FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

STUDENT ID
STUDENT NAME
NUMBER
1.LEONG HOH MUN 17WBR07358
2.MURAYYSN PILLAII A/L CHANDRASEGARAN 17WBR07410
3.TEE KOK CHUNG 17WBR07496
4.ONG KOK YEW 17WBR07432
5.YAP KOK CHIN 17WBR07535

BACHELOR OF BUSINESS (HONOURS) IN ACCOUNTING

TUTORIAL GROUP 3RAC6

BBDM3303 ENTREPRENEURSHIP

HBIOGAS

LECTURER: MR. TEE KOK PENG

TUTOR: MR. AUGUSTIN LEE KUAN LOCK
SUBMISSION DATE: 21/08/2018

MARKS AWARDED

WORD COUNT 7,258

KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

 Faculty of Accountancy, Finance and Business
Plagiarism Declaration Statement

Read, complete and sign this statement to be submitted with your written work

We confirm that the submitted work are all our own work and are in our own words.

Name (Block Capitals) Student ID No. Signature

1. LEONG HOH MUN 17WBR07358

2. MURAYYSN PILLAII A/L 17WBR07410
CHANDRASEGARAN
3. TEE KOK CHUNG 17WBR07496
4. ONG KOK YEW 17WBR07432
5. YAP KOK CHIN 17WBR07535

Programme RAC 3
……………………………………………….

Tutorial Group GROUP 6

……………………………………………….

Date 21/08/2018
……………………………………………….

ASSESSMENT CRITERIA &MARKING RUBRIC: BUSINESS PLAN (CW 3)

Expectations Marks Marks Comments
(max)
Industry Analysis:
Relevance and depth of the research done on the pertinent industry, the
10
market for the product/service as well as the potential competitors. The
use of tools of analysis like Porter’s 5 Forces, and/or PEST/PESTEL
Marketing Plan:
Market segmentation and proper identification of the target market;
10
discussion on market trends; logical & reasonable basis of revenue
projections. Detailed competitor analysis.

Discussion on the marketing objectives and marketing strategy,

10
including the marketing mix: the 4Ps- product, pricing, place of sale
(distribution channels) and promotion.
Operations Plan:
Clarity, relevance, and comprehensiveness (refer to the detailed 10
requirements in the Coursework Specs)
Management Plan:
Clarity, relevance, and comprehensiveness (refer to the detailed 5
requirements in the Coursework Specs)
Financial Plan:
Estimation of the initial capital funding required for start-up costs, pre-
operating expenses, deposits/prepayments, and working capital 10
requirements for the first few months of operation. Table of accounting
assumptions used in preparation of the pro forma accounting
statements, including workings showing the basis of the sales
projections.

The completeness and accuracy of the required 3 years pro forma 10

income statements, cash flow statements, and balance sheets.

Ratio analysis and breakeven analysis (including interpretation) 5

Critical Risks Analysis:
Relevance and comprehensiveness (refer to the detailed requirements 5
in the Coursework Specs)
Implementation Plan:
Detailed explanation of the implementation steps – the logic,
comprehensiveness & reasonableness of the steps 5
&timelines/deadlines. The use of visual-aids like Gantt charts to depict
the milestones.
Overall feasibility:
This business plan is judged on its overall feasibility taking into
10
account the whole business plan, in particular the marketing and
financial plans.
Format and Cohesiveness of the Business Plan:
Understood and applied faithfully the instructions pertaining to the
report structure/format. The report has been presented in a clear, easy-
10
to-understand, and cohesive manner.
A complete &well-written Executive Summary.
Proper referencing using the TARUC Harvard Referencing System.

TOTAL MARKS 100

APPENDIX 6

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

 COURSEWORK FEEDBACK FORM

COURSE CODE/ COURSE TITLE: BBDM3303 ENTREPRENEURSHIP-

NAME OF STUDENT(s): ID No:
1)LEONG HOH MUN 17WBR07358
2) MURAYYSN PILLAII A/L CHANDRASEGARAN 17WBR07410
3)TEE KOK CHUNG 17WBR07496
4)ONG KOK YEW 17WBR07432
5)YAP KOK CHIN 17WBR07535
PROGRAMME:
YEAR OF STUDY: ACADEMIC YEAR: 2017/18
SEMESTER:TWO
GROUP NO:
COURSEWORK NO: NATURE OF COURSEWORK:(e.g. MARKS AWARDED:
presentation,Q&A,individual/group
assignment, etc)

COMMENTS :

Student’s Date: Lecturer/Tutor’s Date:

Acknowledgement: Signature:

Executive summary
HBiogas is a new product to Malaysia, but it has already been in Europe countries such as
Germany. This product has been in the Germany for the past 6 years and it has been very helpful
in the reduction of food waste. Therefore, we are bringing it into Malaysia. We will be leasing a
warehouse located at Petaling Jaya. We has selected this location is because of the potential
location has the highest density of our targeted customers. Generally, the purpose of our business
is to reduce food waste by using it to generate biogas. Biogas will promote the sustainable
production of renewable energy obtained from food waste. This action will contribute to secure,
sustainable and competitively priced energy for country by promoting new and renewable energy
sources and supporting energy diversification. Mainly, we will target household as our main
market as well as restaurant because they are the biggest contribution of food waste in the
country.

