My Security Company - Report Example

Business Pitch: My Security Company Name: Lecturer: Course: Date: Table of Contents Table of Contents 2 Introduction 3 Objectives 3 Start-up Summary 4 Marketing Plan 5 Summary of Market Analysis 5 Target Market 8 Security Service Business Analysis 9 Strategy and implementation 9 Competitive edge 9 Marketing Strategy 10 Sales Forecast 10 Financial Plan 11 Introduction My Security Company will be a startup security company specializing in recruiting and training of youths in a range of positions in first aid and security services. The business will seek capital investment from venture capitalists and angel investors. Given the increased terrorist activities and the present-day economic climate, security has become a concern. This promises an upsurge in outsourcing of security services, implying that this business would be launching at the right time. In regard to first aid, current statistics show that each year in the UAE, thousands of people are injured in accidents, with some 5,514 people killed in road accidents in the UAE between 2006 and 2011 and 51,200 accidents and 63,406 injuries (Anon 2012). A large proportion of the deaths could be prevented if first aid is given at the accident scene before the arrival of emergency response services. This offers a credible premise for My Security Company to operate. To establish a strong base in UAE, the business will target large security companies already established in UAE. The company will expand its employee base of security personnel and trainers on full-time and part-time contracts. My Security Company expects substantial sale of services in the first year, which is expected to double by the end of the second year. The company’s gross margins are also expected to be similar to the industry average. Following the initial investment, subsequent launching, establishment of a training space and office, the business is expected to expand through its own financing in the third year. Objectives My Security Company will base its milestones and successes on the following objectives. Employ 50 security personnel by the end of the third year. Secure 50 contracts by the end of the third year of operating, 100 by the second year and 130 by the third year. Earn 8,100,000 worth of revenues with a net profit of 7,950,000 by the end of the third year. The company will offer the following services. Provision of security personnel in various private and public premises who are trained in first aid. The business service area will be provision of security personnel in a range of private and public premises. The focus of the business is on retail businesses, commercial buildings, accounting and auditing firms, venues of special events as well as other clients. The company will target recruiting energetic youth expected to offer competent security solutions with focus on first aid in both the public and private sector. The target market includes government institutions, airports, sports centres, universities, and private sector institutions such as private colleges, universities and banks. Additional targets include retail businesses, commercial buildings, accounting and auditing firms, venues of special events as well as other clients. Start-up Summary My Security Company will initially be launched as a home-based company to reduce the expenses on rent and equipment. Training for the security personnel will be offered in offices that shall be rented temporarily. Additional start-up cost will include cost of permits and incorporation, including business licence, permits for concealed weapons, legal fees and police clearance fees. Others will include the costs of designing websites, designing and printing brochures and insurance premium. The long-term assets to be used include two-way radios for personnel working as a team and mobile phones for guards and other employees. My Security Company will provide personnel for a range of services including protecting client’s guests, employees and assets, response services to client and employee health accidents and emergencies. The security personnel will be dispatched constantly to the same client. In some cases, substitutes will be provided when necessary. In addition, the company will ensure that comprehensive data on the job is passed to substitute personnel during such events. The company will also build trust with its client-base as a partner in providing security and safety. Although My Office Security will not be fully staffed at launch, the Chief Operating and Chief Executive Officer will be within reach by phone whenever they are at work. Security personnel who encounter breach of security or incidents of accidents will alert the authorities directly instead of calling the communication centre. However, once the company becomes fully staffed in the third year, it will have its own a call centre operated with three personnel. Marketing Plan Summary of Market Analysis The market for security and safety services comprise retail businesses, building management businesses, special events such as weddings and sports as well as other businesses. According to a report by IBISWorld (2013), the demand for security services in the service industry has plummeted. Accordingly, governments and corporate clients have dominated outsourcing of the services. The report indicated that the industry largely depends on outsourcing by retail stores, government agencies