Entrepreneurship Business Plan

Business Plan Solar Energy
Entrepreneurship BUSINESS PLAN

Submitted To: Prof Aitzaz Khursheed Presented By: Muhammad Asim Nawaz Ehtesham Waheed Umer Ghani Mohtsham Aziz l1f05bbam2106 l1f05bbam2134 l1f05bbam2133 l1f05bbam0067
Dated: 16/02/08
INTRODUCTION
Solar Energy:
Say good bye to Wapda.
Introduction:
The biggest problem that Pakistan is facing at this time is consistent break down. And the government as ever is not ready to play any role to solve this problem. The economy of Pakistan is suffering allot due to this problem. The unemployment ratio is climbing high and high. We are here to solve this problem. The bright future is to provide its customer with a new era technology system that is largely used all over the world. We will provide the customers with solar sun screen which have no cost except the initial investment. It will use the natural sun light as its charging instrument. It can be used almost every where in Pakistan. Solar energy is an organization that will help the country in this field. In this pace of fast moving, competitive and challenging world. It has become very difficult to avoid failures and attain success and the basic reason behind these failures is mostly the wrong decision in selection of energy providing sources. The organization has been developed to help the country attain more energy sources.
Our Goal...
Is to get our country out the present situation due lack of energy.
Mission Statement:
Imagine a world where everyone has access to affordable, clean and environment friendly power.
Vision Statement:
Our vision is to facilitate maximum people to use solar energy in Pakistan and to provide best customer services to gain loyal customers.
Why Use Solar Energy Systems?

Today, solar heating is becoming more important than ever before. Natural gas and oil, which are burned to heat our homes and water, are limited. As reserves of gas and oil shrink, these fuels become more expensive. If more people began using solar heating systems, fossil fuels such as oil and gas would become less expensive and last longer. Burning natural gas and oil in our heating systems also causes air pollution. Even electric water and space heaters cause air pollution indirectly, because coal and natural gas are burned to produce electricity in large power plants. So if more people used solar energy to heat the air and water in their homes, our environment would be cleaner.
Objectives / Mission:
-Our mission is to become a market leader in providing excellence and quality in customer services for non stop electric supply. -One of the missions is to attain maximum customer loyalty and satisfaction. -Our Short term objective is to penetrate the industrial areas and markets of Lahore by providing proper and non stop electric supply. 4
Business Plan Solar Energy -Our long term objectives will be later on penetrating the market of Pakistan in this service which no organization is providing now.
Market Research for the Identification of the Needs and Wants of the Consumer:
Through the market research weve come to know about the reasons behind concurrent decline in our economy is the electric breakdowns. Analyzing the facts weve come to know that concurrent failures are backed by wrong polices of government. Pakistan is having natural recourses of water but Pakistan cannot get electricity from water because there is some political problems even then if government starts constructing dams now it will take at least 10 years to get operational but the system and technology provided by the bright future is ready within 5 hours time. Thats why it is very attractive to the industrial fields, business centers, educational institutes. It is even a good option than generators which burns diesel and gas that are much expensive.
Target market:
Our target market is the domestic users who are facing problems due to shortage of electric supply. Also the business centre and educational institutes. Because the 65 to 70 percent of Pakistans wapda provided electricity is being used by the domestic users, business centers and educational institutes. And rest of 30 by the productional companies. They are getting it at higher price than the domestic users. All over the world Industries are getting electricity at cheaper rates than that of domestic users we want to lent helping hand to Wapda so that industries get electricity at cheaper prices, which will effect the prices of domestic goods. As we are focusing on middle and upper middle class, presently in Lahore our target market will be approximately 12 lac.
1) Demographic segmentation:
Demographically we divide our market into 6 segments Age: Every one who is using wapda for domestic purpose. Occupation: Our main focus is on domestic users of an occupation. And our potential customers (family heads) belonging to any Occupation can avail our help to get ride of long wapda bills. Educational Background: Not required. Income: People with income Rs. 20,000-25,000 Gender: No gender specifications Family size: Family size doesnt matter.
2) Geographic Segmentation:
Right now we are focusing on local market Lahore but in near future we will be Focusing on the whole country Pakistan. 6
3) Benefit segmentation:
The benefit we will be providing to our consumers is zero cost electic supply except initial cost. To help people to get rid of long wapda bills. No other organization is providing such opportunity locally. There is highly educated engineers in our organization to provide fast and efficient installation process and mainatain high quality levels.
4) Psychographic segmentation:
Psycho graphically we are focusing on these levels: Social class: Social classes we are focusing on are: -elite class -upper middle class and -middle class Life style: Life style doesnt matter to avail our services. people having any kind of lifestyle can visit our organization and avail our facilities. Personality type: Personality types doesnt matter, person having any kind of personality can avail our facilities.
5) Behavioral segmentation:
Loyal customers: We will be focusing deeply on our loyal customers who will stick to our services generation after generation rather than utilizing other Companies services.
Target Market Segmentation Strategy:

