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Transcript of Business Plan HelMate_Agler_Engert_Hammill_Lowes (1)
Carolin Engert
Dean Lowes
Kristina Agler
Tyler Hammill
BUSINESS PLAN FOR HELMATE
Degree Programme in International Business
2014/15
1
BUSINESS PLAN HELMATE Agler, Kristina Engert, Carolin Hammill, Tyler Lowes, Dean ZUYD University of Applied Sciences
Degree Programme in International Business
April 2015
Supervisor: Gijsberts, Gaby
Number of pages: 58
Appendices: 1
Keywords: Business plan, children, helmet, safety
____________________________________________________________________
The purpose of this thesis was to show the current financial situation of HelMate as
well as future planning for the company.
Style of the abstract is Abstract.
2
MANAGEMENT SUMMARY
Helmate is a small start company with focus in the bike safety market; specifically
with young children’s helmets. We strive for being a market leader with stunning
designs and being seen as a fashionable, eco-friendly choice compared to our com-
petitors.
In the countries of Germany and the Netherlands, bike riding is becoming increasing-
ly more and more popular meaning more and more sales in bikes and related equip-
ment such as helmets. This creates a great potential for an ever-increasing market.
Currently, our plans are to focus on helmets for kids aged from 2 up to 12. This
makes our target market being adults who have kids between these ages. Though we
are not the only competitor in the market; going up against Abus, Uvex, Ked, Alpina
Sports, Casco, and Nutcase to name a few, we do plan on being a stand-out brand
with our appealing designs and green choices.
Our main focus is to make cycling not only safer but encourage kids to strap on a
Helmate when they go out on their bikes that are stylish and comfortable. We want
kids to see either our ads or their friends with these helmets on and want to join them
in wearing them. We offer helmets between a price range starting from €29.99 for
standard helmets, €39.99 for special helmets and up to €79.99 for special customized
helmets.
With Helmate being aimed towards children, we have decided to ask the target mar-
ket where they would expect to find a product such as ours. They chose that the best
places they would like to see our product is in bike stores, on an online market. As
our Business Plan states that we make a huge profit in the third year, we will expand
the idea of Helmate branded stores and our own production line.
3
PRE FACE
In the ranking of bicycle usage of European countries and North America, the Neth-
erlands hold first place with approximately 30 percent of trips that are made by bicy-
cle (Pucher, 1997). Followed by Denmark, Germany is ranked third place by steadily
extending its bicycle usage over the last decades (Pucher, 1997). Besides the increas-
ing fuel prices, studies show that the usage of bicycles not only protects the environ-
ment but also improves health (Pucher et al., 2010). Because of strong believes in the
bicycle as a sustainable transport opportunity the rate of bicycle usage increases tre-
mendously in both the Netherlands and Germany (Welleman, 1995).
Statistics show that children’s head injuries are the main cause of death and chronic
disabilities in cycling-related accidents (Gutsche et al., 2011). Moreover, these inju-
ries could have been prevented in almost 70 percent of all cases if the children would
have worn a helmet. According to the Health Believe Model (HBM) by the social
psychologist Rosenstock (1966), a person will take a health-related action if the per-
son feels that a negative health condition can be avoided. As younger aged children
are not able to decide about their own health security, this responsibility is trans-
ferred to their parents.
There are several debates about whether it is advisable that the government regulates
helmet usage by law and if so, whether this regulation would decrease the figures of
seriously injured persons involved in a bicycle accident. Based on personal observa-
tions and following Internet research, we recognized that there is a need to increase
helmet usage, especially for children in the Netherlands and Germany. According to
these observations we created the start up company Helmate selling uniquely de-
signed helmets on the German and Dutch market. Helmate wants to achieve trust to
their customers and safety for children whilst cycling.
The following work is a detailed explanation of the current market for our company,
known as Helmate. It outlines the challenges we will face as we are entering a mar-
ket for helmets that are aimed towards the younger population of bike users. We aim
to enter the two national markets of the Netherlands and Germany. Moreover, we
applied the Canvas Model, Helmate’s competitive advantage of our Business Model
4
and with a special focus on the analysis of our competitors. Furthermore, we are
showing Helmate’s financial statements and position for the first three years and fi-
nally round it up by closing the ending balance sheets. The numbers we used for cal-
culating the Helmate’s financial statements are fictitious numbers but well chosen
with regards to real-life numbers and seasonal effects.
This document outlines our research that we have obtained through many different
resources; such as the Internet and a questionnaire, to obtain our findings about those
markets.
5
TABLE OF CONTENT MANAGEMENT SUMMARY ........................................................................................ 3 PRE FACE ........................................................................................................................ 4 LIST OF FIGURES ........................................................................................................... 5 LIST OF TABLES ............................................................................................................ 6 LIST OF ABBREVIATIONS ............................................................................................. 1. INTRODUCTION ....................................................................................................... 7 2. BUSINESS MODEL CANVAS ................................................................................. 8
2.1. Key Partners ......................................................................................................... 8 2.2. Key Activities ...................................................................................................... 8 2.3. Value Preposition ................................................................................................. 8 2.4. Target Market ...................................................................................................... 9 2.5. Cost Structure ....................................................................................................... 9 2.6. Customer Relationship .......................................................................................... 9
2.6.1. Involvement .......................................................................................... 9 2.6.2. Customer Service ................................................................................ 10
2.7. Channels ............................................................................................................ 10 2.8. Revenue Streams ................................................................................................. 11 2.9. Payment Methods ............................................................................................... 11
3. EXTERNAL ENVIRONMENT ............................................................................... 11
3.1. Introduction ......................................................................................................... 11 3.2. The Economy ...................................................................................................... 12
3.2.1. Meso Economy ................................................................................... 12 3.2.2. Macro Economy .................................................................................. 13 3.2.3. Micro Economy ................................................................................. 14
3.3. Market Analysis and Key Trends ....................................................................... 15 3.3.1. Demographical Factors ....................................................................... 15 3.3.2. Political Factors .................................................................................. 17 3.3.3. Ecological Factors ............................................................................... 17 3.3.4. Economicl Factors .............................................................................. 19 3.3.5. Sociocultural Factors .......................................................................... 21
3.4. Competitor Analysis ........................................................................................... 23 3.5. Competitive Advantage of our Business ............................................................. 25
4. FINACIAL ANALYSIS ........................................................................................... 25
4.1. Introduction ......................................................................................................... 25 4.2. Break Even Analysis ........................................................................................... 25 4.3. Sales Scenarios and Projections .......................................................................... 26 4.4. Capital Spending ................................................................................................. 26
6
4.5. Operating Costs ................................................................................................... 27 4.6. Funding Requirements ....................................................................................... 27
5. FINANCIAL STATEMENTS .................................................................................. 28
5.1. Introduction ......................................................................................................... 28 5.2. Opening Balance Sheet ....................................................................................... 28 5.3. Profit and Loss Budget ....................................................................................... 30 5.4. Liquidity Budget ................................................................................................. 35 5.5. Ending Balances .................................................................................................. 38
6. CONCLUSION ......................................................................................................... 44 LIST OF REFERENCES ................................................................................................ 45
APPENDIX I ............................................................................................................ 46
7
LIST OF FIGURES
Figure 2: Birth rate for the Netherlands
Figure 3: Birth rate for Germany
Figure 4: Public transportation in the Netherlands
Figure 5: Amount of bikes per 100 households
Figure 6: Bicycle ownership per age
Figure 7: Helmet usage amongst children between the ages 6 to 16
Figure 8: Gas prices in Germany and in the Netherlands
Figure 9: Number of bicycle rides of person per day, by age in the Neth-
erlands
Figure 10: Break-even analysis.
Figure 11: Break-even analysis.
Figure 12: Investment Budget.
