Innovation and New Ventures Business Plan and Investor Presentation (Product) - Coursework Example

?Running head: Innovation and new ventures The Opportunity & Assessment Consultant Project Management Tool The Company productwill be an activator/sensor device. This device automatically mutes TV commercials while watching a movie, soap opera or even business news. This device automatically senses a TV commercial while a program is in progress and it ensures that the commercial break is muted. Technology in the modern world today cannot be ignored and various technological advancements have made the life of a human being easier and interesting. Manual systems, in place, that were introduced in the past are now being replaced with modern automated systems which are more advanced in terms of operational procedures. This product that New Sensor Technologies Company wants to introduce into the market follows the suit of the latest digital technological advancement where muting of TV commercials will be automated hence interruptions will be minimal (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Market Size / Growth Research Apart from United Kingdom(UK) being the sixth largest economy in the whole world, its automotive industry employs more than 800, 000 people and United Kingdom has more than 20 cities with London carrying the largest population of about 7,172,091. Additionally, United Kingdom is recognized as the first industrialized place with England being the most densely populated country in the world. UK has the top world universities; University of Cambridge and the University of Oxford. Many people are well educated in UK and a huge number have attended college and hence belong to the middle class level. With this in mind, UK makes a huge market for the product (muting sensor) device. Targeting London as a major market city and the greatest economy, the city has many middle class families who afford television sets and pay televisions like DSTV Pay TV (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Moreover, technological awareness in UK is on the increase and it is spreading dynamically with good roots from its industrialization in the early 19th and 20th C. In this case, many people in London have the ability to purchase our product, especially the people with more than thirty years and have children who are chronic television addicts. It has also been noted that UK has a very rapid rate of increase of population which in this case dictates the ease of growth of our market in the near future. In this case, England has one of the fastest population growth rates in the world earning it recognition of being a country with the highest population per area. Statistics show that UK is an attractive place for muting sensor device, considering the many cities that have highly established businesses like hotels, lodgings, restaurants, nightclubs, healthcare centre and institutions which require television sets (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). These centers are potential buyers of our product. The many families also described above treat a television set as a basic need for a home and therefore many homes will be willing to buy our product. It is also stated that UK has the top known universities which have attracted many people from all over the world to go to UK to further their studies. These students make our market size larger having in mind that many students in general have a wide interest in watching movies, series and programs in television sets. Technology is not only spreading widely and earning recognition in UK but also in almost other parts of the world including the developing world. Various countries are catching up with technological improvement and as a growth strategy, we are planning that we are going to introduce this sensor device to other developing countries where we can be exporting this device and earn the country foreign exchange (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Market segmentation The New sensor technology Company has categorized its market in the city of London into the following segments; 1. Young college students (The youth) 2. Institutions and organizations that require TVs like healthcare centers, colleges/universities, government institutions (including government offices) and Children care centers. 3. Middle class families in the city 4. The rich families in London Youth/College Students London has several top universities among them being, University College London, University of Cambridge and Imperial College London which attract a large number of students both local and international. Many students know how to influence their peers and it’s clear that more than 95% of young students in the University level watch television programs and are highly exposed to upcoming technology. It is therefore, clear that this group of people is a market segment of its own and hence a potential market for our product. The good thing with muting sensor device is, it can be installed in any TV set and many people of these groups already own television sets (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Institutions, Businesses and organizations Many institutions in the city of London today have television sets for entertainment and information. Various