Tire Shop Business Plan Template
If you want to start a tire shop business or expand your current tire shop, you need a business plan.
The following tire store business plan template gives you the key elements to include in a winning Tire Shop business plan.
Tire Shop Business Plan Example
I. Executive Summary
Business Overview
[Company Name] is a new tire shop located in [Location]. We provide high-quality tires to residents and companies with fleet vehicles for competitive prices. Our inventory is the largest and most diverse in town, including tires of all brands, sizes, and functions. We also provide tire-related services such as tire inspections, flat repairs, tire rotations, and installations. No matter what our customers need, they are guaranteed to receive the best service and customer experience possible.
Products Served
[Company Name] offers the largest variety of tires in town. Our inventory consists of numerous brands, types, and sizes. Some popular types of tires we sell include:
- All-season tires
- All-terrain tires
- Snow tires
- Mud tires
- Spare tires
We sell tires for all vehicle sizes, from sedans to RVs. We also stock numerous popular brands, including Michelin, Goodyear, Bridgestone, and Yokohama. Whatever our customers need, we have it.
In addition to selling tires, we offer limited services to make sure our customers’ tires are in perfect condition. These services include:
- Tire inspections
- Flat repairs
- Tire rotations
- Tire installation (free with every purchase)
- Winter tire changes
- Consultations
Customer Focus
[Company Name] will primarily serve the residents living within a 20-mile radius of our location. The demographics of these customers are as follows:
- 57,913 residents
- Average income of $55,900
- 25.8% in Management/Professional occupations
- 65% vehicle owners
- Median age: 35 years
In addition to serving local residents, we will also provide tires to businesses (such as car rental businesses) that have fleet vehicles.
Management Team
[Company Name] is led and founded by [Founder’s Name], who has been a mechanic and tire expert for [X] years. He started off his career as a general mechanic but eventually transitioned to working at a national tire chain. Here he became an expert in all things tires, including how to repair them and knowing which tires are best for each vehicle. He worked his way into a management position, which gave him an in-depth knowledge of the operations and management sides of the business.
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- Our location is in a high-volume area with easy access from multiple residential and commercial district zones.
- The management team has a track record of success in the tire shop industry.
- Tire shops are a proven business and have succeeded in communities throughout the United States.
- Our shop will offer a greater variety of tires than any of our competitors.
- Our pricing will be affordable for our customers as well as competitive with similar shops nearby.
Financial Highlights
[Company Name] is currently seeking $500,000 to launch. Specifically, these funds will be used as follows:
- Store design/build: $250,000
- Initial inventory and supplies: $100,000
- Working capital: $150,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name] is a new tire shop located in [Location]. We provide high-quality tires to residents and companies with fleet vehicles for competitive prices. Our inventory is the largest and most diverse in town, including tires of all brands, sizes, and functions. We also provide tire-related services such as tire inspections, flat repairs, tire rotations, and installations. No matter what our customers need, they are guaranteed to receive the best service and customer experience possible.
[Company Name] is led and founded by [Founder’s Name], who has been a mechanic and tire expert for [X] years. He gained his knowledge, skills, and expertise while working at a national tire chain. During this time, he ran the store as a manager and gained invaluable in-depth knowledge of all aspects of the business. He is ready to apply this knowledge to his own tire shop business.
[Company Name]’s History
[Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation]. The business is currently being run out of [Founder’s Name] private office, but once the build-out on [Company Name]’s retail location is finalized, all operations will be run from there.
Since incorporation, [Company Name] has achieved the following milestones:
- Found retail space and signed a Letter of Intent to purchase it
- Developed the company’s name, logo, and website located at [website]
- Determined equipment and inventory requirements
- Begun recruiting key employees with previous auto/tire experience
[Company Name]’s Products/Services
[Company Name] offers the largest variety of tires in town. Our inventory consists of numerous brands, types, and sizes. Some popular types of tires we sell include:
- All-season tires
- All-terrain tires
- Snow tires
- Mud tires
- Spare tires
We sell tires for all vehicle sizes, from sedans to RVs. We also stock numerous popular brands, including Michelin, Goodyear, Bridgestone, and Yokohama. Whatever our customers need, we have it.
