Business Plan
Company
Table of Contents
Particulars
Page No.
Executive Summary
3
Market Research
5
Business Model
16
Marketing Strategy
30
Management Summary
33
Sources and Uses of Funds
37
Financial Plan
39
2
â–¸ Executive Summary
3
Executive Summary Company is a company incorporated in the United Kingdom. The company is in the business of providing logistics and transportation services to the construction industry in the UK. The Company is now looking to expand its fleet of trucks, by purchasing five more new vehicles. The company currently owns one concrete mix transport truck. The company is now applying for a loan of £700,000 to finance the purchase of five more of these specialized units. It primarily provides haulage services (as a sub contractor). Many firms in the construction sector rent or lease equipment from the Construction Equipment Rental and Leasing industry to minimise costs and support profit margins.
Overall, commercial construction industry revenue is estimated to grow at a compound annual rate of 3.7% over the five years through 2017 to reach £6.2 billion. Revenue is forecast to expand by 3.1% in the current year.
£2.016 mn Net Present Value
57%
Internal Rate of Return
25%
Revenue Growth
72%
The key financials are as follows:
Profit Growth
84%
Particulars Revenue Net Profit Cash Balance
2018 £675,000 £51,066 £168,833
2019 £866,250 £97,359 £397,781
2020 £1,089,000 £193,996 £749,439
2021 £1,347,638 £310,368 £1,248,188
2022 £1,647,113 £449,346 £1,922,040
Cash Growth
4
â–¸ Market Research
5
Market Research Burgeoning demand from residential and commercial construction has driven growth Many firms in the construction sector rent or lease equipment from the Construction Equipment Rental and Leasing industry to control costs and support profit margins. The faltering nature of economic recovery in the UK has weighed on construction activity and industry demand. A surge in housing starts boosted demand substantially in 2013-14, and revenue rose 11.8% after falling in the previous year. Since then activity in most construction sectors has increased due to improved business confidence, growing government capital expenditure and a buoyant housing market, supported by government initiatives such as the Help to Buy scheme, benefiting industry growth. Contractors have sought to reduce overhead costs by renting and leasing equipment, rather than buying it. Overall, industry revenue is estimated to grow at a compound annual rate of 3.7% over the five years to 2017 to reach ÂŁ6.2 billion. Revenue is forecast to expand by 3.1% in the current year. Employment and enterprise numbers are both expected to rise over the five years to 2017.
The residential and commercial construction sectors have been primary drivers of this expansion. The prevalence of large-scale projects and programmes throughout the United Kingdom has provided opportunities for many different firms in an already fragmented market. Businesses have also been able to improve profitability since the start of the period, when subdued demand constrained profit margins. An anticipated period of economic uncertainty during the Brexit negotiations is expected to have mixed effects on the industry over the next few years. A potential slowdown in investment may constrain demand for construction and civil engineering equipment from the commercial market. A relatively weak Pound is also expected to push up imported material costs for contractors, limiting their ability to spend on industry products. However, operators that adjust stock appropriately should be able to support profit, as many contractors are expected to continue leasing and renting equipment to avoid large capital outlays in a relatively precarious climate. Public funding for infrastructure projects, particularly in air and railway links, along with government housing policies, are likely to boost industry demand. Industry revenue is expected to rise at a compound annual rate of 2.3% to ÂŁ6.9 billion over the five years to 2017. Source: IBISWorld Research
6
Market Research Key External Drivers Government capital expenditure Greater government investment in infrastructure projects and public housing projects contributes to industry growth as demand for the industry’s equipment increases. Constrained government spending in recent years has negatively affected industry activity. However, government capital expenditure is expected to grow in 2017 and beyond. Upcoming projects include Heathrow runway expansion and HS2 rail links.
Demand from water main, sewer system and related project construction Project construction for utilities and infrastructure, such as sewers, water mains, dams, harbours and electricity stations, contributes to demand for the industry’s services. Private and government investment in this sector can provide industry operators with a chance to increase leasing volumes. Demand from this sector is expected to grow in 2017.
