Bussiness plan final

ABPL 90140 ARCHITECTURAL PRACTICE

ASSIGNMENT 1 BUSINESS REPORT

Group 41

contents

Co Cha WAI

323191

Part A

Business Strategy

02

Emily BASILE

327570

Part B

Marketing Strategy

04

Fereshteh TAHERI

569767

Part C

Sales Pipeline& Operational Issues

06

Miao XUE

387344

Part D

Financial Forecast & Budget

08

Yuhan ZHANG

347664

Part E

Cross-cultural Issues

10

PART A business strategy A.1: BUSINESS OVERVIEW

Pet-chitects is a group of five architecture graduates with combined 15 years practicing experience in range of architecture projects from small-scale interior, residential projects to large-scale commercial and public facilities projects. Pet-chitects are also pet enthusiasts who have thorough knowledge on pets behaviours and fully understand the interactions between humans and pets in a living environment.

A.2: DIRECTORS PROFILE Fereshteh

Professional Experience: Skillsets:

Miao

Professional Experience: Skillsets:

Professional Experience: Yuhan Co Cha

Emily

Skillsets:

2 years at large-corporate architecture firm working on medium to large-scale commercial and institutional building projects, both locally and globally Efficient delivery of building design and highly adaptable to designing different building types at different locations 2 years at large commercial architecture design firm focusing on efficient delivery of highdensity building designs Highly efficient in delivering building designs at conceptual and schematic stages 3 years experience at a multi-award winning architecture studio working on projects of various scales Ability to provide high quality designs at all design stages

Professional Experience:

Registered architect with 4 years experience at small-scaled architecture studio mainly working on local residential and interior design projects

Skillsets:

Can acquire professional architect authorisation on architectural design projects; highly familiar with design requirements in residential buildings; ability to provide high quality interior documentations.

2 years as furniture carpenter at a furniture making company; 2 years as a builder in a building company dealing with small to medium-scale projects

Professional Experience: Skillsets:

Highly experienced in building and furniture making; ability to efficiently deliver documentation drawings

A.3: PRODUCT/SERVICES

Pet-chitects provide specialized pet integrated space design services to clients. Our services improve clients’ residual spaces by resolving conflicts of having pets while maintaining a joyful living with their pets. Design scale ranges from small-scaled customized furniture, interior architecture to medium-scaled residential building designs.

A.4: GOALS AND VISIONS

Pet-chitects aim to expand and dominate the market for long term profitable operation by establishing a good reputation as pet integrated space designers and raising awareness among people in regards to the importance of having such environments.

Short Term • Have 2 directors registered and working full-time while others on part-time basis • Establish a large network of pet enthusiasts and animalrelated professions as potential clients • Initiate a market for our services among pet owners • Expand pet/animal-related knowledge that is beneficial to the business • Gaining commissions for furniture, fittings and residential work Target turnover (income): $110,000 Target profit (gross profit): $28,400 Target sales (net profit): -$44,600 (-40%) (see Part D financial forecast & budget, Year 1)

Long Term • Have all 5 directors registered as architects and working full-time at Pet-chitects • Keep staff number within 10 people to maintain high efficiency and simple management • Established a network in the pet and animal-related profession circle • Gain recognition as high quality pet integrated space designers • Have a range of commissions from small to large scale • Dominate pet-related space/architecture design market Target turnover (income): $780,000 Target profit (gross profit): $332,000 Target sales (net profit): $110,500 (14%) (see Part D financial forecast & budget, Year 5) 02

A.5: TARGET MARKET

Australia has one of the highest incidences of pet ownership in the world,where approximately 63% of Australians own pets and 22% intend to own one. In 2012, the Pet Industry was estimated at around AUD7 billion. With Victoria having the second largest pet ownership population in Australia of 7.7 million, Pet-chitects is establishing a new market for pet integrated space design targeting the pet-owners market residing in Victoria. Target clients are divided into three main groups: a. Apartment residents: furniture and fitting services b. House owners: New residential building or existing residential extension design services c. Commercial/public institution owners (Best buyers, potential repeat customers): Interior renovations, extensions, new architecture building design

A.6: ORGANIZATIONAL STRUCTURE

Co Cha is already a registered architect and will work full-time with Emily at Pet-chitects. In the first two years, Co Cha will serve as principal architect whereas Emily will focus working on producing furniture and fittings. Co Cha and Emily will brief directors in weekly meetings on practice operations. Fereshteh, Miao and Yuhan will continue to work at their current jobs while acquiring their architect registration before working full-time at Pet-chitects within 5 years after establishment. All directors have joint business assets and liabilities and have signed a partnership agreement that clarifies each person’s rights, obligations and responsibilities.

