ESS 1 Business Plan
I Executive Summary A. company name, address and phone number Company name: EVEREST SOLAR SOLUTION(ESS) Address: Kamal Pokhari, Kathmandu, Nepal Customer call no:01-4477077 Email:
[email protected], www.uress.com
B. contacts of key people There are altogether three key people in the company. The detail of them are given below: Mr. Rubbendra Maharjan Address: Temporary: Bhakhundol, Kabhrepalanchowk Permanent: Mhepi, Kathmandu Mobile:9841414466 Email:
[email protected] Designation: Research and Development Manager Mr. Ashish Manandhar Address: Temporary: Bhakhundol, Kabhrepalanchowk Permanent:Chhetrapati, Kathmandu Mobile:9851025566 Email:
[email protected] Designation: Operation and Maintenance Manager Mr. Damodar Paudel Address:
ESS 2 Business Plan
Temporary: Bhakhundol, Kabhrepalanchowk Permanent: Khurkot,Parbat Mobile: 9841414141 Email:
[email protected] Designation: Account and Sales Manager
C. Our Business, Services and solutions Everest solar solution presents the market with reliable, cheap and convenient solar solutions for the people suffering from load shedding problems. Our company deals with all parts of solar components and we basically serve solar facilities from survey to installation. ESS focuses on present load shedding crisis and promotion of green energy in our country. Our service will work out on installation and maintenance of solar energy mainly on urban area. Promoting renewable energy our company will limit the uses of non renewable energy which will be environmental friendly.
D. Our Market Initially ESS has targeted the Kathmandu Valley residents as primary customers. Offices and apartments are also among our customers. Kathmandu valley uses most of the electrical energy in Nepal. Due to load shedding problem, people are rundown from their social and professional life. This problem will be solved by our product and services. Our targeted customers have knowledge about solar energy and its benefits. Besides Kathmandu valley, we intended to expand our services outside the valley in near future.
E. Competition and marketing Strategy There are around 7 companies which are directly and indirectly related to our business. Among them 4 companies focus toward rural areas and associated with government, so they are not head to head competitors. The remaining are companies which focuses on large organization instead of residents. Since our company will be in large scale, we will adopt cost leadership marketing strategy. To promote our company different media like Advertisement media, newspapers, Business magazines and Internet will be used. Besides we’ll be focusing on increasing the publicity of our business through activities like: sponsoring in public Medias, organizing campaign, supporting green energy program. Our company will provide flexible service to our customers in financial context by providing installment facilities. Since our company will provide small to large scale solar power installation, it will attract more customers with different potential. Our company’s
ESS 3 Business Plan
web page will provide guidance and instruction to customer regarding our product and services which will make easy access to our company.
F. Management team ESS will have three key personals in the company who are the co-owners and also designated officers of the company. They are: Mr. Rubbendra Maharjan Designation: R&D Manager Education: Master in Renewable Energy Expertise: Photo-voltaic phenomena Mr. Ashish Manandhar Designation: O&M Manager Education: ME in electrical engineering Expertise: Solar Energy Mr. Damodar Paudel Designation: Accounts and Sales Manager Education: Master in Business Administration Expertise: Public Relation
G. Financial forecast ESS company requires capital of NRs.30,00,000 for the startup of its business. The amount includes administration, overhead, marketing costs and also meet short term working capital needs. The capital will be generated by equity of each of partners. The breakeven point is obtained at 88.5 units for the starting year.
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II. VISION AND MISSION STATEMENTS A. Vision statement ‘to change Nepal Into a nation where solar energy provides power to everyday needs.’
B. Mission statement The mission of Everest solar solutions is to increase the quality of life of people of urban areas by eliminating the problems created by load shedding. For this, ESS provides high tech, high quality green energy alternative to home or office use.
Ç. Values and Principles on which business stands ✔ Load shedding should not be a problem to any person. ✔ Solar energy is a precious gift and we should take maximum benefit from it.
D. Competitive Advantage ESS Company possesses significant competitive advantages over its competitors because of the following reasons: • • •
Installment facility is provided so that everyone can afford solar electricity. Run by electrical engineers so that each customer’s energy needs is precisely calculated to gain maximum efficiency. Proper customer care is provided by warranty and repair facility.
ESS 5 Business Plan Fig2: Life Development Solar Profit Sales electrification cycle Diagram Introduction for solar Growth electrification Maturity companies
Saturation
Proper customer care is provided by warranty and repair facility.
Decline
ESS 6 Business Plan
ESS 7 Business Plan
III. BUSINESS AND INDUSTRY PROFILE
ESS 8 Business Plan Fig2: Life Development Solar Profit Sales electrification cycle Diagram Introduction for solar Growth electrification Maturity companies
A. Stage of growth
Saturation
Decline
ESS 9 Business Plan
The solar electrification companies of Nepal at present are at an infant stage. It is in introductory stage but consciousness as well as needs of people is increasing at a good rate and the existing companies are getting popular among upper class of residents. We think at this rate, the popularity and the use of renewable energy will increase. Our Company ESS is in the start up phase of business. As initial market we’ll serve the residential customer and offices. Then we will proceed to large organizations and apartments after getting publicity. After covering our initial market, we are likely to attract the customers outside the valley. Besides we are planning to expand our firm that deals only with parts of solar products
B. Company Goals and Objectives Goal: Our goal is to become the number one company in solar electricity business. Objectives: • To reach a target of installing 50 solar panels within the first 5 months. • To spread our service out of valley within second year
C. Industry analysis 1) Industry background and overview The first commercial renewable energy company of Nepal was lotus energy founded on 1993. Till now there are about four companies which deal with solar energy. But among them, two companies work to provide energy to rural areas only. They are NGOs and are funded by various rural development projects. The remaining 2 also take rural areas as their primary target but they deal with urban areas as well. We are the first company to take the urban areas as the primary consumers and this can be a real opportunity. The demand for green alternative energy in urban is constantly increasing as people are having a hard time coping with the problems caused by load shedding crisis. To tackle the load shedding crisis, there are companies which are providing other forms of solutions such as generator services and inverter services. For these solutions, the consumer must spend constantly on running costs such as cost for fuels and maintenance. Due to this high running cost, people in urban areas want something that is hassle free, and cheaper in long term. So they will be attracted to our services. 2) Significant trends The trend of existing renewable energy companies is to collect money from different rural development projects. None of the existing companies focuses on urban areas and hence they are untapped opportunities.
