Online Auction Company - Business Plan1

7/31/2019 Online Auction Company - Business Plan1

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COMPANY Business Plan

1.0 Executive Summary1.1 Objectives1.2 Mission1.3 Keys to Success

2.0 COMPANY Summary2.1 COMPANY Ownership2.2 COMPANY Location and Facilities

3.0 Services3.1 Service Description3.2 Competitive Comparison3.3 Technology3.4 Future Services

4.0 Market Analysis Summary4.1 Market Segmentation4.2 Target Market Segment Strategy

4.2.1 Market Needs

4.2.2 Market Trend4.2.3 Market Growth

5.0 Strategy and Implementation5.1 Value Propositions5.2 Competitive Edge5.3 Marketing Strategy

5.3.1 Positioning Statement5.3.2 Pricing Strategy5.3.3 Promotion Strategy5.3.4 Distribution Strategy5.3.5 Marketing Programs

5.4 Sales Strategy

5.4.1 Sales Forecast5.4.2 Sales Programs5.5 Strategic Alliances

6.0 Management Summary6.1 Organizational Structure6.2 Management Team6.3 Management Team Gaps6.4 Personnel Plan

7.0 Financial Plans7.1 Break Even Analysis7.2 Projected Profit and Loss

7.3 Exit Plan

8.0 Appendixa. Advertisementb. Pressc. Trade Show Listd. Sales Incentive Programe. Personnel Planf. Customer Survey Resultsg. Press Kit


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1.0 ExecutiveSummaryCOMPANY is an Internet business-to-business auction site that provides insurance companies andfinancial institutionswithamoreprofitableandefficientmethodofmarketingspecialtysalvagevehiclestoanestablishedbaseoflicenseddealers,dismantlers,rebuilders,andexporters.Byuniting in-depthknowledgeoftheautosalvage industrywiththevitalityandreachoftheInternet,thesiteoffersacomprehensivepackageofe-commercesolutionstobothbuyersandsellers.COMPANY isvastlymore convenient thanusing traditional auction yards, becausesellers andbuyerssave timeand effort by participating from their offices, shops, and homes. As well, traditional auctionyardsarelimitedintheirgeographicalreachandthepricestheycanbring.COMPANY eliminates these restrictions by connecting buyers and sellers nationwide. COMPANYoffersanew,powerful,moreprofitable,vastlymoreconvenientmethodofsalvageauctioning. Througha real-time, interactive system, salvage vehicles are marketed directly to an established base ofthousandsof licenseddealers,dismantlers, rebuilders,andexportersnationwide.Thebuyerspurchasedirectly from the insurance companies and financial institutions. COMPANY acts only as a facilitator,notamiddleman.All bids are open rather than sealed, which stimulates competitive bidding, resulting in higher salesprices. Andsincevehicleswillbemarketednationwide, thepotentialnumberofbuyers ishuge, furtherresultingincompetitivebiddingandgreaterreturns.Sincevehicleswillbemarketedwithoutgeographicbarriers,thepotentialnumberofprospectivebuyersisessentiallyunlimited--furtherresultingincompetitivebiddingandincreasedreturns.The foremost advantage of the site is the state-of-the-art interactive software, encompassing servicessuchasauctionwatch,which isuseful forkeeping trackofwinningand losingbidsonaparticular item;autobid, which automatically adjusts a buyer's bid to beat previous bids, up to a confidentialpredetermined maximum set by the buyer; and categorywatch, which e-mails a user when a vehiclematchingtheuser'scriteriaisaddedtothesite.Other

attractive

merits

include

the

dynamic

close

feature.

If

bidding

occurs

within

the

last

five

minutes

ofanauction,dynamicclosewillkeep theauctionopenuntilbiddinghasceased for fiveminutes, thusmaximizingthesaleprice.Thesiteincludesphotosanddescriptionsofthevehiclesbeingoffered,andisopenforbidding24hoursaday,sevendaysaweek. Currently, there isnomembershipcharge. Buyerspaya low five-percentfeeperpurchase. Winningbiddersarecontactedbye-mail.Revenue is generated through percentage based charges to both the buyer and seller. Manyopportunitiestoexpandourrevenuepotentialexist, includingoverallsalvagemanagementforinsurancecompanies via aWeb-based system, handling of catastrophic events with an onsite response service,contingency fees for exceeding vehicle return goals, membership fees, transportation services forbuyersintheformofreversebidpricing,andmarketingGSAvehicles.1.1 Objectives

COMPANY'sobjectivesareasfollows:Three month:1. Raisecapitaltosupportgrowthandexpansion.2. LaunchregionaltestprogramsinPennsylvaniawithnewinsurancecompanies.3. ExpandexistingrelationshipwithProgressiveInsuranceintoadditionalregionaland

nationaloffices.4. UpgradeOpenSiteauctionsoftwaretoincludetheAuctionNowpackage.


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5. Increasevehicleinventorythroughexistingandexpandingnewrelationshipwithinsurancecompanies.

6. Exploreadditionalopportunitieswithbanks,leasingandrepossessioncompanies.7. Hirestaffmemberstosupportgrowth.Three -six months:1. Nationwideroll-outwith3topinsurancecompanies.2. Continuetheexpansionofsalvagevehicleinventory.3. Hirestaffmemberstofacilitatecustomeracquisition,retentionandexpansion.By yearend:1. GrossRevenuesof$4.9M.2. Sell1000vehicles.3. Experiencea220%increaseinsales.4. Own.05%ofthespecialtysalvagemarketof540,000vehicles.

