Business Analysis of RQM Technologies - Assignment Example

Business Plan Analysis Student’s Name Course Name A. Summary of the Business Plans 1. RQM Technologies This business is set to engage directly in the personal tracking devices field given that the sector’s market is set to contribute to at least $22B in the coming 5 or so years. It seeks to build up and thereafter distribute such product as personal locator devices. The development of the product will first be sub-contracted and thereafter; conducted and in-house manufacturing as the company focuses on development of supporting software and systems. The market for this product is diversified enough to include family-based consumption to channels sales and military as well as political class. The company is privately-owned and is set to be located in Bolingbrook, IL Western parts of Chicago. It is ascertained that the first few months of the start-up will entirely focus on establishing offices as well as building up on its system designs and minimal marketing campaigns. In addition to selling its personal locator devices, the company is also seeking to expand its revenue streams by incorporating a service that would include; facilitating training classes; seminars and on-site programming as well as provate labelling services. In its first few years of operations, RQM seeks to only hire a minimum of three and maximum of five employees as increase in the numbers depend highly on the possibility of future sales growth. Presently, the firm is focused on availing an investment offer to another person that would not only contribute financial attributes but also, ensure to also be knowledgeable in matters related to legal, international and financial matters that the current owners lack thereof. Its projected profits are expected to commence at $100,000 in year 1 and escalate to $1M in the third year. 2. J.H Reid Corporation The company falls under the S Corporation category and was incorporated in Illinois for purposes of manufacturing and thereby marketing a distinctive line of chair products known as The Chicago Lounge. The company’s mission rests with being a profitable producer of innovative chairs and thereby avail chances for profitable work within the city as a whole. The firm seeks to sustain a nimble production process that would assist in maintaining capital requirements at the very minimal levels in such a way that it would foster a break-even point of 600 units. It has thus far attained more achievements that include securing of five patents while more are still in processing model. Certainly, it has secured a licensing agreement that has also provided a clause for immediate royalties for each of the chair sold. The target market is set to involve healthy young adults that fall in the age between 18 and 45 whose current population estimate stand at 111M in the US alone. It expects to make sales revenue amounting to $1.02M in the first year of introduction and later; $4.5M in the third year with 30,000 units sold. The business plan identifies that the firm will face indirect competition from such companies as La-Z-Boy as well as other well-known companies that engage in the production of reclining chairs. Under the investment offering section, the plan indicates that the company is proposing a 15% of the overall common stock of the company to a maximum of two investors for at least $275,000. B. 3 Strongest Components For Each Plan 1. RQM Technologies First, the business plan of this company entails a well-detailed analysis of the different financials related to sales forecasts, personnel plan; pro forma profit and loss statement; pro forma cash flow and balance sheet within its appendix section. All of this information has been presented in a much clear and concise manner allowing a reader to fully understand the dynamics of the business as a whole. It also seeks to provide a transparent data that would in turn inform a potential investor of the exact amounts projected both in terms of income and expenses within the first few years of operations. Secondly, the firm provides a section that provides intensive information on how its business operations are going to succeed. This section is important for a potential investor that seeks to put in resources with the company for future gains. In fact, it is ascertained that the company success is relied upon such important as product quality and efficacy in reality; adoption of future technological advancements for purposes of improving on its existing current systems and, also cutting down on possible competition; intensive marketing mechanism that would solely focus on channel attributes while at the same time ensure to solve issues related to advertising and promotional-related budgets; and, ensuring to sustain a controlled growth for purposes of managing a start-up cost in a more efficient manner. Another important strength of the business plan is its ability to identify and expound on its objectives. The company objectives are dividend into business objectives under which it seeks to transform into a premier vendor in the personal locator device sector and attain optimal profitability levels within the first year of operation; financial objectives; that seeks to expound on product sales to a few million dollars by the end of the second year in operations, expound on the gross margin up and thereby sustain a high degree of operations in the third year of operations and, also improve on the existing inventory turnover base; marketing objectives under which it seeks to fully concentrate on the target market and thereby improve on aspects related to penetration as well as market dominance; extend the target markets under a controlled growth mechanism and thereby position itself as a leading PLD company in the globe. 