Next, by doing pest analysis we can could whether to expand or start our business in current
renewable energy market. In the political side, government are trying to reduce the consumption
of petrol and other sources by innovating new renewable energy. Besides that, governments will
give full tax exemption on renewable energy to encourage new renewable energy products. Other
With the advance of technology in the world, it helps the researchers or innovators to develop
new sources of renewable energy as technology is improving very rapidly. For economic,
Malaysia GDP is increasing from 2016 to 2017 and is expected to increase for the next 5 years.
According to AmBank Group chief economist, the multiplier is expected to be at 0.6 to 0.7 times
on average for household which means for every RM1 earned the amount spend is about 60sen
to 70sen. The economic growth has led to a large increase in consumer incomes, which will
make our target market (household) have more purchasing power and willing to spend on
renewable energy product. In this century, people now are more concern about environment.
Therefore, people now are trying to use hybrid car to cut on the usage of fossil fuels.
Government had also started to concentrate more in renewable energy as the cost of electricity
and petrol is high and also is not environmental friendly. Thus, according to the PEST analysis
there is a high success rate for renewable energy products in the market.

As for the market segmentation, HBiogas has selected to target households. Based on the
research, most of the food waste are produced by household and secondly is restaurant.
 TABLE OF CONTENT

Therefore, we have selected households as our targeted customers. Our direct competitors will be
Home biogas in Australia and Germany. Due to the currency rate, their product will sell much
expensive than us. This is the weakness of them and is the biggest advantage for our product. In
marketing mix, the number of enquiries and brand awareness from our marketing
communications activities are increase by 20% in the first year. We will set marketing goals at
30% of sales in 3 years times which is reasonable and achievable developed to meet the business
goal. Due to the good name of this product in oversea, we strongly believe that our product will
make profit as our product is an environment friendly product and able to satisfy customer need
and demand with a reasonable price.

Home Biogas 2.0 would be our main supplier for our products. We will be importing them from
Germany. They are reliable as they have a huge Biogas company with a huge number of
customer. Therefore, there will not be a problem in supplying us their products. Furthermore, we
have a strong management team with expertise skill and qualification to manage and develop the
product. We also have technicians for installation and maintenance of the products. Based on the
financial report, during the first year the company are making loss. It turn into profitable after 6
months starting from jan and the breakeven point achieved at some point in the Oct to Nov 2018
period. In year 2 and year 3, there will be RM276,216 and RM455,755 of Net Profit. Net Profit
Margin of 8.54, 12.32, and 16.26 in Year 1, Year 2 and Year 3 respectively. It show that every
RM1 of revenue will generate 8.54% of the net profit to the investor in Year 1. Net Profit Margin
increased by 44.26% in Year 2 and 32% in Year 3. It shoes that HBiogas are improving their
effectiveness as they improve their sales revenue and reducing their operating expenses. Return
on Investment is constantly 40% in 3 years’ time. It is good sign for the company as RM1 of
investment will generate 40% of income for the shareholders. In other words, company is able to
utilize their funds to purchase assets to generate 40% of income to the company as well as
benefit to the shareholders.
Number Content Pg Number

1. Introduction 1

2. Industry Analysis 2-4

3. Marketing 5-10

4. Operational 11-12

5. Management 13-14

6. Financial 15-16

7. Potential Risk Factors 17-19

8. Implementation Plan 19-21

9. References 22-23
Introduction

Our business is into the renewable energy industry. The product of our company will convert
food waste into biogas for cooking. This is a very effective approach to convert food waste into
energy. Other than that, it doesn't rely on the utilization of any non-renewable power source to
produce the biogas. Our product would solve the food waste problem in Malaysia, as Malaysia
produces tons of food waste every day which eventually ends up in landfills, polluting the
country. The product is from Germany, thus we would be importing the product from Germany
and be reselling it here in Malaysia.

 Vision

Our vision is to change the lifestyle of the people with unique available resources and also to
promote the use of clean energy to the people. As many under developed nations do not have a
clean source of energy, our company is competent in providing them clean energy in a low cost.

 Mission

Our mission is to provide renewable gas and reduce food wastage in the country as Malaysians
generates tons of waste per day. So, we believe that our product can successfully help the
country to solve the food waste issue in the next few years and at the same time help reduce the
emission of methane gas to the atmosphere.

 Goal

Our goal is to expand our business globally within the next 5 years. We strongly believe our
product will be a success due to benefits of our product towards the environment and also the
people.

 Potential of the business

We believe that our product can be successful because of the advancement in technology we
have and the rising demand for renewable energy in the market. We also believe that our product
has the potential to grow in the market because the product would contribute to the
environmental and at the same time also help in providing customer the ability to generate their
own renewable energy at a very low cost.

1
Industry Analysis - PEST

Renewable energy

Renewable energy is from an energy resource that is supplanted quickly by a natural process, for
example, power produced from the sun or from the wind. Most sources of renewable energy,
other than geothermal and tidal power, are from the Sun. Other renewable energy such as rainfall
and wind power are considered as short term energy development. Biomass is amassed over a
time of months, as in straw, or through numerous years as in wood. Catching sustainable power
source by plants, animals and people does not forever exhaust the energy. Renewable energy
resources might be utilized specifically, or used to make more convenient types of energy.