For easy access to and by clients, a small office space will be rented near the Melbourne CBD area for client meetings and administration. Emily will build furniture and fittings from home or on site.

A.7: PERIODICAL OPERATIONS Weekly: Monthly: Quarterly: Half-year: Yearly:

Post on social media to keep active in pet circle, hold weekly directors meeting on operation reviews Track operational finances, join/host pet events, check website statistics, send newsletters Directors get training on pet/animal related knowledge from pet/animal specialists/consultants Check statistics of adoption rates at animal shelters and hospitals to grasp market size Analyse annual finances and review business plan, review project and publication amounts

A.8: SWOT Analysis Strengths

Weaknesses

Pet-chitects are initiating a new market of specialized pet integrated space design services in Australia.

Because there are currently no practices specializing in this design sector, Pet-chitects have the advantage of dominating this niche market.

Due to the fairly new and niche market Pet-chitects are targeting, Pet-chitects need to drive demand for such specialized services.

Opportunities

Threats

Pet-chitects status as active pet circle participants can bring in new clients who are supportive of having pet integrated living environments. Having specialized design services and reputation of pet-friendliness in can bring Pet-chitects good reputation and thus more projects of the same genre at various scales and profits margins.

Pet-chitects may fail to establish the new market if target clients are not willing to pay for such services, especially in the case of economic downturn. Petchitects may fail to dominate the market if competing practices take the same approach.

A.9: EXIT STRATEGY

Each director at Pet-chitects own 20% of the shares. If a director decides to exit the business and sell the shares, her first option would be to sell them to the other directors at each person’s desired purchase rate and portions. Alternatively, the exiting director could sell her shares to external parties upon approval of all directors.

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2.1 OVERVIEW:

The marketing strategy is designed to support Pet-chitects’ goals as shown in Part A: Business Strategy, and to ensure Pet-chitects’ growth and expansion. Overall, the marketing strategy is outlined in 4 parts which includenunique selling points, scope of services, target clients, and marketing approaches.

2.2 UNIQUE SELLING POINTS:

EMPATHIC EXPERIENCES

VARIOUS SELECTIONS

Pet-chitect is a pet-friendly practice.

Proof: Pet-chitect directors are pet

Pet-chitect offers range of selections of services for clients.

Proof: Depending on clients’ budget

owners are actively engaged with the pet circle. The studio and show-room will be decorated as ideal interior space for pet-friendly design.

Client Benefits: As pet owners, we shared similar experiences as our clients on the issues of living with pets. So we are confident of delivering the best design solutions for our clients.

Pet-chitect Benefits: Gain clients from pet-owners and pet-related networks they engaged with.

and inquiries, there is a flexibility in selecting Pet-chitect’s design services, from small furniture at low price to large-scaled projects.

Client Benefits: Provide flexible and affordable services to meet various client needs.

Pet-chitect Benefits: Maximize our market coverage, from residential to commercial.

UNIQUE SPACES

CLIENT-ORIENTED SERVICES

Pet-chitect aims to create interconnected living spaces with unique style for clients and their pets.

Proof: Through meetings with the

Pet-chitect delivers client-oriented services.

Proof:

Pet-chitect starts as a small firm, which enables each clients to easily get contact with the directors.

Client Benefits: Ensure a deep understanding of clients’ enquiries.

Deliver high-quality professional serveces.

Pet-chitect Benefits: Remain reputation and trusts amoung the clients.

Improve the value of Pechitect brand.

clients, we are able to define their interests and enquiries, and will make great effort to create unique furniture and living spaces for the clients and their pets.

