entrepreneurship final project
TRANSCRIPT
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MG-365:ENTREPRENEURSHIP
PROGRAM:BBA
SECTION:A
FINAL PROJECT
BOIL OVER
Submitted to:
Mr. Dawood Ilyas Butt
Submitted by:
Usama Bin Shahid 094005-140
AitzazAmjad 083805-111
AnilaGoshi 094005-131
HaroonHameed 094005-035
Syed Salman Jafar 094005-147
DATE: 19/01/2013
REMARKS
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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Declaration
We students of University of Management and Technology,
hereby declare that all the work that we have done in this
business plan for our product Boil Over, under the guidance of
our resource person, Mr. Dawood Ilyas Butt, is a record of the
original work done by us and is not submitted anywhere else.
Usama Bin Shahid 094005-140
AitzazAmjad 083805-111
AnilaGoshi 094005-131
HaroonHameed 094005-035
Syed Salman Jafar 094005-147
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Acknowledgement
We like this opportunity to express our profound thankfulness, and deep regard to
our guide Mr. Dawood Ilyas Butt for his exemplary guidance, monitoring and
constant encouragement throughout the course of this project. His constant
guidance and willingness to share his vast knowledge made us understand this
project and his feelings in great depths helped us to complete the assigned tasks.
The Blessing, help, and guidance given by him time to time shall carry us a long
way in the journey of life on which we are about to embark.
We also take this opportunity to express a deep sense of thankfulness to all the
people, especially the owner if Mughal Electric for their support, valuable
information and guidance, which helped us in completing this task through various
stages. We are grateful for their cooperation during the time period of our project.
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Declaration .................................................................................................................................................... 2
Acknowledgement ........................................................................................................................................ 3
Executive Summary ....................................................................................................................................... 8
1. Business Description ............................................................................................................................. 9
Form of Business ....................................................................................................................................... 9
Partners ..................................................................................................................................................... 9
Name of Business ...................................................................................................................................... 9
Business Description ................................................................................................................................. 9
Product Description ................................................................................................................................ 10
Gap Identification ................................................................................................................................... 11
2. Research and Analysis ......................................................................................................................... 12
Porters Five Forces Model ..................................................................................................................... 12
Threat of substitute products ............................................................................................................. 12
Threat of new entrants ....................................................................................................................... 13
Industry Rivalry ................................................................................................................................... 13
Bargaining power of suppliers ............................................................................................................ 13
Bargaining power of Buyers ................................................................................................................ 13
PEST Analysis ........................................................................................................................................... 13
Political Environment .......................................................................................................................... 13
Economic Environment: ...................................................................................................................... 14
Social Environment ............................................................................................................................. 14
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Technological Environment ................................................................................................................ 14
SWOT Analysis......................................................................................................................................... 14
Strengths ............................................................................................................................................. 14
Weaknesses ........................................................................................................................................ 15
Opportunities ...................................................................................................................................... 15
Threats ................................................................................................................................................ 15
Key success factor ............................................................................................................................... 16
Internal Factor Evaluation (IFE) Matrix ............................................................................................... 17
External Factor Evaluation (EFE) Matrix ............................................................................................. 18
Market size and Growth ......................................................................................................................... 18
Key Market Trends .................................................................................................................................. 19
Barriers to growth ................................................................................................................................... 19
Competitor analysis ................................................................................................................................ 19
3. MARKET STRETEGY.............................................................................................................................. 20
SEGMENTATION ...................................................................................................................................... 20
Market segmentation ............................................................................................................................. 20
Demographic Segmentation ............................................................................................................... 20
Psychographics Segmentation: ............................................................................................................... 20
Behavioral Segmentation: ....................................................................................................................... 21
Benefit Segmentation: ............................................................................................................................ 21
Target Market: ........................................................................................................................................ 21
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Segmentation Strategy: .......................................................................................................................... 22
Pricing Strategies .................................................................................................................................... 22
Sales and distributions strategy .............................................................................................................. 22
Advertising and promotions strategy ..................................................................................................... 22
4. Operations .......................................................................................................................................... 23
Total Land Requirement ......................................................................................................................... 23
Equipment ............................................................................................................................................... 23
