February 2006

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 Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Mission........................................................................................................................................1
1.2 Objectives ...................................................................................................................................2
1.3 Keys to Success ........................................................................................................................2
2.0 Company Summary.............................................................................................................................2
2.1 Company History........................................................................................................................2
3.0 Products and Services........................................................................................................................4
4.0 Market Analysis Summary..................................................................................................................5
4.1 Market Segmentation ................................................................................................................5
4.2 Target Market Segment Strategy.............................................................................................6
4.3 Service Business Analysis........................................................................................................7
4.3.1 Competition and Buying Patterns .........................................................................................7
5.0 Strategy and Implementation Summary ............................................................................................7
5.1 Competitive Edge ......................................................................................................................7
5.2 Marketing Strategy.....................................................................................................................7
5.3 Sales Strategy............................................................................................................................8
5.3.1 Sales Forecast........................................................................................................................8
5.4 Milestones...................................................................................................................................9
6.0 Web Plan Summary ..........................................................................................................................11
6.1 Website Marketing Strategy...................................................................................................12
6.2 Development Requirements ...................................................................................................13
6.2.1 Technical Specifications......................................................................................................14
7.0 Management Summary ....................................................................................................................14
7.1 Personnel Plan.........................................................................................................................15
8.0 Financial Plan ....................................................................................................................................16
8.1 Break-even Analysis................................................................................................................17
8.2 Projected Profit and Loss .......................................................................................................18
8.3 Projected Cash Flow...............................................................................................................21
8.4 Projected Balance Sheet ........................................................................................................24
8.5 Business Ratios .......................................................................................................................24
8.6 Financial Risks and Contingencies-2....................................................................................26

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1.0 Executive Summary

Mad Keen Motors is a family-owned business loc ated in Bac kwater Downs, a suburb of London. It
has been under the ownership of the Keen family for 35 years and has grown from a single
mec hanical repair shop to five loc ations that deal with body and mechanical repairs, vehicle
storage and towing, washing and valeting and used car sales.

This plan is an internal document, outlining the effects on the company of adding a website. The
Mad Keen Motors website will ac t as an additional customer service element for all our garages,
offering basic advice on car maintenance, information about our services, staff, and loc ation,
and regular disc ount offers for website visitors on featured repairs and maintenance.

Our current phone-based and fac e-to-fac e customer service is excellent, but requires that
potential customers make ac tive contac t with the company to learn about us. Most of our new
business comes from referrals from current satisfied customers. We hope to make the referral
proc ess easier, by encouraging existing customers to point out our website to their friends,
colleagues, neighbours and family members, building familiarity with our company long before
they need emergency car care or consider buying another car. The "advice" section will be
crucial in establishing customers' trust in our expertise, as will our affiliation with nationally-
syndicated car experts.

By helping loc al customers help themselves, Mad Keen hopes to build trust and relationships with
existing and potential customers.

1.1 Mission

Mad Keen Motors provides excellent automotive care and service to all of our customers,
whether they need to buy a used car, contrac t major body work or get a simple wash and wax.

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1.2 Objectives

The objec tives of the Mad Keen Motors website are:

1. To drive traffic from the website to the garage.

2. To expand the community of Mad Keen Motors customers.
3. To provide customers with a substantial list of questions and answers regarding typical car
repairs.
4. To allow convenient bookings for service and repairs.

1.3 Keys to Success

The keys to success for the company's website will be:

1. Compiling an extensive and thorough listing of questions and answers that will encourage
customers to return to the site whenever they have a problem with their cars.
2. Providing additional expert advice for answers that customers don't find in the base list of
questions in a timely and thorough manner.
3. Offering Web-based promotions that will encourage customers to book cars into the garage
through the website.
4. Communicating the site's existence to the businesses and residents within the loc al area.
5. Getting existing customers to rec ommend the website to others.

2.0 Company Summary

Mad Keen Motors is a family-owned business loc ated in Bac kwater Downs, a suburb of London. It
has been under the ownership of the Keen family for 35 years and has grown from a single
mec hanical repair shop to five loc ations that deal with body and mechanical repairs, vehicle
storage and towing, washing and valeting and used car sales.

2.1 Company History

Mad Keen Motors has done very well. Annual net profits have exceeded £30,000 for the last two
years. We dec reased the marketing budget last year, which led to a small dec line in sales. By
directing the missing amount (and a bit more) towards the creation of a website, we hope to
increase overall sales and net profits. The table shows only last year's performance.