In addition to selling tires, we offer limited services to make sure our customers’ tires are in perfect condition. These services include:
- Tire inspections
- Flat repairs
- Tire rotations
- Tire installation (free with every purchase)
- Winter tire changes
- Consultations
III. Industry Analysis
Though the automotive industry is undergoing substantial changes, one thing that has not changed is the need for tires. Whether the world switches to electric vehicles or self-driving vehicles, tires will still be an essential component of these models. Therefore, tire shops will continue to be in great demand, no matter how the automotive industry transforms over the next few decades.
According to Allied Market Research, the tire market was valued at $139 billion last year and is expected to reach $219 billion over the next five years. Though the pandemic hurt the tire industry (as well as the auto industry in general), things are now improving substantially. The industry is expected to grow at a CAGR of 3.8%, showing that the economy has recovered. Other auto industries are also growing again as the demand for vehicles increases. Therefore, this is the perfect time to start and run a new tire shop.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve the residents of [Location] and the immediate surrounding areas.
The area we serve is populated mostly by middle-class Millennials. This age group owns a wide variety of vehicles (from SUVs to luxury vehicles) and therefore has diverse needs when it comes to tires. The town is also home to several mid to large businesses that have a large and diverse fleet of vehicles.
The precise demographics of the town in which our location resides are as follows:
Customer Segmentation
[Company Name] will primarily target the following three customer segments:
- Millennials: Millennials are in the prime of their career and starting families. Therefore, they need a good working vehicle more than ever before to get to work, school, and other destinations. Therefore, we expect most of our customers to come from this generation.
- Middle-class residents: Middle-class residents of any generation are also in great need of a good running car to get to work, school, and other activities. Therefore, they need high-quality tires for a moderate price that will help their vehicles get from A to B. We expect our pricing to be most attractive to this customer segment.
- Businesses with fleet vehicles: Car rental businesses and other businesses with fleets need new tires far more often than the average individual. We can provide these businesses with the inventory and tire services they need to keep their fleet going.
V. Competitive Analysis
Direct & Indirect Competitors
The following tire shops are located within a 20-mile radius of [Company Name], thus providing either direct or indirect competition for customers:
Discount Tire
Established in 1960, Discount Tire has always set out to care for its customers and always do what’s right when it comes to selling tires. The company has thrived due to its focus on ethics as well as its moderate pricing. Nationwide, Discount Tire is seen as one of the best places to find high-quality tires for an affordable price.
Though Discount Tire will continue to thrive, we believe many customers will decide to frequent [Company Name] instead for its connection and dedication to the local community.
Les Schwab
Since 1952, the employees of Les Schwab have been dedicated to service. Customers can always expect a great experience and that they will receive the best quality tires possible. The company provides a good variety of tires to choose from and helps customers with a variety of maintenance and services. In addition to tire services, the company also provides services for batteries, wheels, and brakes.
Though Les Schwab will continue to thrive, the company will be unable to compete with our prices and inventory selection.
Randy’s Tires And Parts
Randy’s has been the small-town tire shop for [Location] since its start in 1990. Randy’s provides a moderate selection of tires, mostly containing popular brands. The company also provides limited services, such as tire installation and inspection. Additionally, the store sells other small parts and tools that vehicle owners may need as well.
Though Randy’s will also offer the locally-owned charm that we incorporate into our brand, the shop is much smaller than ours and can’t compete with the variety of products and services we offer.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Location: [Company Name]’s location is near the center of town, giving us access to commuters, local office workers, and nearby residents.
- Strong inventory: The inventory offered by [Company Name] is much larger and more diverse than any of our local competitors.
- Management: Our management team has years of business and marketing experience that allows us to market to and serve customers in a much more sophisticated manner than our competitors.
