Business Plan for Waterproof Your Roof Limited - Assignment Example

Introduction to the Company Waterproof Your Roof Limited is a business which is going to offer complete roofing services for flat roofs. Our high level expertise will ensure permanent solutions for damp penetration problems for both domestic and commercial flat roof buildings. WYRL will be a sole proprietorship with 100% ownership being hold by me however, as we grow in future, we are anticipating to become a private company first and then going for public subscription of our stocks. It is imperative to note that sole proprietorship at initial stages of the business will allow us to concentrate on developing our business initially because involving other owners now may divide our attention and focus on developing our business. Since, WYRL will be an entrepreneurship based on my own expertise and skills therefore considering the traditional creativity and innovation associated with such businesses, our initial focus will therefore be on developing our core competencies besides developing a sustainable business which can cater to the needs of different classes of customers. We are a socially responsible organization with policies relating to health & safety, training and the environment thereby providing assurance to our customers that they are working with a professional company, fluent in handling the industry's changing requirements while maintaining the traditions of customer satisfaction and quality by offering high end services. WYR Ltd willfully understands the challenges facing the house builders in the current market. This company is going to develop an enviable host of policies and procedures to manage customer requirements, backed up by vision and a financially astute management team. WYRL will be the part of The Intelligent Membrane Trade Association (IMA) which is a top UK based organisation which lists expert contractors as its members. The listing criteria of IMA are tough and only those contractors are listed which have successfully demonstrated highest quality standards. Behind the IMA is the strength of Icopal which is the largest manufacturer of roofing and building membranes in the world. Icopal has been manufacturing plants in the UK, Finland, Norway, Sweden, Denmark, Germany, Poland, Czech Republic, Belgium, France and the USA. Products are distributed by 7 offices across Europe, North America, the Middle East and Asia. Icopal is the largest construction membrane company in the UK and Eire offering the widest possible choice of specification products that include: Built up Flat Roofing, Pitched Roofing, Acoustic Flooring Systems, Structural Waterproofing, and Geomembranes. WYRL aspires to be registered with Icopal in order to achieve industry wide quality standards. WYR Ltd. will be constant in its commitment to delivering high quality expertise and customer service to achieve the Programme requirements. This company can also mobilise its skilled workforce to service the needs of any project in any Wales and UK location. Product & Service Waterproof Your Roof Limited (WYRL) is a service oriented organization offering services to wide range of costumers belonging to both to our Industrial customers as well as general public. The basic services will include water-proof roofing, water-leakage roofing as well as installation of leak proof roofing. All the services may be availed as a complete package or can also be availed as standalone services. In order to further establish ourselves in the business, we shall be striving to develop our unique selling proposition of delivering high quality services at low costs. For this purpose, we will not charge our margins on the products purchased from third parties rather, our aim will be to offer high quality services backed up by inexpensive but highly effective material which can ensure high quality but durable roofline services. All such services will be delivered through highly trained experts who will be delivering all such services within allotted time period mutually agreed between our customers and us. WYRL shall also be cross selling all the accessory material required for offering comprehensive roofing services however such services shall be additional and shall not form the part of the core services offered by WYRL i.e. roofing services. As such, our customers will have flexibility as well as choice to our customers to procure the required material either through themselves or through our company. Generally, our services will include following: 1. Survey roof area prior to submitting quotation (FOC); we will give you the best advice possible regarding your roofline (even if that is -it doesn't need doing).Our advice will be based on top of the line industry standards which ensure quality as well as promptness of our services. 2. Prepare detailed written quotation (FOC); we will provide you with a comprehensivewritten quotation with all details of offers etc. All our quotations come with the 'Reasonable Price Promise' which ensures that you will not get a better price for the job-(on all like for like quotations). 3. Detecting leaks - The most difficult place to detect leaks is on a flat roof. Often, the only answer is to completely coat the roof with a waterproofing solution. 