1.2 MissionCOMPANYstrivestohelpallsegmentsofthespecialtysalvageindustryrealizetheirfullproductivityandprofitabilitypotentialthroughtechnology,e-commerceandinformationmanagement.

1.3 Keys toSuccess1. Securingasupplyofsalvagevehiclethroughrelationshipswithnationalinsurers.1. Maintainingthefrontrunnerpositionintheracetobe"the"internetauctionsolutionforthe

insurancecompanies,dealersanddismantlers.2. Drivingdealersanddismantlerstothesitetopurchase.3. Trulyprovidinga"service"totheinsurancecompanies,dealersanddismantlers.4. Providingthespeedandreturnsfortheinsurancecompanies.5. Securingtoptalentformanagementpositions.6. Expandingproductofferingtoincludeparts,off-leasevehicle,repossessions.7. Capturingmarketsharefromexistingliveauctionmarket.

2.0 COMPANY Summary2.1 COMPANYOwnership

REMOVEDFORCONFIDENTIALITYPURPOSES2.2 COMPANY Locationand Facilities

REMOVEDFORCONFIDENTIALITYPURPOSES3.0 Services

3.1 Service DescriptionCOMPANYisanInternetbusiness-to-businessauctionsitethatprovidesinsurancecompaniesandfinancialinstitutionswithamoreprofitableandefficientmethodofmarketingspecialtysalvagevehiclestoanestablishedbaseoflicenseddealers,dismantlers,rebuilders,andexporters.

COMPANYexpandsvehicleavailabilityanddistribution,expeditesthetransactionprocess(fromthevehicledeclared"totaled"todeliverytothedealerordismantle)andincreasesthereturnsfortheinsuranceagencies. BysellingontheInternet-time,location,reachandcapacityarelimitless. Sellersandbuyerssavetimeandeffortbyparticipatingfromtheiroffices,


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shops,carsandhomeseliminatinggeographicalbarriers. Throughareal-time,interactivesystem,salvagevehiclesaremarketeddirectlytoanationwidepoolofpotentialcustomers.Allbidsareopenratherthansealed,whichstimulatescompetitivebidding,andhighersaleprices.COMPANYactsonlyasafacilitator,notamiddleman.Thebuyerspurchasedirectlyfromtheinsurancecompaniesandfinancialinstitutions.COMPANYhasthefirst-moveradvantageinonlineauctionsofspecialtyautos. Thefirmistheonlyfull-service,interactive,totallyonlineauctionvenueforspecialtysalvagevehicles. Duetoexpanding itsservices tobuyersandsellersnationwide,COMPANY ispoisedforphenomenalgrowthinthecomingmonths.

3.2 CompetitiveComparisonCurrentlytherearethreetypesofcompetitors: LiveAuctions OnlineAuctions TheInsuranceCompaniesLiveAuctions:Thereareseveralnationwideliveauctionbusinesses. ThethreelargestcompetitorsareInsuranceAutoAuctions(IAA),CoPartandSadisco. Theyrepresent36%oftheoverallsalvageauctionmarket. Theremaining64%ofthemarketconsistsofsmallregionalandlocalsalvagepools.

OnlineAuctions:Thereisahand-fullofonlineauctionsites:DirectSalvage.com,SalvageSolutions.com,IAAI.com,Coparts.comandSadisco.com.Allofthecompetitorshavedevelopedonlinepresencethatsupportstheirofflineliveauction. However,thebidsthataresubmittedonlinequalifythehighestbiddertoberepresentedattheliveauction.Noneoftheabovementionedcompetitorsaretrulyauctioningsalvagevehiclesonline.Theyhavecreatedaninfrastructurethatsupportsanddoesnotcannibalizetheirexistingliveauctionbusiness.Insurance Companies:

Thereisthepossibilitythattheinsurancecompaniesmayenterintotheauctionbusinessthemselves. However,thiswillrequirethemtotakeonthefullburdenofmanagingtheprocess. Theyarelookingforthehighestreturnpossible,intheshortestperiodoftimewiththegreatestease. IfCOMPANYcanprovidethemwiththespeed,quality,returnandservicenecessarywebelievetheywillnotassumetheburdenthemselves.COMPANYistheonly100%interactiveonlineauctionsiteontheInternet. OnlineAuctioningprovidesaconvenientandeasymethodoflocating,biddingandpurchasingasalvagevehicle.TheInternetremoveslimitationofgeographyandopenstheavailableinventoryofsalvagevehicletoanationwidelevelwhilesimultaneouslyexpandingthemarketofinterestedbuyers.Withmorevehiclesbeingviewedbymorebuyers,thereisanincreasedprobabilityofhigherandfasterreturnsfortheinsurancecompanies.

3.3 TechnologyTheforemostadvantageofthesiteisthestate-of-the-art OpenSiteinteractivesoftware,encompassingservicessuchas:Auctionwatch: usefulforkeepingtrackofwinningandlosingbidsonaparticularitem.Autobid: automaticallyadjustsabuyer'sbidtobeatpreviousbids,upto aconfidential

predeterminedmaximumsetbythebuyer.Categorywatch: e-mailsauserwhenavehiclematchingtheuser'scriteriaisaddedto thesite.


