1. Xi’an JIAOTONG-LIVERPOOL UNIVERSITY
⻄西 交 利利 物 浦 ⼤大 学
Coursework Submission Cover Sheet
Name 1 Ma Chenghao
Name 2 Nguyen Amanda Mai Vy
Name 3 Patel Abhishek
Name 4 Rolfes Frederik
Student Number 1 1200902
Student Number 2 1406993
Student Number 3 1406980
Student Number 4 1303081
Programme Business
Administration
Module Title Entrepreneurship
Module Code MAN208
Assignment Title Business
Plan
Submission Deadline May
21st
2015
Module Leader Alex
Goldsborough
By uploading or submitting this coursework submission cover sheet, I certify the following:
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FABRICATION Of DATA, as outlined in the Undergraduate Student Handbook of
Xi’an Jiaotong-Liverpool University and as posted on the University Website.
• This work is my own, original work produced specifically for this assignment. It
does not misrepresent the work of another person or institution as my own.
Additionally, it is a submission that has not been previously published, or
submitted to another module.
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others.
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I understand that PLAGIARISM, COLLUSION and the FABRICATION OF DATA are serious
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Students: Please start your assignment on the next
4.
Table
of
Contents
1.0
Executive Summary
................................................................................................
5
2.0 Company Description
................................................................................................
6
2.1
Description
............................................................................................................................................................................
6
2.2
Mission
....................................................................................................................................................................................
6
2.3
Values
......................................................................................................................................................................................
6
3.0 Opportunity Analysis and Research
......................................................................
6
3.1
Industry
Analysis
................................................................................................................................................................
6
3.2
Environmental
analysis:
PESTLE
................................................................................................................................
8
3.3
Competitive
analysis:
SWOT
&
Porter’s
Five
Forces
...........................................................................................
8
Porters
Five
Forces
...................................................................................................................................................................
9
3.4
Market
Opportunity
.......................................................................................................................................................
10
4.0 Marketing Strategy and Plan
................................................................................
11
4.1
Product
.................................................................................................................................................................................
11
4.2
Price
......................................................................................................................................................................................
12
4.3
Place
......................................................................................................................................................................................
13
4.4
Promotion
...........................................................................................................................................................................
14
4.5
Philanthropy
......................................................................................................................................................................
15
5.0 Management Team and Operations
....................................................................
15
5.1
Management
Team
.........................................................................................................................................................
15
5.2
Physical
Location
.............................................................................................................................................................
17
5.3
Facilities
..............................................................................................................................................................................
17
5.4
Production
and
Quality
Assurance
..........................................................................................................................
17
Our
manufacturing
process:
..............................................................................................................................................
19
5.5
Inventory
and
Product
Delivery
...............................................................................................................................
19
6.0 Financial Analysis and Projections
......................................................................
20
6.1
Cash
Flow
Projections
...................................................................................................................................................
20
6.3
Balance
Statement
Projections
..................................................................................................................................
21
6.4
Income
Statement
Projections
...................................................................................................................................
22
6.
5
Breakeven
Analysis
.......................................................................................................................................................
22
7.0 Funding
......................................................................................................................
23
8.0 Appendices
................................................................................................................
24
Appendix
1
(Rental
space
in
SIP)
.....................................................................................................................................
24
Appendix
2
(Our
Make
your
own
pot
Initiative
prototype)
.................................................................................
25
Appendix
3
(Meeting
Log)
..................................................................................................................................................
26
Appendix
4
(Detailed
Financials)
...................................................................................................................................
27
5. 5
1.0 Executive Summary
E-Vita, a sustainable household products brand headquartered in SIP, Suzhou, is now
looking for capital for their new eco-friendly fridge. E-Vita hopes to service happy
customers and a happy planet by offering sustainable, attractive and affordable
household products.
As the large population of Chinese consumers is becoming more and more wealthy,
many are starting to follow the green trend that is evident in many Western countries.
E-Vita is primarily targeting the increasing middle class consumer who wants to enjoy a
cool beverage on their patio, or at a campsite without the need for electricity. E-Vita’s
FreshBox uses ancient technology of clay and sand to create a natural cooling
mechanism that keeps fruits, drinks, even medicine, at cool temperatures while it is hot
outside.