and banks. The demand has however been affected in recent years by growing competition from the security technologies and the declining budget on security due to the 2008 Global Economic Recession. In this case, revenue declined in the 3 years to 2012. Further analysis indicated that due to the global recession, a large number of security companies closed shop as a large bulk of the clients eliminated spending on security in their budgets, while others reduced the number of security personnel they could hire. Such factors were responsible for the fall in demand for security services between 2008 and 2009. According to IBISWorld (2013), demand in security has however increased since 2013 due to security concerns, and is expected to grow over the next five decades, signaling that the industry shall be highly profitable. The industry therefore has a lot of potential, even as security firms continue to be innovative in offering value-added security services such as first aid or cash-handling services (Freedonia 2011). Similar to the trend in UAE, the market for world security services is expected to accelerate, exceeding an annual rate of 4.5 from 2010 to 2015, to reach $174 billion from $220 billion (ReportLinker 2013). According to IBISWorld (2013), the industry has a huge potential and is expected to peak in 2018, when businesses increase their security budgets and security staff. The increased demand is expected to be triggered by increased rate of globalization leading to insecurity concerns such as terrorism, increasing middle class who wish to be protected, increased crime rates and growing disregard for public security system. A report by Freedonia (2011) estimates that market gains are likely to be witnessed in developing parts of the globe such as UAE due to increased economic activities, high personal income, increased foreign investments and increased faith in private security company. The industry in such countries is expected to attain a double-digit growth (ReportLinker 2013). Based on the analysis, it is clear that the security industry offers huge potential for profitability and growth of My Security Company. Market Segmentation The marketing analysis table indicates that the market segmentation for My Security Company will be banks, retail stores, special events, building management firms and educational institutions. The building management companies need security personnel to do security monitoring of construction projects, monitor building equipment as well as emergency response in case of accidents at construction works (Kotler & Keller 2009). Statistics indicate that constructions companies in UAE have been on a steady rise since 2005 given the nation’s strategy of developing infrastructure, when it peaked at AED' 62.4 billion. The industry has averaged AED 40 billion since then (Oryx Middle East 2011). Retail centres such as supermarkets and department stores on the other hand need security personnel to monitor the stores, patrol, prevent theft and emergency response to provide first aid in cases of accidents. Special events need security to take charge of the guest lists and provide emergency response in case of fire and accidents. Special events do not offer vibrant markets as they mostly occur over the weekends or holidays. An average of 100 events are however expected a year. Educational institutions such as universities, colleges and schools hire security personnel to patrol their campuses and buildings and to provide emergency response such as first aids during accidents. However, educational institution in UAE tend to employ their own security and safety personnel, hence offering less demand for private security and safety services (Table 1). Table 1: Market analysis Target Market Based on the analysis, retail stores and building management companies lead among the market segments. My Security Company will target the two through offering competitive pricing, quality customer service and quality assurance. The remaining market segments will be focused on at the end of the third year (Pulendran, Speed & Widing 2003). Security Service Business Analysis The security industry in UAE consists of both large and small companies. However, there are few barriers to entry provided which is that the legal requirements are fulfilled, since there is low capital investment in the business. Additionally, the industry is reliant on labour supply and has often hired the services of retired police officers as security personnel. In UAE, security services are dealt on business-to-business, while marketing targets markets and industries seeking to uphold their security. Businesses tend to search for security service providers through referrals from other companies or individuals or through the internet. Strategy and implementation My Security Company’s key strategy is to put up its operation and marketing based on retail stores that have the capacity to provide onsite security needs but not enough to save substantial amount on money on establishing in-house security staff (Pulendran, Speed & Widing 2003). The company aims to train its security personal to add value in provision of security and offering first aid and to use advertising to market the company to customer markets (The Times 2013). Competitive edge My Security Company will establish its competitive edge through offering quality customer service. The company will aim at not being a broker