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Otherattractivemeritsincludethedynamicclosefeature. Ifbiddingoccurswithinthelastfiveminutesofanauction,dynamicclosewillkeeptheauctionopenuntilbiddinghasceasedforfiveminutes,thusmaximizingthesaleprice.Thesiteincludesphotosanddescriptionsofthevehiclesbeingoffered,andisopenforbidding24hoursaday,sevendaysaweek.OpenSite:

Opensiteistheleaderinonlineauctionsoftware.Theybringtogetherbuyersandsellers,helpingbusinessesdynamicallymanageinventory,createsaleschannels,attractcustomers,andtestmarketnewproductstocreateefficientmarketsforgoodsandservices.Foundedin1996,OpenSitewasthefirstCOMPANY toofferpackagedonlineauctionapplications.TheCOMPANYisanaward-winning,dynamiccommercepioneerwithpartnersworldwidededicatedtosellingandsupportingOpenSitesolutions. Theyhaveover600licensedandoutsourcedauctionsolutionstocustomerssuchasTheSharperImage,CNET,JohnDeere,CaseCapital,andVerticalNet,OpenSiteissupportingthedynamiccommerceinitiativesofleadingcorporationsinarangeofindustries.

3.4 Future ServicesCOMPANYisplanningtoexpanditsservicesbeyondauctionsandcreateatruecentralmarketplacebyofferingavarietyofvalue-addedbenefitstobuyersandsellers. Thefirmwillfunctionasaverticalauctionhubandeasilymoveintoadjacentverticalmarkets.Manyopportunitiestoexpandtherevenuepotentialexist,includingoverallsalvagemanagementforinsurancecompaniesviaaWeb-basedsystem,handlingofcatastrophiceventswithanonsiteresponseservice,transportationservicesforbuyersintheformofreversebidpricing.Stillfurther,thefirmcouldbeginauctioningsalvageboats,parts,heavyequipment,etc.

COMPANYcouldalsoexpandbeyondthesalvageauctioningintheareaofoff-leaseandrepossessedvehiclesforleasingcompanies,banks,institutionsandthegovernment.AnotheropportunityforCOMPANYisintheareaofbrandedauctionsitesfortheinsurancecompanies.

For

example,

if

an

insurance

COMPANY

was

interested

in

auctioning

vehicles

on

theirwebsite,COMPANYwouldprovidethetechnologyandbackshop. Theconceptwouldbe"PoweredbyCOMPANY."ThetransactionandprocessingoftheauctionwouldbemanagedbyCOMPANY,seamlessly. Thiswouldallowtheinsurancecompaniestohavetheirownbrandedauctionsitewithoutthecostandlearningcurveassociatedwithdoingitthemselves. TheSalvageDirect.comsitewouldbethehubconnectingtheinsuranceCOMPANY'sinventoriestogetherforthedealersanddismantlers. Findingthevehicletheyneededwouldbesimpleandeasy. LogontoCOMPANYandwewilltakeyoutothesitethathasthevehicleyouarelookingfor.

COMPANYstrivestobetheproviderofthetechnology,systemsandrelationshipstoassisttheinsurancecompaniesastheyinevitablyentertheworldononlineauctioning.SalvageDirect.comwillbethehubbringingthelargestinventoryandselection.COMPANYwillbeprovidingtheinsurancecompanieswiththetoolsnecessarytoexpeditetheposting,auctioninganddeliveringofsalvagespecialtyvehicles. Withlaptopcomputers,digitalcamerasandwirelesscommunicationsinsuranceadjusterswillbeabletopostavehicleforauctionanddetermineabuyerwithinhoursofposting.Thefirmwillcontinuetopursueaggressive,innovativegrowthintheonlinespecialtysalvagevehicleindustry,sothatitcanalwaysprovidecutting-edgeservicesandthebestvalueavailable.

4.0 MarketAnalysisSummary


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4.1 Market SegmentationCOMPANYisservingtwodistinctmarkets: InsuranceCompanies:Providingtheinventory. Dealers,dismantlers,rebuildersandexporters:Purchasingthevehiclesforthepurposesof

dismantling,repairingorselling.4.2 Target Market Segment Strategy

4.2.1 Market NeedsCurrently"totaled"vehiclesareturnedovertoaliveauctionsalvagenetwork.Dealersanddismantlerstraveltoattendliveauctionstosometimesreturnemptyhanded. Theinsurancecompaniesreceivethe"marketvalue"forthevehicleasdeterminedbytheparticipantsattendingtheliveauctionatthattime. Inventoryislimitedtothelocationandcapacityoftheliveauctiononthatday. Vehiclesaresoldtoalimitedpoolofdealerswhoarewillingorabletoattendtheauction. Thus,thebuyerisnotreceivingthebestselectionorconvenienceandthesellerisnotreceivingthebestreturn.InsuranceCompaniesarelookingforhigherreturns,fasterturns,easierprocessing.Underthetraditionalsalvageprocess,fromthedaythecarisdeemedtotaledandthesalesofthesalvagevehiclecanbeupwardsof90days. Thefastertheyturnthecarthefastertheycangettheirmoneyback.Competitionintheautomotiveinsuranceindustryhasresultedinaracetolowerpremiums. Toremaincompetitiveinthemarket,insurancecompaniesmustnotonlyfocusoncuttingcosts,butalsoonincreasingreturns.Dealersarelookingforgreaterselection,easeofpurchasing,higherqualitycars.