Because we want to develop close working relationship with our customers, we will integrate all our marketing and service provision efforts for projecting a consistent image of our organization and its services. We will build this image around our brand name and will emphasize on our employees to treat the customers with care.
Market needs:
At present Pakistans economy was developing, new industries being installed and foreign investments coming in Pakistan but from last month or so Pakistan is having political and energy problems. The industries and productional areas are are shout down due to lack of energy. As mentioned above 70% is being used by domestic users. It the load of domestic users shift from wapda to solar energy providing industry. Then wapda is in good position to provide consistence and low price supply to industrial units. In todays competitive market the competition among markets have increased to such an extent that achieving success has become a very difficult task which has become a sort of necessity to lead a quality living. So in order to achieve success we need to help our new generation to become capable of achieving success. For this purpose there is a desperate need of developing an organization that can help country in their future development.
Market Trends:
People are getting tired out by the present electric failures and they are looking for the new ways to get rid of break downs. The rising cost of fuels are making the generators an expensive source of electric generation and the common man cannot use it for longer time of period. Where as the solar energy system is one time installed there is no bills or break downs. Some small companies are their but they are not popular do due lack of funds, technology, marketing and HR recourses. People do want to shift towards this system but the present companies in the market are falling to do so.
Marketing Objectives:
1. Maintain a gross margin of up to 10%. 2. To increase public awareness about our services. 3. Experience a 500 increase in quarterly sales with each newsletter. 4. Realize an annual growth rate of approximately 30% each year. 5. To attract the customers. 6. To increase revenue through exhibitions or free trails etc. 7. Reduce the existing credit line. 8. To increase customer satisfaction. 9. To provide quality service. 10. To maintain good relationships with the suppliers. 11. To retain the current customers by maintaining customer satisfaction. 12. To fulfill social responsibilities ( to avoid unethical ways).
SWOT Analysis:
This is a very important thing to be considered which tells the place where an organization stands in market. Its basically a self measuring test which comprises of four things basically these are:
Strengths:
Our strengths include: -we are the only organization in local market that is focusing solar energy systems. -our entire focus is on customer satisfaction. -we have specialized electrical engineers who can install and operate our systems. -The quality services we are providing to our new customers at reasonable prices. -The service we are providing for the welfare of our economy.
Weaknesses:
Our weaknesses include: -We are new in the market -Lack of experience - Our limited resources may not allow us to carry the business on large scale.
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Opportunities:
-Market penetration: We are the only organization focusing on solar energy systems in the market and as there is no other such pre-existing firm we can attain a better share in the market as well as get recognition and good name in market. -Building strong customer relationship: Weve the opportunity to build strong customer relationship by providing them with quality service with accuracy.
Threats:
-As this business is new in market there are chances of its failure. -People may not show acceptance to our organizational services in the beginning. -Other future solar energy providing organizations may not let us expand and capture the desired market share. -It is not good for the cold areas of Pakistan.
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Marketing Strategy:
Our marketing strategy overall will be relationship marketing so our major focus will be on customers. Competitive edge: As a source of competitive advantage we will be considering on many areas like: Focus on customer: Our main focus will be on customers because they are the key to get success in business world. If your customers are satisfied with the organization it leads the organization towards success. Therefore, in order to develop strong customer relationship, we will train our employees properly to handle customers with great responsibility and to provide them with courteous services. As its a engineering related firm we will also train our engineers to deal with the customers patiently because its the most preferred thing a customer wishes to have. It has been seen that while communicating with customers the engineers dont listen to them properly and try to generalize their problems. This would be our foremost preference to satisfy our every customer who enters our premises so that he may promote image of our organization and its quality services because its customers who build up an organizations image in high esteem or low esteem and to attain high esteem in the eyes of our customers is our main motive. Treating customers poorly costs a company 15% to 30% of its total sales whereas replacing lost customers is very expensive; it costs a company five times more to attract a new customer than to sell to an existing one and about 70% of a companys sales come from existing customers because 20% of a typical companys customers account for about 80% of its sales, so we cant afford to isolate our best and most profitable customers i.e. most frequent visitors. So we will be focusing on retaining our old customers as well as attract new customers through our good and quality services and our good name. The most frequent visitors of our organization will also get certain discounts depending on their frequency to visit and the others will be charged full fees for services. 12
Devotion to quality: In order to improve the quality in our service provision well be focusing on giving bonuses and rewards to the employees for good performances. In terms of using different attributes in provision of quality well be focusing on following. 1) Tangibles: We are equipped with proper equipments to measure the performance of our systems. This will help us to achieve high customer satisfaction levels. 2) Reliability: Our solar units are checked properly before and after installation of unit. We provide the customer with after sell services so they can thing about our units as a reliable units. 3) Responsiveness: Our employees will be trained in a manner to be helpful and as well as to be quick in responding to the needs and queries of the customers. For their polite, helpful attitude towards the customers and for motivating the customers to come back and also to promote the name of our organization in good manner, well be giving incentives to our employees to ensure that they may show responsiveness at work and with customers. 4) Assurance and empathy: Considering this, the organization will be focusing on both employees as well as customers in order to improve the quality in provision of services. The organizations employees will be trained well through training programmers and they will also get an assurance that if theyll work well theyll be getting certain bonuses. This would increase the morale of the employees bounding them to do their work responsibly improving our service quality. Our customer desk employees such as assistants, secretaries, receptionist and especially the technicians will be trained through training programs to behave with customer in a manner that will give them an assurance that theyve come to the proper place. 13
Concentration on innovation:
This innovation is the key to our future success. It is one of our greatest strengths as we are introducing engineering system there is all ways no innovations in the technology and keep an close eye on the market and introduce the new technologies in the market to keep the customer attraction consistent. In order to increase our quality in services well be hiring well trained and experienced staff
How it can be achieved

