PIEZOELECTRIC

ALARM SYSTEM

For the course

MGT1022: Lean Start-up Management

By

SAURABH KUMAR PANDEY 16BCM0071

Under the guidance of

Dr. Soumen Pal
School of Mechanical Engineering
TE2 Slot

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Contents
i) Objectives- ......................................................................................................................................................................................3
ii) Mission and vision-........................................................................................................................................................................3
iii) Keys to Success- ...........................................................................................................................................................................4
iv) Start-up Cost and Funding ............................................................................................................................................................4
v) Company Ownership ...................................................................................................................................................................4
vi) Market ...........................................................................................................................................................................................5
vii) Strategy ........................................................................................................................................................................................5
viii) Management ...............................................................................................................................................................................5
ix) Financials .....................................................................................................................................................................................5
x) Investor Considerations ............................................................................................................................................. 6
2) Company Summary-....................................................................................................................................................... 6
i) Start-up Summary- ..................................................................................................................................................... 6
ii) Start-up funding- ....................................................................................................................................................... 6
iii) Company Ownership-............................................................................................................................................... 7
3) Products and Services ..................................................................................................................................................... 7
4) Market Analysis Strategy ............................................................................................................................................... 7
i) Market Segmentation.................................................................................................................................................. 8
ii) Target Market segment strategy................................................................................................................................. 9
5) Strategy and Implementation summary. ....................................................................................................................... 10
i) SWOT analysis. ....................................................................................................................................................... 10
ii) Competitive Edge .................................................................................................................................................... 10
iii) Sales and Marketing Strategy: ............................................................................................................................ 10
iv)Marketing Strategy:- ................................................................................................................................................ 11
v) Sales Forecast .......................................................................................................................................................... 12
vi) Milestone ................................................................................................................................................................ 13
vii) Pricing Strategy .................................................................................................................................................. 13
viii) Sourcing Strategy: ................................................................................................................................................ 13
ix) Location and Facilities: .......................................................................................................................................... 13
We will be accounting inventory by Last-In, First-Out (LIFO) method: ................................................................ 15
6) Management Summary ............................................................................................................................... 15
7) Financial Plan .............................................................................................................................................. 17
i. Break Even Analysis- .......................................................................................................................... 17
ii. Projected Profit and Loss .................................................................................................................. 19
iii. Projected Cash flow- ........................................................................................................................... 21
iv. Projected Balance Sheet ...................................................................................................................... 23
v. Business Ratios- .................................................................................................................................. 24
vi. Long-Term Plan: .................................................................................................................................. 29
vii) Important Assumptions: ........................................................................................................................ 29
1.Risks .................................................................................................................................................... 29
2.Entry Strategy: ..................................................................................................................................... 30
3.Investors Interest: ................................................................................................................................. 31
4.Exit strategy: ........................................................................................................................................ 31

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 BUSINESS PLAN

1) Executive Summary
The main purpose of this plan is to get an additional fundingof 40,00,000 from investors and the
banks in investments and loans, which would be used to cover the startup costs. It will show how
we would be utilising the investments and what kind of return can be expected after a period of
time.
An investor and co-owner are welcome to participate in the company's capital for the
amount of Rs 20,00,000 and could be offered a portion of 33.33 percent ownership of the Rs
60,00,000 company capital.
We analyze the important risks and benefits of the investments to keep a check(balance)on both of
these things.

We do understand that any investor in our startup would need an exit strategy to be on the safer side
if something were to go wrong. So, we want to provide the best way for them to protect their
business interests.

There are several options that would be discussed as alternative methods for the investors to
liquify their money and get back the returns on their investment. These options are discussed in the
final section of this business plan.

i) Objectives-

• To acquire a minimum of 200 clients per month in the first year of operations
• To offer our customers excellent security services, at a cost effective and customer
friendly service, measured by minimum of 7% annual growth, and less than 0.5%
customer complaints.
• To generate positive cash flow from operations, and entering into profits in the first
year.

ii) Mission and vision-

The mission of our company is to provide best security service in India with cost and
customer-friendly service. We will come with different innovations and products that strive
to make not only our country but world a better and safer place.

Our company will use all of its resources and man power to provide each customer with a
three part customer experience i.e service product, service environment, and service delivery
each part of which will meet or exceed our customers expectations.

Our Vision is to become the first choice for the people in the security sector and a respected
company as measure by our customers, our employees, our shareholders and the community
we live in.

Our values are critical to our success and those are-

• Performance excellence
• Teamwork
• Integrity

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iii) Keys to Success-

Our key to success in the security industry is the innovative and different approach we are
trying to apply to different types of security needs. We provide a second layer of security to
homes, private vaults or constructs that need that extra layer of safety. This system can be
put on it’s own i.e., it does not need to be connected to the main security systems. This
product also has an advantage over digitized security systems that it cannot be hacked in the
traditional way and thus is less vulnerable than standard systems.

iv) Start-up Cost and Funding

Businesses spend money before they ever open their doors. Startup costs are those expenses
incurred before the business is running.
After spending several months searching for a convenient location, we decided to lease a
commercial space in a lightly populated area of NOIDA (UP). The start-up capital will be used
for legal expenses, machines and equipment, packing and other materials, insurance, rent,
promotion, business sign, and inventory on hand at start-up, as detailed in the company
summary section of this plan.

