Business plan

COCHIN STRUCTURAL CONSULTANTS

Submitted by
Job Thomas
Roll No. 8, Semester -5
MBA (PT) course

School of Management Studies

Cochin University of Science and Technology

Cochin, Kerala, India PIN 682022
October 2012

1. EXECUTIVE SUMMARY
Cochin Structural Consultants will be formed as a consulting firm specializing in structural engineering
services. A home office in Kalamssery, Cochin will be established the first year of operations to reduce
start up costs. The founder of the firm is a professional structural engineer with fifteen years of
progressive and responsible experience.
The founder, Job Thomas, provided an initial investment towards start-up costs. Of this, more than half is
required for start-up expenses while the balance is to be placed in the company accounts as working
capital.
The firm will specialize in providing three dimensional modeling and visualization to our clients. Stateof-the-art analysis and design tools will be an integral part of the business plan. Implementation of a
quality control and assurance program will provide a focus for production work.
Objectives of Cochin Structural Consultants are:1. Modest revenues the first year, with slow by steady growth over the next two years.
2. Achieve 20% of market value at the end of the third year of operation.
3. Increase gross margin significantly by the third year of operations.
The mission of Cochin Structural Consultants is to provide clients with structural engineering services for
all types of buildings, from concept planning through to completion, with a highly skilled professional
team working together, using common sense and practical experience.
Cochin Structural Consultants is a new company which provides professional engineering design services
for clients which manage, maintain, and plan for residential, commercial, and industrial type buildings.
The firm will be privately owned by Job Thomas. The sale and profit projected for the next three years is
shown Figure 1.

Percentage of sale

160%
140%
120%
100%
80%
60%
40%
20%
0%

Year 1
Year 2
Year 3

Sale

Profit

Figure 1 Sale and profit projected for the upcoming three years

2 Business plan for Cochin Structural Consultants by Job Thomas

2. BUSINESS DESCRIPTION
Cochin Structural Consultants offers complete structural engineering services. Cochin Structural
Consultants will focus on buildings with the following 'Use and Occupancies':

Residential.

Commercial.

Industrial.

The company is 'project' oriented where each project involves:

Renovations.

Rehabilitation.

Additions.

New construction.

The firm offer innovative and economical design services, maintaining state-of-the-art design technology.
The firm meets client needs on projects of all sizes and smaller, special design projects.
The structural analysis based on architectural drawings will be prepared and the CAD drawings of the
structural design will be issued to the client. The charges for the analysis and design of structural elements
and issuing the drawings will be INR 8 rupees per square feet.

3. MARKETING
Cochin Structural Consultants will focus on traditional Architect/Engineering (A/E) contracts. The owner
will usually contract the A/E to perform planning and design services. These design services include
preparation of plans, specifications, and estimates. The market analysis is carried out and the details are
given in Figure 2.

3 Business plan for Cochin Structural Consultants by Job Thomas

Market segmentation

5%
5%
10%

10%

70%

Architectural/Engineering
Firms

Governments / Public
s ector

Law Firms

Local Contractors

Private individuals

Figure 2. Market analysis results

1. Architectural and Engineering firms: Typically, the structural portions of any building
project involve a Prime Consultant who pre-selects their team members and promotes
their strengths in a proposal call to prospective clients. The strategy of Cochin Structural
Consultants is to offer these established firms a viable resource from which to draw upon.
2. Governmental Departments/Public sector companies: In Governmental departments of
Municipalities or Panchayath, prior to public civil work tender notification, the complete design
including structural estimation is required. Cochin Structural Consultants will provide assistance
to prepare structural drawing for governmental departments and public sector companies like
Binani Zinc etc.
3. Law Firms: Cochin Structural Consultants will market our services to the legal community to
provide dispute resolution services, including arbitration, mediation and expert reports for
litigation. This work is supported by forensic engineering services to identify the cause of
failures.
4. Local Contractors: Cochin Structural Consultants will offer design/build services to contractors
for the multitude of potential projects under taken by local contractors.
5. Private Individuals: Cochin Structural Consultants will focus attention on homeowners who are
renovating or contemplating an addition to their residence. Cochin Structural Consultants will
also promote home inspections to those parties contemplating the purchase of a home.
The future services of Cochin Structural Consultants will be

Fabrication and Detailing Drawings: Serving the special needs of steel and concrete
construction, Cochin Structural Consultants will be working toward offering these services to
contractors in the future.

Toll-Free Communications: Cochin Structural Consultants will provide our clients a toll-free
number to access 24 hours a day in the second year of operations.

