Motorcycle Dealership and Racetrack Business Plan
34 Badger Blvd.Waukesha, WI 53186
Patrick J. Kuyath
Zoom Motors will be a totally new kind of motorcycle and ATV dealership that many riders have been waiting to come along. In its current state, Zoom Motors is strictly a home–based racing team that is backed by national sponsor Smith ATV for racing. There is also business that takes place at our current shop on the side, the repair and selling of motorcycles and ATVs. We already have a big consumer base from the quality of work that we complete on the side and we are often forced to turn away business due to our lack of time and space.
Zoom Motors will be using a $1,000,000 line of credit to start the business. This will include fifteen acres of land, a 10,000 square foot building, and national worthy motocross track.
Zoom Motors is a motorcycle dealership that will be located just 40 miles from Milwaukee in Racine County. The focus of this dealership is off–road recreation and racing. Zoom will offer the major brands and their products; which are Honda, Yamaha, Suzuki/Kawasaki, and Ducatti. There will also be a selection available of sport motorcycles and personal watercraft available for purchase.
Zoom Motors will have two on–site motocross tracks that will attract customers to the business—one of which will be the main race track, with another small one in front for displays. This dealership will be unique because it will not only be selling the product, but it will be also providing a place for the customers to ride and race their motorcycles and ATVs at the track.
From the second a customer walks through the door they will experience a totally new kind of dealership. Customers will be encouraged to sit on and tryout the products. There is going to be an extensive amount of inventory and bikes throughout the entire store. This is not going to be the typical modern day trend of selling to the Harley Davidson crowd. This will be the type of dealership that is seen in mail order catalogs that is specifically designed for off–road enthusiasts.
The street legal motorcycles will be concentrated towards the sport bikes rather than cruisers or touring bikes. These are the motorcycles that are raced throughout the world and are available for the public to buy. A customer will be able to come in and purchase their motorcycle and then customize it to the kind of riding they wish to do. This includes things like a better exhaust system or bigger foot pegs for more stability and performance. Zoom Motors will be set up for the action adventure seeking individual who is into extreme sports.
Along with offering a catalog and internet sight for orders, Zoom Motors will pride itself on having the availability of their products in store. If a customer walks in and is looking for a popular off–road product they won't have to pay for it up front, order it, and then return a week later to pick it up. We will have it and we will also have all the needed goods for riding at reasonable prices. This includes oils, gases, safety equipment, boots, and much more.
The race track at the dealership will be sanctioned by the American MotorcyclistAssociation (this is the sanctioning organization of U.S. on– and off–road motorcycle and ATV racing); this way the A.M.A. puts all responsibility in the arms of the rider. To become a member all you have to do is fill out the application that waves the riders rights from holding the A.M.A. or the track owners from any liability due to the rider or other rider's actions. The cost of a membership is $39 per year.
There will also be riding lessons and advanced training available for those interested. These courses will encourage safety and responsibility for new riders along with teaching them the skills that are necessary to be a good rider. The advanced classes will be more focused on racing which will teach important speed techniques and riding styles to improve riders for racing. Along with this there will also be special clinics at times throughout the year that will be taught by past racing legends and current stars of the sport today.
Zoom Motors will be funded by a family loan of $1,000,000; the dealership will be able to pay this back within ten years and be self sufficient. The initial start up cost will cover the initial purchase of heavy equipment for the track, and then fund the building of the dealership. Finally the money will be used for the cost of stocking parts and inventory. The total start up costs included should be under $800,000; this is based off of $300,000 for track and equipment, $250,000 for construction of building, and $250,000 for inventory, supplies, and licensing.
PRODUCTS & SERVICES
As mentioned in the executive summary, Zoom Motors will be driven towards off–roading and performance–based street bikes. To go along with the products that are offered at the dealership there will also be a great amount of service. Zoom Motors will pride itself in addressing the customer's needs. There will be no three week waiting period at this dealership for your bike to be looked at before it can be serviced. Zoom Motors will be able to diagnose on sight what is wrong with the motorcycle or ATV and then have it fixed in a week or less. Most motorcycle dealerships take the better part of three weeks to rebuild a single cylinder engine which only requires about three hours of work. We will be able to do the same service in one week or less because of our extensive inventory of parts and our own machine shop on site. This way all work takes place and gets done in a timely fashion all at one location.
