Entrepreneurship Business Plan, AASKA MINERAL WATER , BY SHAHID ABBAS KAHLON JUTT .
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Transcript of Entrepreneurship Business Plan, AASKA MINERAL WATER , BY SHAHID ABBAS KAHLON JUTT .
SHAHID ABBAS BC11-252 MUHAMMAD ARSLAN BC11-259 AHMAD SHEHZAD BC11-264 KAMAL SUBHANIBC11-294
MUHAMMAD ATIF RAFIQBC11-296
Group Members
AASKA MINERAL WATER
Healthy water for Healthy Life
Company NameAASKA Mineral Water (Pvt) Limited 8 Km raiwind road near Bakhtawar hospital
Lahore. Phone No.042410007
Executive Summary
Muhammad Arslan Phone # +923037343810 Shahid Abbas
Phone # +923447487764 Ahmad Shehzad
Phone # +923426788877 Kamal Subhani
Phone # +923455827242 Muhammad Atif Rafiq
Phone #+923008679443
Partnership
Our business is partnership. We started business with the capital of Rs
30,000,000 Every partner will contribute 5 lac and
remaining amount we will obtain from bank Our business is to provide healthy water to the
people We will make mineral water in different packing Our product is mineral water and we will deliver
our product to customer ‘s home free We will solve the problem of inconvenience of
customer by delivering products to their homes
Our business
Our target market is Johor town, WAPDA town, Azmeer town, EME, Eden housing society Behria town and the departmental stores which are situated near by the above mentioned areas Demographic
Our customers are upper class families They have their own businesses and they are
health conscious They are quality conscious Behria town’s people are richest families and
they are quality conscious
Target market
Our expansion decision is based on our marketing strategy of increasing our customer base
Other mineral water companies are taking this huge opportunity of targeting the psychographic, demographic and benefits sought segments of Lahore region
As we are in the business of bottled water which is a consumer product no big effort in decision making is required by the customers so push strategy is that we are providing free of cost home delivery of water
While other companies charge for this service. Due to this reason we have competitive advantage on other companies
Strategy
Following fixed and working capital requirements have been known for operations of the future business.
Table 1: Capital Investment for the Project
Project cost
Description Amount
Capital Cost
Plant and Machinery 1,600,000
Furniture, Fixture and Office Equipment 200,000
Motor Vehicles (2nd hand) 600,000
Pre-operating Cost 100,000
Total Capital Cost 2500,000
Working capital :
Building Rent 50,000
Cash 800,000
Total project cost
3,000,000
Vision'Each day we struggle to make our goods full of flavor and in good health choices that help clients care for themselves and their families Mission
“Confidently effect the community location in which we work as liable business residents, with due esteem for those ecofriendly ethics and social aims which mend superiority of life”
Vision and Mission Statement
The market of mineral water bottles has risen by at least 15 per cent a year as the quality of tap water depletes persistently in Pakistan
The quantum of the demand is projected to be around 1.1 billion liters as the awareness about the quality of drinking water grows in society
The bottled water has been powered by urban middle class that aspires to switch to bottled water to avoid water-borne diseases
Bottled water has also been treated as status symbol in middle income families that tends to follow the lifestyle of elite in Pakistan
`1
Business and industry profile
Five years back the market was hardly 25 per cent of the current level of 1.1 billion liters a year
People living in posh areas seemed to be switching over to bottled water
The situation seems to be similar in the mineral water business such like tetra milk
Success factor of this business is that water pollution is increasing day by day and people becoming aware of it and they are becoming conscious about health
Our vision is to provide healthy water to the nation
Business and industry profile cont’d
Company has three types of goals, operational, financial and others Operational goals Enhance our water stewardship practices by partnering
with local communities and stakeholders to support up to two watershed improvement projects per year (2014-2018)
Complete a comprehensive assessment of our materials and packaging footprint by 2013, and use findings to make future waste reductions and promote second-life use
Develop next generation bottles made from 100% recycled or renewable material by 2020
Increase the reach of water education through support and engagement with leading water education entities
Company goals and objectives
Financial According to management of company will
sale 250 bottles per day in start and in only one year it will be 450 bottles per day
It is decided by the management that price of the each bottle will be Rs.80 and the amount of the sale will be Rs.20000 which will be Rs.36000 in only one year
According to above mentioned estimation, Rs600000 is the monthly sale of the company
Company goals and objectives cont’d
OthersIn others, company has the following goals
Continue efforts to educate and encourage citizens to reduce their average annual caloric intake from beverages
Continue to advocate for federal standards on public disclosure of source, quality, and process reporting for bottled water
Now, last but not least important goal is that, to provide healthy water for healthy life because quality has a vital role in the success of every type of product
Company goals and objectives cont’d