Business capital expenditure The level of business capital expenditure can have a considerable effect on demand for construction services. Greater business capital expenditure often leads to contractors purchasing their own machinery and equipment, rather than renting these products. The level of business capital expenditure is expected to fall in 2017 as uncertainty caused by the UK’s withdrawal from the EU constrains investment. This could potentially boost industry demand.
Demand from road and motorway construction Higher demand for construction and infrastructure projects, such as work relating to roads, motorways, railways and bridges, benefits the industry. These construction companies may hire or lease construction plant and equipment from the industry, in addition to using their own plant. Demand from the railway and road and motorway construction sectors are expected to grow solidly in 2017, providing an opportunity for the industry.
Demand from commercial building construction Demand from construction companies is a major driver of industry growth. The commercial construction sector is the largest downstream market for the industry. As the construction sector expands in response to better economic conditions, equipment leasing firms generally benefit. Demand from commercial construction firms is expected to grow in 2017. However, the rate of growth could be threatened by economic uncertainty, limiting industry demand.
Source: IBISWorld Research
7
Market Research Current Industry Performance The Construction Equipment Rental and Leasing industry has regained momentum in recent years, after performing poorly at the beginning of the current decade. Downstream demand from residential and commercial building construction has grown in line with a strengthening economy for most of the period, facilitating industry expansion. Many small, independent rental and leasing companies have entered the market to serve construction firms across relatively limited geographic areas. There are also several large companies that operate on a national level and compete for major contracts and service agreements with the bigger construction firms. As more organisations now operate on an international scale, some larger firms in the industry are expanding worldwide. For example, the Leicestershire-based operator Lavendon has recently opened operations in the Middle East ,while Ashtead Plant’s parent company, Ashtead Group, rents out construction equipment in the United States. Although a degree of economic uncertainty has been present for most of the current period, the industry has grown impressively over recent years. Revenue is expected to expand at a compound annual rate of 3.7% over the five years to 2017, reaching £6.2 billion. However, poor conditions prior to the beginning of the period mean that the industry has grown from a particularly low base. Revenue is anticipated to expand at a slower rate in the current year. Some major companies have reported poorer than expected performances due to issues including stock shortages, poor customer service and a more stable economy encouraging firms to buy equipment outright, rather than rent it. However, the effects of the EU referendum are expected to weigh on business capital expenditure, and this could provide opportunities for industry growth, as downstream firms seek to limit their investment in equipment purchases until conditions become more certain. Revenue is forecast to grow by 3.1% in 2017. Source: IBISWorld Research
8
Market Research Commercial Building Construction Industry is growing at 1.4% per year The Commercial Building Construction industry has performed well in recent years, after weak economic conditions restricted private investment in commercial and industrial premises at the start of the five-year period to 2017. However, landmark office developments, rising demand for office space, demand for car parks as new car sales soared, together with renewed spending on public health and educational facilities, have supported a resurgence in industry activity and consistent expansion in industry revenue since 2013-14. The expansion of the economy over the past five years has supported rising capital expenditure, which has led to overall revenue growth. Nevertheless, revenue fell significantly in 2012-13, which was indicative of a lingering degree of uncertainty in the economy.
