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Kelso, K_businessplan
Military EXpress LLC December 2016 1
A Military Veteran Family Corps in the Transportation Industry
109 East 7th Street Cheyenne, WY 82001
p. (214) 713-6644
Kelso, K_businessplan
Military EXpress LLC December 2016 2
Table of Contents
I. Executive Summary ............................................................................................. 4
Objective
Background
Conclusion
II. Company Overview .............................................................................................. 6
Vision Statement
History
Current Status
Strategy
Goals & Mission Objectives
III. Services ................................................................................................................. 8
Current Stage of Development
Operational Benefits
Propriety Position
Competitive Advantage
IV. Market Analysis ................................................................................................... 11
Growth Trends & Key Driving Forces
Market Segmentation
Competition
Market Acceptance
V. Management Team ............................................................................................. 15
Key Personnel
Personnel Needs
Organizational Structure
VI. Operating Strategy .............................................................................................. 18
Location
Acquisition Summary
Operations
Pricing
Advertising and Promotion
VII. Critical Risks ...................................................................................................... 22
Compliance
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Fuel prices
Competitive pricing
VIII. Funding .............................................................................................................. 23
IX. Offering .............................................................................................................. 23
X. Appendix ............................................................................................................ 24
2017 Military EXpress Income Projection Statement
TE Inc Division Balance Sheet – Opening Day
Certificate of Organization
Articles of Organization
FMCSA Motor Carrier USDOT and MC Registration
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Executive Summary
Objective
Our entire corporation will be composed solely of drivers and driver support personnel who
have earned the privilege to be employed by Military EXpress based upon their Veteran or military
family status and hiring criteria. The business entity will be a privately held corporation which will
provide an opportunity for employee or immediate family to become shareholders.
Background
As of 2015, The Department of Veterans Affairs (VA) reported that the three states with the
highest concentrations of Veterans are California, Florida and Texas. Each of these states
accommodate between 950,001 – 1,851,470 Veterans.
Texas Workforce Investment Council’s “2016 Update” concluded that the Dallas-Ft Worth-
Arlington area has a Veteran-rich environment with 13 of its counties having the dense to most
dense concentration of Veterans (144,00 – 655,999). Furthermore, the 2016 Update found that the
annual unemployment rate was 16.2 % for Veterans between the ages of 18 – 24 compared to
nonVeterans 12.5 %. Between the ages of 24 -34, the annual unemployment rate was 7.7 % for
Veterans and 6.5 % for nonVeterans. We intend to capture these unemployed, young Veterans and
provide them with a career in the transportation and logistics industry.
The U.S. Freight Transportation Forecast predicts major growth in the trucking industry by
2022. The forecast suggests that overall revenue for the industry will rise nearly 66 % and tonnage
will increase by 24 %.
At the same time, Genco reports that one of the major trends to affect the trucking industry
is a shortage of qualified Commercial Driver Licensed (CDL) holders. The average age of truck
drivers is moving upward as Baby Boomers are nearing retirement. The number of Americans aged
55 or older will increase by 29.7 %. There will not be enough younger drivers to replace retiring
drivers.
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Retention and recruitment are a staggering cost of doing business for most trucking firms.
Some of the largest firms have a turn-over rate of 100 %. Currently 34 % of experienced CDL
drivers have a military background. We intend to capture those individuals with our generous pay
and benefits package to include an Employee Stock Ownership Program (ESOP). Eventually, 51 %
of the stock will be owned by the Veteran, employee/shareholders.
If you keep the drivers happy they won’t leave your business. An opinion piece, by Norris
Beren in Transport Topics this past April, concluded that there isn’t a driver shortage.
“The revolving door of drivers coming and going is often caused by one simple but
overwhelming factor: the attitude of the CEO [Chief Executive Officer], who drives
company culture and guides operations people…Fix this problem and you will see the
retention percentage begin to improve as long at the employees that these drivers work with
adopt a “Drivers Are First” culture — and live by it.”
Military EXpress intends to be the premier trucking corporation with this “Drivers First”
culture, and it will revolve around the military ethos and mindset to get the mission done in a safe
and conscientious manner.