We have estimated total start-up costs of Rs 80,00,000. The company capital will be Rs 60,00,000.
H. N. Pandey (owner of Hotel Prince Palace) and Ashok Jain (owner of Jain Medicals), as co-owners,
will provide the bulk of start-up financing in the amount of Rs 40,00,000 (Rs 30,00,000 and Rs
10,00,000 with percent of 37.5 and 12.5 ownership each respectively). Approximately Rs 40,00,000
additional funding is needed. The purpose of this business plan is to secure financing for that amount.

An investor and co-owner are welcome to participate in the company's capital for the amount of Rs
20,00,000 and could be offered a portion of 33.33 percent ownership of the Rs 60,00,000 company
capital. The funds provided by the investor will be used to buy equipment, and to cover part of the
start-up expenses.

For the remaining Rs 20,00,000 additional financing needed to cover the start-up costs, the
company plans to receive a five-year term commercial loan facility which will meet the cash flow
requirements. The borrowed funds will be used exclusively to buy equipment, based on the list that
will be made available to the lending institution. The loan could be repaid in equal monthly
instalments over a five-year period.

v) Company Ownership
SKP Piezotronics India pvt. Ltd. will be a privately held C-corporation owned in majority by H.N.
Pandey A new investor will be invited to participate in the company's capital.
At the time of formation, SKP Piezotronics India pvt. Ltd. plans to issue 800 shares of Rs 7500 par
value common stock. The issued and outstanding common stock would be Rs 60,00,000.
H. N. Pandey would receive 400 shares, at Rs 7500 par value and Ashok would receive 134 shares,
at Rs 7500 par value. Their total contributed capital would be Rs 40,00,000 as stated above.
In return for investing Rs 20,00,000 in the company's capital, the new investor would
receive 266 shares at Rs 7500 par value, or 33.33 percent ownership. The new investor
would be invited to discuss the quantity and quality of the stock to be issued, before the
incorporation procedures are started.

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vi) Market
The Noida City is a growing low-to-middle-class area, counting more than seven million residents.
There are about five hundred businesses close to our location. Most of these residents are families of
three or more.
With continued growth in the area, opportunities to serve the Local residents will increase. The
company will sell to individuals.
The main market segments are: a) individuals (retail customers) accounting for more than 40 percent
of our sales, and b) local businesses (corporate customers) which, in terms of purchase orders,
typically make larger orders for their firms and business needs.

Aim of Our Marketing Strategy Would Be To: -

• Increase sales
• Bring in new customers
• Get existing customers to buy more
• Introduce a new product or service
• Increase market share
• Better establish our brand value
• Improved customer loyalty
• Launch an advertising campaign
• Encourage positive word of mouth
• Retain existing profitable customers
vii) Strategy
Being the future of the security system, we will face a lot of competition. There are many competitors
in market at present with good strategy and flourishing business. Our strategy is based on delivering
a strong customer value proposition in a niche market. We are looking to offer the Noida city and its
surrounding areas a new choice in security services.
We are building our marketing infrastructure so that we can eventually reach more customers with
the same product. We focus on satisfying the needs of low-to middle class residents and companies
located inside or outside the India.
viii) Management

Our management is expected to use resources wisely, operate profitably, pay debts, and abide by laws
and regulations. Our management philosophy is based on team work, responsibility, and mutual
respect. People who work at SKP Piezotronics India pvt. Ltd. would want to be part of our team
because we operate in an environment that encourages creativity, diversity, growth, and performance.
H.N. Pandey will be the M.D of SKP Piezotronics India pvt. Ltd., assisted by his friend, ### will be
GM. Both of them have successfully owned and operated a business in India, they have more than
seventeen years relevant experience in the industry and hold various degrees and certificates in
management and hospitality.
ix) Financials
For our company SKP Piezotronics India pvt. Ltd. our main financial objectives include
a) Determining the Capital Requirements
b) Cash Flow
c) Policy Framing
d) Comprehensive risk management plan
e) Tax reduction Strategy

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We also need to set our main business objectives like profit maximisation, sales maximisation,
increasing our market dominance.
So, for our SKP Piezotronics India pvt. Ltd. we are not sure that the current year’s burglar alarms
are going to turn a profit and what we need to measure the number is the of units we will have to
produce and sell. And in order to cover our expenses and make at Rs 500,000 in profit. We had to
produce and sell 2,500 units to cover the company expenditures and had to produce 3,500
units in order to meet the company’s profit objectives.

x) Investor Considerations
As we are just starting out as a company and we cannot provide proof of collateral or a revenue
stream, we cannot rely on the banks to be able to provide us with the money we need.
First of all, we would be looking for seed funding that would allow us to atleast start production.
Then we would consider approaching angel investors as we already would have passed the seed
stages of financing, but we are not ready to seek out venture capitalists who would only invest in us
when we start to show a significant amount of revenue.

2) Company Summary-

i) Start-up Summary-

After extensively searching and brain-storming for the location of our company, we selected
Noida(U.P) as location for our company. The start-up capital will be used for legal expenses,
kitchen inventory and equipment, packing and other materials, insurance, rent, promotion
and business sign, and inventory on hand at start-up.

ii) Start-up funding-

We have estimated total start-up costs of Rs 80,00,000. The company capital will be Rs
60,00,000. H. N. Pandey (owner of Hotel Prince Palace) and Ashok Jain (owner of Jain
Medicals), as co-owners, will provide the bulk of start-up financing in the amount of Rs
40,00,000 (Rs 30,00,000 and Rs 10,00,000 with percent of 37.5 and 12.5 ownership each
respectively). Approximately Rs 40,00,000 additional funding is needed. The purpose of this
business plan is to secure financing for that amount.
An investor and co-owner are welcome to participate in the company's capital for the
amount of Rs 20,00,000 and could be offered a portion of 33.33 percent ownership of the Rs
60,00,000 company capital. The funds provided by the investor will be used to buy
equipment, and to cover part of the start-up expenses.