Desired image and position in market It’s company strategy to get a powerful image in the market and a leading position among the competitors SWOT analysis Strength Socially responsible company Provide quality products Employ skilled labor and educated staff Have easily available products Have an efficient research and development
department Market a strong brand name, with a wide range of
products
Business strategy
Weaknesses Is a relatively new company in Lahore as compare
to its rivals? Have a limited relations with people Opportunities Consider adopting a credit policy to increase sales Develop some farms own Threats Price fluctuations due to rupee devaluation Market segment growth could attract new entrants. Economic slowdown can reduce demand Current market situation
SWOT analysis
Cost leadership We follow cost leadership strategy in our
business We use this strategy for our product, we
offer lower price as compare to our rivals This strategy works well when buyers are
sensitive price changes when competing firms sell the same commodity products, and we can get benefit from economies of scale
Competitive strategy
Differentiation We provide free home delivery to customers at their home
and departmental stores. Focus AASKA wants to win and keep customers: distributors,
departmental stores and retailers and the final consumers They have different requirements Trade customers expect excellent service, correct
information and timely delivery Consumers study taste, appearance and price when they
make their choice. AASKA is offering quality to customers It also means ecofriendly excellence AASKA shares society’s concern for the environment and is
committed to environmentally sound business practices throughout the target Customers are central focus of AASKA and it must always respect their needs and preferences.
Competitive strategy (cont’d)
Product
Company product and services
Product feature Our product is full of minerals and healthy
from all aspects AASKA has very low Sodium content, and
has no calories AASKA has very low Sodium content, and
has no calories AASKA is bottled at its state-of-the-art and
hygienically protected plant at raiwind road AASKA is not chemically treated and no
minerals are added to it artificially
Company product and services
Customer benefits Its great benefit for the customer to receive the product at
home without cost Customer can get high quality water by purchasing it. It has no side effect on customer’s stomach or any health
disease Uniqueness Customer can get his payment back if they are not
satisfied with the product We will provide dispenser to existing customers if they
motivate other people to buy our 1500 bottles per month We will also provide dispenser to retailer if he purchase
2600 bottles per month
Company product and services
Trademark of the company is below
We protect our formula and process of purification and bottle style
Patent or Trademark Protection
Raw Material Natural water is our raw material Production process The first step for setting up a water purification plant is
the analysis of source of water After the chemical analysis, the terms of the purification
plant are set In the purification plant, source water is stored in the feed
water tank, passes through the sand filter for preliminary water filtration
Water then passes through the dosing pump-I where chlorine is added to kill the germs in the water
After the chlorination, water passes through carbon filter It help in the maintenance of proper odor and taste of the
water It also removes chlorine from water. Water is then passes from
dosing pump-II, where Sodium Meta Bisulphate is added It helps in dechlorination of water.
Description of production process
Water is filtered next and passes through dosing pump-III, where anti scallant is added
It prevents scaling of membrane from calcium, magnesium and biological growth
Water then passes through reverse osmosis module This stage of the process makes water clear from all the
impurities and minute elements Water then passes through dosing pump-IV, where minerals are
added for taste development After this stage, water undergoes Ultra Violet treatment to avoid
any impurity from bacteria and other microorganisms Water then passes through automatic washing, filling and
covering plant. Here water is filled into bottles After filling bottles are taken into the warehouse or shipped to
the retailers. The complete process flow diagram is as under
Description of production process(cont’d)
Production process
Magnesium, Sodium, calcium and anti-scallant are consumable asset of the company
Company will utilize almost Rs 30,000 per month on these things purchase
cost
We will produce our own bottles rather than buying from other company
We will give our customer one month credit facility, (customers can pay bill after one month)
We will install one more new plant of water purification, through which customers can enjoy less per unit cost
We will start one new branch in Faisalabad
Future product or service offerings
Marketing Strategy Our target market is Johar town, WAPDA town, Azmeer
town, EME, Eden housing society Behria town and the departmental stores which are situated near by the above mentioned areas
After the company has segmented a market, management must next select one or more segments as its target markets
The target market consists of upper lower class to upper class due to their purchasing power and company is following multiple targeting strategies which include mainly two focus groups i.e. home & Retailer particularly for bulk water.
