Business Plan: Total Repair System

BUSINESS PLAN

TOTAL REPAIRING SOLUTIONS (TRS)

Mr. Aashik a. ambawat MR.VISHESH R. MODI

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Table of Contents: Topic

Page NO:

Introduction

3

General Company Description

4-5

Products and Services

6

Marketing plan

7-10

Operation plan

11-12

Start-up expenses and capitalisation

13

Financial Plan

14-18

BREAK-EVEN analysis

19

Reasons for pursuing this business model

20

conclusion

21

appendices

22

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INTRODUCTION: What do you exactly need to build a perfect structure? Right Material, Right People, Right Place, Right Costs, Right Time. And probably one place where the best of all these come under one roof. TOTAL REPAIRING SOLUTIONS (TRS) is just the place to head. Come over to check out this dream world for your Dream House. Happy Building..!! In today’s fast moving world, people don’t have time to go and search for Masons, Plumbers, Electricians and other emergency repairing service providers when they need to renovate or repair their house/office. Most of the times these service providers are hired through personal contact or from nakas and small building material shops as there is no such specialised outlet available under one roof where you get all these services. Usually the labourers hired are unskilled, who generally roam from one place to another in search of work. They don’t have any fixed rates for any kind of work and charge you exorbitantly for the service they provide. In addition to that, the quality provided by them is of a major concern and an individual from the family has to constantly look after them while they are working in the house to see that the work is done in an effective manner or not. This creates unnecessary panic among the members of the house usually as they have to divert their mind from their day to day work and assist the labourers in getting all the required material for the renovation and look after them while they are working in the house. There are architects who provide all the services but their charges are exorbitantly high and they avoid doing small day to day repairing work, so ordinary people can’t afford to hire the services of an architect. Therefore our basic idea is to provide complete home/office based repairing and renovation solutions all under one roof. Because we know the tough decisions you have to make while hiring someone to work for you. Generally, we observe that the service provided by the contractors are not up to the mark and most important not completing the required work on time and the work done is of inferior quality standards. Our idea is to provide quality customer service with excellent workmanship standards, which customers pay for and rightfully deserve. This concept can work in both urban and rural areas because repair and renovation is an integral part of the house.

In short our main motto is TO CONVERT AN UNORGANISED SECTOR INTO AN ORGANISED ONE which can be beneficial to the society at large.

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GENERAL COMPANY DESCRIPTION:

 Our Business :

We will be engaged primarily in the business of providing the complete solution for activities such as masonry, plumbing, and all works related to electricity and other services related to repairing and renovation.

 Mission Statement : We believe in fulfilling your needs at your doorstep and in the process providing our employees with the opportunity to grow and excel.

 Vision Statement : To become an economical and social service provider Business group.

 Company Goals and objectives : •

To be a leader in the area of customer service

•

To be able to provide complete solutions to our customer

•

To provide the best of services at a reasonable cost

•

To provide an opportunity to our employees for continuous growth and development

•

To make our customer’s life simpler and more convenient

 Business Philosophy :

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Our philosophy in business is to maintain a healthy relationship with all our customers. We understand that keeping our customers happy is our best foot forward. We will focus on providing the best quality services at reasonable prices. Moreover, our aim is to make the lives of our customers much simpler and convenient by fulfilling their needs at their doorstep. We also do believe that an organization cannot grow without the support of its employees. Hence, we would motivate our employees for their all-round development by providing them, necessary training programmes at regular intervals.

 Our Industry:

Our company would broadly fall under the construction service industry related to repairing and renovation. It is a growth industry as services such as masonry; plumbing and electric have a constant demand. We would also be looking to take the first mover advantage and grow as an organization.

The nature of this industry is highly unorganized. Therefore, we foresee other branded players entering the market due to the huge potential this industry offers. Although the entrance of new players will affect our market share but we plan to cash in on the first mover advantage and create a good brand image for ourselves and hence avoiding any encroachment into our market share.

 Company Strengths and Core Competencies :

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Providing service at customer’s doorstep

•

Skilled and well trained employees

•

Quality service at reasonable prices

•

Providing annual contracts for hassle free maintenance

•

Proper follow up and after sales services

 Legal Firm of ownership : We will be starting out as a Partnership firm in the beginning and later look onto form a private limited company after 5 years based on business.

