Conceptual Entrepreneurial Business Plan - Assignment Example

Conceptual Entrepreneurial Business Plan Product/service The owner will prefer service industry that is mainly transport sector. The owner will name it Comfy Bus Company, and it will offer transportation to all passengers within the city and the outskirts. Apart from public transport, it will also offer parcel delivery and hire both for private and commercial with a wide range of competitive prices. Need for transport In the last few months, several truck operators within and outside the city withdrew their buses from the road due to strict transport rules that were implemented. In the past, buses were allowed to operate as per the owners wish without necessarily following the route and time. However, when new policies were implemented, all the Passenger Service Vehicles (PSV) were required to be registered under different Sacco’s. In January 2015, all the PSVs were required to register their vehicles and the route to operate. A minimum of twenty vehicles were allowed to register as a Sacco. Ironically, most bus owners did not like the idea of working in a Sacco. As a result, they withdrew their buses in town and operated other routes outside the town. Indeed, it was a good idea to join a Sacco as it was easy to manage the fleet in town, but owners had a contrary opinion. This brought about a gap in the industry, leaving a lot of passengers frustrated. Approximately 6000 people travel in and out of the city daily. With the few buses remaining, this is not proportion to the need. To meet this demand, the company intends to buy 20 new 40-seater buses. Competitors Very stiff competition will be expected from the already operating bus companies. The City Hopper Company is currently the leading company within the town offering transport services. Nevertheless, it is not the only company. Other companies are: Best ways chopper - it one of the oldest companies that has been in operation and operate within the town only. It has a number of buses, but most of them have been grounded because of mismanagement and poor maintenance. City Hopper- it is the largest company that serves most parts of the city. It has installed bus terminus at strategic places within and outside the city. Nonetheless, there are a few buses owned by the company. On several occasions, they are opportunistic and escalate fares mainly at rush hours and on rainy season. SWOT analysis Strengths Weaknesses Low bus fares Strong communication systems between clients, drivers and bases/bus stops Still new in the market and may face very stiff competition Brand new buses Only a few buses will be in operation at the beginning Qualified management team Integrity of both the drivers and turn-boys will be compromised Free to operate long and short distant journeys Give discount fares to people with special needs People with special needs may be opportunistic to the offer Delivery of parcels Opportunities Threats High demand within the city Replacing competitors Emerging technology and its benefits Fear of the passengers to use the buses Several companies and employees without private vehicles Possessiveness of the competitors Removal of other companies from the operation Very high congestion as the town grows Mission To provide consistent, timely and secure transport services by making use of complete in-car credit/debit card access, and computer aided dispatch. Vision To be the best transport firm for passenger choices and raise their expectations to the highest levels Objectives To serve all the businesses in the town with truck-based transport services To pursue a comprehensive marketing campaign and from the result, penetrate at least 85% of the whole market share To multiply the monthly income per vehicle from the current $2,550 to $6,550 by the end of 2017 To improve the economic status of the company and buy more buses Organizational Structure Management summary Drivers, turn boys/ conductors, secretary, mechanics and accountant/cashier will be on the same level. They will all be answerable to the assistant manager. The entire management system will be supervised by the general manager assisted by his deputy. All the staff will be employed on renewable contracts of one year, subject to their performance. Payments will be paid monthly with the general manager earning $500, assistant manager and the cashier is $400, and the drivers are $300 per month. Turn boys and secretary will be paid $200 whereas the mechanic will be subject to the amount of work done. Measuring performance The company will employ several ways to measure its performance. Some of them are: Quantity- the number of customers served by the buses will indicate how it performs. A steady increase in income will show that several customers are. Furthermore, an increase in demand for more staff indicates the level of performance. Timeliness: how fast the buses can make trips is a performance indicator as well. When buses can make as many trips as possible, it means that several customers prefer using them. However, when buses take some time to move from one destination to another, with all other factors held constant, it implies that passengers have other preferences. Adherence to policy: few deviations from policy structures indicate adherence to rules. This is common in the transport sector because drivers and turn boys may be tempted to overlook the traffic rules at the expense of more money. Sources of funds The company will mainly source its funds from owner’s savings. This be approximately 50% of the capital. The owner will approach