INTERNATIONAL INSTITUTE OF PLANNING & MANAGEMENT
A business plan on carvenience: Car rental firm SUBMITTED TO
PROFF. HARSHA
Submitted By RAHUL GUPTA VARUN GOTI TARUN.C
Contents 1.0 Concept testing 2.0 Executive Summary 2.1 Objectives 2.2 Mission 2.3 Keys to Success 2.4 Vision 2.5 Company Summary 2.5.1 Company Ownership 2.5.2 Start-Up Plan 2.5.3 Company Locations and Facilities
3.0
Services
3.1 service Description 3.2 Sales Literature 3.3 Future services 4.0 Market Planning 4.1 Current Market Situation 4.2 SWOT Analysis
4.3 4.4 4.5 4.6
Objectives Market Trends & Growth Market Needs Market Strategy 4.6.1 Target Market 4.6.2 Positioning 4.6.3 Location 4.6.4 Market Communication 4.6.5 Market Research & Development 4.6.6 Sales forecast 4.7 Market Programs 5.0 Management Summary 6.1 6.2
Organizational Structure Personnel Plan
7.0
Financial Plan 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8
Important Assumptions Key Financial Indicators Projected Profit and Loss Projected Balance Sheet Business Ratios Long-Term PLAN
Questionnaire for Concept Testing 1. Do you hire vehicles for all levels of executives? 2. While hiring cars what would you give priority to cost or comforts (quality service)? 3. How frequently you rent a car • Occasionally • Frequently 4. How do you decide from whom to rent a car? 5. Which mode of payment you prefer? • Cash • Credit 6. Which class of cars do you prefer to hire? 7. Do you hire cars only for local use or even for long distance? 8. Are you satisfied by the services provided by your current hirer? If yes, why? And if not why? 9. Do you prefer to hire Air-conditioned cars or non Airconditioned cars? 10. For what purpose you rent a car
Test Results In this survey we visited various corporate houses in Bandra Kurla Comlex like Workhardt, ICICI Bank, Bank Of Baroda,etc. In Andheri we visited Proctor & Gamble, Glaxo India an many companies in Seepz. The outcome o the survey was positive for us. We found that there is a demand in corporate circle for hiring cars. They usually don’t prefer to have their own cars for all the executives. Instead they hire cars as that is more economical for them. We even found out the choice of cars, which they prefer to hire, which gave us an idea of the composition of cars we should have. The corporate give more importance to quality service than cost but the cost should be according to the market rate. They don’t mind trying a new rental agency if the service offered is better than the current service provider. Based on the test results we conclude that starting a car rental agency is a feasible idea and could lead to a successful business.
Executive Summary Carvenience Provides Corporate Clients with A+ Service! No matter where your business takes you, the agencies of Carvenience will be there to take care of all of your needs! Carvenience welcomes all corporate clients with excellent rates, superb quality, and service you can count on each and every visit. Whenever you need a compact car for a quick day of efficient business traveling, the car rentals from Carvenience are sure to provide an excellent drive during your corporate stay! We aim to take care of corporate clients to make their business trip as smooth and as enjoyable as possible.
Corporate Clients By definition, Carvenience believes that corporate clients are those drivers whose car rental is meant for the purpose of business needs or used during a period of corporate travel. This means that if you are traveling to a destination on business and require a rental car to drive when you get there, if you are staying in your hometown but need a car rental for corporate needs during the day, or if you are booking car rentals for visiting clients or employees, Carvenience considers its customers as corporate client! If business is involved, whether it be for thier private company or for a large national firm, we can combine the Carvenience expertise and guarantee to complement thier corporate driving needs. We know the specific needs of corporate drivers and what they want - a quality car rental, fast and efficient service, friendly staff, and special corporate rates.
Objective • To provide friendly and reliable customer service in order to establish a loyal customer base. • To make the customer aware that hiring a car is the next best option to buy a car. • To effectively promote our service to a wide range of corporates.
Mission A value driven customer experience that defines the character of the company through friendly experience, outstanding service and excellent value.
Keys to Success • • •
Optimum utilization of resources Customer satisfaction Controlling costs
Vision Our vision is to be a nationwide market share leader in each of the markets we serve. We will try to attain this vision by providing our customers cost effective and quality service. We will add value to these services by providing legendary customer service through our uncompromising commitment to customer satisfaction.