Many people on the planet are in need of an electricity-free cooling apparatus, such as
rural Africa or India, who serve as E-Vita’s secondary target market. Using a fridge like
FreshBox will enable families to keep produce up to a week and have fewer trips to the
distant markets, saving valuable time or them to earn money. E-Vita wants to
contribute to society by working with NGOs and local governments to sell FreshBoxes in
large quantities and low margins and ultimately helping those in need.
Through mainly online channels, E-Vita will sell products directly on an electric
storefront and create awareness and buzz for the product through social media. Media
coverage can be obtained for free, fueled by a new focus on philanthropic practices and
trend for all things green. Secondary sources of distribution are through large
supermarkets like IKEA and Auchan that sell a large number of home appliances and
can attract customers who are browsing for related products. Another way E-Vita is
combining corporate social responsibility with raising awareness is through donating
one FreshBox for every 100 sold and initiatives to help bottom of the pyramid
populations in the remotest parts of the world create their own.
There are very few competitors in this niche market, and none of which have opened
sales in China or expanded around Asia. There is an opportunity here to promote green
living in the increasingly aware and increasingly concerned Asian middle class, through
aesthetically pleasing, functional household products.
E-Vita’s executive team has each invested 50,000 CNY into the company and is hoping
to raise funds to help kick start their first product.
6. 6
2.0 Company Description
2.1 Description
E-Vita is a new company that was founded with the hopes of providing high quality eco-
friendly products to both middle class markets and people in need around the world.
E-Vita is working on strategic alliances with other environmentally friendly companies
and NGOs, to strengthen capabilities and flexibility within the market sphere.
E-Vita is a partnership firm, each partner with 20% equity with 50,000 yuan invested
from personal savings.
2.2 Mission
To provide sustainable freshness around the world
E-Vita strives to spread sustainability and to inspire environmentally friendly innovation
throughout the world by constantly providing high quality products.
2.3 Values
Sustainable living
We understand that this world we live in is ultimately borrowed and that we need to
behave in such a way that will ensure clean air, clean water and a high quality of life for
everyone on the planet and for future generations.
Equality
We believe that everyone and everything on earth is made equal and deserves fair
treatment. We encourage female leadership, cultural diversity and always being open to
new perspectives.
Authenticity and ethical practices
We value integrity in every process, and fair treatment of workers, suppliers and
customers. From beginning to end, our product will be made without corruption, or
exploitation, and with the highest quality materials.
Entrepreneurial Spirit
We put great importance on entrepreneurial attitudes and traits; being able to think
outside the box, willingness to take calculated risks, flexibility when things get rough,
and the passion to work extremely hard for what we believe in.
3.0 Opportunity Analysis and Research
3.1 Industry Analysis
Our primary industry to focus on when starting up the business will be the Home
Appliances, and Outdoor Home Appliances market in China, focusing on a niche of
ecofriendly refrigerators.
8. 8
3.2 Environmental analysis: PESTLE
Political
Political regulations have some relevant affects on the firm’s likelihood to succeed. The
main issue is that the Chinese Government requires foreign start-ups to initially invest
300 000 Chinese Yuan into the company, the issue being that it may be difficult to raise
these kind of funds. On the other hand, China has enjoyed a stabilizing political
environment; a great labor force supported by lenient employment laws and good
safety regulations to support a stable future for the company in China. Furthermore,
trade regulations such as free trade zones as well the high amount of export going out
of China make it suitable to distribute our product all over the world.
Economical
Economically China is a great place to start up this business. China’s economy has been
constantly growing over the past 20 years. The country shows a lot of promise to enjoy
a great era of wealth. China also has a great labor force with low wages. Furthermore
the Chinese currency has been rising in value, therefore making it a stable and valuable
currency to work with in the future.
Social
China’s demographics are rapidly changing. The population is aging due to the one child
policy, which may not be optimal for our purposes, as our product is more to be
appreciated by younger environmentally conformed people. On the upside, Chinese
lifestyles have been changing over recent years and consumer habits to purchase have
been increasing. Therefore although our product is in many cases not a necessity,
people will still want to buy it for convenience. Furthermore our product is
environmentally friendly and with the increasing air pollution people are developing an
environmental consciousness and will be more likely to purchase environmentally
friendly products in the future.