Benefits:

Meet enquiries from various clients Overcome pet-related issues in different conditions Express unique tastes and personalities of the clients

2.3 SCOPE OF SERVICES: FURNITURE&FITTING DESIGN

INTERIOR REFURBISHMENT LARGE-SCALE RESIDENTIAL, &RESIDENTIAL COMMERCIAL PROJECTS & INSTITUTIONAL PROJECTS

2.4 TARGET CLIENTS:

STAGE 3.

(BEST BUYERS)

MASS-PRODUCTION FOR OVERSEAS MARKET

• Pet-related company requiring large-scale building design (pet hospitals, pet hotels, RSPCA pet shelters, etc.)

• Exhibition design for pet events and expo (Royal Melbourne Show) • Mostly repeat customers

STAGE 2.

• House owners requiring interior design and furnishing services living in the suburbs of Melbourne • Households with pets • Small-size commercial companies (pet shops, vets, shelters)

STAGE 1.

• Apartment/unit owners requiring some inserted flexible pet-friendly furniture • Mostly living close to Melbourne CBD • Single/couple pet-owners

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2.5 MARKETING APPROACHES:

2015

Set up the Pet-chitect’s official email address and website with following contents: • Introduction of Pet-chitects and staff information, with pet and studio photos; • Portfolio of previous works or designs; • Catalogue of Pechitect’s pet-friendly design, including furniture’s and interior spatial; • Update new products and feedback posts by clients; • News announcements on local pet/design events and exhibitions that Pet-chitect would participate Rent a small office close to CBD: • Controlled environment for business meetings, with easy transportation access; • Interior design by Pet-chitect, which demonstrates a pet-friendly environment between designers and their pets;

2023

Establish cooperative relationship with mass production companies

2019

2017

Conclude and analyse marketing strategy performance in the first five years and Keep track of pet revise marketing statistics with Victoria strategy for the Pet Registration Council following five years accordingly.

Seek opportunities for publications on both Keep track of pet and architecturalpet statistics related media to establish reputation as with Victoria Pet Registration Council specialists in the field

2021

Give lectures to local design schools about our pet-friendly design ideas and concepts;

Explore opportunities for Getting all of the directors registered as mass-production market, especially architect for overseas Rent and move to a small studio with shop front displaying our products close to CBD area.

Expand to largescaled services, including residential design (interior and exterior), and commercial buildings such as animal hospitals, shops, and zoos.

2022

Check statistics of adoption from Victoria Council every 6 months.

Get frequently involved in local pet events while posting pet photos on social media (Instagram, Facebook, Twitter, newsletters)

2018

Keep track of pet statistics with Victoria Pet Registration Council

Economic downfall:

Gain further professional expertise on pets behaviors at educational / research institutions

Attend local pet shows and exhibitions to promote our interior and furnishing design prototypes;

Apply for copyright of Pechitect design and products, for both local and global market

Keeping back to small Referral marketing towards our products with higher profits; According to the previous analytical statistics, sell the remaining stocks to overseas market; Focus services back to affordable small-scale furnishing projects

Sell company at high prices to corporates/ individuals

2020

Keep copyrights of design products under directors names

Make pet-friendly furniture for small animal retail shops and vets at promotional rates to establish network for advertising.

2016

PHASE1:

Launching a small design firm

High Peak: Exiting with highest gain

2024 PHASE2:

Thrive rather than survive

PHASE3:

PHASE4:

A medium size commercial architecture design company Expand to overseas market

PHASE5:

Downturn/Exit Strategy

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PART c sales pipeline & operational issues PART C: Sales Pipeline & Operational Issues Sales Pipeline Pechitects sales pipeline strategy utilises Greg Chapman’s Sales pipeline example tailored to a small studio of 5 founding directors/architects. Our goal is to connect within pet owner networks to offer architectural services catering to the specific physique of their pets. Pechitects aims to target owners who wish to create a living environment which is both functional for their needs and resistant against animal damage.

1. Start of sales pipeline - Maximise client base by target specific pet owner market with marketing flyers with pet shops / vet clinics - Visually presenting our design services in our office showroom - Establish social networks through word of mouth referrals - Establish pet industry networks with allied companies (pet hotels / high end grooming services / veterinarian practices).

2. Initial Consultation - Meet client and establish needs of client themselves and specific needs of their pet.

- Attain pet personality and behaviour profile and the impact the pets have on their current living environment.