Conclusion
The convergence of these facts and predictions will present an opportunity for a new
transportation industry model to emerge. This new model will employ only Veterans and their
immediate family and provide an opportunity to become an owner through an ESOP. Proof of
concept was completed in November 2015, and breakeven point was met within two months. We
request capital funding and mentorship to grow from an LLC to a privately-held corporation that is
large enough to make an ESOP viable.
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Company Overview
Vision Statement
To be the largest nation-wide, for-hire, driver-centric transportation business entity with a
military ethos and safety first mindset, solely owned and operated by Veterans and their immediate
family members.
History
Ken Kelso is a hard-charging, Marine who has dedicated his life to helping fellow Veterans.
Military EXpress (Business) started out as his brainchild in 2010. He envisioned a Transportation
Corps of 50,000 drivers and support staff owned and operated by Veterans and their immediate
family members covering North America within ten (10) years
In October 2014, the Business was formed, and Ken hit the road. He carried 64 loads, and
covered 76,000 accident-free miles in 275 days covering all four corners of the country. Along the
way, he conducted “gorilla recon” at various truck stops. He interviewed 60 random military-
Veteran, “company” Commercial Driver’s License (CDL) holders over a cup of coffee. He asked
about their dispatcher, home time, kids’ college funding. In every case, the driver had a negative
view about their company and stated they were merely “getting by.” When he explained the basic
concepts behind the Business, - to a man - they all asked, “How do I sign up and when do we start?”
The loyalty and trust shared among Veterans is extraordinary testament to the “missing piece” in
“civilian” transport companies. This opportunity can be utilized to the benefit of our Veterans.
Current Status
The Business was organized as a Limited Liability Corporation (LLC) in the State of
Wyoming on October 2, 2014. Ken reached break even status by January 2015 and came off the
road in December 2015. Since then, he has been refining his vision and searching for funding to
expand.
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Strategy
Ken expects to grow the Business to 188 employees in the next three (3) years. He plans to
acquire an established transportation company as a base of operations in Texas. Then hire ten (10)
drivers and four (4) support staff over the next year. The Business will add 50 drivers and 8 support
staff in year 2. In year 3, the Business will hire an additional 100 drivers and 16 support staff. The
Business expects to lease tractors (semis) and trailers. By leasing the equipment, the rental company
will build most of the operating costs into the rental agreement. Accounting services and
oversize/overweight permitting will be outsourced until support staff can be hired to fill these
positions.
Goals & Mission Objectives
The Business will acquire TE Inc.1 by the end of First Quarter 2017. TE Inc has a Data
Universal Numbering System (DUNS) number. This will allow the Business to compete for
Department of Defense (DoD) Carrier Contracts through the Freight Carrier Registration
Program (FCRP) and administered by U.S. Army Military Surface Deployment &
Distribution Command (SDDC) and to be paid for services rendered.
The Business will be co-located with Military Logistics LLC, Military EXpress’ exclusive
brokerage agency, to save brokerage fees and create an income stream.
Within five (5) years, the Business will be transformed from a LLC to a privately-held, C-
Corporation by employing experienced CDL holders and support staff who are either
Veterans with an honorable discharge or their immediate family members.
Within ten (10) years, shares of the corporation will be available to employees and their
immediate family members via an Employee Stock Ownership Plan (ESOP).
We will achieve this goal within three (3) years by hiring a total of 188 employees, and
leasing 160 tractors and 160 trailers and own/lease 5 straight trucks/cargo vans.
1 A Non-Disclosure Agreement prevents us from revealing the actual name of this LLC.
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For the next three (3) years, the Business will provide an 8 % return on investment (ROI)
for our investors/angels.
We intend to have the highest retention rate in the nation thereby saving recruitment and
marketing dollars. We expect to grow our driver pool through word of mouth and social
media.
We will have the lowest at-fault accident ratio in the industry and monitor tractor and/or
trailer movement using telemetric services.
Our drivers will be the most courteous, friendly and thoughtful drivers in the nation. We
will always aid stranded motorists and stop to assist accident victims until relieved by
authorities.