Revenue is estimated to increase by a modest 1.5% to £19.7 billion over 2017, as uncertainty caused by withdrawal from the EU is expected to cause business capital expenditure to fall. Investment in commercial properties is expected to be constrained with many high-profile projects already under threat of being shelved. Industry revenue is estimated to grow at a compound annual rate of 2.2% over the five years to 2017. The industry is expected to grow slowly over the following five years to 2022. Revenue is forecast to rise at a compound annual rate of 1.4% to reach £21.1 billion in 2021-22. The office segment is expected to generate consistent demand in the long run, as the recent growth in new ventures generates increased demand for commercial properties. Growth in this segment has, until recently, remained largely limited to London and the South East, but demand for commercial properties is expected to become more widespread, including other regions across the UK, over the next five years. Nevertheless, uncertainty caused by the Brexit negotiations and longer term impact is expected to curtail short-term demand. Profit margins are expected to come under pressure as the falling value of the pound increases imported purchase costs. Over the long term, should restrictions on free movement arise following the UK’s exit, the current skills shortage in the industry could be exacerbated by a lack of migrant labour. Nevertheless, the industry is expected to continue growing, as demand for the construction and refurbishment of commercial accommodation in London remains strong. Opportunities are also likely to arise in the education sector as the Priority School Building Programme progresses and in the health-care sector as the ProCure22 programme begins. Source: IBISWorld Research
9
Market Research The introduction of the Help to Buy scheme in 2013 significantly boosted downstream demand Private investment in the commercial construction sector was low towards the start of the period, as the economic recovery began. Firms were unwilling to risk the large capital outlays involved in major construction projects, instead preferring to delay projects until financial conditions became less volatile. As conditions slowly stabalised, contractors opted to rent equipment to control the costs of projects, with investment levels still volatile. The commercial sector has continued to expand, predominantly driven by large-scale investment in projects in London, and several contractors have continued to opt for the cheaper short term use of rented or leased construction equipment. Similarly, the residential construction sector has undergone a resurgence, stimulated largely by the Help to Buy scheme. The scheme, introduced in April 2013, originally provided first time buyers with the financial support to acquire a new-build house. However, it was later expanded to include all borrowers and all properties worth less than ÂŁ600,000. This boosted housing transactions and rejuvenated private investment in housing, which has had a positive effect on industry revenue. This was particularly evident in 2013- 14, when soaring housing starts supported revenue growth of an estimated 11.8%. The UK housing market has suffered a chronic shortage of affordable properties for many years and this is likely to continue through the next five years to meet predicted population growth.
Source: IBISWorld Research
Revenue has been further boosted by increased demand for the construction and redevelopment of sports stadiums, railways, train stations, bridges and tunnels. Construction activity in general has been rising as business and consumer confidence have grown over the majority of the period. However, revenue did fall in 2012-13 as the economic recovery faltered. This weighed heavily on demand for commercial construction. However, rising demand from the residential, commercial and infrastructure segments has ensured industry growth since then. Demand has also been boosted by large-scale public projects such as the Lee Tunnel, Crossrail and the Mersey Gateway road bridge, with several more planned (eg Waterloo station redevelopment).
10
Market Research Industry Outlook The industry has a relatively low level of technological change, with limited improvements in systems benefiting the industry in the past five years. Companies have made greater use of computer- and internet-based systems to manage their databases and order processes. There are also increasing environmental requirements related to pollution and vehicle emissions. Site safety is important for construction companies, which are required to meet strict health and safety standards. Therefore, the industry’s larger customers tend to rent or lease equipment from reputable equipment firms that have quality assurance programmes and meet maintenance and repair standards. These customers are also interested in cost savings, which has further encouraged the use of rented equipment. With the commercial and residential construction industries having expanded quickly over the past couple of years, the competition has allowed prices of materials and tools to increase. This has made the renting or leasing of equipment a more profitable option for many industry operators.
However, private investment in the office building and retail segment could slow amid subdued business confidence. Nevertheless, uncertainty could also lead to an increase in rental and leasing activity as firms delay investing their own equipment until the economy is more stable, instead preferring to rent or lease equipment in the shorter term. Industry revenue is expected to rise at a compound annual rate of 2.3% over the five years to 2021-22 to reach ÂŁ6.9 billion.
Industry revenue is anticipated to grow more slowly over the next five years as private and public investment in infrastructure and construction could be threatened by potentially weaker economic conditions in the wake of the EU referendum. Public investment in infrastructure renewal and new projects, as well as in housebuilding and renewable energy projects, may still provide opportunities as many schemes have already been earmarked by the government and are consequently expected to continue unaffected by economic uncertainty. Source: IBISWorld Research
11
Market Research Employment and Enterprises The number of firms operating in the industry is forecast to increase modestly over the five years to 2021-22, as opportunities are expected to develop in the infrastructure and residential markets. Even the smaller segments of these markets, such as water main and sewer system infrastructure, are expected to contribute to an overall increase in the number of firms entering the industry to take advantage of growing demand. For example, a £4.2 billion project to construct the Thames Tideway Tunnel is expected to rely heavily on hired construction equipment, which should help sustain demand for several of the industry’s products over the next five years. Industry employment is forecast to grow over the period as companies expand their operating capacity. Over the five years to 2021-22, industry employment is anticipated to increase at a compound annual rate of 2.1% as companies hire more workers and address skills shortages in the industry, to help them expand into new markets and segments. Despite rising rates of employment, average wages are only expected to grow marginally over the period, as the use of computer technology and advanced booking systems subdues market pressures and allows improved productivity. If the short-term uncertainty over the exit from the EU, which is due to be completed in 2019, is quelled, such that construction demand gathers pace again, some contractors may decide to trade up to purchasing their own equipment as opposed to renting or leasing, providing a threat to industry profitability. However, industry operators are likely to remain optimistic that the growing range of products the industry has Source: IBISWorld Research to offer and rising investment in construction and health and safety regulations will offset these threats.