Figure 13: Opening Balance Sheet.
Figure 14: Profit and Loss Budget.
Figure 15: Liquidity Budget.
Figure 16: Ending Balance Sheet Year 1
Figure 17: Ending Balance Sheet Year 2
Figure 18: Ending Balance Sheet Year 3
8
1 INTRODUCTION
In general, helmets are seen as unnecessary and “uncool”. Moreover, they are seen as
a liability for the wearer. Nonetheless, it is a crucial tool to participate safely in the
traffic environment. Especially the safety of children is often endangered due to self-
caused mistakes or misconduct of other traffic participants. Statistics show that chil-
dren’s head injuries are the main cause of death and chronic disabilities in cycling-
related accidents (Gutsche et al., 2011). Furthermore, these injuries could have been
prevented in almost 70 percent of all cases if the children would have worn a helmet.
According to the Health Believe Model (HBM) by the social psychologist
Rosenstock (1966), a person will take a health-related action if the person feels that a
negative health condition can be avoided. As younger aged children are not able to
decide about their own health security, this responsibility is transferred to their par-
ents.
The aim of HelMate is to change the negative view of helmets and want to give them
a new image. The company wants to reinvent the helmet as a fashionable accessory,
combined with the highest safety standards. To reach this goal, we want to attract
children with current and state of the art designs, whilst ensuring outstanding quality
and high safety to give parents the guarantee that their children are safe.
HelMate’s long-term goal is to establish its helmets as not only something necessary,
but also as something children like to wear and automatically use it while riding their
bike. HelMate – your friend on the street.
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2 THE BUSINESS MODEL CANVAS
2.1 Key partners
The key partners we are planning on working with for the point of sales are Toys’R’Us, MyToys, Decathlon, Bikemax, Intersport, Sportscheck, Planet Sport, and local bike shops in the Netherlands and Germany. The reasons we are going to coop-erate with these other companies for selling points are because they are well estab-lished with kids and well known sport stores.
For production, we will collaborate with MET helmet, an Italian based helmet pro-ducer known for its outstanding quality. Due to the producer’s location, shipping costs are expected to be lower and faster than cooperating with a producer situated overseas or in Asia.
For delivering the product we will use the domestic shipping services of PostNL and Deutsche Post. Both provide the cheapest delivery and are the national postage com-panies of the Netherlands and Germany.
2.2 Key activities
As key activities, our company will be undertaking the duty of designing the helmets
and then sending those deigns to MET helmets to have them produced. Not only the
design of the helmet, but also will we designing the packaging boxes that our cus-
tomers will receive. Furthermore, we as a company will be in charge of maintaining
strong customer and business relations as well as carrying out the maintenance of our
own online store.
2.3 Value preposition
The values we aim for within the company are safety, high quality, Eco friendliness,
and exclusivity. By cooperating with an Italian based manufacturer we aim to claim-
ing the idea of association of “Italian Style” production, which stands for outstanding
10
quality as well as unique style. For Eco friendliness, our products are produced in an
efficient way while ensuring that the environment is harmed as little as possible. Our
products will be well developed and fashionable with safety as the highest priority.
With exclusivity, we plan to offer helmets that will be completely customizable by
the customer to allow helmets that are tailored to our clients.
2.4 Target Market
The target market for our helmets are parents, aged from 20 to 50 years, with chil-
dren, between ages 1 to 14. The aim of advertisements that we plan on using are to
appeal to the children as being seen as the “cool” thing to have but also in the eyes of
the parents as a safe, high quality, and reliable product. Therefore, we are serving a
niche market with our customisable helmets for children.
2.5 Cost structure
Our main costs will arise from production, shipping, maintenance, and wages. The
distribution of those costs fall on us as a company. Our customers, however, will pay
the shipping by themselves. Distributing our products to the several intermediaries,
we are going to commission either TNT or DHL to deliver our products to the out-
lets.
2.6 Customer relationship
2.6.1 Involvement
We will enable customers to design their own helmets. Through our webpage they
are able to choose between different colours, materials and designs to create their
individual helmet.
11
2.6.2 Customer service
We will provide ongoing support through warranty and a service hotline during
working hours as well as a request form on our website. Furthermore, we are going
to interact with our customers through social media channels, like Facebook,
YouTube and Instagram.
2.7 Channels
As primarily distribution channel we use our own web shop. Additionally, we will
utilize the web shops of well-established intermediaries like Toys”R”Us, MyToys,
and Bikemax. Furthermore, we will place our products at the brick-and mortar shops
of the above-mentioned companies as well as in local bike shops in both countries.
Channel phases
1. Awareness
HelMate is planning on using social media channels as primary resource for
advertisement. Furthermore, we use the already established brand images of
our intermediaries. If possible, we aim to set up own television advertise-
ments during the day on children’s channels.
2. Evaluation
With over 50 distributers and more than 250 retailers, MET helmets has a
well-established brand recognition worldwide and hence, supports our core
value of high quality to ensure safety.
3. Purchase
As mentioned above in 2.7 Channels, we will reach our customers primarily
through our own web shop as well as through intermediaries.
4. Delivery
Through advertisement, we want to make customers aware of the importance
of safety, especially for their children. Our unique selling point is the combi-
nation of stylish helmets the most important factor: safety.
12
5. Aftersales
We provide our customers with livelong warranty. Additionally, in case of an
accident and damage of the helmet within two years after purchase, we give
our customers the chance to buy a new helmet at a reduced price.
2.8 Revenue streams
We will set three different price categories on a fixed menu pricing for our helmets:
Basic helmet: €29,99
Special Designs (Disney): €39,99
Customizable helmets: €29,99 – 79,99
2.9 Payment methods
Our customers are able to pay online via Credit Card, PayPal, Ideal (Netherlands)
and Giro Card (Germany) to ensure an easy and convenient shopping experience by
using their preferred payment method.
3 EXTERNAL ENVIRONMENT
3.1 Introduction
This chapter focuses on the external environment of HelMate. Firstly, the current
economic situation will be discussed, followed by a market analysis focused on the
key trends. Furthermore, we will evaluate our competitors and compare our own
business model over them.
13
3.2 The Economy
3.2.1 Mesoenvironment
Who are my customers?
Our main customers are parents in Germany and the Netherlands between the ages of
20 and 50 with children between the ages one to twelve.
Who are my main competitors?
According to online shops like mytoys.de, testberichte.de, stiftungwarentest.de and
kidshealth.com, our main competitors are the well-known brands Abus and Uvex.
Furthermore, KED, Alpina Sports, and Casco, one of the main producers in Germa-
ny, are additional competitors in the market for helmets. Finally, we have to compete
with the online company “Nutcase” (www.nutcase.com), which also offers a great
amount of designs for children helmets.
What are the competitors’ prices?
Due to Internet research the price range of the competing children helmet producer
lies within €30 to Euro €50 (www.abus.com, www.alpina.com, www.nutcase.com).
What are customers willing to pay for our product?
On average, our customers are willing to pay between €21 and €40 for children’s
helmets.
What is the average number of children per household?
According to www.youthpolicy.nl, the average number of children per household
corresponds to 1.72 in the Netherlands and 1.38 in Germany (www.destatis.de)
14
Which transportation options are used?
According to our research, children mostly travel either by car together with their
parents.
3.2.2 Macro environment
Are there any regulations?
There are no strict regulations by law for helmet restrictions for adults and children
in Germany. According to the traffic law there are no administrative fees imposed to
adults and children for not wearing a helmet. However, it is recommended to wear a
helmet (www.fahrrad.bussgeldkatalog.org).
Likewise, there are no regulations for wearing helmets to the Dutch law
(www.rijksoverheid.nl).
Are there any regulations for producing helmets?
