major hub of business within the Southwestern United States. The significant gross profits from ongoing vehicle rentals will fully support the operations of Phoenix Premium Automotive Rentals at all times.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Immense demand for affordable vehicles within the greater Phoenix metropolitan area among travelers to the area.
• Once 100% capacity is achieved for the initial location, the Company can easily scale into other locations within Phoenix.
• The substantial population density of this market will contribute to economic stability.
• Offering vehicles among different pricing points for a provide a competitive advantage.
• Pick up and drop off service services will be highly valued by customers for the level of convenience offered.
Weaknesses
• Operational complexities, given the fact that the business is renting high value vehicles to individuals.
• Ongoing competition from nationally recognized car rental agency chains.
Opportunities
• Continued expansion of the companies marking operations to establish relationships with travel agencies.
• Continued to expansion of the number of vehicles in the Company’s fleet.
• Development of satellite locations within Phoenix or other economically viable markets in the southwestern United States.
Threats
• Ongoing issues with inflation could cause the operating cost of the business to increase.
Appendix B – Critical Risks
Development Risk – Low
Matthew Deutsch has already sourced the potential location that will be used to house the car rental agencies operations. Once the capital sought in this business plan has been secured, the business will immediately begin acquiring the vehicles discussed in this document.
Financing Risk – Low/Moderate
The $300,000 a debt capital will be principal used for the acquisition of vehicles. This will substantially reduce the risks associated with this financing. Furthermore, the company will generate highly predictable income from the ongoing rental vehicles.
Marketing Risk – Low
The Company will use the marketing strategies outlined earlier in order to create a well-respected brand name in the Phoenix market. This will be complimented by the numerous online marketing strategies discussed earlier.
Management Risk – Low
Matthew Deutsch is a highly experienced entrepreneur that will be able to properly establish and expand the operations of Phoenix Premium Automotive Rentals in the coming months. He has extensive experiencing operating car rental agencies throughout his entrepreneurial career.
Valuation Risk – Low
The valuation risk is offset by:
• Immense tangible assets on the balance sheet.
• Strong demand in Phoenix for quality vehicle rentals.
• The business can seamlessly expand its operations through reinvestment into the fleet.
Exit Risk – Low
As noted earlier, there are no long-term plans to sell this car rental agency to a third-party. In this event, a highly qualified business program specializes in automotive business businesses would be hired to manage the sale.