Greenovate: Business plan

Johannes Jacobus van As B0321MPMP0811

Business plan for setting up a modular home construction and lettings company for the South African student market

Greenovate

End street 230Clubview

Centurion South Africa

0699

+27723357350

2/22/2012

Table of Contents

Executive summary

Business Description

Mission statement

Location , Background and History

Location

Background

History

Product description

Suppliers

Business Opportunities

Potential customers

Geographical area

Business competitors

SWOT analysis

Marketing Strategy

Costing

Pricing

Sales projection

There will be very few sales in the first 2 months of the business , at the end of the 3 rd month

when phase 1 is complete the company will see the first income which will equate to R 6 153

600

Marketing plan

Business Operations

Operational function

Team

Technology

Finances

References

Appendices

Solving the student accommodation problem

Organization of the document

Since the conclusions and information in the business plan are directly formed from the

supporting research, there will be repetition. A business plan is fundamentally a living

document, developing as the business progresses and new decisions are made, so this

document represents a snapshot in the beginning of the development of the business plan.

As the company is formed and work begins, the shape of the business will likely change

from what is represented here.

Executive summary

Greenovate is a designer and builder of green modular flats in the Gauteng Province in

South Africa. The aim of the company is to address the growing demand for affordable living

while reducing the impact on the environment while filling the gap in the market for student

accommodation. This is due to an increase in the amount of students going to university,

along with various socio-economic factors which have basically reduced it to a scarcity.

Students also became more aware of their surroundings and the environment; this gives

Greenovate the chance to create a new market sector within the housing industry in South

Africa. The focus of the company will be on providing sustainable living in green modular

flats or studios, without compromising on luxury.

Greenovate is a company that will establish its presence in two market sectors, the one

being in the construction of modular homes and the other sector that of letting out flats to

students. This duality of the company will give it a competitive edge as it will fully be able to

control supply and demand of its product in the student lettings sector and be able to

diversify its product in the other sector. Also using the efficiencies of modular construction,

Greenovate makes green features available without a high price tag at a much faster pace.

Greenovate will have only one standard container set-up when we start off but the idea is to

offer a wide spectrum of luxury housing options to students and later to the general public.

Business Description

Greenovate is a start-up company that will incorporate as a Private company (PTY) based in

Pretoria South Africa. The advantage of registering the business as such is that it will give

Greenovate a more professional image as well as having tax benefits. The ownership

structure will be based around shareholders and that depends on how many people want to

invest in the company.

Greenovate’s purpose is to build and design modular green homes. The focus will be to

design, build and sell affordable sustainable modular homes for students and young people

just starting out.

The idea is to make use of old shipping containers and turn it into liveable, stackable units

that provide a comfortable living at an affordable price, yet very energy efficient. These

container homes will be price competitive in comparison to regular modular homes while

offering the value-added benefits of high design and sustainable materials and methods.

We will compete with construction companies marketing to students and younger people as

well as with other companies providing modular accommodation. Greenovate will be the only

company in the market making use of shipping containers as modular homes for students

with a focus on being green. Customers will prefer our homes over those of other builders

because of our excellent designs, lower prices, shorter construction time, and lower

environmental impact over the entire building life-cycle.

The company will exist in two parts, the first will be the manufacturing section of the

container units which can later diversify into selling off the container homes to private

customers as stackable accommodation, hotels or other types of private accommodation

The second part of the company is using to build complexes and renting out or selling the

flats to students.

Mission statement

To provide sustainable comfortable living that is cost effective with the least amount of

damage to the environment

Location, Background and History

Location

The factory will be located in Centurion which is based close to the University of Pretoria

(UP), University of Witwatersrand, University of South Africa (UNISA), University of

Johannesburg (UJ), Centurion College, Tswane University of Technology (TUT) and a few

other private universities and colleges. This means the container homes can be transported

to location with the least amount of effort and the prospect to put up student housing close to

each university is great.

The location where the container homes will be built as well as the first location where the

student flats will be set up is at the location below, which is based in Centurion. The grounds

is about 2 hectares in size. The containers will be converted in one area of the grounds in

the open air, with only a roof covering it. Therefore the setup cost will be kept at a minimum.