 Political

Political reactions to the world renewable energy industry have included new strategies,
legislation, and duty incentives advancing the development of and investment in renewable
energy with a specific end goal to decrease greenhouse gas emissions. Governments begin
driving the renewable energy advancement forward by giving research funding and creating
incentives for the organizations to make vital, capital intense, long-term investments to
renewable energy organizations. The legislature of Malaysia is currently looking in to new
energy generation ways that will expect to decrease Malaysia's reliance on fossil fuels. In
accordance with the energy demand increment, the Malaysian Government has taken a few
measures to explore and advance the utilization of renewable energy as an option to energy
generated by fossil fuels. The Malaysian government is very encouraging in developing new
sources of renewable energy power source. These measures incorporates the Fifth-Fuel Policy
under the eighth, ninth Malaysia Plans, Energy Efficiency Commercial Buildings, Kyoto
Protocol, the Malaysian Building Integrated Photovoltaic Program, and Biomass. The ninth Plan
reinforced the activities for energy efficiency and renewable energy that concentrated on better
use of energy resources. An emphasis to additionally diminish the reliance on oil accommodates
more efforts to integrate alternative energy. Different tax exemptions were presented for energy
efficiency products and renewable energy generators.

2
 Economic

Malaysia is a middle-income country and transformed itself from a producer of raw materials
into a multi-sector economy. Malaysia’s real gross domestic product (GDP) was grew 5.9% in
2017 compared to last year 2016 which is 4.2% growth. The GDP amount in 2017 was around
RM1, 258,000 million which show Malaysia is number 29 in the ranking of GDP among 196
countries published. It roses around RM59, 784 million with respect to 2016. It shows a
continuous growth in Malaysia’s GDP and expected to be increase in the next few years.
(Trading Economics) According to (AmBank Group chief economist), the estimated multiplier
would be around 0.6 to 0.7 times on average for household which means for every RM1 earned
the amount spend is about 60sen to 70sen. The economic growth has led to a large increase in
consumer incomes and therefore demand, which has attracted our target market(household) have
more purchasing power and willing to spend on renewable energy product.

Demand of consumption on cooking gas for household is extremely high as every household
make use of the cooking gas to prepare food. The usage of liquefied petroleum gas increase s
more and more food produced. The replacement cost and maintenance cost becomes an
economic burden for household and they demanding for some cheaper and convenient substitute
for long term plan. Fuel subsidies are good as it can boost the economy and help economically
deprived Malaysians save up fossil fuel cost. However, Malaysian Government spent about RM5
billion on fuel subsidies in year 2017. Renewable energy and energy efficiency projects instead
of relying on fossil fuel is the right track of developing Malaysia in a sustainable manner. (New
Straits Times) Malaysian location makes it an ideal placed to engage in international trade,
which have advantages for expanding business as Malaysia is the 18th largest export economy in
the world. (Trading Economics)

 Social - economy

Renewable energy is frequently considered as the answer for the world's environmental change
and more extensive natural concerns. The achievement of renewable energy as an alternative
energy source is constantly addressed by its scope and sustainability and the states of mind about
renewable energy appear to be extremely associated with people in general mentalities about
environmental change. The issue of supportability is rising and corporate social responsibility is

3
turning into an expanding worry for all individuals as individuals currently are worried about the
environment effects on their health. Along these lines, governments are attempting to concentrate
more on renewable energy to diminish the cost and to have a clean source of energy for the
world. Thus, numerous individuals presently are more concern about the environment, as they
are trying to save energy by reducing the consumption of petrol by starting to use hybrid car. As
renewable energy keeps on turning into a bigger piece of the energy equation, there will be
increasing focus on its development and utilization. (Deloitte2010) It can be derived that
expanded sustainability and social responsibilities of companies will also help in prompting the
expanded development in the renewable energy sector. It is a good opportunity for the industry
to enter into the market as the government wants to expand the renewable energy industry and
the people are also willing to support the renewable energy industry as it is more environmental
friendly.

 Technological

New and innovative advances are the way to make renewable energies the real energy source for
the world. Without technology we can't push ahead from our present energy production methods.
New technology always creates new challenges and new questions, which is the reason the
renewable energies industry is continually developing. The development of wind and water, the
warmth and light of the sun are all energy sources that can supply our requirements in a
sustainable way. A variety of techniques are utilized to convert these renewable resources into
energy. Every techniques accompany its own particular set of technologies, advantages and
difficulties. New technologies are being produced always to make these strategies more solid and
more effective. Researchers, scientists and engineers are also attempting to make discovered
strategies to work. The technology in renewable energy is in quick improvement. An ever
increasing number of nations are contributing on the generation and advancement of renewable
energy technology. Right now renewable energies are a minor bit of the energy business on the
planet, however that part is expanding each year and its expanding very quickly.