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Table: Past Performance

Past Performance
FY 2003 FY 2004 FY 2005
Sales £0 £0 £798,000
Gross Margin £0 £0 £767,853
Gross Margin % 0.00% 0.00% 96.22%
Operating Expenses £0 £0 £695,820
Stock Turnover 0.00 0.00 5.01

Balance Sheet
FY 2003 FY 2004 FY 2005

Current Assets
Cash £0 £0 £203,488
Stock £0 £0 £12,040
Other Current Assets £0 £0 £70,000
Total Current Assets £0 £0 £285,528

Fixed Assets
Capital Assets £0 £0 £1,250,000
Accumulated Depreciation £0 £0 £15,000
Total Fixed Assets £0 £0 £1,235,000

Total Assets £0 £0 £1,520,528

Current Liabilities
Accounts Payable £0 £0 £20,000
Current Borrowing £0 £0 £0
Other Current Liabilities (interest free) £0 £0 £0
Total Current Liabilities £0 £0 £20,000

Fixed Liabilities £0 £0 £750,000

Total Liabilities £0 £0 £770,000

Paid-in Capital £0 £0 £400,000

Retained Earnings £0 £0 £314,488
Earnings £0 £0 £36,040
Total Capital £0 £0 £750,528

Total Capital and Liabilities £0 £0 £1,520,528

Other Inputs
Payment Days 0 0 30

3.0 Products and Services

Mad Keen Motors offers body and mec hanical repairs, vehicle storage and towing, washing and
valeting and used car sales.

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4.0 Market Analysis Summary

Mad Keen will target the following market segments with its website:

1. New car owners

2. Older luxury car owners
3. Sports car owners
4. Lifetime owners
5. Buyers

4.1 Market Segmentation

Mad Keen Motors segments its customers by type of car ownership. We believe that the type of
car that a person owns says volumes about their driving and therefore their garage
requirements.

1. New car owners: owners of newer cars are likely not to use the company's garage repair
service. If they do have problems with their car, they will return to the dealer where they
bought it. These owners, though, will take great pride in their cars and will bring them often
to the wash and valet service. The goal with these customers is to promote regular use of
the wash and valet service. Eventually, as their warranty runs out, the goal will be to sell
them on the efficiency, excellent service and price competitiveness of Mad Keen Motors'
repair services.
2. Older luxury car owners: people who have either owned their high-end luxury cars for
some years, or are unable to afford the expense of a brand new luxury car but want the feel
of relaxed driving. Both of these groups want to keep their cars in the best shape possible.
Those who have bought second-hand cars will often spend many hours in their cars and will
plac e much importance on reliability. These owners will bring their cars in for regular services
and oc casional valets.
3. Sports car owners: people who are younger, or middle-aged men, and will regard
performance as important. They will also pride themselves on the look of their car and if
involved in a minor sc rape will have the body repaired very quickly, since looks are also
important. These people will have regular service and tune-ups on their cars.
4. Lifetime owners: many of these people have owned their cars for more than five or six
years. They are more likely to be women. They are attac hed to their cars as friends and
though it may be more sensible for them to purchase a new car, they will continue to have
repairs done on their "old faithful."
5. Buyers: the site will provide links to information on new and used car prices and include tips
on what to look for when buying a car.

Table: Market Analysis

Market Analysis
2005 2006 2007 2008 2009
Potential Customers Growth CAGR
New Car Owners 2% 52,000 53,040 54,101 55,183 56,287 2.00%
Sports Car Owner 5% 25,000 26,250 27,563 28,941 30,388 5.00%
Older luxury car owner 10% 30,000 33,000 36,300 39,930 43,923 10.00%
Lifetime Owners 2% 80,000 81,600 83,232 84,897 86,595 2.00%
Used Car Buyers 12% 40,000 44,800 50,176 56,197 62,941 12.00%
Total 5.40% 227,000 238,690 251,372 265,148 280,134 5.40%

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4.2 Target Market Segment Strategy

Aside from the washing and valet services, we are currently targeting owners of older cars or
cars in need of much maintenance, since that will provide us the greatest revenue.

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4.3 Service Business Analysis

The garage repair business as a whole is fragmented. There are a few major dealerships in eac h
area, with a larger number of small garage repair shops, like Mad Keen Motors. Dealers target
customers who buy new and used cars from them. Small garages rely on word of mouth and get
most new customers bec ause of emergency car care needs.

4.3.1 Competition and Buying Patterns

Word of mouth is important in the car repair business, since people are very wary of garages,
due to their lac k of knowledge of cars and engines. Mad Keen Motors leads the loc al competition
in regards to word of mouth, having been in business for over three dec ades under the same
ownership.

Competition from dealerships is bec oming stiffer. Car design is bec oming more and more
specialized, as car manufacturers aim to encourage owners of their vehicles to have services
carried out at their franchised dealerships. However, small garages like Mad Keen have a price
advantage over dealership, usually charging 50-70% less per hour for repair work.

5.0 Strategy and Implementation Summary

The marketing budget for this website is limited, so we will be relying on grassroots and viral
marketing to spread the word about the site. In addition, the narrow geographical foc us of the
business does not necessitate large sc ale advertising and marketing support. We will foc us on
communicating with neighbours, nearby businesses, and existing customers to get the word out
about the new website.

5.1 Competitive Edge

The website's competitive edge is that it:

1. Provides a loc al service for Bac kwater Downs car owners and wannabe car owners;
2. Has the benefit of over 60 years of automobile repair experience to draw from;
3. Provides an additional mode of communication for customers.

In addition, the website itself will be a competitive edge for the company as a whole, opening up
new methods of communicating with our customers and potential customers, and making
bookings and customer service faster and more convenient.

