Goclean Waterless - Production and Use of the Cleaning Products - Business Plan Example

GOCLEAN WATERLESS) Business Plan Contents Executive Summary 2 Business details 4 Industry and market analysis 5 Customers and value proposition 7 Marketing strategy 8 Operations plan 15 Management team and company structure 17 Resources 20 Financing 21 Financial projections 23 Risks and strategic options 24 Key milestones 25 Appendices 26 REFERENCES 30 Executive Summary It is approximated that 16.67% of the world’s population do not have access to clean drinking water. Deaths have been recorded around the globe due to illnesses that are caused by lack of proper sanitation as lack of access to water. It is also approximated that almost half of the world hospital beds are usually occupied by patients suffering from diseases that are caused by poor hygiene, inadequate sanitation and lack of safe drinking water. It is also estimated that every 20 seconds, a child dies as a result of water related diseases. With such worrying facts, it is important to consider how we use and manage the scarce fresh water sources in the country. The company has already been established and has been in operation for the last six months. It has however been slow in its service delivery as most car owners are still reluctant to use the service. The services provided by the company are aimed at cost reduction for the end users. The products used to provide the services to the consumers are designed to provide substantial benefits over the other competitive brands as follows: The company insists on simplicity in production and use of the cleaning products. This means that the organization focuses on ensuring that the production costs are kept as low as possible. Similarly, the products are easy to use as they only comprise of the waterless car wash and a microfiber towel. The cleaning only requires that the car is sprayed and then the microfiber towel is used to wipe the car. Price and performance benefits are also assured by the business. The consumers are assured of significant savings from using the products while at the same time they are sure of the performance of the products. Business details The waterless cleaning services companies have been set all around the world in different countries and they have been successful. In Oman however, there exists no company to provide such services to the public in the country. Having identified that the project is cheap and that it is eco friendly, the adoption of the project will be highly welcomed in the country. The project as the name suggests is waterless cleaning meaning that the large amount of water that is wasted while washing the cars in the country will be saved. Similarly, the products that are used to wash the cars are also eco friendly as they do not contain chemicals that are harmful to the environment. The cost of adoption is equally cheap as it is the costs that the consumers will incur as they are less or almost equal to the amount they regularly pay for the services. The business will go by the name of Goclean waterless. The success of the project will be enhanced by the fact that it encourages innovation while at the same time it saves water since the products that are used to clean the cars are purely from the plants. This means that the products are manufactured from biodegradable ingredients which are usually from petroleum and silicone additives. The business key drivers are quality of product production to be used for the service of cleaning the cars, innovation and sustainability [Ass06]. Industry and market analysis Service competitive analysis Strengths Weaknesses Pricing The pricing of Goclean waterless Company’s services is usually lower than those of the competitor companies. It is so since the company has invested fully in the most advanced technology which allows them to improve the quality of their goods while at the same time reducing the costs of services. Research and development has also allowed the company to provide better quality services than those made by the competitor companies. The pricing of services is vital in any market. Goclean waterless Company should understand that consumer always go for the cheapest but most quality products and services, thus they should ensure that they reduce the prices set for their services while at the same time maintain quality. Quality Quality is another strength that Goclean waterless Company enjoys while it serves its customers. Most of the materials used by Goclean waterless Company are readily available locally thus making it cheap to purchase them. Similarly, Goclean waterless Company enjoys quality through the employees that they have who work in the company for the production of the new products and offering services to the consumers [Ric04]. Company’s reputation and experience Goclean waterless Company has not been in the market for a long period of time as compared to their competitors. The company’s experience in serving customers and sales is still lower than its competitors and so is their reputation in the country. The services by the company have not been properly established and few consumers understand the quality of their services as they are not fully in the market. Most consumers tend to prefer to use products and services from the already existing and established brands around the world [Nad09]. Opportunities Threats New markets There are plenty of emerging new markets that Goclean waterless Company can take advantage of. Most companies have not fully utilized the vast market opportunities in these places. Goclean waterless Company can take advantage of the new market opportunities and set up new warehouses in the area to help them take control of the markets before the competitors come into the market [Law12]. Competition