company z

Order Description Suppose we are an Z company. We're targeting a customer base of people who are renting and owning house(almost full population of Australia). What we plan do is we make an agreement with a customer that we pay all their bills on time, on their behalf. We'll have a tie up with different providers(gas, electricity and water -examples). They will send bills to us and we pay it for the customer. Basically that's the idea. For that service, the customer will have to pay a fee to us. Depends on how long they're gonna take our service We can provide concessions if they sign a contract for 2 years or so!! Suppose we plan to open that company in Melbourne. There should be a capital investment, marketing strategies to convince the customer to join our company for our service, we may have competitors. VI DESIGN AND DEVELOPMENT PLANS A. Development Status and Tasks Describe the current status of each product or service and explain what remains to be done to make it marketable. Describe briefly the competence or expertise that your company has or will require to complete this development. List any customers or end users who are participating in the development, design, and/or testing of the product or service. Indicate results to date or when results are expected. B. Difficulties and Risks Identify any major anticipated design and development problems and approaches to their solution. Discuss the possible effect of the cost of design and development, on the time to market introduction, and so forth, of such problems. C. Product Improvement and New Products In addition to describing the development of the initial products, discuss any ongoing design and development work that is planned to keep product(s) or service(s) competitive and to develop new related product(s) or service(s) that can be sold to the same group of customers. Discuss customers who have participated in these efforts and the reactions, and include any evidence that you may have. D. Costs Present and discuss the design and development budget, including costs of labour, materials consulting fees, etc. Discuss the impact on cash flow projections of underestimating this budget, including the impact of a 15 to 30 percent contingency. E. Proprietary Issues Describe any patent, trademark, copyright, or intellectual property rights you own or are seeking. Describe any contractual rights or agreements that give you exclusivity or proprietary right. Discuss the impact of ownership, relating to proprietary rights on timing and on any competitive edge you have assumed. VII. MANUFACTURING AND OPERATIONS PLAN A. Operating Cycle Describe the lead/lag times that characterise the fundamental operating cycle in your business. Explain how any seasonal production loads will be handled without severe dislocation (e.g. by building to inventory or using part-time help in peak periods). B. Geographical Location Describe the planned geographical location of the business. Include any location analysis, etc, that you have done. Discuss any advantages or disadvantages of the site location in terms of such factors as labour (including labour availability, whether workers are unionised, and wage rates), closeness to customers and/or suppliers, access to transportation, state and local taxes and laws (including zoning regulations), access to utilities, and so forth. C. Facilities and Improvements For an existing business, describe the facilities, including plant and office space, storage and land areas, special tooling, machinery, and other capital equipment currently used to conduct the company's business, and discuss whether these facilities are adequate. Discuss any economies to scale. For start-up, describe how and when the necessary facilities to start production will be acquired. Discuss whether equipment and space will be leased or acquired (new or used) and indicate the costs and timing of such actions and how much of the proposed financing will be devoted to plant and equipment. Explain future equipment needs in the next three years. Discuss how and when, in the next three years, plant space and equipment will be expanded to the capabilities required by future sales projections and any plans to improve or add to existing plant space or move the facility, and indicate the timing and cost of such acquisitions. D. Strategy and Plans Describe the manufacturing processes involved in the production of your product(s) and any decision with respect to subcontracting of component parts, rather than compete in-house manufacture. Justify your proposed make-or-buy policy in terms of inventory financing, available labour skills and other non technical questions, as well as production, cost, and capability issues. Discuss who potential subcontractors and/or suppliers are likely to be and any information about or any surveys which have been made of these subcontractors and suppliers. Present a production plan that shows cost/volume information at various sales levels of operation with breakdowns of applicable material, labour, purchased components, and factory overhead and that shows the inventory required at various sales levels. Describe your approach to quality control, production control, inventory control, and explain what quality control and inspection procedures the company will use to minimise service problems and associated customer dissatisfaction. E. Regulatory and Legal Issues Discuss here any relevant state, federal, or foreign regulatory requirements unique to your product, process, or service, such as laws or other regulatory compliance unique to your business and any licenses, zoning permits, health permits, environmental approvals, and the like, necessary to begin operation. Note any pending regulatory changes that can affect the nature of and timing for your opportunity. Discuss any legal or contractual obligations that are pertinent as well. VIII MANAGEMENT TEAM A. Organisation Present the key management roles in the company and the individual who will fill each position. (If the company is established and of sufficient size, an organisation chart needs to be appended). If it is not possible to fill each executive role with a full-time person without adding