ESS 10 Business Plan
3) Growth rate Currently lotus energy installs 5-6 systems per month in urban areas and this number is increasing even though lotus has no advertisement campaigns. This shows that this rate will increase once people are aware of the availability of such systems. Moreover, the main reason for people not being attracted to solar systems is due to the initial high cost. From our installment provision, people will not be burdened by initial high cost and hence sales will increase. 4) Key success factors In the industry • Load shedding: It has become a huge burden on the life style of urban people. People need other sources of energy to do their jobs as well as for recreation. Also, load shedding problem is forecasted to continue and grow till the next 6 years. So sooner or later, people will search for alternative sources. • Renewable source of energy: Solar energy is renewable source of energy and due to this reason customers are not burdened by any running cost. Once they install the system, they get energy for their lifetime without having to pay any penny. • Pollution free energy: Photovoltaic (PV) modules (Solar Panels) gives free and environment friendly electric power whenever we want it. PV modules generate electricity directly from sunlight and their operation is completely noise and pollution free. Because they have no moving parts to wear and tear, they will provide reliable power for decades. 5) Outlook for the future Presently in many developed countries, there are laws which enable people to sell excessive electricity generated from solar home systems to their regional electricity company. Similarly, such types of laws are being discussed to be applied in Nepal. This process might be completed in the coming 3 to 4 years. So after 3 or 4 years, demand for our products will increase rapidly.
ESS 11 Business Plan
IV. BUSINESS STRATEGY A. Desired Image and Position in the Market We would like to stand out in the solar market through our service and product reliability. We want to be the customer’s first choice by creating positive public image through different media. We want to create an image of a company which provides green energy at cheap and easy installment facility.
B. SWOT Analysis SWOT Analysis for ESS is done as follows: 1. Strength • Good quality of service • Strong public relationship • Highly skilled manpower • Understanding and Unity among the partners • Strong relation with the manufacturers 1. Weakness • Inexperience • Inadequate information about customer’s needs 1. Opportunities • Load shedding • Target customer are unsatisfied with current available services • Promotion of renewable energy from government level • Subsidies and tax credit on the solar products 1. Threats • Political instability • Existing competitors
C. Competitive Strategy The type of strategy we employ to create a market share for our company is focus strategy. We will focus on the class of people who need electricity for their daily works, the class of people who are having a really hard time to deal with the current load shedding problems. By the time competition grows, we will have enough market shares and a distinct brand image. To attract such customers we will engage in advertisement campaigns which will educate people to use green solar energy, campaigns which will explain the long term benefits of using our systems than using generators.
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V Company product and services A. Description 1. Product or Service features Complete solar home system customized to customers’ demands. For this category of products, we will first survey the site and then calculate the required power and its cost. The requirement of different customers may vary. It will include the following components: • Photovoltaic cells (PV): it is the source of energy, it will convert solar energy into electrical energy. We will provide PV cells from Shell-Solar, the largest manufacturer of solar panels in the world. The rating of such panels will vary from 65watts-peak to 200watts-peak. • Charge controller: it will be used to control overcharge and over discharge of battery which will increase battery life. • Heat shrink: helps to overcome overheat of problem of battery • Battery isolator: it will help to run system directly from solar panel after battery is fully charged. • Cable • Battery: it is deep cyclic sealed lead acid battery from TaTa green. Installment of solar panels only(for customers ) From our survey, we have found that about five percent of total population in valley has been using inverters. Customer with this category would need solar panel only. Hence we will install particular solar panel that will match with their system. 1. Customer benefits
✔ First of all the customers are facilitated by services that are customized regarding their needs and perspectives. ✔ Installment facility will make them comfortable with financial context. 1. Warranties and Guarantees
The company shall provide its customers with guaranties and warranties for every component. Failure of any guaranteed component will be repaired or replaced immediately on request (any physical hampers will not be repaired). 2. Uniqueness
Customized system with respect to customers’ perspective is first key point of our company which will satisfy variable needs of our customer.
ESS 13 Business Plan
B. Patent or trademark protection ESS will be register under the Ministry of Industry and Commerce as a service oriented business. It will be a registered as a partnership company in Kathmandu Municipality. ESS will be legally approved after its registration and imitation of our trademark will be punishable as per the Ministry of Industry and Commerce.