Goclean waterless Company has over the years been receiving competition from the companies and organizations that have already been in existence before the establishment of the company. Competition faced by Goclean waterless Company could greatly undermine their market share to other competitors who tend to reduce the prices of their products to win the consumers loyalty [Ann03]. The waterless cleaning service is a less competitive industry in any market around the world. The main competitors in the market for the Goclean waterless company are those that use water to clean the cars. The fact that the company works towards providing services to its customers while preserving water, it is more likely that the company will become competitive in the market and that it will highly be supported by its consumers. The new service supports innovation in the market as well as the preservation of water in the market. The company also ensures truthfulness in its activities as it provided a ticketing criterion that calculates the number of vehicles that have been served [Jul11]. Customers and value proposition Customer satisfaction remains the major reason why businesses come into existence. When they satisfy their customers, profits are realized as more and more customers continue to flock into the business premises to enjoy the services rendered by the business. The emerging trends that impact on the operations of the organization are the customer needs and requirements. The consumer needs keep on changing every single day and it is up to the corporation to ensure they meet the demand of all the consumers through the production of improved services and support services. Goclean waterless company is determined to provide the best quality products meeting the customer requirement to help uphold legal values. The corporation is determined to increase the sales revenue and profits through increased market share to help curb the competition that the company faces from other competitors [Gar05]. Ansoff identifies four main marketing strategies that corporations can successfully use to increase their revenue collections and recorded profits through each financial period. Market development, product development, market penetration and diversification are the major marketing strategies that can be used [Pan12]. The services by Goclean waterless company are new to the market in the Oman and thus market development and product development will be their main strategies for marketing. Marketing strategy 1 2 3 4 Customer Segments Action plan Creating awareness Use of the media in advertising the product. The media is increasingly being used by many people around the world and placing your add on the media will help create awareness of the product Use of the internet to communicate about the product. As the world becomes a global village, setting up a website for the organization will help as people will gain information about the services of the company through the internet. Word of mouth. The customers who have already enjoyed the service by the organization will most likely pass on the word of the good services that the organization offered them. Encouraging trial purchase Discounts. Discounts encourage the customers to make trials to the services offered by the Goclean waterless company in Oman. The major consumers of the services are expected to be the middle class people and a few of the first class people. To encourage them to make trials to the new service, it is important to offer the services at lowered prices than those of their competitors. Promotional activities like gift rewards and reward cards. Promotion provides an increased expenditure for the corporation. The promotion services are a part of the marketing strategies as they encourage the consumers to use the company’s products. Market segregation. Considering the disposable income of households, the corporation should consider the prices at which they set their products. Where the income is higher the corporation should consider market segregation and charge higher prices and where the income is lower, they should charge lower prices. Encouraging repeat purchase Promotions and rewards such as discounts and reward cards provide the organization with an opportunity to have repeat customers as they will most likely be loyal to the services that are cheaper that those of their competitors. Discounts will provide the consumers with an opportunity to enjoy cheap services which will encourage more customers into using the organizations’ services Physical evidence provides for increased loyalty of the consumers. Having a physical address where consumers can have their issues listened to and solved. Physical address also provides better services to the customers. Create positive customer service experience. Focus on competition and remain competitive in the market. Goclean waterless company requires indentifying its major competitors and identifying and exploiting their weaknesses to increase their market share which will help reduce competition. Finding new prospective customers Studying the successful competitors. It is important to understand the successful competitors by understanding where they advertise, their networks and tactics. Trying such would as well work for the company as it does for the competitors. Sponsoring events that might encourage the prospects to attend. Similarly, it could be important to watch out for the events organized by other organizations that might bring together the target market. to win the market, it could be better to contact the organizers of the events and have them give away the products used for the services as rewards Work and identify potential consumers from the newspapers. The newspapers are a great source of contact information