Company Summary Company Ownership Carvenience is a partnership firm owned by seven partners with each pulling in Rs 3500000 and one pulling in Rs 4000000 as our initial capital.
Start-Up Plan The following Carvenience.
are
the
expenses
Expenses • • • • • • • • • • • •
Printing & stationery Cars on lease Fuel Rent Parking charges Salary to staff Salary to salesmen Telephone charges ( incl mobile to chauffeurs) Electricity charges Salary to attendant Miscellaneous expenses Refreshments
Assets • • • •
Air conditioners Computers Furniture and fittings Office premises
incurred
by
Company Locations and Facilities Carvenience’s office will be located at the high profile area namely begumpet. The area hired is of 1000 sq feet for which a monthly rent of Rs. 50000 will be paid, the firm has tied up with 3 garages near petrol pumps to • Jublee hills • secunderabad • mehandipatnam
Services Service Description Carvenience provides its customers with a facility of hiring cars round the clock. It aims to provide its customers a mix of cost and comfort. Carvenience provides latest cars at competitive prices to meet the various requirements of its valuable customers. It has hired efficient chauffeurs to provide quality service to its customers as they come in direct contact with them.
Sales Literature Main source of sales literature will be through our sales executives who will visit the corporates individually. All information pertaining to the company will be provided to our customers through brochures and direct mailing. It will provide the customer with detailed information about the different packages available. In the future as the company grows, we will be able to advertise in travel & auto magazines, newspapers, etc.
Future Services Future services will correlate with the growing demand of a wider returning client base. Carvenience in its coming future can go in for collaboration with other travel agencies, hotels and expand its business and diversify into the sale of second hand cars.
Market Planning Current Market Situation Industry Analysis The vehicle rental market can be divided in terms of • Client type • Location • Rental schemes- car hire Car lease Self drive
Industry Participants Multi national companies- hertz international National companies- autoriders and meeru Local players- mitra, auto cabs & orange The car rental companies may wholly be concentrated into car rental services eg: -ketan travels pvt ltd or may be car rental + allied business eg- autoriders and aqsa Allied business such as hotel reservations, airline & railway ticketing, tour packages etc
The Carvenience Difference Car rentals from Carvenience can meet your corporate needs in a number of different ways. Whether you need a single car for one employee or an entire fleet for a convention group let Carvenience show you the best car rental experience wherever and whenever you need it. There are many, many ways in which Carvenience rental cars can make your daily business easier and more efficient and economical. Consider the following different
suggestions on how Carvenience can serve your corporate needs:
Visiting Employees
- No matter where your employees are traveling on business, can rely on car rentals from Carvenience to get them there safely and on time! Consider Carvenience rental cars for employees traveling to other cities and employees traveling to your own city. Give your employees the A+ treatment they deserve by giving them the opportunity to enjoy driving freedom and pleasure in a quality car rental. •
Potential Clients
- If your business will be entertaining any potential business clients in the near future, seriously consider an impressive rental car to get your meeting off to the right start. By offering a Carvenience car, you can show your potential business clients how important you believe their business is! •
Local Traveling
- Don't worry about having to pay employees miles for using their own car in-town on business travel, instead, reserve one of our rental cars and get the best of both worlds! If any of your employees make daily drives around the region, consider a car rental from Carvenience to make their driving more enjoyable. •
Convention Groups
- Your business can benefit by providing employees with car rentals during conventions or large meetings! Make your employees feel appreciated and give them the opportunity to enjoy our car rentals after the business day has ended! •
Factors of Competition
The following factors of competition give carvenience a competitive edge over the other car rental companies.
Quality: Quality of cars-carvenience strives to consistently offer dependable vehicles. Each car is thoroughly cleaned before every trip so that customers get a perfect car. Quality services-carvenience accords highest priority to fast and friendly customer service, safety and comfort. It strives to offer prompt, personal attention to every client. Our chauffeurs are trained to attend the clients and always believe in giving service with a smile. Punctuality and promptness are the key qualities of our chauffers. Our chauffeurs are uniformed, well behaved, equipped with mobile phone ,well versed with the topography of the city and understand and speak English, Hindi and Marathi .The company is open for 24 hours throughout the year.