Marketing Strategy
Customers know that our product is a quality product and with suitable cost
Customers are very careful about their health, and our product provides them pure water for good health, without any side effect
We will provide dispenser to existing customers if they motivate other people to buy our 1500 bottles per month
We will also provide dispenser to retailer if he purchase 2600 bottles per month
Customer Motivation to Buy
Market of our product is increasing day by day
Customers trends are changing they prefer using purified water to normal water
Our market is not a large but it is growing day by day
Size of marketing is increasing day by day because ever changing fashion and trends are influencing the customer
Market size and trends
Promotion is the very important and crucial element of marketing strategy as through it the company establishes its image in the minds of the customers
AASKA is promoted by using different ways of promotion Advertisement of AASKA is done through TV, radio,
billboards, newspapers and magazines Current advertising slogans are that AASKA is
“HEALTHY WATER FOR HEALTHY LIFE” AASKA also conducts the tradeshows, concerts, events, sponsorships, and discounts for sales promotion
For establishing public relation, AASKA distributes its newsletters, annual reports, calendars and diaries, lobbying, donation for charitable and civic events
Advertising and promotion
Media We use electronic media for advertisement, we have
contract with different websites such as yahoo, send sms.pk, Facebook, news paper and magazine etc.
And we have printed posters and banners for advertisement.
Table 2.Media cost in percentage %
Advertising and promotion (Cont’d)
TV Advertisement 30%
Website 20%
Newspaper 35%
Magazine 7%
Banners and pamphlets 8%
It is decided by the management that price of the each bottle will be Rs.80 for home delivery and Rs70 for retailer and quantity will be 19 Liters
Competitors Sonnevalley, Gourmet, Nestle, Description
mineral water
Pricing
Competitors name Price
Nestle 120
Gourmet 90
Sonnevalley 80
Description mineral water 95
Ahmad Shehzad is a marketing manager who will take over all the following responsibilities
We have two pick up vans for distribution of our product in customers’ homes and departmental stores
Distribution channel Branding and marketing of bottled water is
as essential as water for the survival of the human body
The traditional marketing tools include site advertisement, TV and print media advertising and brochures
Distribution strategy
The study shows that 10% of the revenue is spent for advertising and promotional purposes
The study suggests to focus more on other marketing magnets that include interactive marketing, cooperative marketing may include educating the general public about the importance of water and its daily consumption requirements for human body through the participation in seminars and in general public gatherings
One of the marketing options is to sponsor public events like cricket matches or hospital campaigns, distribution free brochures about water and its daily consumption, water requirements in different age brackets
Distribution strategy
Existing competitors Sonnevalley, Gourmet, Description mineral water ,Nestle, Butt, Atlantic, Kinley, Aqua Fine water Strength Socially responsible company Provide quality products Employ skilled labor and educated staff Have easily available products Have an efficient research and development
department Market a strong brand name, with a wide range of
products
Location and layout
Weaknesses Is a relatively new company in Lahore as compare
to its rivals? Have a limited relations with people Potential Competitors As the trend of market, it is changing and it is a
product which is developing day by day Every 2nd person wants to starts this business.It is
difficult to say something about potential competitors
They can affect our business because people want to taste new thing one time
But our strategy is to improve quality every day to compete such unknown competitors.
Location and layout
Organizational Structure Organizational structure is the formal
framework by which jobs tasks are divided, grouped, and coordinated
AASKA is a function-based organization The tasks are divided into separate jobs and
then these jobs are grouped together under different departments
Each major area is kept under the manager who is skilled in that apprehensive field and is responsible for all activities, which that department performs
Description of Management Team
Muhammad Arslan (Managing director) Phone # +923037343810 New Campus University of the Punjab, hostel # 17, room #132 Ahmad Shehzad (Marketing Manager)
Phone # +923426788877New Campus University of the Punjab,
hostel # 19, room #35
Description of Management Team
list of employees Accountant Two drivers Three helpers Two plant operator with 2 year experience Chemist
Employees
We have chosen partnership because we individually don’t have large amount to start own business individually
We want to share experiences for a best one business
Decision making authority Managing director is the decision making authority, then this decision flow from top to low level Compensation and benefits packages
Company will provide free product to the managers for their household use
Plan of operation
Following financial statements are included in the financial statements: Income statement Balance sheet Breakeven point Ratio analysis
Financial Forecasting
Current assets: Amount (Rs.)