Services
Since September 11, 2001, America has been at war with an implacable enemy. Our military
has sustained operations from the mountain villages of Afghanistan to the desert towns of Iraq. The
enemy has used shifting tactics from Improvised Explosive Devices to Surface-to-Air missiles.
Throughout the conflicts, our military has regrouped and met the challenge. The Army and Marines
depend upon the Air Force to transport the “beans and bullets.” The Air Force depends upon them
to keep the wolves at bay. And everyone depends upon the Navy SEALs to find and eliminate high
value targets.
Today’s business environment is much the same. Shifting priorities, new rules and
complex regulations pose as problematic an environment as the battlefield. But the one
overwhelming article of faith that our Veterans hold dear to their hearts is the simple mantra of “No
One Left Behind.” This guiding principle provides a substrate unknowable to the civilian
population.
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Current Stage of Development
We will provide our clients with exceptional service and overwhelming professionalism. We
will under promise and over deliver on their expectations while continuing to provide transportation
to TE Inc.’s clientele.
Starting March 2017, we will begin to supply transportation to the oil production industry.
Oil companies and those who provide services to those companies expect new growth with the
change in the administration. The Business has secured Master Service Agreements (MSA) with
Coast Services, Centerville, TX and MarCorps Logistics, Houston, TX. The Business will be the
exclusive Rig Mobilization (Rig down, Move and Rig up) transportation providers for the above
entities. These two MSA’s will provide a guaranteed gross revenue of at least $5.06 million.
All our drivers will be fully insured and licensed as well as Transportation Security
Administration (TSA) certified. All driver helpers will be fully insured, bonded and TSA certified.
Driver Benefits
Our pay and benefit package is the most generous in the industry.
Mileage calculated by the actual driven miles rather than “as the crow flies;”
No broker fees if cargo is booked through Military Logistics;
$0.40/mile - New Driver [less than two (2) years’ experience];
$0.50/mile Experienced Drivers with more than two (2) years behind the wheel;
$0.20/mile for hauling an empty trailer;
Safety milestone bonus and/or award starting at
o 250,000 miles – New Drivers Only - Bumped up to experienced rates
o 500,000 miles
o Then in 500,000 mile increments
Assigned tractors will not be shared among the driver pool;
Paid weekly by direct deposit or reloadable payroll card
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Health Insurance;
Annual physical/Current DOT Physical Card
Dedicated dispatch available 24/7/365.
Operational Benefits
The Business has established a Veteran Partnership Lease Agreement with Ryder Truck to
supply sleeper tractors and trailers which includes all operating costs except fuel. Included is license
plates and permits; all required insurance; preventative maintenance, repairs and breakdown service;
telemetric tracking; commercial-grade Global Positioning System (GPS), and a widely-accepted fuel
card. The telemetric and fuel card data will be fed to ATBS accounting service.
ATBS will provide accounting services for a monthly price per vehicle. Its services include
tax consulting; quarterly tax estimates; year-end State & Federal Tax returns; bottom line maximizer;
monthly profit & loss statements, year-to-date profit & loss statements; bookkeeping; details profit
plan; unlimited business consulting; industry benchmarking; entity formation; and payroll services.
Our drivers are to be treated as our primary asset. They will be served in an expert and
prompt manner. They should expect to be treated in a polite and dignified manner by all. Business
will be transparent to our drivers because they are our greatest asset.
Customer Service
Our clients expect to deal with the Business in a professional and expeditious manner. They
expect their goods to be delivered on time and on target and in good condition. Our drivers will
contact each client to provide then an Estimated Time of Arrival (ETA) or Estimated Time of
Departure (ETD). The driver will contact the on-call dispatcher if there are any problems or
unanticipated delays encountered on the road.
Propriety Position
The Business intends to be the first trucking firm that truly revolves around the driver. We
recognized that truck without a driver behind the wheel is a liability. We will hire only Veterans or
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their immediate family members either behind the wheel or driving a desk. All support staff will
gain practical knowledge and an appreciation for driver duties during an annual 48-hour ride along.