Supply Chain Management ..................................................................................................................... 24
Inventory Management .......................................................................................................................... 24
Suppliers .................................................................................................................................................. 25
Location ................................................................................................................................................... 25
Logistics: .................................................................................................................................................. 25
5. Management ....................................................................................................................................... 25
Legal Structure ........................................................................................................................................ 25
Board of Directors ............................................................................................................................... 25
Board of Advisors ................................................................................................................................ 26
Human resource Management ........................................................................................................... 26
Organogram ............................................................................................................................................ 27
Staffing Plan ............................................................................................................................................ 27
Salaries ................................................................................................................................................ 28
6. Financial Projections ........................................................................................................................... 28
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Estimated Sales ................................................................................................................................... 29
Cash Flow Statement .............................................................................................................................. 30
Balance Sheet .......................................................................................................................................... 31
7. Financial Analysis ................................................................................................................................ 32
Return on Equity ..................................................................................................................................... 32
Return on Investment ............................................................................................................................. 33
Payback Period ........................................................................................................................................ 34
Break-Even .............................................................................................................................................. 34
8. Critical Risks ........................................................................................................................................ 35
Potential problem ................................................................................................................................... 35
Obstacles and risks .................................................................................................................................. 35
Contingency plan .................................................................................................................................... 35
9. Exit Strategy ........................................................................................................................................ 36
10. Milestone Schedule ......................................................................................................................... 37
Making of prototype ............................................................................................................................... 37
Business Plan ........................................................................................................................................... 37
PERT ........................................................................................................................................................ 38
CPM ......................................................................................................................................................... 39
Man Power Loading ................................................................................................................................ 39
11. Conclusion ....................................................................................................................................... 40
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Executive Summary
This project is related to a business plan that has been developed for a new product that we were
supposed to invent as a part of our Entrepreneurship course. First of all we as group members
applied the basic part of the course that was related to finding a business idea, by looking in
between and around us and identifying the gap in the demand and supply.
Finally we came up an idea that was related to preventing milk over-boiling at homes. Keeping
this idea we have developed prototype of our product and have prepared a full business plan that
focuses onto all the major areas that are required in order to start a new business, measuring its
feasibility and defining the future of the business.
For this we have included in it business description, market research and analysis, marketing
strategies, operations and management details, projected financials, critical risks involved in this
business and final the exit strategy of the business. We have also included in it the milestone
schedule to provide information regarding our efforts and ways of developing a business plan.
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1. Business Description
Form of Business
The business that we are going to start will be in form ofpartnership.
Partners
Usama Bin Shahid
Aitzaz Amjad
Haroon Hameed
Salman Jafar
Aneela Goshi
Name of Business
Boil Over
Business Description
In everyday life we face many problems and think of the solutions for it but even after finding
solutions we fails to go for them because either the solutions are very critically structured or the
solutions are financially unaffordable.
This is a new business, by the name of Boil Over that will provide the solutions regarding the
problems related to heating and boiling of food items at both the domestic and commercial level.
Our products will be universal and could be easily fitted onto different sources of heat like
electricity and gas. Apart from just selling the devices we will also provide services to our
customers. Currently we are starting with focusing at the domestic level with a wide range of
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products with different specifications depending upon the requirement and affordability of
customers.
Product Description
One of the same problems, discussed above is related to the boiling of milk at homes. The
problem is mainly faced by the women who while boiling milk are involved in many other tasks
as well; due to which the milk is wasted by reaching temperature above the boiling level of milk.
So to avoid this problem of milk over boiling there are many solutions available but they are
quite expensive for middle class to be adopted although the middle class require them more as
compared to upper class in which this process is usually carried out by the servants. So to resolve
this problem, mainly for the middle class we have finally developed a device which is easier to
use; is quite efficient and very economical. One of the great features of this device is that it is an
attachment which is installed to the already fitted gas stove at houses; means there is no need to
change the whole system of the kitchen rather than to just add an additional economical device
onto it.
Before describing the device in depth I would like to share some of the benefits of the device.
First of all as mentioned above the device is economical and easy to use. The device saves
natural gas by cutting it off as soon as the milk reaches it boiling temperature and to tackle the
need of re-boiling milk certain times, the device resumes the gas supply as soon as the
temperature of the milk falls. Now coming towards the main structure of the device, the devicemainly consists of two parts, of which one is thermostat and the other is solenoid valve. Other
things are optional that includes a buzzer, light indicators and a timer that can be fitted upon the
requirement of the customer.