4
Marketing – Research and Analysis

 Market segmentation

Nowadays, the world have a lot of renewable resources that can be use repeatedly or replaced
with it. For examples, oxygen, wastage, solar energy and biomass. Our product is more relevant
with the wastage which is food wastage. It is a backyard appliance that can recycle the food
leftovers and animal manure into gas and the gas can replace with liquid petroleum gas. In
Malaysia, there will have about almost 8000 tons of food wastage per day. As the population
growth increase, we expect that the food wastage will increase while the population increase. For
example, if the population increase by 50%, expect that the food wastage also may increases
about 30% per year. According to Food Aid Foundation- Hayati Ismail, there will be four
segments which is household, night market, food courts and food and beverage. Percentage of
household food wastage is 40%, for the night markets is 25%, the following which is food courts
20% and the last one is food and beverage sectors which is 15%.

 Target Segment

Household will be our target segment which is has the highest percentage of food wastage in
Malaysia. Based on the statistic, household own 40% and we expect that the household will be
our main customer for this product and also will be the highest profit that can earn from the four
segments. For the night market, not most of them will use this product because night market
staller did not work at same place and it will also be a trouble for them by taking the product
from one place to other place. Food courts and food beverage sectors, they maybe will have
supplier of the solid petroleum gas which is cheaper than this product. Because of this reason, we
expect that there will be a low chance that this two segments will buy and use this product. As a
result, target segment will be household which may has higher chance to buy this product from
other three segments. Most of the household are using liquid petroleum gas which is normal
quality and price. Some of the household may using the electronic but it consume a lot of energy
that can increase the electric fees and may not enough power to cook. For our product, the
customer just need to pay one payment only and it is a high quality product which not easy
broken and safety because the product is produce by qualified safety engineer who is a biogas

5
expert. Nowadays household is more care about the kitchen cleanness and using solid petroleum
gas may cause the kitchen easy dirty but out product is totally different. Household just put their
wastage food inside a bin and the product will recycle the wastage automatically into gas and
will not cause any dirty to the kitchen.

 Positioning

High price

Electronic

Low quality High quality

Liquid petroleum gas

Hbiogas

Low price

Based on the price and quality matrix, Hbiogas which is the best product compare with other two
products. Our product has the lowest price and the highest quality among the two products. The
slogan that our company use is “Reduce food waste, generate clean energy” and we will
organized campaign in order to bring awareness to customers.

6
 Market trends

At this century, most of the people they are still prefer using liquid petroleum gas and electronic
product. They might have a same mind that Malaysian will do recycle or trying to reduce the
food wastage but what if everyone also are same. This will be the main reason that the food
wastage increase rapidly in Malaysia as no one are doing recycle. If the food wastage are keep on
increase for a long period, it will not only cause air pollution, diseases as well as it will cause
global warming.

Next, the reason why food wastage is happen is because lack of appropriate planning. One of the
top contributors to food wastage is because of lack of appropriate planning on the consumer part.
Sometimes people buy lots of food without appropriately making plans on when and how the
food will be prepared for consumption. Coupled with the contemporary schedules of work and
appointments, people therefore tend to change food preparation plans or fail to remember using it
on time.

Excess amounts of the food wastage leads to the increase of Methane gas that cause a negative
effect to our planet and cause global warming. As the food wastage problems getting serious, the
awareness of Malaysian want to reduce the wastage are increasing. Therefore, our product will
be their best choice as the aim of our product is to reduce food wastage.

 Basis of Revenue Projections

The target are that we select is Damansara, Selangor which is the second largest district
subdivision in Malaysia with the population 453,420 residents, according to Department of
Statistics of Malaysia. For the first year, we estimate that 0.5% of the residents will buy our
product which is 2200 household. For the first quarter, we are expecting 50 units per month of
our product will be sale and increase to 100units in quarter 2, 200 units in quarter 3 and 300 units
in last quarter. We estimate that revenue in year 2 will increase by 15% and year 3 will increase
by 20%. Furthermore, we sell our product at RM 1000 per unit which include installation fees
and repair and maintenance services. The actual cost of the product is RM600 and our Gross
Profit will be RM400 (40% Margin)

7
 Competition Analysis

In the whole world, there are only 3 suppliers who are selling Biogas for cooking. As for now,
none of them had expanded their product into the Malaysia gas industry. Thus, there is a chance
of this international companies venturing into the Malaysian market. As, currently there is no
direct competitor in Malaysia, we expect that the international company will be our competitor
such as Home Biogas in Australia and Germany. For the Australia Company, they are using the
same product as our product which is Home Biogas but the company will give be giving free
maintenance services for the customer in the first year and also a 2 year warranty period for their
products. This is the main advantage this company has over our company as our company do not
provide maintenance services and only a 1 year warranty period. They would be a strong
competitor for HBiogas is they plan in expanding their product to the Malaysian market.

For the Germany Company which is the supplier of HBiogas, the goods will be cheaper than our
product as they are the manufactures of the product. Therefore, the company can produce biogas
at a lower cost. Besides that, they have also been operating for the past 6 years, thus they should
have enough capital to invest and expand into Malaysia market easily. The exchange rate for
Australia and Germany to Malaysia is about RM3 and RM4.70, It will increase their product
price. For example, Germany sell their product at Euro 250, after the exchange rate conversion
their product will be RM 1,175 excluding tax. The price is far more expensive than our product
as the product cost of our product is RM1,000. This will lower the possibility of customer buying
their product as its quality is the same with our product but with a higher price. With this
justification, we strongly believe that possibility of customer willing to buy our product is higher
than competitors’ product.