4.2.2 Market TrendThe Internet:COMPANYisoneofthenewbreedsofintermediariesemerginginthebusinesstobusinessspace.ParallelingsomeofthehottestInternetdarlingssuchasE-Steel.comandCyberstockyard.com,eachsuccessfullyownsaparticularverticalniche.COMPANYisplayingtheroleofbusinesstobusinessfacilitator,similartothelikesofFreemarkets.com,bringingtogetherbuyersandsellerswithouttheresponsibilityofinventoriesanddeliveries.Theseintermediariesserveaselectronichubsintheirrespectivemarkets. Theyarecreatingvaluebyaggregatingbuyersandsellers,creatingmarketplaceliquidityandreducingtransactioncosts. COMPANYhasanopportunitytocaptureanddominatetheonlinespecialtysalvageauctioningmarket.TheMarket:Currentlytheonlinesalvageauctioningmarketisfragmented. Thereisnotonedominantplayercapitalizingontheopportunityandsupplyingthedealerswithanonlinedestinationtoassistwithlocatingtheneededvehicles. Someonewillfillthisvoid.TheCompetition:Offlinesalvageauctioncompaniesaremovingtotheinternet. Theircurrentinfrastructureislimitingtheirabilitytocapitalizeontheopportunity.TheDealers:Dealersarediscontentwiththecurrentoff-lineauctionprocess. Withincreasingtravelcostsandincreasedcompetitiontheyarelookingforanedge.TheInsuranceCompanies:


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Theinsurancecompaniesarelookingforafastermethodofdisposingoftheirsalvagevehicles. Profitmarginsareshrinkingandcompetitionisgettingtougher. Consumersaredemandinglowerinsurancerates. Theinsurancecompaniesneedafaster,cheaper,easierandmoreprofitablemethodofprocessingtheirsalvagevehicles.Theymayenterthismarketthemselvesbuttheyareslowtorespond.

4.2.3 Market GrowthThesalvageautoauctioningindustryisa$3billionindustryintheU.S.Thereisanestimated205millionvehiclestravelingontheroadsintheUS.Some10percentofallcollisionclaimsresultinthevehiclesbeingtotaled,andabout80percentofthesegotoauction.

The540,000specialtyautosthataretotaledintheU.S.everyyearincludevehiclesfrompremiumautomakerssuchasBMW,Porsche,Mercedes,Jaguar,andLexus,aswellasotherlatemodelcars,trucks,SUVs,motorcycles,andmore.TheUSAutoindustryreportsthatin1999theyexperiencedalltimerecordsalesof16.9millioncarsandlighttrucks. BMWrecordedrecordsaleswithan18%increaseoverlastyear. Mercedes-Benzrecordedrecordsaleswithan11%increase. LandRoversaleswereup37%overlastyear.Withmorenewcarsontheroadandspecialtyautomanufacturersrecordingrecordsalesthereisboundtobeanincreaseinspecialtysalvagevehicles. Plustheweatherinthenortheasthasbeenonourside.Legislationwillaffecttheavailabilityofspecialtysalvagevehicles.TheNationalSalvageMotorVehicleConsumerProtectionAct,S.655isinfrontoftheUSSenate. Ifpassed,itwilllowertherequirementsthatdeemacar"totaled." Thislegislationwillresultinanincreaseinthetotalnumberofcarsthatwillbecomesalvagevehiclesandavailabletobeauctioned.

5.0 Strategy and Implementation5.1 Value Propositions

COMPANYwillbeabletosupplythedealersandinsuranceindustrywithspeed,quality,convenience,returnoninvestmentandselection.

5.2 CompetitiveEdgeOtherInternetautosalvageauctionscombinesealed-bidonlineserviceswithlivebiddingatauctionyards,butCOMPANYacceptsinteractive,online,openbiddingonly,sothatpricesaremaximizedandbuyersandsellersknowthestatusofthesaleatalltimes. COMPANYistheonlyfull-serviceonlineauctioneerthatkeepsthebiddingprocesstotallyonline,withnooff-lineauction.

Becausetraditionalauctionyardsarelimitedbygeography,thepricestheybringarenotfullymaximized. COMPANY,however,opensthemarketplacetobuyersandsellersthroughouttheUnitedStatesandtheglobe.

5.3 MarketingStrategy


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COMPANY'smultifacetedsalesandmarketingstrategiesincludetradepublicationadvertising,tradeshowsandconferences,telemarketing,directmail,in-personpresentations,billboardsnearlargeauctionyards,andInternetadvertisingincludingbanneradsandtargetede-mail.TheInsurerswehavechosenasourcurrenttopcustomersareProgressive,Allstate,Farmers,GEICO,Nationwide,andStateFarm. Throughpartnershipswiththesecompanies,COMPANYwillbeabletoexponentiallyincreaseitsinventoryofspecialtysalvagevehiclesandestablishnationalinventorysites.5.3.1 PositioningStatement

COMPANYistheonly100%interactiveonlineauctionsiteontheInternet.Itoffersanew,powerful,moreprofitable,vastlymoreconvenientmethodofspecialtysalvageauctioning.DealerPositioningCOMPANYwillbepositionedasthenumberoneinteractivespecialtysalvagevehiclesite,convenient,open24hoursaday,and7daysaweekwiththebestselection.InsurancePositioningCOMPANYwillbepositionedastheeasy,effortless,totallyinteractivesitethatprovidethefastestturnwiththehighestreturn.

5.3.2 PricingStrategyTheinsurancecompanieswillnotbechargedafeeforparticipatinginourprogram.Thebuyerischargeda5%feeinadditiontotheagreeduponauctionprice.