With regard to the European Committee for Standardization (CEN) there is a Euro-
pean standard helmet regulation for pedal cyclists (CEN1078, February, 1997),
meaning that these same regulations hold for both Germany and the Netherlands.
Are the people caring about whether our product is eco friendly?
As results of our research, 35 percent of all participants care about an eco-friendly
production. Besides our primarily core value of safety, eco friendliness is another
important factor
What kind of technological opportunities are there?
15
Due to 3D printing innovations, HelMate uses these machines to create cheap proto-
types. Furthermore, to decrease our ecological footprint, HelMate uses eco-friendly
materials (www.reverdia.com) to ensure a sustainable resource usage.
3.2.3 Micro Environment
What technologies do we need?
As HelMate does not own its own production facilities, we do not need to take care
about the machinery. Nonetheless, our company needs to have necessary equipment
of computers, printers as well as design and editing programs.
What knowledge do we have?
As our company consists of four people, we divide the necessary tasks and areas as
follows:
Dean Lowes: Creative Director
Tyler Hammill: COO
Carolin Engert: Customer Relations Management
Kristina Agler: CEO, Marketing
Additionally, Tyler will provide the company with a website and an online shop to
ensure that our customers are provided with every information they need.
As Kristina already has experience in Online Marketing, especially with social media
channels, she is going to set up all necessary online channels to reach existing and
future clients.
Who are the main competitors in the children’s helmet market?
According to online shops like mytoys.de, testberichte.de, stiftungwarentest.de and
kidshealth.com, our main competitors are the well-known brands Abus and Uvex.
Furthermore, KED, Alpina Sports, and Casco, one of the main producers in Germa-
16
ny, are additional competitors in the market for helmets. Finally, we have to compete
with the online company “Nutcase” (www.nutcase.com), which also offers a great
amount of designs for children helmets.
Compared to our competitors, HelMate is going to provide unique and colourful de-
signs that children actually like. Our company aims to adjust the helmets to chil-
dren’s wants whilst ensuring their safety in the traffic environment.
What is HelMate’s financial situation?
So far, HelMate does not have any financial capital. For future investments and
growth of the company HelMate needs to find a producer for the helmets and set the
right price to meet the financial goals. After an introduction period, we will check
whether our products are successful in both the Dutch and German market. Addition-
ally, the board of directors needs to decide whether the company should keep up to
the license agreements with producers or to get a loan to build own production facili-
ties.
3.3 Market analysis and key trends
3.3.1 Demographical factors
Definition of Birth rate: This entry gives the average annual number of births dur-
ing a year per 1,000 persons in the population at midyear; also known as crude birth
rate. The birth rate is usually the dominant factor in determining the rate of popula-
tion growth. It depends on both the level of fertility and the age structure of the popu-
lation (indexmundi).
Birth rate (births/1,000 population) for the Netherlands
17
Figure 2: CIA World Factbook, (2012), Birth rate for the Netherlands, Retrieved
from: http://www.indexmundi.com/g/g.aspx?v=25&c=nl&l=en
Birth rate (births/1,000 population) for Germany
Figure 3: CIA World Factbook, (2012), Birth rate for Germany, Retrieved from:
http://www.indexmundi.com/g/g.aspx?v=25&c=nl&l=en
18
Both graphs show that the birth rate in the Netherlands and Germany decreased in
the last decade. In the long run, this is a major threat for HelMate as the figures state
a decrease in our potential target market. However, in the year 2012 a slight increase
in the birth rate leads to the assumption, that also for the future, HelMate’s target
market is big enough to make profit.
3.3.2 Political factors
There are no strict regulations by law for helmet restrictions for adults and children
in Germany. According to the traffic law there are no administrative fees imposed to
adults and children for not wearing a helmet. However, it is recommended to wear a
helmet (www.fahrrad.bussgeldkatalog.org).
Likewise, there are no regulations for wearing helmets to the Dutch law
(www.rijksoverheid.nl).
Are there any regulations for producing helmets?
With regard to the European Committee for Standardization (CEN) there is a Euro-
pean standard helmet regulation for pedal cyclists (CEN1078, February, 1997),
meaning that these same regulations hold for both Germany and the Netherlands.
Hence, HelMate makes sure that all contracted producers comply with these regula-
tions.
3.3.3 Ecological factors
To decrease our ecological footprint, HelMate uses eco-friendly materials
(www.reverdia.com) to ensure a sustainable resource usage. So far, our research
shows that potential customers do care about eco-friendly production. Additionally,
recent trends show that sustainable responsibility increases rapidly and becomes
more important to both consumers and producers (Bahmra et al. 2008).
19
Public transportation in the Netherlands and in Germany
In the Netherlands with 16.5 million inhabitants, every day 4.5 million trips are made
by bus, tram and metro as well as one million are made by train and no fewer than
14.5 million by bicycle. The average distance that the Dutch travel each day is slight-
ly below the European average. In urbanised areas public transport accounts for as
much as 40 to 50% of journeys, more than half of journeys in the core area of Am-
sterdam being made by public transport or bicycle.
Figure 4: Public transportation in the Netherlands
http://www.washingtonpost.com/blogs/wonkblog/post/what-we-can-learn-from-
german-public-transit/2011/12/04/gIQAfpqkSO_blog.html
The reasons to travel by train also differ from the reasons to travel by bus, tram or
metro. The major part of all train trips in the Netherlands is commuter traffic (50%),
while a smaller share (13%) uses the train for education or social reasons. Travel by
bus, tram or metro is for work or education (both 25%) or for going shopping or vis-
iting (both 13%) (Emta, 2010).
In Germany’s urban areas railroad lines connect bigger cities and public transport
becomes a quite comprehensive and efficient system. Even smaller towns are con-
nected quite well to public transport in Germany and therefore you might even be
able to get around without a car. Public transport in Germany usually includes trams,
buses, underground trains, and suburban express trains in large urban areas. Roughly
88 percent of Germans live within a kilometre of a transit stop. Nevertheless, the
transportation fares in Germany have increased year by year.
20
3.3.4 Economical factors
Figure 5: Wirtschaftsrechnungen (2012), Anzahl der Fahrradgüter je 100 Haushalte,
Retrieved from: Statistisches Bundesamt Wiesbaden, Germany
According to the Statistisches Bundesamt Germany, it is stated that the amount of
bicycles per household increased over the last ten years. Especially children between
the ages of six to seventeen are holders of bicycles (Figure 4). As a result, Germany
offers a growing opportunity as market for HelMate’s products. Additionally, the
Netherlands leads the statistic of bicycle usage where 30 percent of all trips are made
by bike (www.ibike.org, 2014), which strengthens our decision to choose both coun-
tries as main markets for our products.
172
174
176
178
180
182
184
186
188
190
2003 2004 2005 2006 2007 2008 2009 2010 2011
Amount of bikes per 100 households
Amount of bikes per 100 households
21
Figure 6: Mobilität in Deutschland (2008), Fahrradbestand nach Altersgruppen, Re-
trieved from: Bundesministerium für Verkehr, Bau und Stadtentwicklung, Germany
Figure 7: Forschung kompakt (2014), Fahrradhelmnutzung nach Altersgruppen, Re-
trieved from: Bundesanstalt für Straßenwesen, Germany
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 to 6 7 to 10 11 to 13 14 to 17 18 to 29 30 to 39 40 to 49 50 to 59 60 to 64 65 to 74 75 and older
Hund
reds
Bicycle owenership per age Bicycle owenership per age
0
10
20
30
40
50
60
70
80
90
100
Percen
tage
Helmet usage amongst children between the ages 6 to 16
6 to 10
11 to 16
22
As shown in Figure 5, the helmet usage amongst children between the ages of six to
sixteen in Germany increased steadily. Especially after 2010, the percentage of hel-
met usage almost doubled from 38 percent to 75 percent (6 to 10) and from 15 per-
cent to 28 percent (11 to 16). As stated in the following paragraph of sociocultural
factors, the Dutch population refuses to wear helmets as they believe in the well-
developed bicycle environment of their country (Bron: LAS 2005).