C. Description of Service process ESS believes in promoting green energy as well as increasing solar users. ESS creates opportunities for customer to get benefits of solar energy in appropriate costs. Ordering & Payment Procedures: What are the ordering procedures? 1. Contact In order to get our service, one needs to contact in our office. Our advertisement means shall help our customers to get details of offices. 2. Selection of services Our web page; www.uress .com features various products available and our services. The customers can also search the product description and warranty we provide. They can be updated with services we provide through our web page. The customers can select the types of the service they want 3. Pricing Pricing of the services will be mentioned in both in Nepalese as well as US Dollar in our web page. For convenience customer can directly contact in our office.
Payment methods: The payment is divided into full payment and installment basis:
ESS 14 Business Plan
• •
Full payment: customer has to pay immediately after the installation of system. The cards accepted are VISA, Master Card and Standard Chartered card. Installment basis: This payment method is valid for all customers. Customer have to make fifty percent down payment at first after installation then customer shall pay in installment basis with interest to finance company.
D. Future Service offerings: We are planning for adding the services which will target offices and small hotels. ESS has plan to deploy this service after two years of establishment of company
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VI MARKET STRATEGY A. Target Market 1) Complete Demographic Profile: The idea of ESS came due to the emerging market solar energy in Nepal. Every year thousands of Nepalese are attracted toward particularly solar energy in the middle of alternatives energy sources. They want to serve by solar energy to get relieve from load shedding and electricity crisis. Table: total population and targeted customer
YEAR
POPULATION
% Population
2007 2008 2009
39,51,423 41,08,817 45,67,565
5.2 % 5.7 % 6.5 %
2) Electronics equipments List of Mostly used electronics eqipments S.N. 1. 2. 3. 4.
List of electronics equipments CFLs (Tube light) Computer Laptop Mobile charger
B. Customer’s Motivational Factors The concept of solar energy is not new among the Nepali customers. According to our market survey, most of our targeted customers are familiar with solar power installation and their benefits. Majority of customers have positive thinking towards our business idea. We have summarized some factors which help to motivate the customers to use our services. The significant customer’s motivational factors are: 1. Better alternative source of energy
ESS 16 Business Plan
In the long run, solar electricity is cheaper than buying it from the power company. There is a start up cost, but then it starts paying for itself. Once you break even, everything after that is profit. 2. Giving customer what they want There is a huge variety of solar panel systems available. Some can cost tens of thousands of dollars, and some cost just a couple hundred. This means customer can get into solar, with their respective financial effort. 3. Environmental aspects: Solar Energy is clean, renewable (unlike gas, oil and coal) and sustainable, helping to protect our environment. It’s not affected by the supply and demand of fuel and is therefore not subjected to the ever-increasing price of gasoline.
C. Market Size and Trends 1) How large is the market? Solar energy market in Nepal is in growing stage. The location of the company is in Putali Sadak, Kathmandu which shares major part of population. Since it is capital city, most of the people are familiar with benefits of solar energy. This location shares major targeted customer which will be beneficial for our service. Targeted customers have started to use these types of services in Kathmandu valley. Since this type of service is in developing and progressive stage, ESS will catch the present trend customizing the service with customers’ needs. 2) Is it growing or shrinking? There are few companies who are directly related to our services. We are the competitors in this market. Customers preferring solar energy are increasing day by day. Due its advantages, people are more likely to have solar energy in their house and offices. Since our targeted customers are familiar with solar energy and its merits, it is more liable to increase in market. Hence our targeted market is in growing stage.
D. Advertising and Promotion The advertisement is depending upon the target customers; where are they? How should we communicate with them? ESS is going to answer these questions with the effective advertisement ant promotion techniques. This section includes a description of all advertising
ESS 17 Business Plan
means and medium we are planning to use as well as public relations program and promotional materials (such as brochures). We will adopt GUERRILLA marketing approach for marketing our service. As we have focused in Kathmandu valleys’ customer in initial stage, we will use following media for advertisement:
1. Media to be used We are planning to use two types of Advertisement; viz. Offline and Online advertisement. We mainly focused on offline than online advertisement. i. Offline Promotion: Newspaper: News paper is a good source of communicating with the potential customers, especially of age group 20- 40 years. Our targeted customers prefer the English newspapers like The Himalayan Times, The Kathmandu Post, and Nepal Times. We will advertise our company service, contacts, features and website in those papers. As our allocation of cost for offline advertisement is high, the advertisement will be weekly or may be monthly.
Magazines: Another effective means of advertising for our company is magazines which has wide reach to the target customer. Magazines offer long life span resulting in good chance of being seen several times. Magazines ads are usually of high quality, resulting in strong visual appeal. We will use business magazine like The Times Nepal, which are more preferred by our customer. The selection of newspapers and magazines will depend on the Cost per thousand (CPM). Brochure: Our company publishes a brochure annually including all the activities of the company. Brochure helps to make customer up to date about income and expenses of the company. The report of seminars and interaction programs held in the year is published in it. A strong brochure can be the back bone to reflect the positive feedback from customer for an institution. So we are planning to invest enough capital to publish own brochure.
ESS 18 Business Plan
Public Relation: To increase public relation, we will organize program to create awareness about alternative energy. This type of program will help to raise our company status in public perspective and different media covering the program will help recognition of our company existence. This will also help to make relationship with different professional and expertise of different fields. ii. Promotion through internet: Since our targeted costumers are use to with internet, ESS shall be focusing in advertisement through internet. We will use web page of our company that are cost effective but reach the large number of customer, 2. Frequency of usage We are mainly focusing in offline advertisement so our company will be updated in news and magazines regularly. News paper will be used weekly and magazines fort nightly. Costs for news paper and magazines are noted in table below. Our web page will be updated time to time. 3. Advertisement Cost: S.N. Type of Advertisement News paper 1. (The Himalayan Times) (Weekly) Magazines 2. (The Nepal Times) (fort nightly)
Cost Allocated (Rs)
3.