- Relationships: Having lived in the community for [X] years, [Founder’s Name] knows all the local leaders, newspapers, and other influencers. As such, it will be relatively easy for [Company Name] to build brand awareness and an initial customer base.
VI. Marketing Plan
The [Company Name] Brand
The [Company Name] brand will focus on the company’s unique value proposition:
- Convenient location
- Highly trained specialists
- Large inventory
- Significant personal attention
- Moderate price point
- Comfortable, customer-focused environment
Promotions Strategy
[Company Name] expects its target market to be individuals working and/or living within a 20-mile radius of its location. [Company Name]’s promotions strategy to reach these individuals includes:
Billboard Advertising
We will drive attention toward [Company Name] by leasing a billboard alongside [route or highway]. Advertising on heavily traveled commute routes is an opportunity to alert large numbers of individuals who are in need of tires to our opening.
Customer Loyalty Programs
[Company Name] will create a winning customer loyalty program to keep its best clients coming back again and again. In addition, we will send periodic, regular emails and text messages to customers. These communications will (a) ensure that customers are satisfied with their purchases and (b) remind customers after a certain period of time has passed that they might want to service or replace their tires. Long-term customers will have the opportunity to participate in the loyalty program, and referrals will be rewarded as well.
Website/SEO
[Company Name] will develop a professional website that displays all the inventory we sell. It will also invest in SEO so that the company’s website will appear at the top of search engine results. [Company Name] will also publish frequent newsletters and blogs to educate our customers on promotions, tire care tips, and new products.
Social Media
[Founder’s Name] will create the company’s social media accounts and invest in ads on all social media platforms. The company will use targeted marketing to appeal to our target demographics.
Pre-Opening Events
Before opening the shop, [Company Name] will organize pre-opening events designed for prospective customers, local merchants, and press contacts. These events will create buzz and awareness for [Company Name] in the area.
Direct Mail
[Company Name] will blanket neighborhoods surrounding its locations with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts, and/or provide other inducements for people to visit the center.
Pricing Strategy
[Company Name]’s pricing will be competitive, so customers feel they receive great value when shopping for new tires. Customers can expect to receive personalized attention and honest dealing when shopping for the best tires for their vehicles.
VII. Operations Plan
Functional Roles
[Company Name] will carry out its day-to-day operations primarily on an appointment basis. However, walk-ins are welcome if the customers are simply shopping for new tires and do not need additional services.
In order to execute [Company Name]’s business model, the company needs to perform several functions:
Service Functions
- Tire sales and consultations
- Customer service/cash register functions
- Tire-related repairs and other services
Administrative Functions
- Marketing
- Bookkeeping
- Sourcing and storing supplies and inventory
- Hiring and training staff
- Appointment making
- General maintenance functions
- Other general administrative functions
Milestones
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led and founded by [Founder’s Name], who has been a mechanic and tire expert for [X] years. He started off his career as a general mechanic but eventually transitioned to working at a national tire chain. Here he became an expert in all things tires, including how to repair them and knowing which tires are best for each vehicle. He worked his way into a management position, which gave him an in-depth knowledge of the operations and management sides of the business.
Hiring Plan
[Founder’s Name] will serve as the Store Manager. In order to launch our tire shop, we need to hire the following personnel:
- Sales Staff (4 to start)
- Assistant Managers (2 to start)
- Service Personnel/Mechanics (2 to start)
- Administrative Assistants (1 to start)
IX. Financial Plan
Revenue and Cost Drivers
The revenues of [Company Name] will come from the sales of tires and the fees charged for our services.
The major costs will include the inventory and supplies costs, salaries of the staff, and rent/overhead costs. In the initial years, the company’s marketing spending will be high as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name] is currently seeking $500,000 to launch. Specifically, these funds will be used as follows:
- Store design/build: $250,000
- Initial inventory and supplies: $100,000
- Working capital: $150,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of customers per day | |
|---|---|
| FY 1 | 5 |
| FY 2 | 15 |
| FY 3 | 25 |
| FY 4 | 32 |
| FY 5 | 40 |
| Annual Lease (per location) | $40,000 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