between contracted security personnel and the clients. Rather, it will be a partner in offering security and emergency response through first aid (Rasoava & Russell 2003). Marketing Strategy The company’s sales strategy will include listening to the needs of the clients and to offer assurance and understanding of their needs (The Times 2013). The company hopes to reach its target market, mainly retail stores and building management firms, through a range of tactics, namely: Developing a website that has the company’s service offering and contact information. Advertisement of the company in trade publications, specifically those consumed by the two industries. Direct-selling of the company based on a created target list. Creation of brochures and business cards to be distributed to interested parties. Direct mailing of brochures and newsletters through the internet to the targeted clients (Kotler & Keller 2009). Sales Forecast It is hoped that the security personnel sales will recur. Assuming that the rate of client retention is 90 percent annually, it is expected that the total sales will sky-rocket. Direct costs will consist of supplies such as uniform for the security personnel, radio calls and mobile phones. The budget for developing a website and for purchase of stationery and creation of brochures will originate from the start-up costs. On the other hand, marketing costs will originate from the operating budget of the first year after the business is launched (Rasoava & Russell 2003). Financial Plan The personnel will include trainers and full-time office personnel. Security personnel will comprise part-time and full-time staff, which will be hired as the sales increase. Security personnel will be hired for day and night; while part-time will include those who substitute those on day or night. The trainers will be hired after extensive background checks and follow-up interviews with their references. A business office will be rented in the first year. In the second year, expenses are expected to rise, as call centre staff and administrators will be hired. My Security Company expects to generate additional cash after operating in the lean year, to be able to finance its office space along with a three-year equity loan that will finance the expansion of its employee base in the second and the third year. Future growth of the company is expected to be financed by the business, and will include hiring more employees and expansions in other places. The founders will provide the start-up funding while angel investors are expected to provide a funding and will be given 45 percent of the shares of the business. Projected Profit and Loss The business also takes the assumption that the security industry will witness an upsurge in the next three years based on in the industry analysis. Table 2: Financial forecast for the first three years 1st year 2nd year 3rd year Expenditure 300,000 250,000 150,000 Revenue 3,000.000 6,000,000 8,100,000 Net profit 2,700,000 5,750,000 7,950,000 The revenue from sales is expected at 3,000,000 from 50 businesses. Each guard will cost 60,000 The expenditure in the for the first year will include recruitment of the personnel, the wages and salaries, the costs of training, advertisement and cost of office and training space. The expenditure is estimated at 100,000 AED. The revenue is estimated to rise to 200,000 AED, as the business shall have expanded to serve 135 businesses. Therefore, additional costs will comprise purchase of supplies and furniture additional computers for call centre personnel, hiring of addition communication gadgets and computers and hiring of additional guards to serve the 135 businesses (Table 2). Marketing will include cost of developing the website, brochures, direct mail campaigns and cost of hiring salesperson. Training will require the use of a large space in the first year when training is required. Training will call for hiring large rooms that will have to be separate in the first year. Rent of additional space and other utilities will also increase the training expenses. Other additional expenses will include those for registration and incorporation of the company. The expenses for the second year will reduce to 80,000 AED. This is since the costs of advertisement will be reduced since the company will already be having a website. Additionally, the cost of training will be reduced after an officer space is rented, since the company will opt for an office space with a table and a conference room to accommodate training of the employees. The net profit is expected to more than double in the second year to 5,750,000 from 2,700,000, as the company expects to increase sales to 100 clients from 20 clients. This will further be boosted by reduction in expenses. In the third year, the net profit is expected to increase to 7,950,000. This is since the business will have scaled up to cover additional expenses. Additionally, the businesses will have expanded its revenue base by serving 135 businesses, with each security guard costing 60,000 AED a year. Conclusion As outline by the report My Security Company is a viable business that has a potential of growth. In addition the business has the ability to revolutionize security and first aid services in the UAE. As a result, if the business idea is effectively implemented then success can be attained in the Long run. 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