Gas prices in Germany and in the Netherlands
Figure 8: Gas prices in Germany and the Netherlands
In recent years the price of gas has been constantly increasing from the days before
2000. They reached record highs in 2008 when we were in an economic crisis. At the
time of conducting the research it showed that gas was steadily in Europe. In the
Netherlands they see some of the highest prices within Europe. This makes biking
more appealing for people within the country and around Europe.
3.3.5 Sociocultural factors
1. Cycling in Holland is very safe; it has the lowest cycling death and injury rate in
the world. The Dutch have created a safe, secure, and mostly worry-free cycling in-
frastructure (in example separating bicycle roads from car roads).
23
2. No regulations for wearing helmets. And that is probably not going to change, as
the level of bike usage would suffer from this. The Dutch government is proud of its
high bike usage and, since accident rates are low, they would like to keep it that way.
3. Since nobody wears a helmet, especially amongst the younger generation, peer
pressure is a factor that plays a role in this too.
Due to the well-developed cycling infrastructure, Dutch people feel save enough not
to wear a helmet. With a slightly less developed infrastructure, the German popula-
tion, however, feels that there is a need for wearing helmets, at least for their children
(Bron: LAS 2005)
The graph shows the number of bicycle rides of persons per day by age in the Neth-
erlands. As recent statistics show, cycling is an important trend in the Netherlands
and 13.5 million of the Dutch population have a bike (Bron: LAS 2005). In compari-
son to the Netherlands, only 9.92 million cycles per day are made in Germany
(VuMa).
The y-axis demonstrates the amount of rides per day whereas the x-axis shows the
different age groups starting from the age group 0 to 12 years and ending with the
age group 75 and older.
24
Figure 9: Fietsersbond, (2008), Fietsen in cijfers. [ONLINE] Retrieved from:
http://www.fietsersbond.nl/de-feiten/fietsen-cijfers#1
Hence, the Netherlands offers a great opportunity for our company, which cannot be
ignored. Our challenge is the analysis of how to reach and to convince the Dutch
population to use our product.
In Germany wearing a helmet whilst cycling has the image of impractical and look-
ing “ugly”. The German Federal Ministry of Transport launched the campaign “I
wear a helmet” to change the image and increase the helmet quota. In cooperation
with the German fashion designer Guido Maria Kretschmar he designed stylish hel-
mets for adults for the Berlin fashion week in 2013 to spread out the message that
helmets are sexy and attractive.
3.4 Competitor analysis
Abus
Product: Strive for a high quality, durable, trustworthy and simple product. Not fo-
cused on helmets alone, but on safety in general. Therefore we have an advantage
over them as we focus on helmets, and put all our effort into improving our helmets.
Another advantage we have over Abus is their limited designs for their children’s
helmets.
Price: Price range is big. Ranges from premium prices to middle class prices. As we
focus on children’s helmets we do not concern ourselves with Abus’s high-end hel-
mets. This means we have about the same pricing. Children’s helmet prices start
from about 30 Euro.
Promotion: One key promotional channel Abus uses is sponsoring. They sponsor
start-up companies using their product and racing teams. Although we also want to
advertise through sponsoring, since we focus on children’s bicycle helmets, they do
not sponsor in the same field as us.
25
Place: Abus is a German based brand and active all over the world. It makes use of
intermediaries and franchising.
Competitive Advantage: Since Abus is mainly focused on the concept of safety, and
are already well known for this, they have an advantage over us in this respect. Since
we are a start-up company, HelMate doesn’t have much of a reputation yet, but we
plan on focusing on the concept of safety too, as well as the custom designs.
Uvex
Product: Much like Abus, Uvex does not dedicate all its attention to their helmets.
Uvex focuses on two main sectors, helmets and eyewear. Uvex also strive for high
quality products, but have limited designs for children’s helmets.
Price: Prices start at about 30 euros and go all the way up to 200 Euro for their race
helmets. The prices for their children’s helmets align with ours meaning our prices
will range from 29.99 Euro up to 39.99 Euro.
Promotion: Much like Abus, Uvex promotes itself through sponsorships. Their phi-
losophy is Uvex provides head-to-toe protection. Every day. Around the clock.
Worldwide. That is our mandate. Protecting people.” (www.uvex-group.com). As
they convey the message that they are here to provide head-to-toe protection, they
send the message that they don’t focus on helmets alone.
Place: Uvex has been a German based company for over 80 years now, and is active
around the globe. It makes use of intermediaries.
Competitive Advantage: Uvex has been in business for over 80 years now, and are
therefore a very well established brand. Since we are a start-up company getting
brand awareness will be our main struggle, so this is where already well-established
brands such as Uvex have an advantage over us.
26
3.5 Competitive advantage of our business model
Compared to our competitors, HelMate is going to provide unique, colourful and
stylish designs that children actually like. Our company aims to adjust the helmets to
children’s wants whilst ensuring their safety in the traffic environment. Furthermore
HelMate is providing eco-friendly materials and we also ensure this through con-
tracts with our producers. The fact that our company consists of three different na-
tionalities is giving us another unique advantage over our competitors.
4 FINANCIAL ANALYSIS
4.1 Introduction
Through the contents of this chapter, we will outline the ideas of a financial analysis.
It will be discussed what our expected number of helmets must be sold to reach the
breakeven point. Also the projections of sales and scenarios that we anticipate to
have within the company in the first years of operation will be explained. That will
be followed by an explanation of our capital spending at Helmate. Then, this section
will finish off with outlining our operating costs and our requirements of funding.
4.2 Break even analysis
HelMate BP analysis
Standard Customized Sales price per unit 29,99 39,99 Variable cost per unit 15 20 Contribution Mar-‐gin 14,99 19,99 Sales mix in units 2 1 3 14,99 39,98 54,97
27
Weighted-‐average CM per unit 18,32333333 BP units 0 0
Fixed costs 3000
4.3 Sales scenarios and projections
HelMate BP analysis
Standard Customized Sales price per unit 29,99 39,99 Variable cost per unit 15 20 Contribution Mar-gin 14,99 19,99 Sales mix in units 2 1 3 14,99 39,98 54,97 Weighted-average CM per unit 18,32333333 BP units 133 50
As shown in the table above, the breakeven point on units will be 133 of our standard
helmets and 50 of the customized helmets. As calculated (Appendix I: Basics), total
estimated sales in units for year one will be 1190, which is calculated as the sum of
872 standard helmets and 318 specialized helmets. These figures clearly indicate that
we will meet our breakeven analysis and therefore will make a profit in the end.
Hence, the set selling price of €29.99 for the standard helmets and €39.99 for the
specialized are appropriate to meet the company goals.
28
4.4 Capital spending
Current assets:
Envelopes: €100.00 per year
Business Cards: €35.00 per year
Invoice paper: €100.00 per year
Office supplies: €50.00 per month
Long-term assets: Storage room: €696
Rent: €800 (including furniture Centre Ceramique Maastricht)
Computer: €1,000 *4
Printer: €588.06
Beamer: €250,000
4.5 Operating costs According to our financial statement, the operating costs for our company include all
or expenses which are packaging costs, telephone costs, server costs, rent, business
insurance, marketing costs, salaries, depreciation, office supplies, shipment expenses.
