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Do you want to start Auto Parts Store business plan?
Are you looking to learn how to open auto part store? The business can be a great investment if you have a basic understanding of different kinds of automobiles and their part requirements. Starting an auto parts business is relatively simpler as it doesn’t require abundant resources.
The business management side is also relatively easy as you can start it on a small scale. There isn’t a need to have a huge team or a large shop to start up the business initially. This can significantly benefit you if you are new to management and business.
You can also easily draft up an ecommerce startup business plan for your business. As a guide you can look at related plans such as convenience store business plan. For a better reference, you can take help from this automobile parts business plan.
Executive Summary
2.1 The Business
Best Rev will be an auto parts store owned by Sheldon Cooper in Manhattan. The primary aim of the business will be to reduce the hassle of vehicle owners by providing them best condition spare parts for their automobiles. The business will offer a wide range of services and products for the ease of its customers.
2.2 Management of Auto Parts Store
If you are just learning how to start an auto parts business, the best advice you will find is to establish strong management. You can have good management through adequate planning. And there is no better way to plan out every aspect of your store than through an auto parts store business plan pdf like the one presented here.
You can also take aid from relevant business plans like used auto parts business plan or an auto dealership business plan.
In this business plan motor parts shop example, we will guide you about all the components of a strong business plan. Of course, you can alternatively also hire business plan experts to do this work for you.
2.3 Customers of Auto Parts Store
The customers of Best Rev will belong to all classes, and work domains as vehicles have become a fundamental part of life for a majority of the world’s population. The recurring customers of the business will be:
- Personal Vehicle Owners
- Private Dealerships
- Professional Racers
- Cargo Vehicle Businesses
2.4 Business Target
The main aim of Best Rev is to become a reliable and trustworthy source of good auto parts and maintenance services among its customers.
The financial targets that the business wants to achieve within the first five years are mentioned below:
Company Summary
3.1 Company Owner
Best Rev will be owned and operated by Sheldon Cooper. Sheldon completed his Bachelors in Mechanical Engineering two years ago, after which he pursued an engineering position in a noteworthy motor company. However, six months ago, he left the post to fulfill his lifelong passion of starting his own automobile parts and maintenance store.
3.2 Why the Auto Parts Store is being started
Sheldon noticed that Manhattan experiences a lot of traffic, but there are no auto shops or parts stores located in the area or anywhere in the 15-mile radius. Here, he saw the opportunity to cater to vehicle owners of Manhattan and the nearby regions. The result was Best Rev, an auto parts store that deals with the maintenance and repair of vehicles and the provision of spare parts.
3.3 How the Auto Parts Store will be started
Step1: Plan Everything
Good planning is the most crucial step when learning how to start a car parts business. The best aid in planning and managing a business is its business plan. To write your vehicle spare parts business plan, you can take help from this automobile spare parts business plan. Best Rev is an automobile spare parts shop, for which the business plan is detailed here. You can take help from this example or go through other examples like used car dealership business plan to get an idea of what to include when planning for a start-up.
Step2: Define the Brand
What comes next is to highlight your business and its unique propositions. This can be achieved by creating a brand around your business idea. This will include everything from the principles it follows to its unique value above its competitors. This will introduce a good image of your business to your customers and also help you create a space for yourself in the market.
Step3: Establish Your Corporate Office
The next step is to manage the physical aspect of the business. Sheldon decided to rent out two back-to-back small shops in the main Manhattan commercial area. He decided that one of these shops would be the face of the business where all dealing will customers will take place. All the spare parts will also be stored in this area. In contrast, the other shop will be used to maintain and repair vehicles.
Step4: Establish a Web Presence
Establishing a web presence is integral in today’s market. Therefore, Sheldon decided to develop a website for the business and social media presences for marketing.