5.2 Marketing Strategy

Each of the car-owning groups identified in the Market Segmentation will be targeted, with
different portions of the website directed at their unique needs.

Our marketing strategy for the website itself involves mailing fliers to all existing customers in our
database, as well as to nearby neighbours and businesses. The fliers will include a special
savings code - by going to the website and entering the code on the mailer, they ac cess a 10%
off coupon they can use on their next visit.

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5.3 Sales Strategy

Mad Keen c loses the sale by always putting our best fac e forward. Employees are thoroughly
trained in c ustomer service, the fac ilities are attrac tive and clean, and estimates for repair work
are prepared promptly. A customer who is not suffering an immediate emergency will "shop
around" until he finds a shop that feels trustworthy - it is our job to earn that trust in every
encounter and contrac t.

5.3.1 Sales Forecast

"Standard revenues" represents projec tions of existing revenue streams over the next three
years. The second line shows projec tions for additional sales and costs directly related to the
new website, either from increased visibility or online coupons.

By the end of the 2006, we expec t almost 2.5% of monthly sales to be directly trac eable to the
website, rising to 4% by the end of 2008.

Table: Sales Forecast

Sales Forecast
FY 2006 FY 2007 FY 2008
Sales
Revenue from all Standard Streams £804,000 £820,080 £836,482
Increased Sales through website £18,360 £23,000 £35,000
Other £0 £0 £0
Total Sales £822,360 £843,080 £871,482

Direct Cost of Sales FY 2006 FY 2007 FY 2008

Direct Costs £32,894 £33,723 £34,859
Other £0 £0 £0
Subtotal Direct Cost of Sales £32,894 £33,723 £34,859

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5.4 Milestones

The following milestones illustrate the timeline for the development and implementation of our
website.

Table: Milestones
Milestones

Milestone Start Date End Date Budget Manager Department

Draft layout to owners 01/02/2006 10/02/2006 £250 Adrian Consultant
Website Content Developed 01/02/2006 01/03/2006 £0 Mark/Barry Owners
Initial UI Completed 10/02/2006 01/03/2006 £500 Adrian Consultant
Back End Developed 01/03/2006 15/03/2006 £700 Adrian Consultant
Design Approved 16/03/2006 20/03/2006 £0 Mark/Barry Owners
Graphics & Logos Completed 20/03/2006 30/03/2006 £0 Elisabeth Admin
BETA Complete 20/03/2006 30/03/2006 £500 Adrian Consultant
User Testing 01/04/2006 07/04/2006 £200 Adrian Consultant
Necessary Changes 07/04/2006 11/04/2006 £200 Adrian Consultant
Site Launch 12/04/2006 12/04/2006 £0 Adrian Consultant
Totals £2,350

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6.0 Web Plan Summary

The key champion for the development of the website is the co-owner of Mad Keen Motors, Mark
Keen. He will be responsible for managing the development of the site and will work closely with
Adrian Monkey on the design and creation. He will also be responsible for implementing the
promotions that will be run at least monthly on the site and will maintain the "Ask the Mechanic"
section on the site.

Most of the site development will be carried out by the consultant, Adrian Monkey. He will
initially be paid a pre-arranged fee as he completes eac h stage of development. Later he will be
paid a monthly retainer to maintain the site.

Barry Keen will work with Mark to develop the content section of the site dealing with typical car
problems and tips on maintaining your vehicle during the different seasons.

Website Demographics Strategy

The website will foc us on the the first three segments, since the last segment of lifetime owners
are less likely to be connec ted to the Internet. It will also target people in the loc al area who
aim to move into any of these categories (buyers), by providing information on how to buy a
used car, and links to sites that contain new car reviews and pricing information.

Traffic Forecast

The following traffic forec ast has been c reated after researching other small loc al service
websites, and based on the size of the potential market with Internet presence in the Bac kwater
Downs area. It is a conservative estimate of monthly page views and unique user sessions.

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Unique 100 175 250 450 600 400 400 600 600 500 400 600
Users
Page 500 800 1250 2200 2900 2000 2000 2900 2900 2400 2000 2900
Views

Total 600 975 1500 2650 3500 2400 2400 3500 3500 2900 2400 3500

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6.1 Website Marketing Strategy

The website will have two main goals:

1. To provide potential and existing customers with information about their cars through the
provision of a typical problems area, plus an Ask the Mechanic Question and Answer section,
where they can have specific questions about their cars answered.
2. To ease the service experience and improve customer service through online booking
database section that will allow them to review their cars service and repair rec ords.

Key sections of the website will be:

• Question and Answer section.

• Ask the Mechanic section.
• Buyers guide--how to look for a new car.
• Links to information on car reviews--new and used.

Strategic Internet Alliances

Mad Keen Motors will rely on its alliance with Web consultant Adrian Monkey to ensure that the
site is maintained and regularly updated.
Business Model
The aim of this site is not to earn direc t sales, but to increase customer satisfac tion rates, and
therefore increase retention levels by 10%. In addition, the goal will be to encourage other
customers in the Bac kwater Downs area to choose Mad Keen Motors over other service and
repair fac ilities. The overall goal of the site in terms of increased sales is 7-10% over the next
year.
Site Positioning
For sports car owners who value the importance of their car's performance Mad Keen Motors
website will give them tips on how to keep their car in tip-top running condition, with things that
they can do themselves, as well as solutions that their loc al garage can provide. Unlike the loc al
quick stop garages, it will provide part of the full-service solution for sports car owners. Unlike
dealerships, prices will be competitive.