businesses especially restaurants rely on the television sets for entertainment of their customers. It is important to note that London has been growing and developing rapidly and businesses are in the increase. Most of these institutions and businesses will require our sensor device. Moreover, various organizations like children care centers use television sets and will require the automatic muting device (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Middle class families As mentioned earlier, population increase has been rapid in London making it the city with the largest number of people in UK. In this city, most people earn a sustainable income and hence there are an encouraging number of middle class families which rely on television program and pay TV for entertainment. These people will be potential buyers of our product and the increasing rate of rural to urban migration will favor our business (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Rich families There are a large number of rich people in London as a capital city of the United Kingdom. Various investors and large company owners reside in this city. Very few people can avoid entertainment and news transmitted through the TV stations. Hence, there is a considerable market ready for our product (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Marketing and Sales Plan The entrepreneurship world today is a place of competition. The company or organization with the best competition or the most competitive organization survives. Business without a competitive advantage over its competitors is easily likely to collapse. Many organizations rely on marketing activities such as sales promotion to increase sales and grab a bigger market share. Producers can end up spending a lot in personal selling and also advertising their goods and it may still not work. Offering incentives with the aim of attracting customers is what should be done to attract customers in this business (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Sales promotion will help to accelerate sales in the most competitive markets hence increasing profits. Sales will increase as a result of offering discounts on new products and even giving price off offers. It also aims at introducing new products like the sensor through drawing attention of consumers who have the potential to buy. This will be achieved through offering of free samples to customers. Demonstrating the special features and characteristics of the product or service can also work. Scratch and win offers will also attract potential clients. In case of change in preference and taste or rather fashion in the market, sales promotion will enable marketers to dispose the stocks at hand quickly. Another role of sales promotion will be to stabilize the volume of sales through maintenance of the market share of the firm. The customers can get all the important information concerning products and their features and quality through promotion. Sales promotion will also help to raise the standard of living of people. People can exchange their old items with new items like the automatic sensor. It will also promote intermediary sales. People are able to buy more during off-peak times. Another role comes where sales will increase during major events, vacations and important events like athletics competition. Sales promotion will also encourage selling of services usually done by travel intermediaries. It will also help an enterprise like the new sensor Technologies to be able to compete with a manufacturer of a similar product (ePromos Promotional Products, 2011, p 1) The business will rely on use of public notice boards to market and advertise its services. However, this is just for the initial stage, later when the business grows it will be able to use other forms of advertising like the broadcast and print media. Business cards will also be used to create awareness and pass out the message on availability of the new sensor device. Word of mouth advertising will also be important to the business; satisfied clients will be encouraged to share with other people (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). We shall be using various public figures like movie stars, artists and other celebrities to advertise the sensing device. This marketing strategy will be supplemented by holding street shows that will be geared towards informing consumers about our product and popularizing its benefit and contribution in the technology world (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). New Sensor Technologies shall also engage itself with strategic partners like DSTV service providers to ensure our product is involved with superior companies that have already established themselves in the market (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Competitive Edge We shall be providing an automatic sensor a technology that has not been experienced by consumers before. We shall employ skilled marketing officers with a variety of knowledge concerning selling technological products. We shall also employ skilled salesmen who are well trained on communication skills and presentations. We shall also be offering a training sessions to new marketing officers to sharpen their skills in order to ensure our volume sales remain