Technological
As our product is electricity free we will only need a mold and standard production
machinery to mass-produce our product. Technological advancements therefore will not
affect the company’s ability to supply. Furthermore it is unlikely that our product will
need technological advancements, as the idea behind it is that it doesn’t need
electricity.
3.3 Competitive analysis: SWOT & Porter’s Five Forces
SWOT Analysis
9. 9
Strengths
The product is environmentally friendly, made from ecological materials and does not
require any electricity to operate and can therefore be used anywhere, power
consumption is zero when in use and uses water as the refrigerant, as opposed to CFC
(Chlorofluorocarbons). Normal refrigerators have compressors, which use a large
amount of power, with low efficiency. Ordinary fridges also have higher risk of CFC
vapors, which is linked to depleting the ozone layer. Freshbox is cheap to produce in
comparison to its electric counterparts and can be bought at lower prices.
Weaknesses
The product cannot cool down as much as an electric refrigerator and is made of fragile
clay components, which require careful handling.
Opportunities
Growing environmental conscious in the world helps our cause and will likely increase
popularity. We are an early mover in the market. China specifically as our first market
yields high potential from the growing amount of target consumers. In terms of
corporate social responsibility, many new jobs can be created with local production.
Threats
Easy entrance to market, can lead to high risk of competition. Also, people may not
accept that the product doesn’t work as well as an electric refrigerator.
Porters Five Forces
Barriers of entry
Low barriers of entry as we do not have any patented technology and the start up cost
is reasonably low. This might lead to a lot of competition if our product is successful as
people will try and mimic the success.
Bargaining power of buyers
The product is creative and new with a possibly large market. Many environmentally
conscious people may want to purchase one, leading to low bargaining power of
buyers.
Bargaining power of suppliers
There is a low amount of competition in the field. The only serious competition charges
high prices and doesn’t operate in our initial market. This may lead to a high bargaining
power of suppliers
Risk of substitutes
The risk of substitutes in the industry is relatively low, as it is a niche market
10. 10
Competitor Rivalry
As our product serves a niche market in the industry, the number of competitor firms in
almost low to non-existent. Therefore, creating brand loyalty at the early stages would
prove to be a significant factor towards our growth.
3.4 Market Opportunity
Green manufacturing is a relatively new concept developed in recent years. Markets are
shifting towards a sustainable and socially responsible development model for modern
manufacturing industries.
An emerging niche market for innovation and non-electricity based products within the
home appliances market.
Target Market
With improving standards of living and rise in the income, it is observed that the new
growing middle class in China follows the new model of buying sustainable and socially
responsible products. Access to alternate and cheap sources of energy and products is
becoming necessary for China’s booming population; therefore there is a shift towards
eco-friendly products, which are proximate to China’s culture and heritage which makes
middle class families, working class aged 23-35 and students who cannot afford to buy
a refrigerator due to its unnecessary operating cost.
Our target market is further segmented into people in the BOP (bottom of the pyramid)
who live on less than 30 Yuan per day. Our product would be of significant utility for
this target market. Lastly, we would also focus on customers involved in outdoor,
adventure, military and camping segments.
Increased
cost
of
living
due
to
energy
consuming
products
Explosive
increase
in
demand
for
Green
Products
Emergence
of
Sustainable
and
Socially
responsible
industries
Our
Product
11. 11
4.0 Marketing Strategy and Plan
Goal
Bring the right product to the right place at the right price with the right
promotion
4.1 Product
Brand name: E-Vita
Brand Colors: Blue (color of the sky and sea, symbolizes depth, stability, trust, and
frostiness) & Green (color of earth and nature, symbolizes ecology, freshness, calm and
sustainability)
First product name: Freshbox
(590mm*300mm*470mm)
Our Unique Selling Proposition
Giving you effective, elegant and eminently
distributable technology and products.
Usefulness
FreshBox stores up to 30kg food and keeps it fresh
up to 20 days, while costing only 120 RMB to
produce. This product uses a cooling mechanism
that is reliant on nature and has zero energy waste
when used. This can be kept outside to keep food
or medicine fresh.
Design
and
Technology
FreshBox is an appliance as well as home décor,
which is recyclable, affordable and saves space.
