business ideas: Business Plan Driving Wheel and Wheel

* The calculations use the average data for the World

1. SUMMARY OF THE PROJECT

The aim of the project is to create a driving school “Wheel and Wheel” in Volgograd. The task is to prepare for exams at the traffic police, to teach the theoretical and practical fundamentals of driving, and to build a car. The school is located in a room rented from one of the regional universities, so there is no need to equip classrooms.

A prerequisite for creating a project is an ever-growing number of people who want to get rights. Even despite the difficult economic situation in the country and the decline in sales of motor vehicles, the number of people wishing to undergo driving training does not decrease significantly. In addition, the school’s customers are also people who want to improve the quality of their driving skills or refresh their knowledge. All this allows us to talk about a fairly high level of demand for project services. The level of competition is relatively high, but the project involves the creation of a number of competitive advantages that will ensure high school load.

Integrated indicators of the project indicate its effectiveness and investment attractiveness (Table 1).

Table 1. Integrated project performance indicators

Discount rate (r), %	five%
Discount rate (r-month), %	0.407%
Payback period (PP), months	24
Discount payback period (DPP), months	25
Net present value (NPV), rub.	7 114 361
Return on Investment (ARR), %	6.01%
Internal rate of return (IRR), %	4.00%
Profitability Index (PI)	2.13

2. COMPANY DESCRIPTION AND INDUSTRY

Geographically driving school "Wheel and Wheel" is located in Volgograd; classrooms for theoretical studies are located in the training rooms of the regional technical university located in the city center (Sovetsky district). This location can be considered as one of the competitive advantages, since it makes the school logistically accessible for all residents of the city.

Volgograd is a city in the southeast of the European part of the Russian Federation with a population of 1.0 million people. The administrative center of the Volgograd region. Today, the city is in a rather difficult economic situation: many large enterprises are on the verge of bankruptcy, the number of small businesses per capita and the level of salaries among cities of this size are among the lowest in the country. The pricing policy of the school is formed on the basis of these market features.

According to the Avtostat analytical agency, in 2015, about 1.9 million people received a driver's license in Russia, which is 24% less than in 2014 (Fig. 1). According to the traffic police, 1.46 million of them are category B and B1 rights (cars), 181 thousand are category C and C1 rights (trucks), 58 thousand are A and A1 (motorcycles), 62 thousand - M (mopeds or scooters).

In general, the Volgograd region is in the TOP 25 regions in the fleet of cars (Fig. 2), being there in 19th place; the number of cars in the region is estimated at 659 thousand units.

Figure 1. Issuance of driver’s licenses in the Russian Federation, 2010-2015

Figure 2. TOP-25 regions of the Russian Federation in the fleet of cars

The main orientation of the “Steering wheel and wheel” driving school is driving training in categories B and B1. For this, the school has a fleet of three cars, two of which are with a manual transmission, one with an automatic. Driving instruction in other categories is outsourced to other organizations located in the city and having the appropriate fleet of vehicles. At the same time, the remuneration of the driving school “Wheel and Wheel” is 10% of the cost of training. Theoretical training in all categories of "Steering wheel" is carried out on their own.

To carry out activities in the field of education, a driving school receives a license for a period of five years. For this, a prepared set of documents is submitted to the Federal Service for Supervision in Education and Science, including the constituent documents of the company, an application for a license, employment contracts with employees, a lease of premises, documents confirming the availability of teaching materials, etc. The term for obtaining a license is 3-5 months. In the same period, obtaining permits from the SES and Fire Supervision.

According to the requirements of the norms established in this field, such concepts as “cadet” - a person in the process of training, and “candidate for drivers” - a person who has been trained but also passed the exam in the traffic police, are applied to the students of a driving school.

According to the latest innovations, the duration of studies in category B should be 134 hours of theory and 56 hours of practical training. Training in the most difficult category D is 257 hours. By the established program, this number of hours (first of all, we are talking about category B) fits into two - three-month training. The number of cadets in the group is legally limited to 25 people.

The material and technical base of a driving school, according to the latest requirements, should include:

- computers with appropriate specialized software;

- projectors and other demonstration and office equipment;

- training simulators for practicing first aid techniques;

- driver simulators;

- internal combustion engine with attachments;

- gearbox;

- rear axle with braking mechanisms;

- other visual aids.