Step5: Promote and Market
The final step is to develop a good marketing plan and stick to it.
| Start-up Expenses | |
| Legal | $134,400 |
| Consultants | $0 |
| Insurance | $22,200 |
| Rent | $36,600 |
| Research and Development | $10,000 |
| Expensed Equipment | $52,200 |
| Signs | $3,400 |
| TOTAL START-UP EXPENSES | $258,800 |
| Start-up Assets | $222,400 |
| Cash Required | $209,000 |
| Start-up Inventory | $39,000 |
| Other Current Assets | $222,000 |
| Long-term Assets | $287,000 |
| TOTAL ASSETS | $979,400 |
| Total Requirements | $1,238,200 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $258,800 |
| Start-up Assets to Fund | $979,400 |
| TOTAL FUNDING REQUIRED | $1,238,200 |
| Assets | |
| Non-cash Assets from Start-up | $1,240,800 |
| Cash Requirements from Start-up | $122,000 |
| Additional Cash Raised | $50,000 |
| Cash Balance on Starting Date | $35,000 |
| TOTAL ASSETS | $1,447,800 |
| Liabilities and Capital | |
| Liabilities | $18,200 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $58,000 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $76,200 |
| Capital | |
| Planned Investment | $1,238,200 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,238,200 |
| Loss at Start-up (Start-up Expenses) | $133,400 |
| TOTAL CAPITAL | $1,371,600 |
| TOTAL CAPITAL AND LIABILITIES | $1,447,800 |
| Total Funding | $1,238,200 |
Services
Before you start an auto part business, you need to decide on your business’s services to your customers. You may have many auto parts business ideas, but you can’t implement everything in the business initially. Therefore, you have to pick and choose what you will start with.
You can follow this guide on how to start an auto parts business to figure out what the market for the business looks like and what services are ideal to be included in your start-up.
The series of steps to follow can be confusing when learning how to become an auto parts distributor. Therefore, we have described everything here in detail. Since Sheldon started with a variety of services, this format can be used to develop even a flower shop business plan.
- Spare Parts Distribution
Best Rev will sell spare parts for all kinds of automobiles as its base service. As a result, most of the auto parts in demand will be readily available, while there will also be an option for customers to order the parts custom to their vehicle.
- Maintenance
In addition to providing spare parts, Best Rev will also offer maintenance services to its customers. This will include
- Oil Change
- Engine Check
- Break and Battery Fluid change
- Thorough cleaning of the engine
- Repair Services
The customers of Best Rev can also bring their vehicles to the store to get any part fixed. In addition, the business will have mechanics available at all times who will deal with any problems a vehicle might have.
- Cleaning Service
Our last service will be the cleaning service. Our customers can bring their vehicles and get them serviced and cleaned in just 20-40 minutes, depending on vehicle type.
Marketing Analysis of Auto Parts Store
When starting an auto parts business, you should have an excellent understanding of your target market. You can gain this understanding by doing an extensive market analysis as a part of your automobile spare parts business plan pdf. This analysis should look into the past, present, and future market trends for you to make the best choices.
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Your automobile parts business plan should also analyze the price of similar services in the market. This data should be used to forecast the prices you will set for your own products and services.
If you don’t know what to include in your motor vehicle spare parts business plan, then you can take help from the document here. Also, if you are having difficulty conducting a marketing analysis, you can look at the marketing plan of this business plan motor parts shop.
5.1 Market Trends
According to IBISWorld, the auto parts industry holds a market size of $66 Billion in the United States, employing almost 400 thousand people. The industry is continuously in demand as more and more people adopt automotive vehicles in their life. So, opening a business in this industry is a very smart move as the demand will only get bigger.
5.2 Marketing Segmentation
The potential customers of Best Rev will be as follows:
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5.2.1 Personal Vehicle Owners
The primary customers of Best Rev will be people who own cars for personal use. As a majority of the population of Manhattan owns cars, our business will expect these customers to be quite regular. They are expected to avail maintenance and cleaning services most often.
5.2.2 Private Dealerships
Our second target customer will be private dealerships looking to fix up cars and sell them. We will provide them with the spare parts and maintenance services required.
