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Aerotech business plan Aerotech business plan Document Transcript

  • November, 1999This sample business plan has been made available to users of Business Plan Pro®, business planningsoftware published by Palo Alto Software. Names, loc ations and numbers may have been c hanged,and substantial portions of the original plan text may have been omitted to preserve confidentialityand proprietary information.You are welcome to use this plan as a starting point to create your own, but you do not havepermission to reproduce, resell, publish, distribute or even c opy this plan as it exists here.Requests for reprints, ac ademic use, and other dissemination of this sample plan should be emailedto the marketing department of Palo Alto Software at marketing@paloalto.com. For productinformation visit our Website: www.paloalto.com or call: 1-800-229-7526. Copyright © Palo Alto Software, Inc., 1995-2007 All rights reserved.
  • Confidentiality AgreementThe undersigned reader ac knowledges that the information provided by _______________ in thisbusiness plan is confidential; therefore, reader agrees not to disc lose it without the express writtenpermission of _______________.It is ac knowledged by reader that information to be furnished in this business plan is in all respec tsconfidential in nature, other than information which is in the public domain through other means andthat any disc losure or use of same by reader, may cause serious harm or damage to_______________.Upon request, this document is to be immediately returned to _______________.___________________Signature___________________Name (typed or printed)___________________DateThis is a business plan. It does not imply an offering of securities.
  • Table of Contents1.0 Executive Summary.............................................................................................................................1 1.1 Mission........................................................................................................................................3 1.2 Objectives ...................................................................................................................................4 1.3 Keys to Success ........................................................................................................................52.0 Company Summary.............................................................................................................................5 2.1 Company Ownership .................................................................................................................5 2.2 Start-up Summary ......................................................................................................................53.0 Products and Services........................................................................................................................8 3.1 SWOT Analysis ..........................................................................................................................8 3.2 Macroenvironment .....................................................................................................................8 3.3 Sales Literature ..........................................................................................................................9 3.4 Technology..................................................................................................................................9 3.5 Future Products and Services ..................................................................................................94.0 Market Analysis Summary................................................................................................................10 4.1 Market Segmentation..............................................................................................................10 4.2 Target Market Segment Strategy...........................................................................................11 4.2.1 Market Trends .......................................................................................................................12 4.2.2 Market Needs .......................................................................................................................12 4.3 Service Business Analysis .....................................................................................................13 4.3.1 Competition and Buying Patterns .......................................................................................14 4.3.2 Main Competitors .................................................................................................................15 4.3.3 Distributing a Service...........................................................................................................165.0 Strategy and Implementation Summary..........................................................................................16 5.1 Competitive Edge....................................................................................................................16 5.2 Marketing Strategy ..................................................................................................................17 5.2.1 Positioning Statement..........................................................................................................17 5.2.2 Pricing Strategy ....................................................................................................................17 5.2.3 Promotion Strategy ..............................................................................................................18 5.3 Sales Strategy..........................................................................................................................18 5.3.1 Sales Forecast .....................................................................................................................19 5.4 Strategic Alliances...................................................................................................................206.0 Management Summary ....................................................................................................................21 6.1 Organizational Structure..........................................................................................................21 6.2 Management Team .................................................................................................................21 6.3 Personnel Plan.........................................................................................................................227.0 Financial Plan ....................................................................................................................................23 7.1 Important Assumptions............................................................................................................23 7.2 Key Financial Indicators ..........................................................................................................24 7.3 Break-even Analysis................................................................................................................25 7.4 Projected Profit and Loss .......................................................................................................26 7.5 Projected Cash Flow ...............................................................................................................29 7.6 Projected Balance Sheet ........................................................................................................31 7.7 Business Ratios .......................................................................................................................32 Page 1
  • Aero Technologies, Ltd.1.0 Executive Summary Today the world is defined by the term Information Age. All businesses, both large and small, require effec tive and efficient business communication solutions in order to continuously meet their customer expec tations and attain a competitive advantage, and therefore be successful. Whether a company is large or small it is realized that, the right amount of financing, materials, talent, and experience are not enough to succeed without a good communication system in plac e that enables smooth transaction sealing. Communications is at the heart of regional and international integration, with the development of an efficient, cost effective and tec hnologically advanced communications infrastructure essential to Botswanas success in the global market. With the ec onomies of most countries bec oming increasingly sophisticated and knowledge- intensive, there is a greater need for the existence of an efficient network that will enable dec ision-makers to have ac cess to timely and ac curate data to fac ilitate dec ision-making and transaction sealing. We are on the brink of penetrating a lucrative market in a rapidly growing industry. The current increase in the number of entrepreneurs, and competition among existing companies presents an opportunity for Aero Technologies to penetrate the market. Our services/products will be positioned very carefully. They will be of extremely high quality to ensure client satisfac tion, supported by impec cable customer service. Aero Technologies will offer the expertise that a proactive