FreshBox is an elegant, stylish and beautiful product with the utility of storing food
while being low maintenance. FreshBox has the ability to weather natural disasters and
maintain livable conditions in the aftermath of disruptive events. For example, almost all
systems require electricity to operate even if their primary fuel is oil, gas, or wood
pellets; systems that allow operation even if grid electricity is not available are more
resilient in the event of power outages. After a disastrous event where cool storage for
a type of medicine or product is required and there is no power, this product proves
extremely useful.
12. 12
Quality
Our eco-friendly product also strives to minimize the use of any potential toxins or
harmful chemicals in the production, which in our case is zero percent. We use
terracotta clay, which also provides its natural earthly benefits to the food stored in our
product. Normal refrigerators have CFC (chlorofluorocarbons), which are highly toxic
and are also one of the major reasons for the ozone layer depletion. We believe in
Responsible sourcing – creating sustainable industry generating employment in an area
where artisans and clay makers are losing their art due to less demand for their
handcrafted services.
Packaging
For our primary market, we would encourage young enthusiastic artists and painters to
provide their services in enhancing the aesthetic appearance of our product. Also, we
would integrate customization into the mix by offering over thousands of copyrighted
abstract paint and spray paints samples and tools which would engage our customers
to have their fridge reflect their individual styles.
Service/
Support
and
Warranty
Our product is simple to use, thus customer’s wont need considerable after-sales
support. The product is durable and can be used for many years.
4.2 Price
Costs
Materials used: Machinery to press, shape and mold, Builders sand, Clay, water, Paint
Holders, and promotional costs.
It takes 7 kg clay & 2kg sand to produce one Freshbox.
Cost of clay: Red Earthenware clay=2.5 Yuan/kg
Cost of sand: 2 Yuan/kg
Average labor cost: 25yuan/hour
2 refrigerators produced per employee per hour
Average 100 Refrigerators will be produced per month in Year 1.
Glass door: 40 Yuan/unit
Estimated production cost incl. labor=120 Yuan/refrigerator
Retail price: 299 Yuan
Wholesale: 150 Yuan
Profit Margin: 249%
Competition
Mitticool refrigerator: cost = 588 Yuan
In comparison to our main competitor, our price point is marginally lower and should
give us an competitive cost and differentiation advantage
13. 13
Pricing
Structure
We will use a prestige pricing strategy for our primary market, which sends a
message of uniqueness and premium quality to our target customers. The price would
be set at 299 RMB, which would also make Freshbox psychologically priced as well due
to its 99 factor at the end.
For our secondary and tertiary market, a personalized pricing strategy would be
used. We want to work with NGOs and other organizations as a part of our corporate
strategy; therefore we would offer Cost+ 25% markup pricing, which would be around
150 RMB.
4.3 Place
Channel
members
Online
channels
Primarily the product will be sold online, as the margins are much higher and it is an
easy market to enter. Platforms such as Alibaba and Taobao are perfect opportunities
to start selling our product. Going into wholesale may become a little more difficult in
the Chinese market, as there are limited large wholesalers specified on the outdoor and
appliances industry
IKEA
and
Auchan
Large supermarkets or retailers would be a perfect place to distribute our product as
they sell many appliances of all different kinds and have a very large amount of
customers walking through their aisles. Furthermore IKEA would be a perfect place to
sell our product as it fits into their model. However in order to get into IKEA, we would
have to pass IKEA’s testing and go through their channels
Nonprofit
Organizations
in
Developing
Countries
By working with these organizations, there can be a simple channel of product to
people in need. The products would be taken from our facilities and sent in bulk
straight to the areas in question.
Market
Coverage
IKEA would cover: Suzhou, WUXI, and their neighboring cities.
Online: Specific targeted areas such as major cities in China with high density of our
target segments.
NGOs and Organizations: Covering global market and poverty driven regions such as
South Asia and Africa.
For our primary market we would focus on selling directly through our website and
various online channels to our customers (B2C). Also, we are in talks with IKEA Wuxi to
14. 14
secure floor space and negotiate terms and conditions with them. IKEA is very close to
our suppliers and production facility therefore its very convenient and faster for us to
deliver our product.