For older luxury car owners who value personal service, Mad Keen Motors website will provide
another way for them to interac t with the garage and provide excellent customer service. Unlike
dealerships websites, it will not simply foc us on new cars, it will provide them valuable
information on their make and model of older luxury car as well as a full database of information
on their car that they will be able to ac cess at any time.

For buyers who require an abundance of information when making a purchase, Mad Keen Motors
website will provide an extensive list of online resources, so will ac t as a starting point for their
search for information eac h time they ac cess the Web. Unlike other online sites it will also give
customers information about what to look for in a used car, that may save them the time and
money of a mec hanics inspec tion.

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6.2 Development Requirements

Website Outline
The site will be designed with the following technology: ColdFusion, SQL and HTML.
Home Page: explains the website's relation to the company, with visible links to the other
sections of the site.

Section 1 - Q&A: begins with search. Visible links will go off to the subsections below.

• Ask the Mechanic: simple form that sends directly to the head mechanic.
• Q&A Browse: users will be able to browse through other customer's Q&A sessions.

Section 2 - Booking

• Page 1: first page will display available dates, customer clicks on preferred available time,
and proc eeds to the next page.
• Page 2: customer fills out name, phone number, and car problem.
• Page 3: confirmation page for customer to print off as a reminder.
• User Car Information: first page has two links: "Buying a car" and "Selling a car."
• Buying a car: first half of page with summary information, bottom half contains links to helpful
sites.
• Selling a car: first half of page with summary information, bottom half contains links to helpful
sites.

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6.2.1 Technical Specifications

Front End
Bec ause most people in the UK currently ac cess the Web from their homes at 56.6k or less, the
user interfac e will be a simple as possible, though still looking professional. Graphics will be kept
to a minimum in order to keep download times short. Though pictures of cars for sale will take up
room, thumbnail views with access to larger views will be used.
Information will be organized in buckets listed on front of eac h page so navigation will be as
simple as possible for users.
The Objectives of the User Interfac e will be:
1. To allow easy and fast navigation for the users.
2. To create interest so that people will use and return to the site.
3. Display a lot of content information in a simple a manner as possible.
4. To encourage user interac tion, i.e. bookings online and questions to the mec hanics.
Back End
The bac k end of the site will be very simple, since it is really an information only website. There
will be a number of areas where a visitor can send an email to request an answer to an expert
question, to get information about a used car for sale or to book in their car for service.
Visitors will be able to interac t with the site in two ways:

1. Send an email requesting an appointment to have their car cleaned, valeted or repaired.
2. To ask questions about problems they may be having with their car, for example "I had new
brake pads fitted on my car approximately eight moths ago and they have started squeaking.
Is it possible that they are worn out already?"

We will be hiring a Web engineer, Adrian Monkey, to build the website, so he will build this
functionality into the site. We will rely on Adrian to give us rec ommendations for the database
we will use to support the site.

Resource Requirements
Mad Keen Motors will hire the services of a consultant, Adrian Monkey, to build the website. Both
the bac k end and the front end will be outsourced. The contents of the Website will be
developed by the company owners, who between them have over 60 years of automobile repair
experience, and the secretary who has excellent writing skills.

Future Development
Future development will be assessed after the website has been launched and user tested. It is
hoped that the site will be popular enough to include an area for online repair bookings.

7.0 Management Summary

Mad Keen Motors is a family business, in which eac h employed family member oversees the area
of operations best suited to his or her talents.

• Mark Keen is in c harge of marketing and advertising, and non-mec hanic employee training and
personnel issues. Mark will oversee the company's new website
• Barry Keen is head mec hanic, and supervises all the mec hanics working for Mad Keen Motors.
• Elisabeth Keen oversees the financial aspec ts of the business, including billing, ac counting,
and taxes.

In weekly meetings, these managers follow up on planned goals and deadlines and plan for the
ongoing operations of the business.

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7.1 Personnel Plan

Mad Keen employees ten full-time mec hanics, as well as eight other full-time workers who serve
as rec eptionists, car wash and valet attendants, and salespeople.

Table: Personnel
Personnel Plan
FY 2006 FY 2007 FY 2008
Mark Keen, Co-Owner £24,000 £20,000 £20,000
Barry Keen, Co-Owner £18,000 £20,000 £20,000
Mechanics £240,000 £242,000 £243,000
Other Staff £102,000 £103,000 £104,000
Elisabeth Keen, Admin £18,000 £20,000 £20,000
Total People 17 17 19

Total Payroll £402,000 £405,000 £407,000

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8.0 Financial Plan

Website Expenses and Costs:

We expec t to spend £6,200 over the next year on developing and then maintaining the website,
with regular updates. We project another £6,200 will be needed for the same areas over the
following two years.
In addition, we will have a slightly lower price/c ost spread for website-related sales, once online
coupons and other disc ounts are included. These have been fac tored in to the cost of sales. We
will trac k this amount with a special record for "website coupons" in our sales and customer
database.
Website Revenues:
We anticipate an additional £18,360 of sales in the next year direc tly related to the development
of the website. This is based on reports from other loc ally foc used service businesses which
implemented websites to enhance visibility and promote sales through online disc ounts.