that may be used by the organization to acquire potential customers. While identifying such customers, it will also be important to advertise and provide. Identify as many paths for success for the company as possible. The prospective customers can be reached through a number of ways among them being advertisements, promotions and sponsorships. Evaluating service delivery Ticketing would be a smart way to evaluate service delivery for Goclean waterless company. Ticketing will enable the management team of the organization to understand the number of consumers using their services. Ticketing will enable the company to compare the performance for each of month depending on the tickets that have been used by the consumers each time. Requesting the customers for their feedback regarding the quality of services that they have been receiving. The customers usually have their opinion on the quality of services that they received and asking for their feedback will expose weaknesses in the services and thus the organization will have an opportunity for growth and become a market controller. Building relationships Retain professionalism in the daily activities. While trying to build relationships for the business to ensure repeat customers it is also important to consider how the customers see the business through the media and the search engines [Sal13]. While building relationships, it is also important to understand that there is a difference between influence and position for different organization. It is most common that the people with higher positions in the organization may not have the highest influence as they in most cases command their juniors rather than communicating with them and understanding them better. It is therefore to indentify the position in the different organizations that have influence and get close to understanding and building a good relationship with them Estimated cost To manage the organization and increase the probability that the organization will have its activities in the foreseeable future, it is important to identify means through which they can increase their revenues while reducing their costs. Goclean waterless company will first be obliged to conduct a marketing research for the new service. Marketing research provides businesses with a broad picture of the performance of the products that they provide to the public. Marketing research provides the researcher with the specific information that is required to assist in addressing the issues and methods that determine the processes used to provide for the good and services available. Marketing research is a set of processes set by a given company to help link the consumers of the company’s product to the marketer. The marketing research process provides the marketer with information that is used to identify opportunities that may arise in the market, the problems available and how to generate, refine, monitor and evaluate the performance of the goods and services for decision making purposes. [Placeholder1]. It is expected that the new service may face poor performance over the short term period but will improve to perform better in the long term. The marketing plan for goclean waterless company is both direct marketing for the domestic markets and partnerships with other companies around the world to sell their products. While goclean waterless company will conveniently set up new warehouses in the hypermarket areas, they may not have the capacity to reach all their consumers through the stores. Partnerships have been important for goclean waterless company to make to help reduce the competition they face from the other competitor companies. Partnerships will allow the goclean waterless company to reach more consumers as they increase the geographical region in which they cover thus increase the volume of consumers reached by the company. For the stores, sales personnel will be strategically posted around the world and will be paid a basic salary plus commission depending on the sales that they make to entice them to reach more customers and make their sales. 1 2 3 Customer Segments Action plan Target Media Search engines Newspaper posters Communications objectives Create awareness about the services that are being offered by the company Encourage more consumers to use the services that are offered by the organization Communications message Goclean waterless company is the first of its kind that deals with cleaning cars within Oman. The company Come try out our new services of waterless car cleaning that are aimed at environmental conservation while at the same time reduces instances of damages to your vehicle Come try out our new services of waterless car cleaning that are aimed at environmental conservation while at the same time reduces instances of damages to your vehicle Budget OMN 1000 OMN 10000 OMN10000 Communications plan (media, dates, etc.) Operations plan Operations plans requires that we identify the critical activities that when undertaken will enhance the success of the organization. Such activities should consider the pre-launch activities and the ongoing, key operational activities for the business after its start up. The prelaunch activities should include such activities as research and development to help understand the market better as well as developing a product to provide services to the consumers that are highly acceptable. The project targets the hypermarkets in Oman as well as the university in Oman. The ongoing operational activities will require as to identify the classes of people that are using the service more often and work towards encouraging more in the same class to adopt the service. During the first two years, the company will focus on the University of Oman and two select hypermarkets in Oman. The