Price: Carvenience offers its customers car rental packages at a competitive price without compromising on quality or sacrificing company profits.
Convenience: All American Express, Visa, MasterCard ,and BOB card are accepted. Carvenience makes car renting easy and hassle free for corporates by opening a Carvenience corporate account.
Competitive Description Carvenience has an advantage over other the other car dealers due to its location, which is at the center of its market. Carvenience also has round the clock facilities to meet the requirements of the customer. Carvenience offers 4 categories of cars viz Mercedes, Lancers, Ford Ikon and Tata Indica to its prospective customers
Main Competitors • Airlines tie up : Hertz has a tie up with jet airways under which jet airways offers its domestic frequent flyers car hire facility of Hertz . • All India presence: Companies having all India presence e.g. autoriders enjoy higher patronage of outstation contracts as in case of car breakdown, alternate cars can be arranged quickly. • Allied services providers: Car rental companies providing car hire and also allied services such as hotel reservation, airline and railway ticketing and tour planning.
SWOT Analysis Strengths 1. Quality service in terms of time, cost and comfort 2. Proximity of location near to airports, and other corporate houses.
3. Organized manner of communication with drivers 4. Niche market, initially only to corporates and hence less competition
Weaknesses 1. The prices are fixed according to the market conditions (that is demand and supply) 2. Being a new entrant, it is more difficult to capture the market share
Opportunities Online registration and booking 2. Can cater to corporate in other metropolitan cities 3. Providing new facilities like self drive 4. Can cater to travel agencies, banks, hotels etc. apart from corporates. 1.
Threats 1. The car rental companies may wholly be concentrated into car rental services e.g.- ketan travels pvt ltd or may be car rental + allied business e.g.- autoriders and aqsa 2. Rise in lease charges in the market due to inflation
Objectives
Financial Objectives: 1. To reduce the loses in the first two years (introduction stage). 2. To grow at a profitable rate after the introduction stage i.e. the growth stage.
Marketing Objectives: 1. To create a brand name in the market. 2. To create awareness among corporates. 3. To increase the sales revenue. 4. To clearly define the target market.
Market Trends and Growth There is an increasing demand of easy facility in traveling especially in a city like Mumbai. Different firms are coming up in the market to rent a car. Therefore it is important for Carvenience to differentiate its services from others to attract a larger number of potential customers. Bringing new ideas in this particular business is very much important, as customers are keen towards new types of affordable services.
Market Needs In corporate world, need of hiring cars for their employees rather than buying them is more convenient. There are different levels of employees
within a corporate world like top-level management or second level management. Therefore many companies will hire different types of cars depending upon the levels to which a particular employee belongs. Carvenience targets this variety in need and offers different types of cars depending upon the requirement. Though the company is hiring different cars for different employees but still Carvenience is taking care of all customers with a same concern. I.e. For Carvenience customer’s satisfaction is at highest priority no matter who they are.
Marketing Strategy Target Market: Carvenience plans to target corporate world customers, who expect to travel with good customer service and convenience. We are segmenting the market on the basis of purchasing approaches, benefits sought and usage rate. Many companies have general purchasing policies that prefer hiring or leasing the cars for their top-level and second level employees rather than purchasing a car. Also they are benefited in many ways in terms of cost factor and quality service, which includes time factor and comfort factor.
Positioning: Carvenience will appeal to all types of corporates who require the services of vehicles for their professional reasons.
Pricing strategy: This company plans to be very competitive in its pricing strategy as it relates to other similar rental agencies. We will carefully establish prices so that they do not seem too high, while at the same time allowing us to obtain our business goals. We also have categorized the cars in terms of class.
Car category Economy Intermediate Full size Luxury
Tata Indica Ford Ikon Lancer Mercedes Benz
Price grids Car category Economy Intermediate Full size Luxury
Carvenience Rate per km Rs 15/km Rs 20/km Rs 25/km Rs 75/km
Autoriders Rate per km Rs 19/km Rs 23/km Rs 35/km Rs 81/km
Location We have tied up with garages near petrol pumps at three different locations • Jublee hills which is close to major corporate houses like Taj hotels, Hitech City ,etc • Secunderabad near the major crowd travelling markets. • shamshabad near to the International Airport and major Hotels.