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8.1 Break-even Analysis

The following table and chart show our break-even analysis with the website in plac e.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even £40,547

Assumptions:
Average Percent Variable Cost 4%
Estimated Monthly Fixed Cost £38,925

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8.2 Projected Profit and Loss

This table outlines additions to the standard operating expenses for developing and maintaining
the website. Detailed monthly numbers can be found in the appendix.

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Table: Profit and Loss

Pro Forma Profit and Loss
FY 2006 FY 2007 FY 2008
Sales £822,360 £843,080 £871,482
Direct Cost of Sales £32,894 £33,723 £34,859
Other Costs of Sales £0 £0 £0
Total Cost of Sales £32,894 £33,723 £34,859

Gross Margin £789,466 £809,357 £836,622

Gross Margin % 96.00% 96.00% 96.00%

Expenses
Payroll £402,000 £405,000 £407,000
Other Expense Account Name £0 £0 £0
Depreciation £4,800 £4,800 £4,800
Standard Operating Expenses £0 £190,000 £196,000
Website Infrastructure £0 £0 £0
Website Development £0 £0 £0
Website Maintenance £0 £1,500 £1,500
Expensed Equipment £0 £2,000 £1,200
Payroll Taxes (National Insurance, etc.) £60,300 £60,750 £61,050
Other £0 £0 £0

Total Operating Expenses £467,100 £470,550 £472,850

Profit Before Interest and Taxes £322,366 £338,807 £363,772

EBITDA £327,166 £343,607 £368,572
Interest Expense £73,700 £71,400 £69,000
Taxes Incurred £74,600 £80,222 £88,432

Net Profit £174,066 £187,185 £206,341

Net Profit/Sales 21.17% 22.20% 23.68%

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8.3 Projected Cash Flow

Mad Keen Motors is in a strong c ash position right now, and can afford the relatively small
expenses to start up the website. The following table and chart show our projected cash flow
and cash balance.

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Table: Cash Flow

Pro Forma Cash Flow
FY 2006 FY 2007 FY 2008
Cash Received

Cash from Operations

Cash Sales £822,360 £843,080 £871,482
Subtotal Cash from Operations £822,360 £843,080 £871,482

Additional Cash Received

VAT Received (Output Tax) £143,913 £147,539 £152,509
VAT Repayments £0 £0 £0
New Current Borrowing £0 £0 £0
New Other Liabilities (interest-free) £0 £0 £0
New Fixed Liabilities £0 £0 £0
Sales of Other Current Assets £0 £0 £0
Sales of Fixed Assets £0 £0 £0
New Investment Received £0 £0 £0
Subtotal Cash Received £966,273 £990,619 £1,023,991

Expenditures FY 2006 FY 2007 FY 2008

Expenditures from Operations

Cash Spending £402,000 £405,000 £407,000
Bill Payments £232,757 £245,377 £252,838
Subtotal Spent on Operations £634,757 £650,377 £659,838

Additional Cash Spent

VAT Paid Out (Input Tax) £13,175 £15,026 £15,274
VAT Payments £98,254 £164,996 £137,235
Principal Repayment of Current Borrowing £0 £0 £0
Other Liabilities Principal Repayment £0 £0 £0
Fixed Liabilities Principal Repayment £24,000 £24,000 £24,000
Purchase Other Current Assets £0 £0 £0
Purchase Fixed Assets £0 £0 £0
Dividends £0 £0 £0
Subtotal Cash Spent £770,186 £854,400 £836,348

Net Cash Flow £196,087 £136,219 £187,643

Cash Balance £399,575 £535,794 £723,438

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8.4 Projected Balance Sheet

Our Net Worth will continue to grow as we pay off the mortgage for the two newest Mad Keen
Motors loc ations.

Table: Balance Sheet

Pro Forma Balance Sheet
FY 2006 FY 2007 FY 2008
Assets

Current Assets
Cash £399,575 £535,794 £723,438
Stock £2,748 £2,817 £2,912
Other Current Assets £70,000 £70,000 £70,000
Total Current Assets £472,323 £608,611 £796,350

Fixed Assets
Fixed Assets £1,250,000 £1,250,000 £1,250,000
Accumulated Depreciation £19,800 £24,600 £29,400
Total Fixed Assets £1,230,200 £1,225,400 £1,220,600
Total Assets £1,702,523 £1,834,011 £2,016,950

Liabilities and Capital FY 2006 FY 2007 FY 2008

Current Liabilities
Accounts Payable £19,446 £20,233 £20,830
Current Borrowing £0 £0 £0
Other Current Liabilities £130,738 £263,250 £400,485
Subtotal Current Liabilities £150,183 £283,483 £421,316

Fixed Liabilities £726,000 £702,000 £678,000

Total Liabilities £876,183 £985,483 £1,099,316

Paid-in Capital £400,000 £400,000 £400,000

Retained Earnings £350,528 £524,594 £711,779
Earnings £174,066 £187,185 £206,341
Total Capital £924,594 £1,111,779 £1,318,119
Total Liabilities and Capital £1,800,777 £2,097,262 £2,417,435

Net Worth £826,340 £848,528 £917,634

8.5 Business Ratios

The following table outlines some of the more important ratios from the General Automotive
Repair Shop industry. The final column, Industry Profile, details specific ratios based on the
industry.

