Business Plan for the Logistics Support Company - Case Study Example

A Business Plan A Business Plan Executive Summary The logistics support company is a current middle sized, long haul logistics, and Transport Company located at the outskirts of the city. This company remained established by two entrepreneurs who saw the shortage of the transport service in the area. This company has since establishment given service to businesses, people, and organizations around the city and far away from the location as well. The business has established a name for itself within its area of location due to its timely and perfect service delivery as well as developed network and software performance, permitting customers to contract the services of this institution. The company remains controlled by the one entrepreneur and a team of support staff (Folsom, 48) Goals of the company Ease supply of goods and materials to customers in a competent and reliable manner Networking with the surrounding suppliers and storage enterprises to facilitate smooth running and operation of the business Build branches in various parts of the country to facilitate growth of the institution Buy more vehicles to ensure that clients always get services they need on time and efficiently Recruit more staff to improve service delivery and facilitate expansion of the business Increase the revenue base yearly Establish efficient communication channels among the parties involved Fixing the correct programmes which can remain achieved conveniently Employing and maintaining highly qualified and trained staff Trying to precisely understand the client’s needs and help them achieve them (Folsom, 49) Company Description Logistics support company located at the outskirts of the capital city will offer transport and logistics organization solutions for enterprise customers within the region of its location and far. Starting with operations form within the city, the company will transport materials from distributors to manufacturers to wholesalers and retailers, acting in conjunction with supply canters, storage enterprises, and wholesalers. The logistics company remains started by two entrepreneurs who before worked like managers of storage enterprises for a reasonable period. The company will function in the logistics and transportation filed with many services. An extra source of income remains the growth of unique services. This can vary from computer arranging systems to supply services. Cross marketing remains arranged to be one of the key methods in this company, because the whole items remain focused to serve the same requirement and can cheaply remain merged. Synergy in marketing an item across company divisions remains probable to push income further higher. A firm concentration of this company will remain placed on the growth of unique and creative techniques for the clients that offer an important value. A wide variation of customized services will remain provided that will aid make use of the institution and worker potential. A core objective of this suggested business technique remains the growth of a unique corporate personality. Such personality will form client loyalty and aid achieve a competitive advantage. The particular choosing of services and requests provided will remain supervised regularly and differ depending on business requirements. This method offers a competitive border against various businesses in the surrounding and remains anticipated to cause an extra demand and the probability for a cost mark-up (Folsom, 52) Market Analysis This is a big industry with stiff competition from various transport and logistics companies in the region and outside the region. However, the company will battle out in the market with the medium sized institutions of its kind. It will offer general transport and logistics services to its clients at favorable and affordable costs aiming at minimizing cost but making profits as well. Market Segmentation Raw material distributors They transport huge amounts of materials to big producers in the region. These materials wholly do not need refrigeration or heat management. Producers keep a few on location warehouses for these materials and mainly possess some flexibility as to when materials may remain obtained, apart from when estimations remain faulted and supplies fall down. Packaging materials in addition should remain transported to producers and have inclusion in this category. Producers They mainly outsource the supply of their items to enterprises that concentrate in serving a single kind of an enterprise or a retailer. Their packaged items are always transported to just a single supplier or wholesaler, forming a constant business in transporting between the two sites (Folsom, 58) Wholesalers/ suppliers Those wholesalers or suppliers who deliver services to big retailers gather vehicles full of materials from the several producers they serve. Whereas they always possess their personal vehicles or supply mechanisms, a few of these organizations do not as well since they remain minute or due to that, they try to limit their venture in assets. Different firms can need extra transport assistance when they remain functioning at maximum, however, not ready to increase their transport potential. Target Market Strategy The company will start by concentrating particularly on the part of the producers in the area, increasing subsequent to the first year to the complete targeted area. Through serving producers, the company may offer an economical transport answer for unique and developing producers against buying their personal vehicles. Raw material distributors sometimes need flatbed or heavy transport that will not be the first service provided by the company and wholesalers always possess their personal vehicles. These parts remain anticipated to give a few clients, however, through concentrating initially on the center of the distribution channel with producers. The company will remain introduced to distributors and suppliers who can need their services lacking connection in complete selling promotions to these parts (Folsom, 64) Competition Moreover, to battling out with various transport institutions, together with national carriers, the company will battle out with rail and flight goods shipping. Nevertheless, for the miles it wishes to travel, it has to ensure that it keeps its competitors under check and knows exactly the way to act at each time without compulsion. Transporters in the region select transport companies considering: i. Their maintained record of timely and correct supplies ii. Their cost iii. Their capacity to join with the transporter to provide logistics proficiency and extra services iv. Organization and Management The CEO will control the tactical path, sales and promotion operations of the company. The CEO will have gained experience in the total of these sections by job in his before storage business that he managed for a number of years. The Chief Operating Officer rank will remain occupied through a partner and will receive up to 10% of the shares in the company following satisfaction of specific regulations. Extra shares will remain given if the COO contributes finances to the enterprise. The COO will control money, labor, operations, and purchases. The enterprise will need extra