2. J.H Reid Corporation First, company’s business plan entails a risk analysis section that puts forward of the imminent risks attributed to its operations and how it will certainly manage them from ruining operations into the future period. The risk section ascertains that the company will face risks attributed to imitation such that indirect competition could engage in trying to launch a much similar product-line or in other cases the possibility of offshore rivals trying to launch and almost similar product for their foreign product market. This risk will be eliminated by engaging in extensive patent, which make product infringement somehow unattractive in nature. other possible risks associated with the business operations include product liability litigations that will be offset by ensuring to secure a product liability insurance; restrictions of industry experiences that would be offset through engaging with suppliers and competition in order to develop from their insights; restricted operating history that will be countered through offering product quality at all times in order to develop brand image and reputation. Secondly, the company’s offering section provides intensive details on the specifics of the entire process of finding one and the exact amount needed from the potentials. It notes that it needs one or two potential investors that would enjoy a 15% of the underlying common stock for an amount approximated to be $275,000 with the investor given an option of selling them to the company in 3 years time for approximately $750,000. Third, the business plan marketing overview and plan is elaborated to cover different attributes attributed to getting the product sold successfully in the proposed sector. These attributes that are fairly-mentioned in the section include; product definition that seeks to promote its functionality amongst the targeted market; market definition that identifies the market target as being the young adults that range in the age of between 18 and 45; marketing strategy for which the chairs would be availed through such platforms as upscale stores like the Room & Board, Dania and Back Stores; and a possible market response that would be used to improve on future developments of the chair; and the underlying market size for which the domestic USA market is perceived to be sole primary market-base for these products before expanding distribution to other sectors of the globe. C. 3 Weakest Components For Each Plan 1. RQM Technologies First, the business plan fails to mention possible risks associated with operations especially in the first few years of operations. The failure to identify these risks means that the company is poorly positioned in case when operations are altered due to unforeseen sets of uncertainties. The ability to prepare for future uncertainty helps a start-up to manage its underlying resources much better and efficiently and thus, maximise on its profitability and capacity to survive into the future. Secondly, the appendix provides a distinctive set of projections that might be cumbersome to a potential investor since it limits the offer to an investor that clearly understand financial analysis. An extensive financial analysis is not recommended since most of the investors do not wish to waste time reading through an entire document. This is somehow a risky affair as there are more potential investors that would be willing and able to provide resources but due to limited knowledge forgo the whole idea altogether. Third, the company’s business plan does not provide an adequate and well-prepared marketing plan overview, which is in fact needed for the purpose of directing sales and distribution of the products. It is important to note that prior to development of any product or service; a start-up entrepreneur is expected to establish the targeted market as well as the platforms that would be used for distributing a product to the end consumer not only locally but also in the foreign market platforms. 2. J.H Reid Corporation The first weak point identified with this business plan rests with the fact that it does not provide a clear and detailed financial analysis of the future projections; this is needed for purposes of enlightening the potential investor of approximate income revenues and expenses expected to be experienced in the future and how these items come about exactly. Secondly, the business plan does not provide structural financial statements for easier reading and interpretations. It is important that a professional business plan portray such crucial statements as the balance sheet; income statement and the statement of cash flow for purposes of ensuring that all detailed financial evaluations are put to immediate reflection of an a potential analysts and interested party. Third, the financials section of the plan fails to provide clear estimates of the personnel required and relies on uninformed data, which might be detrimental to its operations in the future in the event that none of the stages proposed therein fail to occur. D. Suggestions For Improvements Considering that J.H Reid’s Corporation’s business plan makes unrealistic and unconfirmed evaluations, it is recommended that it focuses on coming up with extensive set of assumptions that it will use to ensure future disappointments do not fail operations completely. It is also important that it makes efforts to come up with strategic and structural financial statements that should be presented in a manner that allows full comprehension of all income and expense estimates. These evaluations should also incorporate pictures and graphs for purposes of ensuring that the analysis is comprehensive enough for any given investor or analyst. For the case of RQM Technologies, i think that the business plan is effective and efficient since it covers most of the primary aspects needed for presentation within such a plan. It could however be improved by simplifying these financial statements in such a way that reflects possible success in the future operations. E. Challenges Experienced, Competencies & Lessons Learned In analysing these two business plans, I faced such challenges as; Understanding the financial section of the plans but I managed this through conducting further research especially on matters related to financial statement analysis and in interpretation accounting items like income and expenses. Sometimes it was a challenge to relate the financials and operations of the company but I managed this through identifying and therefore evaluating the objectives associated with the company mission as a whole. In conducting this business plan analysis, I have managed to gather important information on what details to include in a business plan that range from financials, objectives and even describing the potential market for the product at hand. I have also managed to comprehend the importance of setting up workable assumptions in the very first stage of developing a business plan since this will help to cushion a start-up from unnecessary expenses and possible close down due to a certain degree of external uncertainties. References J.H Reid Corporation. Business Plan. Retrived from http://www.businessplans.org/Reid/reid04.html RQM Technologies. Business Plan. Retrieved from http://www.bplans.com/tracking_device_maker_business_plan/products_and_services_fc.php Read More