The other reason for choosing this location is that it is a very central location in a secure

area which is of the utmost importance and, it is close to all student amenities and the

GAUTRAIN 1

(End street 230,Google earth)

1 Fast train service equivalent to the underground

Background

Housing is an increasing problem, especially in highly populated areas. More and more

people are moving to residential areas which are becoming over populated. There is not

enough housing and building time can take anything from a few months to a few years

depending on the type and size of building being built.

Other factors that needs to be considered is price, it is very expensive to build normal homes

or flats in South Africa especially in Gauteng. The reason for this is political as well as

economic factors like the rise in price and availability of cement due to a shortage. There is

also shortage of electricity and water as well as sewage problems due to a lack of planning

for extra power stations, dams and poor city planning. This makes the housing market a very

difficult one to enter. Especially as some municipality’s has stopped planning permission for

certain types of building for up to 7 years.

Security is a huge problem in South Africa and therefore housing needs to be very secure

and best be built in clusters and in a security village as less break-ins or armed robberies

occur in these complexes. Also best to have electrical fences surrounding the place as well

as have security guards.

Therefore coming up with a product that can be built quickly, cost effectively, that accounts

for the climate conditions as well as being spacious, luxurious, in a secure environment and

energy efficient would be easily approved and well accepted by the local government as well

as people wanting to move into these complexes

History

The idea for the company arose out of an interest for green living and modular home design

as well as the idea of making use of recyclable materials in return providing healthy living,

optimum design and limiting the negative impacts of housing on the environment while

being sustainable.

The CEO noticed that there is a gap in the market for student accommodation that is

affordable yet comfortable and green. Therefore the CEO decided to start-up a company in a

niche market that will cater as a green company providing much needed accommodation

surrounding universities, the idea is to later expand the company into modular hotels and

other products but that is the long term goal.

Product description

One shipping container will be converted into 2 small studio flats, which is very similar in size

compared to student accommodation found in the university hostels as well as the student

accommodation found in Hatfield. The floor space will be about 13.5m2 per flat.

The container entrance will be fitted with a glass door and windows which are double glazed

to let most of the light in as well as keep internal environment insulated. It will be fitted with

wooden laminated floors and the walls and ceiling will be insulated with insulation foam

covered with dry-walling. The lighting used in the house will be LED to conserve most

energy.

The bathroom will be one meter in length and the full width of the container which is 2.33m.

The one side will be a wall which is 20cm in diameter fitted with fibreglass and

soundproofing as it is the will that will divide the container in two. The other wall will be the

backside of a built in cupboard to conserve space. Both walls will be coated with a

waterproof layer and an extractor fan will be inserted that goes on with the light.

The bathroom will be fitted with a shower which will a power shower to conserve energy, a

toilet, and a sink also with an on demand water heater and a heated towel rail.

The front room will have a double bed which is situated close to the built in cupboard. The

base of the built in cupboard will also have drawers for extra space. The room is open plan

and will also have a small couch and an LED tv fixed to the wall. There will also be a small

kitchen with a microwave small fridge and washer/dryer. The kitchen sink will also have a on

demand water heater so as to conserve energy and space by excluding a geyser.

On top of the roof of the complex solar panels will be placed to provide electricity for the

units. Used water from the kitchen and the bathroom will be filtered and fed into the toilet

and in that way reduce water wastage. A sewage digester will be placed under the complex

to produce methane which can be used for electricity generation or for providing gas to the

flats.

Traditional

modular

traditional site

built

Green site-built Greenovate

Cost/ sq m R3500 R6800 R8000 R42852

Level of green None None Low-Med Med-high

2 Figures for this table was obtained from Roeleveld quantities surveyors in the Eastern Cape. The figure for Greenovate was worked out by taking the estimate building cost divided by the size of the flat.