The thermostat functions as the temperature adjuster for the gas cutting point, providing an ease
to the users to adjust temperature accordingly. The solenoid valve plays a vital role in this device
by communicating with the thermostat and cutting and resuming the gas supply when needed.
Some additional things as mentioned above, that can be added to this device includes a buzzer
that starts as soon as the solenoid valve cut gas supply and stop when it resumes gas supply, a
timer that will allow the user to set time it requires the milk to be boiled, and the indicators inform of lights which will light up at different stages of the milk boiling process.
The device is independent and can be installed into or removed out of the stove and is workable
with all types of stoves and burners whether working onto natural gas, gas cylinder or electricity.
In case anyone wants that device to be fitted in to the stove than that is also possible but the stove
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needs to be of a standard size for it and there will be some adjustments needed to be made in the
stove. Secondly, after the removal of the equipment from the stove the stove will have the marks
remained on it of the installation.
Products
Sr# Features Budget Econo Premium Premium Plus
1 ThermostatDigital
Analog
2 Digital Timer
3 Buzzer
4 Light Indicators
Gap Identification
We identified a gap in this through our own daily life experiences as well as through carrying out
a research related to problems the people face in this regard.
As soon as we identified this gap, we start searching for the already available solutions which
could easily fulfill this gap. After searching we found out that the solutions were available but
that were not financially affordable by the people who required it. So the main thing that we
needed to focus onto was to provide an easy and economical solution.
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2. Research and Analysis
Porters Five Forces Model
There are five competitive forces that identify the competitive power in a business situation.
1. Threat of substitute products
2. Threat of new entrants
3. Intense rivalry among existing players
4. Bargaining power of suppliers
5. Bargaining power of Buyers
Threat of substitute products
Our product (Boil Over) will be new in the market. We may have indirect competitors but not
direct ones so the substitutes are not a threat to our company. Even those indirect competitors
cant affect our business because the products they are selling are quite expensive and are
targeting a completely different market.
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Threat of new entrants
A new entry of a competitor into the market can weaken our power, but the new entrants will
need time and efforts to compete us because we will not be going to stay at the same point from
where we will start the business and will keep on bringing changes in designs and especially
technology.
Industry Rivalry
Intensity of rivalry depends on the number of competitors and their capabilities but we are
offering new product which does not exist so the industry rivalry is not high. We have indirect
competitors which are offering their product with a high price.
Bargaining power of suppliers
The bargaining power of suppliers in our case will be low because there are a number ofsuppliers available so we have options and we can get raw materials from any supplier which is
economical and has good quality supplies.
Bargaining power of Buyers
Initially the bargaining power of buyers will be low because we have no direct competitors but
can be more in long run when new entrants may come in the market. To cater with even the long
term threats we are already planning to charge customers as less we can by reducing our
margins.
PEST Analysis
Political Environment
The political environment is not stable in Pakistan. In short run and long run we can face
problems. In short run it could be difficult for us to deliver products to our customers on time
and we may have to maintain some inventory also with us. In long run when we may focus on
importing raw material the problem we can face can be in form of imposition of taxes anddelayed deliveries
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Economic Environment:
Economic environment is a most critical environment for any industry. So if we analyze
Pakistans economy in the our economy is growing and if we see the GDP of Pakistan, it is
growing from last five years but negative point is this that inflation is also growing rapidly which
is not a good sign for our economy. For investment purpose Pakistans economy is not
impressive because inflation rate is very high so we can say economic environment is very risky
in Pakistan.
Social Environment
After considering the government rules and regulations the social environment of a country gives
a good idea about their product sale in a particular country. Pakistan has very different sort of
culture, there are many languages are being speak here and basically it is an Islamic country and97% are Muslims. Up to 40% people adopt new fashion and changes in industry.
Technological Environment
Todays era technology can play a back born role for any industry and if anyone do not
implement those changes that are occurring in the industry then we can simply say that it would
not survive and will get end very soon. Pakistan social trend has changed and people also want
fully quality product. Consumer here wants new products in lower cost which are easy to use andincrease their life standers; it cannot be possible without technology.