The on–site motocross track is another service that is available at Zoom Motors that is not available at any other dealerships. Not only will the customers and racers be able to come and enjoy riding, but there will be riding classes and lessons to teach upcoming racers how to ride, as well as existing racers how to improve upon their ability. The services of Zoom Motors will start first with the opening of the track when the land is acquired and a track is built. It will remain open while the dealership is constructed and eventually open. The track will be functional for a full year before the dealership is open.
Also with being able to place orders in the store, consumers will be able to order either over the phone or through the internet from our parts catalog. The parts catalog will list all of our products that we stock and can order along with our services such as rebuilding of components. A big contribution to our part catalog is that we will be the only dealership other than Smith to sell Smith custom ATV products. This is a high–end line of accessories for motorcycles and ATVs that are currently only available through Smith. Smith is a very popular and well known business throughout the entire United States. This will better improve Zoom Motors' business along with Smith's because they will then have an established distributor in the Midwest. Once the dealership is open and attending racing events other than its own, the dealership will set up the system of selling parts and accessories at races other than its own. This will be done by having an extra trailer come to other races that will be stocked with products.
The NAICS code for a dealership is 441221 and for a race track it is 711212; SIC dealership code is 5571. According to the database this industry is growing rapidly with a lot of profit being made. The 1997 Economic Census showed that the NAICS 441221 motorcycle dealers showed 3,635 establishments with sales ($1,000) of 7,369,260. The SIC code showed that from 1992 to 1997 the number of establishments had grown from 3,585 to 3,635 and sales ($1,000) had jumped from 4,162,684 to 7,369260. The Payroll had gone from ($1,000) 427,155 to 712,065 and paid employees had gone from 22,184 in 1992 to 29,026 in 1997. So, while there had only been 1.4% increase in establishments, there had been a 77% growth in sales, a 66.7% growth in payroll and a 30.8% growth in employees. A more recent 2002 survey that was conducted by ATV Aficionado showed increases since 1997; these were a 4.3 % in establishments and a 45% growth in sales. This proves that the business is growing at a quick pace and that new establishments are successful.
Currently in 2005, there are seven motocross tracks in Wisconsin and five in Illinois. These tracks will be distant enough that permission is not required for A.M.A. sanctioning. Of the tracks that do exist, they are general purpose tracks that are not laid out in the fashion that Zoom's will be; there will be an easy distinction between the tracks. There are a number of other riding areas in the state of Wisconsin, but they are of a different layout and are therefore separate from Zoom's side of business and competition would not exist.
The target market for Zoom Motors is very broad, it reaches out to families who are wanting something fun to do together, farmers who are looking for an ATV to help with the chores, and racers interested in dirt and street racing. The bull's–eye for this dealership is the off–road racer and enthusiast, but everyone else is not far off. A family will be able to come in and buy small dirt bikes and ATVs for their children and more advanced ones for themselves. The children can then be properly instructed with the professional judgment and obtain skills that are necessary to be safe and have fun while riding their motorcycles and ATVs. Zoom Motors is also chasing after the mail–order consumer who takes care of their bike themselves. A mail–order consumer is a person involved in the sport but acts as their own mechanic by ordering their own parts and doing their own maintenance. Zoom Motors will be able to satisfy this crowd as well because of our long line of parts that are offered through our own catalog and out of numerous parts that we keep in stock at all times. Our consumer area is the entire United States, due to the mail order catalog. However, our main concentration of customers will be anyone within a four hour drive of Zoom Motors. This is so because the enthusiasts of the sport are used to traveling for races and are more than happy to travel in order to get the right part when they need it. Because Zoom Motors will be able to attract customers from different backgrounds, the profitability will be continually growing each year.