We aim to treat our drivers as an asset rather than employee. Within ten (10) years, the Business will
be a privately-held, employee-owned corporation with the employees having proportional seating on
the Board of Directors.
Competitive Advantage
Because of the trust and loyalty shared among Veterans, other Veterans are willing to use
Veteran owned and operated businesses. They know that if a Veteran is given a job it will be
mission accomplished. Many companies go out of their way to hire Veterans because of the ethos
and prior training they bring to the job. This is amply demonstrated by a simple internet search
regarding Veteran recruitment bonuses and hiring preferences.
In 2015, there were 21.2 million men and women were Veterans, accounting for
approximately 9 % of the civilian population. Per Mike Haynie, director IVMF, this increasing
dichotomy has “disconnected the consequences of war from the American public.” This gives
Veterans another powerful link to each other as well as introduces a feeling of responsibility among
civilians.
Market Analysis
The Business has two different market sectors: the Veterans we hire and Veteran clientele.
Over one-third of CDL holders are Veterans. This ratio far over represents the 9 % Veteran
population. Transportation companies want to hire our Veterans for the various reasons outlined
above. Our ethos, esprit de corps, and viewing drivers as an asset will be spread through word of
mouth, social media and a professionally designed hiring portal.
Our second sector entails growing our transportation network to reach throughout North
America. Therefore, we will heavily target end users through print, social media, the internet and
other brokers.
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Growth Trends & Key Driving Forces
2014 Texas Veteran Population by County
The American Trucking Associations (ATA) cites a growing shortage of nearly 50,000
drivers in America. In 2013, that number was 30,000. In addition, the median age for truck drivers
is 49 years old while per the Labor Department, the median age for American workers is 42 years
old. Furthermore, the Labor Department states that the national average unemployment rate is
5 %
However, per the Department of Veterans Affairs (VA) and the Texas Workforce
Investment Council’s 2016 Update, the unemployment rate for Veterans between the ages of 18 – 24
years old is 16.2 %. The unemployment rate for Veterans between the ages of 25 – 34 years old is
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7.7 %. This is the same demographic which the trucking industry fails to recruit. Veterans want to
work and are not afraid of putting in the hours necessary to accomplish the mission
We will become an employer for the unemployed younger Veteran workforce and
provide a true career path with room to advancement. Because our drivers will be treated as a true
asset we will save our recruitment and training dollars to put that back into our drivers’ pockets.
The Bureau of Labor and Statistics cites a CDL driver’s average salary is $43,180 per year.
Under our pay and benefit package our drivers can expect to earn well over $60,000. Further, our
drivers will be able to book with any broker, but if one books through Military Logistics the
brokerage fee is waived putting more money in the driver’s pocket. This benefit is unheard of in the
trucking industry, and we predict to be on the leading edge of what will become a new industry
standard.
Finally, the population in this region is set to explode over the next 15 years. Using data from
the U.S. Census Bureau and Texas Office of the State, the population will grow by more than 3.5
million between now and 2030. Somehow all these people will need to be fed, housed, and clothed.
These needs are currently filled by the trucking industry and this demand will only grow as well. The
Business wants to be poised ahead of the oncoming tsunami both as an employer and as a
transportation entity.
Market Segmentation
As described above we have two distinct customer mindsets. We have drivers who want to
drive and shippers who wants their goods and products transported. One would think mix the two
together and shake well would produce a martini of satisfaction. But if you mix too much vermouth
or a low-quality gin, it may be a martini, but I wouldn’t want to drink it. It takes a skilled bartender
to get the right ingredients in the right amount, and that is the expertise of a broker can make or
break a successful run.
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The Business expects to provide services for the local trade (within 100 miles) that TE Inc.
Division. has been filling and increase Over-the-Road (OTR) capacity to accommodate DoD cargo.
The Oil Field Division will provide transportation for the oil production industry. For the next 18
months, we project gross revenue to fall into the following categories:
Other services involve: Secured Delivery; Overnight Delivery; Same Day Delivery; Fleet Exclusivity;
White Glove2/Two-man team; Residential/Inside Delivery; Packing and transportation of
Household Goods; Unpack and Debris Removal; Lift Gate Service; Dock Transfer and
Warehousing.
