San Francisco Limo, a limousine company that serves San Francisco, Burlingame & San Jose, offers high quality transportation services with late-model limousine sedans. John Smith and David Jones are the sole owners of the company, which is a California corporation. San Francisco Limo will earn $52,000 net profit in the third year.
The Market
The transportation/limousine in San Francisco is quite competitive. The prices for airport transportation, as well as weddings, prom nights and ‘nights on town’ are very competitive. Margins have been eroded. San Francisco Limo is able to serve these niches and reduce downtime while building a loyal base. San Francisco Limo will be focusing on the private school student transportation, elderly transportation, as well as sightseeing trips. These niches offer higher margins but are also less price sensitive. There are 10 private schools with 3,502 students. For the sight seeing market, there are 25 B&Bs and 44 hotels/motels and for the elderly transportation market there are 19 retirement and assisted living facilities in the area. These markets show a 5% rate of growth, with potential customers in the following three areas: 2,700, 1,816 and 2,000. San Francisco Limo will provide service to San Jose and Burlingame. Burlingame has an affluent population, which is not surprising given the large amount of money that flows through the city due to the boom from the Internet age. Burlingame has 14 neighboring communities with a total of 3,632 households making more than $150,000. That is the exact demographic that uses limousines.
A Business Model
San Francisco Limo will launch the business at a conservative rate. The company 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.
Right now, the industry average is $4.614 per vehicle, with San Francisco Limo only earning $2,500. San Francisco Limo has to significantly increase this number in order to continue growing and remaining profitable. The low market average revenue is due to a small customer base, and participation in niche markets. 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.
The Management Team
For the company to succeed, it must leverage the knowledge and experience of John & David their management team. John is an industry veteran of eight years. John was a limo driver the first three years. For the next five years he was elevated to manager of a 12 car limo fleet. John gained most of his industry knowledge during this five-year tenure. David is an experienced manager. His background is in logistics, which he worked for a shipping firm. David has spent nine years at Airborne Express in their logistics department. This experience was crucial in David’s development as a manager and gave him the confidence to open his own business.
San Francisco Limo will grow in a moderate pace, with both principals hard at work doing a little bit. Year one revenue is forecasted to reach $92,000, jumping to $225,000 by year three. 52,000 net profits by year three will represent 22.94% sales. Six months from now, profitability will be achieved.
1.1 Objectives
This business plan has the objective to increase monthly revenue per vehicle from the current $2,500 to $6.250 by the end 2001. This figure will be 35% more than the national average of $4,614, which is the median for limousines in the Northern California Region.
This will be accomplished by:
- Reducing the company’s dependence on airport transfer types that are competitive.
- Increased penetration of lucrative markets close to your home base
- The most lucrative part of the CATA agreement should be kept, but you can find a better use for the vehicle.
1.2 Mission
San Francisco Limo has the mission to be the best hourly hire sedan company within a 10 mile radius of Burlingame. We are committed to serving repeat customers who value and can afford reliable, professional service from drivers with extensive knowledge of the area.