5.3.3 PromotionStrategyCOMPANYstrivestohelpallsegmentsofthespecialtysalvageindustryrealizetheirfullproductivityandprofitabilitypotentialthroughtechnology,ecommerceandinformationmanagement.

5.3.4

DistributionStrategy

COMPANYaspirestoestablishanationwidepoolofsalvagevehiclesthroughpartnershipswiththetopnationalinsurancecompanies. VehiclescanbeviewedandpurchasedfromlocalitiesthroughouttheUSandtransportedtodesireddestinationviaaffiliationswithnationalautocarriers.

5.3.5 MarketingProgramsCOMPANY'sgoalistolockupsupplyoftotaledspecialtyvehiclesfromInsuranceCompanies(supply). Createawareness,preferenceandactionbydealersanddismantlers(buyers). TheCOMPANYisprojectingtosecure2000registereddealersanddismantlersbyJune2000.

Advertising:COMPANYwillcreatebrandrecognitionthroughaggressiveadvertisingintradepublicationssuchastheLocator(dealersanddismantlers)andClaimsinsurancecompanies).

Thisisaveryfinitemarket. Theinsurancecompaniesanddealerhaveonlyahandfullof"bibles"theydependuponforinformationrelatingtoindustrynewsandavailableinventories. Thisallowsforaminimaladvertisingexpenditurewithaneffectivereach.Outdooradvertisinginselectmarketsaroundliveauctionlocations.


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SeeAppendixAforsampleofadvertisements.Promotions:COMPANYwilldependuponpersonalsellingasamethodofpromotion. Facetofaceinteractionandtelemarketingwiththeinsurancecompaniesandthedealersanddismantlers. Hightouchandhighcustomerservicetodevelopthecreditability,loyalty,recognitionandrelationships.

Instituteafour-stepsalescallprogram:1. Directmailpostcard/flyers/pressreleases2. Telemarketingtoschedulethesalescall3. SalesCall4. Follow-upcall

Incentiveprogramswillbeinitiatedtoencouragedealersanddismantlerstoregisteronthesite. Wewilldistributetshirts,coffeemugs,mousepads,etc.tothosethatregister.Thebenefitofthisprogramistwofold:1)wegivethedealersanddismantlersanextrareasontotakethetimetoregister,2)COMPANYwillbeontopoftheirmindsastheydrinktheircoffee,surfthenet,getdressedinthemorning. ConstantremindersandreinforcementthatCOMPANYistheplacetolocatespecialtysalvagevehiclesontheInternet.

Public Relations:PromoteCOMPANY asthe dominateplayer, profitable,firstmover,leader,innovatorandthedestinationforonlinespecialtysalvage auctioning.RecruitanInternetexperiencedPRfirmtoaggressivelyattackthetradepressonlineandoff-linerelatingtoventurecapital,insurancecompaniesandthedismantlers,dealertrade.

AggressivePRpushtocreateawarenessandcreditabilitywithminimalcost.Focusonlocalizednewspaperandindustrypublications.PromotetheCOMPANYconceptoverthenext6monthsasCOMPANYgainsmomentuminnationalpublicationssuchasUSAToday,WallStreetJournal,andonlinethroughtheAPwire.TargetselectTradeAssociationssuchasAmericanSalvagePoolAssociationCertifiedAutomotivePartsAssociation,AmericanInsuranceServicesGroup,ClaimsandAllianceofAmericanInsurers.SeeAppendixBforsampleeditorial.Direct Mail:Mailbrochures,flyers,postcards,presskitstoinsurancecompanies,registeredcustomers,prospectivedealersanddismantlers,tradeassociationsandtradepublications.

InsuranceCompanies:Sendflyersandpostcardstogainrecognition,driveinterestandtraffic. Promotesuccessstoriesthroughpostcards:"SoldXcarwith$XreturnoverXtimeperiod." Partofthefour-stepsalescall.Dealers:Sendpostcardspromotingspecificspecialtyvehiclethatareavailable.Frequentmailingstoourcurrentaccountlistaswellasprospects. Promotethesuccessesaswellasparticularvehiclesofinterest. Encourageregistration.


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Direct Email:InsuranceCompanies:Promotethesuccesswehaveexperiencedwithexistinginsurancecompaniesbyprovidinghigherreturnsandfasterturns.AffirmtheirdecisionstohaveutilizedCOMPANYortopromotewhytheyaremissingoutontheopportunity.

Dealers:Pushavailableproducttoregisteredusersbasedontheirpreferencesascapturedatthepointofregistration. Proactivelyinformthemofwhatisavailableonthesite.

TradeShows and LiveAuctions:AttendRegionalandNationalshowssuchas:

AmericanSalvagePoolAssociation April26-30FourStatesRecyclersExpo July27-29AutomotiveRecyclersAssociationConvention November8-11Nace December7-10

InfiltratethelocalandnationalliveauctionstopromoteCOMPANY.Distributestickers,mugs,t-shirts,brochuresandpresskits.Telemarketing:Thesalesforcewillnothaveachancetovisiteverycustomerandprospect.COMPANYwillutilizeateamoftelemarketersfromMarketInsights,aprestigioustelemarketingfirm,tolaunchanaggressivecampaignstartingonMarch1.Insurance Companies:Pre-salescalls for thesale representatives. InformcompaniesofthebenefitsofusingCOMPANYasamethodofdisposingoftheirsalvagevehicles.Higherreturns,fasterturnsandeaseofoperation.Dealers: Encouragedealerstoregisteronthesite. Promotethevehicleswehaveavailable.