4 Business plan for Cochin Structural Consultants by Job Thomas

4. OPERATIONS
Cochin Structural Consultants will be functioning as a private firm. The company will be privately owned
by Job Thomas. Cochin Structural Consultants offers their clients superior service accompanied with
state-of-the-art analysis and design capabilities. We will offer three-dimensional visualization services to
reduce the possibility of spatial conflicts with architectural elements and other engineering disciplines. In
comparison, our competitors rely mostly on two-dimensional models. Initial start-up fund requirement is
worked out and the details are given in Figure 3.

Start-up fund summary

INR 500,000
INR 400,000
INR 300,000
INR 200,000
INR 100,000
INR 0
Start-up fund

Assets

Liabalities

Capital

Figure 3 Start-up fund requirement of Cochin Structural Consultants

5. MANAGEMENT
The owner Job Thomas will be the person who is doing the job. The finance will be managed by Job
Thomas. Job Thomas has 15 years of experience in doing the structural design of building. Job Thomas is
working as a faculty in prestigious engineering institute. As a part-time activity he is undertaking
structural design works from local architectural firms. His experience in doing design of special structures
like bridges, chimneys etc. will be added flavor for the present proposal. The manpower requirement is
projected for the upcoming three years and the details are given in Table 1. Depending upon the actual
growth of the work, possibility of employing more people will be considered in the future.

Table 1. Personnel Planning

Personnel
Job Thomas
Number of
persons
Total

Year 1
INR
1,000,000

Year 2
INR
1,200,000

Year 3
INR
1,400,000

1
INR
1,000,000

1
INR
1,200,000

1
INR
1,400,000

6. FINANCE
5 Business plan for Cochin Structural Consultants by Job Thomas

The sale is forecasted and the profit and loss account is projected for the upcoming three years. The
details are shown in Figure 4. The profit is INR 35,000/- in the first year corresponding to a projected sale
of INR 1,500,000/-. In the upcoming years, the profit of the company will be increasing significantly.
INR 3,000,000
INR 2,000,000
INR 1,000,000

Year 1
Year 2
Year 3

INR 0

Figure 4. Projected sale and profit details of Cochin Structural Consultants

The balance sheet of Cochin Structural Consultants is projected for the upcoming three years. The balance
sheet details are given in Figure 5. There is a significant increase in the assets and capital of the firm,
which indicate that the net-worth of the firm is increasing.

INR 1,200,000
INR 1,000,000
INR 800,000
Assets

INR 600,000

Liabilities
Capital

INR 400,000
INR 200,000
INR 0
Year 1

Year 2

Year 3

Figure 5. Projected, assets, liabilities and capital of Cochin Structural Consultants

7. CRITICAL RISKS

6 Business plan for Cochin Structural Consultants by Job Thomas

Pricing of projects and billing rates are surprisingly variable. In consulting at this level, it is easier to be
priced too low than too high. Clients and potential clients expect to pay substantial fees for the best
quality professional advice. The nature of the billing, however, is sensitive. Clients rarely compare
consultants directly, looking for two, or more, possible providers of a proposed project or job. Usually
they follow word-of-mouth recommendations and either go for the job or not, rather than selecting from a
menu of possible providers. The most important element of general competition, by far, is what it takes to
keep clients for repeat business. It is worth making concessions in any single project to maintain a client
relationship that brings the client back for future projects. The potential competitors are:-

Stuba Structural Consultants This multi-discipline engineering firm is well established in

Ernakulam. At present, there is no experienced resident structural engineer on staff in Stuba
structural consultants.
Associated Structural Consultants: This is a small one person architectural and engineering
firm which specializes in providing services for residential construction projects. It is our hope
that we can form a strategic alliance to carry out consulting work jointly as needs and occasions
arise.

8. HARVEST STRATEGY
Cochin Structural Consultants is a private firm planned with one structural engineer in the beginning. In
future Cochin Structural Consultants will acquire more small firms or make strategic alliance with other
firms. The ownership change will follow the leadership change in Cochin Structural Consultants.

9. MILESTONE SCHEDULE
The business plan of Cochin Structural Consultants includes complete provisions for plan-vs.-actual
analysis, which will be updated monthly to compare the variance and plan for course corrections. The
mile stone of activities planned is given below

Mile stone
Activity

Month
1

Legal
Stationery
Insurance
Business Licenses
Association fee

Month
2
XXXXX
XX
XXXXX
XX
XXXXX
XX

Month
3

Month
4

XXXXX
XX
XXXXX
XX

7 Business plan for Cochin Structural Consultants by Job Thomas

Website Development
Office Furniture
Software Purchases
Computer/Office
Equipment
Advertisement
Start business