 Partners:  Mr. Aashik Ambawat  Mr. Vishesh Modi

PRODUCTS AND SERVICES: Our Service boasts of the following major facilities: A) Masonry  Kitchen Renovation  Bathroom Renovation  Flooring  Tiling  Plasters  Any other work as per customers requirement

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B) Plumbing Work C) Electric Work D) Painting Work E) Water Proofing

In addition to the above facilities, we are also providing following services on demand:  Vastu-Consultancy  Pest Control  Architect  POP Work  Carpentry  Interior Decorator  Legal Tips  Technical Knowledge

We will also be dealing for the products required for all the above services which are as follows:  Cement  Steel  Sand  White Cement  Water Proofing Materials  Bricks  Tiles  Paints

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 Electrical Products  Plumbing Products

*E-payment Facility *Basic Vastu -Consultancy and Cost estimation is free.

MARKETING PLAN: Market Information: Size of the Markets: Repairs and Renovation segment contributes to approx. 45 % of the construction industry potentially. E.g.: South Mumbai is the best example for this segment as there is no new land available and renovation is carried on throughout the year as structures available are all old and due to environmental conditions repairs and renovation is a need of hour.

Barriers to Entry: Competition from Non-organised sectors.

Major Customers:  Co-operative Housing Societies  Individual House Builders(IHB)  Petty Contractors  Small Builders  Institutions  Commercial Premises

MARKETING STRATEGY: •

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Direct mailers :

We would be sending direct mails to our target customers informing them about the services we provide. We would include our brochures and pamphlets in the mails that would be sent to the potential customers. This will create knowledge about the services that we provide amongst the customers.

•

E- marketing :

We would also be using internet as a medium to promote our services with the help of our own website. We would also post links to our website on various search engines as well as popular networking sites.

•

Word of mouth:

As we are not investing a lot of money in direct advertising, it will be very important for us to promote our services through word of mouth. For this purpose, it will be very crucial to develop good relations with the housing societies in the city and the customers that we make. As it is usually said and now proven by market research “A satisfied customer talks good about the product or service to 10 other customers”. Therefore we would be looking to satisfy our customers by providing excellent quality of service at reasonable prices.

Other Promotion Techniques:  Mass Publicity  Hand Outs in Newspaper  Key Customers Meetings which includes: -Petty Contractors and Small Builders Meetings

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-Housing Society Decision Maker Meetings

PORTER’S FIVE FORCES MODEL: Bargaining power of supplier: High - We would have greater bargaining power with supplier because the materials would be purchased in bulk and on advance payment basis which will be beneficial to us up to a large extent.

Bargaining power of buyer:

Low - The buyers will have little or very low bargaining power with respect to our services because we will have fixed prices which will already be very reasonable keeping the in mind the people from all strata’s and sections of the society

Threat from substitutes:

Low - The threat of substitutes is low in our industry due to the fact that all the other players in the market are highly unorganized and charge exorbitant prices without any cost analysis behind their pricing policy. It is here that our firm would look to build an advantage over them by proving best quality at very reasonable prices supported by adequate cost analysis and logic.

Threat from new entrants: High- The threat of new entrants is very large in this industry as there are no real barriers to entry. Moreover, this is a niche market which has not been tapped by the organized sector as yet. Therefore there are high chances of big players entering the market.

Competitive rivalry within the industry: 10

Low to Medium - As we have already mentioned this industry has lot of competition in the unorganized sector. There are thousands of freelance workers and small shops and establishments which perform these services individually. On the contrary, there is not a single organized player in the market who provides all these services under one roof. Therefore we would face low to medium competitive rivalry from these unorganized players in the market. To counter this competition we would look to score over them through superior quality and competitive pricing policy.

POSITIONING: Competition and Market: In terms of the competition and market we would position our firm as a leader in the market. As we are the first player to introduce the entire gamut of services under one roof ,we would enjoy the position of market leaders in the market along with getting the First Mover Advantage.

Customer : In the eye of the customer we would like to position ourselves as leaders in terms of providing the best service at reasonable prices. We would like our customers to associate us with excellent service quality and a firm which makes their lives simpler and more convenient.

