Business plan for structural engineering firm
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    Business plan for structural engineering firm Business plan for structural engineering firm Document Transcript

    • Business plan COCHIN STRUCTURAL CONSULTANTS Submitted by Job Thomas Roll No. 8, Semester -5 MBA (PT) course School of Management StudiesCochin University of Science and Technology Cochin, Kerala, India PIN 682022 October 2012
    • 1. EXECUTIVE SUMMARYCochin Structural Consultants will be formed as a consulting firm specializing in structural engineeringservices. A home office in Kalamssery, Cochin will be established the first year of operations to reducestart up costs. The founder of the firm is a professional structural engineer with fifteen years ofprogressive and responsible experience.The founder, Job Thomas, provided an initial investment towards start-up costs. Of this, more than half isrequired for start-up expenses while the balance is to be placed in the company accounts as workingcapital.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 aquality 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 forall types of buildings, from concept planning through to completion, with a highly skilled professionalteam working together, using common sense and practical experience.Cochin Structural Consultants is a new company which provides professional engineering design servicesfor 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 isshown Figure 1. 150% Percentage of sale 100% Year 1 Year 2 50% Year 3 0% Sale ProfitFigure 1 Sale and profit projected for the upcoming three years 2 Business plan for Cochin Structural Consultants by Job Thomas
    • 2. BUSINESS DESCRIPTIONCochin Structural Consultants offers complete structural engineering services. Cochin StructuralConsultants 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 thestructural design will be issued to the client. The charges for the analysis and design of structural elementsand issuing the drawings will be INR 8 rupees per square feet. 3. MARKETINGCochin Structural Consultants will focus on traditional Architect/Engineering (A/E) contracts. The ownerwill usually contract the A/E to perform planning and design services. These design services includepreparation of plans, specifications, and estimates. The market analysis is carried out and the details aregiven in Figure 2. Market segmentation 5% 5% 10% Architectural/Engineering Firms 10% Governments/ Public sector 70% Law Firms Local Contractors Private individualsFigure 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 3 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. OPERATIONSCochin Structural Consultants will be functioning as a private firm. The company will be privately ownedby Job Thomas. Cochin Structural Consultants offers their clients superior service accompanied withstate-of-the-art analysis and design capabilities. We will offer three-dimensional visualization services toreduce the possibility of spatial conflicts with architectural elements and other engineering disciplines. Incomparison, our competitors rely mostly on two-dimensional models. Initial start-up fund requirement isworked out and the details are given in Figure 3. Start-up fund summary INR 500,000 INR 400,000 INR 300,000 INR 200,000 INR 100,000 INR 0 Start-up fund Assets Liabalities Capital Figure 3 Start-up fund requirement of Cochin Structural Consultants 4 Business plan for Cochin Structural Consultants by Job Thomas
    • 5. MANAGEMENTThe owner Job Thomas will be the person who is doing the job. The finance will be managed by JobThomas. Job Thomas has 15 years of experience in doing the structural design of building. Job Thomas isworking as a faculty in prestigious engineering institute. As a part-time activity he is undertakingstructural design works from local architectural firms. His experience in doing design of special structureslike bridges, chimneys etc. will be added flavor for the present proposal. The manpower requirement isprojected for the upcoming three years and the details are given in Table 1. Depending upon the actualgrowth 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. FINANCEThe sale is forecasted and the profit and loss account is projected for the upcoming three years. Thedetails are shown in Figure 4. The profit is INR 35,000/- in the first year corresponding to a projected saleof INR 1,500,000/-. In the upcoming years, the profit of the company will be increasing significantly. INR 3,000,000 INR 2,000,000 Year 1 Year 2 INR 1,000,000 Year 3 INR 0 Sale Margin operating Profit expensesFigure 4. Projected sale and profit details of Cochin Structural ConsultantsThe balance sheet of Cochin Structural Consultants is projected for the upcoming three years. The balancesheet 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. 5 Business plan for Cochin Structural Consultants by Job Thomas