oriented and market-opportunity seeking company needs to develop and maintain a good communications system. We intend to provide a number of necessary services the business community and to the public. Initial plans are to introduce five main lines of services, with the primary foc us on Multimedia, Call Centre fac ility, Data Communications and IT, Financial Services, and Knowledge Consulting. We realize that, for us to prosper, there is need to be flexible and responsive, to delight clients by providing them what they want, when they want it, and before the competition can offer it. The company intends to ac hieve this through a systematic approach that is customer-centric, and in which the customers business objec tives enjoy top priority. This involves not only skill and depth of knowledge, but time devoted to studying a customers needs. Aero Technologies will view the provision of value-added services over the entire sc ope of our customers requirements as not only essential, but as a competitive advantage which the company protects as a key asset; from service concept to service provision, the intention will be to ensure that every policy and proc edure, system and proc ess has the objec tive of improving the flexibility and response of the whole company. There is a need for interac tion between all functional areas, particularly between marketing and service logistics, if the projec t is to realize its full potential, with marketing being employed as a strategic weapon. Once the needs and proc esses are understood and described, leading edge products and best- of-industry skills will be applied to design and develop a fitting solution to satisfy the need and enable the clients business in the most cost effec tive way. Our marketing strategy will be based mainly on ensuring customers know what need the service (s) is able to fulfill, and making the right service and information available to the right target client. We intend to implement a market penetration strategy that will ensure that our services are well known and respec ted in our respec tive industry. Our marketing strategy will convey the sense of quality and satisfac tion in every picture, every promotion, and every publication. Our promotional strategy will involve integrating traditional advertising, breakfast seminars, events, Internet marketing, personal selling, public relations, and direc t marketing, details of which are provided in the marketing section of this plan. Page 1
  • Aero Technologies, Ltd.We intend to build our projec t management team correc tly. We need the right people in the rightplac e at the right time if we are to ensure optimum growth. We intend to develop our team sothat our people can grow as the company grows -- a mutually beneficial relationship.The intention is to go into partnership with NNN Limited, a company registered in QQQ, andprovide financial, IT, and data communications consultancy services to industries in theapplication and use of latest technologies such as data communication and Wireless ApplicationProtoc ol (WAP), enabling cellular telec ommunications.In a nutshell, we dont just intend to market and sell our service, but to market and provide aservice that will ensure our clients customer satisfac tion, ease of communication, improvedcorporate logistics, and cost savings on transactions ensuring a total-quality environment. Thiswill ensure we establish and maintain a reputable corporate image. However it should be notedthat timing and information provision will be of the utmost importance and significance in termsof the projec ts introduction onto the market. In addition we are apprec iative of the fac t thatentering such a market is not a bed of roses, particularly as it is still a relatively new conceptneeding to be implanted in peoples minds in terms of the benefits it may bring to them, as wellas the number of laggard firms who often do not easily apprec iate the need for change, be it totheir benefit. In such a case the need will exist to aggressively market the concept to theseorganizations and individuals through various means. Hence the intention is to utilize thetechnical and business know-how of tec hnical partners in order to implement and attain ourbusiness objec tives.NOTE: All currency values in this plan are expressed in Botswanan Pula [P]. Page 2
  • Aero Technologies, Ltd.1.1 Mission Aero Technologies, Ltd. offers marketing oriented organizations a reliable, high-quality alternative to in-house resources for business development, market development, and channel development on a loc al and regional sc ale. A true alternative to in-house resources offers a very high level of prac tical experience, know-how, contac ts, and confidentiality. Clients will know that working with Aero Tec hnologies is a more professional, less risky way to undertake communication with its various stakeholders, than working completely in-house with their own people. Aero Tec hnologies must also maintain financial balance, charge a reasonable value for its services, and deliver a higher value to its clients. Initial foc us will be development in the regional markets, or for international clients in Botswana. Aero Technologies is also an excellent plac e to work, a professional environment that is challenging, rewarding, creative, and respec tful of ideas and individuals. Aero Technologies ultimately provides excellent value to its customers and fair reward to its owners and employees. Internally we intend to create and nurture a healthy, creative, respec tful and enjoyable office environment, in which our employees are fairly compensated and encouraged to respec t the customer and the quality of the service we provide. In addition follow-up will be mandatory so as ensure customer satisfac tion and make any improvements as rec ommended by the customers in future. We seek fair and responsible profit, enough to keep the company financially healthy for the short and long term, and to fairly compensate investors for the money and risk. Page 3
  • Aero Technologies, Ltd.1.2 Objectives Our business strategy will revolve around the need to provide quality service and products to our various target clients, in the proc ess fully satisfying their needs. This shall be undertaken through rec ruitment of a professional telemarketing, sales and tec hnical team and the provision of good quality custom-designed services, catering for the clients particular needs. With time our marketing campaign will increase the knowledge of our services to the various market segments we shall be targeting. This is particularly so with organizations looking at establishing a competitive advantage(s) on the market due to increased competition, hence providing them with the opportunity to foc us on their core ac tivities whilst proc uring increased business from new and existing customers. Marketing material shall be professionally done so as to be reflec tive of our intended image and reputation. We shall position ourselves as a quality total communications solution service provider that strives to provide effective and efficient communication solutions. We intend to establish a good rapport with all the relevant stakeholders. In summary we intend to attain the following objec tives: • Continuously provide professional quality services on time and on budget. • Develop a follow-up strategy to gauge performance with all our clients. • Implement and maintain a quality control system and assurance policy. • To continuously formalize and measure cross-functional working communication so as to ensure that the various departments work harmoniously towards attainment of company objec tives. • To instill a culture of continuous improvement in beating standards of customer satisfac tion and efficiency. • We are fully committed to supporting growth and development in the economy. Page 4
  • Aero Technologies, Ltd.1.3 Keys to Success The keys to this projec ts success will undoubtedly be effective market segmentation through identification of several niche markets and implementation strategies. Along these lines the company intends to implement personal selling and direc t marketing strategies to the target markets. Hence the key success fac tors will include the following: 1. Excellence in fulfilling the promise: Completely confidential, reliable, trustworthy expertise and service(s) through the provision of an uncompromising service. This dictates that we have in plac e the latest technology, hardware and software, and well-trained personnel so as to fulfill the aforesaid. 2. Timely response to clients orders: We cannot afford to delay our clients for whatever reason, as this will have a negative bearing on our image and reputation, including future business. Hence we need to be continually communicating with the client ensuring we provide needs-based solutions. 3. Skill and depth of knowledge: Considering the nature of our services and their relative infancy on the market, the skill and depth of knowledge of our personnel shall be of utmost importance in determining the provision of the service(s) to the end-users. 4. Marketing know-how: In a relatively volatile market there will be a need to aggressively market our business and the services we provide so as to be continuously at the top of our prospec tive and current clients minds. This will also ac t as a temporary deterrent for companies contemplating entering our market. Advertising shall be one of our competitive advantages. 