The industry closely associated is the American Motorcyclist Association and its members. In order to race at Zoom Motors, the participant would have to be a member. Currently the A.M.A. has around 270,000 members with an average household income of $84,000. Out of the 270,000 members there are 50,000 that would fall into the specific target area of Zoom Motors. This is a big industry base to pull customers off of and it would be easily accomplished by placing an ad in the monthly A.M.A. magazine.
Direct competition would be minimal and mainly be on the mail–order side of the business with catalogs and magazines. Other dealerships in the area of Zoom Motors address themselves to a different following that we do, except for one. Wisconsin Cycles is this dealership; however they mainly address themselves to the sales of Polaris, all terrain vehicles; which is the agricultural side of the business that Zoom Motors would not be investing in. Since Zoom Motors will be offering Honda, Yamaha, Kawasaki/Suzuki, and Ducatti, Wisconsin Cycles is a very insignificant threat to business. The closest dealer of any brand of motorcycle and ATV would be Amazing Motors in New Berlin. This business is only ten miles from the location of Zoom Motors, but they would be at the disadvantage of this dealership. Amazing Motors sells only two brands of machines, KTM and Arctic Cat. Both are off brand versions and are very much less sought after in the U.S. Their product line would keep them distinguished to their customers and Amazing Motors. Amazing Motors will actually help out Zoom Motors by referring them to us for the brands that we carry.
Competition on the racetrack side would be any track in the state of Wisconsin and Illinois. There are only eight tracks in the state of Wisconsin and ten in Illinois. The closest one to Zoom Motors would be the track located in Pewaukee, Wisconsin, approximately a half hour away. They would also be the only direct barrier to entry as well. However, this obstacle is already overcome. In order to become an A.M.A. sanctioned track and hold events you must get the permission of anyone else that has a track within a 50 mile area. The owner of the Pewaukee track has already given the go ahead for a track at Zoom Motors. This is so because the Pewaukee track is very long and motocross style (smaller jumps), while the Zoom Motors track will be significantly shorter with more of a supercross layout (larger jumps). Because of this, all competition between the two tracks is eliminated. There are two other area sanctioned A.M.A. tracks but they are enduro tracks which do not affect a motocross track because it is a different form of racing.
MARKETING & SALES
The marketing strategy for Zoom Motors is very simple; let consumers know we have what they want and at a fair price. In order to achieve this, Zoom Motors will have a race trailer at every major race in the area as well as at the national events and will be promoting the business and giving out promotional spark plugs to racers. This is something that will attract much attention because spark plugs normally cost three dollars, but at a race track they can sell for anywhere from six to ten dollars. It costs eighteen dollars for a twenty pack of sparkplugs and racers in need will be sure to remember who gave them that sparkplug.
Another marketing strategy that Zoom Motors wi11 use is sponsorship. Any rider who wins in their class at the Zoom Motors race track will be offered sponsorship of 10% off of any purchases for the rest of the season; this will be an advantage over competition because no one else can offer this due to our on site track. There will also be more sponsorship available for selected riders who go to the nationals along with the development of the dealership owned race team. Other competitors offer sponsorship at many different levels, however the Midwest has been left behind in some areas of this because most of the bigger dealers who offer this are located on the east and west coasts.
A big advantage in marketing that the dealership has over any other competitor is the race track available on site. The dealership will sponsor its own events along with selected promoters and will advertise their products by having the dealership open during race days. This way anyone who came to watch a race, or racer who is participating in it, can buy any product on the race day.
Web site marketing will also help move product, this will be so because the website will be accessible around the clock so that the customer can place their order any time. The product catalog will also help with marketing because it will be freely distributed at racing events and mailed out to any customer that has made a purchase of twenty dollars or more from the previous year. These two forces combined will inform customers of our new and existing products and bring their attention to what exactly Zoom Motors has to offer. Another thing as mentioned in the industry description that would be taken advantage of to promote Zoom Motors is the A.M.A. magazine. Advertisements placed in this would be seen by key consumers that are specifically being targeted by the business.