4.5 Funding requirements
Investment Budget Fixed Assets Equipment 2.000 Deposit 1.000 Total FA 3.000 Current Assets Cash 14.250 Inventory 2.550
29
Office Supplies 1.950 Prepaid Rent 800 Total CA 19.550 Total 22.550
As a start-up company, we have some investments made in the beginning to help fuel
our starting operations. These investments include €2,000 for equipment costs (com-
puters and software required for designs). Then, we will place a €1,000 deposit on
our rented office space. As a start-up, we will use our own savings as starting cash
totalling €14,250. We will begin operations with €2,550 worth of inventory to begin
sales. We will have €1,950 in office supplies to last us the year and finally we will
prepay rent for the forthcoming month.
5 FINANCIAL STATEMENTS
5.1 Introduction
This chapter of the business plan, we are going to outline the money matters of our
company. This includes how our company acquires our investments; what we will
have for start-up cash, starting inventory, and the type of assets we will need. Also
included, is our financing plan; ways in which we will finance our investments. On
top of that, we will talk about our projected profit and loss budgets and what we ex-
pect after three years of operation from the finance side of our business.
30
5.2 Opening balance sheet
As you can see on our Opening Balance Sheet, HelMate’s total assets are valued at
€22,550 and are divided in the following:
- Equipment: this account represents the computers etc. that HelMate needs to
operate. It consists of 4 computers valued at €500 each.
- Deposit: this account represents the deposit we have to pay for our office.
Since the deposit is only returned when HelMate no longer rents the office,
the value of this account stays the same every year.
- Cash: this account represents the amount of cash HelMate possesses (on
hand).
- Inventory: this account represents the products we have ‘in stock’ (expressed
in monetary value).
- Office Supplies: this account represents the supplies (such as Stationary)
HelMate needs to operate. We order the same amount every year.
- Prepaid Rent: this account represents the rent HelMate pays one month in ad-
vance. The value of this account stays the same every month.
Also HelMate’s total Equity capital is €18,050, and consists of only one account;
Capital. The Capital account is established by our private contributions, which are
€4,512.50 each.
31
Finally HelMate’s total liabilities are €4,500 and consist of only one account; Suppli-
ers. The Suppliers account represents the combined cost of the Inventory account and
the Office Supplies account, since these are the Assets that we acquire through sup-
pliers.
32
5.3 Profit and loss budget
Profit-and-loss budget Jan Feb Mar Apr May Jun
Gross profit
Turnover, sales standard 479,84 719,76 1.199,60 1.439,52 1.679,44 2.879,04
Turnover, sales special 219,96 439,92 549,90 879,84 1.319,76 1.759,68
Turnover Shipment 90,00 144,00 225,00 288,00 360,00 576,00
Total turnover, sales 789,80 1.303,68 1.974,50 2.607,36 3.359,20 5.214,72
COGS standard 160,00 240,00 400,00 480,00 560,00 106,00
COGS special 60,00 120,00 150,00 240,00 360,00 480,00
COGS Total 220,00 360,00 550,00 720,00 920,00 586,00
Packaging 100,00 160,00 250,00 320,00 400,00 640,00
Telephone 200,00 200,00 200,00 200,00 200,00 200,00
Server costs 15,00 15,00 15,00 15,00 15,00 15,00
Rent 800,00 800,00 800,00 800,00 800,00 800,00
Business insurance 75,00 75,00 75,00 75,00 75,00 75,00
Marketing 50,00 50,00 50,00 50,00 50,00 50,00
Salary (incl taxes) 1.000,00 1.000,00 1.000,00 1.000,00 1.000,00 1.000,00
Depreciation 50,00 50,00 50,00 50,00 50,00 50,00
Office supplies 162,50 162,50 162,50 162,50 162,50 162,50
Shipment expense 50,00 80,00 125,00 160,00 200,00 320,00
Total Cost 2.722,50 2.952,50 3.277,50 3.552,50 3.872,50 3.898,50
Net profit before taxes -1.932,70 -1.648,82 -1.303,00 -945,14 -513,30 1.316,22
33
Jul Aug Sep Oct Nov Dec Total Year 1 Year 2 Year 3
3.358,88 3.358,88 2.879,04 1.679,44 2.879,04 3.598,80 26.151,28 29.990,00 38.987,00
2.199,60 2.639,52 1.759,68 1.319,76 1.759,68 2.639,52 17.486,82 21.996,00 82.485,00
684,00 720,00 576,00 360,00 576,00 756,00 5.355,00 8.100,00 12.600,00
6.242,48 6.718,40 5.214,72 3.359,20 5.214,72 6.994,32 48.993,10 51.986,00 121.472,00
1.120,00 1.120,00 960,00 560,00 960,00 1.200,00 7.866,00 10.000,00 19.500,00
600,00 720,00 480,00 360,00 480,00 720,00 4.770,00 12.000,00 15.000,00
1.720,00 1.840,00 1.440,00 920,00 1.440,00 1.920,00 12.636,00 22.000,00 34.500,00
760,00 800,00 640,00 400,00 640,00 840,00 5.950,00 9.000,00 14.000,00
200,00 200,00 200,00 200,00 200,00 200,00 2.400,00 2.400,00 2.400,00
15,00 15,00 15,00 15,00 15,00 15,00 180,00 180,00 180,00
800,00 800,00 800,00 800,00 800,00 800,00 9.600,00 9.600,00 9.600,00
75,00 75,00 75,00 75,00 75,00 75,00 900,00 900,00 900,00
50,00 50,00 50,00 50,00 50,00 50,00 600,00 600,00 600,00
1.000,00 1.000,00 1.000,00 1.000,00 1.000,00 1.000,00 12.000,00 12.000,00 12.000,00
50,00 50,00 50,00 50,00 50,00 50,00 600,00 600,00 600,00
162,50 162,50 162,50 162,50 162,50 162,50 1.950,00 1.950,00 1.950,00
380,00 400,00 320,00 200,00 320,00 420,00 2.975,00 4.500,00 7.000,00
5.212,50 5.392,50 4.752,50 3.872,50 4.752,50 5.532,50 49.791,00 63.730,00 83.730,00
1.029,98 1.325,90 462,22 -513,30 462,22 1.461,82 -797,90 -11.744,00 37.742,00
HelMate’s profit and loss budget is divided up in months for the first year and for
year two and three as a total for the year. The budget starts with showing total turno-
ver from sales for standardized and special helmets as well as the turnover shipment.
Furthermore, it includes the total Cost of Goods sold for our standard and specialised
helmets and finally all other expenses like packaging, telephone, server costs, rent,
business insurance, marketing, Salary (incl. taxes), depreciation, office supplies and
shipment expenses. In the end, we are going to show our net profit before taxes.
34
According to our survey we found out that our customers are willing to pay an
amount between €30 up to €80 for helmets. Therefore, we set the price for our stand-
ard helmet for €29.99 and we took the average from those amounts and set the price
for the specialised helmets for €54.99. We also include the shipment price of €4.50,
which we asked from our customers for the total sales turnover.
Helmate listed all sales for the first and the two following years in a separate sheet
called ‘Basics’. There we stated the following sales figures in units: Year 1 Standard Special Total
January 16 4 20
February 24 8 32
March 40 10 50
April 48 16 64
May 56 24 80
June 96 32 128
July 112 40 152
August 112 48 160
September 96 32 128
October 56 24 80
November 96 32 128
December 120 48 168
Total 872 318 1190
Year 2 1000 800 1800
Year 3 1300 1500 2800
Our company decided to start with an explicitly lower amount on sales in units for
the specialised helmets compared to sales for the standard helmets and we also went
on with this sales structure for the next months and two years. As HelMate is a start-
up company with a not very well known reputation so far, our total sales for the first
month are 20 helmets. The figure shows an increase due to seasonal effects in the
months starting in March to August as the weather is changing and children cycle
more on the streets than in other months. However, we see a decrease in sales in Sep-
tember and October due to a seasonal effect. At the time before and around Christ-
mas parents are looking for nice and stylish presents for their children, that is the rea-
son why we increases the sales in the months November and December.
