Oolite Electronics Project - Business Plan Example

10000201701

EXECUTIVE SUMMARY

Oolite Electronics is an electronics store that will be located in Miami Mall, 1stFloor, Shop number 110 at 65070 Blue Lagoon Drive number 827 in Miami. Miami is one of the cities in the state of Florida and Oolite Electronics will be strategically located in one of the busiest malls. The store will be easily accessible by locals living in the neighborhood, travelers who stop by the mall and thousands of cruise-tourists who dock at the port of Miami.

With the innovation, new electronics and improvements of the existing electronics are released in the market every day. Oolite Electronics will capitalize on the ever-growing electronics market and the leading purchasing power of Miami City to establish itself as the leading store in the region. The goal of the company is to become the leading distributor of electronics in the area. Oolite Electronic store will stock home, office, industrial, communication, and entertainment electronics. In addition to selling electronics, Oolite will also be delivering the items to customers who need such services within Miami and later in other areas. The company technicians will also be doing minor installation such as TV mounting free and major installations for half the market price.

To achieve the goal, the Oolite Electronics Shop will keep up with the innovation and emerging trend. The company will provide high-quality services in the sales of the electronics, delivery of the electronics, warranting of the equipment, and installation. The store will invest heavily in marketing and advertisement and will provide an online option where customers can, view the electronics on the stock, buy or book for their electronics, make their payments, track their deliveries and give feedback of their experience. The website and the online app will also allow customization of electronics for the premium market.

The idea was born from the founder- (Student’s Name) experience living in Miami where he had to wait for days to get a phone he had bought online. (Student’s Name) had lost his phone on an evening party and purchase a new phone since it was on the weekend. To his rude shock, he had to drive for hours before locating an electronic shop. Unfortunately, the electronic shops he found did not have any recent device, not even the model of the phone he lost. He did not have a choice by evening, and he ordered the phone online, which was to arrive in 3 days but annoyingly took six days to reach him. In his search for a new phone, over ten people who needed to buy different electronic asked him for direction to electronic shops. The need in the market caught his attention, and after a period of soul-searching, he decided to venture into the business.

(Student’s Name) started the business from his house where he would get orders from customers, source and ship their orders within the same day, unlike the online platforms that were taking three to five days. (Student’s Name) only put up posters in his neighborhood and within three months, he was getting orders even from other neighborhoods from referrals. Initially, the business did not have a name until (Student’s Name) younger sister learning Geography of Miami wrote Oolite all over his note that he used to writer clients orders. Oolite is limestone and Miami bedrock is made of that rock, which was formed some 130,000 years ago. He adopted the name Oolite casually and later officially when he registered the business.

The orders grew especially from electricians, and he was forced to stock some of the conventional products in advance. By the fifth month, the business had grown and (Student’s Name) could not operate it alone, thus, he hired an assistant who would help with delivery. The company had a saving of $800,000 and operation capital of $1.2 Million by the end of the firth month and (Student’s Name) has developed a good relationship with several electronics manufacturers. The successful start-up of the business gives him the drive to venture fully and establish the Oolite Electronics Store in Miami looking forward to opening branches in other regions. The saving and the operational cost of the home-based business will help in covering the stocking, rent, and hiring of 2 electricians and 2 more assistants for the first 3 months. To boost this capital (Student’s Name) has already has arranged with his bank and the bank is willing to loan him up to $ 1 million.

PROJECTION

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BENEFITS TO THE COMMUNITY

Oolite Electronics Store is a business, and its core aim is to make a profit. In the process, the company will not only be beneficial to the owner but also to the community. The store will be the bridge between the electronics manufacturers and the consumers. It will bring the goods closer to the manufacturer, which will save the society time and money. Before the establishment of the store, the electronics consumers had to travel all the way to electronics shops sometimes even outside Miami to get what they wanted or buy online and wait for the goods to be delivered. Travelling miles to buy electronics was an extra cost the consumer incurred and consumed precious time, which would have been spent constructively to earn an income. Buying electronics online and waiting for delivery leads to inconvenience as consumers go without essential services or important processes stalls down. In addition, the customers will enjoy free minor installation and half cost on all major installations that qualify, which is a big saving to the members of the community.