OnlineAdvertising and Promotion:CrosspromotethroughlinksandbannersonotherrelatedInternetsitesuchasSalvageAuto.com. SecureourpositioninkeyworksearchesinYahoo,Dogpile,Excite,Iwonetc.

5.4 Sales StrategyThesalesstrategyforCOMPANYisbaseduponsecuringinventoryfromtheparticipatingInsurancecompaniesanddrivingqualifiedbuyerstothewebsite.AllforecastsarebaseduponmarketsizeandCOMPANY'sabilitytopenetratethemarket.Annualprojectedfeerevenues(gross)areillustratedintheSalesForecast.Note: Over30insuranceofficesinPennsylvaniaarecurrentlyactivewithCOMPANY. Initialmonthlyrevenuesarebaseduponcurrentandhistoricauctionrevenues.Onanaveragebasis,therevenueprojectionsforspecialtysalvagearebasedupona$5,000sellingpricepervehicle.AdditionalrevenueswillbegeneratedbyAdvertisingsalesandreferralfeesfromstrategicpartnershipswithtransportcompanies.Advertisingsaleswillbeexecutedbyanoutsourced


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advertisingsellingfirm. Transportationrevenuesarebasedona5%referralfee. RevenuesbaseduponadvertisingandtransportationwillshowupinMarchof2000.5.4.1 Sales Forecast

Thefollowingsalesforecastsarebaseduponthepremisespreviouslypresented.Managementfeelstheseforecastsarehighlyattainable.

350,000,000

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

-560,353 4,990,875

293,134,774

57,772,771

FY1999 FY2000 FY2001 FY2002700,000

600,000576,000

500,000

400,000

300,000

200,000

100,000

82,500

288,000

-

FY2000 FY2001 FY2002

900,000

800,000762,150

700,000

600,000

500,000

400,000

300,000

200,000

100,000

-

6,488

112,657

FY2000 FY2001 FY2002

5.4.2.1 SalesProgramsCOMPANYwillimplementanincentiveprogramforitssalesrepresentatives.Withtheprogram,repswillencourageInsuranceCompaniestolisttheirsalvageinventorywithCOMPANY,andkeeptheinventorypreviouslysecuredonthewebsite.Therepswillreceive$20(2000),$10(2001)and$5(2002)foreveryspecialtycarlistedonthesite.


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5.5 StrategicAlliancesCOMPANYwillcontinuetoformanddevelopstrategicallianceswithestablishedSalvageIndustry,MarketingandTechnologyorganizationstostrengthentheorganizationalinfrastructureandbetterservethecustomers.Salvage IndustryWithinthesalvageindustry,COMPANYhasidentifiedtheneedtoactivelypursuestrategicpartnershipsintheareasofTowingandTransport. Partnersbeingpursuedinclude:

Towing:

AAA RegionalTowingNetworks

Transportation:

SchultzInternational/AcceleratedExpress(www.transportautos.com).AleadingglobalvehicletransportCOMPANY. Clientsincludeprivateindividuals,fleets,moviestudios,dealerships,banks,fortune500companies,exporters,city,stateandfederalgov'ts,military,leasingcompaniesandequipmentmanufacturers.TNT(www.tnt-inc.com). Leadingspecialistsinautomotivetransport. TNThasnationwideservice,withover80servicelocationsacrosstheUnitedStateswithmostinmajorcities,andcomputerizedvehicletracking.CentralDispatch.com.CentralDispatchisarevolutionaryonlinetransportCOMPANYwithadatabasethatredefinesthewayautotransportersdobusinesswithcarcarriersnationwide.ItsdatabaseofAutoTransportloadshelpscarriersfindloadsenteredbybrokers,dealers,autoauctions,manufacturersandrentalagenciesacrosstheU.S.andCanada.

MoveCars.com. MoveCars.comistheInternetDirectoryofAutoTransportCompanies,linkingbuyerstovehicleshippingcompaniesthroughouttheU.S.andCanada.Technology:

COMPANYiscurrentlyutilizingOpenSiteTechnologies,Inc.foritsauctionfunctionality.OpenSiteistheleaderinonlineauctionsdrivingthedynamiccommercerevolution.OpenSite'spowerfulsuiteofproducts,andhostingandprofessionalservicesenablesCOMPANYtocreateitsbranded,Internet-baseddynamiccommercesite. OpenSitebringstogetherbuyersandsellers,helpingbusinessesdynamicallymanageinventory,createsaleschannels,attractcustomers,andtestmarketnewproductstocreateefficientmarketsforgoodsandservices.COMPANY'sInformationTechnologypartnerisaleadingproviderofinnovativetechnology-basedsolutions. Micros&MorewillfullycustomizeeveryproductandservicetomeetCOMPANY'sInformationTechnologyrequirements,automatingthecriticalfunctionstoreducecostsandincreaseefficiencies. Utilizingtheskillsandexperienceofitsworldclasstechnologypartners,COMPANYisdevelopingantechnologyinfrastructurethatwillsupportthegrowthandvolumethattheCOMPANYexpects.