5. Leveraging from a large pool of expertise: The companys various alliances with technological partners shall prove invaluable considering the skills and intellec tual capacity these partners will have in the fields of design and system integration, implementation and exec ution, lifecycle support and understanding, and in the application of new technology. This has the potential of proving to be an important differentiator on the market.2.0 Company Summary Aero Technologies, Ltd. was founded in November 1999 as a Private Limited Company through the foresight and vision of the three direc tors. It was formed as a division of TTT with the direc tors having identified a large potential market for their products and services. For most of its initial existence, the company intends to utilize the large database and experience of its direc tors in obtaining orders, with the intention of establishing close relationships with its clients.2.1 Company Ownership Aero Technologies is a company incorporated at the Registrar of Companies by XXX, YYY, and ZZZ. Though relatively new, the direc tors realize their companys vast potential market and opportunity for growth given implementation of the appropriate strategies, aided by the necessary finances. Aero Tec hnologies was established with 3,000 shares equally distributed amongst the direc tors.2.2 Start-up Summary Total start-up expenses covered (including legal costs, logo design, stationery and related expenses) came to approximately P1,192,000. Start-up assets required and utilized included personal computers, vehicles, office furniture, and other office equipment. NOTE: All currency values in this plan are expressed in Botswanan Pula [P]. Page 5
  • Aero Technologies, Ltd.Table: Start-upStart-upRequirementsStart-up ExpensesLegal $2,000Stationery etc. $2,000Brochures $5,000Consultants $5,000Supplier Contracts $3,000Rent $4,000Staff Training $8,000Expensed Equipment $1,135,000Other $28,000Total Start-up Expenses $1,192,000Start-up AssetsCash Required $350,000Start-up Inventory $0Other Current Assets $0Long-term Assets $1,012,400Total Assets $1,362,400Total Requirements $2,554,400 Page 6
  • Aero Technologies, Ltd.Table: Start-up FundingStart-up FundingStart-up Expenses to Fund $1,192,000Start-up Assets to Fund $1,362,400Total Funding Required $2,554,400AssetsNon-cash Assets from Start-up $1,012,400Cash Requirements from Start-up $350,000Additional Cash Raised $0Cash Balance on Starting Date $350,000Total Assets $1,362,400Liabilities and CapitalLiabilitiesCurrent Borrowing $0Long-term Liabilities $0Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $0CapitalPlanned InvestmentInvestor 1 $1,000,000Investor 2 $1,000,000Investor 3 $554,400Additional Investment Requirement $0Total Planned Investment $2,554,400Loss at Start-up (Start-up Expenses) ($1,192,000)Total Capital $1,362,400Total Capital and Liabilities $1,362,400Total Funding $2,554,400 Page 7
  • Aero Technologies, Ltd.3.0 Products and Services Aero Technologies offers the expertise a proactive oriented and technologically inclined company needs to perform its operations efficiently and effectively, through allowing it to concentrate on its core ac tivities whilst deploying the latest communication implements. Its wide range of solutions will incorporate and embrac e customer contac t centres, technology enabled relationship management, technology enabled marketing and tec hnology enabled selling solutions, multi-service data and voice networking as well as Individualized Customer Relationship Management centres, integration services and Knowledge Management Consulting. Hence we intend to provide a number of necessary services to the business community, primarily the upper ec helons, as well as the public. These can be summed up in five main areas: • Multimedia • Call Centre Fac ility • Data Communications and IT • Financial Services • Knowledge Management. Hence we intend to offer the expertise a high-technology company needs to develop new product distribution and new market segments in new markets. However it should be noted that the Knowledge Management Centre will invariably incorporate the functions of the other divisions.3.1 SWOT Analysis We are presently in a highly lucrative market in a rapidly growing economy. We foresee our strengths as the ability to respond timeously to the market dictates and to provide custom designed technological services. Our key personnel will have a wide and thorough knowledge of the technological services we intend to provide, and expertise, which will go a long way towards penetrating the market. Below are the summarized strengths, weaknesses, opportunities and threats.3.2 Macroenvironment Research indicates that the younger more ambitious market presently in the exec utive and overall business sector, being more educated and aware of the global environment, assesses and implements its core ac tivities to a much higher degree than past trends have indicated. This is exac erbated by the increase in c ompetition in all industries. Therefore with the emergence of this generation of individuals, the apprec iation of quality services and business communication solutions/rec ommendations that provide for and enable company growth, dictates that our service lines will be popular. The current drive by the government towards a more diversified economy presents an opportunity for our business to propel and excel in our intended markets, benefiting from the support of the concerned institutions and trade bodies. In addition with the country increasingly bec oming an ec onomic hub, we foresee a demand for high quality business communication solutions. Through undertaking our business ac tivities professionally, we foresee that it should not be too difficult to gain market ac ceptance if we deliver the final service timeously and of good quality, at competitive rates. Page 8
  • Aero Technologies, Ltd.3.3 Sales Literature The business will begin with a general services broc hure establishing the positioning of the company and services clients are able to benefit from. These shall be designed for the dec ision- makers ensuring they are not too technical, but short and concise. Literature and mailings shall also be designed in such a way that they establish a high-quality look and feel, in order to create and fulfill the right sense of professionalism. Breakfast seminars shall be undertaken in the initial period of the projec t targeting dec ision-makers and ensuring they understand the benefits of our services in todays business environment. Another important marketing tool will be CD- ROMS. These shall be targeted at business exec utives who often do not have much time on their hands and are looking at utilizing every second productively. These CD-ROMS shall be most useful as they will listen to them whilst in transit from one business meeting to another. We also intend to have well designed posters, table tents, T-shirts, mouse pads, keys-holders, and mugs distributed at strategic points and proc ured through reputable manufac turers so as not to compromise on quality. Potential strategic points for our literature include hotels, lodges, computer hardware and software distributors amongst others.3.4 Technology Aero Technologies will strive to maintain the latest business communication hardware and software capabilities so as to ensure we are continuously at the forefront in our market arena. The one certainty in our industry is that technology will continue to evolve and develop, changing what we market as well as how we market it. Our aim will be to be aware of the implications of this new tec hnology and utilize it in our existing framework where possible. Complete presentation fac ilities for preparation and delivery of multimedia presentations on Mac intosh or Windows mac hines, in formats that include on-disk presentation or video presentation are also possibilities that still are being looked into. We also intend to have the latest and most efficient software in plac e to enable smooth operations. Please see the capital equipment for further details.3.5 Future Products and Services In putting the projec t together we have attempted to offer enough services to allow us to always be in demand by our clients. However, technological developments have provided us with a new era of opportunities for the various organizations in which we can only guess at the needs. For example, current rapid innovations/ development of Wireless Application Protoc ol (WAP) technology, which is seeing a new service being introduced almost on a fortnightly basis overseas, presents an opportunity to be realized, particularly foc using on WAP enabled cellphones that enable individuals to ac cess or send their email messages over the cellphone. There is also the possibility to introduce video-conferencing, as we will have the necessary infrastructure in plac e. Applications such as banking by cellphone, online telephone direc tories and delivery of breaking news headlines are also future services to be utilized. However, the most important fac tor in developing future services will be market need. Our understanding of the needs of our target market segments will be one of our competitive advantages. It is critical to our effort to develop the right new services. Page 9