The area of the training site should be at least 0.25 hectares, it should be equipped with traffic lights, road markings, level crossings, elevations, intersections, etc. Since there is only one site in Volgograd that meets these requirements, it is planned to rent it for the duration of the classes. Its size allows you to comfortably conduct classes for ten cars at the same time, so there should be no problems with the educational process.

In addition to the equipment of the training facilities, three driving vehicles with duplicate governing bodies are acquired in the ownership of the driving school. Given the positioning of the enterprise in the budget segment, the cost of each of the cars should not exceed 300, 000 rubles.

Table 2. Investment costs

	NAME	AMOUNT, rub.

Equipment
one	Computers	500, 000
2	Other office equipment	200, 000
3	Visual aids	120, 000
four	Training cars	900, 000

Intangible assets
five	Obtaining licenses and permissions	70, 000
6	Site	100, 000
7	Advertising	100, 000

Current assets
eight	Current assets	1, 350, 000

	Total:	3 340 000 ₽

	Own funds:	₽ 1 300 000, 00
	Required borrowed funds:	2 040 000 ₽

	Rate:	18.00%

	Duration, months:	36

3. DESCRIPTION OF SERVICES

Driving school “Wheel and Wheel” offers driving training services, preparing cadets for exams at the traffic police, as well as training, retraining, and improving driving skills. The full list of services is given in Table. 3.

Table 3. The nomenclature of services of a driving school “Wheel and Wheel”

No.	Name of service	Service Description
one	Training, category "A"	Theoretical and practical training for passing exams in the traffic police for category "A" (motorcycles). 140 hours of theoretical classes, 21 hours of practical classes. The total training period is 2 months. The course is conducted as the group is recruited, the group is transferred to the appropriate subcontractor having the necessary equipment and vehicle fleet
2	Training, category "B"	Theoretical and practical training for exams in the traffic police for category "B" (cars). 140 hours of theoretical classes, 60 hours of practical classes. Total duration of study - 2 months
3	Training, category "C", "D"	Theoretical and practical training for passing exams in the traffic police for category "C", "D" (trucks, buses). 260 hours of theoretical classes, 80 hours of practical classes. The total training period is 2.5 months. The course is conducted as the group is recruited, the group is transferred to the appropriate subcontractor having the necessary equipment and vehicle fleet
four	Driving skills restoration	Individual program for drivers who have not had a driving practice for a long time. 12 hours of practical training, 24 hours of practical driving. Duration - by agreement, depending on the individual schedule.
five	Individual lessons with an instructor	Individual lessons with an instructor aimed at improving the quality of driving skills. Conducted for all categories of students: cadets, candidates for drivers and drivers
6	Advanced training of drivers of vehicles for obtaining the right to driving training	Training of drivers with real driving experience for the purpose of their subsequent employment as instructors in driving schools

Groups in the main area (category “B”) are recruited on an ongoing basis. The maximum number of cadets is 25 people. The schedule assumes three parallel groups: morning, evening and weekend. In other categories, groups are formed as a set of interested persons; then the groups are transferred to a subcontracting organization, “Wheel and Wheel” receives a reward of 10% of the cost of training. In their free time from classes with groups, instructors conduct individual lessons with interested persons; the instructor receives 40% of the cost of training.

The theoretical part of the training is carried out in a classroom using computer equipment, driving simulators and other supporting materials. In the theoretical part, such issues are studied as: administrative, civil and criminal law related to road transport; basics of labor and environmental protection; Actually, the rules of the road. The practical part consists of teaching the basics of driving at the training site and driving in the traffic stream (“leaving the city”).

At the end of the training, candidates for drivers pass a test exam, according to the results of which they receive an appropriate certificate and are sent to the traffic police to pass the final exam.

Table 4. Cost of services and variable costs

	GOODS / SERVICES	COSTS UNITS, rub.	TRADING VALUE, %	UNIT COST, rub.
one	Training, cat. "BUT"	100	1400%	1, 500
2	Training, cat. "B"	550	2750%	15 675
3	Training, cat. "C", "D"	100	1900%	2, 000
four	Driving skills restoration	550	2000%	11 550
five	Individual lessons, 1 hour	100	400%	500
6	Advanced training for vehicle drivers	100	2400%	2, 500
			Total:	33 725 ₽

4. SALES AND MARKETING

Sales of school services are passive. At the first stage of the project, the occupancy of the groups is ensured by mass advertising and promotion of the school’s website. In the future, as the population of groups according to recommendations grows, advertising will be of secondary importance.