Page 24
 Mad Keen Motors

Table: Ratios
Ratio Analysis
FY 2006 FY 2007 FY 2008 Industry Profile
Sales Growth 3.05% 2.52% 3.37% 5.37%

Percent of Total Assets

Stock 0.16% 0.15% 0.14% 8.50%
Other Current Assets 4.11% 3.82% 3.47% 24.67%
Total Current Assets 27.74% 33.18% 39.48% 45.07%
Fixed Assets 72.26% 66.82% 60.52% 54.93%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 8.82% 15.46% 20.89% 22.43%

Fixed Liabilities 42.64% 38.28% 33.62% 26.48%
Total Liabilities 51.46% 53.73% 54.50% 48.91%
Net Worth 48.54% 46.27% 45.50% 51.09%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 96.00% 96.00% 96.00% 100.00%
Selling, General & Administrative Expenses 74.83% 73.80% 72.32% 71.18%
Advertising Expenses 0.00% 0.00% 0.00% 1.75%
Profit Before Interest and Taxes 39.20% 40.19% 41.74% 2.37%

Main Ratios
Current 3.14 2.15 1.89 1.48
Quick 3.13 2.14 1.88 0.91
Total Debt to Total Assets 51.46% 53.73% 54.50% 54.67%
Pre-tax Return on Net Worth 30.09% 31.51% 32.12% 3.63%
Pre-tax Return on Assets 14.61% 14.58% 14.61% 8.00%

Additional Ratios FY 2006 FY 2007 FY 2008

Net Profit Margin 21.17% 22.20% 23.68% n.a
Return on Equity 21.06% 22.06% 22.49% n.a

Activity Ratios
Stock Turnover 8.86 12.12 12.17 n.a
Accounts Payable Turnover 11.94 12.17 12.17 n.a
Payment Days 30 29 30 n.a
Total Asset Turnover 0.48 0.46 0.43 n.a

Debt Ratios
Debt to Net Worth 1.06 1.16 1.20 n.a
Current Liab. to Liab. 0.17 0.29 0.38 n.a

Liquidity Ratios
Net Working Capital £322,140 £325,128 £375,034 n.a
Interest Coverage 4.37 4.75 5.27 n.a

Additional Ratios
Assets to Sales 2.07 2.18 2.31 n.a
Current Debt/Total Assets 9% 15% 21% n.a
Acid Test 3.13 2.14 1.88 n.a
Sales/Net Worth 1.00 0.99 0.95 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Page 25
 Mad Keen Motors

8.6 Financial Risks and Contingencies-2

Risks and Assumptions

The key risk with this website for Mad Keen Motors is that people will get information on their
cars from other plac es. Since it is not typical for small garages to have this much c ontent on
their sites, Bac kwater Downs loc als may not think to search for car and garage information on
the Web. As cars and components bec ome more specialized and car owners may tend to trust
dealerships more, they will be less likely to use their loc al garage. This is a risk to the business
as a whole, though we hope that the website will help to reduce Mad Keen Motors' exposure to
this risk.

If the site is not supported properly and people do not get quick answers to their questions,
they may assume that service from the garage itself is lac king too. Therefore, emails must be
answered promptly, the site must be updated regularly and the garage workers should also be
aware of information and features on the website, and be educated about it when they speak to
customers.

Contingency Plan
Since there will be minimal integration between the website and Mad Keen Motors' c ore business,
a contingency plan is not a huge concern. If use of the site falls well below forec asted levels
and it proves not to be cost effective to continue the site in its current format, the site will be
changed to essentially a business card site, where people can get information about the garage,
loc ation, hours, ownership information, etc.

Page 26
 Appendix
Table: Sales Forecast

Sales Forecast
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Sales VAT Rate
Revenue from all Standard Streams 17.50% £67,000 £67,000 £67,000 £67,000 £67,000 £67,000 £67,000 £67,000 £67,000 £67,000 £67,000 £67,000
Increased Sales through website 17.50% £660 £1,000 £1,400 £1,700 £1,350 £1,350 £1,350 £1,700 £2,050 £2,400 £1,700 £1,700
Other 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Total Sales £67,660 £68,000 £68,400 £68,700 £68,350 £68,350 £68,350 £68,700 £69,050 £69,400 £68,700 £68,700