  • Aero Technologies, Ltd.4.0 Market Analysis Summary We are today experiencing a rapid growth in the economy of unsurpassed nature. This has been brought about by, amongst other things, the relaxation of foreign exchange policies and mac roeconomic policies geared towards attrac ting foreign investors into the country. The fisc al and monetary policies of the government geared towards maintaining growth with soc ial justice have largely contributed towards this, evidenced by our ec onomy averaging a growth rate of 7% since 1990 -- very high by international standards. The current drive and emphasis by the government on diversification of the industrial base away from the minerals sector presents an opportunity for Aero Tec hnologies to make a valuable contribution towards ac hieving this goal. This will result in implementation of modern Information Tec hnology services and techniques, and transfer of knowledge. Aware of the fac t that we will be operating in a predominantly infant market we intend to ensure that our marketing strategies are considerate of the importance of the fit between our services capabilities and benefits, and the target market, so as to develop a strong sustainable competitive position in the market. As a result we intend to implement a niche marketing strategy, foc using on certain target markets. It should be apprec iated that entering such a market is not a bed of roses, particularly considering its infancy and hence the intention will be to implement an aggressive marketing strategy, well supported by the other business functions. The above prognosis influenced our dec ision to enter the IT business communication service provision/consultancy industry.4.1 Market Segmentation We will be foc using on proactive, market seeking organizations, who want to sell into markets in the region and overseas. These are mostly larger companies, and oc casionally medium-sized companies. Our most important group of potential customers are business exec utives in large, medium and small corporations. These are marketing managers, general managers, sales managers, sometimes charged with international foc us and sometimes charged with market or even specific channel foc us. They do not want to waste their time or money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their companys name and reputation. Hence the need to professionally market our services and business as a whole, offering impec cable expertise. Our intention will be to offer an attrac tive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments due to technological shortfalls. Page 10
  • Aero Technologies, Ltd. Table: Market Analysis Market Analysis 1999 2000 2001 2002 2003 Potential Customers Growth CAGR SOHO Executives 1% 100 101 102 103 104 0.99% Professionals 10% 1,000 1,100 1,210 1,331 1,464 10.00% Medium-sized Co. Executives 14% 2,100 2,394 2,729 3,111 3,547 14.00% Large-sized Co. Executives 19% 2,850 3,392 4,036 4,803 5,716 19.00% Academics 1% 150 151 152 153 154 0.66% Total 15.37% 6,200 7,138 8,229 9,501 10,985 15.37%4.2 Target Market Segment Strategy Our marketing strategy will be based mainly on making the right service(s) available to the right target customer. We will ensure that our services prices take into consideration organizations/peoples budgets, and that these people apprec iate the service and know that it exists, including where to find it. The marketing will convey the sense of quality in every picture, every promotion, and every publication. Our intention will be to target those innovative or proactive companies contemplating transferring a part of their marketing ac tivities on the Internet, in order to benefit from the advantages offered by this unique system of communication. We realize the need to foc us our marketing message and our service offerings. We need to develop our message, communicate it, and make good on it. Page 11
  • Aero Technologies, Ltd.4.2.1 Market Trends Today we are passing through a tec hnological disc ontinuity of epic proportions. The growth of the Internet shows no signs of abating and has profound implications for businesses not only in Africa, but also throughout the world. Though e-commerce is largely developed country-led, with the Americas and Europe in the forefront, this is slowly changing with more and more servers being set up in Asian and African countries, Botswana being no exception. As e-commerce knows no boundaries the intention of Aero Tec hnologies will be to assist clients in undertaking communication and transactions with ease, initially on a regional level, but also at the global level. This has resulted in the significant trend toward greater international sales and communication between organizations throughout the world. Another important trend is the one toward greater use of specialized and foc used consultants, instead of in-house resources. Companies are increasingly looking for more out-sourcing and, in general, a preference for variable costs instead of fixed costs. This shall have important implications on the ac ceptance of our services on the market. In summary, the range and volume of products sold online are likely to increase vastly in the future, expanding the size and value of the elec tronic market. However, encouragement may be obtained from the fac t that in its pursuit of diversification the Government of Botswana would very much encourage an additional player in the e-commerce market, provided they are of the right caliber and beneficial to the ec onomy as a whole.4.2.2 Market Needs Aero Technologies intends to provide customers with the necessary systems and services to provide cutting-edge customer service, by essentially offering a certain spec trum of communications solutions, primarily the interac tion applications. We understand that our target markets need more than just continuous communication and information from their various stakeholders, but communication and information that will enable them to make more informed dec isions and transactions at the earliest opportunity. We dont just intend to provide a service(s), but to provide one of unparalleled nature relative to the market. Our target market are not businesses that want to make dec isions solely on the basis of price, but instead are mainly concerned with having reliable providers of expertise and a good communications network in plac e. Page 12
  • Aero Technologies, Ltd.4.3 Service Business Analysis A general market study about the benefits of wireless technology undertaken by Ovum Research, an international research c ompany, was conducted on the use of cellular data communications and other conferencing fac ilities. The study notes that with the provision of wireless tec hnology to various sub-Saharan countries, telec ommunications systems could be profitably established. The art of m-commerce relies on the convergence of Internet technologies, mobile devices, cellular phones, band-width and a whole lot of companies champing at the bit of m-commerce. M-commerce is about being able to transact business through any portable intelligent device and some of the greatest growth in the m-commerce arena is coming from the development of the cellular phone. The one wireless standard uniting and gaining momentum in the use of personal digital assistants (PDA) is the Wireless Application Protoc ol (WAP). This protoc ol uses wireless means to connec t any mobile device to specific Internet information. The computing device has to be WAP enabling and only a few Internet sites have been set up to cope with WAP transactions. It is an obvious fac t that the wireless revolution will have a positive impact on the ec onomic and social development of Africa. Africas critical requirement is to build infrastructure. Wireless technology overcomes infrastructure costs of setting up fixed lines. International research has projec ted that wireless portals will bec ome a US$42 billion revenue opportunity by 2005 as mobile users, including those in Africa, increasingly shift their businesses and other transactions from PCs to their handsets. Banking, email, surfing the Web, and even shopping will now be done anywhere and at any time. There is a significant demand for WAP, with the prime candidate being small businesses, sales forces, and field support engineers as well as growing numbers of mobile managers equipped with PCs and cellular phones. In this way WAP is an important step toward third-generation mobile networks. New WAP enabling phones provide the user with email, personal organizer and the ability to check bank ac counts, time sc hedules, restaurant menus and more. All these online interac tive services are especially written and formatted to be ac cessed on cellular phones. The growing popularity of WAP phones (c urrently 25,000 in South Africa alone) has meant that a number of companies are developing Internet sites with the content to service the WAP devices on the market. The above analysis indicates how the wireless tec hnology will revolutionize African business and particularly the small businesses run by individuals that may not be able to afford the luxury of a PC but will always need a phone and ac quire the same services offered by the PC through their mobile phones. It should also be noted that the IT industry is an environment where small niche players and developers can compete with the larger groups and corporations. An individual can have the vision or development skills to deliver a meaningful concept, product or service, but the weak links in this proc ess are the foc us to end-user requirements, financial support in the development stages and the effec tive channels to market for the finished product or service. Page 13