Web page
10,000
4.
Brochure (Annually)
60000
50000
70,000
ESS 19 Business Plan
E. Pricing 1. Cost Structure a. Fixed Cost: PreOperating Fixed cost computer (3) Furniture Fax and printer other Rent Salaries Insurance Total Fixed Cost
Second First Year Year Amount Amount (Rs) Amount (Rs) (Rs) 90000 100000 30000 10000 240000 468000 336000 768000 20000 20000 230000 596000 12,56,000
Third Year Amount (Rs)
468000 768000 20000 1256000
b. Variable Cost:
Variable cost Transportation Electricity Telephone bill Tax Total Variable Cost
First Year Amount (Rs) 30,000 7200 14,400 1,35,625 1,87,225
Second Year Amount (Rs) 48,000 10000 14,400 1,51,671 2,24,071
Third Year Amount (Rs) 48,000 10000 14,400 2,51,292 3,23,692
2. Desired Image in the market We will like to see ESS next to leading companies like Lotus in national market and next to some international companies like Solar Shell in few years. We will like to establish a strong brand image by the consistent quality services. As our vision we will always try to deliver value to our customers, employees and to our nation as well.
ESS 20 Business Plan
VII: Location and Layout A. Location and demographic analysis We have selected Kamal Pokhari as the appropriate location because of the proximity of our suppliers.The rental rates are also cheaper in this part of the valley and building is facilitated with telephone, internet and electricity facilities, so this location is appropriate for our business.
1. Traffic count About 55 vehicles per minute keep on running in the road during peak hours in kamalpokhari area. 2. Lease Rates Being the center of Kathmandu valley the rental rates is slightly lower than other areas in putalisadak and kamalpokhari area so we are focusing in this area. We are planning to rent a flat with two rooms with cost of 20000 per month in the starting year. 3. Labor Needs and Supply ESS mainly needs the labor for transporting the equipments to the customer place and helper for installing the system in customer’s home or office. Our business attracts the people with required qualifiacation to fill of ther application for being an employer in ESS since its central location and facilities provided.
A. Layout and ergonomics issue ESS is established in two rooms in its starting, each room is with size of 20*20 sq. feet. One room is allocated for reception and customer dealing with place for 3 head manager of ESS. Another one is separated for storing the goods with a corner for resting of employees to feel energetic when tired from working.
ESS 21 Business Plan
Our working area is well equipped with furniture and standard lighting in the room. The space will be sufficient to create workable environment inside the office. The working area will have all the necessary facilities needed for the business. Note: appendix contains the detail layout of office.
VIII COMPETITORS ANALYSIS A. Existing Competitors 1. Competitive Profile Matrix Major competitors: These competitors are the giants of online shopping in Nepal. They are: 1. Kevin solar solution 2. Swogun Energy PVT. LT Swogun Energy PVT. LT •
Business type: manufacturer, retail sales, wholesale supplier, importer
•
Product types: Solar Home System, Portable Power Pack solar system system, solar batteries, charge controller and others.
•
Service types: consulting, installation, project development services, research services, site survey and assessment services, contractor services, maintenance and repair services
Kevin Solar Solution: •
Business type: manufacturer, exporter
•
Product types: backup power systems, DC to AC power Inverters sine wave, Batteries Deep Cycle, SMF Batteries, Solar Water Heating Systems, Solar Lighting Systems, Online UPS, Automatic Lift Backup System, IGBT Based Home UPS, CFL Lights, Cyber H-UPS, Sine Wave Inverter, Sine Wave UPS, DSP Sine Wave H-UPS, DSP Sine Wave Inverter, DSP Sine Wave Online UPS, DSP Sine Wave Static UPS. We have constructed the CPM of Kevin Solar solution, Swogun Energy PVT. LT and ESS as following: Table: Competitive Profile Matrix (CPM) Kevin Solar solution
Key Success Factors
Innovative services Price Competitiveness Financial Strength
Swogun Energy PVT. LT
ESS
Weight Rating 0.1 4
Score 0.4
Rating 2
Score 0.2
Rating Score 4 0.4
0.2
1
0.2
2
0.4
3
0.6
0.1
4
0.4
2
0.2
3
0.3
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Service Quality Customer Trust
0.4 0.2
4 3
Total
1.6 0.6 3.2
3 3
1.2 0.6 2.6
4 2
1.6 0.4 3.3
2. Strengths and Weakness of competitors The major competitors are the established companies. They have established their service image and they have good technology and financial strengths. Kevin Solar solution Strength • Strong brand name • They are manufacturer Weakness • Expensive delivery charge • Slow delivery process Swogun Energy PVT. LT Strength • Strong brand name • Unique R&D deparment Weakness • location • low interaction with customers
B. Potential competitors Solar home installation company is medium scale company. So, there will always be possibility of new competitors. Our potential competitors will be those who will focus on installation service only in particularly in Kathmandu valley. Some of the potential customers are:
Kinetic Energy Pvt. Ltd. •
Business type: wholesale supplier
•
Product types: solar lighting systems, batteries lead acid deep-cycle, solar charge controllers, DC lighting, solar water pumping systems, batteries lead acid flooded, retails sales, wholesale supplier, design.