excessive overhead, indicate how these functions will be performed (e.g., using part-time specialists or consultants to perform some functions), who will perform them, and when they will be replaced by a full-time staff member. If any key individuals will not be on board at the start of the venture, indicate when they will join the company. Discuss any current or past situations where key management people have worked together that could indicate how their skills complement each other and result in an effective management team. B. Key Management Personnel For each key person, describe in detail career highlights, particularly relevant know-how, skills, and track record of accomplishments, that demonstrate his or her ability to perform the assigned role. Include in your description sales and profitability achievements (budget size, number s of subordinates, new product introductions, etc) and other prior entrepreneurial or general management results. Describe the exact duties and responsibilities of each of the key members of the management team. Complete resumes for each key management member need to be included here or as an exhibit and need to stress relevant training, experience, and concrete accomplishments, such as profit and sales improvement, labour management success; manufacturing or technical achievements; and meeting of budgets and schedules. C. Management Compensation and Ownership State the salary to be paid, the stock ownership planned, and the amount of their equity investment (if any) of each key member of the management team. Compare the compensation of each key member to the salary he or she received as his or her last independent job. D. Other Investors Describe there any other investors in your venture, the number and percent of outstanding shares they own, when they were acquired, and at what price. E. Employment and Other Agreements and Stock Option and Bonus Plans Describe any existing or contemplated employment or other agreements with key members. Indicate any restrictions on stock and voting that affect ownership and disposition of stock. Describe any performance-dependent stock option or bonus plans that are contemplated. Summarise any incentive stock option or other stock ownership plans planned or in effect for key people and employees. F. Board of Directors Discuss the company's philosophy about the size and composition of the board. Identify any proposed board members and include a one - or two - sentence statement of the member's background that shows what he or she can bring to the company. G. Other Shareholders, Rights and Restrictions Indicate any other shareholders in your company and any rights and restrictions or obligations, such as notes, guarantees, associated with these. (If they have been accounted for above, simply note that there are no others). H. Supporting Professional Advisers and Services Indicate the supporting services that will be required. Indicate the names and affiliations of the legal, accounting, advertising, consulting, and banking advisers selected for your venture and the services each will provide. IX OVERALL SCHEDULE Step 1: Lay out (use a bar chart) the cash conversion cycle in the business to capture for each product or service expected the lead and elapsed times from an order to the purchase or raw materials or inventory to shipping and collection. Step 2 Prepare a monthly schedule that shows the timing of such activities as product development, market planning, sales programs, production, and operations, and that includes sufficient detail to show the timing of the primary tasks required to accomplish an activity. Step 3: Show on the schedule the deadlines or milestones critical to the venture's success, such as: - Incorporation of the Venture. - Completion of design and development. - Completion of prototypes. - Obtaining of sales representatives. - Obtaining product display at trade shows. - Signing up of distributors and dealers. - Ordering of materials in production quantities. - Starting of production or operation. - Receipt of first orders. - Delivery on first sale. - Receiving the first payment on accounts receivable. Step 4: Show on the schedule the "ramp up" of the number of management personnel, the number of production and operations personnel, and plant or equipment and their relation to the development of the business. Step 5: Discuss in a general way the activities most likely to cause a schedule slippage, what steps will be taken to correct such slippages, and the impact of schedule slippages on the venture's operation, especially its potential viability and capital needs. X. CRITICAL RISKS, PROBLEMS AND ASSUMPTIONS The development of a business has risks and problems, and the business plan invariably contains some implicit assumptions about them. This needs to include a description of the risks and the consequences of adverse outcomes relating to your industry, your company and its personnel, your product's market appeal, and the timing and financing of your start-up. Be sure to discuss assumptions about and behind sales projections, customer orders, and so forth. If the venture has anything that could be considered a fatal flaw, discuss why it is not. The discovery of any unstated negative factors by potential investors can undermine the credibility of the venture and endanger its financing. Be aware that most investors will read the section describing the management team first and then this section. It is recommended that you not omit this section. If you do, the reader will most likely come to one or more of the following conclusions: 1. You think he or she is incredibly naive or stupid, or both. 2. You hope to pull, deliberately, the wool over his or her eyes. 3. You do not have enough objectivity to recognise and deal with assumptions and problems. Identify and discussing the risks in your venture demonstrates your skills as a manager and increases the credibility of your and your venture capital or a private investor. Taking the initiative on the identification and discussion of risks helps you to demonstrate to the investor that you have thought about them and can handle them. Risks then tend not to loom as large black clouds in the investor's thinking about your venture. 