4. Complete removal of the damaged roofing membrane; 5. Replacement of the flat roof covering. It is also important to note that initially we shall be offering free annual servicing of the work done by our firm. At the time, of signing service agreements with our customers, we shall be offering an option to receive free services annually by taking an option under which they will charged slightly higher than our regular pricing. Pricing Strategy There are different ways to price a good or service based on the intended objectives and strategic orientation of the firm. Based on the market conditions and the current stage of the life cycle of the product or service, different pricing strategies are adopted to suit the current market situation. Since WYRL is a new entrant into the market therefore our pricing strategy shall be based on the penetration pricing strategies. Penetration Pricing Strategies are adopted to set the prices relatively lower than the market in order to gain the necessary market share to establish in the market. As such, our aim would be to employ cost+ pricing strategy by adding up a gross margin of 25% to our overall cost of producing services. It is also imperative that the material used in our services will be charged based on the market prices for which a separate invoice will be produced to our customers. In order to further solidify our position in the market, we will be offering 45 days of credit to our commercial customers. This credit extension period is 15 days greater than the industry average of extending 30 days of credit. It is also important to note that our pricing will slightly differ in cases where our customers prefer to opt for annual servicing. At the time, of signing the service agreement, we shall be providing an option, as mentioned above. From the perspective of pricing the product, it would therefore be important that we charge slightly higher than what we will be charging for our regular service charges. Initially, we aim to offer an additional 5% to be added for annual inspection of the work performed by us however, the service agreement will include the clause where we will be charging separately for the regular annual services plus material installed during such annual services. However, the follow-up servicing will be performed at 50% discount charges to all such customers who will be signing such an agreement at the time of first sale. The Market UK's construction market is going to boom in the future due to the continuous inflow of immigrants into the country. The relatively easier immigration laws allowed immigrants from different countries to make UK as their next home. It is due to this reason, it is anticipated that the market is going to increase over the period of time. During last twenty years, the housing market in UK remained overvalued due to generous financing provided by financial institutions. A little look at the housing history of UK would suggest that the demand for housing units has continuously increased over the period of time. Such increased demand therefore has created more volatility in the market with prices touching extreme levels. Such volatility in the market prices has therefore created more sensitive market structure where consumers are continuously becoming more conscious of pricing. Further, the first time owners of homes in UK are increasing too suggesting that the demand for waterproofing services may consistently increase because new buyers prefer to have homes which are up to date in every respect. Recent changes in the market also indicate towards a shift which is gradually taking place in the market. This shift is towards developing green housing units which can conserve the energy and protect the environment. With the increase in demand for green housing units, we anticipate that the market is further going to increase for installation of green roofs which not only conserve energy for housing units but will also use sustainable material. However, the recent crisis in the financial markets of the world is indicating a very bleak future for the housing market in UK due to lack of financing offered by financial institutions. (BBC, 2007). Since our firm will be offering waterproofing services therefore we anticipate that due to lack of new construction activity in the country, expenditure on the current infrastructure to maintain them is going to increase therefore our market is going to increase at least in short term. Waterproofing market in England & Wales is largely fragmented with very few players who can claim to be the market leaders. Due to this fragmentation in the market and relatively lesser degree of branding allowed many small to medium enterprises to dominate the market however with lesser intensity and market shares. Due to lack of accurate data on the industry, it is therefore almost impossible to accurately judge the concentration ratio in the market and as such defining exactly as to who is the market leader will be touch difficult to assess. As discussed above that our major target area will be Wales and Cardiff therefore our focus will be on the different players working in this area, and we anticipate a lesser degree of competition from different players working in this area. Further, our aim would be to develop a business which is sustainable and provide a state of the art services, therefore, we believe our competitive advantage would be to offer services which are unmatched in the area. Target Market Our target market consists of following two broader categories of customers: 1. Industrial/ Businesses 2. Households/Public Businesses Our Businesses/Industrial clients shall include: 1. Construction Companies/Builders, 2. Commercial businesses/Property Management Companies, 3. Local authorities, 4. Estate agents, Construction Company / Builders. Anon (2008) stated that, the registered Building Contractors & construction