Figure 1: A cost comparison of different types of construction options including

Greenovate

Environmental Financial

40 % less construction waste 37% lower price

50% more energy efficient 70% faster construction

50% more water efficient

Figure 2: Advantages of Greenovate over traditional site built homes

● Intelligent design and site orientation

● No carpeting

● Non-toxic paint finishes and

adhesives

● Double glazed windows and door

● Energy efficient appliances

● Waste water re-used

● Sewage digester

● Low-flow fixtures and appliances

● Bamboo flooring

● Formaldehyde free cabinets and

adhesives

● Tankless water heating

● LED lighting

● Solar power

Figure 3: A select list of Green features within the Greenovate modular home

Standard container dimensions for the container to be used

Internal External

Container Height 2.35 2.59m

Container Width 2.33 2.44m

Container Length 12.00m 12.19m

End door width 2.28m

End door height 2.26m

Floor area 28.33m2

Container weight 4.06 tonnes

The containers (flats) will be stacked 4 on top of each other and 10 next to each other so as

to have a complex containing 80 studio flats with 13.5m2 living space. The first complex

based in Centurion is situated close to the Gautrain which can give students access to most

of the universities.

Figure 4: The diagram gives an indication what the student flats will look like. The

only difference is there will be 10 containers next to one another to make up the block

of flats.

The goal is to convert and install one container per week, and to finish the first 80 flats in a

year. It will be installed in phases so that students can move in during the building process

as well so that there is a return as soon as the flats are finished and installed

Phase 1 will be to prepare the land while finishing up the planning permission as well as

getting a sewage connection and paving a road. While this phase start the team will also

start to create an awareness of the company and start building the first few flats which can

be used for viewings.

Phase 2 will be to install the first 10 containers which will be the ground floor in 3 months.

Installation is planned to be less than a day after delivery and placement as container only

have to be connected to sewage line electricity and water. Each container is fitted with its

own small piece of walkway, same width as the container which only has to be connected to

the adjacent piece as well. This makes installation very quick. The first 20 flats will be

advertised to students with a move in date set. The team will also search for another piece of

land to set up a block of flats

Phase 3. The 20 ground floor flats will be opened up to students for moving in. The first floor

will be installed after all the containers were finished and 2 weeks to the end production will

be used for aligning and installing the containers. Production time will be 10 weeks and then

2 weeks for delivery and installation

Phase 4 and 5 is too install the next floor in about the same period of time as the previous

phases while also starting to advertise and organising move in dates for these floors.

Suppliers

The materials and suppliers used for the building of the container flats will be heavily

researched regarding the sustainability of the products. Suppliers will also be chosen on

experience, reputation, their location and environmental commitment as well as the price of

the materials sourced.

Material qualities System qualities

Is recyclable Is energy efficient

Contains no or few toxins Water efficient

Durable product Makes products locally

Less resource intensive SABS approved where possible

Locally made

Sustainable

Figure 5: The preferred attributes for suppliers to be selected.

The secondhand containers will be sourced from big shipping companies like Merck, which

is situated in Durban or Richards Bay in Kwazulu-Natal. Shipping containers can be

transported from there by train to Centurion and a delivery company can transport the

containers from the station to the factory. The second option it to obtain the containers from

a secondary distributor like Joduwo Industrial trading, situated in Johannesburg, but this

means the containers might be more expensive.

The task of sourcing the containers and other materials at the best price, taking into account

the above mentioned factors will fall to the business development and marketing manager.

This person will help establish good relationships with reliable suppliers at the best price.

Business Opportunities

Potential customers

The first potential customers would be university students as well as young people starting

out looking for accommodation that is affordable, safe, secure, luxurious and central. The

second potential customer is outside buyers that want to put up container flats. Outside

buyers will be obtained as soon as the company is ready to diversify by marketing the

product.

Potential outside buyers

● Private home owners that would like to put up a flat in their back garden

● Construction companies that want to put up apartments

● On site housing for mining companies and other companies

● Private businesses

Geographical area

As discussed Greenovate will be strategically placed in Centurion, Gauteng, which is a

central hub to the universities in Gauteng. Greenovate can easily transport the container

flats to the selected locations where they will be set up. Also if the containers is to be sold to

private owners. The company is based closed to the main national road (N1) connecting the

major cities in South Africa. It is also situated close to a train station where the containers

can be delivered nationally.

Greenovate’s main focus will be on renovating the containers and setting up them up as

student residences at selected locations across the country, first starting with Centurion. The

next phase will be to set up one in Hatfield, Pretoria, after that 2 in Johannesburg at UJ and

Wits. The next phase will be to set up accommodation in Cape Town and Stellenbosch in the

Western Cape.