For the remaining Rs 20,00,000 additional financing needed to cover the start-up costs, the
company plans to receive a five-year term commercial loan facility which will meet the
cash flow requirements. The borrowed funds will be used exclusively to buy equipment,
based on the list that will be made available to the lending institution. The loan could be
repaid in equal monthly instalments over a five-year period.

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iii) Company Ownership-

SKP Piezotronics India pvt. Ltd. will be a privately held C-corporation owned in majority by
H.N. Pandey A new investor will be invited to participate in the company's capital.

At the time of formation, SKP Piezotronics India pvt. Ltd. plans to issue 800 shares of Rs
7500 par value common stock. The issued and outstanding common stock would be Rs
60,00,000.

H. N. Pandey would receive 400 shares, at Rs 7500 par value and Ashok would receive 134
shares, at Rs 7500 par value. Their total contributed capital would be Rs 40,00,000 as stated
above.

In return for investing Rs 20,00,000 in the company's capital, the new investor would
receive 266 shares at Rs 7500 par value, or 33.33 percent ownership. The new investor
would be invited to discuss the quantity and quality of the stock to be issued, before the
incorporation procedures are started.

3) Products and Services

SKP Piezotronics India pvt. Ltd. will manufacture Burglar alarms using piezoelectricity for security
services. The piezoelectric sensor(s) will convert any mechanical vibration into electrical variation.
As it doesn’t sense sound from a distance, it avoids false triggering. The sensor can be fixed on a
door, cash box, cupboard etc. using adhesive. It is connected to an output signal LED or alarm or

both via a wire. So, when someone knocks on the door, the piezoelectric sensor generates an electrical
signal and prevents the burglary.

i) Being the future of the security system, we will face a lot of competition. There are many
competitors in market at present with good strategy and flourishing business.

Our counterparts in the manufacturing industry are:

• KKNTECH
• DIGISOUND
• MOFLASH
• IMO
At present these companies are well known for the security systems. In order to tackle to these
companies and make our space in the market we need to have a strong marketing strategy.

4) Market Analysis Strategy

Segmentation and Targeting: This is the process of dividing the market into subsets of consumers
with common needs or characteristics.

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i) Market Segmentation
We will split our existing and targeted customers into groups and sub groups, according to what
they need from our business - which will definitely differ. Some on them will focus on cost-
effectiveness, some quality, some great customer service, and so on.Therefore, we will advertise
for them accordingly.

We will divide the market on the basis of their social class,

social status, cultural and economical background,crime rate
of particular regions, etc.

For our product, i.e. Piezometric alarm system,the main

segments we will target are:-

Building management companies generally install

surveillance equipment and employ security guards to monitor
that equipment, to staff front desks and security checks, and
sometimes for general patrol and our technology would help to avoid any trespassing
in restricted areas.
Established Security Firms : We will provide our piezoelectronic alarm to these as a surveillance
equipment which would help us to make a name initially in the market and will be the major source
of sales in the initial days.
• The rich aristocratic people who need private security for their homes and other
properties. They are the highly influential people who have high priorities in the
society.
• Places where the crime rate is very high. These are the places where we will find most
of the middle class people, hence they need low cost security measures to keep their
households safe.
• Places of national strategic importance like ISRO, DRDO, RBI and classified
government organizations.
• Top private security solution firms and consultants which can provide security
measures for the above mentioned segments.
Large retail businesses use security guards to avoid theft and to provide safety. These
include departmental stores as well as other retail stores over 4,000 square feet,
although some smaller stores may use security guards if they sell high-priced items
(designer fashion, jewelry, technology, etc.) and at night when they are closed our
technology could help them to avoid any burglary.

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After dividing the market, we will target these segments to pursue. The targeting will be done
according to the socio-economic status of various classes in the society.

ii) Target Market segment strategy

After dividing the market, we will target these segments to pursue. The targeting will be done
according to the socio-economic status of various classes in the society.
Hence, the segments will be targeted with the following schemes:-

Our firm will target the above mentioned institutions initially like building management companies ,
retail businesses etc. All segments require ongoing security vendors and are eager to establish a long-
term relationships. Once relationships are established then by good customer service, quality
assurance, and competitive pricing we can ensure that the relationships are retained and that the
security provider is considered a true partner in the protection of the building or businesses' assets
and people and that is how we are going to develop our brand value via these targeted segments.

Also we develop a distinct image for our product in the mind of the consumers that we will do by
Communicating the benefits of the product, rather than its features. Also, we will Communicate a
Unique Selling Proposition of our product.

To sell our product effectively we will utilize the following strategies:

1. We will conduct workshops which demonstrate the need of security in any household or society.
2. Bringing awareness to the consumers by means of ad campaigns.
3. Giving live demonstrations to the security firms via trial runs.
4. Reaching out to the organization whose utmost priority is security and tell them about our
product.
5. In order to attract more companies, we will provide high class security equipment along with free
servicing of our product for a year.
6. We will keep ties with insurance companies to help the security firms and the consumers claim
their insurance efficiently if there has been any theft of property which were protected by our
product.
7. To help and support any need or query of the consumers there will be a fully responsive
customer care service which will provide immediate response or any technical help required via
telephonic calls and online chat.