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OPERATIONAL PLAN: For the Business to be set up, we will primarily hire an office space on of apprx.500 sq. feet and godown cum training centre of 1000 sq.ft.In the outlet, we will provide the customer with an computerised estimate of the work they require as soon as they give their requirement and we will show them the quality of the work done by us. Our marketing manager will be very courteous in explaining them the minute details of the work to be done. We will be opening our first outlet in Mira-Bhayandar Area as we have a strong base over here in Building Material supply and its fastest growing town of Mumbai region with a population of more than 10 lakhs people. The approximate number of residential houses in this region sums up to 1, 25,000 with more than 20% of the houses requiring constant need for renovation and repairing plus in addition to the above, commercial premises and godowns will also be our clientele. In future, we would also be aiming to provide skilled trained labourers in the real estate sector to builders and contractors. We would be hiring 10 pairs (1 Main worker + 1 Helper) of skilled and unskilled labourers as a full time employee to work with us which includes 6 pairs of Masons, 2 pairs each of Plumbers and Electricians. In our godown, we would be storing all the materials and inventory required to carry out the work and simultaneously train our unskilled labourers for the task they need to perform in the most effective manner with the help of our skilled labourers. Our Outlet would be equipped with modern facilities such as computerised display of our work, various designs and concepts of renovation and repairing, computerised design of the work needed by the customer which would enable them to visualise the exact nature of our skilled work. Once a customer specifies their requirement, we would provide them with the exact quotation for the work to be done for them and the duration of the work. We would also be providing them with online quotation facility also. The work done by our labourers would be personally monitored by our team of experts and there would be a guarantee period which would depend on the nature of work. We will be also providing them with an Annual Maintenance Contract (AMC) which would include free service of basic repairing required for electric, plumbing and small masonry work. Our Inventory basically includes all the necessary modern tools and kits required for masonry, plumbing and electric work. The materials for our work would be supplied by various top branded manufacturers and distributors including us.

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Our name “TOTAL REPAIRING SOLUTION” (TRS) would be a registered Brand Name. As far as our credit policy is concerned:  50% of the advance at the time of booking.  25% after completion of 50% of work.  25% after completion of the work. *Discount Schemes would be there for the customer paying entire amount in advance.

License Required For Start-Up:  PAN Card No.  VAT TIN No  Profession Tax No.  Employees Profession Tax No.  Service Tax No.  Shops and Establishment License

Owners (Partners): Mr. Aashik Ambawat Mr. Vishesh R.Modi

After the completion of the work at the customer’s premises, we would be collecting feedbacks from them regarding the work done by our team, whether they were satisfied with the work done by our team or not and what improvements they would like us to make for the betterment of everyone. If we receive a positive response from them, it would result in greater customer satisfaction and at the same time it would result in extra added incentives for the employees depending upon the work performed. 14

If a negative feedback is received regarding any work performed by the labourer, it would result in penalty, so that the same is not repeated again in future. Depending upon the response we receive of our outlet within 6 months, we will enhance the penetration of these concepts by opening new outlets area wise.

Start Up Expenses & Capitalization

Amount ( Rs.)

Computers & Laptops

1,25,000

Display & Projectors

75,000

Interiors - Contractor's Charges

2,00,000

Legal & Professional Expenses

30,000

To Security Deposit

1,50,000

To Rent - Office

25,000

To Rent - Godown

25,000

Material, Stores, Tools & Kits

2,00,000 8,30,000

Note:  Our initial Investment for opening our first outlet will be approximately ` 8,30,000  The above Capital will be brought in the following manner:  Savings of Partners since childhood- ` 2, 00,000 each.

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 Bank Loan- ` 10, 00,000 @ 12 % against guarantee provided by each partners Father equally.

FINANCIAL PLAN: Finance is considered to be the most crucial part of any business. At the end, Business irrespective of the nature of its work should be able to generate money. So following are the projections for our Business Model: PROJECTED PROFIT & LOSS A/C:  The sales of the First year would be ` 12,450,000 as per the following details: -

10 pairs of Labour which includes 6 pairs of masons,2 pairs each of electrician and plumbers

-

The daily expected collection of 1 pair of labour without materials is ` 2000-3000. E.g.: 1 pair can do minimum work of 100sq.ft to 150 sq. of flooring tiles in 8 hours of duty. The minimum rates are ` 35 to ` 40/sq.ft i.e. =100 sq. * 35 = ` 3500/- day.

* /sq.ft- Per Square Feet

Approximate Rates of Repairing and Renovation are as follows:

Services Tiles/Flooring/Wall Bricks Plaster(New)-Wall Plaster(New)-Ceiling Breaking of Old Plaster 16

Rates(INR) ` 35/sq.ft ` 20/sq.ft ` 20/sq.ft ` 40/sq.ft ` 10/sq.ft

-

Door Framing Windows Framing Kitchen Platform Toilet Fittings Storage

-

` 40/Running Ft. ` 40/Running Ft. ` 700/Running Ft. ` 4000 & Above ` 25/sq.ft

 BREAKUP OF SALES :

 Masons

(6 pairs *` 6,50,000 = ` 39,00,000/- )

 Plumbers

(2 pairs *` 4,50,000 = ` 9,75,000/-)

 Electricians (2 pairs *` 4,50,000 = ` 9,75,000/- )

(Total Service Income: ` 58, 50,000/+  Sale of Materials- ` 66, 00,000/- which is approx. 53% of the Total Sales.