as high as possible. We shall also ensure that we guard our reputation and image to the public through practicing corporate social responsibilities by involving ourselves with community development projects especially raising funds; children care centers and donations to less fortunate (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Financial Forecast and Funding It is anticipated that a startup capital of $ 55555 will be needed in manufacturing of the muting sensor device. Half of the money will be devoted to buying equipment needed for production and the rest will be geared towards management in the first year of operation. Our projection is to ensure that the money will be paid back by the profits within three years so that expansion will start in the fourth year of operation (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Product Definition New sensor technologies intends to take the digital technology to the next level through selling of an automatic activator/sensor device that mutes commercials when one is watching a program. This product is manufactured and programmed with the most up to date technology that enables a customer to watch TV programs without interruptions and it does not require a remote since it has its own settings which enable muting different from manual remote muting. We shall have many sensor technology shops in different parts of the city in London. Moreover, the company shall employ sales men who will be going to residential areas to distribute our product. The salesmen will be making the customer work easier because they will also be showing customers how to use the device and they will also be installing the sensor for the customers. The product will be given a six month warranty where the device can be replaced if broken or faulty before six months are over. The company shall also have customer care agents in different parts of the city. The agents will be contacted in case of any problem and they will be processing any complaint that will be presented by our customers. We shall be targeting customers who own television sets in the order of the market segments outlined earlier (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). A pack of the activator/sensor with its accessories will be costing about $66 and after buying services like installation and troubleshooting will be offered by the employees. Moreover, our employees will be taking our customers through the processes of troubleshooting and they will also be educating the customers concerning safety precautions of usage of the product and how to prevent the product from spoiling fast. Our product will include other features like sound devices and hazard detectors (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Elevator Pitch With the new muting sensor device our clients will be able to enjoy watching movies, series and soap operas while getting instant notifications on TV commercials hence they can be able to do other things, such as making calls, during these breaks. It also enables one not to be interrupted by the commercials where one can choose whether to see the commercial or not (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Assessments The framework of this venture combines the focus of marketing on the link that joins the customer and the service or product with the focus on the link between various partners of the business with people in general using a concept known as fit. With reference to the above statement, a fit can be described as the relationship between the opportunity that will be pursued, activities involved with the venture, the people and the possibility of the venture succeeding (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Reverse engineering will be used in pursuing this venture where it involves analyzing and evaluating the path that will be followed in pursuit of the opportunity starting with assembly of resources, proceeding to identification of customers when the product is being launched to when the pursuit will be in the process in the future. The discovery in this case will ensure that the path linking the two kinds of customers (the customers when the product will be launched and after commencement of the business) is well understood and defined (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Field Report Entrepreneurial marketing can be described as state of mind adopted by individuals like salesmen, engineers, local/international investors, item distributors and competitive suppliers. This state of mind is characterized by confidence, aggressiveness in chasing opportunities and assembly of the resources required to undertake the opportunity. Additionally, as entrepreneurs New Sensor Technologies gathered enough concrete evidence that will convince people that the sensor device being sold to them is valuable and fits their needs. A lot of research undertakings have been conducted. The aims of these researches were to determine the customer needs and the ways in which they will be provided with products that meet these needs. In this entrepreneurial venture, many stakeholders like suppliers and partners financing the business are involved, and the evidence gathered has proven that the venture being financed will be profitable or beneficial to them in one