•
Service types: consulting, contractor services, research and development
ESS 23 Business Plan
Nepal Energy Development Company (Pvt.) Ltd. (NEDCO) •
Business type: retail sales, wholesale supplier
•
Product types: appliances, custom batteries, water heating systems, sun concentrating photovoltaic systems, photovoltaic modules, compact fluorescent lighting, Compact Flourecent Lamps (CFL), Complete Solar Home Systems, Complete Solar Water Heating Systems.
•
Service types: consulting, installation
•
Address: Bharatpur-10, Chaubiskothi, Chitwan, Narayangarh, Narayani Nepal 26, Bharatpur
Lotus Energy Pvt. Ltd. •
Business type: Manufacturer, Wholesale, Supplier, Retail Sales, Service, Installer
•
Product types: Complete Solar Energy Systems, photovoltaic modules, rechargeable batteries, Power backup systems, Solar charge controller, Solar pumps, Solar Tukis(alternate to kerosene lamp), Solar LEDs, Solar prayer wheels, Solar ozone water purification systems, etc. .
•
Address: P. O. Box 9219, 1679 Thirbam Sadak 3, Bhatbhateni, Kathmandu, Bagmati Nepal
•
Telephone: +977 (1) 441 8203
•
FAX: +977 (1) 441 2924
Impact on our business: They are potential competitors with similar services we provide. If they plan to target in our customer and location under these circumstances we will lose our potential customer. As well as, market will saturate before than we estimated.
ESS 24 Business Plan
IX DESCRIPTION OF MANAGEMENT TEAM ESS is partnership business organization which will be owned and manage by its three partners. The three partners will jointly share the ownership of the business and they will have equal amount of equity, profitability and all of these members hold equal decision making authority. ESS will operate with three departments—Research and Development Department ,Account and Sales Department, Operation and Maintenance Department, at the office which is based in Kamal Pokhari. The partners are responsible for one department and they will make the decisions on their respective department and the major decisions of the company will be jointly discussed.
A. Key managers and employees 1. Designation of Key managers Name
Designation
Mr. Damodar Paudel Mr Ashish Manandhar Mr. Rubbendra Maharjan
Accounts and Sales Department Operation & Maintenance Department Research and Development Department
2. Key Employees:
1. Receptionist 2. Helper The number of helper will be increased in the consecutive second year from one to four. The female applicants are encouraged to be employed in the reception. Helper is required to be more experienced so no complain may arise from customers. 3. Salary Structure of staffs: Employee R&D Manager Accounts and Sales manager Operation and Maintenance manager Receptionist Delivery Boy
Salary/Month (Rs.) 8,000 8,000 8,000 8,000 8,000
ESS 25 Business Plan
We designated the salary structure such that the employees do not have to make any compromise in their self-esteem.the salary scale is equally divided from top to bottom level of management.At the end of the year profit is shared among the three owners of ESS.
A. Qualification of Management Team Ashish Manandhar : ME in Electrical Engineering Damodar Paudel : Masters in Business Administration Rubbendra Maharjan : Master in Renewable Energy Receptionist : Bachelors in Business Administration Helper : Diploma level
ESS 26 Business Plan
X PLAN OF OPERATION A. Form of ownership ESS will be operating as a partnership firm. All the three partners will jointly share the ownership of the business and they will have equal amount of equity, profitability and all of these members hold equal decision making authority. All the partners will be actively involved in the day to day operations of the business. The partners have the responsibilities in three departments. The main reason for operating as Partnership business is to establish such a business that is strong in financing and management. Three partner viz. Mr. Damodar Paudel, Mr Ashish Manandhar and Mr. Rubbendra Maharjan will jointly invest the equity capital of Rs.1,000,000 each. The sources of equity financing of the partners will be personal savings and their friends and family members.
B. Structure of the Company
ESS
R&D Manager
O&M Manager
Helper
C. Decision Making Authority
Account &Sales Manager Reception ist
All the three partners off the ESS will have equal authority to make decisions. The partners are responsible for one department and they will make the decisions on their respective department and the major decisions of the company will be jointly discussed. All the major decisions of the company must require the consent of each member.
ESS 27 Business Plan
D. Compensation and Benefits Packages As our mission “Solar energy is a precious gift and we should take maximum benefit from it.”, we will never compromise in the quality of our service. The customers can check the condition of the service installed and they can complain if unsatisfied with our work. We will always remember “the customer’s satisfaction is our motto” during our business.