    • INR 1,200,000 INR 1,000,000 INR 800,000 Assets INR 600,000 Liabilities Capital INR 400,000 INR 200,000 INR 0 Year 1 Year 2 Year 3Figure 5. Projected, assets, liabilities and capital of Cochin Structural Consultants 7. CRITICAL RISKSPricing of projects and billing rates are surprisingly variable. In consulting at this level, it is easier to bepriced too low than too high. Clients and potential clients expect to pay substantial fees for the bestquality professional advice. The nature of the billing, however, is sensitive. Clients rarely compareconsultants directly, looking for two, or more, possible providers of a proposed project or job. Usuallythey follow word-of-mouth recommendations and either go for the job or not, rather than selecting from amenu of possible providers. The most important element of general competition, by far, is what it takes tokeep clients for repeat business. It is worth making concessions in any single project to maintain a clientrelationship that brings the client back for future projects. The potential competitors are:- Stuba Structural Consultants This multi-discipline engineering firm is well established inErnakulam. At present, there is no experienced resident structural engineer on staff in Stubastructural consultants. Associated Structural Consultants: This is a small one person architectural and engineeringfirm which specializes in providing services for residential construction projects. It is our hopethat we can form a strategic alliance to carry out consulting work jointly as needs and occasionsarise. 8. HARVEST STRATEGYCochin Structural Consultants is a private firm planned with one structural engineer in the beginning. Infuture Cochin Structural Consultants will acquire more small firms or make strategic alliance with otherfirms. The ownership change will follow the leadership change in Cochin Structural Consultants. 6 Business plan for Cochin Structural Consultants by Job Thomas
    • 9. MILESTONE SCHEDULEThe business plan of Cochin Structural Consultants includes complete provisions for plan-vs.-actualanalysis, which will be updated monthly to compare the variance and plan for course corrections. Themile 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 7 Business plan for Cochin Structural Consultants by Job Thomas
    • 10. APPENDIXA1. Start-up requirementsStart-up ExpensesLegal INR 10,000Stationery etc. INR 12,000Insurance INR 24,000Business License INR 20,000Professional License INR 10,000Website Development INR 12,000Office Furniture INR 12,000Software Purchases INR 140,000Computer/Office Equipment INR 10,000Other INR 10,000 Total Start-up Expenses INR 260,000Start-up AssetsCash Required INR 240,000Other Current Assets INR 0Long-term Assets INR 0 Total Assets INR 240,000Total Requirements INR 500,000 8 Business plan for Cochin Structural Consultants by Job Thomas
    • A2. Start-up FundingStart-up Expenses to Fund INR 260,000Start-up Assets to Fund INR 240,000 Total Funding Required INR 500,000AssetsNon-cash Assets from Start-up INR 0Cash Requirements from Start-up INR 240,000Additional Cash Raised INR 0Cash Balance on Starting Date INR 240,000 Total Assets INR 240,000Liabilities and CapitalLiabilitiesCurrent Borrowing INR 0Long-term Liabilities INR 0Accounts Payable (Outstanding Bills) INR 0Other Current Liabilities (interest-free) INR 0 Total Liabilities INR 0CapitalPlanned InvestmentOwner INR 0Investor INR 0Additional Investment Requirement INR 500,000 Total Planned Investment INR 500,000Loss at Start-up (Start-up Expenses) (INR 260,000) Total Capital INR 240,000 Total Capital and Liabilities INR 240,000 9 Business plan for Cochin Structural Consultants by Job Thomas
    • A3. Profit and Loss account (projected) Year 1 Year 2 Year 3Sales INR 1,500,000 INR 1,875,000 INR 2,250,000Direct Cost of Sales (0.3-0.15) INR 450,000 INR 468,750 INR 337,500Other 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 1,912,500Gross Margin % 70% 75% 85%ExpensesPayroll INR 1,000,000 INR 1,200,000 INR 1,400,000Marketing/Promotion INR 0 INR 0 INR 0Depreciation INR 0 INR 0 INR 0Website Hosting Fees INR 0 INR 0 INR 0Engineering Assoc Annual Fees INR 0 INR 0 INR 0Continuing Education INR 0 INR 0 INR 0Yellow Pages/White Pages INR 0 INR 0 INR 0Telephone/Fax INR 0 INR 0 INR 0Software Purchases INR 0 INR 0 INR 0Utilities INR 0 INR 0 INR 0Errors and Omissions Insurance INR 0 INR 0 INR 0Rent INR 0 INR 0 INR 0Payroll Taxes INR 0 INR 0 INR 0Contract/Consultants INR 0 INR 0 INR 0Other INR 0 INR 0 INR 0 Total Operating Expenses INR 1,000,000 INR 1,200,000 INR 1,400,000Profit Before Interest and Taxes INR 50,000 INR 206,250 INR 512,500EBITDA INR 50,000 INR 206,250 INR 512,500Interest Expense INR 0 INR 0 INR 0Taxes Incurred (0.3) INR 15,000 INR 61,875 INR 153,750 Net Profit INR 35,000 INR 394,800 INR 1,006,600Net Profit/Sales 2% 21% 45% 10 Business plan for Cochin Structural Consultants by Job Thomas
    • A4. Balance Sheet (projected) Year 1 Year 2 Year 3AssetsCurrent AssetsCash INR 103,000 INR 427,400 INR 703,300Accounts Receivable INR 200,000 INR 350,000 INR 400,000Other Current Assets INR 0 INR 0 INR 0 Total Current Assets INR 303,000 INR 777,400 INR 1,103,300Long-term Assets INR 0 INR 0 INR 0Long-term Assets INR 0 INR 0 INR 0Accumulated 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 1,103,300Liabilities and Capital Year 1 Year 2 Year 3Current LiabilitiesAccounts Payable INR 80,000 INR 80,000 INR 100,000Current Borrowing INR 0 INR 0 INR 0Other Current Liabilities INR 0 INR 0 INR 0 Subtotal Current Liabilities INR 80,000 INR 80,000 INR 100,000Long-term Liabilities INR 0 INR 0 INR 0 Total Liabilities INR 80,000 INR 80,000 INR 100,000Paid-in Capital INR 500,000 INR 500,000 INR 500,000Retained 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 1,003,300Total Liabilities and Capital INR 303,000 INR 777,400 INR 1,103,300 11 Business plan for Cochin Structural Consultants by Job Thomas