Therefore the company will be distributed over South Africa in a period of 5 years.

Business competitors

Greenovate will compete in two sectors one with green modular builders that market their

products to customers interested in modular flats. The second will be to companies that

provides accommodation to students and young people. Customers will prefer our flats over

those of our competitors because of our excellent design and functionality, lower prices,

shorter construction time, the homes lower energy consumption as well as the lower impact

that our buildings has on the environment as well as the flats being in a secure environment

close to all amenities.

There is AfriPanel based in Johannesburg which is about 50km away from Greenovates

proposed location. AfriPanel focuses on modular building for temporary situations. However

they do not focus on style or green features and it does not look stylish or aesthetic,

therefore in the niche that Greenovate wants to move in they will not really be a competitor.

Figure 6: AfriPanel modular home

The next competitor is LogHomesGroup situated in Pretoria which is 15km from Centurion.

This company focuses on prefabricated log homes, as they are focussing on game farms

and lodges or farms they are not really a competitor.

NOMC is the next potential competitor and they based in Bloemfontein in the Free state

which is about 500km from Centurion. This company focuses on bigger modular home

production, they might possibly the only real competitor as their designs are more stylish and

they are reasonably priced. However they do not focus on student accommodation and also

not on stackable units to form a block of flats. They also do not focus on green living

features, and they are far from Centurion.

These seems to be the only modular home production company in South Africa and only one

have to be a slight potential threat as it is an established company with a good reputation,

but as we are not completely in the same market there is very little overlap.

In the other segment there are a number of competitors, however because there is such a

big shortage in student accommodation, there is room for a lot more accomdation. What will

set us out from the rest is the stylishness of the studio’s as well as the cost undercutting of

being cheaper than most other options for the same luxury.

SWOT analysis for Greenovate

Strengths

● Unique product

● Stylish design

● Affordable price

● Fast construction

● Good management team

● Only green modular builder

● Few competitors

● Energy efficiency of product

Weaknesses

● Over-dependent on student market

● Small company

● No established logistics in place

Opportunities

● Diversification to produce different

types of products

● Expanding business into other

regions

● Increased popularity of modular

construction

Threats

● Increase in raw material price

● Decline in housing market

● New competitor in the market

● Government regulations

Marketing Strategy

Costing

The average cost per unit without installation will be R80 000 and an estimation of R15 000

installation cost which includes the delivery and positioning fee. Therefore one container

consisting of 2 flats will cost R190 000

Pricing

As most of the flats will be rented out, the renting price is dependent on the area as well as

security and luxury of the flat.

Accomodation type Price to buy Price to rent per year

University residence Not for sale R 21 600

University flats Not for sale R 33 400

Student private accomodation R 560 000 R 55 200

House share (commune) Not for sale R 21 600

Private 1 bedroom house in

local non student area

R 500 000 R 42 000

Private studio flat R 450 000 R 43 200

Figure 7: Average price for student accomdation in Pretoria

(Anon., 2012)

For the first block of student flats Greenovate can ask on average R3200-00 per month per

unit, which will include council tax and water but will exclude electricity. Each unit will have a

small electricity box where you type in a voucher to buy your months units. The electricity

which will be generated via solar panels as well as the gas generators (obtained from

sewage) and some units from the local grid will be sold at the same price as ESKOM3

If the units are to be sold in the already set up complexes they will be sold at R300 000 4 a

unit and still have to pay the monthly levy of around R600 for security, council tax and water.

If the units are sold as is for set up elsewhere, the container containing either 1 or 2 flats will

be sold at R350 000 which will include delivery and set up cost of up to R30 000

Sales projection

Value Based Sales Forecast

The idea is to have a ratio of 1:1:0.5 meaning 1 unit to let out, one unit in the complex being

sold and one private sale of a container. In 3 months there should be 40 units in place (as 20

3 Sole electricity supplier in South Africa4 R400 000 is the average price for a luxurious bachelors/studio flat in the Gauteng province

containers would have been converted) meaning 16 units should be rented out, 16 units sold

and 4 containers (8 units) sold privately.

