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I-Drive Stoke Ltd.

Business Plan
&
Cash Flow Projections

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I-Drive Stoke Ltd. – Car & Van Rental

CONTENTS
The Owner

Objectives

Market Research

Staff

Funding

Projections for the three accounting years to October 2006, 2007 and 2008,
including:

- Highlights
- Survival Ratio

- Cash Flow Forecasts

- Profit and Loss Forecasts

- Balance Sheet Projection

- Analyses of Operational Expenditure

- Sales Analysis

Conclusion

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I-Drive Stoke Ltd. – Car & Van Rental
THE OWNER

The proposed venture is organised by Mr. Mark Smith who is at present the owner
of the successful Property managed business “I-PROPERTIES LTD.”. With a
substantial experience in the area of business management and a very well
established client base Mr. Smith is ideally positioned to undertake this venture.

OBJECTIVES

Our aim is to provide a local Car and Van Rental Service in Stoke at a completive
market rates. In addition to the core business of car rental we are also planning to
provide Caravan Storage Facility. We believe that this service will be particular
popular as it will provide caravan owners with a very cost effective (£15 pounds
per week) and totally secure way of storing their caravans. As well as the above
we are also planning to create the facility to store Damaged Vehicles. This facility
can be used by individuals as well as other businesses. Finally we also will be
offering a Damaged Vehicles Recovery service.

Based on such a diversified structure of the proposed business we believe that it


will be a very stable and profitable venture.

MARKET RESEARCH

We envisage that the following points will be our keys to successfully establishing
the new business: -
− Our large client database already includes many addresses of satisfied
customers from the Stoke area and beyond.
− Many of these customers have asked us when we will open a car rental
business.
− We have already established a partnership arrangement for the Damaged
Vehicle Storage facility with another local business.
− At present there are no available Caravan storage facilities available in the
local area.
− Based on our market research the prices for Car & Van rental are very
completive comparing to the competition.

I-Drive Stoke Ltd. – Car & Van Rental


STAFF

Mr. Smith will be managing this business directly eliminating the need for an
additional managerial post. In addition to the manager two support staff will be
employed to ensure that the business runs smoothly.

FUNDING

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In the initial setup process it is intended to purchase the following types of
vehicles:

Vehicle Type Quantity Type of Initial Cost


Purchase (Incl. VAT)
Large Van 4 Finance Lease £8,400
(Capital)
Small Van 3 Finance Lease £5,250
(Capital)
Medium Car 4 Cash Purchase £24,000
Large Car 4 Cash Purchase £28,000
TOTAL £65,650

The estimated setup costs per the cash flow statement are summarised in the
table below.

Item Cost
(Incl. VAT)
Cost of Vehicles £65,650
Legal fees £500
Initial advertising £4,000
Refurbishment £3,500
Computers & Furniture £2,000
CCTV & Security £1,500
Car Insurance £2,100
Road Tax £2,850
Rent & Rate £2,500
TOTAL £84,600
Capital introduced £ 35,000
by directors
Bank loan £ 50,000

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I-Drive Stoke Ltd. – Car & Van Rental
PROJECTIONS

The attached cash flow, profit and loss and balance sheet projections are based
on the following assumptions and estimates: -

− The business will have the capacity to rent out:

4 Medium Cars - at the rate of £35 per day

4 Large Cars - at the rate of £50 per day

3 Small Vans - at the rate of £35 per day

4 Large Vans - at the rate of £45 per day

We estimate for the vehicle to be initially occupied 10 days per month with the
growth up-to 20 days per month by November.

− The business will be able to store up-to 20 caravans at the rate of £15 per
week.
− The business will store on average 5 damaged vehicles at the rate of £12 per
week.
− Initial sales in the first month are estimated at £8,300.
− An estimated £20,000 sales per month is envisaged from December 2006
once the business has reached its full capacity.

Running cash outflow is estimated to be approximately £19,000 per month once


the initial setup process is completed.

Item Cost
Vehicles – Finance Lease Repayments £1,481
Advertising £400
Car Insurance £2,100
Vehicle Service & Maintenance £750
Rent & Rate £2,500
Staff Cost £3,000
Loan Repayment & Interest £400
Capital Lease - Interest £121
TOTAL £10,752

− Depreciation on vehicles over 5 years on a straight line basis


− Interest on the loan of £50,000 repayable over 15 years has been calculated
at 5.5% p.a.