The store will also be a source of employment for the two electricians and three assistants hired to work in the store or make deliveries. Therefore, the store will improve the welfare of the employees and their families. They will be able to afford a better living and to educate their children. The store will also cater for hospital insurance of the employees and their families and retirement benefits for them. In addition, it will also cater for the skills training all the unskilled and semi-skilled employees to attain full qualification of electricians. The workers will have a better future even after leaving Oolite Store they can get good jobs with the qualifications in other firms.The company will offer 10% of its profit to charities in the community. The children homes, schooling funds for the disadvantaged children and fight against cancer among other charitable courses will be the main objectives. The funds will be channeled through Oolite’s foundation, which will also offer free electronics, upgrades, and repairs to children homes every 3rd year. The company will also champion green living by supporting environment conservative measure, sustainable utilization of resources, recycling, and appropriate disposal of waste. The store will have a counter to receive discarded electronics, which will be shipped back to manufacturers and recyclers.

COMPANY AND INDUSTRY

Oolite Electronics Store is a private limited company owned by (Student’s Name). It will be licensed in Miami as an electronics store and as a supplier and distributor of electronics in accordance with the Florida State rules and regulations. The office and the sales store are located at Miami Mall, First Floor, Shop number 110 at 65070 Blue Lagoon Drive #827 in Miami. The office and the sales store are strategically located in a busy mall with frequent shoppers comprising of locals, travelers, and cruise-tourist. Miami ranks highly in purchasing power, and among the richest in the United States. It also harbors the Port of Miami commonly referred to as “Cruise Capital of the World” and ranked the leading cruise passenger port in the world for over two decades bringing thousands of tourists and shoppers in Miami. In addition to the cruise ship, the port also docks cargo ship facilitating easy importation of electronics in bulk. These are key supporting factors to the location of the Oolite Electronics Stores.

The electronic store will stock varieties of assorted electronics targeting locals, travelers, and cruise-tourists as its different categories of consumers. The electronics will include office electronics such as computers and desktops, projectors, printers, scanners, and internet and telecommunication equipment. Home appliances will include televisions, audio equipment, and kitchen appliances such as heaters, boilers, refrigerators, microwaves, ovens, toasters, and coffee makers among others. Under the music categories, there will be music instruments such as guitars, keyboards, microphones, mixers, turntables, amplifiers, and drum sets. The store will also sell software, audio and videos discs, and games. Under small appliances will be bulbs, extensions, sockets, faceplates, switches, fuses, diodes, capacitors, electrical wires, and CCTV cameras and their accessories among others. Other electronics such as cameras, video recorders, phones, tablets, gaming equipment, public address systems will also be in stock.

The responsibility of the electronic store will be:

• Hire, orient, and/or train electrician to carry out various responsibilities in the store.
• To source and ship quality and authentic electronics from manufacturers or main distributors of various brands
• Stock most recent electronics
• Sell the assortment of electronics to consumers
• Provide warrant to respective electronics
• Provide return policy for faulty electronics
• Deliver the electronics to those who need delivery services for free to those within 10km radius and at a small fee to those outside the free delivery radius
• Provide installation services to clients who require the service. Installation is free for the electronics that qualify for free installation such as TVs or at half price for the electronics that qualify for the service in accordance with the company terms of sale.
• Provide collection point for electronics the consumers wish to discard.

THE MANAGEMENT TEAM

The structures of the store will be in 4 levers, the top management, the lower level management, the lower level employees.

The top management will only have 4members, the CEO who is also the founder, (Student’s Name), Mr. Paul Keen the store manager, Mr. Stevenson Porter the IT expert and Miss Marie Ranks the store accountant. The CEO will be in charge overall. With over ten year experience in marketing, the C.E.O will also be the store marketer. Mr. Paul Keen filling the position of a store manager with over ten years in electronic store management will provide the essential management skills and experience needed to start and run the store. He will be in charge of the daily management and running of the store. Mr. Stevenson, an IT guru with vast experience working with big retail firms such as eBay, will manage the store website and apps. He will guide the receiving, processing, and delivery of orders placed online via the website or the mobile app and their payment before delivery. Miss Marie is a young professional skilled experienced to handle all accounting issues.

The management will begin their work with the advertisement, interviewing and hiring of employees to fill the4 head of sales, the nine sales assistants, two delivery drivers and two installation/delivery technicians posts.