companies in Wales are nearly 3,000 and in whereas in Cardiff, there are around 348 contractors. Such large number of contractors in the region indicates a potential new business opportunity with consistent growth to be witnessed in the future. Our aim is also to work as specialist sub-contractors to deliver flat roof work, especially for new building, refurbishment as well as extension of existing projects such as Private House; Schools; Offices; Flats/apartments; Industrial Developments Buildings. This company is also going to deliver contracts for a wide array of development designs on behalf of a broad spectrum of developers. This level of activity will contribute to WYR Ltd being not only one of the largest but the most experienced premier contractors in the housing market. Property Management Companies. In order to further develop our market, our aim will be to tap into the different segments of our targeted industrial customers. For this reason, our focus will also be on booking different property management companies as our prime customers to whom we can build on to develop our future market strength. The office of this company is going to be located at Wyeverne Road, Cathays. This location is strategic for us to offer and get a contract directly from the property agent. We have found out that, they are nearly twenty property agents that are actively running their business in this area. We are also going to make communication a of the highest importance in our strategic with our potential customers as we aim to tap our strategic location more fully by keeping in close touch with a major chunk of customers. Closer proximity with property management companies shall provide us a strategic advantage in gathering market information regarding latest developments taking place into the market besides utilizing different technologies which can improve upon our efficiency as well as reducing overall costs. Local Authorities There are 22 local authorities in Welsh consisting of such wider areas such as Cardiff, Newport, and Swansea etc. Such as large number of local authorities provides a very wider base of customers which can offer high volume business to our firm. Our strategy regarding this segment of our market will therefore be based on developing strategic relationships by offering them specialized services. It is also anticipated that with the increase in the population of the country, local authorities will be requiring higher accommodation space to reach out to the local public therefore we forecast that there will be a general increase in demand for services in the future. Further, local authorities also seem to control different government buildings such as railway stations, bus terminals as well as other places of public importance therefore with such a large number of public buildings requiring regular maintenance, the demand for waterproofing service from this segment of our market is going to increase. Real Estate Agents Our strategy regarding real estate agents would be based on developing ways and means through which we can cross sell through them. Our focus will therefore be based on indirect selling to such customers. We are also planning to imitate the model adopted by pharmaceutical companies which market their products to doctors and not to the patients directly therefore we shall also be focusing on imitating such a marketing strategy. Households/Private Private Housing; Welsh Housing Statistics 2007, (2008) stated that, "The number of dwellings in Wales was estimated to be 1.32 million". By assuming 30% of 1.32 million that are going to flat roofs, the number of dwellings is to be 0.4 million. National statistic (2005) stated in the Living statistics 2004, "The majority (79 per cent) of households lived in houses: 12 per cent lived in bungalows and 9 per cent in flats. However, National Statistics (2005() stated that in the Living in Wales 2004-Household structure, "The type of dwelling, 2001/2002 showed that 29 per cent lived in detached house: 30 percent lived in semi-detached houses: 32 per cent lived in a terraced house: 7 per cent lived in flat and 2 percent lived in other types of dwelling. From the figure of 0.4 million dwellings have flat roofs and the statistics given, This company is going to have a great potential to deliver contracts for a wide array of maintenance works or new works for the private dwellings (houses) and flats. Competitive Business Strategy Anon (2008) stated that about 722 roofing contractors registered in Wales and 89 in Cardiff but as per our survey, majority of them are not offering waterproof services for the flat roof works. This industry is driven primarily by generic services being offered by most of the players in the market however, our competitive business strategy will be based on following characteristics: 1. We realize that paying for this work is the hard bit! We have come up with a few ideas that should make this easier for our customers. Had the work fitted now and then make 12 easy equal payments again NO INTEREST STRAIGHTFORWARD- SIMPLE-NO GIMMICKS!!!.; by doing so, we aim to provide a flexible payment option to our customers so that they not only can evaluate our work but also design their own repayment plan according to their own financial projections. 