  • Aero Technologies, Ltd.4.3.1 Competition and Buying Patterns The key element in purchase or subsc ription dec isions made at the companys client level is trust in the professional reputation and reliability of the firm. The most important fac tor in this market will be the quality of the service. This is particularly so considering the potential impact e- commerce will have on organizations meeting their bottom lines. The very nature of our services dictates that oc casionally the pricing of our projec ts and billing rates will be variable, as different clients require different needs to be fulfilled in variable industry environments. In our line of business clients rarely compare service providers direc tly, looking for two, or more, possible providers of a proposed projec t or job. Usually they follow word-of-mouth rec ommendations and either go for the job or not, rather than selec ting 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 service to maintain a client relationship that brings the client bac k for future services -- realizing customer-lifetime value. Page 14
  • Aero Technologies, Ltd.4.3.2 Main Competitors In identifying competition in this new concept market, we find few companies currently offering services similar to ours. There are numerous providers of the older established ancillary services including traditional call centres. Hence there will be a need to strongly differentiate ourselves from these other businesses and market the benefit of utilizing our service(s). However on a broader sc ale our competition comes in several forms: 1. The most significant competition will be the traditional communication systems currently in plac e within the respec tive organizations, particularly considering advances in technology enabling these organizations (potential clients) to better handle their calls, inquiries, and transactions. Many organizations are currently investing in technological instruments that will enable them to better handle their customers. This is particularly so considering the advances that have been made in terms of customer relationship management and all its related hardware and software programs, many of which have not yet been fully exposed on the loc al and African markets. The current onset and wave of customer relationship management overseas does pose a serious challenge for Aero Tec hnologiess intended services, as they are bound to infiltrate into the region in the form of software programs and hardware components. 2. The increasing investment in training by organizations also represents competition in the area of intent. With organizations striving to instill a performance culture through training there will be a need to market the benefits of utilizing our service in c onjunction with these organizations respec tive communications systems. This is due to the fac t that these same organizations may feel that there is no need to utilize our service(s) as they would have invested large amounts into hardware and customer handling training of front office personnel. 3. Major potential competitors will include all those service providers that offer Internet, email, e-commerce, and other related services to the market. Examples include (Disc ussion omitted). These companies already have a firm footing in their Internet businesses and are carefully analyzing the prospec ts of e-commerce. 4. Though currently not engaged in e-commerce, numerous other IT, marketing and advertising companies are also contemplating entering this market. They are seeking to utilize or foc us on their core competencies in their respec tive markets, whilst taking advantage of the technological revolution in c onjunction with strategic partners who are well versed in the technical aspec ts. The rec ent installation of a top-of-the range computer network (with Internet) system by FFF is one case in point, as they seek to tap the vast opportunity presented by e-commerce. The majority of these have alliances with international firms. However, upon closer analysis of the above competitors it may be observed that several of these potential competitors also represent client opportunities to be realized by us. Page 15
  • Aero Technologies, Ltd.4.3.3 Distributing a Service Service provision and consulting will be sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being, by far, the most important fac tor. In this regard we intend to provide a service that exceeds customer expec tations so as to ensure they refer us to potential clients through word-of-mouth. New business shall be developed through industry associations, business associations, and in some cases, social associations such as country clubs. As our services are relatively new on both the Botswana and regional markets we intend to host breakfast seminars and workshops primarily for senior managers and dec ision-makers, who may benefit from our services. This function will involve a considerable amount of networking on our part, as these individuals often do not have a lot of spare time.5.0 Strategy and Implementation Summary Initially, Aero Technologies will foc us on the loc al and regional markets in the previously mentioned services. The target customers will include key dec ision-makers in the large, medium, and small-sized organizations, be they in a start-up, stable, or growth period. Our marketing strategy will emphasize foc us. This will be the key. We are a relatively new company on the market and must foc us on certain kinds of services with c ertain kinds of clients. The projec t will foc us on the loc al and regional markets, expanding into the international markets as time progresses, and as we gain the necessary experience. The form of growth that shall be initially pursued will be that of organic growth mainly due to limited resources and the need to instill awareness and confidence in our services. The target customers will include key dec ision- makers, sales and marketing personnel involved in decision-making and transaction sealing. • We intend to build image and awareness through consistency and distinctiveness in our service provision. • We intend to foc us on delivering quality services and end products that in turn produces good referrals, which c an then generate revenue. • We intend to always have a relatively heavy personal selling component to our marketing. Our strategy is to (Disc ussion omitted). Through the implementation of a fair, effec tive and competitive remuneration policy we intend to optimize our human resource output and advancement. We need the right people in the right plac e at the right time if we are to ensure optimum growth. We intend to develop our team so that our people can grow as the company grows -- a mutually beneficial relationship. As a result we intend to vigorously search and find the right people for our organization.5.1 Competitive Edge A key fac tor to the future success of this projec t is the bac kground and experience of the management team and strategic partners, and their ability to work the market based on an innate understanding of both the business proc esses and market structures. The delivery of whole, end-to-end solutions will have a significant impac t on gaining commitment from the market at all levels. Therefore, the company believes in partnering with its customers to bring the future in c ommunication and information technology into the customer contac t zone. Inevitably this shall involve constant liaison with the client, a customer-centric approach that is need-based. Page 16
  • Aero Technologies, Ltd.5.2 Marketing Strategy One core element of our strategy will be that of differentiation from our competitors. In terms of marketing, we intend to sell our company as a differentiated strategic ally, not just our services. In price, we intend to offer reasonable and competitive prices in c omparison to competition and we need to be able to sustain that. Market penetration through lower prices shall be undertaken where need be whilst premium pricing in the case of high quality services targeted at the upper- end of the market. Our service marketing will strive to ensure that we establish long-term relationships with c lients. Our primary intention will be to sell a relationship more than services. Our service marketing will emphasize the benefits of speed, interac tion and flexibility to be gained from utilizing our services. The approach will be entirely needs-driven and a thorough understanding of the business requirements, business proc esses and tec hnology strategy of the customer being the basis on which an Aero Technologies solution will be built. Once the needs and proc esses are understood and described, leading edge products and best-of-industry skills will be applied to design and develop a fitting solution to satisfy the need and enable the customers business in the most cost effective way.5.2.1 Positioning Statement Aero Technologies intends to be uniquely