Cash in hand 50,000
Cash at bank 500,000
Account receivable 405,000
Stores & spares 200,000
Advertising expenses 195,000
Fixed assets:
Plant & machinery 1,600,000
Furniture & fixture 200,000
Equipment 200,000
Motor vehicle 600,000
Bottles ([email protected]) 350,000
Total assets 4,300,000Liabilities & Owner’s Equity:
Current liabilities:
Account payable 400,000
Note payable 300,000
Rent payable 600,000 1,300,000
Fixed liabilities:
Bank loan@15% p.a 500,000
Owner’s Equity:
Arslan’s capital 500,000
Shahid’s capital 500,000
Ahmad’s capital 500,000
Kamal’s capital 500,000
Atif’s capital 500,000
Total capital 2,500,000
Total liabilities & owner’s equity 4,300,000
Balance sheet
Revenue From Sales: Amount Amount
Sales 6,120,000
Less: Cost of goods sold 3,672,000
Gross Profit 2,448,000
OPERATING EXPENSES:
Advertising expenses 5,000
Bad debts expense 5000
Rent expenses 600,000
Office expenses 30,000
Salary expenses 300,000
Factory expenses 100,000
Utility expenses 420,000
Total operating expenses 1,460,000
Other expenses:
Interest expenses 75,000
Net income before taxes 913,000
Income tax on exceeding amount 400,000@10% 51,300
Net Income
861,700
Income statement
Following are the notes related with Balance Sheet and Income Statement : Balance Sheet Furniture and Fixture include 20 chairs, 5 tables and 2
cupboards and depreciation will be charged @10% with straight line balance method
The cost of the plant and machinery is Rs. 1,600,000 and depreciation will be charged @5% with straight line balance method. It was decided that useful life of the plant and machinery is 30 years and residual value will be Rs. 300,000
Depreciation on equipment and motor vehicle will be charged @10% per annum
It was decided by the management that the depreciation will not be charged 1st year
Bank loan obtained @15% for 5 years and interest will be paid at the end of every six month
Notes to financial statements
Income Statement It was assumed that total sales include 40%
to home based customers and 60% sold to retailers
Cost of goods sold is the 60% of the total sales
Advertising expenses are amortized in 5 years @ 5%
Notes to financial statements(cont’d)
Selling price = Profit+ (Variable cost per unit * Quantity
produced) + Total fixed cost/ Quantity produced To break-even point, the management
assumes that the profit is Rs.0.= Rs.4.5 per unit
Break even
Now it was supposed by the management that company will earn Rs. 50,000 profit
Then the selling price is calculated as follows:
= 50000 + (2.23 * 90,000) + 200,000 / 90,000
= 450700 / 90,000= Rs. 5 per unit
Selling price (cont’d)
In ratios analysis following ratios are calculated
Liquidity ratio Current ratio Quick ratio Current ratio =current asset / current liability =1,350,000 / 1,300,000 =1.038 Quick ratio =current assets – inventories / current liability =1,350,000 – 200,000 / 1,300,000 =0.885
Ratio Analysis with Comparison to
Industry Standard
Leverage ratio Debt ratio Debt to equity ratio
Debt ratio
=total debts / total assets=1,800,000 / 4,300,000=0.418
Debt to equity ratio
=total debts / total equity=1,800,000 / 2,500,000=0.72
Ratio Analysis with Comparison to Industry Standard
Amount Requested Total capital of the partnership is
Rs.3,000,000 Every partner is contributing Rs. 500,000 Remaining amount is covered through bank
loan@15% per annum
Loan or Investment Proposal
Task #/Name Person
Responsible
Month of Action for Task
Assigned
Completion Date
January February February March
Apply for loan Shahid Abbas X X
Finalize
suppliers
Kamal Subhani X X
Seek for
building
Atif Rafique X X
Marketing
materials
created and
distributed
Ahmad Shehzad X X
Hiring
Employees
Muhammad
Arslan
X X
Timetable for Implementing Plan and Launching Business