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
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Business plan for Cochin Structural Consultants by Job Thomas

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. State-
of-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.

Figure 1 Sale and profit projected for the upcoming three years

0%
50%
100%
150%
Sale Profit
P
e
r
c
e
n
t
a
g
e

o
f

s
a
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Year 1
Year 2
Year 3
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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.

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
70%
10%
5%
5%
10%
Market segmentation
Architectural/Engineering Firms
Governments/ Public sector
Law Firms
Local Contractors
Private individuals
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Business plan for Cochin Structural Consultants by Job Thomas

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. 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.

Figure 3 Start-up fund requirement of Cochin Structural Consultants
INR 0
INR 100,000
INR 200,000
INR 300,000
INR 400,000
INR 500,000
Start-up fund Assets Liabalities Capital
Start-up fund summary
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Business plan for Cochin Structural Consultants by Job Thomas

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 Year 1 Year 2 Year 3
Job Thomas INR 1,000,000 INR 1,200,000 INR 1,400,000
Number of persons 1 1 1
Total INR 1,000,000 INR 1,200,000 INR 1,400,000

6. FINANCE
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.

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 0
INR 1,000,000
INR 2,000,000
INR 3,000,000
Sale Margin operating
expenses
Profit
Year 1
Year 2
Year 3
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Business plan for Cochin Structural Consultants by Job Thomas


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


INR 0
INR 200,000
INR 400,000
INR 600,000
INR 800,000
INR 1,000,000
INR 1,200,000
Year 1 Year 2 Year 3
Assets
Liabilities
Capital
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Business plan for Cochin Structural Consultants by Job Thomas

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 Month1 Month2 Month3 Month4
Legal

XXXXXXX

Stationery

XXXXXXX

Insurance

XXXXXXX

Business Licenses XXXXXXX

Association fee

XXXXXXX

Website Development

XXXXXXX

Office Furniture

XXXXXXX

Software Purchases

XXXXXXX

Computer/Office Equipment

XXXXXXX

Advertisement

XXXXXXX

Start business XXXXXXX



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Business plan for Cochin Structural Consultants by Job Thomas

10. APPENDIX
A1. Start-up requirements

Start-up Expenses

Legal INR 10,000
Stationery etc. INR 12,000
Insurance INR 24,000
Business License INR 20,000
Professional License INR 10,000
Website Development INR 12,000
Office Furniture INR 12,000
Software Purchases INR 140,000
Computer/Office Equipment INR 10,000
Other INR 10,000
Total Start-up Expenses INR 260,000
Start-up Assets

Cash Required INR 240,000
Other Current Assets INR 0
Long-term Assets INR 0
Total Assets INR 240,000
Total Requirements INR 500,000


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Business plan for Cochin Structural Consultants by Job Thomas

A2. Start-up Funding
Start-up Expenses to Fund INR 260,000
Start-up Assets to Fund INR 240,000
Total Funding Required INR 500,000
Assets

Non-cash Assets from Start-up INR 0
Cash Requirements from Start-up INR 240,000
Additional Cash Raised INR 0
Cash Balance on Starting Date INR 240,000
Total Assets INR 240,000
Liabilities and Capital

Liabilities

Current Borrowing INR 0
Long-term Liabilities INR 0
Accounts Payable (Outstanding Bills) INR 0
Other Current Liabilities (interest-
free) INR 0
Total Liabilities INR 0
Capital

Planned Investment

Owner INR 0
Investor INR 0
Additional Investment Requirement INR 500,000
Total Planned Investment INR 500,000
Loss at Start-up (Start-up Expenses) (INR 260,000)
Total Capital INR 240,000
Total Capital and Liabilities INR 240,000


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Business plan for Cochin Structural Consultants by Job Thomas

A3. Profit and Loss account (projected)

Year 1 Year 2 Year 3
Sales INR 1,500,000 INR 1,875,000 INR 2,250,000
Direct Cost of Sales (0.3-0.15) INR 450,000 INR 468,750 INR 337,500
Other Costs of Sales INR 0 INR 0 INR 0
Total Cost of Sales INR 450,000 INR 468,750 INR 337,500
Gross Margin INR 1,050,000 INR 1,406,250 INR 1,912,500
Gross Margin % 70% 75% 85%
Expenses

Payroll INR 1,000,000 INR 1,200,000 INR 1,400,000
Marketing/Promotion INR 0 INR 0 INR 0
Depreciation INR 0 INR 0 INR 0
Website Hosting Fees INR 0 INR 0 INR 0
Engineering Assoc Annual Fees INR 0 INR 0 INR 0
Continuing Education INR 0 INR 0 INR 0
Yellow Pages/White Pages INR 0 INR 0 INR 0
Telephone/Fax INR 0 INR 0 INR 0
Software Purchases INR 0 INR 0 INR 0
Utilities INR 0 INR 0 INR 0
Errors and Omissions Insurance INR 0 INR 0 INR 0
Rent INR 0 INR 0 INR 0
Payroll Taxes INR 0 INR 0 INR 0
Contract/Consultants INR 0 INR 0 INR 0
Other INR 0 INR 0 INR 0
Total Operating Expenses INR 1,000,000 INR 1,200,000 INR 1,400,000
Profit Before Interest and Taxes INR 50,000 INR 206,250 INR 512,500
EBITDA INR 50,000 INR 206,250 INR 512,500
Interest Expense INR 0 INR 0 INR 0
Taxes Incurred (0.3) INR 15,000 INR 61,875 INR 153,750
Net Profit INR 35,000 INR 394,800 INR 1,006,600
Net Profit/Sales 2% 21% 45%


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Business plan for Cochin Structural Consultants by Job Thomas

A4. Balance Sheet (projected)
Year 1 Year 2 Year 3
Assets

Current Assets

Cash INR 103,000 INR 427,400 INR 703,300
Accounts Receivable INR 200,000 INR 350,000 INR 400,000
Other Current Assets INR 0 INR 0 INR 0
Total Current Assets INR 303,000 INR 777,400 INR 1,103,300
Long-term Assets INR 0 INR 0 INR 0
Long-term Assets INR 0 INR 0 INR 0
Accumulated Depreciation INR 0 INR 0 INR 0
Total Long-term Assets INR 0 INR 0 INR 0
Total Assets INR 303,000 INR 777,400 INR 1,103,300
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities

Accounts Payable INR 80,000 INR 80,000 INR 100,000
Current Borrowing INR 0 INR 0 INR 0
Other Current Liabilities INR 0 INR 0 INR 0
Subtotal Current Liabilities INR 80,000 INR 80,000 INR 100,000
Long-term Liabilities INR 0 INR 0 INR 0
Total Liabilities INR 80,000 INR 80,000 INR 100,000
Paid-in Capital INR 500,000 INR 500,000 INR 500,000
Retained Earnings (INR 312,000) (INR 197,400) (INR 503,300)
Earnings INR 35,000 INR 394,800 INR 1,006,600
Total Capital INR 223,000 INR 697,400 INR 1,003,300
Total Liabilities and Capital INR 303,000 INR 777,400 INR 1,103,300