positioned to help customers apply communication and information technology products and skills to meet the challenges fac ing their businesses today. Our competitive edge will be our dominance of the market as early entrants, customer orientation and traditional hard work. Though our clients might range from large corporations to medium or even small businesses, what is important to the client irrespec tive of the size or industry is total satisfac tion with the end product matched to their capabilities and resources.5.2.2 Pricing Strategy Aero Technologies will be competitively priced in relation to the dictates of the market. The pricing fits with the general positioning of Aero Tec hnologies as providing high-level quality service and expertise. Due to the introductory nature of the vast majority of our services we intend to implement a penetration pricing strategy which will ensure that potential clients are not frightened away by our prices up until our services are apprec iated and fully operational. However this will dictate that our costs are prudently kept so as to ensure our financial goals come to fruition. Once development of the online applications is completed it is our intention to charge a monthly/six-monthly, or whichever the client prefers, rec urring fee which will be charged to their ac count. This fee will be worked out in such a way that it covers for operating expenses as much as possible (Disc ussion omitted). We will make sure that we charge for the service, expertise and any delivery with our aim being to ac hieve a gross profit margin of at least 60%. Naturally services targeted at the higher end of the market will have higher mark ups as these clients are less price sensitive. All in all we intend our prices to be extremely competitive on the market. Page 17
  • Aero Technologies, Ltd.5.2.3 Promotion Strategy Aero Technologies intends to utilize an aggressive promotional campaign to introduce its business units to the market. The intention will be to take advantage of several media sources in announcing the services and in the proc ess reinforcing awareness of its existence. It should be stressed that these promotional campaigns shall be designed in such a way that they do not undermine the organizations current corporate image but instead enhance it. Our promotional ac tivities shall be foc used towards driving the organizations overall strategy relentlessly, developing internal consistency and preparing it to confront any radical changes that may arise. This strategy will be based primarily on informing potential customers of the existence of our services and making the right information available to our target customer. The intention will be to highlight the benefit of utilizing our service(s) which will include: • Ease of communication • Improved corporate logistics • Cost savings on transactions • Chance to maintain if not improve the corporate image • Improvements in the operations of the value chain • Chance to improve corporate visibility regionally as well as globally, and develop niche strategies. In such a market we cannot afford to appear in or produce second-rate material with poor labels that make our services look less than they are. We intend to leverage our presence using quality broc hures and other sales literature, including promotional material such as pens, complimentary slips and pads. We intend to spread the word about our business through the following: 1. Advertising (Disc ussion omitted) 2. Personal Selling (Disc ussion omitted) 3. Public Relations (Disc ussion omitted) 4. Events (Disc ussion omitted) 5. Direc t Marketing (Disc ussion omitted) 6. Internet Marketing (Disc ussion omitted). In all the above we intend to communicate our ability to deliver a service of uncompromised nature and high quality that will satisfy the clients needs. Hence our messages will influence the dec isions of prospec tive clients by emphasizing our unique selling proposition and, persuade prospec tive clients that we are different from our competitors. All the above promotional tools shall be well integrated and utilized in c oncert so as to maximize their effec t.5.3 Sales Strategy The sales forec ast monthly table is included in the appendix. The annual sales projec tions are included here. It should be noted that as we bec ome established and known on the market we projec t sales to increase at a faster rate than during the initial year. Page 18
  • Aero Technologies, Ltd.5.3.1 Sales Forecast Aero Technologies will rec eive its revenue streams from a combination of licensing agreements, royalties, sales commissions, monthly subsc riptions, registration fees, network ac cess charges, service fees, transaction charges, marketing fees, promotional incentive programs, etc. From this one can see the heavy service orientation nature of the projec t. The derived value of Aero Tec hnologies will come from the key partnerships established and developed in order to deliver a service provision of transactionally based ac tivities, providing opportunity to build brand and loyalty, around which relationship marketing will play a key role. Table: Sales Forecast Sales Forecast FY 2000 FY 2001 FY 2002 Sales All Services $820,000 $1,230,000 $1,835,000 Other $0 $0 $0 Total Sales $820,000 $1,230,000 $1,835,000 Direct Cost of Sales FY 2000 FY 2001 FY 2002 All Services $410,000 $492,000 $734,000 Other $0 $0 $0 Subtotal Direct Cost of Sales $410,000 $492,000 $734,000 Page 19
  • Aero Technologies, Ltd.5.4 Strategic Alliances In todays volatile and competitive environment it is bec oming increasingly essential for organizations to concentrate on their core ac tivities so as to gain and maintain a competitive advantage. This brings out the advantage of undertaking strategic alliances with organizations that the firm may benefit from and visa versa. The solid partnerships the company intends to entrench with several companies will ensure that its solutions are world-class, best-of-breed products and systems. They will also reassure our customers that they are investing in "winning" technology and service that is maintainable, flexible and sc alable enough to meet future demands. At this writing, strategic alliances with several firms are possibilities, including JJJ and KKK given the content of existing interest and disc ussions. By going into strategic partnerships with suitable organizations we intend to benefit from being able to concentrate on our core ac tivities in the delivery of our service(s) to the end-user, whilst ensuring that we do not have to compromise on quality of exec ution or the number of services we are able to deliver. Page 20
  • Aero Technologies, Ltd.6.0 Management Summary The human resources element shall be an essential component in the delivery of the total service. By encouraging all employees close to our clients to think tac tically about what the projec ts service offerings should be, and by having enthusiastic, capable and empowered people interac ting with our clients, we intend to build the competitive advantage of being able to comprehensively meet our clients needs. We also intend to give our teams enough leverage in dec ision-making (empowerment) in order to ensure that clients are handled promptly and to reduce lead-time in actual delivery of the service. There will be a need to evaluate jobs and remuneration pac kages against market benchmarks to ensure they are competitive. These principles extend to ac cident, medical, death and welfare benefits such as (but not limited to) support for housing finance, education and training. Consonant with its efforts to create added value by employees, Aero Tec hnologies seeks to negotiate the provision of incentive pay delivery mec hanisms against ac hievement of agreed targets relating to ac complishment in the areas of customer satisfac tion, service provision, and other specific successes, that is, the implementation of an effective performance management system.6.1 Organizational Structure The organization structure the business units shall take will be that of a matrix structure where staff reports into a functional structure but are grouped together in projec t or product foc us teams when nec essary. A projec t foc us team will typically be headed up by a projec t manager or supervisor, while a service/product foc us team will typically be headed by another supervisor. In a highly volatile industry and environment, with increased competition and market entry, we rec ognize the need to be constantly changing so as to adapt to the prevailing environment. Hence we intend to have in plac e a highly flexible structure allowing for the above to be undertaken swiftly and smoothly. It shall be noted that the customer will be the foc us in all instances as we strive to provide the ideal custom-designed service(s). The following main functional groupings are to be rec ommended: • Sales & Marketing • Professional Services • Customer Service • Logistics • Finance.6.2 Management Team Management style will reflec t the participation of the shareholders. The company intends to respec t its community and treat all employees well. We will develop and nurture the company as community. We do not intend to be very hierarchical. Managements ongoing initiatives to drive sales, market share, and productivity will provide additional impetus (Disc ussion omitted). Page 21