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5) Strategy and Implementation summary.
i) SWOT analysis.

ii) Competitive Edge

In today’s crowded market, people will not buy the product if it is mimic of some other
product. Thus, our product has to be original and stand apart from others. Our product is compact in
size and has a robust design making it different from many existing security systems.

Our product is a focused on the security systems. Thus, it is a reliable and an efficient
product. Being user friendly, this product can be used in every household to keep their houses safe.
The main competitive edge given by our product is the use of Piezoelectric Technology. It is a green
source of technology that converts the mechanical energy (in form of pressure) into electrical
energy.

Moreover, it is very sensitive and responsive in nature. Thus the alarm switches on as soon as
some pressure is applied to it without any delay.

iii) Sales and Marketing Strategy:

Aim of Our Sales and Marketing Strategy Would Be To: -
Increase sales
Bring in new customers
Get existing customers to buy more

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 Introduce a new product or service
Increase market share
Better establish our brand value
Improved customer loyalty
Launch an advertising campaign
Encourage positive word of mouth
Retain existing profitable customers
Make customers feel more valued

iv)Marketing Strategy:-

1. Research - There is mainly two type of research analysis that could be done for marketing.

a. Quantitative Research: This includes experiments, survey techniques, and observation etc.

b. Qualitative Analysis : Generally it is done for small sample size and the data is more reliable. It
consists of depth interviews, focus groups, metaphor analysis, collage research, and projective
techniques.
2 . For more detailed customer research. Then we will:
⚫ Segment them: split our existing and targeted customers into groups and sub groups, according
to what they need from our business - which will definitely differ. Some will want cost-
effectiveness, some quality, some great customer service, and so on. Therefore, we will advertise for
them accordingly.

⚫ Positioning: how we compete to our competitors for each of our customer’s segments like are
you the fastest, do you have the best customer service, are you the third most popular, and so on.

I. We will first carry out a detailed customer research. From the customer research we will get to
know what the consumers demand right now.
II. We will then start making the prototypes of the product with the required specifications and
testing phase will begin. The testing will be a crucial phase for us.
III. After the testing has been done the production of the product in limited quantity will start (say
50). These 50 systems will be distributed to the selected consumers. These will be called as test
samples.
IV. Once the customers have used our product we will collect their review and ask what problem
did they face.
V. For each and every problem we will analyse it using the Fish bone diagram / Ishikawa Diagram.
This will help us eliminate all the root causes to a problem.
VI. Once this is done the large-scale manufacturing will start.
VII. Meanwhile we will project or product to be most economical in terms of money, energy saving
etc.

Our Marketing Strategy Will Cover These Four P’s For An Effective Market Strategy:
• Product: The goods and/or services offered by a company to its customers.variety, quality,
design, features, brand name, packaging, services.
• Price: list price, discounts, allowance, payment period and edit terms.

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 • Place: channels, coverage, assortments, locations, inventory, transportation as well as
logistics
• Promotion: advertising, personal selling, sales promotion, public relations.

UNIQUE SELLING PROPOSITION [USP]: In order to have a leading age from our competitors
we will be coming up with USP in which we will advertise what our product can offer that no other
product or business can. People will be attracted to our product because it is a new type of
technology which is self-sufficient and reliable enough. Also, the customers don’t need a major
space for the installation of the product.
Our tactics will be to attract customers based on the name of “Green Energy” which will be better
towards environment.

v) Sales Forecast

Forecasting is a technique used to predict the future. Sales forecast is the method of estimating the
future sales of our product. Using sales forecasting technique we will come to know how much our
sales people will sell the product daily, weekly, monthly and yearly. Moreover it will allow us to
witness the issues which the customers might face if our sales go down.
There are various number of techniques used for the sales forecasting method.

The best and the most efficient way for sales forecast is Multi-Variable Analysis. It uses predictive
analytics and incorporates several factors like average sales cycle length, probability of closing
based on opportunity type and individual representative performance.

In this method the quality of sales representatives is determined. Using this information, we will be
able to find out the quarterly sales forecast of our product. This information will be transferred to the
production unit which will analyze the quantity of product required to make. Also, it will also tell us
how much profit or company will earn on the quarterly basis.

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vi) Milestone

Given Below is the timeline for our business. It depicts how much our business will grow over the
years. It is clear indication of our targets in the coming years that we aim to achieve.

vii) Pricing Strategy

It is the method where we fix or assign the price to our product. Not only the base price of the
product is set, the pricing strategy also includes the labor and advertising expenses and then adding
certain percentage to gain profit.

We will initially keep the price of our product high so that we can quickly recover the expenditures
for the production and advertising. This will enable us to achieve the profit quickly. Also, we will be

using the new technology and the first of its type in the market, the customers will be willing to pay
higher prices.

As the product grows in the market, we will try to introduce new technology in the same product so
that the sales do not decline. If sales start declining we will reduce the cost of the product since the
demand in less. This will maintain the equilibrium in the market. We will also provide the discounts
and coupons so that during the last stages of product we still earn some profit. Volume discounts
can also be deployed such as “buy 2 get 1 free”.

viii) Sourcing Strategy:

It involves the planning of the sources for the raw materials, services etc at what price and at what
volume.
Since our product has many components we will opt for multisource strategy where will we receive
various raw materials from different companies at reasonable costs. Also in order to reduce the
inventory costs, we will opt for Just In Time (JIT) technique.

ix) Location and Facilities:

The location factors, weightage and scores for three potential sites namely Gurgaon (Haryana), Noida
(U.P), Ghaziabad (U.P) were taken from the internet. We have calculated the best location based on
Weightage Rating Method (WRM).