This means that in a year’s forecast the company will have produced and sold or let out 78

containers (156 units) for the year which in the ratio of sales will equate to 63 units being

rented out, 63 units being sold and 30 units (15 containers) being sold privately

This equates to a yearly gross income of R 25 819 200

Figure 8: Breakdown of year 1 sales forecast

Price per unit Yearly gross profit

63 units let out R 3200 per month R 2 419 200

63 units sold R300 000 R 18 900 000

15 containers sold R300 000 R 4 500 000

Total income R 25 819 200

Figure 9 Breakdown of quarterly sales forecast

Price per unit Quarterly gross profit

16 units let out R 3200 per month R 153 600

16 units sold R 300 000 R 4 800 000

4 containers sold R 300 000 R 1 200 000

Total gross income R 6 153 600

There will be very few sales in the first 2 months of the business, at the end of the 3rd month

when phase 1 is complete the company will see the first income which will equate to R 6 153

600

Figure 10: Pie chart showing the estimated sales projections ratio for the Greenovate

product. 1 Income from lettings, 2 Income from unit sales, 3 Income from container

sales.

Marketing plan

Greenovate will be the first mover to move into the green modular house market specifically

targeting students. This gives Greenovate the competitive edge and the style, design and

functionality of our buildings as well as its security and its convenient location will be the

main selling point.

The project will be marketed in the following way.

Website:

This will be an enormous channel of information and advertisement. The website will be

easy to use focussing on the 3 click rule5 as well as aesthetically pleasing and have guided

tours and video clips of our designs interior and exterior. You can have a virtual tour around

the complex as well as inside the studio. It will also focus on the green options on why our

buildings are better to live in for the customer as well as the environment.

Advertising:

Greenovate will not make use of any paper marketing like pamphlets or brochures to keep a

more environmental friendly approach. We will however email an interactive brochure to

potential clients.

The company will however advertise on boards in and around the university campuses as

well as placing an advert in the university newspaper.

Showhouse:

We will try to work alongside the university to host a promotion week, promoting green living

and Eco friendliness, during this time we will have a show house at the university that

students can walk through and also have videos showing our dedication to green building

features as well as the design and building of our product.

We will also open up a show house in front of the complex which people can come and have

a look at. As the area where the first two complexes will be built is very central with a lot of

cars passing by this will attract a lot of potential customers

Word of mouth:

5 The three-click rule or three click rule is an unofficial web design rule concerning the design of website navigation. It suggests that a user of a website should be able to find any information with no more than three mouse clicks

This is ideally what Greenovate would like to achieve, we do not really want to focus much

on advertising but rather let the product advertise itself by people living in our complexes or

that has seen our homes. We want our product to be of such a superior nature inside and

out that it really gets people talking.

Business Operations

Operational function

The production plant based in Pretoria will be open air only a roof covering the containers

and the office, workshop, and storage surrounding it which is built out of containers. This

means that the set up cost for the factory is held at a minimum

2 containers converted into offices R 60 000

2 containers converted into factory space R60 000

2 containers used for storage R40 000

Plastic Roof with split poles and concrete slabs R15 000

R175 000

The project manager and labourers will set up the plant, this will be done as soon as the

company is set up and the people are hired. Before that the CEO will use his house to run

the business from which is situated close to the plant.

The workshop will be fitted with all the necessary equipment that might be needed to build

the containers. It is still unclear on what all the equipment is that will be needed but the

estimated budget for equipment is R500 000

The containers will be rested on 1m high concrete slabs to give workers access to the

underside as well to fit plumbing etc. At any given stage there will be four containers in the

factory which will be at different stages of completion. The reason for this because the

containers is so big and easy to move, Greenovate will contract in a company to move the

containers away. So after they start work on the fourth container, the logistics company will

be asked to come and remove the containers and take them to the site for installation as well

as replace them with new containers. The price of transport has been included in the

container conversion price as it will be a variable cost dependent on the amount of

containers moved.

Enough stock will be kept to complete 7 containers at any stage so that there is always

enough to keep on going, to make sure if anything happens regarding supplies (delivery or

out of stock etc.) that the labour team can continue working.

Team

As Greenovate is a start-up company it is best to start the company very small with a flat

structure. As with most entrepreneurial ventures the team members will have many duties to

perform. The team will be made up of energetic hardworking individuals, that have a passion

for green living and design and will promote the company to the best of their abilities.