The business operates on a cash basis; as such there are not debtors or creditors

I-Drive Stoke Ltd. – Car & Van Rental


HIGHLIGHTS

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Revenue Net Net Profit
Period Operating Profit Closing Bank Balance
s Profit (%)
2006/07 211,545 79,570 37.61 83,636 101,253
Jul-6 8,300 -13,822 -166.52 -13,594 4,537
Aug-06 12,130 3,012 24.83 3,365 11,974
Sep-06 14,870 6,532 43.93 6,884 18,787
Oct-06 16,600 6,492 39.11 6,843 25,132
Nov-06 19,890 9,762 49.08 10,112 35,171
Dec-06 19,965 9,817 49.17 10,166 44,723
Jan-07 19,965 9,796 49.07 10,145 54,261
Feb-07 19,965 9,776 48.97 10,124 63,800
Mar-07 19,965 9,756 48.87 10,103 73,338
Apr-07 19,965 9,036 45.26 9,382 82,054
May-07 19,965 9,716 48.66 10,061 91,715
Jun-07 19,965 9,696 48.56 10,040 101,253
2007/08 215,622 84,377 39.13 88,444 186,278
2008/09 239,580 105,181 43.90 109,116 295,768

HIGHLIGHTS

250,000

200,000

150,000
Revenue

100,000 Profit

50,000

0
2006/07 2007/08 2008/09

I-Drive Stoke Ltd. – Car & Van Rental


SURVIVAL RATIO

2006/0 2008/0
Description 7 2007/08 9
Operating Profit / Assets (%) 50.80 35.90 31.20
Acc. Profit / Assets (%) 48.30 66.60 77.00
Equity / Debt (%) 228.90 420.60 673.20
Working Capital / Assets (%) 60.10 74.90 84.00

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Revenues / Assets (%) 128.50 87.60 68.60

Survival Ratio 4.66 4.86 5.74

Survival Ratio

6.00

5.00

4.00
2006/07
3.00 2007/08
2008/09
2.00

1.00

0.00
2006/07 2007/08 2008/09

I-Drive Stoke Ltd. – Car & Van Rental

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CASH FLOW (PART 1)

Aug- Nov- Jan-


Description Jul-06 Sep-06 Oct-06 Dec-06
06 06 07
Cash flow provided/used by operating
activities
Net Income -13,822 3,012 6,532 6,492 9,762 9,817 9,796
Depreciation 1,060 1,081 1,102 1,123 1,144 1,165 1,186
Amortization of Goodwill
Change in long term provisions
Cash Earnings -12,761 4,094 7,634 7,615 10,906 10,982 10,983
Change in Accounts Receivable -3,905 3,905
Change in Inventory
Change in Accounts Payable 879 620 172 576 13
Change in Accrued Expenses
Cash flow provided/used by operating
-16,667 8,878 8,254 7,787 11,482 10,995 10,983
activities
Cash Flows from Investing Activities
Purchase of property, plant, and
-63,617 -1,260 -1,260 -1,260 -1,260 -1,260 -1,260
equipment
Disposal of property, plant and
equipment
Investments in Goodwill
Cash flow provided/used by investing
-63,617 -1,260 -1,260 -1,260 -1,260 -1,260 -1,260
activities
Cash Flow from Financing Activities
Owners' Equity 35,000
Change of long term debt 49,821 -180 -181 -182 -183 -184 -184
Change in short term debt
Payment of Dividend
Cash flow provided/used by financing
84,821 -180 -181 -182 -183 -184 -184
activities
Change in cash and cash equivalents 4,537 7,437 6,813 6,345 10,039 9,552 9,538
Net Cash in the beginning of the year 4,537 11,974 18,787 25,132 35,171 44,723
Net Cash at the end of the year 4,537 11,974 18,787 25,132 35,171 44,723 54,261

I-Drive Stoke Ltd. – Car & Van Rental


CASH FLOW (PART 2)