Our government is encouraging technology competition in local market. E-Commerce is growing
up and people buy their favorite product online and Government establishes a Hardware
Development Fund (HDF) to finance IT hardware related R&D and manufacturing activities.
SWOT Analysis
Strengths
Technology
Unique Products
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Cost Advantages
Pricing Power
Innovative Product
Weaknesses
Cost Structure
Lack of Skills
Competition
Opportunities
New Markets
New Products
New Technology
New Services
Innovation
Online Market
Threats
Substitute Products
Govt Regulations
Political Risk
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Change in structure of stoves
Mature Markets
Competition
Bad Economy
Intense Competition
Key success factor
Quality product
Lower cost differentiation
Quality and skilled employees
Advertisement /positioning according to the targeted customers
Easily accessible location
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Internal Factor Evaluation (IFE) Matrix
Key internal factor Weight Rating WeightedScore
Strengths
Technology 0.15 4 0.6
Unique Products 0.1 3 0.3
Cost Advantages 0.1 2 0.2
Pricing Power 0.1 2 0.2
Innovative Product 0.15 3 0.45
Weaknesses
Cost Structure 0.1 2.5 0.25
Lack of Skills 0.2 3 0.6
Competition 0.1 1 0.1
Total 1 2.7
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External Factor Evaluation (EFE) Matrix
Key External factor Weight Rating WeightedScore
Opportunities
New Markets 0.07 2 0.14
New Products 0.1 3 0.3
New Technology 0.1 4 0.4
New Services 0.05 2 0.1
Innovation 0.1 3 0.3
Online Market 0.05 2 0.1
Threats
Substitute Products 0.05 1 0.05
Govt Regulations 0.08 2 0.16
Political Risk 0.05 1.5 0.075
Change in structure of stoves 0.1 1 0.1
Mature Markets 0.1 3 0.3
Competition 0.05 1 0.05
Bad Economy 0.05 2 0.1
Intense Competition 0.05 1 0.05
Total 1 2.23
Market size and Growth
We are targeting the middle and upper middle class. The size of the Pakistani middle class, underprevailing economic conditions is estimated at 20 million, out of a population of 180 million.
Boil over is basically a new product so thats way over potential growth will be high, if no copy
version of the product will come. Electronic industry is basically a big industry. In market there
are many competitors offering different electronic products. When we look at the industry we
can see that there are a lot of electronic shops in Pakistan. In the modern age Pakistani people
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have become very advance especially the upper middle class people they prefer these new
technologies for their ease and time saving. This industry caters one of the basic needs of all the
people in the world.
Key Market Trends
Technology and Innovation
Consumer Awareness
Portable device
Low Price
Through the market analysis we can find the needs and wants of the customers. The availability
of the products is monitored as well as information about the competitors is gathered through thisanalysis. The image of the product in the minds of the customers is also judged and boil over
success depends on meeting the needs and expectations of our customer. Through listening and
understanding, it can make products that they will want to use all through their lives.
Barriers to growth
Initially there are no barriers to growth as we are starting a business from a very low level. So
what we need to do is just to get ourselves registered and start selling our products. In long run
we may face issues regarding growth if we face some pressures from big giants working in the
same field and if we lose our focus on product quality and improvement and any new entrants
tries to take place of us.
Competitor analysis
We have no direct competitors. We are offering new product in market. Our indirect competitors
are offering their product but to a different target market, in quite high prices.
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3. MARKET STRETEGY
SEGMENTATION
In this portion of project we will discuss that how many segments we are using for this product
and what strategy we are using for these segments.
Market segmentation
Demographic Segmentation
Age: People from all age groups
Gender: Female
Occupation: House wife or working women
Income: Rs. 25,000/- and above
Religion: every religion
Psychographics Segmentation:
The social class, which includes the target group of milk boiling device, is consumer from upper
middle class. They will buy this product because of their social set up and price of the product.
The consumer has large range of personalities from dynamic to interesting. From self-confident
to extra vested, from risk-taking to social able. The personality of a person makes a lot of
difference in buying power.
The lifestyle of consumer varies from flashy, broadminded modern too dull traditional andbackward. It is a very important factor which very much influences the buying pattern of the
consumer. People will be mostly influenced by high quality, new technology and branding of
product.