Competition
There are 62 small freight businesses within 100-mile radius of DFW area. However, while the
larger freight corporations have a professional web presence, the majority have simple weblinks and
contact information. While conducting research, we encountered numerous wrong contact
information, broken weblinks or a minimalist website. Also, many of these small businesses, have
arcane pricing which makes it extremely difficult for the average consumer to compare apples to
apples. Within this environment, the freight broker works. The broker negotiates the price between
what the shipper wants to pay and what the transport company receives in payment. In return, the
2 Sensitive shipments and fragile items which must be delivered with special care.
Oil Rig Transport
40%
Local LTL50%
OTR TL5%
Other Services
5%
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broker receives a commission based upon the value of the cargo and from the trucker hauling the
freight.
Market Acceptance
For the same reason that freight companies want to hire the Veteran, the broker wants to
use Veteran transportation services. Many times, the in-built trust among Veteran brokers,
dispatchers and drivers delivers a better paying load quicker than the major competitors can muster
their forces.
Management Team
The Business’s management team will be recruited from Veteran professionals in various
fields of expertise. Ken Kelso has identified key personnel and Advisory Board members. In
addition, he will be hiring personnel central to the success of the Business.
Key Personnel
Ken Kelso, Marine, CDL Holder
He is the President and CEO of the Business. He is a CDL holder, with the following
endorsements: HAZMAT, Tanker, and Double/Triple Vans. He holds a Transportation Worker
Identification Credential authorized by the TSA. Furthermore, he is a Certified Master Broker and
can turn a wrench too. In 2014, Ken graduated from the Honor Courage Commitment, Inc. (HHC)
Fellows Program held at Southern Methodist University, Cox School of Business and the Caruth
Center of Entrepreneurship. The mission of HHC is to “maximize Veteran talent to grow the U.S.
economy and build local communities.” At HHC he learned how to create a start-up business plan.
Not being satisfied with a “paper exercise,” he hopped out on the road to provide proof of concept.
It was at HHC that he worked with many of the people who will sit on our Advisory Board
which he has begun to establish. These board members will be instrumental in providing guidance
to the Business during its transformative period from LLC to C-corporation. It will be comprised of
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Veterans in the oil production industry, financing professionals, entrepreneurs, and motivational
speakers.
Mike Rimpley, USMC Veteran
Don Neil, US Army Veteran
Kory Ryan,USMC, Attorney
Salvatore "Sal" Giunta, Army Veteran, Medal of Honor Recipient, Motivational Speaker
Sal is the first living person since the Vietnam War to receive the U.S. military's highest
decoration for valor, the Medal of Honor. He was cited for saving the lives of members of his squad
on October 25, 2007 during the War in Afghanistan. He left the U.S. Army in June 2011 and has
since gone on to be a successful author and motivational speaker. He is a Fellow graduate of HHC
and sits on their Board of Directors.
Michael Jernigan, Marine Veteran
He was blinded by a roadside bomb in Iraq on August 22nd 2004. Micheal had 45% of his
cranium crushed and suffered severe damage to his right hand and left knee. He graduated with a
Bachelor’s Degree in History from the University of South Florida in the spring of 2012. Michael is
a Community Outreach Coordinator at Southeastern Guide Dogs. He was featured in the HBO
documentary Alive Day with James Gandolfini and has been a contributing writer for the New York
Times. He remains active in Veteran affairs by representing blind Veterans and bringing awareness
to the trials faced by our service members that have returned home wounded.
Mary Ellen ‘Mel’ Spera, Army Veteran, Marketing and Social Media
Mel is Market Analyst, Copywriter, and Social Media expert. She is Chief Financial Officer
and Lead Copywriter at Parker’s Voice, an independent small business in Delaware. According to
Ken, her grasp of disparate information and ability to dig out nuggets of gold is phenomenal. She
claims that she’s just using the skill set she acquired when she was a military intelligence analyst and
being the “Godzilla of rabbit holes” is second nature to her
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Personnel Needs
It is critical that qualified, Veterans be hired by the end of First Quarter 2017 to meet our
MSA commitments and provide transportation that TE Inc.’s customer base has come to expect.