The advertising plan includes measures to promote the company's website on search engines, contextual advertising, periodic advertising on the radio, as well as periodic advertising in print media.

The competitive environment is represented by driving schools offering similar services in the amount of about 30 units. Thus, we can talk about a fairly saturated competitive environment. Of this number, 5 schools can be attributed to the premium segment; they have a fleet of new high-end cars, offer extreme driving programs, etc. The price level, respectively, is significantly higher than average. Another 12 driving schools have a critically outdated fleet.

Under these conditions, it is especially important to provide a number of competitive advantages. First of all, they include the high requirements that the “Wheel and Wheel” makes to its instructors, which allows to achieve a higher quality of training compared to most competitors. The placement of the school in the premises of the university avoids significant costs for the equipment of educational premises, which positively affects the cost of the services provided; the level of proposed prices for school services is on average 10% lower than competitors' prices. The logistic accessibility of the school is also an advantage. The fleet does not imply the availability of new cars, however, each car of the school is kept clean and tidy, for which the instructor assigned to it is responsible. Training cars of competitors, as a rule, are in a deplorable state.

5. PRODUCTION PLAN

The main training program offered by the driving school “Steering Wheel and Wheel” is training in category “B”. Groups are recruited on an ongoing basis, the duration of training is 2 months. A set of three parallel groups is supposed: morning, evening and weekend. The maximum number of cadets in each group is 25 people. Thus, during each educational stream, 75 cadets study simultaneously. For the convenience of financial calculations, the monthly number of students under this program is accepted as 75/2 = 37 people. Similarly, traffic is calculated in other areas. The difference is that other areas bring much less profit; their presence in the program is necessary first of all to create an image and a comprehensive offer.

Variable costs for the services offered include depreciation of vehicles, other training equipment, and fuel and lubricant costs. The remaining costs are fixed.

The need for training facilities - one audience for practical training and premises for staff; total area - 50 m2. A driving training site is rented at the largest training center in the city for 30, 000 rubles per month; The schedule of classes is agreed for a month in advance.

All educational equipment and teaching materials are purchased in Moscow in a specialized organization. The content and completeness of teaching materials is coordinated with the Federal Service for Supervision of Education.

Table 5. Planned indicators of the sale of services

	GOODS / SERVICES	AVERAGE PLANNED VOLUME OF SALES, units / month	PRICE FOR UNIT., Rub.	REVENUE, rub.	VARIABLE COSTS, rub.
one	Training, cat. "BUT"	20	1, 500	30, 000	2, 000
2	Training, cat. "B"	37	15 675	579 975	20 350
3	Training, cat. "C", "D"	20	2, 000	40, 000	2, 000
four	Driving skills restoration	ten	11 550	115, 500	5 500
five	Individual lessons, 1 hour	50	500	25, 000	5, 000
6	Advanced training for vehicle drivers	five	2, 500	12 500	500

			Total:	802 975	35, 350

Demand for driving school services has no pronounced seasonality. The achievement of planned sales volumes is expected in 6 months from the start of the project.

6. ORGANIZATIONAL PLAN

Since the essence of the project is to provide training services for the population in such a crucial area as driving vehicles, especially stringent requirements are imposed on personnel. Leading functions are performed by the director of the organization. In addition, his responsibilities include maintaining the entire marketing mix. In his direct subordination are all employees of the company.

The most stringent requirements are imposed on the instructors - both in theory and in practical driving. Each of them must have at least 10 years of experience in their field. High qualification and pedagogical skills of instructors are one of the most important competitive advantages of the driving wheel “Wheel and Wheel”.

The administrator is responsible for the smooth functioning of the driving school, accepting applications for training, organizing coordination with subcontractors, partners, etc.