35
HelMate’s total turnover sales show a continually increasing amount on sales for the
first two years with a total of €48.933,00 for the first year and €51.986,00 for the se-
cond year. As HelMate’s national and international reputation is increasing, we have
a total sales turnover of €137,969.00 for the third year.
Due to the fact that HelMate is a Merchandising company and not manufacturing the
helmets by ourselves, we get them produced by an Italian company. Therefore, our
producing costs are €10.00 for the standard ones and €15.00 for the special helmets.
To calculate the Cost of Goods sold we need the sales units for each month in the
first year times the producing costs for the helmets, standard or special. As we al-
ready mentioned above we just took the total from the second and third year. Due to
seasonal effects in spring and summer months and the time right before Christmas,
we can see a particularly high amount of Cost of Goods sold. Moreover, we can con-
clude that the amounts of Cost of Goods sold are nearly doubled from year to year
(12.636,00, 22.000,00, 34.500,00).
After the total of Cost of Goods sold, we listed all the expenses and started with the
packaging costs, which are €5.00 for each helmet, no matter of a standard or special-
ised one. Therefore, we multiplied the total sales units with the packaging costs for
the first three years.
HelMate rents a fully furnished office, including office chairs tables etc. in Maas-
tricht with a monthly rent of €800. As we are a start-up company we decided to pay
the rent monthly and not on a prepaid amount. In the list for the expenses we also
included ‘telephone’, which are the monthly costs for our four business Mobil
phones, each €50 per month and in total €200 per month. Furthermore, we are paying
an amount of €15.00 monthly for our server and €75.00 monthly for Business Insur-
ance. Moreover, for all our Marketing costs including all social media channels and
advertisement we pay a fixed amount of €50.00 per month. Our monthly salary is in
total €1000.00 and is split up in €250.00 each.
Nevertheless, we rent a fully furnished office we do not have to include the deprecia-
tion for equipment. However, we still have two laptops for €2000.00 and therefore
we need to consider depreciation. We used the straight-line method for calculating
36
depreciation and a residual value of 200 and a time range of three years (36 months).
So the following calculation is (2000-200)/36= 50. Finally, we have a monthly de-
preciation for our laptops of €50.00.
According to our office supplies, we took the amount from the opening balance sheet
€1950.00 divided it by 12 to get a monthly amount of €162.50. For the shipment ex-
pense we multiplied the total sales with shipment expense of €2.50. Our total costs,
including all expenses are for the first year €49.791,00, for the second year
€63.730,00 and for the third year €83.730,00.
Finally, Helmate comes to a net profit before taxes, which is calculated by total turn-
over sales minus total costs, to a net loss of -€797,90 for the first year and -
€11.744,00 for the second year. Finally, we can make our net profit of €37.742,00.
37
5.4 Liquidity budget
38
According to the opening balance sheet, the amount of total liquid assets in January
of year one is €14,250.00. Payments in January include the fixed costs for telephone
(€200.00 per month), server costs (€15.00 per month), Marketing expenses (€50.00
per month), Business insurance (€75.00 per month), salary compensation (€1,000.00
per month), and rent (€800.00 per month). Additionally, variable costs for cost of
goods sold (€220.00 in January) and shipment expenses (€50.00) incur. Furthermore,
HelMate will pay for its office supplies (€1,950.00 per year) as well as the payment
of suppliers (€4,500.00 in year one) in the beginning of the year. In total, HelMate
has a total amount of €7,867.30 of expenses in January and an ending amount of
€5,390.00 of liquid assets in the end of the first period.
In February, the company has a cash amount of €7,867.30 in the beginning of the
month. As we as a company have a 30-day payment policy, revenue of the month
will be received in the following month. This means that HelMate will receive a total
of €789.80 of sales revenue from January. As fixed costs will stay the same as men-
tioned for January, cost of goods sold will be €440.00. This leads to total liquid as-
sets at the end of February of €6,268.48.
As shown in the following months from March until June, HelMate’s total receipts
will increase as sales increases. As a result, the variable cost (cost of goods sold and
shipment expense) will increase, too, which leads to a decrease in total liquid assets
(lowest amount in October with €3,359.20 at the end of the period). This is also, be-
cause the company paid some of its fixed costs (office supplies and suppliers) in the
beginning of the year, which we now have to compensate for with the profit margin.
In general, HelMate’s liquid assets are constantly increasing up to €9,552.50 in De-
cember. In total, the company’s liquid assets at the end of year one will be €9,552.50.
For the end of year two, HelMate is going to make a loss of €1.591,90. This is the
result of high cost of goods sold and expenses that need to be covered in the start up
of our company.
39
In year three, however, HelMate is going to have total liquid assets of €38,700.10 at
the end of the year, which indicates that the company is going to make profits and,
hence, is able to cover its expenses.
In the end, the company’s liquidity budget shows clearly that HelMate will increase
its liquid assets at hand. Despite the loss in year two, HelMate is going to increase its
liquid assets, which states a vital business operation.
40
5.5 Ending balances
After 1 year of being in business, HelMate’s balance sheet looks as follows:
Fixed Assets Equity Capital
Equipement 2,000 Capital 18,050
Deposit 1,000 Retained earnings -798
Acc. Depreciation -600.00
Current Assets
Inventory 2,550
Prepaid Rent 800
Office supplies 1,950
Cash 9,552
Total 17,252 Total 17,252
HelMate’s total assets are now valued at €17,760 and consists of the following ac-
counts:
- Equipment: This account remains the same on all HelMate’s balance sheets,
as the price we paid for the equipment does not change. However, to record a
loss in value HelMate has depreciation accounts.
- Deposit: This account remains the same on all HelMate’s balance sheets, as
HelMate will only get the deposit back when HelMate no longer rents the of-
fice.
- Inventory: This account represents the products HelMate has ‘in stock’. This
account changes on each balance sheet, as HelMate sells products during the
year. The amount of this account is calculated as follows; Beginning Invento-
41
ry (2,550) – the amount of products sold during the year (1,190) = ending in-
ventory (1,360)
- Prepaid Rent: This account remains the same on all HelMate’s balance
sheets, as HelMate pays the rent one month in advance. This mean that there
is always a rent expense of €800
- Salaries: This account represents the salaries that need to be paid out to the
HelMate employees (4). Each employee gets a total of €250 per month, this
adds up to €1,000 a month in salaries. This means that there is a total of
€12,000 a year (€1,000*12 months).
- Accumulated Depreciation: This account represents the depreciation on the
equipment. It is a cumulative account, which means it adds up each year
(Acc. Depreciation year 2 = year 1 + year 2). To calculate the annual depreci-
ation on equipment, HelMate must choose a Depreciation method, a suitable
residual value and a depreciation period. The method HelMate chose is the
Straight-line method, which means that each year the same amount is depre-
ciated. For the residual value HelMate came to the amount of €200, this
means that at the end of the depreciation period the equipment will be worth
$200. The depreciation period will be 3 years. Now we can calculate the an-
nual depreciation. The starting value of the equipment is €2,000, the residual
value is $200, this means that within 3 years (depreciation period) the equip-
ment depreciates for €1,800 (2,000-200). The annual depreciation then equals
€1,800/3 = $600.