Compliance and Safety Officer. The holder of this position will ensure that federal and state
rules and regulations are followed and documented. The Business will need an experienced safety
officer with a special emphasis in the Federal Motor Carrier Safety Administration’s (FMCSA)
programs. Experience in land based rig mobilization will be helpful but not a critical need.
Oil Field Division Chief. This position will require an intimate knowledge regarding rig
mobilization. In the past, costly mistakes have occurred in the industry from moving and rig crews
not following their own procedural requirements nor having the required equipment for loading
equipment. Expensive delays can arise without comprehensive planning.
Experienced CDL holders. It is estimated that a minimum of eight (8) drivers will be
necessary to fulfill our MSA requirements. Current forecasts call for 18 rigs to be moved per month
with each move (without complications) taking from two (2) to three (3) days This will provide
adequate home time and mitigate anticipated unexpected delays.
Support staff. At a minimum, the Business requires four (4) full time staff members.
Support staff will be responsible for producing required transportation paperwork such as bills of
lading and invoices. In addition, support staff will also act as dispatchers and monitor the various
Load Management websites and telemetric sources.
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Organizational Structure
Operating Strategy
The Business expects continual growth as it transforms into a privately-held, C-Corporation
within the next five (5) years (classes of shares are undetermined). Once the Business’s entity has
been transformed, we will provide our 200+ employees with an ESOP. The ESOP will provide
capital to grow the Business to 1,000 employee/shareholders with a 51% stake within ten (10) years.
The Business is currently comprised of a two (2) revenue streams: Less than Truck Load
(LTL) and Truck Load (TL) and is run on a cash basis. We will reorganize the two revenue streams
in by the end of First Quarter 2017. TE Inc. Division is an established business that provides
mostly LTL within a 100-mile radius of DFW International Airport. The Oil Field Division will
provide equipment oil rig transportation as specified above.
Location
Ken is negotiating the purchase of TE Inc. real property, assets and business. It is situated
within the Dallas corridor and will act as a base of operations. The Dallas–Fort Worth–Arlington,
TX Metropolitan Statistical Area is comprised of 13 counties, and it is the economic and cultural
Advisory BoardKen Kelso President
TE Inc. Division Chief
2 Drivers 2 Support Staff
Oil Field Division Chief
8 Drivers 2 Support Staff
Compliance & Safety Offier
Mel Spera
Marketing & Social Media
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hub of the region commonly called North Central Texas. It is the largest inland metropolitan area in
the United States. Factoring in a higher than average growth, data from the 2010 Census estimated
that the 2015 population grew to 7,102,796. In 2014, 1.57 million tons of goods and materials
landed at DFW International Airport via dedicated all-cargo aircraft. This made DFW Airport the
10th largest air-cargo hub in the nation surpassing Newark (NJ) and Logan (MA) International
Airports.
The regional economy of the area is driven by the service sector, trade, and transportation
industries. Per the Texas Workforce Investment Council’s 2016 Update, the truck transportation
industry was listed as one of the top 10 industries employing over 15,600 Veterans throughout
Texas.
In addition, trucking moves over a network of greater than 556 miles of Interstate and other
highways and 1,026 miles of other principal arterial roads within the area.
Finally, Dallas is one of the apexes of the “Texas Triangle” (an area that measures several
thousand square miles) which is comprised of Dallas, Houston and San Antonio.
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As mentioned earlier, the population is expected grow above the national average with the next
15 years. The above map predicts the impact of this growth on the trucking industry in 2040. All of
this combines to provide a target-rich opportunity for an organization which will pride itself on its
Veterans and “Driver’s First Mentality.”
Acquisition Summary
With the acquisition of TE Inc., Military EXpress will own a successful business established
in 1992 that serves the North Central Texas area. Most of its clientele are long-term patrons who
require delivery from/to DFW International Airport. It provides a base of operations, four (4) older
vehicles and three (3) functional dry vans with one (1) non-functioning dry van used for storage.