5.2.3 Cargo Vehicle Businesses
Due to the vast amounts of construction being carried out in Manhattan and surrounding areas, we expect our third most frequent customers to be cargo vehicle businesses looking for spare parts, maintenance, and cleaning services.
5.2.4 Professional Racers
Our final customer group will be professional racers. They are expected to avail our spare parts and maintenance services, although not that often.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Personal Vehicle Owners | 39% | 59,900 | 71,880 | 86,256 | 103,507 | 124,209 | 10.00% |
| Private Dealerships | 37% | 45,800 | 54,960 | 65,952 | 79,142 | 94,971 | 10.00% |
| Cargo Vehicle Businesses | 14% | 22,700 | 27,240 | 32,688 | 39,226 | 47,071 | 10.00% |
| Professional Racers | 10% | 22,300 | 26,760 | 32,112 | 38,534 | 46,241 | 11.00% |
| Total | 100% | 150,700 | 180,840 | 217,008 | 260,410 | 312,492 | 10% |
5.3 Business Target
- To become the most reliable distributor of spare parts across Manhattan
- To provide quick services to our clients
- To earn a net profit of $40k/month at the end of three years
- To keep itself in the good graces of customers.
5.4 Product Pricing
Our prices will be economical compared to our competitors since they won’t pay extra shipping fees for spare parts.
Marketing Strategy
To gain attention in the market among your competitors, you need to highlight your competitive advantages. This is crucial in developing a business, especially an online auto parts business.
You can market what makes you unique in the industry through a solid marketing plan. A market plan will not only allow you to bring light to your strongest features, but it will also help you in learning how to become an auto parts distributor in a saturated market.
So, if you want to develop a strong marketing strategy for your business, you can take help from this motor parts business plan pdf. You can also look at other business plans such as skateboard store business plan to understand how to build a marketing strategy.
6.1 Competitive Analysis
- We have quick customer care services. We respond to customer queries efficiently.
- We have a fast turnaround time as we take customer orders and requests and fulfill them as soon as possible.
- We have excellent customer support staff that guides our customers in choosing the best parts for their vehicle and their budget.
- Through our 24/7 online services, customers can peruse the parts available at the shop or order them on request.
6.2 Sales Strategy
- We will advertise our services through social media platforms like Instagram and Facebook.
- We will offer a 25% discount on our first 25 purchases.
- We will offer significant discounts to our regulars.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Spare Parts | 8,200 | 8,692 | 9,214 |
| Maintenance | 4,550 | 4,823 | 5,112 |
| Repair Service | 1,450 | 1,537 | 1,629 |
| Cleaning Service | 1,550 | 1,643 | 1,742 |
| TOTAL UNIT SALES | 15,750 | 16,695 | 17,697 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Spare Parts | $60.00 | $69.60 | $80.74 |
| Maintenance | $75.00 | $87.00 | $100.92 |
| Repair Service | $350.00 | $406.00 | $470.96 |
| Cleaning Service | $150.00 | $174.00 | $201.84 |
| Sales | |||
| Spare Parts | $492,000.00 | $604,963.20 | $743,862.75 |
| Maintenance | $341,250.00 | $419,601.00 | $515,941.39 |
| Repair Service | $507,500.00 | $624,022.00 | $767,297.45 |
| Cleaning Service | $232,500.00 | $285,882.00 | $351,520.51 |
| TOTAL SALES | $1,573,250.00 | $1,934,468.20 | $2,378,622.10 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Spare Parts | $20.00 | $22.00 | $23.10 |
| Maintenance | $15.00 | $16.50 | $17.33 |
| Repair Service | $100.00 | $110.00 | $115.50 |
| Cleaning Service | $80.00 | $88.00 | $92.40 |
| Direct Cost of Sales | |||
| Spare Parts | $164,000.00 | $191,224.00 | $212,832.31 |
| Maintenance | $68,250.00 | $79,579.50 | $88,571.98 |
| Repair Service | $145,000.00 | $169,070.00 | $188,174.91 |
| Cleaning Service | $124,000.00 | $144,584.00 | $160,921.99 |
| Subtotal Direct Cost of Sales | $501,250.00 | $584,457.50 | $650,501.20 |
Personnel plan
There are a lot of auto parts stores in the world. But only those are popular that make customers happy and satisfied. The success of a business, especially in the automobile industry, depends not only on the quality of parts but also on the customer support staff.