  • Aero Technologies, Ltd.6.3 Personnel Plan The detailed monthly personnel plan for the first year is included in the appendix. The annual personnel estimates are included here. We believe this plan is an ac ceptable compromise between fairness and expedience, and meets the commitments of our vision and ethos. We do not intend to be a large organization or "top heavy" as our industry does not require our doing so. We want the company to stay lean and flexible so that we can respond to a clients needs quickly. However as we expand and increase in size (increase in our client base) we do expec t to increase our personnel. We intend to compensate our personnel well, so as to retain their invaluable expertise and to ensure job satisfac tion and enrichment through delegation of authority. Our compensation will include health c are, generous profit sharing, plus a minimum of three weeks vac ation. Since multifunctional teams have to be established there is need to establish a support system that will enable members to easily work together effec tively, meshing well with eac h others ac tivities. This will also allow members of a team to apprec iate the implications of the concerns and issues that may be expressed by their colleagues. All the above point to the fac t that there is need to instill a good corporate culture that nurtures a fruitful working relationship amongst all individuals/team members. In-house training shall be continuous with regular external training being undertaken particularly following any new developments in the market. This is so as to ensure that we are continuously able to anticipate our markets needs -- a proactive approach, which is so essential if we are to gain and maintain a competitive advantage (Disc ussion omitted). Table: Personnel Personnel Plan FY 2000 FY 2001 FY 2002 Directors $216,000 $259,200 $259,200 Multimedia $72,000 $72,000 $108,000 Data Communications $180,000 $144,000 $192,000 Call Center $48,600 $38,880 $58,320 Conference secr. $54,000 $43,200 $72,000 Other $0 $0 $0 Total People 23 23 31 Total Payroll $570,600 $557,280 $689,520 Page 22
  • Aero Technologies, Ltd.7.0 Financial Plan We want to finance growth mainly through cash flow and equity. We rec ognize that this means we will have to grow more slowly than we might like. The most important fac tor in our case is collec tion days. We cant push our clients hard on collec tion days, bec ause they are in larger companies and will normally have marketing authority, not financial authority. Therefore we need to develop a permanent system of rec eivables financing, using one of the established ac counting systems. In turn we intend to ensure that our investors are compatible with our growth plan, management style and vision. Compatibility in this regard means: • A fundamental respec t for giving our customers value, and for maintaining a healthy and congenial workplac e. • Respec t for realistic forec asts, and conservative cash flow and financial management. • Cash flow as first priority, growth sec ond, profits third. • Willingness to follow the projec t objec tives and contribute valuable input to strategy and implementation dec isions. With sufficient working capital the forec asted revenues and sales should be within the forec asted market demands for the companys services. From the second year onwards, the various divisions should be able to bring in adequate sales revenues. It is assumed that by then the objec tive of investing in c omputer equipment and retraining will have taken effec t, the trained tec hnicians will have bec ome adept at their crafts and new service offers for corporate clients will be added to the companys product line on a regular basis.7.1 Important Assumptions The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. From the beginning, we rec ognize that collec tion days are critical, but not a fac tor we can influence easily. At least we are planning on the problem, and dealing with it. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Some of the more important underlying assumptions are: • We assume a strong economy, without major rec ession. • We assume, of course, that there are no unforeseen changes in economic policy to make our clients products immediately obsolete, though we do forec ast tec hnological changes. Table: General Assumptions General Assumptions FY 2000 FY 2001 FY 2002 Plan Month 1 2 3 Current Interest Rate 10.00% 10.00% 10.00% Long-term Interest Rate 10.00% 10.00% 10.00% Tax Rate 25.42% 25.00% 25.42% Other 0 0 0 Page 23
  • Aero Technologies, Ltd.7.2 Key Financial Indicators We foresee a slow initial growth in sales, though operating expenses will be relatively high, and a bump in our sales and revenue generation as we spread our services during expansion. Collec tion days are very important. We do not want to let our average collec tion days get above the clients ac tual subsc ription period under any circumstances. This could cause a serious problem with c ash flow, bec ause our working capital situation is chronically tight. However, we rec ognize that we cannot control this fac tor easily, bec ause of the relationship we wish to create with our clients. Page 24
  • Aero Technologies, Ltd.7.3 Break-even Analysis Our Break-even Analysis will be based on running costs, that is, costs we shall incur in keeping the business running, including salaries and wages, rent, computer maintenance costs, water and elec tricity, and insurance amongst others. Hence many fixed costs shall be included in these costs. We will thus ensure that our sales levels are running comfortably above break-even. The following table summarizes our break-even analysis. Table: Break-even Analysis Break-even Analysis Monthly Revenue Break-even $109,300 Assumptions: Average Percent Variable Cost 50% Estimated Monthly Fixed Cost $54,650 Page 25
  • Aero Technologies, Ltd.7.4 Projected Profit and Loss The following table presents the profit and loss information for Aero Technologies. Initial marketing and training expenses will be relatively high as we seek to bec ome known on the market and staff get trained in provision of our services. This will be brought about by the development of sales literature, advertising expenses, function expenses including lunches and dinners with interested stakeholders. As our market share increases and capital is generated, further marketing programs and the expansion of those in existence at the time will be undertaken, to ensure market development. However with time these programs will start generating revenue for the business, which we shall in turn reinvest. Page 26
  • Aero Technologies, Ltd.Table: Profit and LossPro Forma Profit and Loss FY 2000 FY 2001 FY 2002Sales $820,000 $1,230,000 $1,835,000Direct Cost of Sales $410,000 $492,000 $734,000Other $0 $0 $0Total Cost of Sales $410,000 $492,000 $734,000Gross Margin $410,000 $738,000 $1,101,000Gross Margin % 50.00% 60.00% 60.00%ExpensesPayroll $570,600 $557,280 $689,520Sales and Marketing and Other Expenses $39,600 $0 $0Depreciation $0 $0 $0Leased Equipment $0 $0 $0Utilities $3,600 $0 $0Insurance $18,000 $0 $0Rent $24,000 $0 $0Payroll Taxes $0 $0 $0Other $0 $0 $0Total Operating Expenses $655,800 $557,280 $689,520Profit Before Interest and Taxes ($245,800) $180,720 $411,480EBITDA ($245,800) $180,720 $411,480 Interest Expense $0 $0 $0 Taxes Incurred $0 $45,180 $104,585Net Profit ($245,800) $135,540 $306,895Net Profit/Sales -29.98% 11.02% 16.72% Page 27
  • Aero Technologies, Ltd. Page 28
  • Aero Technologies, Ltd.7.5 Projected Cash Flow The chart and table below provide details to the companys cash flow situation. The chart shows a monthly breakdown while the table shows a year-end statement. Page 29
  • Aero Technologies, Ltd.Table: Cash FlowPro Forma Cash Flow FY 2000 FY 2001 FY 2002Cash ReceivedCash from OperationsCash Sales $205,000 $307,500 $458,750Cash from Receivables $474,875 $852,438 $1,272,865Subtotal Cash from Operations $679,875 $1,159,938 $1,731,615Additional Cash ReceivedSales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0Subtotal Cash Received $679,875 $1,159,938 $1,731,615Expenditures FY 2000 FY 2001 FY 2002Expenditures from OperationsCash Spending $570,600 $557,280 $689,520Bill Payments $495,395 $554,674 $842,976Subtotal Spent on Operations $1,065,995 $1,111,954 $1,532,496Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $1,065,995 $1,111,954 $1,532,496Net Cash Flow ($386,120) $47,983 $199,119Cash Balance ($36,120) $11,863 $210,982 Page 30
  • Aero Technologies, Ltd.7.6 Projected Balance Sheet The Balance Sheet below highlights the important numbers for the company. Table: Balance Sheet Pro Forma Balance Sheet FY 2000 FY 2001 FY 2002 Assets Current Assets Cash ($36,120) $11,863 $210,982 Accounts Receivable $140,125 $210,188 $313,572 Inventory $52,250 $62,700 $93,540 Other Current Assets $0 $0 $0 Total Current Assets $156,255 $284,751 $618,095 Long-term Assets Long-term Assets $1,012,400 $1,012,400 $1,012,400 Accumulated Depreciation $0 $0 $0 Total Long-term Assets $1,012,400 $1,012,400 $1,012,400 Total Assets $1,168,655 $1,297,151 $1,630,495 Liabilities and Capital FY 2000 FY 2001 FY 2002 Current Liabilities Accounts Payable $52,055 $45,011 $71,460 Current Borrowing $0 $0 $0 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $52,055 $45,011 $71,460 Long-term Liabilities $0 $0 $0 Total Liabilities $52,055 $45,011 $71,460 Paid-in Capital $2,554,400 $2,554,400 $2,554,400 Retained Earnings ($1,192,000) ($1,437,800) ($1,302,260) Earnings ($245,800) $135,540 $306,895 Total Capital $1,116,600 $1,252,140 $1,559,036 Total Liabilities and Capital $1,168,655 $1,297,151 $1,630,495 Net Worth $1,116,600 $1,252,140 $1,559,035 Page 31