ESS 28 Business Plan
XI FINANCIAL FORCASTS A. Financial statement 1. Pro forma Income Statement Income Statement of Everest Solar Solutions (in Rupees) First Year Second Year 1,26,48,768 1,51,54,656
Net Sales Revenue Cost of materials Balance
Operating Expenses Rent Salaries Telephone Electricity cost Insurance Stationary Transportation Internet charge Other Total operating expenses Balance Depreciation Computer 9,000 Furniture 10,000 Fax and printer 3,000 Electronic appliances 1,500 Total depreciation Balance
93,28,000
1,11,76,000
1,33,76,000
33,20,768
39,78,656
47,62,856
2,40,000 3,36,000 14,400 7,200 20,000 24,000 30,000 12,000 2,400
4,68,000 7,68,000 14,400 10,000 20,000 24,000 48,000 12,000 2,400 6,86,000 26,34,768
4,68,000 7,68,000 14,400 10,000 20,000 24,000 48,000 12,000 2,400 13,66,800 26,11,856
8,100 9,000 2,700 1,350
13,66,800 33,96,056
7,290 8,100 2,430 1,215
23,500 26,11,268
21,150 2590706
19,035 33,77,021
Balance
5,28,000 20,83,268
5,28,000 19,09,106
7,04,000 26,73,021
Balance
10,40,000 10,43,268
7,40,000 11,66,706
7,40,000 19,33,021
1,35,625 9,07,643
1,51,671 10,15,035
2,51,292 16,81,729
Inventory
Advertisement cost
Tax(13%) Net income
Third Year 1,81,38,856
ESS 29 Business Plan
B. Annual Expenses (in Rupees) Category
First year
Rent Salaries Telephone Electricity cost Insurance Stationary Transportation Internet charge Advertisement cost Other
Tax Total
Second year
Third year
2,40,000 3,36,000 14,400 7,200 20,000 24,000 30,000 12,000 10,40,000 2,400 1,35,625
4,68,000 7,68,000 14,400 10,000 20,000 24,000 48,000 12,000 7,40,000 2,400 1,51,671
4,68,000 7,68,000 14,400 10,000 20,000 24,000 48,000 12,000 7,40,000 2,400 2,51,292
18,61,625
22,59,471
23,58,092
Sales and profit statement Sales st
1 year 2nd year 3rd year
20000000 18000000 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0
Profit 1,26,48,768
9,07,643
1,51,54,656
10,15,035
1,81,38,856
16,81,729
sales profit
1st year
2nd year
3rd year
Forecasts profits of first three years
ESS 30 Business Plan
C. Pro forma Balance Sheet(at the end of first fiscal year) Assets Current Assets Cash Account receivable Prepaid expenses Inventory Total Current Assets Fixed Assets Electronic appliances Less Accumulated Depreciation Computer Less Accumulated Depreciation Fax and printer Less Accumulated Depreciation Furniture Less Accumulated Depreciation Total fixed Assets Total Assets
9,07,643
0 0 20,83,268 29,90,911
15,000 1500
13,500 90,000
9,000
81,000 30,000
3,000
27,000 100,000
10,000
90,000 2,11,500 32,02,411
Liabilities Current Liabilities Account Payable Wages, Salaries Payables Advertisement Payables 1st cost Taxes Payable
0 0 0 2,35,000 0 2,35,000
Total Current Liabilities Owner’s Equity Partners’ Capital Total Liabilities and Partners’ Equity
29,67,411 32,02,411
ESS 31 Business Plan Particular Cash inflow Equity
Pre-operating
Cash outflow Pre-operating expenses (Purchase of fixed assets) Cost of materials Operative Expenses Inventory Advertisement cost Tax Total cash outflows Net cash flows
3. Cash flow statement
Third year
1,26,48,768
1,51,54,656 1,81,38,856
1,26,48,768
1,51,54,656 1,81,38,856
93,28,000 6,86,000 5,28,000 10,40,000 1,35,625
1,11,76,000 1,33,76,000 13,67,800 13,66,800 5,28,000 7,04,000 7,40,000 7,40,000 1,51,671 2,51,292
2,35,000
1,17,17,625
1,39,63,471 1,64,38,092
27,32,411
9,31,143
11,91,185
17,00,764
27,32,411 –
36,63,554 –
48,54,739 –
36,63,554
48,54,739
65,55,503
29,67,411
2,35,000
Cash balance in the beginning Borrowing/Repayment Cash balance at the end
Second year
29,67,411
Sales Total cash inflows
First year
27,32,411
ESS 32 Business Plan
B. Breakeven analysis First year Fixed cost
25,8000
Selling price per unit
1,19,328
Variable cost per unit
91,000
Breakeven point in units
89 units
breakeven point=fixed costselling price per unit-variable cost per unit The fixed cost includes: Advertisement cost (Rs.10,40,000), Initial start up cost (Rs.2,85,000), Running cost for one year (Rs.6,55,000) And the inventory cost(Rs.5,28,000) Hence after sales of 89 units, we will go into profit.
ESS 33 Business Plan
C. Ratio Analysis: 1. Net profit on Sales ratio: Net profit on Sales ratio = Net profit ÷ net sales
Net profit Net sales Net profit on Sales ratio
First year
Second year
Third year
9,07,643
10,15,035 1,51,54,656 6.69%
16,81,729 1,81,38,856 9.27%
1,26,48,768 7.175 %
Conclusion : After deducting all the expenses, 7.175 paisa of each sales rupees remains as a profit for us in the first year. Then in second year due increase in expenses in addition of rooms and human resources, it is decrease to 6.69 paisa of each sales rupees. After third year, it will increase to 9.27 paisa of each sales rupess as no more additional expenses will be added. In other hand advertisement expenses will be deducted after second fiscal year. 2. Net profit to equity (Return on Investment Ratio) Net profit to equity Ratio= net profits before tax / shareholders equity First Year Net Profit Owner’s Equity Net profit to equity ratio
10,43,268
32,02,411 32.5%
Conclusion: The earning of ESS is 32.5 percent on the money the partners have invested in ESS for first year. 3. Times interest earned ratio: Times interest earned ratio= (earnings before interest and taxes)/ (total interest expense) First Year Earnings before interest and taxes Total interest expense Time interest earned ratio Conclusion: ESS earned 7.69 times more than its tax expenses.