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May- 2006/0 2007/0
Description Feb-07 Mar-07 Apr-07 Jun-07 2008/09
07 7 8
Cash flow provided/used by operating
activities
Net Income 9,776 9,756 9,036 9,716 9,696 79,570 84,377 105,181
Depreciation 1,207 1,228 1,249 1,270 1,291 14,109 18,518 21,541
Amortization of Goodwill
Change in long term provisions
Cash Earnings 10,984 10,984 10,285 10,986 10,987 93,679 102,895 126,722
Change in Accounts Receivable
Change in Inventory
Change in Accounts Payable -123 123 2,258 -423 346
Change in Accrued Expenses
Cash flow provided/used by operating
10,984 10,984 10,163 11,109 10,987 95,938 102,472 127,068
activities
Cash Flows from Investing Activities
Purchase of property, plant, and
-1,260 -1,260 -1,260 -1,260 -1,260 -77,477 -15,115 -15,115
equipment
Disposal of property, plant and
equipment
Investments in Goodwill
Cash flow provided/used by investing
-1,260 -1,260 -1,260 -1,260 -1,260 -77,477 -15,115 -15,115
activities
Cash Flow from Financing Activities
Owners' Equity 35,000
Change of long term debt -185 -186 -187 -188 -189 47,792 -2,332 -2,464
Change in short term debt
Payment of Dividend
Cash flow provided/used by financing
-185 -186 -187 -188 -189 82,792 -2,332 -2,464
activities
Change in cash and cash equivalents 9,538 9,538 8,716 9,661 9,538 101,253 85,025 109,489
Net Cash in the beginning of the year 54,261 63,800 73,338 82,054 91,715 101,253 186,278
101,25
Net Cash at the end of the year 63,800 73,338 82,054 91,715 101,253 186,278 295,768
3

I-Drive Stoke Ltd. – Car & Van Rental


PROFIT & LOSS (PART 1)

Aug- Sep- Oct- Nov- Dec- Jan-


Description Jul-06
06 06 06 06 06 07

Revenues 8,300 12,130 14,870 16,600 19,890 19,965 19,965


Other Operating Income
Direct Cost
Production Depreciation

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Gross Profit 8,300 12,130 14,870 16,600 19,890 19,965 19,965
Main 20,833 7,683 6,883 8,633 8,633 8,633 8,633
Unrecoverable Debts
Depreciation 1,060 1,081 1,102 1,123 1,144 1,165 1,186
Warranty
Provisions
Amortization of Goodwill
Total Operation
21,894 8,765 7,986 9,757 9,778 9,799 9,820
Expenses
Operating Profit -13,594 3,365 6,884 6,843 10,112 10,166 10,145
Interest Income
Interest Expenses 228 353 352 351 351 350 349
Total Finance -228 -353 -352 -351 -351 -350 -349
Other Income
Other Expenses
Total Others
Income before Tax -13,822 3,012 6,532 6,492 9,762 9,817 9,796
Income Tax
Net Profit -13,822 3,012 6,532 6,492 9,762 9,817 9,796

I-Drive Stoke Ltd. – Car & Van Rental


PROFIT & LOSS (PART 2)
2008/0
Feb- Mar- Apr- May- Jun- 2006/0 2007/0
Description 9
07 07 07 07 07 7 8
19,96
Revenues 19,965 19,965 19,965 19,965 211,545 215,622 239,580
5
Other Operating Income
Direct Cost
Production Depreciation
19,96
Gross Profit 19,965 19,965 19,965 19,965 211,545 215,622 239,580
5
Main 8,633 8,633 9,333 8,633 8,633 113,800 108,660 108,922
Unrecoverable Debts
Depreciation 1,207 1,228 1,249 1,270 1,291 14,109 18,518 21,541
Warranty
Provisions
Amortization of Goodwill

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Total Operation
9,841 9,862 10,583 9,904 9,925 127,909 127,178 130,464
Expenses
10,04
Operating Profit 10,124 10,103 9,382 10,061 83,636 88,444 109,116
0
Interest Income
Interest Expenses 348 347 346 346 345 4,066 4,067 3,935
Total Finance -348 -347 -346 -346 -345 -4,066 -4,067 -3,935
Other Income
Other Expenses
Total Others
Income before Tax 9,776 9,756 9,036 9,716 9,696 79,570 84,377 105,181
Income Tax
Net Profit 9,776 9,756 9,036 9,716 9,696 79,570 84,377 105,181

I-Drive Stoke Ltd. – Car & Van Rental


BALANCE SHEET (PART 1)