Total: ` 12,450,000/-

PLAN & POLICIES: Projected Year Year 1 Year 2 Year 3 Year 4

Additions of Outlets 1 2 2

Total No. of Outlets 1 2 4 6

SALES:  As per our Calculation above, in the 1st Projected Year our Service Income will be ` 58, 50, 000/- and Sale of Materials will be ` 66, 00,000.

 In 2nd, 3rd and 4th Projected Year, as the number of outlets is increasing, so we do expect our Service Income increases by 5%, 6.25%, and 16.67% per outlet from Projected Year 1. 17

 In 2nd, 3rd and 4th Projected Year, as the number of outlets is increasing, so we do expect our Sale of Materials to increase by 25% per year. Also, we are earning a 10% profit on Raw Materials purchased.

RAW MATERIALS:

 We expect Raw Materials to be consumed in the 1st Projected year will be around Rs.60,00,000/-

 In the 2nd, 3rd & 4th Projected Years, we expect inflation rate to be around 8%, 6.5% and 5 % respectively.

CLOSING STOCK :

 Every Month we are maintaining Closing Stock of Rs.2, 00,000 per outlet which includes Raw Materials & Tools and Kits.

DIRECT EXPENSES:

 In projected Year 1, we will be employing 10 pairs of workers per outlet and approx. will pay them a salary of Rs.26,40,000/ At the end of Projected Year 4,our total strength of employees will be 120(60 pairs i.e. 10 pair/Outlet)

 The salary will be increased by 10% p.a. at the end of the first projected year for every year.

GROSS PROFIT:

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 Our Gross Profit will be in the following manner: Project Year

Gross Profit

1

32.21 %

2

36.27 %

3

38.02 %

4

39.78 %

 The following are the details of the number of staff which will be employed by us for administrative purposes :

Projected Year Peon Receptionist Marketing Manager 1

2

1

1

2

3

2

2

3

5

4

4

4

7

6

6

 Our Chief Accountant will be the same for all Outlets opened by us.

 Salaries of all employees would be increased by 10 % p.a.

PARTNERS SALARY:

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 Salary to both the partner’s for the Projected Year 1st and 2nd will be ` 30000 per month and for the Projected Year 3rd and 4th will be ` 40000 per month.

RENT (OFFICE AND GODOWN):  Rent of Office and Godown will be ` 25000 per month for Projected Year 1 which will be subject to an increase of 10% per annum w.r.t to the number of outlets.

DEPRECIATION:  Depreciation will be charged @ 60% on fixed assets as per Written Down Value Method.

TAXATION:  As the current Tax rate is 30.9 %, so we will expect it to be same for all the four projected years.

NET OPERATING PROFIT AFTER TAX (NOPAT):  As the total revenue will be increasing but at the same time the Fixed Cost will be increasing but with a decreasing effect, so out NOPAT will be increasing every as follows:

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Project Year

Net Profit

1

8.66 %

2

13.58 %

3

14.36 %

4

16.92 %

PROJECTED BALANCE SHEET:

 We expect Creditors to be 10% of total Purchases with a time lag in payment of 1 month.

 We also expect Debtors to be 10% of total Sales with a time lag in payment of 1 month.

 Salary and Direct Expenses will be on accrual basis for a period of 1 month.

 Labourers for the new outlet will be hired at current market price.

 Interest on Bank O/D @ 12 % will be paid in Projected Year 1 and the entire amount Bank O/D of ` 10, 00, 00 will be repaid on the 1st day of Projected Year 2.

 Security Deposit will be ` 1, 50,000 per outlet.

 Prepaid Expenses includes Rent for a period of 1 month.

