San Francisco Limo provides limousine services in San Francisco, Burlingame and San Jose using limousine sedans of the latest models. The company has been formed as a California corporation with John Smith and David Jones the sole owners. San Francisco Limo will make $52,000 in net profits by the third year.
The transportation/limousine in San Francisco is quite competitive. It is very difficult to find airport transportation. San Francisco Limo will serve these niches to eliminate downtime of the vehicles as well as building a loyal customer base. San Francisco Limo will primarily focus on elderly transportation, private school students transport, and sightseeing trips. These niches have higher margins, but are less price sensitive. There are 10 local private schools that have 3,502 students. There are 25 B&Bs as well as 44 hotels/motels in the area. For elderly transportation, there are 19 retirement or assisted living facilities. These markets are experiencing a 5% increase in growth and have potential customers of 2,000, 2,700 and 1,816 respectively. San Francisco Limo will be serving the Burlingame market and San Jose, as well as the San Francisco market. It is well-known that the boom in the Internet age has brought a lot of money to the city. However, Burlingame is still quite wealthy. Burlingame’s 14 neighbouring communities have a combined income of over $150,000 and 3,632 families. These are the exact people who use limousines.
The Model for Business
The business will be launched by San Francisco Limo at a modest rate. It currently owns three sedans. To reduce costs, the office is house-based. The vehicles are kept in a rented parking garage. This area has a high demand for office space so home-based service will continue to be offered as long it is possible.
At the moment, the industry average for revenue per car is $4,614 and San Francisco Limo generates $2,500. San Francisco Limo has to significantly increase this number in order to continue growing and remaining profitable. This is due to a smaller customer base and participation within competitive niches. The customer base will expand over time, as will penetration in less competitive markets. This will lead to a dramatic increase in revenue per car.
In order for the company to be successful, the business must fully leverage the experience and insight of their management team of John and David. John is a veteran of the transportation industry for eight years. For the first three years John was a limo driver. The next five years saw him rise to the rank of manager of a 12-car limo fleet. It was during this five year tenure that John really learned the majority of his industry knowledge and insight. While David is an equally seasoned manager, his background is in logistics for a shipping company. David has worked nine years in Airborne Express’s logistics department. This experience was instrumental in the development of David’s management skills and gave him the necessary confidence to start his own business.
San Francisco Limo will grow at an acceptable pace as both principals work hard and do a little bit of everything. Revenues for year one are expected to rise to $92,000 by year two, and to $225,000 the following year. By year three, net profits will reach $52,000. This represents 22.94% of sales. In the sixth month, profitability will be attained.
This business plan’s objective is to increase monthly vehicle sales from the current $2,500, to $6.250 by 2002. This will be 35% greater than the 4614% statistical average for sedans in Northern California Region limousine industry.
This can be done by:
- Decreasing the companyâ€™s reliance on competitive airport transfer type business.
- More lucrative market segments within close proximity to the home base will be tapped.
- Keep the CATA contract’s highest-profitable part, but find another use for it.
San Francisco Limo has the mission to be the best hourly hire sedan company within a 10 mile radius of Burlingame. We aim to provide a reliable, safe service that is affordable and accessible to repeat clients who are familiar with the area.
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