Sep- Oct- Nov-


Description Jul-06 Aug-06 Dec-06 Jan-07
06 06 06
Cash 4,537 11,974 18,787 25,132 35,171 44,723 54,261
Accounts Receivable
Inventory
Other Accounts
3,905
Receivable
Total Current Assets 8,442 11,974 18,787 25,132 35,171 44,723 54,261
Fixed Assets 63,617 64,877 66,137 67,397 68,657 69,917 71,177
Acc. Depreciation -1,060 -2,142 -3,244 -4,367 -5,511 -6,677 -7,863
Goodwill
Total Fixed Assets 62,557 62,735 62,893 63,030 63,146 63,240 63,314
107,96
Total Assets 70,999 74,710 81,680 88,162 98,317 117,575
3
Accounts Payable
Other Payables
Bank and S.T. Liabilities
Tax Due
VAT Payable 879 1,498 1,670 2,245 2,258 2,258
Salary & Benefits Payable
Total Current Liabilities 879 1,498 1,670 2,245 2,258 2,258

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L.T. Liabilities 49,821 49,640 49,459 49,278 49,095 48,911 48,727
Other Provisions
Pension Provision
Total L.T. Liabilities 49,821 49,640 49,459 49,278 49,095 48,911 48,727
Total Liabilities 49,821 50,519 50,957 50,947 51,340 51,170 50,985
Owners Equity 35,000 35,000 35,000 35,000 35,000 35,000 35,000
Profit Provision
Retained Earnings -13,822 -10,809 -4,277 2,215 11,977 21,793 31,590
Total Equity 21,178 24,191 30,723 37,215 46,977 56,793 66,590
Total Equity and 107,96
70,999 74,710 81,680 88,162 98,317 117,575
Liabilities 3

I-Drive Stoke Ltd. – Car & Van Rental


BALANCE SHEET (PART 2)

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2006/0 2007/0
Description Feb-07 Mar-07 Apr-07 May-07 Jun-07 2008/09
7 8

Cash 63,800 73,338 82,054 91,715 101,253 101,253 186,278 295,768


Accounts Receivable
Inventory
Other Accounts Receivable
Total Current Assets 63,800 73,338 82,054 91,715 101,253 101,253 186,278 295,768
Fixed Assets 72,437 73,697 74,957 76,217 77,477 77,477 92,592 107,707
Acc. Depreciation -9,070 -10,299 -11,548 -12,818 -14,109 -14,109 -32,628 -54,169
Goodwill
Total Fixed Assets 63,367 63,398 63,409 63,399 63,368 63,368 59,964 53,538
Total Assets 127,166 136,736 145,463 155,114 164,621 164,621 246,243 349,305
Accounts Payable
Other Payables
Bank and S.T. Liabilities
Tax Due
VAT Payable 2,258 2,258 2,136 2,258 2,258 2,258 1,835 2,181
Salary & Benefits Payable
Total Current Liabilities 2,258 2,258 2,136 2,258 2,258 2,258 1,835 2,181
L.T. Liabilities 48,542 48,356 48,169 47,981 47,792 47,792 45,460 42,997
Other Provisions
Pension Provision
Total L.T. Liabilities 48,542 48,356 48,169 47,981 47,792 47,792 45,460 42,997
Total Liabilities 50,800 50,614 50,305 50,239 50,051 50,051 47,296 45,177
Owners Equity 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000
Profit Provision
Retained Earnings 41,366 51,122 60,158 69,874 79,570 79,570 163,947 269,128
Total Equity 76,366 86,122 95,158 104,874 114,570 114,570 198,947 304,128
Total Equity and Liabilities 127,166 136,736 145,463 155,114 164,621 164,621 246,243 349,305

I-Drive Stoke Ltd. – Car & Van Rental


ANALYSIS OF OPERATIONAL EXPNDITURE (PART 1)

Aug- Sep- Oct- Nov- Dec- Jan-


Description Jul-06
06 06 06 06 06 07

Fixed Expenses
Rates 417 417 417 417 417 417 417
Rent 2,083 2,083 2,083 2,083 2,083 2,083 2,083