Table 6. Staffing and payroll

	Position	Salary, RUB	Number of people	PHOT, RUB
Administrative
one	Director	40, 000	one	40, 000
2	Accountant	25, 000	one	25, 000
3	Administrator	23, 000	one	23, 000

				0
Industrial
four	Theory Instructor	30, 000	one	30, 000
five	Driving instructor	30, 000	3	90, 000

	Total:			₽ 208, 000.00
	Social Security contributions:			₽ 62, 400.00
	Total deductions:			$ 270, 400.00

7. FINANCIAL PLAN

Financial is designed for a five-year period. When calculating the cost of services, we took into account variable and fixed costs, depreciation of fixed assets (determined linearly for five years), payroll, and also loan obligations (2, 040, 000 rubles), which the organization attracts to cover its own funds deficit. Credit conditions: rate - 18% per annum, term - 36 months, credit holidays - three months; payment is made by annuity payments. Since reaching the planned sales volume is expected only from the 6th month of the project, a working capital reserve is required - one of the main items of investment costs.

Based on a comparison of several taxation options, a simplified taxation system was selected with the object “income reduced by the amount of expenses”. A detailed financial plan is given in Appendix 1 to this business plan. Fixed costs are given in Table. 7.

Table 7. Fixed costs

	NAME	AMOUNT PER MONTH., Rub.
one	Rent	50, 000
2	Advertising	60, 000
3	Communal payments	7 500
four	Telephony and Internet	5, 000
five	Rental site	30, 000
6	Selling expenses	20, 000
7	Management expenses	10, 000
	Total:	182 500 ₽

8. EVALUATION OF EFFICIENCY

On the economic efficiency and investment attractiveness of the project allows us to judge a number of indicators. The main (integral) indicators of project efficiency are given in Table. 1 of this business plan. The assessment takes into account the change in the value of money over time, for which a discount rate is introduced, adopted for this project at the level of 5%, since the market is formed, the service is not innovative, the technology has been tested and is well known.

The payback period of the project is 24 months, the discounted payback period is 25 months. Net present value (NPV) - 7 114 361 rubles, which significantly exceeds the initial investment costs. Internal rate of return (IRR) - 4.0%; it is below the barrier rate (r = 5%) - some investors refuse to finance projects under this condition. Profitability Index (PI) is more than 1, which is a positive indicator. The net profit of the project for the fifth year will amount to 3.2 million rubles. Thus, with one negative integral indicator and a number of positive ones, we can say that the project is still of interest from the point of view of investing capital. An important point in this case is the consideration of all possible risks associated with the project.

Figure 2. The dynamics of the net profit of the project

9. RISKS AND WARRANTIES

Given the rather stringent conditions of the competitive environment, the difficult economic situation in the region, as well as the need to adhere to the pricing policy of the budget segment, special attention should be paid to the risks associated with the successful development of the project. In addition, you must use the strengths of the enterprise to provide additional competitive advantages. For this, a SWOT analysis of the enterprise is carried out (Table 8)

Table 8. SWOT analysis

S	W
- The fleet is maintained in a clean and healthy condition. - Instructors are highly qualified and have long experience - The average price level is 10% lower than competitors of the corresponding level - Convenient location of the school in terms of logistics - The presence of three parallel groups, allowing you to take training at any convenient time	- A new player in the market, without a reputation - Lack of accumulated customer base - Lack of own training base for categories other than "B" - Lack of own training site
O	T
- Attraction of cadets, regardless of their area of residence - Attracting cadets regardless of their type of employment and work schedule - The ability to receive recommendations through quality services and an individual approach - Savings on the maintenance of your own fleet (in categories "A", "C". "D")	- Breaking relationships with subcontractors - Breaking the relationship with the lessor of the training site - Failure to plan for customer acquisition - Failure of cars of the enterprise park

Thus, the main threats are associated with the lack of its own training base in some areas. Risks associated with breaking the relationship can be avoided by forming a base of alternative subcontractors. In addition, as a training site, you can use the site, usually used by citizens for self-study, located 7 minutes from the city border.

To achieve the established targets for revenue, you need high-quality work with customers in order to obtain further recommendations, as well as high advertising activity. In case of critical impossibility to provide the required occupancy of groups, a price increase can be used as a backup option. Estimatedly, increasing the cost of training by up to 15% will not have a critical impact on demand.