Understanding this importance, Sheldon included some essential features as a part of employee hiring criteria in the automobile spare parts business plan. He also formed a list of employees necessary for running his business. This list can be seen in this auto parts store business plan sample.
7.1 Company Staff
- 1 Manager
- 1 Receptionist
- 3 Cleaners/Servicers
- 4 Mechanics
- 1 Social Media Strategist and Manager
- 1 Web Developer
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Manager | $45,000 | $49,500 | $54,450 |
| Receptionist | $30,000 | $33,000 | $36,300 |
| Cleaners | $92,000 | $101,200 | $111,320 |
| Mechanics | $123,000 | $135,300 | $148,830 |
| Social Media Manager | $23,500 | $25,850 | $28,435 |
| Web Developer | $22,500 | $24,750 | $27,225 |
| Total Salaries | $336,000 | $369,600 | $406,560 |
Financial Plan
You can’t ensure the success of an automobile parts business through just sales. You need to ensure that all the resources are efficiently managed so that your business doesn’t go into a loss.
You can prevent your business from losing resources by developing a financial plan as a part of your motor spare parts business plan. This will include the costs associated with your business’s essential aspects, such as an auto parts franchise cost. In addition, it will analyze where you are spending your money and how you are earning to keep everything in balance.
Here, we are describing the details of the financial plan of Best Rev.
You can also look at a business plan for e-commerce to get a good idea of managing business finances.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.12% | 8.20% | 8.26% |
| Long-term Interest Rate | 8.40% | 8.44% | 8.47% |
| Tax Rate | 24.03% | 24.21% | 24.60% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
| Break-Even Analysis | |
| Monthly Units Break-even | 5340 |
| Monthly Revenue Break-even | $132,500 |
| Assumptions: | |
| Average Per-Unit Revenue | $231.00 |
| Average Per-Unit Variable Cost | $0.62 |
| Estimated Monthly Fixed Cost | $163,800 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $1,573,250 | $1,934,468 | $2,378,622 |
| Direct Cost of Sales | $501,250 | $584,458 | $650,501 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $501,250 | $584,458 | $650,501 |
| Gross Margin | $1,072,000 | $1,350,011 | $1,728,121 |
| Gross Margin % | 68.14% | 69.79% | 72.65% |
| Expenses | |||
| Payroll | $336,000 | $369,600 | $406,560 |
| Sales and Marketing and Other Expenses | $145,000 | $148,000 | $156,000 |
| Depreciation | $2,300 | $2,350 | $2,500 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $2,900 | $3,000 | $3,100 |
| Insurance | $2,100 | $2,100 | $2,100 |
| Rent | $2,900 | $3,000 | $3,200 |
| Payroll Taxes | $24,000 | $25,000 | $27,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $515,200 | $553,050 | $600,460 |
| Profit Before Interest and Taxes | $556,800 | $796,961 | $1,127,661 |
| EBITDA | $556,800 | $796,961 | $1,127,661 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $111,360 | $159,392 | $225,532 |
| Net Profit | $445,440 | $637,569 | $902,129 |
| Net Profit/Sales | 28.31% | 32.96% | 37.93% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $51,000 | $55,080 | $59,486 |
| Cash from Receivables | $22,000 | $23,760 | $25,661 |
| SUBTOTAL CASH FROM OPERATIONS | $73,000 | $79,570 | $85,936 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $74,000 | $79,000 | $85,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $42,000 | $42,000 | $45,000 |
| Bill Payments | $27,000 | $28,000 | $31,000 |
| SUBTOTAL SPENT ON OPERATIONS | $69,000 | $70,000 | $76,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $69,000 | $74,520 | $80,482 |