way or another (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Therefore, researches have made sure that all the setbacks that may occur are known, and their solutions provided. On the other hand, factors that can assist breakthroughs have been identified and the ways of inducing and supporting these factors have been found and they shall be implemented. Therefore, this report predicts that the customer will need our product in the future; leave alone, the technological needs at hand now. Moreover marketing will involve several steps to be taken in a sequence. In this case, the marketing crew will came up with or rather innovated a way that connects two different consumers at two different points. In this way, New Sensor Technologies will be able to have a plan for selling the merchandise it intends to sell. The plan dictates a schedule that will be followed, and it demonstrates the activities of the distributors. The plan also includes the methods of acquiring information about the product. It also describes the process that will be followed to obtain the resources required to pursue the opportunity. In the plan, key partnerships will be formed, customers targeted and suppliers required are recommended. Additionally, it comes up with a complete process that the entrepreneurial activities will take. Through fulfilling this, the process will be complete, and loopholes will be sealed to prevent probable setbacks that could have been experienced in the future. The process is continuous, and it takes the form of a road map to the success of the entrepreneurial marketing activity (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Financial Plan and financial projection statements Funding Request & Exit Strategy Amount & Type of Funds Requested A startup capital of $55555 will be an appropriate amount for buying the starting requirements (assets, equipments/machinery), rent, insuring the business, and paying for all the start up expenses. $27777 of the amount will be raised from a financier, that is, an investor through presentation of the plan and showing the uses of the capital needed. The company intends to pay the financier double the amount of the loan. Therefore, the interest rates charged will be equivalent to the double amount of the loan. In the first year, the interest paid will be equivalent to $556 and the rest of the amount will be divided by two and paid in the remaining two years. In summary, the loan will be repaid in three months. The remaining capital required will be the stockholders equity accrued from other businesses (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). New sensor technologies will be selling bonds after the business has picked well. The bonds will be sold to the public in order to obtain money to expand the business to other cities in the United Kingdom (OmeSteps Introduces National Summer Sales Promotion, 2011, p 1). Exit Plan Form of Payment/Payout Planned (yes/no) Anticipated Time Frame Repayment of debt yes 3years New Sensor technologies will franchise its business. However, it is expected that the sensor/activator will be licensed and copyrighted under the patent law. Entrepreneurship Cash Flow Projections List And description of the monthly fixed costs Fixed Cost Amount Description Utilities $ 170 Water and electricity paid at $85 per month Salaries $ 670 Five employees each getting $134 per month Advertising $ 1120 Road shows and radio advertisements Insurance $ 220 Premeum of $ 220 per month Interest $ 20 Interest of loan at $ 20 every month Rent $ 1120 Land on lease by new sensor technologies Depreciation $ 50 Equipment lose value Unexpected $ 50___________ Misceleneous cost TOTAL $ 3420 *3= 10260 Projected cash flow 1Q 2Q 3Q 4Q YR2 YR3 Starting Cash (+) $27777 $ 64838 $88756 $108640 $138824 $188231 Cash in from Operations [Sales] (+) $21000 $25000 $30000 $ 40000 $112000 $ 200000 Cash out from Operations [Cost of Goods Sold, Expenses, Taxes] (-) $ 10260 $10260 $10260 $10260 $41040 $41040 Cash in from Investing [Equity Infusions, Earnings on Investments] (+) $0 $500 $ 700 $ 1000 $ 4000 $3700 Cash out from Investing [Equipment Purchases, Repaying Investors] (-) $900 $ 0 $ 0 $ 0 $ 0 $ 0 Cash in from Financing [Loans] (+) $27777 $ 0 $ 0 $ 0 $ 0 $0 Cash out for Financing [Repayment of Debt] (-) ___$556__ __$556___ __$556__ $ 556 ___$25553__ __$25553___ Ending Cash Balance [Starting Balance for Next Period] (=) $64838 $88756 $108640 $138824 $188231 $325338 burn rate for the business. (Cash + Revenue)/Negative Cash Outflow per Month = Number of Months Before Cash Runs Out. $27777 + $64838 / $11716 = 7.9 Balance Sheet Projections Projected Balance Sheet Balance Sheet for (New Sensor Technologies) As of (Month/Day) 1Q 2Q 3Q 4Q YR1 YR2 YR3 Assets Cash $_____ $_____ $_____ $27777 $64838 $88756 108640 $138824 $188231 Accounts Receivable $20000 $15000 $2000 $40000 $160000 $160000 Inventory $2000 $3000 $4000 $10000 $40000 $50000 Capital Equipment $900 $900 $900 $900 $900 $900 Other Assets $ 0 $0 $0 $0 $0 $0 Total Assets $32677 $83738 $95656 $159540 $ $299724 $399131 Liabilities Short-Term Liabilities $27777 $27221 $26665 $26109 $26109 $27777 Long-Term Liabilities $0 $0 $0 $0 $0 $0 Total Liabilities $27777 $27221 $26665 $26109 $ $26109 $27777 Owner’s Equity $ 4900 $56517 $68991 $133431 $ $273615 $371354 Total Liabilities & Owner’s Equity $32677 $83738 $95656 $159540 $ $299724 399131 pie chart showing the current assets, long-term assets, current liabilities, and long-term liabilities. Income Statement Projections Projected Income Statement for the business For the Year Ending December 31, Year 1Q 2Q 3Q 4Q YR1 YR2 YR3 Net Sales Revenue (+) $21000 $25000 $30000 $40000 $112000 $200000 Cost of Goods Sold (-) $10260 $10260 10260 $10260 $41040 $41040 ______ _____ _____ ______ ______ ______ ______ Gross Profit (=) 10740 23740 19740 29740 107860 158960 Operating Expenses (-) $0 $0 $0 $0 $0 $0 $0 General Expenses (-) $0 $0 $0 $0 $0 $0 $0 Other Expenses (-) $0 $0 $0 $0 $0 $0 $0 ______ ______ ______ ______ ______ ______ ______ Net Income Before Taxes $10740 23740 19740 29740 107860 158960 Taxes $900 $1000 $900 $1000 $1000 $1000 ______ ______ ______ ______ ______ ______ ______ Net Income $9840 22740 18840 28740 106860 157960 7.7 Risks & Assumptions List of the risks and assumptions which will underlie the financial projection is given below. Category of Risk or Assumption Assumption Significance General economy Poor economical performance Low risk Interest rates Rising of interest rates Low risk Inflation Increase on the fuel prices High risk Economic health Decrease of economic strength Low risk Tax rates Rising of the Tax rates Low risk Industry growth/decline Increased competition High risk Customer preferences Changing of customer preferences Low risk Competitive entrants/changes New companies joining the market Low risk Prices Falling of the prices Low risk Costs of goods sold Increasing of cost of production High risk Sources & Uses of Capital capital needed, When, What type and the terms Type of Capital Amount When Needed? What Terms? Loan $27777 November Pay interest equal to the amount given Land $1120 November Pay as rent on a monthly basis How the money raised will be used Use of Capital Amount When Needed? Notes Cash reserve $83331 November Will act as the reserved amount of capital before the business picks Starting cash $27777 November Will be the starting cash in the first quarter of the business. List of the items needed to buy to start the business Item Cost Estimate/Actual Start-Up Expenses Accountant Fees $300 Estimate Expensed Equipment $50 Estimate Financial Institution Fees $200 Estimate Identity Set/Stationary 1100 Estimate Insurance 220 Estimate Legal Fees $200 Estimate Licenses/Certificates/Permits $300 Estimate Marketing Materials $1120 Estimate Payroll (with taxes) $670 Estimate Professional Fees – Other $500 Estimate Rent $1120 Estimate Research and Development $200 Estimate Travel $150 Estimate Utilities $170 Estimate Web Fees $250 Estimate Other 9633 Estimate Total Start-Up Expenses 16183 Estimate Start-Up Assets Cash Balance for Starting Date $27777 Estimate Equipment $40 Estimate Furniture & Fixtures $50 Estimate Leasehold Improvements $1000 Estimate Machinery $800 Estimate Rent Deposit $200 Estimate Signage $100 Estimate Utility Deposit $70 Estimate Other $9633 Estimate Total Start-Up Assets $2260 Start-Up Investment—TOTAL $55554 Cash Reserve $83331 Total Start-Up Investment + Capital Reserve $138885 A. List the sources of financing for your start-up capital. Identify each source as equity, debt, or gift. Indicate the amount and type for each source. Funding Source Equity Debt Gift Financier $27777 _ _ savings _ $27777 friends _ _ $83331 TOTAL START-UP INVESTMENT $138885 payback period Payback = Start-up Investment Net Profit per Month Payback = $138885 / $9840 =14.11 financing sources cmpanies doing well in the diaspora are appropriate sources of finances since many companies like IBM computer manufacturers have a great interest in technology development. IBM can be finance New sensor Technologies with exchange for equity. venture capital Venture Capital Source Type of Fund Amount Available Expected Terms International Investors money $ 83331 Pay double the amount offered within three years Venture capital will enable the business to keep a capital reserve before commencement. Breakeven Analysis Breakeven Units = Fixed Cost Gross Profit per Unit 10260/ 3.3 = 3109 units Ratio Analysis Key ratios. Current ratio = Current assets Current liabilities = 399131/ 27777 = 14.4 Quick ratio = Quick assets (Quick assets = Current assets – inventory) Current liabilities = 399131- 50000 = 349131 349131/27777 = 12.6 Debt ratio = Total debt (or liabilities) Total assets = 27777/ 399131 = 0.069 Debt to net worth ratio or debt to equity = Total debt (or liabilities) Tangible net worth = 27777/157960 = 0.75 Times interest earned = Earnings before interest and taxes (or EBIT) Total interest expense = 158960 / 27777 = 5.7 Average inventory turnover ratio = Cost of goods sold Average inventory 41040/50000 = 0.82 Net profit on sales = Net profit Net sales (annual) =157960/200000 = 0.79 Net profit to equity = Net profit Owners’ equity (or net worth) 157960/ 371354 = 0.42 References OmeSteps Introduces National Summer Sales Promotion, (2011). Professional Services Close - Up Retrieved; May 31, 2011, from ABI/INFORM Trade & Industry. (Document ID: 2357652491). EPromos Promotional Products, (2011). ePromos and Constant Contact Announce Strategic Partnership Agreement. Marketing Weekly News, 1299.  Read More