- Introduce our services and examples of products to client. Initially this would be small products and prototypes of pet furnishings and equipment and as our portfolio grows it would include architectural works.

3. Proposal Quote - Present hand sketch design options to respond to the client’s need and provide client with an insight into the possible design.

- Clarify the client’s needs are understood.

- Present staged fee proposal options to encourage clients to accept our initial services: feasibility study, architectural services, additional fittings and fixtures. Offer a satisfaction guarantee at an early point in our services to create confidence.

4. Sales - Ask the client for the sale.

5. Follow Up Contact - Collect information and satisfaction feedback from completed project to create database to improve quality.

- Document/ Photograph project for portfolio use and to present to client to maintain contact.

6. Ongoing contact - Identify further services the client may need for their growing pet family.

- Maintain client relations to obtain referrals for new clients.

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Pet hotel

Vet

Pet shop

Website

Client referrals

Publication

Training school

Start of sales pipeline

(1000 leads)

Initial consultation

50% Lost

30% Lost

10% Lost

50% Lost

(500 leads)

(250 leads)

Sales

Follow Up contact

Ongoing

(175 leads)

Pechitects Process

Proposal

50% Lost

Pet expo

(158 leads)

(79 leads)

Operational Issues Feedback Loops To adjust for lost leads in the sales pipeline, we have identified feedback systems.

Scenario A: There are a lot of initial inquiries and quote proposals, however a low progression to sales.

Feedback Review: The services offered are not being accepted by the client at the proposed fee levels.

Is the fee proposal appropriate/competitive within the market? Are the marketing strategies targeted at clients who will value our services? How can we increase perceived value of our niche services?

Scenario B: There is a steady stream of continuing clients however there is a low volume of new contacts.

Feedback Review: The quality of services is suited to a very specific market and the start of the sales pipeline needs to target this market more specifically. Ask for potential clients to be referred by existing clients? Can clients with greater networks be identified? i.e. pet hotel chains / grooming services.

Scenario C: There are a lot of sales for small projects, however the time consumed generating a lot of low revenue clients is impacting on revenue.

Feedback Review: Seek larger projects or reoccurring clients to minimise sales pipeline efforts.

Collaborate with/ market our services as sub-consultant specialists to other design professionals who could offer repeat clients.

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PART d Financial Forecast & Budget PART D: Financial Forecast and Budget Start Up Cost Analysis Start-up Expenses Legal PI Insurance Animal Consultants Rent Utilities Phone & Internet Fit-out Furniture Computers Software Plotter & Printers Stationary Marketing Website TOTAL START UP EXPENSES

Start-up Funding Start Up Expenses to Fund Startup assets to fund TOTAL FUNDING REQUIRED

5 000 1 300 10 000 20 000 1 000 200 12 000 1 000 3 000 6 000 1 300 500 2 000 1 500 64 800

Assets Non-cash assets from Start Up Cash requirements from Start Up TOTAL ASSETS

0 50 000 50 000

Liabilities & Capital Liabilities Current Borrowing Total Liabilities

54 800 54 800

Capital Investment Total Planned Investment Loss at Start Up Total Capital & Liabilities Total Funding

Start Up Assets Cash Required TOTAL START UP ASSETS TOTAL REQUIREMENTS

64 800 40 000 104 800

40 000 40 000 $104 800

50 000 50 000 (64 800) (14 800) $104 800

Staff Payment 5 Year Analysis Staff Payment Analysis Staff Level

COGS

Salary

COGS cost

Y1

Y2

Y3

Y4

Y5

No. EFT* people

No. EFT* people

No. EFT* people

No. EFT* people

No. EFT* people

5

5

1

3 .5 373 500 104 500

Top (yr 1-2) 65% 40 000 26 000 3 4 Top (yr 3-4) 70% 65 000 45 500 Top (yr 5+) 75% 80 000 60 000 Bottom 80% 45 000 36 000 Support 10% 40 000 4 000 TOTAL COGS WAGES 78 000 104 000 TOTAL OVERHEAD WAGES 42 000 56 000 *EFT = Equivalent Full time (aggregate of full time and part time staff)

263500 106 500

5 4 1 448 000 172 000

Staff COGS & Overhead Hourly Rates Analysis Working Days / yr Hours / day Working Hours / yr Staff Level Top (yr 1-2) Top (yr 3-4) Top (yr 5+) Bottom Support

220 7.5 1650 Hourly Rates COGS cost 26 000 45 500 60 000 36000 4000

COGS $/hr 15.75 27.50 36.30 22 3

Overhead Cost 14 000 19 500 20 000 9000 36000

Overhead $/hr 8.50 11.80 12.10 6 22

Total $/hr 25 39 49 28 25

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Five year budget Analysis Initial est.