6.0 Management Summary6.1 OrganizationalStructureREMOVEDFORCONFIDENTIALITYPURPOSES


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6.2 Management TeamREMOVEDFORCONFIDENTIALITYPURPOSES6.3 Management TeamGaps

COMPANYhassecuredkeymanagementpersonneltoreach theCOMPANY'sgoals in themarketing,legalandInformationTechnologyarenas. GapsinthemanagementteamwillbefilledbyMayof2000. Thescheduleforsecuringthoseindividualsisasfollows:Position Name Start DateCEO TBA May,2000VPSales TBA March,2000VPOperations TBA May,2000VPFinance/CFO TBA May,2000Webmaster TBA March,2000SalesManager TBA March,2000CustomerServiceManager TBA April,2001


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7.0 FinancialPlans7.1 Break-EvenAnalysis

Break-EvenAnalysisNumber of Months 36Projected Sales $375,666,012Less Variable Expenses

CostofVehicles $356,024,508SalesIncentives $504,287AdCommissions $189,300

WebsiteDevelopmentandMaintenance $82,400Labor $2,082,332

InternetService $25,270ContributionMargin $19,344,535ContributionMargin RatioFixed Expenses

5%

Salariesandwages $1,701,910Employeebenefits $260,461Payrolltaxes $297,939Rent $42,500

Utilities $19,251

Insurance-Other $19,000

Travel $127,000

Meals&Entertainment $134,724AutoExpense $30,019Telephone $69,317

Postage $85,564

Officesupplies $34,350Marketing/promotion $2,655,069

Professionalfees $315,165

LicenseandFees $3,400Bankcharges $50,400Hardware $96,000

Software $117,250

Depreciation $57,528

Miscellaneous $35,500

Total Fixed Expenses $6,152,348Break-Even Sales $119,477,046Monthly Break-Even Sales $3,318,807Profit During Period $13,192,187


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7.2

Projected

Profit

&Loss

Income Statement - FY2000

Period Starting: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Totals

Sales

Sales

Vehicles 86,255 51,365 175,000 175,000 210,000 252,000 327,600 425,880 553,644 719,737 935,658 1,216,356 5,128

Auction Fees 0 0 8,750 8,750 10,500 12,600 16,380 21,294 27,682 35,987 46,783 60,818 249

Advertising 0 0 450 1,050 2,550 6,450 12,000 12,000 12,000 12,000 12,000 12,000 82

Transportation 0 0 228 228 273 328 426 554 720 936 1,216 1,581 6

Miscellaneous Income 1,755 500 500 500 500 500 500 500 500 500 500 500 7

TotalSales 88,010 51,865 184,928 185,528 223,823 271,878 356,906 460,228 594,546 769,160 996,158 1,291,255 5,474

Less CostofGoods SoldCostof Vehicles 79,127 46,960 175,000 175,000 210,000 252,000 327,600 425,880 553,644 719,737 935,658 1,216,356 5,116

Sales Incentives 0 0 824 824 988 1,186 1,542 2,004 2,605 3,387 4,403 5,724 23

AdCommissions 0 0 90 210 510 1,290 2,400 2,400 2,400 2,400 2,400 2,400 16

Website Development and Maintenance 200 200 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 10

Labor 582 500 1,667 1,667 35,000 35,000 35,000 35,000 35,000 35,000 36,667 36,667 287

InternetService 170 0 200 200 200 500 500 500 500 500 500 500 4

TotalCostofGoods Sold 80,079 47,660 178,780 178,900 247,698 290,976 368,042 466,784 595,149 762,024 980,628 1,262,647 5,459

Gross Profit 7,931 4,205 6,147 6,627 (23,875) (19,098) (11,136) (6,556) (603) 7,136 15,530 28,608 14

OperatingExpenses

Salaries and wages 2,538 2,538 27,333 27,333 35,667 35,667 35,667 35,667 35,667 35,667 37,750 37,750 349

Employee benefits 231 231 3,500 3,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 83

Payroll taxes 215 215 5,500 5,500 10,708 10,708 10,708 10,708 10,708 10,708 11,177 11,177 98

Rent 500 500 550 550 550 550 550 550 550 550 550 550 6

Utilities 125 126 100 100 100 100 100 100 100 100 100 100 1

Insurance-Other 0 0 100 100 100 100 100 100 100 100 100 100 1

Travel 0 0 1,500 1,500 2,000 2,000 4,000 4,000 4,000 4,000 4,000 4,000 31

Meals & Entertainment 223 0 250 250 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 8

AutoExpense 119 200 100 100 275 275 275 275 275 275 275 275 2

Telephone 117 200 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 15

Postage 264 300 1,000 1,000 1,000 1,000 1,500 1,500 1,500 1,500 1,500 1,500 13

Office supplies 175 175 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 10

Marketing/promotion 618 8,700 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 259

Professional fees 65 100 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 75

License and Fees 0 0 100 100 100 100 100 100 100 100 100 100 1

Bank charges 200 200 200 200 200 200 200 200 200 200 200 200 2

Hardware 0 0 12,000 0 6,000 0 0 0 0 0 6,000 0 24Software 0 0 100,000 250 250 250 250 250 250 250 250 250 102

Depreciation 0 0 3,111 1,028 1,028 1,028 1,028 1,028 1,028 1,028 1,194 1,194 12

Miscellaneous 0 500 500 500 500 500 500 500 500 500 500 500 5

TotalOperatingExpenses 5,390 13,985 190,844 77,011 103,978 97,978 100,478 100,478 100,478 100,478 109,197 103,197 1,103

OperatingIncome 2,541 (9,780) (184,697) (70,384) (127,853) (117,076) (111,614) (107,034) (101,081) (93,342) (93,667) (74,588) (1,088