The plan is to start the company with 10 people, where 5 people will make up the

management team and the other 5 people will be manual labourers to help with

transformation of the containers as well as set them up at the location.

CEO: Janus van As

As CEO, Janus van As will establish the strategic direction for Greenovate while making

sure the day to day operations of the company is correctly performed. Janus will direct the

organisation to achieve its goals and outcomes by developing and implementing strategic

and operational plans, as well as integrating the work of all the team members to work well

in a coherent group and meet strict deadlines. Janus will also select the other team

members according to experience, personality and passion to build up a team that will work

well together.

Janus van As did a B.Ed FET (natural science), focussing on biological sciences and has a

passion for the environment. During his studies he worked as a researcher and lecturer as

well as managing one of the academic programmes. He then went on to do an MBA in

Finance and Investment at the University of Gloucester, through SBL in London.

The CEO will work with a recruitment firm to recruit people to fill the following positions which

will be created to help run and manage the day to day activities as well as working on

expanding. The positions that will be created for the company as a start-up is as follows:

Business development and marketing manager

This position will entail the procurement and strategy development for the company which

will include consulting, strategic sourcing and process design as well as liaising with

suppliers. This person will also be responsible for market research and analysis,

administering marketing tools like market studies, signage, brochures, model homes,

promotional events, product development and active promotion by word of mouth and

networking.

Sales and operations manager

This position will entail direct-to-customer sales, working towards a specific sales target and

building up a customer base. Managing sales from order to delivery and liaising with the

project manager. This person will also be responsible for compliance, quality control, labour

relations and inventory.

Accounts and administration manager

This position will entail managing production schedules as well as managing the lettings,

controlling the funds, managing the accounts and doing the ordering.

Project manager

This person will be directly responsible for day to day oversight of construction as well as the

installation of container flats to strict standards and deadlines. This person also has to

manage the team of labourers working with him/her, as well as working closely alongside

other members of the management team. This person will also be directly responsible for

coordinating building times and installation, quality control and site safety.

Some of the roles will be interchangeable and as it is a start-up everybody is responsible to

help out in all departments where needed. The CEO will oversee the management of

everybody as well as taking on different roles and responsibilities, from sales to accounts

depending where help is needed.

Technology

Greenovate is not in an industry that is highly reliant on technology or where it puts the

company at a major advantage. The focus would rather be on better service, product

differentiation and lower prices as this gives companies a competitive edge in the

construction market place.

However Greenovate will be reliant on green technology that will be used in the construction

of the container flats. Main technologies that will be used is solar power on the roofs of

buildings to provide power for the LED lighting. The next would be next generation LED

lighting for a major saving in electricity but not giving way to lack in light intensity.

Finances

Capital expenses

Greenovate will initially require R 13 000 000 for the first year to set up the physical

presence of the business. This will include setting up the factory, offices and buying all the

equipment, and capital for the whole year’s container construction.

The capital for the variable cost and containers can be received quarterly as the whole

amount will not be needed straight away, just enough to cover 3 months expenses.

General and administrative cost for Greenovate (Fixed cost)

These costs which includes salaries are normally estimated at a percentage of the sales

income. The average for the construction industry is 7% of the sales price. Based on the

yearly production this cost falls just below the 7% margin. A breakdown of the administrative

cost is given in the Appendix

Timeline and growth

plan

Milestones Description Time required Funding required

Obtain management The CEO will 3 months before Salary negotiation

concentrate to find

the best team to join

the company + the

projectmanager and

labour will start a

month earlier to set

up shop

company starts in budget + R5000

for travel and time

Register company As a private

company (PTY) and

get legal advice

3 months before

company starts

Legal fees

Design contracts for employees and

other contracts

needed for business

functioning

3 months before

start

Legal fees

Design and develop

prototype

Building a prototype

to green regulations

and criteria working

closely together

with the architect

2 months before the

company starts

R250 000

Build a network of

suppliers and

distributors

The CEO will do

most of this before

the start and then

the Business

development and

marketing manager

can continue

2 months before

start

R10 000 travel

expenses and time

Set up shop Building and setting

up offices and

factory shop and

obtain tools

1 month before start R800 000

After start

Start building

containers

Construction team

settled and start

construction of

prefab homes

2 weeks after start Moderate

Marketing Marketing manager

start with marketing

1 week after

opening

Moderate

Get SABS approved

and planning

permission for site

Business operation

managers will deal

with city planning to

sort out final details

of planning and set

up

1 week after start

( gives 2.5 months

time before

installation of first

containers)