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Behavioral Segmentation:
The customer expects high quality in a new product to shift from existing one. Milk boiling
device is helpful for the females. Milk boiling device will be available in small (portable) size
and suitable for consumers that they can use it any time at home. It is very regularly consumed
product.
Benefit Segmentation:
The people groups (females) at the time of boiling the milk, womens can leaves the kitchen and
have a more time to do all the other activities.
Target Market:
A target market is defined as a group of customers (people) at whom seller specifically intends to
aim its marketing efforts. For this purpose we analyze three components:
Consumer Buying Power Social and psychological factors influencing buying patterns
Over target market is upper middle class people. Upper middle classes people those
people who are well educated. Mostly they use new products and new technology because of
comfortable incomes. milk boiling portal (new product) that can reflect over target market
(females) because it is a convenient product, she can leaves the kitchen and she have a more
time to do all the other activities.
The size of the Pakistani middle class, under prevailing economic conditions is estimated at 20
million, out of a population of 180 million. Middle class people those people who have a at leastone Bick at their home and somehow know about the new technologies.
Due to increased industrialization the income and the life standards are improving.
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Segmentation Strategy:
Milk boiling portal is targeting all above mentioned Segments. Target segment is getting benefit
from this product (milk boiling portal) like:
Females will prefer that technology for their ease and convenient. So there will be a strategy to target females, house women and working women
Pricing Strategies
We are using Markup price strategy. Our pricing strategy will not be more. We will set a low
initial price for their innovative new products when we enter the market. The lower or
affordable price can help to attract more customers.
Sales and distributions strategy
Exclusive distribution: we will open of our own shop on Hall Road.
Advertising and promotions strategy
For advertising we will use female magazines like female lifestyle magazine and female fashionmagazines etc. we will promote our product by using the websites, social media such as twitter,
face book page etc and through advertisements.
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4. Operations
Boil Over has 5 founders who are also going to be the partners for this new business. They
would have the voting power for any decision that has to be made. All the five founders of Boil
Over are Business Management Students with corporate experience. The founders are also going
to act as operational managers, Marketing Managers and Supply Chain Managers.
Total Land Requirement
Approximately 2 Marla covered area is required for the proposed Boil Over shop.
Equipment
Following equipment would be required for the proposed beauty clinic. Equipment is chosen
keeping in mind the kind of services we are going to offer at our clinic. Approximate prices are
also given along with the list.
Furniture & Fixture Required Cost per Unit Total Cost
Back rack 1 30500 30500
Reception & cash
counter 1 20000 20000
Display counter 1 14500 14500
Main door 1 35000 35000
Front Board 1 14000 14000
Counter chair 1 7000 7000
Assembly desk 2 10500 21000
Generator 1 120000 120000
Waiting area chairs 5 4000 20000
Waiting area sofa set 1 30000 30000
Air conditioners (4 ton) 1 125000 125000
Television 1 22000 22000
Lighting 1 6000 6000
Total 465000
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Equipment/Machines Required Cost Per Machine Total Cost
Computers 1 12000 12000
Assembly Equipment 3 5000 15000
Motor Bike 1 50000 50000
Telephones 1 1000 1000
Total 78000
Supply Chain Management
Inventory Management
Inventory management is not a big issue initially because the company has decided to purchase
raw materials from local suppliers. Later on after a year depending upon the business conditions
Raw
Material
Shop
OrderAssembly at
Shop
Dilevery
Assembly at
order Placed
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we could go for importing raw materials. So currently we can easily get any amount of raw
materials we need for operations in local market and dont need to maintain any inventory level.
Suppliers
There are many suppliers in Brandrath Road. But company has selected only three suppliers.
Mughal Equipments, Ahmed Equipments and Siddique Electric and gas works.
Location
We are going to take a 2 Marla shop on rent in Hall Road. Starting the business in a rented
building would significantly reduce the initial cost of the project. We have searched the market
and a 2 Marla shop can be easily found in approximately 60,000, in one of the busiest roads from
commercial point of view. This will cost us Rs.20, 000/month. Comparatively if a land is
purchased and a new building is constructed it would cost us in millions. This makes a huge
difference in project cost. This location itself has several of the advantages for new ventures and
the especially the kind of target market we have, it tends to be the ideal location.
Logistics:
Company only requires 1 motor bike initially which will used for placement of order or purchase
of products. Some of the Company Directors have their own cars which will also be used for
these purposes.