| Net Cash Flow | $21,000 | $23,000 | $25,000 |
| Cash Balance | $27,000 | $30,000 | $33,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $275,000 | $308,000 | $338,800 |
| Accounts Receivable | $24,000 | $26,880 | $30,213 |
| Inventory | $4,300 | $4,816 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $282,000 | $315,840 | $355,004 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $19,400 | $21,728 | $24,444 |
| TOTAL LONG-TERM ASSETS | $24,400 | $27,328 | $30,744 |
| TOTAL ASSETS | $294,000 | $329,280 | $370,440 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $18,700 | $20,944 | $23,541 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $19,000 | $21,280 | $23,919 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $15,000 | $16,800 | $18,883 |
| Paid-in Capital | $30,000 | $30,000 | $31,000 |
| Retained Earnings | $53,000 | $57,770 | $63,547 |
| Earnings | $193,400 | $210,806 | $231,887 |
| TOTAL CAPITAL | $285,000 | $310,650 | $341,715 |
| TOTAL LIABILITIES AND CAPITAL | $300,000 | $329,280 | $370,440 |
| Net Worth | $293,400 | $319,806 | $351,787 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.25% | 8.03% | 8.90% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.21% | 10.20% | 11.31% | 9.80% |
| Inventory | 5.39% | 5.97% | 6.62% | 9.90% |
| Other Current Assets | 2.11% | 2.34% | 2.59% | 2.40% |
| Total Current Assets | 149.80% | 151.00% | 152.00% | 158.00% |
| Long-term Assets | 11.55% | 11.60% | 11.64% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.90% | 4.94% | 4.98% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.59% | 7.65% | 7.72% | 7.38% |
| NET WORTH | 100.45% | 101.25% | 102.19% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.60% | 97.15% | 99.87% | 99.00% |
| Selling, General & Administrative Expenses | 93.56% | 96.09% | 98.78% | 97.80% |
| Advertising Expenses | 1.52% | 1.56% | 1.60% | 1.40% |
| Profit Before Interest and Taxes | 41.50% | 42.62% | 43.81% | 33.90% |
| Main Ratios | ||||
| Current | 34 | 35 | 36 | 32 |
| Quick | 33 | 33.8 | 34.645 | 33 |
| Total Debt to Total Assets | 0.18% | 0.18% | 0.17% | 0.40% |
| Pre-tax Return on Net Worth | 74.08% | 74.89% | 75.00% | 75.00% |
| Pre-tax Return on Assets | 96.30% | 101.12% | 106.17% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 33.56% | 34.60% | 35.67% | N.A. |
| Return on Equity | 55.80% | 57.53% | 59.31% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.7 | 7.8 | 7.8 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 32.4 | 34.02 | 35 | N.A. |
| Accounts Payable Turnover | 15.6 | 16 | 16.3 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.5 | 2.5 | 2.6 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.04 | -0.03 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $244,000 | $257,664 | $272,093 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.85 | 0.87 | 0.89 | N.A. |
| Current Debt/Total Assets | 1% | 0% | 0% | N.A. |
| Acid Test | 29 | 29.12 | 29.16 | N.A. |
| Sales/Net Worth | 2.1 | 2.2 | 2.2 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
FAQ
1. How to start an auto parts store?
You can start an auto parts store by developing a good auto parts store business plan.
2. How to open an auto parts store?
For starting an auto parts store, you will need to rent or buy a physical space and create management plans.
3. How to start an online auto parts business?
To start an online auto parts business, you will need to manage your business finances and develop a strong marketing plan. Furthermore, you will need to establish social media presence as well.
Download Auto Parts Store Business Plan Sample in pdf
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