HelMate’s total Equity Capital is €4,400 and consists of the following:
- Equipment Expense: This account simply reports the expense of the equip-
ment
- Depreciation Expense: This account reports the expense of the depreciation
- Deposit Expense: This account reports the expense of the deposit
- Rent Expense: This account reports the expense for prepaid rent
HelMate’s total Current Liabilities is €13,360 and consists of the following:
- Suppliers: This account represents all the goods HelMate gets from external
suppliers. Inventory + Supplies
- Salaries Payable: This account reports that there are still salaries to be paid
out to the HelMate employees (for further details see ‘Salaries’ above)
42
After the second year in business, HelMate’s balance sheet looks as follows:
Fixed Assets Equity Capital Equipment 2,000 Capital 18,050 Deposit 1,000 Retained earnings -12,542 Acc. Depreciation -1,200 Current Assets Inventory 2,550 Prepaid Rent 800 Office supplies 1,950 Cash -1,592 Total 5,508 Total 5,508 HelMate’s total Assets are now valued at €5,508 and consist of the following:
- Equipment: This account remains the same on all HelMate’s balance sheets,
as the price we paid for the equipment does not change. However, to record a
loss in value HelMate has depreciation accounts.
- Deposit: This account remains the same on all HelMate’s balance sheets, as
HelMate will only get the deposit back when HelMate no longer rents the of-
fice.
- Inventory: This account represents the products HelMate has ‘in stock’. This
account changes on each balance sheet, as HelMate sells products during the
year. The amount of this account is calculated as follows; Beginning Invento-
ry (5,360) – the amount of products sold during the year (1,800) = ending in-
ventory (3,560)
- Prepaid Rent: This account remains the same on all HelMate’s balance
sheets, as HelMate pays the rent one month in advance. This mean that there
is always a rent expense of €800
- Salaries: This account represents the salaries that need to be paid out to the
HelMate employees (4). Each employee gets a total of €250 per month, this
adds up to €1,000 a month in salaries. This means that there is a total of
€12,000 a year (€1,000*12 months).
43
- Accumulated Depreciation: This account represents the depreciation on the
equipment. It is a cumulative account, which means it adds up each year
(Acc. Depreciation year 2 = year 1 + year 2). To calculate the annual depreci-
ation on equipment, HelMate must choose a Depreciation method, a suitable
residual value and a depreciation period. The method HelMate chose is the
Straight-line method, which means that each year the same amount is depre-
ciated. For the residual value HelMate came to the amount of €200, this
means that at the end of the depreciation period the equipment will be worth
€200. The depreciation period will be 3 years. Now we can calculate the an-
nual depreciation. The starting value of the equipment is €2,000, the residual
value is €200, this means that within 3 years (depreciation period) the equip-
ment depreciates for €1,800 (2,000-200). The annual depreciation then equals
€1,800/3 = €600. Since this is the second year the depreciation = Deprecia-
tion year 1 + Depreciation year 2 => €600+€600=€1,200
HelMate’s total Equity Capital is €5,000 and consists of the following:
- Equipment Expense: This account simply reports the expense of the equip-
ment
- Depreciation Expense: This account reports the expense of the depreciation
- Deposit Expense: This account reports the expense of the deposit
- Rent Expense: This account reports the expense for prepaid rent
HelMate’s total Current Liabilities is €15,560 and consists of the following:
- Suppliers: This account represents all the goods HelMate gets from external
suppliers. Inventory + Supplies
- Salaries Payable: This account reports that there are still salaries to be paid
out to the HelMate employees (for further details see ‘Salaries’ above)
44
After the third year of business HelMate’s balance sheet looks as follows:
Ending Balance Sheet Year 3 Fixed Assets Equity Capital Equipment 2,000 Capital 18,050 Deposit 1,000 Retained earnings 25,200 Acc. Depreciation -1,800 Current Assets Inventory 2,550 Prepaid Rent 800 Cash 38,700 Total 43250 Total 43250 HelMate’s total Assets are now valued at €43,250 and consist of the following:
- Equipment: This account remains the same on all HelMate’s balance sheets,
as the price we paid for the equipment does not change. However, to record a
loss in value HelMate has depreciation accounts.
- Deposit: This account remains the same on all HelMate’s balance sheets, as
HelMate will only get the deposit back when HelMate no longer rents the of-
fice.
- Inventory: This account represents the products HelMate has ‘in stock’. This
account changes on each balance sheet, as HelMate sells products during the
year. The amount of this account is calculated as follows; Beginning Invento-
ry (5,360) – the amount of products sold during the year (1,800) = ending in-
ventory (3,560)
- Prepaid Rent: This account remains the same on all HelMate’s balance
sheets, as HelMate pays the rent one month in advance. This mean that there
is always a rent expense of €800
- Accounts Receivable: This account represents the net profit from sales on ac-
count (for further information see profit and loss budget)
- Salaries: This account represents the salaries that need to be paid out to the
HelMate employees (4). Each employee gets a total of €250 per month, this
45
adds up to €1,000 a month in salaries. This means that there is a total of
€12,000 a year (€1,000*12 months).
- Accumulated Depreciation: This account represents the depreciation on the
equipment. It is a cumulative account, which means it adds up each year
(Acc. Depreciation year 2 = year 1 + year 2). To calculate the annual depreci-
ation on equipment, HelMate must choose a Depreciation method, a suitable
residual value and a depreciation period. The method HelMate chose is the
Straight-line method, which means that each year the same amount is depre-
ciated. For the residual value HelMate came to the amount of €200, this
means that at the end of the depreciation period the equipment will be worth
€200. The depreciation period will be 3 years. Now we can calculate the an-
nual depreciation. The starting value of the equipment is €2,000, the residual
value is $200, this means that within 3 years (depreciation period) the equip-
ment depreciates for €1,800 (2,000-200). The annual depreciation then equals
€1,800/3 = €600. Since this is the third year, the depreciation = Depreciation
year 1 + Depreciation year 2 + Depreciation year 3 =>
€600+€600+€600=€1,800
HelMate’s total Equity Capital is €43,342 and consists of the following:
- Service Revenue: Net Profit.
- Equipment Expense: This account simply reports the expense of the equip-
ment
- Depreciation Expense: This account reports the expense of the depreciation
- Deposit Expense: This account reports the expense of the deposit
- Rent Expense: This account reports the expense for prepaid rent
HelMate’s total Current Liabilities is €18,960 and consists of the following:
- Suppliers: This account represents all the goods HelMate gets from external
suppliers. Inventory + Supplies
- Salaries Payable: This account reports that there are still salaries to be paid
out to the HelMate employees (for further details see ‘Salaries’ above)
46
6 CONCLUSION
Through the above information, HelMate has provided all necessary information
what the company expects in terms of sales of our HelMate branded helmets. It is
shown, through our profit and loss summary, that in the first year we project to sell
872 standard bike helmets and 318 customized helmets. For the following two years,
we are expecting sales to increase, as more people get aware of the brand HelMate,
and relate this brand with safety and being fashionable for their children. These ex-
pected sales will then allow for us to continue producing more helmets per year with
increasing profits along the lines. Also included in the above document, you can see
what we can expect in the terms of costs through the first years of ownership. We
outline, in detail, where our funds will be distributed in terms of costs and how they
will help increase the value of our company as a whole. The approach and attitude
we have taken towards our young company and with wise monetary distribution have
allowed for us to foresee a profitable future from our company.
In the long planning of our start-up company, HelMate aims to invest retained earn-
ings into own production facilities to ensure our high quality standards as well as to
increase production possibilities. Furthermore, the development of new markets is
one of HelMates main goals for the next decade. As shown in the estimated figures
above, HelMate is very confident to be a successful company.