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Steps for using Factor Rating.

• List the most relevant factors in the location decision (column 1).
• Each factor is rated, say from 1(very low) to 5(very high), acc. to its importance (column 2).
• Each location is rated, say from 1(very low) to 10(very high), according to its merits on each
characteristic (column 3)
• The factor rating is multiplied by the location rating for each factor.
• The sum of the product yields the total rating score for that location.

Total rating score of A = (4*8) +(3*4) +(3*5) +(5*2) +(1*3) +(5*5) +(4*2) +(3*9) +(2*6)+(2*6)=
156

Total rating score of B = (4*9) +(3*5) +(3*6) +(5*3) +(1*4) +(5*4) +(4*3)+(3*10)+(2*7)+(2*8) =
180

Total rating score of C = (4*9) +(3*4) +(3*5) +(5*2) +(1*4) +(5*4) +(4*3)+(3*10)+(2*7)+(2*7)=
167

So, here as we can see that location B (Noida) is having maximum total score i.e. 180
Therefore, Noida (U.P) will be our desired business location.

Materials:
The materials will be bought from the firms that are located in Noida to avoid any transportation
cost as well as we will be always in touch with the suppliers.

Production:
Explain how long it takes to produce a unit and when you'll be able to start producing your product
or service. Include factors that may affect the time frame of production and how you'll deal with
potential problems such as rush orders.

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Inventory:
Since the product has no expiration date we can store it for as long as possible, though it is better to
invest money where we can get profit as soon as possible therefore, we will keep enough amount to
not have any product short as well as we will look into previous month’s sales in order to have the
sufficient closing stock. The formula we will using to maintain our inventory would be: -
(Sale of previous month - Opening stock of this month) * 1.5 = Order or inventory

We will be accounting inventory by Last-In, First-Out (LIFO) method:

LIFO assumes that the last items put on the shelf are the first items sold. Last-in, first-out is a good
system to use when your products are not perishable or at risk of quickly becoming obsolete.

6) Management Summary
Organisational Structure of our Company:-

*Red values indicate the number of people required in each department.

1. General manager: We decided to choose only one GM for our company. She or He will manage
or supervise Sales/ Marketing Managers, Plant Manager and Research and Development
Department of our firm.
The educational qualification required by our firm to appoint a GM are:
• Bachelor’s Degree in Management
• Masters in Management
• 10+year experience

Skills required: Good communication, analytical thought process, proficient in Microsoft and excel.

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2. Sales/Marketing Managers: We have decided to appoint 2 Sales/Marketing Managers in our
firm which will supervise sales and marketing departments respectively. The department will
consist of an approximate 10 people working under them.

The educational qualifications of managers required by our firm are:

• Bachelor Degree in any Management course, masters often preferred.
• 7+ year industry experience related to management

Key skills required: Strong communication , sales presentation and management, leadership skills,
strong budgeting, computer skills,knowledge of current marketing trend.

3. Plant Manager: In our firm there will be only one plant manager since our firm will
manufacture only one type of product. The plant manager will supervise engineering, quality
control, production, purchase and administration departments.

Qualification for plant manager are:

• Minimum of bachelor degree in business or industrial management.
• 5+ year industrial experience

Key skills: Practical knowledge, Management skills, Understanding of Demand and Supply trends,
communication, computer skill, leadership, problem solving .

Employees specification:

• Engineering wing:

This wing will work under the plant manager having strength of 5 employees.
Qualification of employee: bachelor degree in electrical or electronics stream
Experience: 0-2 year industry experience.
Key skills: life long learning, commitment, flexibility

• Quality Head:

This wing is also work under plant manager consisting 2 employees.

Qualification of employee: bachelor degree in any technical and production field
Experience: 0-2 years quality management industry exposure
Key skills: Analytical and problem solving attitude, time management, flexibility.

• Production Wing:
This wing will work under plant manager having strength of 4 employees.
Qualification of employees: bachelor degree in technical field
Experience:2-4 years experience in production sector
Key skill: teamwork, commitment, flexibility and technical literacy

• Purchase wing:

This wing consists of 4 employees

Qualification: bachelors in any marketing, economics courses
Experience: 0-2 years’ experience in industry
Key skills: product knowledge, active listening, strategic prospecting attitude

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 • Administration wing:

This wing consists of Accounting and Human Resources department.

Accounting:
This wings have 4 employees.
Qualification: chartered accountants and bachelors in marketing preferred
Experience: 2-5 years’ experience in banking or accounting sector.
Key skills: basic business interest and awareness, numeracy, organisational

Human Resources:
This wing will be handled by 2 employees.
Qualifications: bachelor in technical course with and masters in administrative course.
Experience:2-5 experience in industry
Key skills: Trustworthy, impartial and objective oriented, communication skill

7) Financial Plan
i. Break Even Analysis-

Break-even point analysis is a measurement system that calculates the margin of safety by
comparing the amount of revenues or units that must be sold to cover fixed and variable costs
associated with making the sales. In other words, it’s a way to calculate when a project will
be profitable by equating its total revenues with its total expenses.

The break-even analysis is based upon the following assumptions:

a) All elements of cost, i.e., production, administration and selling and distribution can
be segregated into fixed and variable components.
b) Variable cost remains constant per unit of output irrespective of the level of output and
thus fluctuates directly in proportion to changes in the volume of output.
c) Fixed cost remains constant at all volumes of output.
d) Selling price per unit remains unchanged or constant at all levels of output.
e) Volume of production is the only factor that influences cost.
f) There will be no change in the general price-level.
g) There is only one product or in case of multi-products, the sales mix remains
unchanged.
h) There is synchronisation between production and sales.
So, for our SKP Piezotronics India pvt. Ltd. we are not sure that the current year’s burglar alarms are
going to turn a profit and what to measure the number of units we will have to produce and sell in
order to cover our expenses and make at Rs 500,000 in profit.
Here are the production stats.