MANUFACTURING AND OPERATIONAL PLAN

Oolite Electronics Store and its offices will be housed under one roof for efficiency and teamwork. We will rent 18,000 sq. feet of space in Miami Mall, 1stFloor, Shop number 110 at 65070 Blue Lagoon Drive number 827 in Miami. Miami Mall not only offers a good flow of customers but also comfortable with modern facilities and houses other leading brands in beauty, health, entertainment, and beverages industry. The 10, 000 sq. feet will be partitioned into five office; 4, 9-square foot offices and a 12-square foot office at the back and the rest of the space used as the electronics retail store with goods arranged in the four sections. The C.E.O, the store manager, the IT manager and the account will each get an office. The head of sales in the various sections will share the remaining bigger office, which will also act as the meeting boardroom.

Each of the four offices will require a computer, the common office will require four computers, and the sales store will require four computers. The offices will also need furniture (12 office desks and 12 chairs), eight fireproof filing cabinets, and one safe in the accountant's office. The sales hall will require installation, display shelves, and 10 CCTV cameras. The offices will also require CCTV cameras except the one occupied by the C.E.O. The computers, the filing cabinets, the safe, office furniture and the CCTV cameras will be purchased and shipped with the first stock. The installation of the CCTV and display shelves will begin immediately the equipment arrives. Assembling of the office furniture’s and the computers will follow. The POS software will be installed on the computers for efficiency, accuracy, and easy management of the inventory. The lower level employees will report to work after the installations and begin with the arrangements of the electronics in the display shelves. The Oolite Electronics website will be launched to allow customers to book for electronics as the store finalizes to open doors to the clients. There will be no need of buying new trucks since the CEO's car, and his dad's old truck will be branded and used for delivery until the business can purchase one.

The sales of the electronics will be physically in the mall and on the e-commerce integrated into the Oolite Website. The two platforms will adequately serve the clients. They will be able to view the electronics on stock and purchase by a simple click on their laptop or phones. They will also get an opportunity to book for the electronics that are out of stock or order custom-made electronics

LABOR FORCE

A labor force of 21 personnel including the management team will be working on the store under three hierarchical levels. All the employees will require necessary skills except the sales assistant. The accountant will require to professionally trained and registered. The IT manager will be a professional IT expert with over three years' experience in IT, and the Store manager need possess the skills and over five years' experience in management. The C.E.O has already identified the other three personals to occupy the top management, and they will help him in for other posts. The head of sales will be technicians and experts in various electronics, the sales attendants/assistants, and the installation/delivery person will be semi-skilled technicians. The drivers will also require being skilled in the delivery of even fragile electronics.

The Hierarchy of the Oolite Electronics Store

The C.E.O, IT Manager, Store Manager, and the Account will all be under the top management. Below the senior management is the lower management comprising of the head of sales of various store sections. There will be four head of sales heading the respective sections in the store, the home appliances section, the office equipment & software section, the music section and the small electronics section. The lower management members are in charge of their respective section supervising the sales, filling returns with the accountant, arranging for delivery of the electronics, taking of stock and ordering new stock via the store manager.

Sales assistants who also act as the store attendants assist the head of respective sections. Each section has two sales assistant except the small electronics section, which has three attendants. This level also has the delivery team, which consists of two truck drivers and two electronics installation technician. The store will be admitting interns in various capacities including IT, Sales and Marketing, Management and Accounting periodically. The store considers the interns as volunteers although the company may give allowances.

The Pay-Roll Projection

Year 1

Year 2

Year 3

Position

FT/PT

NE

Salary

NE

Salary

NE

Salary

Owner/C.E.O/Marketer

FT

Retains 55% of the Net Profit

Accountant

FT

1

65,000

1

67,000

1

70,000

IT Manager

FT

1

63,000

1

65,000

1

68,000

Store Manager

FT

1

60,000

1

63,000

1

65,000

Heads Of Sales

FT

4

44,000

4

47,000

4

50,000

Sales Assistant

FT

6

36,000

8

40,000

9

44,000

Drivers

FT

1

19,000

2

23,000

2

27,000

Installation /Delivery Technicians

`FT

1

16,500

2

21,000

2

25,000

Total

15

615,500

19

791,000

20

903,000

MARKETING PLAN

Oolite Electronic Store being a start-up company will require intensive marketing. The management has agreed to adopt both physical and online marketing. The C.E.O, having worked for five years in sales and marketing, will head the market and spearhead physical marketing while the IT Manager will be in charge of online marketing. The C. E.O knows wells the value of advertising as an expert in the field the company will invest intensively both in the capital and manpower to reach out to the customers. A budget of $7200 is set aside for advertising for year 1 to ensure the company starts successfully.