InterestIncome 397 210 307 331 (1,194) (955) (557) (328) (30) 357 776 1,430

InterestExpense (139) (74) (108) (116) 418 334 195 115 11 (125) (272) (501)

Total NonoperatingIncome (Expense) 258 137 200 215 (776) (621) (362) (213) (20) 232 505 930

Income (Loss) Before Taxes 2,799 (9,643) (184,497) (70,168) (128,629) (117,697) (111,975) (107,247) (101,101) (93,110) (93,162) (73,658) (1,088

Income Taxes 1,176 (4,050) (77,489) (29,471) (54,024) (49,433) (47,030) (45,044) (42,462) (39,106) (39,128) (30,937) (456

NetIncome (Loss) 1,623 (5,593) (107,008) (40,698) (74,605) (68,264) (64,946) (62,203) (58,638) (54,004) (54,034) (42,722) (631

Cumulative NetIncome (Loss) 1,623 (3,969) (110,978) (151,676) (226,280) (294,545) (359,490) (421,694) (480,332) (534,336) (588,370) (631,092) (631


16/17

IncomeStatement FY2000 FY2001 FY2002

Sales

Vehicles 5,128,495 57,772,771

AuctionFees 249,544 2,888,639 293,134,774Advertising 82,500 288,000 14,656,739

Transportation 6,488 112,657 576,000

Miscellaneous Income 7,255 762,150TotalSales 5,474,282 61,062,067 309,129,663CostofGoodsSold

Costof Vehicles 5,116,962 57,772,771 293,134,774SalesIncentives 23,486 135,936 344,864AdCommissions 16,500 57,600 115,200WebsiteDevelopment and Maintenance 10,400 24,000 48,000Labor 287,748 559,583 1,235,000

InternetService 4,270 9,000 12,000TotalCostofGoodsSold 5,459,367 58,558,891 294,889,839GrossProfit 14,915 2,503,176 14,239,825OperatingExpenses

Salariesand wages 349,244 539,667 813,000Employee benefits 83,461 157,000 20,000Payroll taxes 98,033 159,906 40,000Rent 6,500 12,000 24,000

Utilities 1,251 6,000 12,000

Insurance-Other 1,000 6,000 12,000

Travel 31,000 48,000 48,000

Meals& Entertainment 8,724 30,000 96,000AutoExpense 2,719 3,300 24,000Telephone 15,317 18,000 36,000

Postage 13,564 24,000 48,000

Office supplies 10,350 12,000 12,000Marketing/promotion 259,318 627,782 1,767,969

Professional fees 75,165 120,000 120,000Licenseand Fees 1,000 1,200 1,200Bankcharges 2,400 12,000 36,000Hardware 24,000 45,000 27,000

Software 102,250 3,000 12,000

Depreciation 12,694 18,917 25,917

Miscellaneous 5,500 6,000 24,000

TotalOperatingExpenses 1,103,490 1,849,772 3,199,086OperatingIncome (1,088,575) 653,404 11,040,739

InterestIncome 746 32,670 552,037InterestExpense (261) (11,435) (193,213)

TotalNonoperatingIncome(Expense) 485 21,236 358,824Income(Loss)BeforeTaxes (1,088,090) 674,640 11,399,563IncomeTaxes (456,998) 283,349 4,787,816NetIncome(Loss) (631,092) 391,291 6,611,747CumulativeNetIncome(Loss) (631,092) (239,801) 6,371,946


17/17

7.3 Exit PlanCOMPANYwilllikelygothroughtworoundsoffunding.Thefirstwillbebetween$1and$2million.ThisstagewillinvolvebuildingtheCOMPANY'sinfrastructurewithkeypersonnelandtechnology,securingrelationshipswithinsurancecompaniesandtowingnetworks,andrampingupmarketingefforts.Atthispoint,asecondstageoffundingintherangeof$5-$10millionwillbesought.ThisfundingwillcompletethenationwiderolloutofCOMPANY,expandthemarketingandadvertisingcampaignsforboththeinsurancecompaniesanddealers/dismantlers,andexpandintotheRepossessedandOff-leasemarkets.IndustrytrendscontinuallychangeandCOMPANY'sstrengthliesintheabilitytoprovidefullserviceneedstotheinsurancecompanies.COMPANYintendstobecometheonestopshopwiththeabilitytoprovidethehighlevelofpersonalcustomerservicethathasbecomeitsmantra.

Currentindustrytrendsillustratethatthegreatestthreatfacingtraditionalauctionsisthethreatoftheinsurancecompaniesmarketingsalvagedvehiclesdirectlytothebuyers. Suchinsurancecompanies,desiringtheuniquecharacteristicsandcustomerbaseofCOMPANY,arealllikelycandidatestomergerwithoracquireCOMPANY.AsecondandalsolikelyexitplanwouldbetheoptiontoconstructaninitialpublicofferingoncetheCOMPANYhassuccessfullylaunchedandbecomeestablishedinthesalvagemarket.ThethirdoptionforCOMPANYwouldbetoinstitutearoll-upwithrelatedcompanieswithinthesalvageindustry,partsindustry,andverticalauctioningorebusinesssolutions.Dependingoninvestmentmarkettrendsatanytimeinthefuture,eitheroneoftheseexitplanscouldbeimplementedatanyphaseinthedevelopmentoftheCOMPANY.

Online Auction Company - Business Plan1

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