10,43,268 1,35,625
7.69
ESS 34 Business Plan
References 1. 2. 3. 4. 5.
www.solarpanels.com www.scribd.com www.nea.com .np www.lotusenergy.com www.solarbuzz.com
ESS 35 Business Plan
Appendices Appendix no. 1 A. Location: Kamal Pokhari
Layout of the Office: Plan of working area
40*60 ft2
Area of the office: Room
Size(ft*ft)
Account & sales section 5*5
ESS 36 Business Plan
Store room
20*30
Reception
5*5
O&M
5*5
R&D
5*5
Appendix no. 2 Business plan survey We have done a survey on the students of Kathmandu University coming from Kathmandu altogether about 20 Students by distributing a questionnaire and make them free to express anything on the topic. Here is the result and model of questions QN1. How often load shedding is becoming an obstacles in your routine life? a. Not so often b. Is curse c. Loving it QN2. What may the best alternatives to solve present load shedding? a. b. c. d.
Inverters Diesel generator Solar plant Anything you suggest
Among the participants two of them suggested that bio fuel can be used to stop loadshedding. QN3. Do you know about green energy? a. Yes b. No
QN4. What you use to read during night for study?
ESS 37 Business Plan a. b. c. d.
Solar lamps Emergency lights Candles Don’t read when loadshedding
QN5. Do you think solar plant is costly? a. Yes b. No c. Do not know
QN6. What is the main reason behind present energy crisis? a. Political instability b. Not enough hydropower plant c. Leakage and theft of electricity
QN7. What you suggest about to reduce present load shedding and promoting use of solar energy? Participant expressed their views on the use of solar plants some expressed about high cost of it, So we need to search other alternatives but many of them wrote that sun is this is nature’s gift for us so we must make benefits from it by using solarplants and promoting green energy.
ESS 38 Business Plan
Appendix no. 3 Result of survey conducted among 20 persons S.N
Payment types
No of person
1 2
Full payment Installment
13 7
ESS 39 Business Plan
Appendix no. 4 Glossary Competitive advantage The aggregation of factors that sets a small business apart from its competitors and gives it a unique position in the market. Equity: In property, the difference between the property’s current market value and the claims against the property. In a firm the shareholder’s equity is the ownership interest in the firm. Depreciation Decrease in the value of equipment from wear and tear and the passage of time. Partnership An association of two or more people who co-own a business for the purpose of making a profit. Guerrilla Marketing Strategy Unconventional, low cost, creative marketing strategies designed to give small companies an edge over their large, richer more powerful rivals. Innovation The ability to apply creative solutions to problems and opportunities to enhance. Revenue The entire amounts of income before any deductions are made. Assets: Accounting term for everything a company owns and which has a monetary value listed in the balance sheet. Budget: A plan of future income and expenses during a specified period, such as one year. In an operating budget the planned costs and revenues, expenditures and incomes are compared. Variable Cost Any costs that change significantly with the level of output. Fixed Cost Any cost of production that does not vary significantly with the volume of output. Income Statement A financial statement that represents a moving picture of a business, comparing its expenses against its revenue over a period of time to show its net profit. Balance Sheet
ESS 40 Business Plan
A financial statement, that provides a snapshot of a business’s financial position. Current Assets Assets such as cash and other items to be converted into cash within one year. Fixed Assets Assets acquired for long-term use in a business. Liabilities Creditors’ claims against a company’s assets. Current Liabilities Those debts that must be paid within one year. Cash Inflow Cash flowing into the business from all sources over a period of time. Cash Outflow Cash flowing out of the business from all sources over a period of time. Expense Amounts paid for goods and services that may be currently tax deductible. Return on Investment The amount of profit (return) based on the amount of resources (funds) used to produce it. Profit Profit is the excess of income over expenses. Differentiation Strategy A strategy in which a company seeks to build customer loyalty by positioning its goods or services in a unique or different fashion.
ESS 41 Business Plan
Appendix no. 5 Resume of Key Managers Name: Ashish Manandhar Age: 27 Address: Chetrapati, kathmandu Residence Ph: 01-4460365 Mobile: 9846060720 E-mail:
[email protected] Present status: Manager at CDC Advertising Pvt. Ltd. Interest: Sports, Reading, Music, Chess
Academic Achievements Serial No. 1. 2. 3. 4.
Degree Achieved
Awarding Institute
Grades Obtained
Remarks
MBA B.E I.SC SLC
KU KU S. Xaviers Gandaki H.S.S
3.5 CGPA 3.03 CGPA 73% 80.00%
Distinction First division First Division Distinction
Awards Achieved: • •
Best cricketer of Kathmandu, 2008 Face of Thamel, 2007
Presentation and Seminars: Marketing seminar organized by KUSOM, 2007
ESS 42 Business Plan
Name: Damodar Paudel Age: 27 Address: Khurkot-5, Parbat Residence Ph: 067-420341 Mobile: 9841419586 E-mail:
[email protected] Present Status: Account Manager in Himstar Electronics PVT LTD. Interest: Reading, sports, travelling
Academic Achievements Serial No 1. 2. 3. 4.
Degree Achieved
Awarding Institute
Grades Obtained
Remarks
MBA BE I S C. SLC
KU KU NIST Kalika Ma.Vi, parbat
3.85 CGPA 3.5 CGPA 77% 75%
Distinction Distinction First Division First Division
Other Degrees Obtained: 1.
“Complete Windows Package” course from Brilliant Computers, 2006.