Total fixed costs: Rs 500,000

Variable costs per unit: Rs 300
Sale price per unit: Rs 500
Desired profits: Rs 200,000

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First, we need to calculate the break-even point per unit, so we will divide the Rs 500,000 of fixed
costs by the Rs 200 contribution margin per unit (Rs 500 – Rs 300).
𝐶𝑜𝑠𝑡𝑠
Break even points in units = 𝑆𝑎𝑙𝑒𝑠𝑝𝑟𝑖𝑐𝑒𝑝𝑒𝑟𝑢𝑛𝑖𝑡−𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒𝑐𝑜𝑠𝑡𝑝𝑒𝑟𝑢𝑛𝑖𝑡
500,000
= 500−300 = 2500 units
As we can see that, our company will have to sell at least 2,500 units in order to cover its fixed and
variable costs. Anything it sells after the 2,500 mark will go straight to the contribution margin since
the fixed costs are already covered.
Next, we can translate the number of units into total sales by multiplying the 2,500 units by the total
sales price for each unit of Rs 500.
i.e. = 2500 units * Rs. 500 per unit
= Rs. 1,250,000

Now we can say that the company must sell at least 2,500 units or the equivalent of Rs 1,250,000 in
sales before any profits are realized. We can also take it a step further and use a break-even point
calculator to compute the total number of units that must be produced in order to meet Rs 200,000
profitability goal by dividing the Rs 200,000 desired profit by the contribution margin then adding
the total number of break-even point units.
Therefore,
𝐷𝑖𝑠𝑖𝑟𝑒𝑑𝑝𝑟𝑜𝑓𝑖𝑡∈𝑅𝑢𝑝𝑒𝑒𝑠
No. of units to produce desired profit = 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛𝑚𝑎𝑟𝑔𝑖𝑛𝑝𝑒𝑟𝑢𝑛𝑖𝑡 + Break even of units
𝑅𝑠200,000
= 𝑅𝑠500−𝑅𝑠300 + 2500 units
= 3500 units

Break Even Analysis

2500000

2000000
Cost (in Rs)

1500000

1000000

500000

0
0 500 1000 1500 2000 2500 3000 3500 4000
Number of Units

Analysis:
Lower variable costs equate to greater profits per unit and reduce the total number that must be
produced. Outsourcing can also change the cost structure.
One of the most important concepts here is the margin of safety. That’s the difference between the
number of units required to meet a profit goal and the required units that must be sold to cover the
expenses. Here, we had to produce and sell 2,500 units to cover the company expenditures and
had to produce 3,500 units in order to meet the company’s profit objectives. This 1,000-unit
spread is the margin of safety. It’s the amount of sales the company can afford to lose but still cover
its expenditures.

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 ii. Projected Profit and Loss

We have projected the 1st FY to be in a little loss but it is extremely backed up by the 2nd FY which
gives us an immense profit. From 2nd FY onwards the profit of our company increases at an
exponential rate encouraging us to expand our business and take it to new heights.

Below is the table and graphs for the estimated profit and loss.
2019 2020 2021
Financial Year(FY)
(1000 units) (2500 units) (3500 units)
Total revenue 1,00,000 2,00,000 3,00,000
Cost of Goods Sold 5,00,000 12,50,000 17,50,000
Gross Profit 6,00,000 14,50,000 20,50,000

Expenses
Accounting and legal fees 80,000 11,700 11,700
Advertising 20,000 15,000 16,000
Depreciation 40,000 32,000 30,000
Electricity 21,000 19,000 19,000
Insurance 15,200 15,200 15,200
Interest and bank charges 15,300 13,300 13,300
Postage 10,500 10,500 10,500
Printing and stationery 30,000 24,700 24,700
Professional memberships 6,000 5,000 5,000
Rent for premises 80,000 80,000 80,000
Repairs and maintenance 45,000 45,000 40,000
Training 30,000 20,000 20,000
Vehicle operating costs 20,000 14,000 50,000
Wages and salaries 2,20,000 3,00,000 3,75,000
Workers compensation 8,500 6,500 8,000
All other expenses(R&D) 1,00,000 1,00,000 4,00,000
Total Expenses 7,41,500 7,12,900 11,18,400
Net Profit -141,500 +7,37,100 +9,31,600

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 Monthly Profit
60000
50000
40000
30000
20000
10000
0
jan feb mar apr may jun july aug sep oct nov dec
-10000
-20000
-30000
-40000

Yearly Profit

2023

2022

2021

2020

2019

-500000 0 500000 1000000 1500000

We clearly see that for the financial year 2019 where we sell the alarm less than 2500 pieces, we are
in a loss of Rs 76,500 but as soon as we enter in the next FY our sales increases drastically and we
start getting the profit. Thus before the selling of 2500 units, our company is in loss and to start
incurring the money for loss we increase the production of our product as the demand increases. Over
the years we spend more money on the Research and Development Sector since it is an emerging
technology. By developing our product we stay in the competitive market giving a tough competition
to our other counterparts.

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 iii. Projected Cash flow-
Our main concern will be to have sufficient cash on hand so that we can meet our payment obligations,
and therefore be prepared for unexpected needs of cash. Our projections will indicate that our
business is able to generate positive cash flows and sufficient cash reserves.