Location is a very big key element to any business, which is why Zoom Motors has precisely chosen its location in an area that has a high demand for our product. Zoom Motors will be located right along the side of Hwy. 18 in Waukesha, WI. This is only forty miles from downtown Milwaukee and two hundred from Cheboygan. Customers will be able to simply exit at the Waukesha exit and make a right on the north service road and come right back to the dealership. And not only is the dealership visible from the highway, the motocross track is as well. This location will sell itself when people passing by will see the track and people riding on it.
As far as the track is concerned, this location will bring in many customers. I have not been to a single motocross track that is not out of the way. Every one seems to be at least fifty miles off the main roadway on a dirt road with no hotels or amenities near by. This location is seconds from the highway which makes it very easy to find and will draw in many participants because of this.
The physical facility of the dealership will be a 10,000 square foot steel erection building. It will have a divider directly in the center of it which will divide the service/inventory area from the show room which will contain motorcycles and apparel. Hours of operation for the dealership will be Monday through Friday 9:00 a.m.- 7:00 p.m., and Saturday from 8:00 a.m. -5:00 p.m. Hours of operation for the motocross track will be Tuesday through Friday from 12:00 a.m. -6:00 p.m., Saturday and Sunday from 7:00 a.m. -6:00 p.m. Also, zoning for the location will not be a factor because the physical approval paperwork is currently being approved and will be official in a matter of weeks. This was an easy barrier to get around because there are no homes close to the site of the business.
The service department of the dealership will be growing and advancing rapidly along with the rest of the company. The plan is for one mechanic starting out (Kyle Pelz), who will also run the parts department, and then add a new mechanic to the business each year as business grows. Kyle holds Motorcycle Mechanics Institute Certification for mechanics on motorcycles and ATVs; along with five years experience. The office/paperwork portion of the business will be handled by the secretary of the business (Megan Brown) and she will maintain the human resources portion of the business as well. Megan has six years experience of running two different businesses; this is a proven track record that she has what it takes to make an office work. The owner (Greg Johnston), will be the overseer of the entire business and concentrate most of his time towards sales and the race track. Greg currently runs Zoom Motors out of his race garage where he currently maintains inventory, oversees maintenance of customers' bikes, sells bikes to customers, and preps a private race track.
There will also be the hiring of a sales person in the second year to better serve customers. The human resource side of the business is planning on employing about two new employees per year until needs are satisfied. An employee will not be hired until the business has grown to the point that additional help is needed beyond the three initial employees. This means that there could be an extra mechanic hired the second week of business or the second month, work load is determined on this. There will also be a seasonal part time worker for the preparation of the track and maintenance of the facility.
For race day staffing there will be a number of local part time workers and volunteers that are friends or family of the racers. There is also a volunteer force for motocross events, the Motocross Parents Association. This group of individuals shows up at races where their family is racing and they help out at the track by filling in a number of different jobs. There will be a total employed work force of eight for race days and on average twenty volunteers.
The plan of attack for the financials is to first construct and open the motocross track portion of the business first. By doing this the word will get out to a large number of consumers about a new motocross track that is open in the area to go riding at and that holds races. Once there, they will be able to see the ongoing construction of the dealership and they will realize that this is going to be much more than just a track. By implementing this plan, Zoom Motors will have a big customer base before the doors of the business even open. Once the dealership is open for business there will already be an established customer base and consumers will be coming for all of their needs. The financial schedule plans for there to be an average start in the sales and service of the business with a major emphasis on the revenue from the track. Sales of new and used motorcycles and ATVs along with parts should start out sufficient with the four product lines offered and then grow rapidly once a broad customer base is achieved.
On the financial schedule the motorcycles show up as not that much; that is because this is only the price of used and custom built machines that are at the dealership. All new motorcycles, ATVs, and personal watercraft are under contract from the manufacturers and belong to them until time of sale. This means that Zoom Motors can have at any time upwards of $500,000 of motorcycles available for sale, but only a fraction of that is actual property of the dealership.