XXXXX
XX
XXXXX
XX
XXXXX
XX
XXXXX
XX
XXXXX
XX
XXXX
XXX

8 Business plan for Cochin Structural Consultants by Job Thomas

10. APPENDIX

A1. Start-up
requirements
Start-up Expenses
Legal
Stationery etc.
Insurance
Business License
Professional License
Website Development
Office Furniture
Software Purchases
Computer/Office Equipment
Other
Total Start-up Expenses
Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets
Total Requirements

INR
10,000
INR
12,000
INR
24,000
INR
20,000
INR
10,000
INR
12,000
INR
12,000
INR
140,000
INR
10,000
INR
10,000
INR
260,000
INR
240,000
INR 0
INR 0
INR
240,000
INR
500,000

9 Business plan for Cochin Structural Consultants by Job Thomas

A2. Start-up
Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from
Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable
(Outstanding Bills)
Other Current Liabilities
(interest-free)
Total Liabilities
Capital
Planned Investment
Owner
Investor
Additional Investment
Requirement
Total Planned Investment
Loss at Start-up (Start-up
Expenses)
Total Capital
Total Capital and Liabilities

INR
260,000
INR
240,000
INR
500,000
INR 0
INR
240,000
INR 0
INR
240,000
INR
240,000

INR 0
INR 0
INR 0
INR 0
INR 0

INR 0
INR 0
INR
500,000
INR
500,000
(INR
260,000)
INR
240,000
INR
240,000

10 Business plan for Cochin Structural Consultants by Job Thomas

A3. Profit and Loss account

(projected)
Year 1
Sales
Direct Cost of Sales (0.3-0.15)
Other Costs of Sales
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Payroll
Marketing/Promotion
Depreciation
Website Hosting Fees
Engineering Assoc Annual
Fees
Continuing Education
Yellow Pages/White Pages
Telephone/Fax
Software Purchases
Utilities
Errors and Omissions
Insurance
Rent
Payroll Taxes
Contract/Consultants
Other

Year 2

Year 3

INR
1,500,000

INR
1,875,000

INR 450,000
INR 0
INR
450,000
INR
1,050,000
70%

INR 468,750
INR 0
INR
468,750
INR
1,406,250
75%

INR
2,250,000
INR
337,500
INR 0
INR
337,500
INR
1,912,500
85%

INR
1,000,000
INR 0
INR 0
INR 0

INR
1,200,000
INR 0
INR 0
INR 0

INR
1,400,000
INR 0
INR 0
INR 0

INR
INR
INR
INR
INR
INR

0
0
0
0
0
0

INR
INR
INR
INR
INR
INR

0
0
0
0
0
0

INR 0
INR 0
INR 0
INR 0
INR 0
INR
1,000,000

INR 0
INR 0
INR 0
INR 0
INR 0
INR
1,200,000

INR 50,000

INR 206,250

EBITDA
Interest Expense

INR 50,000
INR 0

INR 206,250
INR 0

Taxes Incurred (0.3)

INR 15,000

INR 61,875
INR
394,800
21%

Total Operating Expenses

Profit Before Interest and
Taxes

Net Profit
Net Profit/Sales

INR 35,000
2%

11 Business plan for Cochin Structural Consultants by Job Thomas

INR
INR
INR
INR
INR
INR

0
0
0
0
0
0

INR 0
INR 0
INR 0
INR 0
INR 0
INR
1,400,000
INR
512,500
INR
512,500
INR 0
INR
153,750
INR
1,006,600
45%

12 Business plan for Cochin Structural Consultants by Job Thomas

A4. Balance Sheet (projected)

Year 1

Year 2

Year 3

Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated
Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current
Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and
Capital

INR
103,000
INR
200,000
INR 0
INR
303,000
INR 0
INR 0

INR
427,400
INR
350,000
INR 0
INR
777,400
INR 0
INR 0

INR
703,300
INR
400,000
INR 0
INR
1,103,300
INR 0
INR 0

INR 0
INR 0
INR 0
INR 0
INR 0
INR 0
INR
INR
INR
303,000
777,400 1,103,300
Year 1
Year 2
Year 3

INR 80,000
INR 0
INR 0

INR 80,000
INR 0
INR 0

INR 80,000
INR 0
INR
80,000
INR
500,000
(INR
312,000)

INR 80,000
INR 0
INR
80,000
INR
500,000
(INR
197,400)
INR
394,800
INR
697,400
INR
777,400

INR 35,000
INR
223,000
INR
303,000

INR
100,000
INR 0
INR 0
INR
100,000
INR 0
INR
100,000
INR
500,000
(INR
503,300)
INR
1,006,600
INR
1,003,300
INR
1,103,300

13 Business plan for Cochin Structural Consultants by Job Thomas