staff together with an administrator or a send off worker and a marketing assistant partner. These people will be under the control of the COO and the CEO. Ten part-time drivers will have to remain recruited at first (Folsom, 78) Services The company will provide the below services for enterprises in the region: Collect and deliver supplies of customers containing a low per-delivery mass of 20,000 Ibs from and to sites in its regional coverage through trucks Both “minimum than lorry cargo” and “lorry cargo” services Web tracking data give information on the sites of the total GPS-tagged Lorries and the condition of supplies, including anticipated arrival periods for collection and supply Phone assistance for all client queries, supply alterations, and programming Desired customer services together with web accounts, constant programs of transporting, or connecting of customer demand data straight to the company’s programming software to permit for seamless transport (Folsom, 89). The vehicles remain driven by effective and precisely well-coached drivers with clean records of accomplishment. The drivers receive coaching on road security and re-evaluated for intelligence of statutes as they reform. The services help our clients derive satisfaction and confidence in the company and thus they can contract it any time for deliveries. The clients in addition establish a good relationship with the company as well as the staff members and this helps to build a strong and united team. The company’s image remains boosted finally. The company anticipates offering these transport services for the unforeseeable future for the benefit of the society and the organization at large. Marketing and Sales The company will try to quickly accomplish sensitization in the area within its location concerning its enterprise in the initial year, then after familiarization with the areas bordering the location of the company in the forthcoming years. It will look to locate itself not as the major cheapest transporter, however, as the transporter with the precise timely record supported with developed mechanisms to assist customers control their transport precisely. Minor enterprises can feel extra relaxed doing job with a minute transporter since they fear remaining lost in the mix up by larger transporters who as well deal with big accounts. The strategies to apply include (Folsom, 98): Establishing a website containing visibility on exploration engines and records of transport institutions Forming a forcing catalog of the company services that will remain supplied by direct mail and stored in inventory for networking activities Advertisements in commerce magazines Displaying at commerce service meetings, mainly for parts of the producing company Public associations attempts including media publications associated to the enterprise launch and its new desired customer account control package Sales strategy The CEO will control sales for the organization, booking appointments with and touring customer enterprises in the area when need be to build associations founded on knowing the customer’s requirements for transporting. The CEO will view from a record of producer businesses in the area, beginning with minor and current organizations that may not have build a fixed association with a transporter yet (Folsom, 102) Funding Request The CEO will offer most of the money initially out of his savings. Extra venture will come from investing associates who will remain offered 20% of shares in the organization for their venture. Start- up Funding Start- up Expenses to Fund……………………………………………………..$50,000 Start-up Assets to Fund…………………………………………………………$850,000 Total Funding Needed……………………………………………………………$900,000 Assets Non-cash Items from Start-up……………………………………………………$500,000 Cash Requirements from Start-up………………………………………………...$100,000 Additional Cash Raised……………………………………………………………$0 Cash Balance on Starting Date………………………………………………….....$80,000 Total Assets………………………………………………………………………..$680,000 Liabilities and Capital Liabilities Current Borrowing…………………………………………………………………$5,000 Fixed liabilities…………………………………………………………………………$0 Accounts Payable………………………………………………………………………$0 Other Current Liabilities………………………………………………………………..$0 Total Liabilities………………………………………………………………………..$5,000 Capital Planned Investment CEO…………………………………………………………………………………$500,000 Investors……………………………………………………………………………$200,000 Additional Investment Requirement……………………………………………………………………….$0 Total Planned Investment…………………………………………………………………………$900,000 Loss at Start-up (Start-up Expenses)………………………………………………($50,000) Total Capital………………………………………………………………………$850,000 Total Capital and Liabilities…………………………………………………………………………$855,000 Total Funding……………………………………………………………………$900,000 Financial Projections Projected Profit and Loss The main costs include: 1. Payroll: includes the administration, employees, and lorry driver salaries (when not straight featured to employments) 2. Marketing/ Promotion: Estimated higher in the starting year and then declining because of additional selling committed to the opening and the weaning off of exploration engine selling against time 3. Depreciation: shows the increasing venture in vehicles and facilities for the years. Vehicles remain devalued on a 10-year straight-line format. The wear out remains estimated at $1150 each month or $1450 monthly together with the extra facilities bought with every lorry. The enterprise will develop from five trucks by the end of first year to eight by the end of second year to ten at the end of third year. 4. Truck maintenance/ Repair: Projected at $300 monthly for each lorry for a start and increasing to $325 during third year because of a few of the initial Lorries bought growing old. 5. Rent and Utilities: estimated to increase slowly because of inflation rise 6. Insurance: will increase with the increase in number of trucks and dimension of activities 7. Payroll Taxes: Used to payroll as recorded and half of the straight expense of sales (Lorry driver salaries) 8. Licensing and Permitting: Comprise of going on renewals of licenses and extra licenses for current Lorries as they remain bought (Folsom, 120) Pro Forma Profit and Loss Year 1 year 2 year 3 Sales $868, 180 $1, 453, 712 $2, 354, 980 Direct Cost of Sales $398, 890 $815, 978 $945, 170 Other Cost of Sales $0 $0 $0 Total Cost of Sales $398, 890 $615, 976 $945, 170 Gross Margin $469, 290 $837, 736 $1, 409,810 Gross Margin % 54.05% 57.63% 59.875% Expenses Payroll $197, 961 $260,000 $290,000 Marketing $102,000 $80,000 $100,000 Depreciation $59, 334 $89, 952 $124, 944 Truck Repair $7,800 $12,000 $18,900 Rent $36, 000 $37,800 $39, 690 Utilities $3, 600 $3, 780 $3, 969 Insurance $12, 000 $18, 000 $25,000 Payroll Taxes $59, 611 $85, 198 $114, 388 Licenses and Permitting $8, 000 $10, 000 $10, 000 Web Hosting and Development $4, 125 $7, 200 $7, 560 Total Operating Expenses $490, 431 $603, 930 $734, 451 Profit Before Interest and Taxes ($21, 141) $233, 806 $675, 359 EBITDA $38, 193 $323, 758 $800, 303 Interest Expense $3, 889 $21, 975 $35, 250 Taxes Incurred $0 $63, 549 $192, 033 Net Profit ($25, 030) $148, 282 $448, 077 Net Profit/ Sales -2.88% 10.20% 19.03% Work cited Folsom, W D, and Rick Boulware. Encyclopedia of American Business. New York: Facts On File, 2004. Internet resource. Read More