Quarterly REVENUE Architectural Services TOTAL REVENUE Growth Margin COGS Employee Wages Animal Consultant TOTAL COGS

1st Yr

2nd Yr

3rd Yr

4th Yr

5th Yr

27 500 27 500

110 000 110 000

200 000 200 000

450 000 450 000

585 000 585 000

780 000 780 000

-

-

180%

225%

130%

130%

19 500 900 20 400

78 000 3 600 81 600

104 000 2 400 106 400

263 500 3 200 266 700

373 500 3 400 376 900

448 000 0 448 000

28 400

93 600

183 300

208 100

332 000

GROSS PROFIT Overhead Wages Legal PI Insurance Rent Utilities Phone & Internet Fit-out Furniture Computers Software Plotter & Printers Stationary Marketing Website

10 500 300 325 3 750 250 50 0 125 500 1 500 125 75 500 250

42 000 1 200 1 300 15 000 1 000 200 0 500 2 000 6 000 500 300 2 000 750

56 000 0 1 300 15 000 1 000 200 0 0 1 000 6 000 500 300 2 000 200

106 500 0 1 300 20 000 1 000 200 0 1 500 3 000 6 000 500 400 2 000 200

104 500 0 1 300 20 000 1 000 200 5 000 3 000 1 500 6 000 500 500 2 000 1 500

172 000 0 1 300 30 000 1 000 200 0 2 000 5 000 6 000 1 300 500 2 000 200

TOTAL EXPENSES

18 250

73 000

87 100

142 600

148 500

221 500

(11 150)

(44 600)

6 500

40 700

59 600

110 500

-40%

-40%

3%

9%

10%

14%

NET PROFIT Profit Margin

5 year Budget Forcast 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 -100000 1

2

3

TOTAL REVENUE

TOTAL COGS

TOTAL EXPENSES

NET PROFIT

4

5

GROSS PROFIT

09

5.1 pet culture OVERVIEW: In order to plant the seed of Pet-chitects in the right soil, we have conducted a careful search for a premise which offers maximum opportunities and benefits for our business. The following are the rationales behind our city of choice - Melbourne.

5.11 why australia?

PEOPLE WHO WISH TO GET A PET OR PETS 22%

AUSTRALIAN PET OWNERS 63%

Figure 1: Graph of Australian and their pets. http://www.acac.org.au/pet_care.html

Figure 2: Australians' expenditure on pets 2010-2011, http://www.news.com.au/finance/money/australians-spending-up-on-pets/story-e6frfmd9-1226151433811

•

•

With just over 8 million households, Australia has one of the highest incidences of pet ownership in the world.1

•

With a strong history of pet ownership, there are an • estimated 33 million pets in Australi. As shown in Figure 1, 63% of Australian population own pets while 22% of the rest of it plan to have pets in the future.

The health and economic benefits of keeping a pet are extensively documented and published by Australians.

As shown in Figure2, the statistics demonstrate Australian pet owners’ values in terms of pet care-taking. They seem to be very willing to spend large amounts of money on their pets even during belt-tightening economy.

Apparently, pets play a very important role in Australian society which gives us a great advantage to establish and develop our business.

5.12 why melbourne?

•

According to the chart in Figure 3, Melbourne has the second largest pet population in Australia. Although not the largest, it is constantly growing.

•

Given the fact that all five of us have lived in Melbourne for over 5 years or even more, we are equipped with good understanding of the city and local networks which will greatly benefit our business in terms of marketing.

•

According to the research done by The Age, we mapped out the popular neighborhoods of pet- owners. Taken considerations from the human population distribution map, we decided to locate our office in the CBD given it is surrounded by pet-owners and potential clients.