In addition to normal cash inflows as well as outflows, we will also focus on establishing sufficient
cash reserves in case of contingencies. That includes a line of credit with the bank, that could be used
in slow sales periods time. It will be a good way to control the cash flow risk.
The positive cash in flows and a very high increase in our Net cash flow suggests that the business
will expand at a great rate.
Cash from Operations

YEAR 1st year 2nd year 3rd year 4th year 5th year

Cash Sales 13,00,000 17,50,000 30,00,000 45,00,000 55,00,000

Cash From 2,00,000 3,50,000 5,00,000 6,50,000 8,00,000

Receivables

Sub Totals from 14,50,000 21,00,000 35,00,000 51,50,000 63,00,000

operations

Additional cash received

1,50,000 2,20,000 3,60,000 5,20,000 6,00,000

Sales Tax, VAT, HST/GST

Received

New Current Borrowing 0 0 0 0 0

New Other Liabilities (interest- 0 0 0 0 0

free)

NewLong-term Liabilities 5,00,000 0 0 0 0

Sales of Other Current Assets 0 0 0 0 0

Sales of Long-term Assets 0 0 0 0 0

New Investment Received 0 0 0 0 0

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 Subtotal Cash Received 6,50,000 2,20,000 3,60,000 5,20,000 6,00,000

Projected Cash Flow Table-

Expenditure

Expenditure From Operations

Sub Total 10,75,000 13,55,000 19,20,000 21,50,000 30,00,000

Cash 75,000 1,05,000 1,20,000 1,50,000 200000

Spending

Bill Payments 10,00,000 12,50,000 18,00,000 20,00,000 28,00,000

Additional cash spent

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 Sales Tax, 1,50,000 2,20,000 3,60,000 5,20,000 6,00,000
VAT,
HST/GST
Paid Out

Principal 1,00,000 0 0 0 0
Repayment of
Current
Borrowing

Other 0 0 0 0 0
Liabilities
Principal
Repayment

Long-term 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000

Liabilities
Principal
Repayment

Purchase 2,00,000 0 0 0 0
Other Current
Assets

Purchase 5,00,000 0 0 0 0
Long-term
Assets

Dividends 0 0 0 0 0

Sub total 10,50,000 3,20,000 4,60,000 6,20,000 7,00,000

Net Cash 25,000 6,45,000 14,80,000 29,00,000 32,00,000

Flow

Cash 35,000 6,80,000 21,60,000 50,60,000 8260000

Balance

Note :

⚫ Initial cash balance before 1st Fiscal year will be 10,000.

⚫ All cash units are in Rupees.

iv. Projected Balance Sheet

We expect a healthy growth in net worth and a healthy financial position. We do not project any real
trouble meeting our debt obligations, as long as we achieve our specific objectives.

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The following table is the projected balance sheet for five years.

Pro Forma Balance Sheet FY1 FY2 FY3 FY4 FY5

Assets

Current Assets
Cash 40,00,000 1,00,00,000 2,00,00,000 3,00,00,000 4,50,00,000
Account Receivable 5,00,000 8,00,000 9,00,000 10,00,000 12,00,000
Inventory 10,00,000 12,00,000 15,00,000 18,00,000 20,00,000
Other current Assets 6,00,000 6,00,000 6,00,000 6,00,000 6,00,000
Total current assets 61,00,000 1,26,00,000 2,30,00,000 3,34,00,000 4,88,00,000

Long term assets

Long term assets 50,00,000 50,00,000 50,00,000 50,00,000 50,00,000
Accumulated depreciation 6,00,000 12,00,000 18,00,000 24,00,000 30,00,000
Total long term assets 44,00,000 38,00,000 32,00,000 26,00,000 20,00,000
Total assets 1,05,00,000 1,64,00,000 2,62,00,000 3,60,00,000 5,08,00,000

Current liabilities
Accounts payable 8,00,000 25,00,000 30,00,000 35,00,000 40,00,000
Current borrowing 0 0 0 0 0
Other current liabilities 0 0 0 0 0
Subtotal current
8,00,000 25,00,000 30,00,000 35,00,000 40,00,000
liabilities

Long term liabilities 36,00,000 30,00,000 24,00,000 18,00,000 12,00,000

Total liabilities 44,00,000 55,00,000 54,00,000 53,00,000 52,00,000

Paid in capital 60,00,000 60,00,000 60,00,000 60,00,000 60,00,000

Retained earnings 45,00,000 20,00,000 15,00,000 61,00,000 1,20,00,000
Earnings 40,00,000 55,00,000 70,00,000 80,00,000 95,00,000
Total Capital 55,00,000 95,00,000 1,45,00,000 2,01,00,000 2,75,00,000
Total liabilities and
1,05,00,000 1,64,00,000 2,62,00,000 3,60,00,000 5,08,00,000
Capital

Net Worth 55,00,000 95,00,000 1,45,00,000 2,01,00,000 2,75,00,000

v. Business Ratios-
Business Ratios for three years of this plan are shown below. Managements main objective is to put
into action and to carry out this plan that is designed to achieve the financial performance objective.
1) Liquidity Ratio-
It’s a ratio which tells one’s ability to pay off its debt as and when they become due. In other
words, we can say this ratio tells how quickly a company can convert its current assets into

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 cash so that it can pay off its liability on a timely basis. There are different methods from
which liquidity ratio can be calculated and Acid Test Ratio is the best method.
Generally, 1:1 is treated as ideal ratio.
Formula- Quick Assets/ Current Liability
Where,
Quick Assets = Current Assets – Inventory – Prepaid Expenses
2) Long Term Solvency ratios-
Indicate a good capital structure, and more than adequate creditor's protection from default on
interest payments

3) Cash flow-adequacy ratio-

(cash flow yield, cash flow to sales, cash flow to assets, and net cash flow) indicate a good
ability to generate operating cash flows in relation to net income, a good ability of sales and
assets to generate operating cash flows, and positive cash flow after providing for
commitments.
4) Market Strength ratio-
(price/earnings ratio and dividend yield) measure investor confidence in the company, and
will be computed only after the company will go public so market price per share can be
determined.