5. Management
Legal Structure
Board of Directors
The founders of Boil Over are also going to be the member of board of directors. Boil Over has 5
founders and each one would have 20% voting right. 80% of the vote should be in favor for any
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decision to pass. The board of directors is also going to responsible for HR activities (hiring &
Firing). All the 5 members are also going to serve as the operational managers who are going to
visit the Shop according to their fixed times.
Board of Advisors
Our resource person Mr. Dawood Ilyas Butt will assist us in implementing this project so he and
some of our other teachers will act as Board of Advisors as well. We will seek help and guidance
from them time to time. Other than there is a person, Mr.Ahsan who has been successfully
running his Business of Ovens and gadgets like these. He has helped us a lot in this project and
he will further assist us in implementation phase of our project.
Human resource Management
The company is owned by 5 founders who are equal stock holders of the Boil Over. The sister
concern of the board of directors is the board of advisors who advise the board on different
issues mostly when the board or the owners are facing any problem with the business. The Board
of directors perform the activities of HR Department themselves Operational manager, financial
manager and marketing manager. One of the Directors will purchase the Raw material and will
be marketing manager. Two will take the orders and perform the management job and other two
will place and assemble the order.
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Organogr
Staffing Plan
Ceo
HR ManagerMarketing
Manager
Financial
Manager
Supplychain
Manager
Staff
SweeperSecurity
GaurdElectrician Office Boy
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Salaries
Staff Required Salary/month
Guard 1 7000
Electrician 1 12000
Sweeper 1 5000Office Boy 1 7000
Total 4 31000
6. Financial Projections
Net sales 13100000 17775000 21190000
CGS
Purchases 10480000 14220000 16952000
Gross profit 2620000 3555000 4238000
Expenses
Depreciation Expense 201000 201000 201000
Salaries 372000 409200 450120
Rent of Shop 240000 264000 290400
Electricity Bills/Petrol 120000 132000 145200
Maintanance 50000 55000 60500Marketing and Advertisement 100000 1083000 110000 1171200 121000 1268220
Operational profits 1537000 2383800 2969780
Tax 99905 154947 193035.7
Profit after tax 1437095 2228853 2776744
20142013 2015
Projected Income statement
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Estimated Sales
Budget 5000 1000 5000000
Econo 2000 1300
2600000Premium 2000 1750 3500000
Premium Plus 1000 2000 2000000
Budget 7000 1000 7000000
Econo 3000 1300 3900000
Premium 2500 1750 4375000
Premium Plus 1250 2000 2500000
Budget 8000 1000 8000000
Econo 3800 1300 4940000
Premium 3000 1750 5250000
Premium Plus 1500 2000 3000000
2014
2015
2013
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Cash Flow Statement
Cash Flow Statement 2013 2014 2015
Cash Flow from Operations
Net income 1437095 2228853 2776744
Depreciation 201000 201000 201000
Increase in Account payables 51000 56100 61710
Increase in taxes payable 99905 154947 193036
Cash at the end of the year 1789000 2640900 3232490
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Balance Sheet
Total Assets Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Fixed Asse ts le ss Acumulated Depreciati Cost Acc.DepNet Cost Cost Acc.DepNet Cost Cost Acc.Dep Net Cost
Shop Advance 60000 20000 40000 60000 40000 20000 60000 60000 0Back rack 30500 10167 20333 30500 20333 10167 30500 30500 0
Reception & cash counter 20000 6667 13333 20000 13333 6667 20000 20000 0
Display counter 14500 4833 9667 14500 9667 4833 14500 14500 0
Main door 35000 11667 23333 35000 23333 11667 35000 35000 0
Front Board 14000 4667 9333 14000 9333 4667 14000 14000 0
Counter chair 7000 2333 4667 7000 4667 2333 7000 7000 0
Assembly desk 21000 7000 14000 21000 14000 7000 21000 21000 0
Generator 120000 40000 80000 120000 80000 40000 120000 120000 0
Waiting area chairs 20000 6667 13333 20000 13333 6667 20000 20000 0
Waiting area sofa set 30000 10000 20000 30000 20000 10000 30000 30000 0
Air conditioners (4 ton) 125000 41667 83333 125000 83333 41667 1 25000 1 25000 0
Television 22000 7333 14667 22000 14667 7333 22000 22000 0
Lighting 6000 2000 4000 6000 4000 2000 6000 6000 0
Computers 12000 4000 8000 12000 8000 4000 12000 12000 0
Assembly Equipment 15000 5000 10000 15000 10000 5000 15000 15000 0
Motor Bike 50000 16667 33333 50000 33333 16667 50000 50000 0
Telephones 1000 333 667 1000 667 333 1000 1000 0
Total Fixed Assets 402000 201000 0
Current Assets:
Cash 1789000 2640900 3230490
Inventory 0 0 0
Other current assets 0 0 0