47
LIST OF REFERENCES
CIA World Factbook, (2012), Birth rate for the Netherlands, Retrieved from: http://www.indexmundi.com/g/g.aspx?v=25&c=nl&l=en
CIA World Factbook, (2012), Birth rate for Germany, Retrieved from: http://www.indexmundi.com/g/g.aspx?v=25&c=nl&l=en
Public transportation in the Netherlands http://www.washingtonpost.com/blogs/wonkblog/post/what-‐we-‐can-‐learn-‐from-‐germanpublic-‐transit/2011/12/04/gIQAfpqkSO_blog.html
Wirtschaftsrechnungen (2012), Anzahl der Fahrradgüter je 100 Haushalte, Retrieved from: Statistisches Bundesamt Wiesbaden, Germany
Mobilität in Deutschland (2008), Fahrradbestand nach Altersgruppen, Retrieved from: Bun-‐desministerium für Verkehr, Bau und Stadtentwicklung, Germany
Forschung kompakt (2014), Fahrradhelmnutzung nach Altersgruppen, Retrieved from: Bun-‐desanstalt für Straßenwesen, Germany
Fietsersbond, (2008), Fietsen in cijfers. [ONLINE] Retrieved from: http://www.fietsersbond.nl/de-‐feiten/fietsen-‐cijfers#1
Appendix I:
Figure 2: Birth Rate for the Netherlands.
Figure 3: Birth Rate for Germany.
Figure 4: Public Transport in the Netherlands.
Figure 5: Amount of Biked per 100 Households.
172
174
176
178
180
182
184
186
188
190
2003 2004 2005 2006 2007 2008 2009 2010 2011
Amount of bikes per 100 households
Amount of bikes per 100 households
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 to 6 7 to 10 11 to 13 14 to 17 18 to 29 30 to 39 40 to 49 50 to 59 60 to 64 65 to 74 75 and older
Hund
reds
Bicycle owenership per age Bicycle owenership per age
Figure 6: Bicycle owner per age.
Figure 7: Helmet usage amongst children between 6 to 16
Figure 8: Gas prices in Germany and the Netherlands.
0
10
20
30
40
50
60
70
80
90
100
Percen
tage
Helmet usage amongst children between the ages 6 to 16
6 to 10
11 to 16
Figure 9: Bike rides per person per day.
Figure 10: Break-‐even Analysis
HelMate BP analysis
Standard Customized
Sales price per unit 29,99 39,99
Variable cost per unit 15 20
Contribution Margin 14,99 19,99
Sales mix in units 2 1 3
14,99 39,98 54,97
Weighted-‐average CM per unit 18,32333333
BP units 0 0
HelMate BP analysis
Figure 11: Break-‐even Analysis
Investment Budget
Fixed Assets
Equipement 2.000
Deposit 1.000
Total FA 3.000
Current Assets
Cash 14.250
Inventory 2.550
Office Supplies 1.950
Standard Customized
Sales price per unit 29,99 39,99
Variable cost per unit 15 20
Contribution Margin 14,99 19,99
Sales mix in units 2 1 3
14,99 39,98 54,97
Weighted-‐average CM per unit 18,32333333
BP units 133 50
Prepaid Rent 800
Total CA 19.550
Total 22.550
Figure 12: Investment Budget.
Figure 13: Opening Balance Sheet
Profit-and-loss budget Jan Feb Mar Apr May Jun
Gross profit
Turnover, sales standard 479,84 719,76 1.199,60 1.439,52 1.679,44 2.879,04
Turnover, sales special 219,96 439,92 549,90 879,84 1.319,76 1.759,68
Turnover Shipment 90,00 144,00 225,00 288,00 360,00 576,00
Total turnover, sales 789,80 1.303,68 1.974,50 2.607,36 3.359,20 5.214,72
COGS standard 160,00 240,00 400,00 480,00 560,00 106,00
COGS special 60,00 120,00 150,00 240,00 360,00 480,00
COGS Total 220,00 360,00 550,00 720,00 920,00 586,00
Packaging 100,00 160,00 250,00 320,00 400,00 640,00
Telephone 200,00 200,00 200,00 200,00 200,00 200,00
Server costs 15,00 15,00 15,00 15,00 15,00 15,00
Rent 800,00 800,00 800,00 800,00 800,00 800,00
Business insurance 75,00 75,00 75,00 75,00 75,00 75,00
Marketing 50,00 50,00 50,00 50,00 50,00 50,00
Salary (incl taxes) 1.000,00 1.000,00 1.000,00 1.000,00 1.000,00 1.000,00
Depreciation 50,00 50,00 50,00 50,00 50,00 50,00
Office supplies 162,50 162,50 162,50 162,50 162,50 162,50
Shipment expense 50,00 80,00 125,00 160,00 200,00 320,00
Total Cost 2.722,50 2.952,50 3.277,50 3.552,50 3.872,50 3.898,50
Net profit before taxes -1.932,70 -1.648,82 -1.303,00 -945,14 -513,30 1.316,22
Jul Aug Sep Oct Nov Dec Total Year 1 Year 2 Year 3
3.358,88 3.358,88 2.879,04 1.679,44 2.879,04 3.598,80 26.151,28 29.990,00 38.987,00
2.199,60 2.639,52 1.759,68 1.319,76 1.759,68 2.639,52 17.486,82 21.996,00 82.485,00
684,00 720,00 576,00 360,00 576,00 756,00 5.355,00 8.100,00 12.600,00
6.242,48 6.718,40 5.214,72 3.359,20 5.214,72 6.994,32 48.993,10 51.986,00 121.472,00
1.120,00 1.120,00 960,00 560,00 960,00 1.200,00 7.866,00 10.000,00 19.500,00
600,00 720,00 480,00 360,00 480,00 720,00 4.770,00 12.000,00 15.000,00
1.720,00 1.840,00 1.440,00 920,00 1.440,00 1.920,00 12.636,00 22.000,00 34.500,00
760,00 800,00 640,00 400,00 640,00 840,00 5.950,00 9.000,00 14.000,00
200,00 200,00 200,00 200,00 200,00 200,00 2.400,00 2.400,00 2.400,00
15,00 15,00 15,00 15,00 15,00 15,00 180,00 180,00 180,00
800,00 800,00 800,00 800,00 800,00 800,00 9.600,00 9.600,00 9.600,00
75,00 75,00 75,00 75,00 75,00 75,00 900,00 900,00 900,00
50,00 50,00 50,00 50,00 50,00 50,00 600,00 600,00 600,00
1.000,00 1.000,00 1.000,00 1.000,00 1.000,00 1.000,00 12.000,00 12.000,00 12.000,00
50,00 50,00 50,00 50,00 50,00 50,00 600,00 600,00 600,00
162,50 162,50 162,50 162,50 162,50 162,50 1.950,00 1.950,00 1.950,00
380,00 400,00 320,00 200,00 320,00 420,00 2.975,00 4.500,00 7.000,00
5.212,50 5.392,50 4.752,50 3.872,50 4.752,50 5.532,50 49.791,00 63.730,00 83.730,00
1.029,98 1.325,90 462,22 -513,30 462,22 1.461,82 -797,90 -11.744,00 37.742,00
Figure 14: Profit and loss Budget
Figure 15: Liquidity Budget
Fixed Assets Equity Capital
Equipement 2,000 Capital 18,050
Deposit 1,000 Retained earnings -798
Acc. Depreciation -600.00
Current Assets
Inventory 2,550
Prepaid Rent 800
Office supplies 1,950
Cash 9,552
Total 17,252 Total 17,252
Figure 16: Ending Balance Year 1
Fixed Assets Equity Capital Equipment 2,000 Capital 18,050 Deposit 1,000 Retained earnings -12,542 Acc. Depreciation -1,200 Current Assets Inventory 2,550 Prepaid Rent 800 Office supplies 1,950 Cash -1,592 Total 5,508 Total 5,508 Figure 17: Ending Balance Year 2
Ending Balance Sheet Year 3
Fixed Assets Equity Capital Equipment 2,000 Capital 18,050 Deposit 1,000 Retained earnings 25,200 Acc. Depreciation -1,800 Current Assets Inventory 2,550 Prepaid Rent 800 Cash 38,700 Total 43250 Total 43250 Figure 18: Ending Balance Year 3