The Construction Equipment Rental and Leasing industry is estimated to be in the mature phase of its life cycle. Industry value added is estimated to grow at a compound annual rate of 4.1% over the decade to 2021-22. Over the same period the UK economy is expected to grow at a compound annual rate of 2.3%. Although this suggests the industry is growing at a faster rate than the UK economy, the rate of growth can be largely attributed to the surge in growth towards the start of the period as the industry emerged from the faltering economic recovery and uncertainty in downstream construction markets. Therefore, moderate industry growth over the next five years would suggest a mature stage. Demand for the leasing and renting of construction machinery has been recovering over the past five years, with growth also expected over the coming five years. The number of new players entering the industry is expected to grow slowly over this timescale. However, many of the current players are expected to expand their market shares as they continue to invest in more construction equipment stock and expanding the range of services provided, from established relationships with large scale contractors. This is evidence that the industry is slowly consolidating. Industry employment dropped slightly as the period began, with some operators contracting and taking cost-cutting measures, due to the fragile economic climate. Since then, many of the companies remaining in the industry have reduced their debt and positioned themselves to be more competitive in future years. This is expected to result in a more efficient industry, with employment expected to grow as companies increase operating capacity and meet growing demand in the market.
12
Market Research Major Market Segmentation Commercial construction companies Commercial construction companies are the largest market segment for this industry, accounting for a forecast 44.5% of revenue in 2017. This segment includes companies involved in a wide range of commercial building activities, including the construction of office buildings, retail, healthcare facilities, educational facilities and other commercial projects. The companies that are involved in this segment rent and lease equipment from this industry and employ their own operators for the running of the machinery and equipment on site. As many construction firms already own some of their own plant and equipment and have their own operators, this industry assists the construction division by providing additional machinery and equipment for rent or lease on a short-term or long-term basis, which can help with cash flow and investment levels. During periods of lower demand and investment, such as a large portion of the past five years, commercial construction operators can improve margins by renting and leasing equipment rather than buying it. This has increased demand in this market over recent years and may provide some opportunities in the coming years if economic uncertainty curtails investment. Private contractors The private contractor segment is expected to make up 18.5% of industry revenue in the current year. Companies and individuals in this segment rent and lease machinery for work across a wide range of civil engineering and construction projects. This segment is set to expand its market share over the next five-year period as private contractors are meeting growing construction demand in business, housing and transport infrastructure. Source: IBISWorld Research
Government The government is a major customer of this industry, whether through direct involvement in public construction projects, or by outsourcing to commercial firms. The government is forecast to account for 14.2% of industry revenue in 2017 through direct involvement, and this includes the rent or lease of equipment used for government buildings, roads, bridges, pipes and other infrastructure projects. The government has increased public spending on new infrastructure and renewals in recent years, including large scale projects like Crossrail, the London Power Tunnels and the construction of Smart Motorways. Public investment in major infrastructure projects is expected to grow over the coming years, increasing this segment’s share of industry revenue.