Total Current Assets: 1789000 2640900 3230490
Total Assets 2191000 2841900 3230490
Liabilities and Capital:
Current Liabilities:
Rent Payable 20000 22000 24200
Salaries Payable 31000 34100 37510
Tax payable 99905 154947 193036
Long Term Liabilities: 0 0 0
Total Liabilities 150905 211047 254746
OE 603000 402000 201000
R.E 1437095 2228853 2776744
Total Capital 2040095 2630853 2977744
Total Liabilities and Capital 2191000 2841900 3232490
Year 1 Year 2 Year 3
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7. Financial Analysis
Return on Equity
Return on Equity Net Income Total Equity ROE2013 1437095 2040095 1.4195965
2014 2228853 2630853 1.1803618
2015 2776744.3 2977744 1.0723868
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Return on Investment
Return on Investment Gain from Investment Investment ROI
2013 1638095 603000 1.7165755
2014 2429853 603000 3.029607
2015 2977744.3 603000 3.9382161
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Payback Period
The payback period in our case is 3 years. We have estimated an investment of Rs. 603000/- and
have decided to depreciate it over 3 years.
Break-Even
Year Total Investment Dep. Charged Acc. Dep Investment Remaining
1 603000 201000 201000 402000
2 603000 201000 402000 201000
3 603000 201000 603000 0
Depreciation on start-up capital 3yrs Rs201,000
Salaries Rs372,000
Rent of shop Rs240,000
Electricity Bill/ Petrol Rs120,000Maintanance Rs50,000
Marketing Rs100,000
Total amount to be covered Rs1,083,000
Break-even sales (1083000/200)Assuming margin of Rs.200/unit
Break-Even Calculations
5415
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8. Critical Risks
Potential problem
As we are coming up with a new product that does not exist in the market and if it exists in the
market either the cost is high which is out of the range of many people or people are not properly
aware of this product so basically our potential problem is to give awareness of our product in
the market and to the end consumers. This product is used in house basically used by most of the
women so we have to market our product in such a way that the women sitting in the home
knows.
What the product is? How to use it? Basically we have to show them the importance of our
product and make them realized that they really that product. Most of women listen radio while
doing work so we have to give repetitive add on the radio and same case with the TV adds busy
women got less time to watch TV by giving repetitive adds we can aware them with the productand its usage. This process increases our advertising cost. In start we might have to go for direct
sale means hired people that go to the doorsteps and sell the product.
Obstacles and risks
As we are coming with a new product and we dont have any direct competitor so we dont have
to face much obstacles but the main thing is to change the perception and minds of the people
that we are offering a quality product at low cost because of Chinese cheap products our market
is spoiled and people perceive that cheap products as not durable. As we can observe that cheap
product with great deals one for one free are available but their quality is too low.
This is main obstacles other than that we are coming up with a new product that is very useful
for busy housewives. As risk is involved in every business, mostly at the start of new business
which has to face high factor of risk as compared to the running businesses so, at the starting of
our business the only risk that we could face is the acceptability of targeted customers and their
agreeableness to buy this product.
Contingency plan
A contingency is an unexpected event or situation that affects the financial health or marketshare of a company. It is usually a negative event, but can also be an unexpected windfall such as
a huge order. Anything companys expected operation can harm the company even if the
disruption is because of a windfall. That is why companies create contingency plans for many
possible situations, so company management has a pre-researched plan of action to immediately
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follow. Some threats usually covered in contingency plans are crisis management, business
continuity, mismanagement and reorganization. Contingency plan is like an option of plan B if
the ways u think are not going the same then what u have to do as we are launching a new
product so if it does not work so what should we do contingency planning is not just about major
disasters. On a smaller scale, it's about preparing for events such as the loss of data, people,
customers, and suppliers, and other disruptive unknowns. That's why it's important to make
contingency planning a normal part of your everyday business operations.