Although TE’s personnel are not Veterans, we will grandfather them into our organization for as
long as they wish to be employed by us.
TE Inc sits on 2.6 acres and, spending on marketing is marginal. Most clients find them via
word of mouth, an antiquated website or from brokers. As stated above, TE Inc. already has a
DUNS which is vital to the Business’ plans to capitalize on the opportunity to transport freight for
the DoD A rare open season is scheduled to run from January 9 – February 28, 2017.
Currently the business and all assets are listed for $770,000 with the real estate valued at
$160,000. Businesses of this type sell somewhere between 2-4x the net operating income. Based
upon net operating income for the 2015 tax year ($332,600) x 3 calculates to a valuation of $690,000.
Although 2016 gross revenue will be less than 2015, expenditures are down and the net operating
income has been projected to be well over $220,000. Last, but certainly not least, the business will be
without any liens or encumbrances upon transfer of ownership.
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*Data through September 2016 ** 2017 Projection based on average of previous four years
Operations
The Business will operate on a 24-hour basis. Our drivers will receive goods, transport, and
deliver the goods 365 days per year. The Business will employee staff to provide 24/7/365 to
support our drivers. If one of our drivers in on the road, there will be someone “home” to assist as
necessary.
Financial Strategies
During the 1st year, we project to add 10 leased tractors, 10 leased trailers, 10 drivers and 2
support staff. The additional equipment and staff will provide transport and support the Oil Field
Division’s MSAs. TE Inc’s location will provide enough room to store the additional equipment.
The office space will be tight but will accommodate the extra staff.
During the 2nd year, we project adding 50 more tractors, 50 trailers, 50 more drivers and 8
more support staff. TE Inc. real property is 2.6 acres and will able to accommodate the additional
equipment especially because all the equipment will rarely be on-site at the same time.
By year 3, we should have out grown the property. We should find a site that has ample
space and is well lit, fenced and gated. This new depot should be able to secure 160 tractors, 160
trailers, five (5) straight trucks/cargo vans and provide room for the support staff. Either TE Inc.
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2013 2014 2015 2016* 2017**
TE Inc. Finacial Overview
Gross Expenses Net
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will be consolidated at the new location or it will remain as a separate entity in its current location.
Consolidating operations will provide strength multipliers that will be absent working out of two
locations. Therefore, it is recommended that the 2.6-acre site and warehouse be sold to provide
capital for the third-year expansion.
Pricing
TE Inc. Division’s rate model is based on zone of delivery, weight and distance.
The Oil Field Division’s pricing is determined upon the size of the oil rig and at a fixed rate per
move. Gulf coast rate is $30,000 per rig and MarCorps is $20,000 per rig. Gulf Coast anticipates
two moves per month while MarCorps has scheduled 217 moves during 2017.
Advertising and Promotion
Current adverting for the TE Inc Division is negligible. The owners have built a successful business
model through clients’ word of mouth, broker relationship and an antiquated website. The Business
plans to ramp up advertising dollars, invest in professionally designed website and maintain its client
base. In additional it will invest in DAT and Internet Truck Stop Load Boards to monitor the most
profitable transportation lanes.
Once the Business establishes its reputation for on time and on target rig mobilization.
Word of mouth in the oil production industry will garner more MSAs. Because we will be renting
our tractors and trailers we will not over extend our self with capital investment or over hiring.
Critical Risks
Compliance
Staying compliant with the myriad federal and state rules and regulations will be a fulltime
job for our Compliance and Safety Officer. The FMCSA is mandated to reduce crashes, injuries and
fatalities involving large trucks and buses. Some of FMCSA’s programs require annual driver
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Military EXpress LLC December 2016 23
physicals; random drug and alcohol testing; HAZMAT regulations; Hours of Service (HOS); and
Cargo Securement. The regulations often change at the last minute.
Fuel prices
As diesel fuel rises the tight margin of profit shrinks. However, in many cases this is countered by
the carrier by implementing a fuel surcharge.