13
Market Research Competition Analysis Shayler Concrete Pumping Limited Established in 2002, the company is based in Oxfordshire and serves most of Southern England with a fleet of concrete pumps and truck mixers. This includes a range of pumps from 16m to 42m booms, to meet the needs of all customers. The fleet is maintained to the highest standards of safety and to ensure reliability of delivery. The company hires out truck mixers to most of the major concrete suppliers across the South East of England. All drivers and operators are CPCS trained, and fully insured with public liability of £5,000,000
Mister Concrete Mister Concrete supplies a high quality ready mixed & onsite mixes of concrete and floor screed for domestic, commercial and industrial projects, while minimizing environmental impact by meeting all regulations. They operate in London & Surrey. The ready mix can be used for a huge variety of purposes; including driveways, patios, footings, underpinning, building foundations for either new build or extensions. Together with their concrete pump hire service, they offer a complete solution whatever the concrete requirements are.
Mixamate Mixamate provides the happy medium - a super-convenient ‘mix on site’ concrete delivery service that supplies concrete mixes to site, together with floor screed at the customers request, in whatever quantities requires. Their All-New Concrete Pumping Truck is now available for use throughout London and the South East. This specialist truck has been exclusively engineered by Mixamate to allow for the delivery, mixing, and pumping of concrete from a single vehicle.
14
Market Research SWOT Analysis
Strengths
Weaknesses
• Excellent potential for good contractors in the UK construction industry • Growing industry • Demand-supply gap in the market • Existing contract with the Hanson’s group
• New to the UK market (as a company) • Initial time and staffing constraints • Competition from established players
Opportunities • Partnering with local players to penetrate the market • Expand to other regions of the UK which are anticipated to expand
S
W
O
T
Threats • Economic downturns through uncertainties of Brexit • Regulations • Construction industry cycles
15
â–¸ Business Model
16
Business Model The Entity Business Summary
Company is a company Incorporated in England and Wales. The company is in the business of providing logistics and transportation to construction companies operating in the UK.
Name: Company
The company is now looking to expand its fleet of trucks, by adding five additional vehicles. The company currently owns one specialized concrete mixer truck. It primarily provides haulage services (as a sub contractor).
Location: Sheffield, United Kingdom, S8 0ZT Geographical Focus: United Kingdom
Management: A, B, C Target Customers: Construction and Real Estate Development Companies
A
B
25%
C 50%
25%
Company
17
Business Model Service Offerings The company believes that transport is more than just about ferrying people and have adapted to meet the requirements of our fast-evolving logistics industry. The company’s expertise lies in providing services to the construction industry, including the provision of heavy specialized vehicles and drivers to execute deliveries. The services of the company are unique (key differentiators) because of the following reasons: Customer friendly services Motivated and well trained drivers
Top quality vehicles in fully fit condition, adhering to UK road safety regulations On-time availability, leading to fewer delays and less for time wastage for customers
18
Business Model Primary Customer: Customer A Customer A is the UK’s largest supplier of ready-mixed concrete to site, from a national network of 178 static and mobile production plants. Their integrated supply network and experienced management team makes them an ideal partner for supplying a range of construction materials. Customer A is a leading supplier of heavy building materials to the construction industry. They produce aggregates (crushed rock, sand and gravel), ready-mixed concrete, asphalt, cement and cement related materials. Their basic raw materials are used to make added value products: • Crushed rock and sand is mixed with bitumen to make asphalt for road surfacing • Sand, gravel and limestone is mixed with cement to make ready-mixed concrete • Aggregates and cement are put into handy sized bags for selling through builders' merchants and DIY stores Their principal markets are the major conurbations in England and Wales and the central belt of Scotland. They employ around 3,500 people, in jobs ranging from specialist and professional managers through to production operatives. The location of the quarries is determined by a number of factors, not least geology and planning constraints. Where practical, production sites are located close to core markets to reduce the costs and impact of transportation. They operate a series of depots and wharves, supplied by road, rail and sea, to ensure the efficient transfer of aggregates and cement to areas of greatest demand, or where local materials are not readily available. They operate a fleet of more than 1,200 vehicles to deliver these products, including 850 tippers and mixers operated by independent owner-drivers under a franchise agreement. They also have a fleet of four locomotives and 140 wagons operated by a joint venture rail freight business, Mendip Rail. The Group employs around 45,000 people at 2,300 locations in 40 countries. The UK headquarters is in Maidenhead.