 We have invested excess Profits in Long Term Fixed Deposits @ 8% per annum because for further expansion from a partnership firm into a private limited company, we require money which would help us in getting bigger contract from corporates and strengthening our clientele. It has been invested in the following manner:

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Projected Year

Amount(INR)

2

` 10,00,000

3

` 30,00,000

4

` 90,00,000

BREAK-EVEN ANALYSIS:

Profit/Volume Ratio = Contribution Sales

= ` 40, 10, 000 ` 1, 24, 50, 000 = 32.21 %

Break Even Sales = Fixed Expenses P/V Ratio = ` 23, 30,000 32.21 % = ` 72, 337, 78 /-

So that means our break even sales would achieve when we achieve the target sales figure of ` 72, 337, 78 /- i.e. after approx. 7 months of start-up of our business, we would be able to breakthrough which would be a very positive sign for the success of this Business Model.

CONCLUSION: The total accumulated Profit for all the four projected years of all outlets comes upto ` 1, 87, 94,632/We expect our Net Operating Profit after Tax around ` 10, 00,000/- per outlet in Projected Year 1 which in the Projected Year 4 goes on an average to ` 15, 00,000 /per outlet which shows that the Business is continuously making rapid progress.With the help of above Financial Report, we can finally come to say that the above business model would result in viable and profitable business venture if implemented and executed as per the plan.

REASONS FOR PURSUING THIS BUSINESS MODEL: 22

Everyone House needs some repairing and renovation in some or the other form in every year whether it is a small masonry work or leakages during rainy reasons. As per our calculation, in a year, a household does minimum repairing and renovation of around ` 6000/-.And even after doing this, many of them are not satisfied with the service provided and the quality of work. So, we thought it would be good to provide all the major services required under one roof under a proper brand name, which would be beneficial to the society at large and at the same can be a sustainable business model as repairing and renovation is an on-going activity. The main advantage of having this Business Model is that it is applicable to all the people living under the sky and is not applicable to a particular s market because repairing and renovation would be required by everyone in some or the form. ADVANTAGES:  Under one roof, consumer will be able to get all the facilities and services pertaining to repairing and renovation work  Easy Availability of Labour because of fixed income offered by us.  Safety of Consumer as trusted company labourer in uniform would do the work  Guaranteed and Quality work  Bills of every work done  Online Quotation & E-payment facility  Government will get Revenue because of the legalisation of the work  Employment Opportunities DISADVANTAGES:  Competition with unorganised sector.  Migration After training.  New Player can enter the market after our start. WAYS TO OVERCOME DISADVANTAGES:  People want quality work at a reasonable price in a fixed duration which unorganised sector can’t provide. Also, a business like this is more is more trustworthy than an unorganised sector.

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 As the sector is unorganised, there would be never any shortage of labour who wants to do the work at fixed income.

 We would be always having the first mover advantage over any other player who tries to enter the market at a later stage.

 Goodwill of the outlet will help us to compete with unorganised sector and new players who enter the market.

CONCLUSION: If we manage to start this concept, we will be contributing towards the society primarily in the followings ways:  Economically: We would be converting an unorganised sector to an organised sector and at the same time we would be able to generate revenue and also able to achieve Customer Satisfaction.

 Ethically: Government would be able to generate revenue for which they were deprived till now in this repairing and renovation sector as it was completely an unorganised one.

 Socially: It would also lead to the upliftmen of the status of labour class as it would provide them with a fixed job in a friendly environment with complete peace of mind. Also, the employment opportunities increases for people belonging to this class as they mostly use to work on an individual basis with no fixed source of income.

The above Business Model also helps us to curb the menace of Labour Exploitation done by contractors and Builders as it would give them a fixed secured job with a fixed source of income. It also helps labourers in the following manner:

 Job Security  Job Satisfaction  Family Security 24

 Higher Status  Insurance, Medical Facilities  Incentives

If a worker performs a similar kind of work individually, he would be deprived of all the above facilities and in addition to no fixed source of income as they are generally not able to get work on all 30 days of a month and here we would be providing them with fixed salary + incentives based upon their work.

We can expand this Business model as much as we are able to because at the end everyone wants an effective service at a reasonable price and enhance the penetration of this concept. We can also work out a similar concept for other Industries also as it would be of great help to the society at large.

At the end, we would like to conclude by saying “We have one thing in common between all of us, i.e. 24 hours a day; it is that how we use it which makes a difference in our life.”

APPENDICES:

 All Financial Reports which are as follows:

 Start-up Expenses and Capitalisation.

 Projected Balance Sheet for 4 years.

 Profit and Loss Statement for 1 year.

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 Cash Flow Statement (Though as per Accounting Standard 3, it is not prepared for Partnership Firm but just for our reference it has been prepared).

 Sales Breakup

 Costing Sheet

 Investing Finance

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