Our cars will be available with chauffers carrying cell phones so communication with them is easy as the demand for service arises. Our office will be open for 24 hours with two operators on shifts so that customers can avail anytime of our services. Our parking spots will also have an attendant who will clean the cars take care.
Market communications: Initially we are not spending much on advertising but we have employed smart sales executives who will visit the corporate houses individually and try to convince them to avail of our services. Our sales executives will help us in creating awareness among new customers and getting feedback from the existing customers. Later on, when profits start rising we can advertise in business magazines and newspapers etc. Direct mail-we will be sending pamphlets through direct mail to our prospective corporate clients. E-mail- we will be promoting our organization by sending e-mails to prospective clients.
Market Research & Development A regular feedback is needed from the customers, and an accurate study of customer satisfaction and identification of opportunities for future service development is needed from the feedback received from the customers. For this we have to take our
chauffers into confidence,train them to take regular feed back from the customers,they arte the one’s who will help us build relationship with thew customers as they will be in direct contact with the customers.
Action Programs Carvenience will utilize a variety of sources to promote their service. Through the Internet, telemarketing and direct mails, carvenience will be able to spread their company name to various people in the focused market segment. With the use of these sources as advertising agents we will be able to attract potential customers
Organizational Structure
Finance manager
Marketing & sales manager
Personnel manager
DSE Accountant
Accountant
Receptionist
Chauffeurs, attendants
Management Summary Organizational Structure Carvenience is a private partnership equally owned by seven executive members. A few of the executives of the company share the responsibility in the decision-making process. Each member specializes in specific field within the company. The combination of each member’s skill allows our company to establish a successful conglomeration.
Personnel Plan 2003 2004 2005 2006 2007 to 360000 360000 360000 360000 360000
Remuneration partners Salaries to 48000 54000 60000 60000 62400 receptionist Salaries to peon 30000 33600 36000 36000 37200 Salaries attendant 54000 72000 82800 82800 30000 Salaries 60000 72000 79200 79200 81600 Telephone operator Salaries to 48000 54000 27600 27600 60000 accountant Salaries to 420000 960000 1548000 1548000 chauffeurs Salaries to 192000 216000 230400 230400 240000 salesmen
Long-Term Plan Our long-term plans are: To become market leaders in car rental business. To increase our name recognition To be recognized for our outstanding service
Income Statement - Summary of Years 1 to 5
Lease rental income
2009-2010
2010-2011
2011-2012
8,410,668
16,996,446
30,575,822
2012-2013
2013-2014
34,698,720
38,278,507
Total
8,410,668
16,996,446
30,575,822
34,698,720
38,278,507
Gross Profit
8,410,668
16,996,446
30,575,822
34,698,720
38,278,507
Operating Expenses Salaries to chauffeurs
420,000
960,000
1,548,000
1,620,000
1,620,000
fuel
1,591,040
2,268,470
5,261,220
6,275,360
6,817,949
lease charges
7,440,000
12,060,000
17,520,000
14,040,000
14,040,000
39,600
79,200
118,800
143,640
143,640
100,000
150,000
200,000
200,000
225,000
2,500
2,500
7,500
7,500
7,500
permit charges
18,000
17,000
21,000
14,500
12,000
washing
12,000
12,000
20,000
25,000
25,000
Rent
960,000
960,000
960,000
salaries
240,000
315,600
315,600
315,600
electricity
102,000
285600 120,000