8
Marketing mix

 Marketing goals

Increase the number of enquiries and brand awareness from our marketing communications
activities by 20% in the first year. We will set marketing goals to capture 30% of sales in 3 years
times which is measurable and achievable by plans developed to meet business goal.

 Product

Malaysia is slowly becoming a land with tons of food waste produced. HBiogas is a user-friendly
tangible asset which can transform food wastage into clean, renewable cooking gas in order to
replace liquefied petroleum gas which ordinary using by consumers. HBiogas is a local biogas
system company and the first who bring this new renewable energy which from the Germany to
Malaysia. This product ordinarily performed successfully in the market of foreign country with
good reviews. There was significant bottleneck in the supply of energy resources since year 2000
caused energy crisis. It takes hundreds of thousands of years to replenish the stores. It leads to
the growth of green power which is more environment friendly product accepted by consumers
especially household which generate highest level of food wastage in Malaysia. HBiogas able to
meet customer need and demand with an affordable price. Innovation of biogas is a different
alternative for customers other than liquefied petroleum gas that have to replace at every certain
period. It is able to meet government policy which promoting energy saving projects as it is part
of corporate social responsibility.

 Price

Price is the biggest barriers to introduce biogas system as renewable energy in a new market. The
product is priced lower than its perceived value for customer even new technology consists high
cost level. The actual amount to the end user is expected to pay RM1, 000 for each product
according to the size. There will be 40% of margin of sales and 60% are cost of sales. It is an
affordable price for customer in Petalling Jaya area as it is the area with high income level. We
have taken into consideration the government subsidiary, supply and demand of product and any
direct attributable expenses before setting up the price of products. According to research on
(Gas Malaysia), 10kg of liquefied petroleum gas are RM20 on average based on areas before any
consideration in installation and maintenance charges. It has to replace monthly on average

9
which have a high level of cost. Biogas system provide long term cooking gas with a single
payment which able customers to use more than 5 years. The current price in Germany was 650
US Dollar.

 Place

HBiogas will be provided to the customer in Petalling Jaya area with high number of household
which is our target market bringing up sales level. An outlets center set up for any customer who
interested to buy and inquiry information. Samples and videos will be provided in the outlet to
show more details about the techniques to use the biogas system. Products will be displayed in
the outlets and customer can make payment by cash or cards on the spot to ease sales and
transaction process. Customer can visit company website to get more information or make
purchase on it. There will be free on delivery without any charges of transportation fees. The
distribution channel through which the system is sold, is in an area through their work with
installers, developers and suppliers. It helps to build up a stronger supplier network in keeping up
with rising demand and ensure customers can easily find to increases customer’s satisfaction
sales turnover.

 Promotion

HBiogas are operates on B2C market. Online advertisement will be the first way of advertising
method as it is the cheapest way with millions of users every day. For example, advertise on
social media like facebook and youtube can effectively increase the visibility of HBiogas and
broaden the appeal of this system to Malaysian. Since we are targeting household as our target
market, advertisement on television have great impact on household as well. It ensures the right
message and create environment awareness are presented to the public and build a strong market
for the technology of biogas system. We are using communications and promotional strategies to
favorably present biogas in the markerplace by giving 20% of discount on the first purchase of
any biogas system product from the shop and give away event from sponsorship will be organize
in the outlets in the first launching 3 months of product. Free on maintenance fees on the first
year purchase to attract customers.

10
Operations

 Business Premises

HBiogas will be leasing a warehouse located at Petaling Jaya. The office space is leased and will
accommodate the necessary office equipment such as computers, fax machine, photo copier, and
other equipment. This facility will be used as an office and also a storage area for our products.
The office will be located at the top floor and the warehouse will be located at the ground floor.
It can accommodate up to a maximum of 200 products. The office space is 13,000 square feet.
These facilities will be leased at RM9,000 per month. RM6,000 would be for the ground floor
and RM3,000 for the top floor.

HBiogas has selected this location is because it is located in the area with the highest density of
our targeted customers. Thus, this location would be the perfect place to set up our business
premises as customers all around the area will find it convenient as its only 5-15km radius away
from them. In addition, HBiogas will require to renovate and equip the business premises with
certain equipment which would help in increase work effectiveness, professionalism and it will
also prepare the business to achieve its targeting forecast.

 General Operating Hours

HBiogas will be operating from Monday to Friday from 8:30 am to 9pm. HBiogas will be
operating a year round with no off days on festive seasons.

 Operational Workflow

The operational workflow of the HBiogas is very simple to follow. The following is a step by
step workflow of HBiogas business operational flow:

Step 1 HBiogas would get orders from customer through our online website or from our business
outlet located at Petaling Jaya. Online customers will need to make payment through our online
paying system. If the customers were walk-in then the customer will have an option to pay with
cash or debit/credit card.

11
Step 2 Once, payment has been made, if the customers require delivery to the premises, our
staffs would pick the products from our warehouse and transfer it into the van for delivery. If the
customers are walk in our staffs would pack the product and pass it to the customers.

Step 3 The delivery staff would then go to the customer premises to help in assembling the
product and also give the customer a brief explanation on how the product works and how to
operate the product.

The above business operational workflow is quite simple and easy to understand. HBiogas will
be accepting cash, cheque and also debit or credit card payments. These payment methods is
standard within the industry.