•

Easy access to public transport for both us and clients to travel

•

There are ongoing projects such as Pets in the City, carried out by Pet care Information & Advisory Service who aims to introduce and encourage living in the city with pets2.

Figure 3: Pet population in different states in Australia. http://www.acac.org.au/pet_care.html

5.13 why locating our office near cbd?

Figure 4: Map of pet owner distribution based on research from The Age. http://www.theage.com.au/victoria/

cats-are-top-dog-in-innercity-suburbs-201308292stn4.html

Figure 5: Melbourne population distribution map. http://blog.rpdata.

com/2012/06/the-top-20-most-crowded-suburbsacross-australia/

1. Pet Ownership Statistics, Australian Companion Animal Council, 10th Jan, http://www.acac.org.au/pet_care.html 2. Pets in the City, Petcare Information & Advisory Service, 23th May, www.petsinthecity.net.au

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5.2 business culture and legal issues OVERVIEW: Understanding local culture and perform accordingly is extremely important for Pet-chitects to root in Melbourne. The cultural context is therefore analyzed to ensure that Pet-chitects can grow smoothly in our chosen city.

5.21 australian business etiQuette

communication

negotiation

•

•

• • •

Directness is cherished in Australia, however, a hard sell approach is resented.

Communications will be direct, good-humored and to the point. Brevity is considered a virtue, complicated or flowery language should be avoid.

Australians dislike people who overplay qualifications, rank or titles.

Open debate is highly appreciated through meetings which reflects the Australian egalitarian approach.

Meetings with clients are expected to be well prepared and the ones within our business should be efficient

•

agreements and contracts

•

•

•

There are multiple ways to document and verify understanding and commitment made during business meetings, most of the agreements will be recognized.

However, only a final contract signed by both parties constitutes a binding agreement. Written contracts usualy contains detailed terms and conditions for the core agreements and many eventualities. Generally, requests to change contract details after signature is considered bad faith.

dress code •

team spirit •

In Australia, negotiating often means engaging in a friendly debate aimed at reaching a mutually agreeable solution. Since Australians believe in the concept of win-win, they expect you to reciprocate their respect and trust. It is also important to show willingness to compromise if conflicts rise in negotiation.

In terms of exchanging information and negotiation, it us usually done in the manner with minimum bargains. Bargaining is not customary. They will expect your initial proposal to have only a small margin for negotiation.

Negotiations vary in speed, appearing pushy is a negative action to take.

Bargaining tactics are not often employed as Australians are not overly fond of either. Prices rarely move by more than 20 to 30 percent between initial offer and final agreement.

Being a good team player is an extremely important part of the Australian psyche. Bonding events such as staff party will be encouraged and held regularly by Pet-chitects.

Most businesses in Australia expect conservative attire.

Especially in Melbourne and Sydney, dark colored suits and dresses are expected. As for us, Pet-chitects will adopt this dress code later in the stage when we start to expand and interact with other businesses.

5.22 typical australian small business start-up process • • •

Name of business Business structure Business plan

• • • • • •

Register ABN, TFN • Register business name Prepare adquate protection • of intellectual property Understand tax obligation • Set up record keeping & accounting system Get state government liscences

Get council permits Register domain name Understand legal requirements such as CCA, ACL, leasing laws and privacy laws

• • •

Understand ongoing employer obligations Understand work health & safety obligations Prepare for emergency

Having our business plan sorted out, the next step would be to understand the legal processes and obligations. The typical Australian small business start-up process listed above is a very helpful reference.

5.23 government bodies for enQuiries • • • •

ASIC for company registration and legal requirements Australian Business Register register for an ABN and other tax obligations such as GST Australian Tax Office for small business tax information Business.gov.au an online government resource for the Australian business community

• • •

Department of Employment and workplace relations employment and workplace relations information AusIndustry for advice on Government grants GrantsLink for information on Government grants

1. Researches from Part 5.21- 5.23 are partialy extracted and partialy concluded from the following two sources: Checklist: Starting a small business from scratch, Ninemsn, 11th December, http://finance.ninemsn.com.au/smallbusiness/planning/8124625/checklist-starting-a-small-business-from-scratch Lothar Katz, Negotiating International Business (BookSurge Publishing, May 31, 2006), 144

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