Analysis-
Year 2019

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26 | P a g e
 Note- The currency used is Rupees.

Year 2020-

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Note- The currency used is Rupees.
Year 2021-

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Note- The actual Currency used is Rupees.

vi. Long-Term Plan:

Our projections given here are for the next five fiscal years. Further projections will be made in
five-year increments. After we start to make good amounts of profit, we would expand our
customer base. Not only we will stick to security system but also use the green energy to make
the earth a better place to live in. we will provide sustainable equipments that will enhance the
human survival on this planet.
vii) Important Assumptions:

1.Risks

In starting up a new business and possibility to get it successful is also dependent upon the
luck. Whole business model must be planned around the possibility getting failure i.e. risk
analysis. There are several types of risks attached to a business model:

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 a. Strategic risks:
As a robust business needs well brain stormed and diverse business plan. But many time
your planned strategy whether it be a well thought or not becomes very ineffective and
outdated which leads your company to struggles to reach its milestones. This could
occur upon several factors like rise in cost of raw materials, shift in customer’s needs,
technological changes or change in government policies.
b. Reputational risk:
Reputation of your product and your company is the most important asset which helps in
making trust between company and customer. This type of risk can occur due to several
reasons like negative customer service, bad product quality and less product to price
satisfaction. Sometimes these risks could also lead to embarrassing product recall,
negative publicity, major lawsuit, high level criticism of your company. This risk can
lead to slow death of your business so there must be full proof plan to fight this type of
risk.
c. Financial and Market Risk:
Any type of risk has financial impact, in term of lost revenue or extra cost. But the
category of financial risk refers specifically to the money flowing in and out of your
business, and the possibility of a sudden financial loss. Financial risk can also occur due
to customers fail to pay or delay of payment due to some reason, increase in interest
rates, change in government policies, increase in debts. This can only can be overcome
by keeping a separate cash reserve for risk management.
d. The human factor:
As your company grow ups and more employees get hired which also leads to risks like
effectiveness of employees as they promised at the time of recruitment, salary
expectations. In these risk Human resources wing must have good hold upon the
employees.

2.Entry Strategy:

Whether your product is best innovation ever in mankind but without marketing strategy it
can’t sustain in market. Marketing strategy is the fuel which drives the customer relations
and grows the sales pipeline. Following are some steps that helps in entering market:
a. Strategic positioning, branding and publicity
Strategizing the possible customers.
Development of the product like how it will look from outside i.e. logo, name and url.
And outreaching upon the social media and other platforms.
b. Blogging and digital partnership strategy
By consulting the critics and good technocrats for writing the blogs upon their
experience with the product and posting on their channels can leads to good outreach act
for sales.
With making small partnerships with the other established companies or selling our
product with other established companies under offers can also boost our sales.
c. Crowdsourcing and Advertising
By analysing the viral content and marketing ideas, making strategy based upon the
output of analysis.

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3.Investors Interest:

While pitching the product idea among the investors, bankers or angel investors following
factors must be taken care of firmly:
a. Effective business model
As soon as our company begins to generate profit its strategic value will tends to
increase. We will present that business model to the investors and prove that it will help
our company become more profitable. Will ask for suggestions in order to improve or
customize the model as per investors need.
b. Company uniqueness:
As our main essence of the product is use of piezoelectric power generation which is
unique in itself which makes it more attractive and innovative so we will emphasize
more upon this concept while pitching the product. As our product is more cost and
maintenance effective with respected to our potential competitors, investors will
possibly get influenced by our product.
c. Background and experience in the industry:
Investors don’t want their capital to go in losses so they will look for experience and
management team with the record of high performance and leadership skill in the
company’s industry.
d. Financial performance:
When pitching to investors based upon our company’s financial performance in present
year we will assure them that current assets are sufficient to cover our long and midterm
goals. We will show our debt repayment plan also and prove them that our business plan
is flexible enough to resist the financial barriers.

4.Exit strategy:

After our start up reaches the penultimate bridge financing stage of funding lifecycle, where
funds are pulled off, we will hunt for the exit strategy. At this point owners and investors
gather most of the investment returns. Our team will go through one of the two exit
strategies:
a. Merger or Acquisition:
Merger defines as two or more existing companies combine forming a new company
whereas Acquisition means purchase of one company by another company and not
forming a new company. We will make our company more appealing for such buy outs
by

• Transparent and clean financial machinery.

• A strong customer trusts.
• Vibrant management team.
b. Initial public offering [IPO]
This strategy can also be tried if the offer granted in M&A are low and if our team and
investors feel our company has more potential. As a result, in IPO where we sell a part of your
business to the public in the form of shares. This tool is sometime better as this give access to
liquidity for you in the event that investors are seeking returns or refunds earlier than
anticipated. We can also get chance to buy out the financially roadblock firms on better deals.

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