 Personnel

HBiogas will employ 1 Senior Technicians for the servicing and repairing of the product. Mr.
James will be senior technicians of HBiogas. He has a degree in engineering and a work
experience of 5 years in the engineering industry. He fits the jobs as he has a wide knowledge on
the products, thus would be very helpful in solving problems of the products. Besides that,
HBiogas will also be employing 2 Junior Technicians to help on the senior technician of the
company. The Junior Technicians job will be more to the assembling of the product. The cost of
the Senior Technician will be RM2,000 per month and for the Junior Technicians will be
RM1,500 per month.

 Main Supplier

Home Biogas 2.0 would be our main supplier for our products. Home Biogas 2.0 is a German
company producing Biogas for cooking with the utilization of food waste. They have been in the
industry for the past 6 years and have established a good reputation in Germany. They are
reliable as they have a huge company with a huge client base. Home Biogas 2.0 can be contacted
through e-mail or by their landline. Their e-mail address is support@Homebiogas.com and their
landline number is +1-541-754-3010. We will be only importing our products from Home
Biogas 2.0 as they are currently the best company in the market.

12
Management

 Management team

The management team of HBiogas is capable in developing biogas system from development to
operation and beyond. Leong Hoh Mun was general manager of HBiogas which was the creater
of HBiogas. He was graduated from Tunku Abdul Rahman University College, Bachelor in
accounting in year 2017. He had been participated internship in Ernst & Young, audit and
assurance department. His half year intern career built a good leadership and understanding in
vary businesses improve skills in functioning an organization for example strong communication
skill.

Ong Kok Yew is the manager of human resources department of HBiogas which responsible for
day-to-day operations and structuring the business. He was graduated from Tunku Abdul
Rahman University College, Bachelor in accounting in year 2017. He had been participated
internship in Deloitte, audit and assurance department. Have proper knowledge in employee’s
benefits and rights, organizational assessment and good labor relations after experience of
supervisor in part time job.

Tee Kok Chung as manager of accounting department of HBiogas, responsible for the financial
and consulting roles. He was graduated from Tunku Abdul Rahman University College,
Bachelor in accounting in year 2017. He did his internship in Grant Thornton, audit and
assurance department. He established his finance strategic leadership in accordance with the
company’s long range goals, plans and policies. He has a 2 year experience as a part time
accountant in his brother’s company with proper accounting knowledge.

Yap Kok Chin works as the manager of marketing department of HBiogas who leads on
coordinating the sales and marketing department. He graduated from Tunku Abdul Rahman
University College, Bachelor in accounting in year 2017. He did his internship in KPMG, audit
and assurance department. A creative person, who participated in events during his college
period as a planner and is also sensitive in to market trend.

13
Manager of sales department will be Murayysn. He graduated from Tunku Abdul Rahman
University College, Bachelor in accounting in year 2017. He did his internship in KPMG, audit
and assurance departments. He plays an important role to achieve growth and hitting sales targets
by successfully managing the sales team. Designing, implementing and monitoring of sales. He
was a debater during college, with excellent communication skills and negotiation skills which
will be able to help company to hit its sales target.

 Legal Structure

HBiogas will be setup as a company limited by shares HBiogas Sdn Bhd (Sendirian Berhad) in
legal form in accordance to the Malaysia Company Act 2016 and Malaysian corporate tax for
accounting purpose in the financial plan. Liabilities of company’s members limited to the
amount unpaid on the share held by members. Members will enjoy limited liability and they are
not liable for the debts of the company.

 Organization chart

General Manager- Leong Hoh Mun

HR’s Accounts’ Marketing’s Sales’s

Manager- Manager- Manager- Manager-
Ong Kok Yew Tee Kok Yap Kok Chin Murayysn
Chung

Expert Expert

Technicians (Expert) qualification

Company is going to hire 2 technicians that having degree in engineering in local or foreign
university or technical schools with sufficient technical skills for installation and maintain the
products. 5 years’ of work experiences in relevant industry are required. Able to cope with stress
and coordinate jobs with members

14
Financial

 Financial Summary and Highlights

HBiogas Sdn Bhd required initial capital of RM500,000 which RM250,000 will be contributed
by all of our 5 team members in the form of buying the shares of HBiogas Sdn Bhd and balance
RM250,000 will be finance by loan.

During first year, there will be profits of RM166,567 and business are making losses from
starting January 2019 until Jun 2019. HBiogas turns profitable when comes to July 2019 and the
breakeven point achieved at some point in the Oct to Nov 2018 period. In year 2 and year 3,
there will be RM276,216 and RM455,755 of Net Profit and every month are expected making
profits.

In the 3 Years Cash Flow Forecast, there are no any cash deficiencies. However, there will be
cash of RM1,187,518 expected in the end of Year 3. It is a huge amount of the cash and
company might loss the value of the money due to inflation. Therefore, HBiogas will consider
new investment by utilizing the cash surplus.

 Net Profit Margin

Net Profit Margin of 8.54, 12.32, and 16.26 in Year 1, Year 2 and Year 3 respectively. It show
that every RM1 of revenue will generate 8.54%of the net profit to the investor in Year 1. Net
Profit Margin increased by 44.26% in Year 2 and 32% in Year 3. It also indicate that HBiogas
are improving their efficiency in the sense that improving their sales revenue and reducing their
operating expenses.