Moderate

Phase 1

Selling the first units

Working towards

immediate sales

and lettings for

occupation 2

months later

1 week after start

and continuous

Moderate

Installation phase Setting up the first

block of flats for

students to move in

3 months after

opening

Moderate

Gross profit Margin

Direct Cost /Selling Price x 100 = GPM%

R 80 000/R 300 000 x 100 = 387.948%

References

Appendices

Fixed Cost Item Estimated Cost Estimated yearly cost

Salaries    

Salary per manager R220,000.00 R1,100,000.00

Salary for labourer R24,000.00 R120,000.00

     

Loan for buying the land @

12% R20,000.00 R240,000.00

     

Utility bills    

Phone R2,000.00 R24,000.00

Electricity R10,000.00 R120,000.00

Water R2,500.00 R30,000.00

Internet R1,000.00 R12,000.00

Other R5,000.00 R60,000.00

Interest and repayment on start

up cash borrowing

R200,000.00

R2,400,000.00

Banking services R500.00 R6,000.00

Professional Indemnity Insurance R3,500.00 R42,000.00

Web hosting

R500.00

Bottom of Form

R6,000.00

Marketing   R50,000.00

     

Total fixed cost   R4,210,000.00

Item Price per item Total price

Container R20 000 R10 000

Insulation R50 per m26 R1650

Laminated flooring R80 per m2 R2630

Dry walling R120 per board R1800

LED lighting R800

Shower R1500

Water shower heater R3000

Toilet R800

6 The total wall/ floor space is 32.85 cubic meters this is the surface area that was used to worked the pricing for items that is prices per square meter.

Plumbing R3000

Bathroom Sink &cupboard R1200

Sink water heater R1450

Built in cupboard R2500

Soundproofing R80 per m2 R450

Double bed R 2000

LED TV R8000

Couch R1500

Coffee table R300

Built in kitchen unit R2800

Multifunction microwave R3000

Kitchen sink R500

Water heater R1450

Washing machine/dryer R3500

Fridge R2000

Glass door and frame R5000

Blinds R1500

Extra’s R15000

Total price per unit R77 330

Rounded price per container R160 000

3 question

Is setting up a business like this anywhere a good idea?

Is there worthwhile demand for this type of product?

.

What would local people want from such a product?

* Who makes up the target audience?

* What do they want?

* When do they need it?

* Where does it sell best?

* How can it be taken to them?

* Why do they want/need it?

* What are our competitors doing?

* How is our market changing?

ConLIV flats are constructed in a open air factory in the Gauteng area. A single containers is

turned into either one or 2 small studio flats.. These homes are a standard size and can be

either one or 2 units per container. The workers at each station will be trained and skilled to

complete these homes to a high quality standard. Greenovate sets out to get its container

homes SABS7 approved.

The flats will be 95% complete when transported to the site with only connection to water,

electricity and sewage needed. The result is a beautiful, high performing, healthy, green flat

at a fraction of the price of traditional, on-site-built flats. The flats can be stacked closely

together and on top of each other saving space

Google earth. (2012). End street 230. Available at: www.googlemaps.com [Cited: 20

February 2012]

Solving the student accommodation problem

7 South African Bureau of Standards

01 Dec 2004

With matric exams now behind them, the parents of many university or college hopefuls will

soon have to address the problem of finding them suitable away-from-home accommodation

next year.

And it could be a serious problem, says Berry Everitt, MD of the Chas Everitt International

property group. "In the first place, most universities have insufficient hostel accommodation

to meet demand.

"According to a recent Rapport article, only about 15 000 of the estimated 63 000 students

who will attend Wits and the new Johannesburg University next year will be able to be

accommodated in hostels. In Stellenbosch, there is only room in the hostels for about 6500

of the university's 22 500 students."