4.4 Promotion
Basically a hybrid push and pull strategy: pushing our products through NGO’s and
organization’s and pulling more and more customers towards our selling channels
(online and IKEA) to generate more buzz and garner attention.
Our IMC plan would follow the principle of AIDA
Attention Interest Desire Action
Therefore; We would tactically focus on creating awareness and generating attention
about our product. Our most essential tool is that our company is Highly Eco-friendly
and socially responsible, we are highly reliant on nature i.e. Going green, supporting
CSR, also we are cultivating a sustainable industry and also generating employment in
an area where artisans and clay makers are losing their art due to less demand for their
handcrafted services. We are also addressing the need for using renewable energy, our
leadership focuses on encouraging women to hold core management positions.
Therefore, we would use all these to our advantage, which would result in promoting
our product free of cost. This would generate more credibility, goodwill and
appreciation from the society, which is crucial for our branding.
This will spontaneously generate more interest towards our product, thus making it
easier for us to engage and partner with distribution channels NGO’s and other
charitable organizations’ due to our credibility and goodwill, which we attained in the
first stage. We would further use the credibility and reputation of our partner NGO’s and
charities to our advantage, thus making it easier to build trust with our primary target
market and drive traffic through brand spiraling.
Our customers by now have became aware and interested in buying our product, they
now desire to buy the product and thus to convert this desire into an action, i.e. actual
purchase we would use these channels, which we secured in the second stage to make
the product available in the market for people to purchase.
We also plan to launch “Create your own clay pot initiative” where we would teach
people in the remotest area of the world to create their own pot. The pot is round and
smaller in size and the physical prototype can be found in the appendices. Also, for
every 100 freshboxes bought one is donated to a family without electricity (serves the
purpose of appealing to the ecofriendly market, also serves as a good CSR strategy
which can immensely drive publicity as well as sales)
15. 15
Other possible promotions could include green billboards and green ads, which capture
the attention of people on social media. Furthermore regular updates and a good social
media presence can gain us inexpensive publicity.
Lastly we will have to advertise the product at tradeshows regarding the outdoor as
well as home appliances market to build a name for the brand in the industry.
Thus, this encompasses our PR, publicity and viral marketing strategy. Since our
primary market is based in China use of television, radio, magazine and newspaper
advertisement would not prove to be fruitful. Therefore, we would use non-paid form of
print and non-print; online and offline advertising through the following sources, i.e.
using CSR, women in leadership, generating employment, and encouraging
sustainability as tools for our PR and publicity campaigns that would highlight us in
media, newspapers, and recognized bodies.
Marketing budget would include: Website domain purchase, events, guerrilla
marketing, trade shows and targeted Internet advertisements other misc. promotional
expenses.
4.5 Philanthropy
Our product also serves a segmented target market of people in BOP (bottom of the
pyramid) who live on 35 RMB a day. Our product would have a significant amount of
functional utility for this target market. Therefore, a cause related marketing would be
executed in partnership with the NGO’s and other charitable organizations’, which will
not only bring additional customers but also support our CSR policy to ultimately
promote our product to the masses for a conveniently affordable discounted price.
5.0 Management Team and Operations
5.1 Management Team
CEO
Amanda Nguyen is in the middle of completing a Bachelor in International Business all
while being a forward thinker and entrepreneur. Amanda has always been interested in
socially responsible companies and products. When the idea of bringing ecological,
nonelectric fridges came into existence, it was clear that this was a path that needed to
be taken by a group that had enough intention to go through with it, and there needed
to be someone to help keep clear intentions.
Amanda has extensive leadership experience in global organizations and has learned to
work on virtual teams. Using her strong interpersonal skills, she will be the glue of the
E-Vita team, keeping morale high and always striving for better targets.
16. 16
Marketing & PR
Abhishek Patel studies Business Administration in the UK and is currently on exchange
in China. He had always known about the concept of clay fridges from his relations with
India, but little did he know that this was an opportunity for a three P company. One
that benefits all three Ps: Profit, People, and Planet.
Abhishek has shown his expert knowledge in business administration and marketing
through his exemplar projects, presentations and constant review of current events.. He
has been itching to utilize his marketing expertise in Asia and has acknowledged the
“Green” trend that is slowly making its way East from other developed countries.
Abhishek has already thought of market campaigns for expansion and seeks to imprint
E-Vita as an eco-friendly brand the world will remember.