Through a combination of planned research and direct feedback we will seek to ensure that the voice of the customer is available to decision makers to assist in improving and developing our range of products and services. We will undertake an ongoing, systematic approach to understanding customer attitudes and opinions, with regard to the quality of the product and service they receive. All customer enquiries will be dealt with promptly, in a personalized manner. We will maintain comprehensive customer records to assist in this and, to ensure that our database can be used for targeting marketing activity in the future. Customer complaints will always be dealt with in a timely, professional and efficient manner, and will be used positively to inform the process of improvement. We will engender a customer- focused attitude within the business; such that this is communicated through daily contact with customers and colleagues. To this end, we will provide our employees, agents and partners with the opportunity to develop their skills, for the benefit of our customers and the internal colleagues whom they support. 14
Competitors: The Marketing Mix

We will believe on the 7Ps of the marketing mix. 1. Product 2. Price 3. Place 4. Promotion 5. People 6. Process 7. Physical evidence Product: Our brand name is bright future and the product that we will be providing consists of the solar screens, sheets and batteries. The screens consisting of the glass and sheet will absorb the light and transfer it to the batteries which will store it for the current or future use. We will be providing all after sell serves including repair and replace. We are providing 5 years warranty of batteries and solar sheets. Price: We will be following the skimming price strategy as we are not having any present big competitor in the market. We have set price 80 thousand for the whole system but for our customer convenience we will provide them with the facility of leasing with 20 percent initial payments and rest to be paid in period of one to two years. Place: As presently we are focusing the Lahore and its rural surrounding. Our head office is located at 59 A Main Boulevard Gulberg Lahore and our production house is in Faisalabad on Sheikhupura Road. We will operate through our franchises, online service. The customer can come to our franchise to have a look how our system operates or he/she 15
Business Plan Solar Energy can call/make online order to us and our correspondent will travel to them, show them all detail and take order if they wish. After taking the order he is responsible for the installation with in 48 hours. Promotion: In the promotions plan we will be focusing on the push strategy. And we will be spending 20 percent of whole budged on promotions. Promotions will be done through T.V adds. Stalls Bill boards Brushier People: All people that are direct or indirectly involved in the consumption of a service are an important part of extended marketing mix. All the knowledge workers, employees, management and the consumers. We will try our level best to train and maintain high levels of services. Process: Procedures, mechanisms and flow of activates by which services are consumed are an essential element of the marketing strategy.
Physical evidence: We will be providing our customers with a very good environment and our physical evidence will be achieved through the high customer satisfaction. 16
Product mix:
Economy Pack: In this pack we will provide 5 sheets and 4 batteries which can store 3 days of electricity back up it can provide electricity for the whole house with the help of sheets. It cost like 80000 Rs. Its an 220 AC system. It can support the 8 energy savers, 3 fans, and 3 exhaust fans. This system is ideal for small families who use one or two air conditioners during the summers. Value Pack: In this pack we will provide 9 sheets and 7 batteries which can store 8 days of electricity back up it can provide electricity for the whole house with the help of sheets. It cost like 150000 Rs. This system can support 20 lights and 5 exhausts and 6 fans. Its also an AC 220 watts system and it is ideal for the families who have 4 or 5 Air conditioner during the summer. This system can also operate oven and water pump. Super Value Pack: In this pack we will provide 10 lagre sheets and 11 batteries which can store 15 days of electricity back up it can provide electricity for the whole house with the help of sheets. It cost like 260000 Rs. This syetem is ideal for the business centres, schools. It can provide power to 50 to 80 lights, 20 exhaust fans and 10 to 14 air conditioner. It is also an 220 watts AC system but it is most powerful and efficient of all the other packages.
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OPERATIONAL PLAN
18
Solar Energy:
Say good bye to Wapda.
Introduction:
The biggest problem that Pakistan is facing at this time is consistent break down of light. And the government as ever is not ready to play any role to solve this problem. The economy of Pakistan is suffering allot due to this problem. The unemployment ratio is climbing high and high. We are here to solve this problem. The bright future is to provide its customer with a new era technology system that is largely used all over the world. We will provide the customers with solar sun screen which have no cost except the initial investment. It will use the natural sun light as its charging instrument. It can be used almost every where in Pakistan. Solar energy is an organization that will help the country in this field. In this pace of fast moving, competitive and challenging world. It has become very difficult to avoid failures and attain success and the basic reason behind these failures is mostly the wrong decision in selection of energy providing sources. The organization has been developed to help the country attain more energy sources.
19
Strength of Employees CEO=1

Admin department:
Manager=1 Finance officer=1 Accountant=1 Security guard=5 Sweeper=2 Total=10
Designatio Manager Finance Accountan Security n officer t guard Strength

Sales:
Manager=1 Assist. Managers=3 Customer services officers=6 Sales force=10 Total=20
Sweeper Total
10
Designation
Manager
Strength
Marketing:
Manger=1 Assist. Manager= 3
Assist Customer manager services officers 3 6
Sales force 10
total
20
20
Business Plan Solar Energy Marketing force=5 Total=8
Designation Strength R&D:

Manager=1 Assist. Manager=2 Engineers=3 Total=6
Manager 1
Assist Marketing manager force 3 5
Total 8
Designation Strength
Manager 1
Assist Engineers manager 2 3
Total 6
Finance department:
Manager=1 Assist Manager=3 Finance officers=6 Total=10
Manager 1
Assist manager 3
Finance officer 6
Total 10
HRM department:
Manager=1 Assist manager=3 Total= 4
Manager 1
Assist manager 3
Total 4
21
Procurement department:
Manager=1 Purchase officer=2 Inventory officer=4 Total=5
Manager 1
Purchase Inventory officer officer 2 4
Total 5
22
List of departments:
Sales Marketing Research and development Production Shipping Finance department Customer service Human Resource Department Admin department Operations Procurement
Admin department:
To organize personnel matters such as recruitment, promotions, recommendation and confirmation of post increment discipline and processing for further action and payment of all categories. To arrange for the payment of salaries, allowances and other payments To process applications for leave. To supervise all the working of the departments.
Sales:
Our sales management will revolve around the following procedures.. Functions of sales management:
Supervising and directing the sales activities of the men out in the field, sending them letters and providing helpful information. Preparing and furnishing equipment for salesmen in the way of samples, sample cases, price lists, kits, portfolios, or whatever else may be necessary, depending on the nature of the business and the product or service sold. Supervising and checking the expense accounts, route lists, detailed reports and daily letters of the salesmen. Determining sales quotas, providing bonuses and prizes, conducting sales contests and special sales campaigns.
23
Business Plan Solar Energy Preparing, or directing the preparation of, sales manuals, or salesmen's handbooks, giving detailed information about the company, the products, and the sales principles and methods involved in selling. Cooperating with the advertising department by helping the salesmen utilize and sell the company's advertising and aiding them to assist customers to make use of advertising helps, and by obtaining reports from the field concerning the reaction to the company's advertising and that of competitors. Cooperating with the production department in the matter of qualities, quantities, containers, packages, sizes and seasonal goods, and reporting their reaction on dealers and consumers. Making investigations of the products or offering to discover new uses and new appeals to dealer or consumer. Conducting, or arranging for, special market surveys and analyses of territories with a view to discovering new markets for the goods or new methods of developing old markets.
Human Resource Management:

Basic Overviews of Human Resource Management: HRM departments as heart acts in the body if you have the correct persons at correct place, the goals get easier to achieve. Getting the Best Employees: Its the duty of HRM department to get the best suitable persons from the market. Our HRM department gets the people according to the manual prepared by the department that requires the employees. Normally its procedure follows as 1. CVs 2. Initial test 3. Interviews 4. Training 5. Ensuring the safe work environment 6. Sustaining high performance levels 7. Making work schedules etc.
Marketing:
Advertising is the promotion of a product or service and is extremely pervasive in contemporary society. To maximize sales, companies will pay a premium for wide exposure through the mass media. In the diagram above, we see that marketing integrates all functions, including the marketing department (which is responsible for activities such as promotion). The marketing concept depends on an acknowledgement that marketing is the responsibility 24
Business Plan Solar Energy of everyone in the organization. However, one cannot expect positive results unless responsibility is accompanied by knowledge, skills and understanding. Not to mention attitude. Training is essential. At the solar energy company we try to equip our employees by knowledge, skills and make them understand what the customer wants. All managers must understand:

brand - what it is, how it is shaped, what effect it has, its value segmentation - why it is the foundation of marketing and how it should affect everyone in the firm positioning - something that takes place in the mind of the customer how customers buy - their criteria and processes, factors that influence their choices Competitors - who they are (not always obvious), their likely actions ..... and so on.
Research and development:

As we have stated in our marketing plan that we believe in innovation rather than just copying what is happening in the market. As solar energy is an engineering company and there is always chance to improve in the technology. Our R&D department is highly equipped with all the electric equipments required for the farms smooth running.
Production:
As solar systems are an engineering related farm, we will be producing most of our parts at our own factory. Also to maintain the high quality we will be importing some of the parts from some other countries too.
Shipping:
Some of the parts of the solar system are to be imported from the china, Japan and UK. So their will be a shipping department. Who will be responsible for the smooth and timely shipping of both imports and exports from the country.
Finance department:
Functions of the Department:25
Business Plan Solar Energy Maintenance of books of accounts and preparation of financial statements. Coordination and facilitation for Business planning and budgeting function in the company and periodic reporting to the management and to the Board. Management of he regional offices, accounts, policies and operations maintenance. Maintenance of investments and execution of International payments and receipts. Maintenance of accounts relating to International Organizations and partner organizations. Control of cash follow within and out side the company.
Customer service:
Customer service (also known as Client Service) is the provision of service to customers before, during and after a purchase. Customer service is a series of activities designed to enhance the level of customer satisfaction. That is, the feeling that a product or service has met the customer expectation. For any organization its customers are important than any other thing. Keeping this point in mind we have formed a customer oriented policy. Their will be a 24 hours service providing helpline for the new and exciting customers. Also those who only want information can also call. Their will be also a customer desk in every franchise for customer help and information. There is a warranty/replace department in our organization which will deal with the customer orders.
26
FINANCIAL PLAN
27
FINANCIAL REQUIREMENTS
INITIAL INVESTMENT Land (15 Marlas)1 Building Office equipment Furniture and fixture Other initial expenses Total Cost FIXED COSTS/month Fixed portion of Utility bills 50,000 Salaries 30,0000 Depreciation 50,000 Total fixed cost per month VARIABLE COSTS Utility expenses Electricity Telephone Misc. operation expense Rs. 23040 Rs.40/hour Rs.24/hour Rs.3/hour Rs. 1080 Rs.100, 000/month Rs. 400,000 0 2,500,000 500,000 300,000 100,000 Rs. 34, 00,000
Marketing cost Brochures Rs. 50,000 Ads Rs. 395,000 Cable network Rs. 20,000 Magazine ads Rs. 30,000 Online ads Rs. 40,000 Banner ads Rs.55, 000 Bill board ads Rs. 250,000 Total variable cost per month
1
Rs. 495000
28
Business Plan Solar Energy Start up capital= total F.C + total V.C = Rs.400000+495000 =8950000 Total working capital= Rs. 10,00,000
CAPACITY/PRICE AT WHICH WE CAN BREAK EVEN Break -Even Sales = Total fixed cost Contribution margin expressed as %age of sales
Where, Contribution margin is = Net Sales Total variable cost And we expect net sales of Rs. 5429440 in upcoming year Then, Contribution margin is= 5429440- 495000 Rs. 4934440 OR CM %age of sales = Total Variable Cost Net Sales = 495000 5429440 = 0.09117% So firm uses 0.09117 ut of every sales rupee to cover variable expenses, leaving 0.9088 a contribution margin to cover fixed cost and make a profit.
Break- even sales =
total fixed cost. Contribution margin as% age of sales
= 400000 0.9088 = Rs. 440140.84
29
TIME IN WHICH WE WILL COVER INITIAL INVESTMENT GROWTH POTENTIALS Cash Inflows 1st year = 5429440 2nd year = 5429440 (1+0.1) = 5972384 3rd year = 5429440 (1+0.1) = 5972384 4th year = 5972384 (1+0.1) = 6569622.4 5th year = 6569622.4 (1+0.1) = 7226584.64 Cash Outflows 1st year = 4429440 2nd year = 4429440 (1+0.1) = 4872384 3rd year = 4429440 (1+0.1) = 4872384 4th year = 4872384 (1+0.1) = 5359622.4 5th year = 5359622.4 (1+0.1) = 5895584.64 Operating Cash Flows = cash inflows cash outflows 1st year = 5429440 - 4429440 = 1,000,000 nd 2 year = 5972384 - 4872384 = 1,100,000 3rd year = 5972384 - 4872384 = 1,100,000 th 4 year = 6569622.4 - 5359622.4 = 1,210,000 5th year = 7226584.64 5895584.64 = 1,331,000 Note: After first year, we assumed a growth rate of 10 % because with the passage of time awareness about our services will enhance resulting in increase in number of our customers. Assuming interest rate to be 10% Net present value:2 NPV= CF0 + CF1 + CF2 + CF3 + CF4 + CF5 (1+ k) (1+k)2 (1+k)3 (1+k)4 (1+k)5 NPV = -2800000 + 1000000 + 1100000 + 1100000 + 1210000 + 1331000
{
30
Business Plan Solar Energy (1 + 0.1) NPV = 1397521 As our NPV is positive therefore this project is feasible. Internal rate of return: IRR = 26 % (IRR>cost of capital) As IRR is positive and greater than cost of capital i.e. 10% therefore this project is feasible. Pay back period:3 PBP = 3.3 years As pay back period is 3.3 years, therefore initial investment growth potential will be covered in 3 years and 3 months.
3
(1+0.1)2 (1+0.1)3
(1+0.1)4
(1+0.1)5
31
SWOT ANALYSIS
32
TRAGET MARKET
33
MARKETING STRETEGY
34
THE PRODUCT MIX
35

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Business Plan Solar Energy