 Return on Investment

Return on Investment is constantly 40% in 3 years’ time. It is good indication for the company as
RM1 of investment will generate 40% of income for the shareholders. In other words, company
is able to utilize their funds to purchase assets to generate 40% of income to the company as well
as benefit shareholders. Based on the forecast, ROI remain unchanged in 3 years’ time despite
the net profit is increasing mainly due to the cumulative retained earnings. It mean that HBiogas
Sdn Bhd retained their profit for future investment without reducing the return on investment for
the shareholders. It is a very good indication that HBiogas will perform better in future.

15
 Debt Ratio

Total Liabilites are 34% to the Total Assets. It mean that each RM1 of Assets can be used to pay
off RM0.34 liabilities. It indicate that HBiogas is solvent in Year 1 and the liabilities level will
be reduceto 21% Year 2 and 12% in Year 3. It show HBiogas have low financial leverage and
less riskly for investors to invest as the level of liabilities are not high and there are enough of
assets to be cover the liabilities.

 Debt to Equity Ratio

In Year 1, 52% of Debt to Equity Ratio indicates HBiogas financing structure are more relying
on external financing (Bank Loan) rather than internal financing (Equity). Investor might refuse
to invest in HBiogas as higher Debt to Equity Ratio will carry higher finance risk to the company.
However, interest expenses on bank loan are actually tax deductible and therefore can reduce the
cost of capital of the company. Besides, Debt to Equity Ratio also decreasing to 27% and 14% in
Year 2 and Year 3 respectively. It indicates that HBiogas' s financial risk are reducing from Year
2 onward and it is expected continuing decrease in future as it will bring lesser risk to the
investor.

16
Potential Risk

1) Foreign Exchange Risk

As all the products of HBiogas will be imported from Germany, HBiogas will need to purchase
those products in Euro which is the currency of Germany.As currency has the possibilities to
fluctuate, the cost consented to the supplier could rise or decline if the exchange rate changes.
Although Malaysian Ringgit has been settled against Euro in the course of recent months, this
pattern may not proceed. There is dependably a probability of Euro strengthening against
Malaysian Ringgit relying upon each nation's monetary and political elements. As such, there is
a risk of HBiogas losing about 5% of its revenue to currency exchange fluctuation.

2) Customer Acceptance

Items are produced to meet a particular need or want. Just because there is a demand in Germany
and European nations for the Biogas item, this doesn't imply that demand is widespread all
around the world. Different nations have diverse societies, innovation, social economy and
different political condition. Countries may have no enthusiasm for a specific product or service
that is offering admirably in different countries. New innovation like Biogas may not be
acknowledged by the general population of Malaysia, as it is an entirely new item to them.
Individuals in Malaysia would not know about HBiogas, hence making them to not have faith in
the effectiveness and advantages of the item. There is an immense hazard that the general
population of Malaysia may not acknowledge HBiogas as their new wellspring of energy source
for cooking.

3) Sole Sourcing

While utilizing a sole supplier as the primary hotspot for buying principle items in your business
can have benefits, there are possibly exorbitant disadvantages to consider too. Sole supplier has
the risk of rising its product cost quickly without informing its purchasers on the increase of
price. This would risk HBiogas from huge losses if there is a sudden increment it the product
cost. There is likewise a risk that the sole supplier leaves business or is assumed control by
another organization which could hurt HBiogas. Existing contracts may not be satisfied, and
HBiogas may end up entangled in costly legal action to attempt and recover lost venture. In the

17
event that another organization assumes control and grabs existing supply contracts, there's no
guarantee HBiogas will get precisely the same product price and quality the first supplier gave.

Solution for Potential Risk

1) Currency Forward Contract

Huge bank offer currency forward contracts, which are basically a consent to trade certain
amounts of Malaysian Ringgit to foreign currency on a future date. This enables you to secure an
import purchase at the present exchange rate, ensuring your exchange at the agreed price.
Obviously, if the Malaysian currency fortifies subsequently, you can't benefit from it since you're
bolted into an exchange rate. In any case, you have shielded your business from the danger of a
debilitating Malaysian Ringgit. Therefore, this would help HBiogas in reducing its losses in
currency exchange fluctuation by exchanging currency on a future date with the current
exchange rate.

2) Customer Acceptance

In order to solve the risk of the people in Malaysia not accepting HBiogas as their new source of
energy for cooking, HBiogas should conduct free talks or programs to educate the people in
Malaysia on the benefits of the product and the effectiveness of the product. HBiogas should also
promote the product to the Ministry of Energy, Green Technology and Water of Malaysia, to
spread awareness about how HBiogas would reduce food waste in Malaysia and at the same time
provide clean renewable energy to the people of Malaysia. HBiogas should also advertise the
product widely around the targeted location to spread knowledge on the products. By doing this,
the people of Malaysia would get a brief understanding and knowledge about Biogas, increasing
the chances of our product being accepted by them.