Competitive pricing
Staying competitive in a tight market means keeping close watch on the operating expenses
and having a good working relationship with a broker. Military EXpress will generate sufficient
income to continue growing and return an excellent ROI by using Military Logistics brokerage
service.
Funding
Both TE Inc. and Oil Field Divisions will provide substantial gross revenue. However, the Business
will be left without any operating capital. A cash infusion of $100,000 will provide operating capital
until our accounts receivables begin. We project the debt of $850,000 to be paid in full within three
(3) years allowing us to proceed with our expansion plans. We are planning to finance the
acquisition of TE Inc. through a financing package developed by Don Neil of ATBS
Offering
We anticipate that our total debt of $950,000 will be paid before January 2020. We are offering our
investors 8% net revenue over the next three (3) years for an investment of $100,000 in operating
capital. We project an ROI of $125,364 in the first year alone.
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Military EXpress LLC December 2016 24
Appendix
2017 Military EXpress Income Projection Statement
Revenue
TE Inc $ 492,800
Gulf Coast MSA $ 720,000
MarCorps MSA $ 4, 340,000
Total Gross Income $ 5,552,800
Fixed Yearly Expenses
President $ 75,000
Social Media $ 42,000
Compliance Officer $ 50,000
Division Chiefs $ 100,000
Ryder Tractor Lease (8) $ 406,560
Ryder Trailer Lease (8) $ 6,400
Liability & Physical Damage Ins** $ 3,300
Real Property Ins** $ 344
ACA Medical Ins (Drivers) $ 156,000
ACA Medical Ins (Support Staff) $ 6,000
Worker's Compensation Ins $ 25,000
Advertising & Marketing $ 7,000
License Plates $ 8,700
Personal Property Tax $ 13,000
Ryder Extended Coverage Ins $ 57,600
Ryder Fuel Use & Tax Reporting $ 2,560
GPS Service** $ 790
ATBS Accounting $ 15,000
Support Staff $ 87,000
Cargo Ins $ 28,880
DAT/Internet Truckstop Load Boards $ 6,950
Total Fixed Expenses $ 1,098,084
Variable Yearly Expenses
Ryder Tractor Lease/mile $ 624,000
Ryder Trailer Lease/mile $ 48,000
Tractor Fuel $ 780,000
Parking Fees & Tolls $ 15,000
Permits $ 25,000
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Military EXpress LLC December 2016 25
Travel Expenses $ 12,500
Tires** $ 1,800
Maintenance** $ 8,700
Repairs** $ 13,666
Legal Fees $ 10,000
Driver Wages $ 528,000
Payroll Taxes $ 215,250
Delivery Supply Expenses $ 7,000
Lawn & Brush Hog Service $ 1,500
Contract Labor $ 25,000
Postage $ 950
Office Supplies $ 12,000
Utilities $ 2,800
Phone/Internet $ 1,500
Misc Expenses/Losses $ 5,000
Total Variable Expenses $ 2,337,666
Profit (Loss) $ 2,117,050
Minus cash asset debt $ (100,000)
Minus acquisition debt $ (450,000)
Net Profit $ 1,567,050
Return on Investment in the first year $ 125,364
** For physical assets belonging to TE Inc.
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Military EXpress LLC December 2016 26
TE Inc Division Balance Sheet – Opening Day
Assets
Current Assets:
Cash: $100,000
Petty Cash $1,000
Accounts
Receivable
$0
Fixed Assets:
Land $110,000
Buildings $50,000
Office Equip $4,940
Office Furn $5,319
GPS Systems $2,454
Automobiles/
Vehicles
$79,756
Software $5,751
TOTAL ASSETS: $359,189
Liabilities
Current
Liabilities:
Notes Payable $100,000
Interest
Payable
$42,500
Investor Payable $125,364
Taxes Payable:
Federal
Income Tax
$0
State Income
Tax
$0
Property Tax $4,644
Payroll
Accrual
$6,224
Long-Term
Liabilities
$850,000
Net
Worth/Owner’s
Equity/Retained
Earnings
$0
TOTAL
LIABILITIES:
$1,128,732
Certificate of Organization
Articles of Organization
FMCSA Motor Carrier USDOT and MC Registration