Direct Cost of Sales VAT Rate Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Direct Costs 17.50% £2,706 £2,720 £2,736 £2,748 £2,734 £2,734 £2,734 £2,748 £2,762 £2,776 £2,748 £2,748
Other 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Subtotal Direct Cost of Sales £2,706 £2,720 £2,736 £2,748 £2,734 £2,734 £2,734 £2,748 £2,762 £2,776 £2,748 £2,748

Page 1
 Appendix
Table: Personnel

Personnel Plan
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Mark Keen, Co-Owner 0% £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000
Barry Keen, Co-Owner 0% £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500
Mechanics 0% £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000 £20,000
Other Staff 0% £8,500 £8,500 £8,500 £8,500 £8,500 £8,500 £8,500 £8,500 £8,500 £8,500 £8,500 £8,500
Elisabeth Keen, Admin 0% £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500 £1,500
Total People 17 17 17 17 17 17 17 17 17 17 17 17

Total Payroll £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500

Page 2
 Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Sales VAT Rate £67,660 £68,000 £68,400 £68,700 £68,350 £68,350 £68,350 £68,700 £69,050 £69,400 £68,700 £68,700
Direct Cost of Sales £2,706 £2,720 £2,736 £2,748 £2,734 £2,734 £2,734 £2,748 £2,762 £2,776 £2,748 £2,748
Other Costs of Sales 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Total Cost of Sales £2,706 £2,720 £2,736 £2,748 £2,734 £2,734 £2,734 £2,748 £2,762 £2,776 £2,748 £2,748

Gross Margin £64,954 £65,280 £65,664 £65,952 £65,616 £65,616 £65,616 £65,952 £66,288 £66,624 £65,952 £65,952
Gross Margin % 96.00% 96.00% 96.00% 96.00% 96.00% 96.00% 96.00% 96.00% 96.00% 96.00% 96.00% 96.00%

Expenses VAT Rate

Payroll £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500
Other Expense Account Name 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Depreciation £400 £400 £400 £400 £400 £400 £400 £400 £400 £400 £400 £400
Standard Operating Expenses 15.00% £15,000 £15,000 £15,000 £15,000 £15,000 £15,000 £15,000 £15,000 £15,000 £15,000 £15,000 £15,000
Website Infrastructure 0.00% £0 £0 £0 £350 £350 £350 £0 £0 £0 £0 £0 £0
Website Development 17.50% £600 £600 £600 £0 £0 £0 £0 £0 £0 £0 £0 £0
Website Maintenance 17.50% £0 £0 £0 £150 £150 £150 £150 £150 £150 £150 £150 £150
Expensed Equipment 17.50% £2,000 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Payroll Taxes (National Insurance, etc.) 15.00% £5,025 £5,025 £5,025 £5,025 £5,025 £5,025 £5,025 £5,025 £5,025 £5,025 £5,025 £5,025
Other 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0

Total Operating Expenses VAT Rate £38,925 £38,925 £38,925 £38,925 £38,925 £38,925 £38,925 £38,925 £38,925 £38,925 £38,925 £38,925

Profit Before Interest and Taxes £26,029 £26,355 £26,739 £27,027 £26,691 £26,691 £26,691 £27,027 £27,363 £27,699 £27,027 £27,027
EBITDA £26,429 £26,755 £27,139 £27,427 £27,091 £27,091 £27,091 £27,427 £27,763 £28,099 £27,427 £27,427
Interest Expense £6,233 £6,217 £6,200 £6,183 £6,167 £6,150 £6,133 £6,117 £6,100 £6,083 £6,067 £6,050
Taxes Incurred £5,939 £6,041 £6,162 £6,253 £6,157 £6,162 £6,167 £6,273 £6,379 £6,485 £6,288 £6,293

Net Profit £13,857 £14,097 £14,377 £14,591 £14,367 £14,379 £14,390 £14,637 £14,884 £15,131 £14,672 £14,684
Net Profit/Sales 20.48% 20.73% 21.02% 21.24% 21.02% 21.04% 21.05% 21.31% 21.56% 21.80% 21.36% 21.37%

Page 3
 Appendix
Table: Cash Flow

Pro Forma Cash Flow

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Cash Received

Cash from Operations

Cash Sales £67,660 £68,000 £68,400 £68,700 £68,350 £68,350 £68,350 £68,700 £69,050 £69,400 £68,700 £68,700
Subtotal Cash from Operations £67,660 £68,000 £68,400 £68,700 £68,350 £68,350 £68,350 £68,700 £69,050 £69,400 £68,700 £68,700

Additional Cash Received VAT Rate

VAT Received (Output Tax) £11,841 £11,900 £11,970 £12,023 £11,961 £11,961 £11,961 £12,023 £12,084 £12,145 £12,023 £12,023
VAT Repayments £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
New Current Borrowing £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
New Other Liabilities (interest-free) £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
New Fixed Liabilities £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Sales of Other Current Assets 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Sales of Fix ed Assets 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
New Investment Received £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Subtotal Cash Received £79,501 £79,900 £80,370 £80,723 £80,311 £80,311 £80,311 £80,723 £81,134 £81,545 £80,723 £80,723

Expenditures Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Expenditures from Operations