Awards Achieved: •
Gold Medal for highest CGPA, 2007
Presentation and Seminars: • •
Seminar on Microeconomics organized By Nepal chamber of Commerce, 2006 Presented paper on Microeconomics, 2007
ESS 43 Business Plan
Name: Rubbendra Maharjan Age: 28 Address: Jorpati-5, Kathmandu Residence Ph: 01 – 4486163 Mobile: 9841291928 E-mail: gnr_Rubbendra @hotmail.com Present Status: Customer Service Officer at Prisma Electronics Pvt. Ltd. Interest: Reading, Sports, Music
Academic Achievements Serial No 1. 2. 3. 4.
Degree Achieved
Awarding Institute
Grades Obtained
Remarks
ME B.E ISC SLC
KU KU KU Gyanodaya
3.75 CGPA 3.65 CGPA 70% 80.2%
Distinction Distinction First Division Distinction
Other Degrees Obtained: 1. 1.
Microsoft Office Package Course from New Tech Institute,2007 6 months training in Organizational Development and Leadership , Malthus Institute, Putalisadak, 2006
Awards Achieved: •
Winner of Music Competition at Gyanodaya, 2002
Presentation and Seminars: •
Attended one day seminar on “Renewable Energy” ,2007
ESS 44 Business Plan
Table of Contents I Executive Summary..................................................................................................................................1 A. company name, address and phone number........................................................................................1 B. contacts of key people.........................................................................................................................1 C. Our Business, Services and solutions..................................................................................................2 D. Our Market.........................................................................................................................................2 E. Competition and marketing Strategy...................................................................................................2 F. Management team...............................................................................................................................3 G. Financial forecast................................................................................................................................3 II. VISION AND MISSION STATEMENTS.............................................................................................4 A. vision statement..................................................................................................................................4 B. Mission statement...............................................................................................................................4 Ç. Values and Principles on which business stands.................................................................................4 D. Competitive Advantage......................................................................................................................4 III. BUSINESS AND INDUSTRY PROFILE.............................................................................................5 A. stage of growth...................................................................................................................................5 B. Company Goals and Objectives..........................................................................................................5 C. Industry analysis.................................................................................................................................6 1) Industry background and overview..................................................................................................6 2) Significant trends.............................................................................................................................6 3) Growth rate......................................................................................................................................6 4) Key success factors In the industry..................................................................................................6 5) Outlook for the future......................................................................................................................7 IV. BUSINESS STRATEGY......................................................................................................................8 A. Desired Image and Position in the Market..........................................................................................8 B. SWOT Analysis..................................................................................................................................8 C. Competitive Strategy..........................................................................................................................8 V Company product and services................................................................................................................9 A.
Description......................................................................................................................................9 1.
Product or Service features..........................................................................................................9
2.
Customer benefits........................................................................................................................9
ESS 45 Business Plan 3.
Warranties and Guarantees..........................................................................................................9
4.
Uniqueness................................................................................................................................10
B. Patent or trademark protection..........................................................................................................10 C. Description of Service process..........................................................................................................10 D. Future Service offerings:...................................................................................................................11 VI MARKET STRATEGY.......................................................................................................................12 A. Target Market...................................................................................................................................12 1)
Complete Demographic Profile:................................................................................................12
2)
Electronics equipments..............................................................................................................12
B. Customer’s Motivational Factors......................................................................................................12 C. Market Size and Trends....................................................................................................................13 1) How large is the market?..............................................................................................................13 2) Is it growing or shrinking?.............................................................................................................13 D. Advertising and Promotion...............................................................................................................13 1. Media to be used............................................................................................................................14 2. Frequency of usage........................................................................................................................15 E. Pricing...............................................................................................................................................16 VII: Location and Layout..........................................................................................................................18 A.
Location and demographic analysis...............................................................................................18
B.
Layout and ergonomics issue.........................................................................................................18
VIII COMPETITORS ANALYSIS...........................................................................................................19 A. Existing Competitors........................................................................................................................19 1. Competitive Profile Matrix............................................................................................................19 2. Strengths and Weakness of competitors.........................................................................................20 B. Potential competitors.........................................................................................................................20 Kinetic Energy Pvt. Ltd.........................................................................................................................20 Nepal Energy Development Company (Pvt.) Ltd. (NEDCO)................................................................21 Lotus Energy Pvt. Ltd............................................................................................................................21 IX DESCRIPTION OF MANAGEMENT TEAM....................................................................................22 A.
B.
Key managers and employees........................................................................................................22 1.
Designation of Key managers....................................................................................................22
2.
Key Employees: .......................................................................................................................22
3.
Salary Structure of staffs:...........................................................................................................23 Qualification of Management Team..............................................................................................23
ESS 46 Business Plan X PLAN OF OPERATION.......................................................................................................................24 A.
Form of ownership.........................................................................................................................24
B.
Structure of the Company..............................................................................................................24
C. Decision Making Authority...............................................................................................................24 D. Compensation and Benefits Packages...............................................................................................25 XI FINANCIAL FORCASTS...................................................................................................................26 A. Financial statement...........................................................................................................................26 1.
Pro forma Income Statement......................................................................................................26
B. Annual Expenses ..............................................................................................................................27 C. Pro forma Balance Sheet ..................................................................................................................28 D. Cash flow statement..........................................................................................................................29 E. Breakeven analysis............................................................................................................................30 References.................................................................................................................................................33 Appendices................................................................................................................................................34 Appendices