  • Aero Technologies, Ltd.7.7 Business Ratios The following table presents important business ratios for Aero Technology. These figures come from the communications services industry, as determined by the Standard Industry Classification (SIC) Index. Page 32
  • Aero Technologies, Ltd.Table: RatiosRatio Analysis FY 2000 FY 2001 FY 2002 Industry ProfileSales Growth 0.00% 50.00% 49.19% 0.00%Percent of Total AssetsAccounts Receivable 11.99% 16.20% 19.23% 0.00%Inventory 4.47% 4.83% 5.74% 0.00%Other Current Assets 0.00% 0.00% 0.00% 100.00%Total Current Assets 13.37% 21.95% 37.91% 100.00%Long-term Assets 86.63% 78.05% 62.09% 0.00%Total Assets 100.00% 100.00% 100.00% 100.00%Current Liabilities 4.45% 3.47% 4.38% 0.00%Long-term Liabilities 0.00% 0.00% 0.00% 0.00%Total Liabilities 4.45% 3.47% 4.38% 0.00%Net Worth 95.55% 96.53% 95.62% 100.00%Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 50.00% 60.00% 60.00% 0.00%Selling, General & Administrative Expenses 79.98% 48.98% 43.18% 0.00%Advertising Expenses 2.56% 0.00% 0.00% 0.00%Profit Before Interest and Taxes -29.98% 14.69% 22.42% 0.00%Main RatiosCurrent 3.00 6.33 8.65 0.00Quick 2.00 4.93 7.34 0.00Total Debt to Total Assets 4.45% 3.47% 4.38% 0.00%Pre-tax Return on Net Worth -22.01% 14.43% 26.39% 0.00%Pre-tax Return on Assets -21.03% 13.93% 25.24% 0.00%Additional Ratios FY 2000 FY 2001 FY 2002Net Profit Margin -29.98% 11.02% 16.72% n.aReturn on Equity -22.01% 10.82% 19.68% n.aActivity RatiosAccounts Receivable Turnover 4.39 4.39 4.39 n.aCollection Days 56 69 69 n.aInventory Turnover 10.91 8.56 9.40 n.aAccounts Payable Turnover 10.52 12.17 12.17 n.aPayment Days 27 32 24 n.aTotal Asset Turnover 0.70 0.95 1.13 n.aDebt RatiosDebt to Net Worth 0.05 0.04 0.05 n.aCurrent Liab. to Liab. 1.00 1.00 1.00 n.aLiquidity RatiosNet Working Capital $104,200 $239,740 $546,635 n.aInterest Coverage 0.00 0.00 0.00 n.aAdditional RatiosAssets to Sales 1.43 1.05 0.89 n.aCurrent Debt/Total Assets 4% 3% 4% n.aAcid Test -0.69 0.26 2.95 n.aSales/Net Worth 0.73 0.98 1.18 n.a Page 33
  • Aero Technologies, Ltd.Dividend Payout 0.00 0.00 0.00 n.a Page 34
  • AppendixTable: Sales ForecastSales Forecast Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctSalesAll Services 0% $40,000 $40,000 $40,000 $55,000 $55,000 $70,000 $70,000 $80,000 $85,000 $95,000 $95,000 $95,000Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Sales $40,000 $40,000 $40,000 $55,000 $55,000 $70,000 $70,000 $80,000 $85,000 $95,000 $95,000 $95,000Direct Cost of Sales Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctAll Services $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Direct Cost of Sales $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500 Page 1
  • AppendixTable: PersonnelPersonnel Plan Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctDirectors 0% $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000Multimedia 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000Data Communications 0% $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000Call Center 0% $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400Conference secr. 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total People 23 23 23 23 23 23 23 23 23 23 23 23Total Payroll $37,700 $37,700 $37,700 $37,700 $37,700 $37,700 $57,400 $57,400 $57,400 $57,400 $57,400 $57,400 Page 2
  • AppendixTable: General AssumptionsGeneral Assumptions Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctPlan Month 1 2 3 4 5 6 7 8 9 10 11 12Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%Other 0 0 0 0 0 0 0 0 0 0 0 0 Page 3
  • AppendixTable: Profit and LossPro Forma Profit and Loss Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctSales $40,000 $40,000 $40,000 $55,000 $55,000 $70,000 $70,000 $80,000 $85,000 $95,000 $95,000 $95,000Direct Cost of Sales $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Cost of Sales $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500Gross Margin $20,000 $20,000 $20,000 $27,500 $27,500 $35,000 $35,000 $40,000 $42,500 $47,500 $47,500 $47,500Gross Margin % 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%ExpensesPayroll $37,700 $37,700 $37,700 $37,700 $37,700 $37,700 $57,400 $57,400 $57,400 $57,400 $57,400 $57,400Sales and Marketing and Other $11,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550 $2,550ExpensesDepreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Utilities $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000Payroll Taxes 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Operating Expenses $53,050 $44,050 $44,050 $44,050 $44,050 $44,050 $63,750 $63,750 $63,750 $63,750 $63,750 $63,750Profit Before Interest and Taxes ($33,050) ($24,050) ($24,050) ($16,550) ($16,550) ($9,050) ($28,750) ($23,750) ($21,250) ($16,250) ($16,250) ($16,250)EBITDA ($33,050) ($24,050) ($24,050) ($16,550) ($16,550) ($9,050) ($28,750) ($23,750) ($21,250) ($16,250) ($16,250) ($16,250) Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Profit ($33,050) ($24,050) ($24,050) ($16,550) ($16,550) ($9,050) ($28,750) ($23,750) ($21,250) ($16,250) ($16,250) ($16,250)Net Profit/Sales -82.63% -60.12% -60.12% -30.09% -30.09% -12.93% -41.07% -29.69% -25.00% -17.11% -17.11% -17.11% Page 4
  • AppendixTable: Cash FlowPro Forma Cash Flow Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctCash ReceivedCash from OperationsCash Sales $10,000 $10,000 $10,000 $13,750 $13,750 $17,500 $17,500 $20,000 $21,250 $23,750 $23,750 $23,750Cash from Receivables $0 $1,000 $30,000 $30,000 $30,375 $41,250 $41,625 $52,500 $52,750 $60,125 $64,000 $71,250Subtotal Cash from Operations $10,000 $11,000 $40,000 $43,750 $44,125 $58,750 $59,125 $72,500 $74,000 $83,875 $87,750 $95,000Additional Cash ReceivedSales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Received $10,000 $11,000 $40,000 $43,750 $44,125 $58,750 $59,125 $72,500 $74,000 $83,875 $87,750 $95,000Expenditures Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctExpenditures from OperationsCash Spending $37,700 $37,700 $37,700 $37,700 $37,700 $37,700 $57,400 $57,400 $57,400 $57,400 $57,400 $57,400Bill Payments $1,912 $56,317 $26,350 $26,875 $41,825 $34,375 $49,325 $41,700 $51,842 $51,858 $59,167 $53,850Subtotal Spent on Operations $39,612 $94,017 $64,050 $64,575 $79,525 $72,075 $106,725 $99,100 $109,242 $109,258 $116,567 $111,250Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Spent $39,612 $94,017 $64,050 $64,575 $79,525 $72,075 $106,725 $99,100 $109,242 $109,258 $116,567 $111,250Net Cash Flow ($29,612) ($83,017) ($24,050) ($20,825) ($35,400) ($13,325) ($47,600) ($26,600) ($35,242) ($25,383) ($28,817) ($16,250)Cash Balance $320,388 $237,372 $213,322 $192,497 $157,097 $143,772 $96,172 $69,572 $34,330 $8,947 ($19,870) ($36,120) Page 5
  • AppendixTable: Balance SheetPro Forma Balance Sheet Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctAssets Starting BalancesCurrent AssetsCash $350,000 $320,388 $237,372 $213,322 $192,497 $157,097 $143,772 $96,172 $69,572 $34,330 $8,947 ($19,870) ($36,120)Accounts Receivable $0 $30,000 $59,000 $59,000 $70,250 $81,125 $92,375 $103,250 $110,750 $121,750 $132,875 $140,125 $140,125Inventory $0 $22,000 $22,000 $22,000 $30,250 $30,250 $38,500 $38,500 $44,000 $46,750 $52,250 $52,250 $52,250Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Current Assets $350,000 $372,388 $318,372 $294,322 $292,997 $268,472 $274,647 $237,922 $224,322 $202,830 $194,072 $172,505 $156,255Long-term AssetsLong-term Assets $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Long-term Assets $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400 $1,012,400Total Assets $1,362,400 $1,384,788 $1,330,772 $1,306,722 $1,305,397 $1,280,872 $1,287,047 $1,250,322 $1,236,722 $1,215,230 $1,206,472 $1,184,905 $1,168,655Liabilities and Capital Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep OctCurrent LiabilitiesAccounts Payable $0 $55,438 $25,472 $25,472 $40,697 $32,722 $47,947 $39,972 $50,122 $49,880 $57,372 $52,055 $52,055Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $55,438 $25,472 $25,472 $40,697 $32,722 $47,947 $39,972 $50,122 $49,880 $57,372 $52,055 $52,055Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Liabilities $0 $55,438 $25,472 $25,472 $40,697 $32,722 $47,947 $39,972 $50,122 $49,880 $57,372 $52,055 $52,055Paid-in Capital $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400 $2,554,400Retained Earnings ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000) ($1,192,000)Earnings $0 ($33,050) ($57,100) ($81,150) ($97,700) ($114,250) ($123,300) ($152,050) ($175,800) ($197,050) ($213,300) ($229,550) ($245,800)Total Capital $1,362,400 $1,329,350 $1,305,300 $1,281,250 $1,264,700 $1,248,150 $1,239,100 $1,210,350 $1,186,600 $1,165,350 $1,149,100 $1,132,850 $1,116,600Total Liabilities and Capital $1,362,400 $1,384,788 $1,330,772 $1,306,722 $1,305,397 $1,280,872 $1,287,047 $1,250,322 $1,236,722 $1,215,230 $1,206,472 $1,184,905 $1,168,655Net Worth $1,362,400 $1,329,350 $1,305,300 $1,281,250 $1,264,700 $1,248,150 $1,239,100 $1,210,350 $1,186,600 $1,165,350 $1,149,100 $1,132,850 $1,116,600 Page 6