consequent years after the second year the company will focus on expands the services to other hypermarkets until the fifth year of its operations. After the fifth year, the company hopes to expand to foreign markets, concentrating mostly on the Arab markets in Asia, and a few of the European markets [Mic082]. Gantt chart showing key operational activities Task name 2015 2016 2017 2018 2019 Jan-June July –Dec Jan-June July –Dec Jan-June July –Dec Jan-June July –Dec Jan-June Planning Research Design Implementation Follow up Management team and company structure The missions and visions of most organization depend on the leadership of the organization in order to be achieved. Leadership is thus a crucial part of the organization. Apart from meeting the organization’s mission, vision and objectives, leadership also plays an integral part in inventions, innovations, and implementation for change in the organization. The success of goclean waterless company is dependent on the management’s ability to innovate their products and services through a cost effective delivery line that is large and receptive to the market. Each department in the above chart has tasks and responsibilities which they perform in order to achieve goclean waterless Company’s objectives and goals. This simple structure is very suitable for our services that we offer to our consumers. The structure can ensure that our employees understand the goal and that they are clear, smooth communication is enhanced and stability is assured. The company has anticipated that the profits from the organization will be realized as from the second year of operation for the services. The realization of revenues is expected to increase over the years as the consumers of the product realize its performance to be better, they will most likely purchase the services over the others that already exist in the market as it will be encouraged by the better management practices of the organization [Jos10]. The company has offered equity positions for all the officers and employees in the company. Hopefully, the company will go public and offer affordable shares to the public in the next five years. A current ownership breakdown for the company is as follows: Pablo Hussein 60% Amyl Ginjeans 18% Priscilla Sproviero 8% Vincent Losciallo 7% Other employees 7% Resources Human Resource Management entails balancing the resources of the corporation. There are two types of resources in the organization among them being human resources and natural resources. The available resources are people and processes and the Human Resource Management working towards providing the optimal ratio to enhance the best achievements for goals and strategies in the organization. The Human Resource Management integrates the wide range of culture, ideas, and products with the human resources available to achieve maximum potential of the organization. Understanding that of the employees are the most important people in ensuring the success of the company helps corporations to ensure that their welfare of the employees. The quality of goods produced and services offered by the employees are highly determined by the quality of benefits and compensation that the employees receive from the company [Mic06]. Financing First year Asset Cost (Rial Millions) Buy/lease/rent/bootleg Production machines 10 Buy warehouse 8 Rent furniture 6 Buy Fixtures and fittings 2 Buy Second year Asset Cost(Rial Millions) Buy/lease/rent/bootleg Production machines 2 Buy warehouse 2 Rent furniture 1.4 Buy Fixtures and fittings 0.3 Buy Third year Asset Cost(Rial Millions) Buy/lease/rent/bootleg Production machines 0.5 Buy warehouse 2 Rent furniture 0.2 Buy Fixtures and fittings 0.1 Buy Goclean waterless company requires an initial expense of OMN 26 million for the first year for the new installations and services to start working. The cost of assets for the second and third years respectively will be OMN 5.7 million and OMN 2.8 million. The cost will be inclusive of both the fixed and variable costs. Consequently, the project will require a fixed cost OMN 2.5 million for the consequent years after the third year. Additional variable costs on services provided by the company will be dependent on the demand of the services. Other standard costs to be paid by goclean waterless company include tax on their profits and duties from the export of their goods. Whilst some of the financing of the project will be obtained from the retained earnings from the company, debt financing will also be crucial for the organization. Goclean waterless company has anticipated that the profits from the organization will be realized as from the second year of operation for the product. The realization of revenues is expected to increase over the years as the consumers of the product realize its performance to be better, they will most likely purchase the product over the others that already exist in the market. As the founder and pioneer of the goclean waterless company, it is important to retain a controlling interest in the company. For this reason, the owner will finance 60% of the anticipated costs, 20% will be offered to the staff and employees to take the interest while the remaining 20% will be finance through debt financing. The finances to be used for debt financing will be obtained as loans from the banks. Although the debentures attract a higher interest rate for the organization at 10%, as compared to the short term that attract 8% interest, the company will objectively take up the debenture options as they will be better for the organization to achieve its objectives. Source of finance Amount to be invested % amount of investment Equity –personal Other shareholders 15.6 60% 5.2 20% Debt financing 5.2 20% Financial projections The project promises