Cash Spending £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500 £33,500
Bill Payments £20,573 £17,200 £17,287 £17,443 £19,113 £20,069 £20,071 £20,064 £20,180 £20,283 £20,374 £20,100
Subtotal Spent on Operations £54,073 £50,700 £50,787 £50,943 £52,613 £53,569 £53,571 £53,564 £53,680 £53,783 £53,874 £53,600

Additional Cash Spent VAT Rate

VAT Paid Out (Input Tax) £754 £754 £754 £1,037 £1,230 £1,232 £1,232 £1,237 £1,240 £1,242 £1,230 £1,235
VAT Payments £0 £0 £0 £33,449 £0 £0 £32,446 £0 £0 £32,359 £0 £0
Principal Repayment of Current Borrowing £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Other Liabilities Principal Repayment £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Fix ed Liabilities Principal Repayment £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000
Purchase Other Current Assets 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Purchase Fix ed Assets 17.50% £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Dividends £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Subtotal Cash Spent £56,827 £53,454 £53,540 £87,429 £55,843 £56,801 £89,249 £56,801 £56,920 £89,384 £57,103 £56,835

Net Cash Flow £22,674 £26,446 £26,830 (£6,707) £24,469 £23,510 (£8,938) £23,922 £24,214 (£7,839) £23,619 £23,888
Cash Balance £226,162 £252,608 £279,438 £272,731 £297,199 £320,709 £311,772 £335,693 £359,907 £352,068 £375,688 £399,575

Page 4
 Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Assets Starting Balances

Current Assets
Cash £203,488 £226,162 £252,608 £279,438 £272,731 £297,199 £320,709 £311,772 £335,693 £359,907 £352,068 £375,688 £399,575
Stock £12,040 £9,334 £6,614 £3,878 £2,748 £2,734 £2,734 £2,734 £2,748 £2,762 £2,776 £2,748 £2,748
Other Current Assets £70,000 £70,000 £70,000 £70,000 £70,000 £70,000 £70,000 £70,000 £70,000 £70,000 £70,000 £70,000 £70,000
Total Current Assets £285,528 £305,495 £329,222 £353,315 £345,479 £369,933 £393,443 £384,506 £408,441 £432,669 £424,844 £448,436 £472,323

Fix ed Assets
Fix ed Assets £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000 £1,250,000
Accumulated Depreciation £15,000 £15,400 £15,800 £16,200 £16,600 £17,000 £17,400 £17,800 £18,200 £18,600 £19,000 £19,400 £19,800
Total Fixed Assets £1,235,000 £1,234,600 £1,234,200 £1,233,800 £1,233,400 £1,233,000 £1,232,600 £1,232,200 £1,231,800 £1,231,400 £1,231,000 £1,230,600 £1,230,200
Total Assets £1,520,528 £1,540,095 £1,563,422 £1,587,115 £1,578,879 £1,602,933 £1,626,043 £1,616,706 £1,640,241 £1,664,069 £1,655,844 £1,679,036 £1,702,523

Liabilities and Capital Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Current Liabilities
Accounts Payable £20,000 £16,624 £16,707 £16,807 £18,444 £19,400 £19,402 £19,391 £19,504 £19,604 £19,704 £19,430 £19,446
Current Borrowing £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Other Current Liabilities £0 £11,087 £22,233 £33,449 £44,435 £55,166 £65,895 £76,624 £87,410 £98,254 £109,157 £119,950 £130,738
Subtotal Current Liabilities £20,000 £27,710 £38,940 £50,256 £62,879 £74,566 £85,298 £96,015 £106,914 £117,858 £128,861 £139,380 £150,183

Fix ed Liabilities £750,000 £748,000 £746,000 £744,000 £742,000 £740,000 £738,000 £736,000 £734,000 £732,000 £730,000 £728,000 £726,000
Total Liabilities £770,000 £775,710 £784,940 £794,256 £804,879 £814,566 £823,298 £832,015 £840,914 £849,858 £858,861 £867,380 £876,183

Paid-in Capital £400,000 £400,000 £400,000 £400,000 £400,000 £400,000 £400,000 £400,000 £400,000 £400,000 £400,000 £400,000 £400,000
Retained Earnings £314,488 £350,528 £350,528 £350,528 £350,528 £350,528 £350,528 £350,528 £350,528 £350,528 £350,528 £350,528 £350,528
Earnings £36,040 £13,857 £27,954 £42,331 £56,921 £71,288 £85,667 £100,057 £114,695 £129,579 £144,710 £159,382 £174,066
Total Capital £750,528 £764,385 £778,482 £792,859 £807,449 £821,816 £836,195 £850,585 £865,223 £880,107 £895,238 £909,910 £924,594
Total Liabilities and Capital £1,520,528 £1,540,095 £1,563,422 £1,587,115 £1,612,328 £1,636,383 £1,659,493 £1,682,601 £1,706,137 £1,729,965 £1,754,098 £1,777,290 £1,800,777

Net Worth £750,528 £764,385 £778,482 £792,859 £774,000 £788,367 £802,746 £784,690 £799,327 £814,211 £796,984 £811,656 £826,340

Page 5