Finance
Frederik Rolfes is currently taking a Bachelor in Business Administration in China.
Being a critical thinker he understood that this startup venture will be costly and risky,
but he believes that he can use his personal experience and mentors to alleviate this
risk and make smart decisions and smart budgets.
He takes meticulous care into each endeavor and understands the value of money,
which makes him most suitable to manage the finances of E-Vita.
Operations
Chenghao Ma is also taking a Bachelor in Business Administration in China and is
prepared to oversee the entire E-Vita process, including supplier management,
manufacturing, quality control, and distribution. Throughout Chenghao’s academic
career, he has proved to be a logical, detail oriented and highly diligent individual. He
will use these capabilities and his fluency in Mandarin to create strong relationships with
local suppliers and other companies in the industrial areas.
He is committed to providing products of the highest quality in the market through
thorough testing and ethical methods. Chenghao intends to make sure all operations
run smoothly, from beginning to end.
Research and Development
Steve is an accomplished undergrad of Industrial Design and is seeking to utilize his
skills to create an intelligent and attractive product using the new program SolidWorks.
He has been commended for his recent public bus handle design for its combination of
creativity and functionality. Steve understands the scientific mechanisms of clay
refrigerators and has designed a tasteful, economically sized E-Vita for the energy-
saving home. Steve will keep improving the design to be as cost efficient in terms of
materials, energy efficient in terms of product creation and of course to meet the needs
of the consumer.
17. 17
5.2 Physical Location
Our headquarters will be in Suzhou, SIP, close to our target market. We believe that
this is a prime location where we can conduct our research, meetings, and foster an
entrepreneurial community.
The physical location of our manufacturing plants will be strategically placed near the
target markets in Asia. This is essential as our product has the fragile component of
clay and the less geographical distance it has to travel, the better. Many cities in China
and other Asian countries have Industrial parks or clusters where businesses are
flourishing and can facilitate accessing the local distribution systems. Our first plant will
be located as close as possible to headquarters within the constraints of reality, it may
be in a neighboring city such as Wuxi.
5.3 Facilities
Because we are a start up and doing our best to reduce expenses, we will not have rent
an office space, and can use whatever space is available to us without extra expenses.
This could mean one of our apartments, a friend’s apartment or, public spaces such as
coffee shops or libraries. The space we need can be modest in size and interior, there
only needs to be a space to make and field calls, and work efficiently on our own
personal devices so no need for much office equipment or office supply investment.
The first step in the process of creating the E-Vita fridge is to use the molds to make
the clay shells, and plastic components. Then there is assembly, testing, and painting
the outer shell of aesthetic purposes. There needs to be a section of the facilities for
each step and enough space for a smooth workflow. A suitable space was found for
rent in SIP at a reasonable price.
5.4 Production and Quality Assurance
Pot
Mechanism
As water from the wet sand slowly diffuses through the porous outer part, the water
evaporates into the drier outside air and cools the system. For this to work effectively,
the fridge must be placed in a dry, ventilated space. This cooling effect keeps the food
in the smaller pot fresh by slowing decomposition and thus keeping nutrients intact.
However the mechanisms of a simple looking device can be quite complex based on
principles of evaporation and thermodynamics
Sweat evaporation occurs from the surface of a liquid into a gaseous phase that is not
saturated with the evaporating substance. The amount of heat that is needed to
evaporate the liquid is drawn partly from the air and evaporating surface. Thus the
surface becomes cooler. Evaporative cooling occurs at the surface. The heat needed to
change phase is drawn from the surface and thus it can be used to cool without using
much energy like common refrigerators.
18. 18
Product
Research
Our scientific research concluded answers to the following questions:
• How long will food stay fresh in our product compared to an electric refrigerator?
• Does the size of our product make a difference in the lowest temperature
achieved?
• How does the amount of water in the sand affect the temperature?
• What effect does the amount of sand have on the temperature?
• How does increasing the surface area of the outer part affect the temperature
change?
•
19. 19
Our manufacturing process:
We will purchase two metal mold to create the two different sized clay shells. Then, it
shall be assembled together with the sand and other components, painted for aesthetic
reasons and sent to quality testing.