19
Business Model Truck Models being purchased Volvo FMX 410 8x2 Concrete Mixer
20
Business Model Critical Success Factors Optimum capacity utilisation Optimal capacity utilisation is crucial to maximise revenue and profit. Operating significantly below capacity can tighten the gap between revenue and costs.
Ability to accommodate environmental requirements Operators in the industry are subject to European regulations on vehicle emissions. It is important for drivers to be aware of what their vehicles emit and how regulations could change in the future. Output is sold under contract –preferrably long-term sales contracts Strong competition means long-term contracts are desirable. If a client is tied to a distribution system that commits them to the operator’s facilities and approach, it may be difficult and costly for the client to transfer elsewhere. Effective cost controls Effectively managing costs is important to the success of a road freight business, particularly because one of the main expenses is fuel, the price of which can be volatile. Development of a symbiotic relationship with another industry Road freight is often part of a longer and more complex logistics chain, so a business is likely to be more successful if it has productive relationships with other transport industries.
21
Business Model Operational Flows
Marketing Quotations and Shortlisting The company has already obtained quotations for these trucks. These have to be finalised once the loan is sanctioned. Establishing Partnerships Once the fleet is expanded, the company will focus on establishing strategic partnerships. Truck Maintenance Trucks in the construction segment undergo heavy wear and tear. This requires regular maintenance and overhaul, fully recorded for compliance
Initially, the company will market itself through business networking, seeking and finding industry contacts. Apart from this, it will deploy a combination of offline and online techniques Insurance All trucks will be fully covered by legally required insurance policies, considering the risks that they are exposed to Fleet Management The company will have a fleet management mechanism in place to ensure that optimum utilization of time is undertaken for all trucks.
22
Business Model Organizational Structure CEO Overall business monitoring Business development Marketing and expansion Monitoring of budgets and KPIs
CEO
Fleet Manager Establish rates Survey local markets Client liaison Trip sheet verification and billing Ensure compliance of fleet maintenance, insurance and driver regulations Operators/Drivers Truck driving Documentation Trip Sheet Maintenance
Fleet Manager
Operators/ Drivers
Admin Assistant
Administration Assistant Collect invoices Documentation Compliance Contract management
23
Business Model Staffing Plan Particulars Annual Salaries per person CEO Fleet Manager Truck Drivers Admin Assistant
2018
2019
2020
2021
2022
£40,000 £40,000 £35,000 £25,000
£50,000 £50,000 £40,000 £26,250
£52,500 £52,500 £42,000 £27,563
£55,125 £55,125 £44,100 £28,941
£57,881 £57,881 £46,305 £30,388
Designation CEO Fleet Manager Truck Drivers Admin Assistant
1 2 6 1
1 2 7 1
1 2 8 1
1 2 9 1
1 2 10 1
Total Salaries
£355,000
£456,250
£521,063
£591,216
£667,081
24
Business Model Business Strategies The Company will endeavour to deliver high-quality services on time and within budget to an exceptional standard. This attention to high standards is what will ensure the company’s contracts are renewed each cycle.
Strategic • Build brand awareness • Ensure only high-quality and timely services are delivered • Be socially responsible and environmentally friendly • Achieve a high degree of profitability Managerial • Build relationships with partners and suppliers • Geographic expansion to other regions Tactical • Provide excellent service to clients • Enhance customer satisfaction levels • Have strict quality control and safety mechanisms in place • Build good internal control processes/procedures
25
Business Model Business Strategies
Fleet Management Strategy
Human Resource Strategy
Have reminders in place for insurance renewals
Recruit fleet managers and assistants giving them training, knowledge and experience in the industry
Utilise fleet management software to monitor and record maintenance of all the trucks under management Have escalation mechanisms in place for missed deadlines or outstanding service requests so that immediate action can be taken when necessary Track costs and budgets by truck and rental unit to ensure good MIS control and timely reporting of issues
Keep all staff updated with statutory and legal requirements with mandatory training of at least four calendar days each year Aim to recruit managers with two or more years experience and allow opportunities for promotion and development
Networking Strategies Identify those companies where trucks and overhaul services are needed and pitch the services to these clients. Also ensure good ongoing relationships with existing clients to ensure renewal. Tie up with industry associations, chambers of commerce, construction industry organizations to enhance brand visibility. Tie up with other contractors in a local area to expand the opportunities
Regularly update clients on issues and important matters relating to fleet
26
Business Model Further Development The primary strategy for the future development will be to increase both the fleet and it’s customer base, allowing the company to offer services to multiple customers and contractors. This will significantly multiply the revenue, and help achieve higher profitability through best utilisation of capacity. The further development roadmap of the company is given below:
Expand the current fleet and provide full support to Hanson’s
Pitch to potential clients who are competitors of Hansons to provide similar services
Target customers like Breedon, Cemex, Tarmac, Lafarge etc.