Physical marketing will entail buying billboard space, print media, and television marketing. The company’s support and sponsorship of environmental conservation campaign and disadvantaged members of the society will also help in selling the brand. Online Marketing will involve buying of Google and Facebook ads to advertise the store and its products to the target market. Buying ads is one of the most effective marketing tools in the modern world today where one can filter who sees the advertisement and choose the number of people to be reached. The IT manager will also advertise in the social media on Facebook, Twitter, and Instagram among others.

FINANCIAL PLAN

Establishing the Oolite Electronic Store and successfully launching the company requires intensive financial planning. The first year of the establishment is projected to capital intensive as it involves buying office furniture and equipment, paying the rent goodwill in addition to the month’s rent, partitioning of the rented space, buying the necessary sales software, branding of the vehicles, installation of the display shelves, and buying new stock among other expenses.

Oolite Electronics Store Cost Projections

Variable Costs

Year #1

Year #2

Year #3

Facility Rent & Goodwill

$34,000

$24,000

$24,000

Office Equipment and furniture

$50,000

$2000

$2000

Security Equipment

$2000

$500

$500

Partitioning and Installation of the shelves

$3000

$200

$200

Brandingand repair of the Vehicles

$1200

$400

$200

Buying and customization of the sales software

$500

$100

$50

Total Fixed Cost

90,700

27,200

26,950

Fixed Costs

Year #1

Year #2

Year #3

Salary

615,500

791,000

903,000

Marketing

12,000

15,000

18,000

Utilities

18,000

22,000

25,000

Insurance

50,000

70,000

80,000

Stock

500,000

780,000

1,000,000

Total Variable Cost

1,195,500

1,678,000

2,026,000

Profit Projections

Year #1

Year #2

Year #3

Total Fixed Cost

90,700

27,200

26,950

Total Variable Cost

1,195,500

1,678,000

2,026,000

Total Cost

1,286, 200

1,705,200

2,052,950

Total Revenue

1,150,000

3,342,709

4,733,386

Profit

-136,200

1,637,509

2,680,436

The breakeven point of the store is where the total cost equals total revenue. Any business must at least meet all its cost to be able to remain operational. The Oolite Electronic Shop will break even in the second year of operation according to projections.

The source of capital will be the $800,000 savings and the $1,200,000 operational cost of the existing business ran by the C.E.O from his house. The money will be enough to learn the business for the first 1 year. If any case arises, needing more capital the C.E.O has an arrangement with his bank that is ready to loan him up to $2,500,000.

EXIT STRATEGY

The successful startup of the business will give it a platform for growth and opening new branches in other cities and states. At the level of more than ten branches, the business will be ready to go public to raise capital to maintain its expansion and its increase. In addition to giving investors a sense of accomplishment, their demand for performance gives the firm the zeal to do better. On IPO, the founder and the C.E.O will retain 31% share of the company, the existing employees will share 20% share and the rest of the shares will be open to the public. The shareholder will elect the board of management in, during the first shareholders meeting and the board will take over the management of Oolite Electronics from the founder and his top management. If a new C.E.O is elected during the annual shareholders general meeting

CRITICAL RISKS AND ASSUMPTION

The business plan is written with the assumption that the consumption and purchasing power of Miami will remain constant or improve. It is assumed that no new expenses will emerge requiring more capital than what in the business budget. The business plan also assumes that despite the purchasing power and demand for business space remaining constant or growing there will be no drastic increase in rent. The biggest risk of the business is keeping up with teleological innovation. To remain competitiveness and relevance the business requires keeping up with the electronics innovation. Sometimes electronics launched in the market and within a short time, their predecessors edge them out. Such electronics usually becomes dead stock and a loss to the seller.

The SWOT analysis of the Oolite Electronics Store is as follows

Strengths

• Strategic location
• Experience top management
• Availability of startup capital

Weaknesses

• It’s a startup business and may face stiff competition from the existing businesses

Threats

• The electronics world is an ever-changing world and expensive to keep up with the tread
• Deadstock due to electronics being edged out by their predecessors within no time
• The advertisement may not work as perceived

Opportunities

• Located in a high traffic Mall
• Existing good relationship with electronics manufacturer and consumers
• Readily available loan
• Room for growth and to go public

Appendix 1

A sample of Social Media Advert

Appendix 2

The Stores Operational Cycle