132,000
136,000
156,000
10,000
10,000
35000
37,400
mobile charges parking charges depreciation on mobile
office and administration
auditors remuneration Subscription Telephone
8,000
8,000
8,000
25,000
25,000
30,000
-
120,000
144,000
160,000
170,000
180,000
refreshments
15,000
15,000
20,000
25,000
26,200
Office supplies
42,000
60,000
70,000
75,000
81,000
depreciation
46,250
46,250
293,750
2,837,083
2,769,000
360,000
360,000
360,000
360,000
360,000
16,500
40,000
remuneration to partners Commission to salesman selling expenses salaries to salesmen internet charges
192,000
216,000
230,400
240,000
240,000
12,000
12,000
12,000
12,600
13,000
Advertising
36,000
finance expenses preliminary expenses
12,000
12,000
12,000
12,000
12,000
bad debts
14,986
14,836
30,283
68,098
77,280
Total Operating Expenses
11,772,376
17,827,856
Operating Income
(3,361,708 )
(831,410)
3,245,269
608063
643,026
Interest income
575,000
27,330,553
Other income Total Nonoperating Income Income (Loss) Before Taxes Income Taxes Net Income (Loss) less partners capital partner 1 partner 2 partner 3 partner 4 partner 5 partner 6 partner 7
575,000 (2,786,708 ) 0
608,063 (223,347)
0
(2,786,708 )
(223,347)
-398102 -398101 -398101 -398101 -398101 -398101 -398101
-31911 -31906 -31906 -31906 -31906 -31906 -31906
26,638,881
27,244,569
8,059,839
11,033,938
330,000
800,000
643,026
330,000
800,000
3,888,295
8,389,839
11,833,938
1,394,926
3,009,855
4,245,425
2,493,369
5,379,984
7,588,513
356199 356195 356195 356195 356195 356195 356195
768570 768569 768569 768569 768569 768569 768569
1690566 1690562 1690562 1690562 1690562 1690562 1690562
Balance Sheet - Summary of Years 1 to 5 Opening
2009-2010
2010-2011
Cash
8,789,468
6,474,062
Debtors
1,483,574
3,028,320
12,000
2011-2012
2012-2013
2013-2014
4,027,230
8,010,486
18,825,789
6,809,760
7,728,000
8,525,280
12,000
12,000
12,000
12,000
10,575,000
11,183,063
0
1,000,000
1,000,000
0
21,860,04 2
21,697,44 5
ASSETS Current Assets, loans, advces
telephone deposits fixed deposits office deposits Total Current Assets
0
10,848,990
15,750,48 6
27,363,069
Long-Term Assets Computers furniture and fittings air conditioner
51,750
34,500
17,250
0
0
180,000
160,000
140,000
120,000
100,000
51,000
42,000
office premises
33,000 14,750,000
Vehicles
Mobiles Total Long-Term Assets
0
22,500
20,000
65,000
73,500
256,500
25,854,240
48,000
36,000
24,000
24,000 13,250,000
15,000 11,750,000
3,659,167
2,419,167
57,500
50,000
32,861,15 3
14,334,167
miscellaneous expenses preliminary expenses
12,000
0
Other long-term assets Total Assets
0
22,213,29 2
21,989,94 5
25,878,240
32,873,15 3
41,697,236
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Income taxes payable
0
0
1,394,926
3,009,855
4,245,425
0
0
1,394,926
3,009,855
4,245,425
partner 1
4,000,000
3,601,898
3,569,987
3,926,186
4,694,756
partner 2
3,500,000
3,101,899
3,069,993
3,426,188
4,194,757
partner 3
3,500,000
3,101,899
3,069,993
3,426,188
4,194,757
partner 4
3,500,000
3,101,899
3,069,993
3,426,188
4,194,757
Total Current Liabilities
0
capital a/c
partner 5
3,500,000
3,101,899
3,069,993
3,426,188
4,194,757
partner 6
3,500,000
3,101,899
3,069,993
3,426,188
4,194,757
partner 7
3,500,000
3,101,899
3,069,993
3,426,188
4,194,757
add/less net loss/profits partner 1
(398,102)
(31,911)
partner 2
(398,101)
(31,906)
partner 3
(398,101)
(31,906)
partner 4
(398,101)
(31,906)
partner 5
(398,101)
(31,906)
partner 6
(398,101)
(31,906)
partner 7
(398,101)
(31,906)
0
22,213,29 2
21,989,94 5
0
22,213,29 2
21,989,94 5
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
356199 356195 356195 356195 356195 356195 356195
768570 768569 768569 768569 768569 768569 768569
1690566 1690562 1690562 1690562 1690562 1690562 1690562
25,878,240
32,873,15 3
41,697,236
27,273,166
35,883,00 8
45,942,661