1. Discuss any assumptions and risks implicit in your plan. 2. Identify and discuss any major problems and other risks, such as: * Running out of cash before orders are secured. * Potential price cutting by competitors. * Any potentially unfavourable industry wide trends. * Design or manufacturing costs in excess of estimates. * Sales projections not achieved. * An unmet product development schedule. * Difficulties or long lead times encountered in the procurement of parts or raw materials. * Difficulties encountered in obtaining needed bank credit. * Larger - then - expected innovation and development costs. * Running out of cash after orders pour in. 3. Indicate what assumptions or potential problems and risks are most critical to the success of the venture, and describe your plans for minimising the impact of unfavourable developments in each. XI. THE FINANCIAL PLAN A. Actual Income Statements and Balance Sheets For an existing business, prepare income statements and balance sheets for the current year and for the prior two years. B. Pro Forma Income Statements Using sales forecasts and the accompanying production or operations costs, prepare pro forma income statements for at least the first three years. Fully discuss assumptions (e.g., the amount allowed for bad debts and discounts, or any assumptions made with respect to sales expenses or general and administrative costs ageing a fixed percentage of costs or sales) made in preparing the pro forma income statement and document them. C. Pro Forma Balance Sheets Prepare pro forma balance sheets semi-annually in the first year and at the end of each of the first three years of operation. D. Pro Forma Cash Flow Analysis Project cash flows monthly for the first year of operation and quarterly for at least the next two years, detailing the amount and timing of expected cash inflows and outflows, determine the need for an timing of additional financing and indicate peak requirements for working capital; and indicate how needed additional financing is to be obtained, such as through the equity financing, through bank loans, or through short-term lines of credit from banks, on what terms, and how it is to be repaid. Remember they are based on cash and not accrual accounting. Discuss assumptions, such as those made on the timing of collection of receivables, trade discounts given, terms of payments to vendors, planned salary and wage increases, anticipated increases in any operating expenses, seasonality characteristics of the business as they affect inventory requirements, inventory turnovers per year, capital equipment purchases, and so forth. Again, these are real time (i.e. cash), not accrual. Discuss cash flow sensitivity to a variety of assumptions about business factors (e.g., possible changes in such crucial assumptions as an increase in the receivable collection period or a sales level lower than that forecasted). E. Break even Chart Calculate break even and prepare a chart that shows when break even will be reached and any stepwise changes in break even which may occur. Discuss the break even shown for your venture and whether it will be easy or difficult to attain break even, including a discussion of the size of break even sales volume relative to projected total sales, the size of gross margins and price sensitivity, and how the break even point might be lowered in case the venture falls short of sales projections. F. Cost Control Describe how you will obtain information about report costs and how often, who will be responsible for the control of various elements, and how you will take action on budget overruns. G. Highlights Highlight the important conclusions, such as what the maximum amount of cash required is and when it will be required, the amount of debt and the equity needed, how fast any debts can be repaid etc., that can be drawn. XII. PROPOSED COMPANY OFFERING A. Desired Financing Based on your real-time cash flow projections and your estimate of how much money is required over the next three years to carry out the development and/or expansion of your business as described, indicate how much this capital requirement will be obtained by this offering and how much will be obtained via term loans and lines of credit. B. Offering Describe the type (e.g. common stock, convertible debentures, debt with warrants, debt plus stock), unit price, and total amount of securities to be sold in this offering. If securities are not just common stock, indicate by type, interest, maturity, and conversion conditions. Show the percentage of the company that the investors of this offering will hold after it is completed or after exercise of any stock conversion or purchase rights in the case of convertible debentures or warrants. C. Capitalisation Present in tabular form the current and proposed (post offering) number of outstanding shares of common stock. Indicate any shares offered by key management people and show the number of shares that they will hold after completion of the proposed financing. Indicate how many shares of your company's stock will remain authorised but unissued after the offering and how many of these will be reserved for stock options for future key employees. D. Use of Funds Investors like to know how their money is going to be spent. Provide a brief description of how the capital raised will be used. Summarise specifically what amount will be used for such things as product design and development, capital equipment, marketing, and general working capital needs. E. Investors' Return Indicate how your valuation and proposed ownership shares will result in the desired rate of return for the investors you have targeted and what the likely harvest or exist mechanism (e.g., IPO, outright sale, merger, MBO, etc) will be. XIII APPENDICES Include pertinent information here that is too extensive for the body of the business plan but which is necessary (e.g., product specs or photos; lists of references; suppliers of critical components; special location factors, facilities, or technical analysis; reports from consultants or technical experts; and copies of any critical regulatory approval, licences, and so forth).