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Building Insurance 50 50 50 50 50 50 50
Advertising 4,000 1,200 400 400 400 400 400
Accountancy Fees
Legal Fees 500
Building Work 3,500
Computers & Furniture 2,000
CCTV & Security 1,500
Car Insurance 2,100 2,100 2,100 2,100 2,100 2,100 2,100
Road Tax (Van & Minibus) 2,850
Service & Maint. (Van &
750 750 750 750
Minibus)
19,00
Total Fixed Expenses 5,850 5,050 5,800 5,800 5,800 5,800
0

Personnel Cost
Managing Director 1,000 1,000 1,000 1,000
Company Secretary 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Car Cleaner 833 833 833 833 833 833 833
Total Personnel Cost 1,833 1,833 1,833 2,833 2,833 2,833 2,833
20,83
Total 7,683 6,883 8,633 8,633 8,633 8,633
3

I-Drive Stoke Ltd. – Car & Van Rental


ANALYSIS OF OPERATIONAL EXPNDITURE (PART 2)

Feb- Mar- Apr- May- Jun- 2006/0 2007/0 2008/0


Description
07 07 07 07 07 7 8 9

Fixed Expenses
Rates 417 417 417 417 417 5,000 5,250 5,513
Rent 2,083 2,083 2,083 2,083 2,083 25,000 25,000 25,000
Building Insurance 50 50 50 50 50 600 600 600
Advertising 400 400 400 400 400 9,200 4,800 4,800
Accountancy Fees 700 700 1,200 1,200
Legal Fees 500
Building Work 3,500
Computers & Furniture 2,000

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CCTV & Security 1,500
Car Insurance 2,100 2,100 2,100 2,100 2,100 25,200 25,200 25,200
Road Tax (Van & Minibus) 2,850 3,610 3,610
Service & Maint. (Van &
750 750 750 750 750 6,750 9,000 9,000
Minibus)
Total Fixed Expenses 5,800 5,800 6,500 5,800 5,800 82,800 74,660 74,922

Personnel Cost
Managing Director 1,000 1,000 1,000 1,000 1,000 9,000 12,000 12,000
Company Secretary 1,000 1,000 1,000 1,000 1,000 12,000 12,000 12,000
Car Cleaner 833 833 833 833 833 10,000 10,000 10,000
Total Personnel Cost 2,833 2,833 2,833 2,833 2,833 31,000 34,000 34,000
Total 8,633 8,633 9,333 8,633 8,633 113,800 108,660 108,922

I-Drive Stoke Ltd. – Car & Van Rental


SALES ANALYSIS

Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb-


Description
06 06 06 06 06 06 07 07
19,96
Revenues 8,300 12,130 14,870 16,600 19,890 19,965 19,965
5
Medium Car Rental 1,400 1,960 2,520 2,800 3,500 3,500 3,500 3,500
Large Car Rental 2,000 2,800 3,600 4,000 5,000 5,000 5,000 5,000
Small Van Rental 1,050 1,470 1,890 2,100 2,625 2,625 2,625 2,625
Large Van Rental 1,800 2,520 3,240 3,600 4,500 4,500 4,500 4,500
Caravan Storage 120 240 480 960 1,125 1,200 1,200 1,200
Damaged Vehicles
1,800 2,880 2,880 2,880 2,880 2,880 2,880 2,880
Storage
Damaged Vehicles
130 260 260 260 260 260 260 260
Recovery

Mar- May-
Description Apr-07 Jun-07 2006/07 2007/08 2008/09
07 07

Revenues 19,965 19,965 19,965 19,965 211,545 215,622 239,580


Medium Car Rental 3,500 3,500 3,500 3,500 36,680 37,800 42,000
Large Car Rental 5,000 5,000 5,000 5,000 52,400 54,000 60,000
Small Van Rental 2,625 2,625 2,625 2,625 27,510 28,350 31,500

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Large Van Rental 4,500 4,500 4,500 4,500 47,160 48,600 54,000
Caravan Storage 1,200 1,200 1,200 1,200 11,325 12,960 14,400
Damaged Vehicles Storage 2,880 2,880 2,880 2,880 33,480 31,104 34,560
Damaged Vehicles Recovery 260 260 260 260 2,990 2,808 3,120

I-Drive Stoke Ltd. – Car & Van Rental


CONCLUSION

From a detailed review of the enclosed projections, it is to be concluded that the


expected profits are comfortably sufficient to justify the pursuing of the objectives
detailed at the beginning of this business plan.

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