Annually increase the size of the fleet through cash surpluses generated by the business
27
Business Model Short Term Milestones
Milestone Scout for office space Memberships of industry associations and chambers of commerce
Period October 2017 December 2017
Networking opportunities through industry associations and chambers of commerce
January 2018 onwards
Acquisition of new trucks
October 2017
Identification of new potential target customers
January 2018
Business networking Website setup and marketing Recruitment of staff
Ongoing from October 2017 November 2017 onwards November 2017
28
Business Model Long Term Milestones First-Year Milestones ▸ ▸ ▸ ▸ ▸ ▸
Business setup and staffing Implementation of marketing strategy Registration with industry associations and chambers of commerce Creating brand awareness Networking and partnerships Establishing supplier relationships
Future Roadmap ▸ ▸ ▸
▸ ▸
Compliance with ISO 9000 Quality control mechanisms Strategic partnerships with construction industry players, trucking associations etc. Expansion into other localities in the UK Ongoing renewal of contracts and addition of new contracts
29
â–¸ Marketing Strategy
30
Marketing Strategy Marketing Strategy Business Networking In this industry, relationships are more important than anything else. The CEO will be active in developing his business networking opportunities. He will be interacting with industry specialists, influencers, and he will offer the company’s services at every appropriate opportunity. Also establishing relationships with local construction companies to highlight potential new contracts. This will generate lots of leads and help establish long-term customers. Construction Industry Associations The company will be an active member in the following construction industry associations. This will give enhanced visibility and build industry networking opportunities: • Construction Industry Council • Construction Organizations, Associations and Governing Bodies • Engineering Construction Industry Association • Federation of Master Builders • Road Haulage Associations
Advertisements The company will be using a variety of online and offline advertisements. This will include social media ads, google ads, news magazines, association magazines, etc. It has allocated about 5% of its revenue as a budget for this purpose.
31
Marketing Strategy Marketing Mix
Promotion The Company will promote its services using business networking, real estate associations, offline advertising such as print media, as well as online techniques (social media, email marketing, etc.)
Product/Services The Company offers trucks and overhauling services
Price The pricing strategy will be in line with competitors and the market pricing.
Product
Promotion
Price
Place
Place The company is based in the UK. The focus will be on localities all over the UK.