2. Our company is going to be the only specialist contractor that IMA approved contractor in Cardiff and Wales. This is proven by The Intelligent Membrane Trade Association (2008) showed that, there is only one contractor in Wales registered under them. We anticipate that the demand for our services is going to be very high, since we are going to be the second IMA member contractor in Wales. This is taken based on our potential customers mentioned above. IMA registration will also provide us an opportunity to serve the market by following high quality industry standards which will not only provide peace of mind to our customers but will also serve as a signal for future improvements in our quality of services. By following IMA standards, we also anticipate to improve upon our quality standards as and when they are upgraded by IMA. 3. All Icopal flat roof systems are covered as standard by comprehensive guarantees, providing absolute reassurance for specifies. Through the Icopal team of quality inspectors, contractors can benefit from on a site or in house training to ensure the highest possible standards continue to be met. Our workers are going to be trained through the Icopal team of quality inspectors to ensure the highest possible standards continue to meet. We are also having a technical support from the Icopal team of bespoken specifications to the completion of detailed drawings and get assistance on a site or over the phone to ensure the highest standards are met to help our secure future business. On whole, our competitive business strategy will be based on delivering quality services at a reasonable level of speed and maturity. By offering other incentives such as payment relaxations etc., we aim to lock in customers by making switching cost a smaller portion of the overall costs of the clients. In such way, we anticipate that we will be able to retain a permanent base of customers and by offering them high end services; we will further solidify our position. Registering with IMA As a part of our strategy, we shall be registering with IMA and train our employees as per the standards set by IMA In order to register with IMA; we shall be approaching them for listing as member before the start of our proposed business. Currently, IMA is offering membership exclusively to 200 contractors across the UK at a cost of GBP 700+ VAT. Since IMA has been established by ICOPAL as a non-profit entity to define and implement industry wise standards, therefore registering with IMA and ICOPAL shall be providing us an opportunity to be a certified contractor. Marketing Plan Our marketing plan will be based on a thorough analysis of our target market, and it would be based on our segmentation. We intend to follow two different sets of marketing strategies i.e. each of them will be serving each category of our customers. In order to better promote our business, our marketing planning is going to be different for each segment of our market however as a general rule, the best way to promote our business to our potential customer will be: Need to invest in some kind of advertising and marketing to really get our business off the ground, even if at first it's just telling friends and family to spread the word. To get our business out there by; Word of mouth. Free ad papers - Contact local free and publications for advertising opportunities. Leaflets / brochures / business cards - Information of our business. Notices - Will create promotion cards to stick in shop windows, on notice boards, etc. Door drops - Make a promotion leaflet and post it through doors. Business directories - A Yellow Pages and Thomson Local Listing will be really effective. Cold Calling - Use our enthusiasm and belief that our service is the best in the market to make a sale. Direct mail - To get our communication right, cost effective results, especially if our follow-up phone call. Local newspaper - Promote our business with ads and / or editorial coverage. Trade magazine - Ads in these can be ideal for a small, well-defined business audience. Local radio - Immediate results, if supported by a strong message that gets customers to act. Trade fairs / exhibitions - Will reach a large audience in one go. Website - Easier and cheaper to update a website than printed promotional items. From the services that we are going to provide will make our potential customers are more confident and choosing our services as their final decision. We are going to try our best to provide our professional service, quality guaranteed products and competitive pricing. We will offer our customers the necessary advice on what we understand to be the most effective solution for their requirements, providing information in an understandable format, with no pressure attached. Waterproof Your Roof Ltd. is going to aware of the concern about the hit-and -miss nature of the waterproofing quality in the UK. This issue is seen as a key area of financial risk and problems can occur with choice of products, with workmanship or with both. Waterproof Your Roof Ltd aims to address these concerns by offering a manufacturers insurance backed warranty for all our works. Distribution & Production Strategy and Structure Since our company is going to be a service oriented company therefore our distribution strategy shall involve two different sets of distribution and production. Our retail customers i.e. households can reach us either of the following way: 1. By visiting our different centers located strategically across the region. 