9. Exit Strategy
In our case exit strategy is not that difficult as we are launching a product for a middle class
which is not commonly used so we are starting it from very small scale by keeping that point in
our mind that ifproduct does not work well so we dont face a huge loss for huge investment as
our target market is middle class so we have to cut down our prices and have to earn reasonable
profit.
For defining a exit strategy we need to first focus on, What we really have at the start?
We will have at the start s shop which will be on rental basis and furniture and equipment for
which the details are provided above. All the raw materials as discussed above will be bought at
the time we require them, from the local suppliers. Keeping this in view the exit strategies we
can adopt are:
Let it run dry: This strategy well works in small business. We will run the business until and
unless it starts generating loses.
Selling share: This strategy well works in partnership business. We can sell our shares to any
partner who is willing to carry on with this business.
Merge: We can merge this business with another business of that type that has a brand name and
a high market share and reputation.
Sell: Selling outright can also allow for an easy exit. If partners agree we can take the moneyfrom the sale and distribute it.
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10. Milestone Schedule
Making of prototype
For our prototype we got help from many technicians and consulted many companies that are in
similar types of businesses. As this was a new idea so most of them were not even willing to try
it and many suggested us already manufactured full panel electrical and gas equipment which
were not easily understandable from technical point of view and were also much costly, both for
purchase and operation and had nothing unique in them other than their designs. At last after
number of meeting we learnt that the real manufacturers that are mostly at the back end in big
companies are separate from sellers, that are on front end and do not have any proper technical
knowledge of what they sell.
So we decided to stop wasting time over these types of companies and to start targeting small
businesses that are mostly operated by their owners, who have all knowledge of the product dueto their involvement in the manufacturing process as well. Finally we met the owner of Mughal
Electric and discussed this idea with him. After two to three meetings he was able to suggest us
the favorable solution to this. After that to further know about the technicalities of the product
we met their technicians and got some technical knowledge required to create a circuit of the
product from them.
The main part of our prototype is that we made it by our own. We made the circuit by ourselves
and even assembled it ourselves.
Business Plan
Coming towards the business plan, we all group members divided the parts of the business plan
among us, as shown in the PERT, below. After that we started working onto the business plan,
the description of which is provided in the CPM.
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PERT
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CPM
First of all as a basic step of the business plan or we can say the foundation of the plan we
discussed the product and the proposed business in depth with each other covering it through all
aspects, so that every group member must be clear of what we were actually focusing onto with
this product and business. This was important because if we wouldnt have practiced this than
our work may not have any relation with each others work.
After that, with the help of Microsoft Project we finally distributed different portions of the
project among us and started working onto it. We were in communication with all of our group
members and at any level we needed help we communicated with each other through mails, calls
or even conference calls where required. After completing the work we again had a meeting in
which we analyzed our work and then made corrections were needed.
In this way we finally came up with a business plan for our business.
Man Power Loading
We altogether are 5 group members. All of us were having efficiency in different fields so we
divided the work based on the level of efficiency every one could give on different parts of the
project. Almost all of us were given equal amount of work to be performed in this project and
tried our level best to do work as efficiently as we could.
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11. Conclusion
Finally we will like to conclude this business plan as a challenging and learning one. Its
challenging because it was not like other project in which we were focusing mainly onto theory
or doing the quality work by focusing onto the text only but we had to focus on the quality of the
practical work as well in this business plan. Its learning because in this business plan we were
required to apply whole our learning and knowledge that we gained in first 6 semesters of our
BBA program.
The product that we have developed by the name of Boil Over has itself made us learn a lot. It let
us to meet the people in industry, it let us to know how people feel when you have an idea, it let
us know who can be helpful for you and finally that until and unless we have the power to reach
our desired destination, we cant succeed.
All the work done in this plan has been tried to link to the practical information as much as
possible, but there are certain stages or areas where we need to make assumptions like in case of
financial. In case of a new business the assumptions are usually more because there is no
experience in behind that could guide us.
Finally we have decided that we will try to take this product to market and will try selling this.
The aim behind this may be not to earn money but to experience this and know about our
potential.