32
â–¸ Management Summary
33
Management Summary Management Team XXXXX Owner Driver Email: Phone:
Experience
XXXX XXXXX XXXX XXXXX
Technical Skills
XXXX XXXXX XXXX XXXXX
34
Management Summary Management Team XXXXX Owner Driver Email: Phone:
Experience
XXXX XXXXX XXXX XXXXX
Technical Skills
XXXX XXXXX XXXX XXXXX
35
Management Summary Management Team XXXXX Owner Driver Email: Phone:
Experience
XXXX XXXXX XXXX XXXXX
Technical Skills
XXXX XXXXX XXXX XXXXX
36
â–¸ Sources and Uses of Funds
37
Sources and Uses of Funds Sources and Uses of Funds The company is applying for a loan of £700,000 to purchase five additional trucks for its fleet. These are Volvo FMX 410 8*2 Concrete Mixer trucks, as specified on slide 20 Particulars Uses of Funds Trucks Total Sources of Funds Loan Total
Amount (£) £700,000 £700,000
£700,000 £700,000
38
â–¸ Financial Plan
39
Financial Plan Projected Income Statements Particulars Revenues Truck Rental
2018
2019
2020
2021
2022
£675,000
£866,250
£1,089,000
£1,347,638
£1,647,113
Total
£675,000
£866,250
£1,089,000
£1,347,638
£1,647,113
Expenses Manpower Expenses Truck Maintenance Insurance Professional & Legal Marketing Interest Depreciation Admin Expenses Total
£355,000 £67,500 £2,975 £10,000 £33,750 £26,942 £105,000 £10,000 £611,167
£456,250 £86,625 £3,039 £11,000 £43,313 £24,575 £107,250 £12,500 £744,551
£521,063 £108,900 £3,093 £12,100 £54,450 £22,112 £109,163 £15,625 £846,504
£591,216 £134,764 £3,139 £13,310 £67,382 £19,548 £110,788 £19,531 £959,677
£667,081 £164,711 £3,178 £14,641 £82,356 £16,879 £112,170 £24,414 £1,085,430
£63,833 £12,767 £51,066
£121,699 £24,340 £97,359
£242,496 £48,499 £193,996
£387,960 £77,592 £310,368
£561,682 £112,336 £449,346
Net Profit before tax Taxes Net Profit after tax
8%
11%
18%
23%
27%
40
Financial Plan Projected Cash Flows Particulars Cash In Truck Rental Loan
2018
2019
2020
2021
2022
£675,000 £700,000
£866,250
£1,089,000
£1,347,638
£1,647,113
Total
£1,375,000
£866,250
£1,089,000
£1,347,638
£1,647,113
Cash Out Manpower Expenses Truck Maintenance Insurance Professional & Legal Marketing Interest Admin Expenses Trucks Total
£355,000 £67,500 £2,975 £10,000 £33,750 £26,942 £10,000 £700,000 £1,206,167
£456,250 £86,625 £3,039 £11,000 £43,313 £24,575 £12,500 £120,000 £637,301
£521,063 £108,900 £3,093 £12,100 £54,450 £22,112 £15,625 £120,000 £737,342
£591,216 £134,764 £3,139 £13,310 £67,382 £19,548 £19,531 £120,000 £848,889
£667,081 £164,711 £3,178 £14,641 £82,356 £16,879 £24,414 £120,000 £973,260
££168,833 £168,833
£168,833 £228,949 £397,781
£397,781 £351,658 £749,439
£749,439 £498,748 £1,248,188
£1,248,188 £673,852 £1,922,040
Opening Balance Surplus Closing Balance
41
Financial Plan Financial Charts Financial Performance
Structure of Expenses
2,500,000
2,000,000
17% 4% 6% 2% 0% 11%
Manpower Expenses
2%
Truck Maintenance
1,500,000
Insurance 58%
Professional & Legal Marketing
1,000,000
Interest Depreciation Admin Expenses
500,000
0 2018 Revenue
2019
2020
Net Profit
2021
2022
Cash Balance
42
Financial Plan Key Financial Indicators Particulars Net Present Value Internal Rate of Return Revenue CAGR Profit CAGR Cash CAGR
Value £2,016,607 57% 25% 72% 84%
43
Financial Plan Appendix Term Interest Loan Schedule Particulars Opening Balance Interest Repayment Closing Balance
Revenue Assumptions Particulars Number of Trucks Average Daily Rental Number of days Revenue
Truck Assumptions Particulars Opening Balance Additions Depreciation Closing Balance
10 4%
years
2018 £700,000 £26,942 £85,046 £641,897
2019 £641,897 £24,575 £85,046 £581,426
2020 £581,426 £22,112 £85,046 £518,491
2021 £518,491 £19,548 £85,046 £452,993
2022 £452,993 £16,879 £85,046 £384,826
2018 6 £450 250 £675,000
2019 7 £495 250 £866,250
2020 8 £545 250 £1,089,000
2021 9 £599 250 £1,347,638
2022 10 £659 250 £1,647,113
2018 ££700,000 £105,000 £595,000
2019 £595,000 £120,000 £107,250 £607,750
2020 £607,750 £120,000 £109,163 £618,588
2021 £618,588 £120,000 £110,788 £627,799
2022 £627,799 £120,000 £112,170 £635,629
44