Angel Investor and Venture Capital group to supplement his. This be in form of loan that will be paid when the business picks up. The owner will approach other potential people; though will not rely on them majorly. Projected Cash Flow The following chart is the projected cash flow for Comfy Bus Company Break even analysis The table below shows the break even analysis for Comfy Bus Company Break-even Analysis Annual Revenue Break-even $4,839,300 Assumptions: Average Percent Variable Cost 15% Estimated Annual Fixed Cost $430,760 Principles of ROI The company will use ROI to measure the effectiveness of the business so as to know the return on the capital invested. To achieve this, it will employ the following principles (Phillips, 2003): 1. Knowing where the money is- i.e. finding out the real stakeholders in terms of who pays the costs and who should understand the costs 2. Knowing the data flow within the company i.e. usage and purpose 3. Keeping the model simple 4. Studying the stakeholders 5. Ensuring there is investment in time, resource and funding 6. Establishing the organization and structure 7. Building momentum within the DQ state 8. Gathering statistical information from external sources Cash flow analysis Pro Forma Cash Flow 2016 2017 2018 Cash Received       Cash from Operations       Cash Sales $5,800,000 $6,150,000 $6,600,000 Subtotal Cash from Operations $5,800,000 $6,150,000 $6,600,000 Additional Cash Received       Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $250,000 $250,000 $250,000 New Long-term Liabilities $0 $25,000 $25,000 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $6,050,000 $6,425,000 $6,875,000 Expenditures 2016 2017 2018 Expenditures from Operations       Cash Spending $2,980,900 $3,120,800 $3,280,070 Bill Payments $2,212,500 $2,404,300 $2,585,900 Subtotal Spent on Operations $5,193,400 $5,525,100 $5,865,970 Additional Cash Spent       Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $16,800 $16,800 $16,800 Purchase Other Current Assets $24,000 $24,000 $24,000 Purchase Long-term Assets $240,000 $240,000 $240,000 Dividends $0 $0 $0 Subtotal Cash Spent $5,474,200 $5,805,900 $6,146,770 Net Cash Flow $325,800 $344,100 $453,230 Balance sheet Pro Forma Balance Sheet   2016 2017 2018 Assets Current Assets       Cash $599,790 $1,057,120 $1,723,130 Other Current Assets $250,000 $460,000 $520,000 Total Current Assets $849,790 $1,517,120 $2,243,130 Long-term Assets Long-term Assets $1,553,000 $1,680,800 $2,000,000 Accumulated Depreciation $422,640 $601,280 $736,920 Total Long-term Assets $1,130,360 $1,079,520 $1,263,080 Total Assets $1,980,150 $2,596,640 $3,506,210 Liabilities and Capital 2016 2017 2018 Current Liabilities       Accounts Payable $187,800 $189,330 $206,540 Current Borrowing $0 $0 $0 Other Current Liabilities $252,000 $445,000 $690,000 Subtotal Current Liabilities $439,800 $634,330 $896,540 Long-term Liabilities $63,900 $70,900 $78,600 Total Liabilities $503,700 $705,230 $975,140 Paid-in Capital $0 $0 $0 Retained Earnings $603,000 $796,030 $982,210 Earnings $295,320 $432,190 $634,350 Total Capital $898,320 $1,228,220 $1,616,560 Total Liabilities and Capital $1,980,150 $2,596,640 $3,506,210 Net Worth $898,320 $1,228,220 $1,616,560 The Executive Summary For several days, the city residents have experienced a lot of challenges due to inadequate transport facilities. Most potential people have moved away from the public entities and invested in private sectors. This has crippled the transportation industry, especially when new traffic rules were implemented. As a result, there has been a gap of transport services. The Comfy Bus Company intends to close the gap by offering transport services within and outside the town. Because of the few buses, there is a high demand for transport services. The buses will ferry people from various destinations to and fro town from 00500hrs to 2100hrs, Monday to Saturday to capture most customers. In order to capitalize on the market, the company will offer free services to special people and market itself online. It will employ various people including drivers, general manager and the assistant, touts, secretary and cashier. They will work in line with their assigned duties and responsibilities. The company anticipates doubling its profits in subsequent years with the guide of ROI principles. References BHANDARI. (n.d.). Strategic management: A Conceptual Framework. Tata McGraw-Hill Education. Christine K. Volkmann, K. O. (2010). Entrepreneurship in a European Perspective: Concepts for the Creation and Growth of New Ventures. Springer Science & Business Media. Eugene Brigham, J. H. (2011). Fundamentals of Financial Management, Concise Edition. Chicago: Cengage Learning. Hess, E. (2011). Growing an Entrepreneurial Business: Concepts & Cases. Stanford University : Stanford University Press. Kaufmann, H.-R. (2014). Handbook of Research on Consumerism in Business and Marketing: Concepts and Practices: Concepts and Practices. IGI Global. Kolb, B. (2015). Entrepreneurship for the Creative and Cultural Industries. New York: Routledge. Kraten, M. (2010). Business Planning and Entrepreneurship: An Accounting Approach. NY: Business Expert Press. Management Association, Information Resources. (2014). Marketing and Consumer Behavior: Concepts, Methodologies, Tools, and Applications: Concepts, Methodologies, Tools, and Applications. IGI Global. Melodi Botha, F. F.-W. (2006). Tourism Entrepreneurs. Juta : Juta and Company Ltd,. Phillips, J. J. (2003). Return on Investment in Training and Performance Improvement Programs. London: Routledge. Read More