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  1. E-LEM N-ATOR Feasibility Plan Mark Gershfeld Cathy Badell Daniel Wallace July 30, 2003 www.mylemon.com

  2. Opportunity / Need Market Demand • Prior to purchasing a used car, many people seek the advice of an impartial auto mechanic for a professional evaluation, or request guidance from friends or family who are knowledgeable about cars. • There is inconsistent quality of mechanical checks and the evaluation may not be comprehensive. • Buyers face general risk in dealing with unscrupulous or uninformed private sellers, and in general, buyers distrust used car dealers. • The opportunity is growing for companies to offer time saving services. Market Accessibility • Fragmented market is composed of mechanics and car dealers who do not offer impartial, comprehensive mobile evaluation and diagnostic services to potential used car buyers, as well as buyers who conduct title research themselves. • Barriers to entry include the cost of capital equipment and upgrades, insurance, labor, and appropriate trade certifications. Compelling Need • Physiological: Increases operational safety for driver, passengers, and occupants of other vehicles. • Emotional: Certification by a professional auto mechanic offers some degree of peace of mind. Reduces stress related to car purchase decision. • Social: Promotes honesty, fairness, and integrity of car dealers and private sellers. • Economic: Identifies the current and anticipated repairs that the vehicle would need post-purchase and provides buyers with a cost estimate. Saves time for buyers by providing mobile on-site inspection and diagnostic services. May provide buyer and seller with a negotiating tool. • Intellectual: Enables more informed decision-making for the buyer.

  3. A professional, experienced auto mechanic that offers on-site evaluations of used cars prior to purchase. Service Description Range of Services • Diagnostic engine and emissions analysis. • Visual inspection of major components. • Test drive with buyer • Cost estimate of current and anticipated repairs. • Information packet containing useful websites and legal information. Service Attributes • Performance: Advertised accuracy level which adheres to industry standards (to be researched). • Availability: Within 24 hours of requested evaluation. Evaluation would take approximately 1 hour. • Service: Early and late hours of operation to accommodate busy schedules. Services initially available only in the Denver metro area. • Limitations: Do not perform repairs. No advice on whether the customer should purchase car. Scheduling conflicts and staffing to meet demand for services. • Environment: Honda Elements driven to sites by mechanic. Elements equipped with laptop & wireless internet access. Highly professional, uniformed mechanic staff with strong customer service skills.

  4. Features & Benefits

  5. Target Market Demographics • Male or female adults working in all occupations, except auto repair, who have low to medium income levels and live in metro areas (consolidated population centers). Buying Decision • Individuals who seek to purchase used cars and base decision on total value offered by the vehicle. Psychographics • Risk averse, value peace of mind, distrustful of used car dealers and private sellers, values safety as a fundamental need, unsatisfied with existing resources to evaluate mechanical condition of used cars. Value Proposition “E-Lemon-ator is a mobile vehicle analysis service. Offering on-site analyses and repair cost estimates, E-Lemon-ator provides convenience, time savings, peace of mind, and cost-effective professional assistance for purchasers of used vehicles.”

  6. Competitive Analysis

  7. Sustainable Competitive Advantage Market Opportunity • Independent = credibility (intellectual) • Comprehensive = peace of mind (emotional) • Mobile = convenience (economic) Competitive Analysis • One direct competitor in Denver metro area • Major weakness is limited service offering • No evidence of strong market presence Resources & Capabilities • Virtual office model saves operating expenses & improves mobility • Simple, agile, scalable business model • Flexibility to expand services to meet new market challenges • Fully loaded vehicle allows rapid & thorough service • Price setting ability – no corporate control

  8. Risk Factors Legal • Errors and Omissions • Missing a problem – customer may sue • Diagnosing a problem that doesn’t exist – seller may sue • Accidents • During test drive - our insurance must cover any costs • Liability for accidents after service is performed Financial • ROI – uncertainty of recovering our investment • Long term profitability – uncertainty of sustainability, competition from large players Business • Reputation • Worker risk – injury and related compensation, and loss of resource Competition Response • AAA Diagnostic – No action, likely to maintain current capacity • Car dealers – Most welcome a second opinion for the customer, may result in more car sales • Mechanics – No action, will continue to rely on local word of mouth and customer loyalty

  9. Investment, Breakeven, & Profitability

  10. Feasibility Conclusions • Compelling emotional, financial, intellectual needs satisfied • Convenient evaluation process • Reduces risk in purchase process • Unique combination of features creates a sustainable competitive advantage • Mobility of the service • Flexibility for additional services • Scalable business model • The market is accessible • No major barriers • No inhibitive competition • Risks can be controlled by taking the proper legal and insurance precaution, and of course with thorough and accurate service • This venture is profitable after 3 years with an initial investment of $175,000

  11. Recommendations • Prepare business plan • Initiate a 5 year expansion plan • Used motorcycles • Further market coverage • Examine potential for lending institution partnerships • Develop marketing strategy • Need to make our services known • Feasibility dependent on ability to maximize capacity • Hire mechanics • Begin the design process for the E-lem n-ator Honda Elements