positive cash flows as from the second year of its operations. Although the project promises high revenues in the first year, the expenses outweigh the revenues since it is a new product and thus is expected to incur more distributions costs and marketing costs to create awareness in the market. As from the second year the services will have been well established and the will be enough knowledge about the services. Since the company expects to be in operations for the foreseeable future, having to record negative profits for the first year will be understandable since the revenues will be used to pay for the purchases of assets and other expenses that they organization expects to incur Risks and strategic options The risks that new start up organizations faces are usually vast and thus they should be considered and strategies set up to indentify means through which they can be reduced or completely eradicated. The major identifiable risks that goclean waterless company is likely to face are the financial risks and social risks. Competition is the major shortcoming for the organizations and it determines the financials and social risks that the organization faces. An organization that is established in a market with no other business like itself means that there is no competition that it faces and is thus a market controller and it is thus easy for the organization to improve its reputation thus reducing its social risks. Key milestones As competition in the market continues to increase, the competition continues to thrive, the pressure from consumers on the pricing of the products push the margins lower and their product quality is demanded to improve over time. Goclean waterless Company has been formed by a strong team of highly experienced directors who design a good quality service line which is aimed at improving the flexibility of manufacturing and cost efficiency through enhancing accuracy in production, increasing manufacturing productivity, reducing labour costs such as the supervisory costs and identifying means through which they can reduce and convert the variable costs into fixed costs. When this is achieved, Goclean waterless Company is able to increase its profit margins and allows changes to be made on the processes without changing or increasing the capital structures [She10]. The aim of the new service is flexibility, improved performance capacity, cost reduction for the end user and precision. Flexibility will allow Goclean waterless Company to provide differentiated product and provide them as and when the consumers demand for them. Improved performance capacity means that the organization manufactures better engines with better performance. The consumers of currently pay large finances to have their cars cleaned. The cost of the products used for the service is usually cheap and thus it is expected that the services will cost the consumers even less [Ric091]. Appendices Appendix 1: Estimated sales volume and value for each month Month Units (millions) Value (OMN millions) January 4.6 46 February 5.4 54 March 5.5 55 April 7.0 70 May 1.30 130 June 2.00 200 July 3.20 320 August 4.60 460 September 4.70 470 October 5.20 520 November 4.80 480 December 5.20 520 Total 33.25 3325 Appendix 2: Forecast income statement Year 1 Year 2 Year 3 TURNOVER 2000 2800 3325 Cost of sales Materials (200) (400) (820) Wages (420) (500) (615) Factory overheads (100) (260) (500) Total cost of sales (720) (1160) (1935) GROSS PROFIT 1280 1640 1390 Operating expenses Selling and marketing costs (290) (280) (265) Distribution costs (520) (540) (560) Administrative and general costs (460) (276) (120) Other costs (100) (70) (70) Depreciation (8) (8) (8) Total operating expenses (1378) (1174) (1023) OPERATING INCOME (98) 466 367 Other income Interest income 20 (160) 230 Interest expense (70) (90) (110) Total income (50) 250 120 NET INCOME (48) 216 247 Appendix 3: Calculation of contribution, operating income, Net income, Contribution Margin, Breakeven Point before interest, Breakeven Point after interest, and Margin of safety after interest. Year 1 Year 2 Year 3 TURNOVER 2000 2800 3325 Variable costs Materials 200 400 600 Wages 420 500 540 Factory overheads 100 (720) 260 (1160) 300 1440 Contribution 1280 1640 1885 Fixed costs Selling and marketing costs 290 280 280 Administrative and general costs 460 276 280 Depreciation 8 8 8 Distribution costs 520 540 560 Other 100 (1378) 70 (1174) 60 1188 Operating income (98) 466 697 Other income Interest income 20 160 200 Less: interest expense 70 (90) 90 (250) 110 301 Net income (188) 216 387 CONTRIBUTION MARGIN 0.64 0.58571 0.56692 BREAKEVEN POINT BEFORE INTEREST 2004.39 2095.54 BREAKEVEN POINT AFTER INTEREST 2431.22 2642.36 MARGIN OF SAFETY AFTER INTEREST 2799.13 3324.21 Appendix 4: Forecast balance sheet Forecast balance sheet Year 1 Year 2 Year 3 Fixed Assets Cost 26 23 18.5 Less depreciation 8 18 8 15.7 8 10.5 Current assets Stock 3325 2000 2800 Debtors 0 230 20 Cash 15 10 26 Total 3340 2240 2846 Less: creditors due within one year Overdraft 30 36 40 Trade creditors 300 300 300 Other liabilities 245 320 350 total 575 656 690 Net current assets 2765 1584 2156 NET ASSETS 2783 1599.7 2166.5 Long term loans 80 80.7 80.5 2703 1519 2086 Capital reserves Share capital 2000 540 507 Profit B/F 0 703 979 Profit for current year 703 703 276 979 600 1579 2703 1519 2086 REFERENCES Ass06: , (Assink, 2006), Ric04: , (Bruce & Ricky, 2004), Nad09: , (Anne & Nadine, 2009), Law12: , (Lawrence, et al., 2012), Ann03: , (Annacchino, 2003), Jul11: , (Julien, 2011), Gar05: , (Gary, 2005), Pan12: , (Panos, 2012), Sal13: , (Salem, Press;, 2013), Placeholder1: , (Suja, 2009), Mic082: , (Michael, 2008), Jos10: , (Joseph, 2010), Mic06: , (Michael, 2006), She10: , (Shelby, 2010), Ric091: , (Richard, 2009), Read More