2. By calling our 24/7 call center to order any service 3. Log on to our website to order the services through our interactive and easy to use menus. We intend to utilize a local line for our call center which shall be based in our office i.e. one of our employees will be taking calls from our customers to book their orders and forward the same to the production department to render the ordered services. However, as we grow in future, we intend to outsource our call center services by expanding the scope as well as breadth of services to be provided by our company. We intend to serve our retail customers through this call center however, for our industrial customers, we aim to reach them through direct marketing therefore first we shall market them our products and on the booking of the orders, our servicemen shall visit their projects to perform the services. As such our distribution and production structure shall be based on centralised regional offices which shall be coordinating with our industrial customers. These regional offices shall be coordinating with one centralised warehouse which shall be providing all the material required to complete the projects. Our suppliers will be providing the raw material i.e. material to be used in waterproofing services directly to our warehouses. It is also important to understand that centarlised regional offices shall mainly provide marketing services i.e. they will be serving as the point of sales for our retail as well as industrial customers and will also serve as a liaison between our head office and the field. It is also important to note that all the administrative matters i.e. workers' compensation etc. shall not be dealt at our regional centers as they will only be serving as a point of sales locations to offer high quality services to our customers. Further, as we grow, we intend to provide a substantial degree of autonomy to our regional offices by empowering them to set up their own annual business targets besides managing their affairs on their own. Further, we also aim to offer franchising to different players which shall be using our name and expertise to deliver services offered by us. Our franchising strategy will be therefore focused on increasing our distribution channels and will also further increase our penetration into different areas of the market i.e. rest of UK. Financial Requirements & Deal Structure Considering the above business plan, we aim to anticipate following financial requirements & deal structure to complete the financial closure of our proposed business: Total Funds required = GBP 200,000/- Bank Borrowing = GBP 100,000/- Equity Contribution = GBP 100,000/- The above deal structure suggests that initially, we will be requiring only GBP 200,000/- for setting up our business. 50% of the contribution will come from the owners of the business whereas rest of 50% i.e. approximately GBP 100,000/- shall be raised through banking channels at prime rate plus 2%. Payable in five years. We are assuming that our negotiation with the XYZ Bank Ltd is already finalised and Bank has agreed to provide required funding at the agreed rate. In order to fund the future expansion, we however shall be relying on our own internal resources to be re-invested to fund our future expansion plans however as of now, 50% of the fund contribution will come from banks and 50% will be contributed by the owners. Major Costs We anticipate that following preliminary costs will be incurred during the first year: Leasing expenses on offices and warehouse 15,000 Training cost of employees 20,000 Registration charges 5,000 Furniture & fixtures 50,000 Miscellaneous 10,000 Total 100,000/- Leasing expenses shall be incurred on getting the lease for our proposed office as well as warehouse. As a part of our expansion policy, we shall be phasing out our distribution locations in different phases therefore initially, our aim is to market and serve limited market area therefore warehousing requirements are conservatively forecasted. Registration charges include business registration with the public authorities as well as registration with the ICOPAL and IMA whereas furniture and fixtures shall be utilized to set up our newly leased offices and warehouses. Furniture and fixtures shall also include storing space which will be used for storing different waterproofing material to be used in waterproofing services to be offered to our clients. Miscellaneous charges will include purchasing necessary stationary, paying petty bills etc. It is therefore important to note that miscellaneous charges are totally unanticipated and may greatly increase from the projections made. Financial Projections In order to effectively prepare financial projections for next five years, following assumptions are taken: 1. There will be no taxes 2. Gross Margin will subsequently increase due to efficiency achieved 3. Training costs for employees is considered as an admin expense. 4. All figures are assumed however, projections are made based on industry analysis. Projected Income Statement Projected Balance Sheet Projected Cash Flow Statement Bibliography 1. Anon(2008),Welsh Housing Statistics 2007.cited at www.new.wales.gov.uk. and accessed 18 November 2008. 2. Welsh Assembly Government (2005), National Statistics-Living statistics 2004. cited at www.new.wales.gov.uk. and accessed 18 November 2008. 3. Welsh Assembly Government (2005), Living in Wales 2004-Household structure. cited at www.new.wales.gov.uk. and accessed 18 November 2008. 4. Anon (2008)i, Yell limited, cited at www.yell.com. and accessed 20 November 2008. 5. The Intelligent Membrane Trade Association (2008), cited at www.imaroofer.com/index.php. and accessed 15 November 2008. 6. Icopal Ltd (2008), cited at ww.icopal.co.uk. and accessed 15 November 2008. 7. BBC. (2007, July 30). UK housing market is 'overvalued'. Retrieved January 17, 2009, from BBC: http://news.bbc.co.uk/2/hi/business/6922109.stm Read More