Secondly, he says, although there are student apartment developments springing up around

most universities, up to 80 percent of the units are being bought by investors and rentals are

high. "In the new complexes close to the old RAU campus, for example, the rent for a 25sqm

one-bedroom unit is about R1800 a month, and that for a 67sqm one-bedroom unit up to

R2950 a month.

"In Hatfield, close to the University of Pretoria, landlords are asking up to R2800 a month for

one-bedroom student flat and up to R1900 a month for a studio."

However, he says, current market conditions are making it possible for many parents to

consider as an alternative the purchase of an ordinary flat or house to be used as off-

campus "digs" while their children are studying.

The current low interest rates mean that the repayments on such a property may actually be

lower than the fee for a hostel room or rental for a "student" flat – especially if a group of

parents form a syndicate to buy a house.

"Such properties are also likely to be good investments, with parents whose offspring have

graduated able to find a ready market among the parents of "incoming" students in years to

come – and to generate a profit than can be used to put a new graduate on his or her feet

financially."

Mike Spencer of Platinum Global says student accommodation in Bloemfontein has also

become a major headache for parents, students and neighbours.

"Even though many students have already left the varsity at the end of the academic year,

we are still getting enquiries for student flats. Even with the number of flats that we have to

rent, we expect them to be full long before the students start coming back next year.

"Some investors have taken the opportunity to buy up houses in the Brandwag and

Universitas suburbs and convert them to dense student accommodation often housing

upwards of 12 student per house, but this has not been popular with everyone, especially

when student house owners do not exercise control over their student tenants. This has led

to a number of incidents during the year, where neighbours have complained to the police

and municipality about noise, and lack of maintance."

However, local developer Delan Kruger has now developed 288 well-appointed bachelor

flats in Faure Ave Willows, which not only provide much needed accommodation but also

24-hour gated security. Roving security patrols will also be provided within the complex in

order to control any unruly behavior and excessive noise.

The development, which consists of 15 separate apartment blocks, is proving to be very

popular with parents as well as investors. Originally sold for R110 000, units are now still

selling for between R150 000 and R160 000. Rentals are around R1500pm including a

parking bay.

http :// www . property 24. com / articles / solving - the - student - accommodation - problem /2177

http :// www . google . co . za / imgres ?

q = container + flats + designs & um =1& hl = en & biw =1024& bih =545& tbm = isch & tbnid = s 1 FVLFKLh

7 MyRM :& imgrefurl = http :// ffffound . com /

image /

4 caba 4 df 7 e 480 c 82 b 24197018 a 9656 d 849 f 37712& docid = Dzoxi 5 RGRtrtLM & imgurl = http ://

www . containerhome . info / wp - content / gallery / shipping - container - apartments / shipping -

container - apartments -14. jpg & w =700& h =700& ei = p 9 U _ T _ vwCIi 1 hAefqczbBQ & zoom =1

http://www.google.co.za/imgres?

q=container+home+designs&um=1&hl=en&sa=N&biw=1024&bih=545&tbm=isch&tbnid=1-

pZWf4fGslrZM:&imgrefurl=http://gliving.com/tag/shipping-containers/&docid=hkd0fsjaI-

4YDM&imgurl=http://gliving.com/wp-content/uploads/2009/04/zigloo-kitcontainerhome-

01.jpg&w=600&h=400&ei=59Q_T9jeGMKHhQf0zJzjBQ&zoom=1

http://www.google.co.za/imgres?

q=container+home+designs&um=1&hl=en&sa=N&biw=1024&bih=545&tbm=isch&tbnid=Baj

eT-AC6PTSEM:&imgrefurl=http://tinyhouseblog.com/pre-fab/shipping-container-homes-in-

costa-rica/&docid=w22EA6tfv8RS9M&imgurl=http://tinyhouseblog.com/wp-content/uploads/

2009/07/great-inside-shipping-container-homes-costa-

rica.jpg&w=448&h=336&ei=59Q_T9jeGMKHhQf0zJzjBQ&zoom=1

Extra information

http :// web . up . ac . za / sitefiles / file /121/ Accommodation %20 fees %202012. pdf

http :// www . afripanels . co . za /

http://www.noversea.co.za/site_files/index.asp?pid=3&spid=17&parentName=Modular

Homes