3) Sole Sourcing

HBiogas should ensure that the contract with the supplier is tightly drafted with terms that
incorporate the maximum percentage of price change within 2 years such as the supplier can
only increase its product price by 10% in every 2 years. This would limit the supplier from rising
its product price within a brief timeframe. HBiogas should also source an alternative reliable
supplier just in the event that the present supplier escapes business or goes bankrupt. HBiogas

18
ought to guarantee that the agreement with the present supplier is firmly drafted to avoid any
situation where HBiogas will not be able to change its sole supplier. This would reduce the risk
of HBiogas from ending up in massive losses when the sole supplier goes bankrupt or ceases
business.

Implementation Plan (Milestone Schedule)

 Deadlines and milestones Table (Pre-Operating Period)

Due date Duratio Who’s Details

Milestones n Responsible
Logo Design, 15 Sept 2018 15days General Designing Logo and
Objective Manager Discuss for company
mission and vision

Marketing, 30 Sept 2018 15 days Marketing Discuss about 4P such as

Location selection Manager pricing strategy,
promotion plan and etc

Register Business 10 Oct 2018 10 days General Register Business and

and Obtain license Manager Obtain Business License
Secure funding for 31 Oct 2018 1 Finance Secure funding for the
the project month Manager business ensure there are
enough working capital

Market Survey for 10 Nov 2018 1 Marketing Market Survey for

our product month Manager research on customer
acceptance.

Purchasing Office 10 Nov 2018 10 days General Purchase of Fixed Assets

Equipment, Manager such as Computer,
Machinery Machinery and Fitting
and Furniture.

Recruitment and 30 Nov 2018 20 days Human Recruitment and Staff

Staff Training Resource Training for installation
Manager and maintenance service.

Pre – launch 31 Dec 2018 1 month Marketing Launching an event for

advertising Manager free trial and promotion
price for I month period.

Launching 1 Jan 2019 - Start Operating Business.

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 Deadlines and milestones Table (Operating Period)

Due date Duratio Who’s Details

Milestones n Responsible
Online sales 31 Jan 2019 31 days Sales Manager Implement Website that
ordering website allow customers to make
implementation order through online.
Advertising on 31 Mar 2019 61 days Marketing Advertising on social
social media Manager media such as Instagram
program and Facebook for 2
months period.

Review monthly 30 Apr 2019 30 days General Review monthly sales

sales report Manager & report and quarterly
compare with Sales Manager income statement report
expected and compare with
budgeted result.

Promotion for free 31 May 31 days Marketing Organized an event of

trial 30days 2019 Manager free trial of 30days for
program our product to bring
more awareness to
customers.
Review monthly 30 Jun 2019 30 days Finance Review past few months
profit & Cashflow Manager profits and make
projection necessary adjustment to
forecast cash flow
projection and budget.

Customer 30 Sep 2019 90 days Sales Manager Asking Customer

feedback and feedback in order to
improvement plan improve our product and
program services. Improve
customers’ satisfaction
also help improving
reputation of company.

After sales service 31 Dec 2019 90 days Sales Manager Provide free
(Repair service ) maintenance service to
the customers.

20
 Gantt Charts for deadlines and milestones. (Pre-Operating Period)

 Gantt Charts for deadlines and milestones. (Operating Period)

21
Reference

New Straits Times, 2018

https://www.nst.com.my/business/2018/05/374468/higher-oil-price-makes-fuel-subsidy-less-
viable
Viewed on 3 August 2018

Trading Economics, 2018

https://tradingeconomics.com/malaysia/gdp
Viewed on 3 August 2018

Abdul Qayyum, J., & Navshed, N, Malaysia’s Taste for Waste, 2010
http://poskod.my/features/malaysias-taste-waste/
Viewed on 5 August 2018

Export Government, 2018

https://www.export.gov/apex/article2?id=Malaysia-Oil-and-Gas-Equipment
Viewed on 7 August 2018

Home Biogas, 2018

https://homebiogas.com/how-homebiogas-works/
Viewed on 7 August 2018

Star2 Online, 2017

https://www.star2.com/food/2017/10/16/malaysian-food-waste-facts/
Viewed on 7 August 2018

Chalak, A., Abou-Daher, C., Chaaban, J., & Abiad, M. G, Waste Management, 2016
http://doi.org/10.1016/j.wasman
Viewed on 7 August 2018

22
Chien Bong, C. P., Ho, W. S., Hashim, H., Lim, J. S., Ho, C. S., Peng Tan, W. S., & Lee, C. T,
renewable and Sustainable Energy Reviews, 2016
http://doi.org/10.1016/j.rser.
Viewed on 10 August 2018

Malaysia Kini, Battling food waste, 2018

http://www.malaysiakini.com/letters/359487
Viewed on 10 August 2018

Accounting Verse, 2018

https://www.accountingverse.com/managerial-accounting/fs-analysis/financial-ratios.html
Viewed on 15 August 2018

My Accounting Course, 2017

https://www.myaccountingcourse.com/financial-ratios
Viewed on 15 August 2018

Science Daily, 2017

https://www.sciencedaily.com/terms/renewable_energy.htm
Viewed on 15 August 2018

Hearst Newspaper, 2018

https://smallbusiness.chron.com/challenges-company-face-developing-new-products-global-
economy-70701.html

Viewed on 16 August 2018

PNGLC, 2018

http://pnglc.com/5-international-shipping-risks-that-importers-face/
Viewed on 16 August 2018

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APPENDICES

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