Our product performs its cooling function under certain humidity. We will take one from
every ten fridges and perform a quick cooling exam to verify that our fridges meet
working conditions. We will check what temperature the fridge is able to achieve and it
passes the test, it moves on to packaging.
5.5 Inventory and Product Delivery
In order to deliver high quality products, we will focus on carefully selecting our
materials, employees, suppliers, and delivery methods.
To meet customer demands we will have __ amount of pieces in inventory at all times.
The products in inventory will be kept stacked to the side of our rented facility. The clay
and materials will be kept safe with foam/ paper and covered in plastic to prevent dust.
Further packaging with air filled plastic packaging will be used to encase the final
product during transport. The product will be fitted inside labeled and branded
cardboard boxes and shipped directly to customers buying through the online shop or in
large quantities to partnering NGOs.
Our company email will be constantly monitored for valuable complaints and feedback
that will help us pinpoint weak spots in our product or customer service.
Mold
clay
shells
Assemble
clay
shells
with
sand
Assemble
plastic
components
onto
fridge
Paint
clay
exterior
Quality
testing
Engage
suppliers
Create
Product
Delight
Customer
Gain
pro]its
Invest
and
innovate
20. 20
6.0 Financial Analysis and Projections
6.1 Cash Flow Projections
E-Vita
Cash Flow Projections
Year 1 Year 2 Year 3
CASH RECEIPTS Total Total Total
Cash Sales ¥287,040 ¥344,448 ¥413,338
Collection of Accounts Receivable
Loan Proceeds
Owner's Equity Contributions ¥250,000
Sales of Assets
Other
Total Cash Receipts ¥537,040 ¥344,448 ¥413,338
CASH DISBURSEMENTS
Purchase of Material Assets ¥79,950 ¥95,940 ¥115,128
Purchase of Fixed Assets ¥120,000
Owner's Salaries
Employee Wages ¥72,000 ¥72,000 ¥72,000
Employee Benefits
Advertising and Promotion ¥75,000 ¥75,000 ¥75,000
Rent ¥24,000 ¥24,000 ¥24,000
Utilities ¥3,000 ¥3,000 ¥3,000
Other Office Expenses
Income Tax Payments ¥93,488 ¥67,485 ¥43,500
Other
Total Cash Disbursements ¥467,438 ¥337,425 ¥332,628
Increase (Decrease) in Cash ¥69,602 ¥7,023 ¥80,711
Opening Cash Balance ¥98,107 ¥77,890 ¥86,041
Closing Cash Balance ¥76,536 ¥86,041 ¥166,753
21. 21
6.3 Balance Statement Projections
E－Vita
Expected Balance Sheet
Assets(￥) Beginning Year 1 Year 2 Year 3
Current Assets:
Accounts Receivable 0 143520 107640 71760
Cash 250000 120500 321160 530000
Inventories 0 28800 0 15840
Other Current Assets 0 25800 25800 32250
Total Current Assets 0 318620 346960 722050
PROPERTY & EQUITPMENT 0 120000 120000 120000
Total assets: 250000 438620 466960 842050
Liabilities(￥) 2015.01 2015.12 2016.12 2017.12
Current Liabilities:
Short-Term Debt 0 0 0 0
Accounts Payable & Accrued Expenses 0 0 0 0
Other Current Liabilities 0 0 0 0
Current Portion of Long-Term Debt 0 0 0 0
Total Current Liabilities 0 0 0 0
LONG-TERM DEBT 0 0 0 0
Short-Term Debt 0 0 0 0
Accounts Payable & Accrued Expenses 0 0 0 0
Other Current Liabilities 0 0 0 0
Owner's Equity(￥)
Retained earnings
250000 438620 466960 842050
Total Equity:
250000 438620 466960 842050
Total Equity and liabilities:
250000 438620 466960 842050
22. 22
6.4 Income Statement Projections
Projected Income Statement
YEAR 1 YEAR 2 YEAR 3
INCOME
Revenues
Sales ¥287,040.00 ¥344,448.00 ¥413,218.00
Net sales revenue ¥287,040.00 ¥344,448.00 ¥413,218.00
Less COGS
Opening stock ¥287,040.00 ¥344,448.00 ¥413,218.00
Cost of Goods Sold ¥129,600.00 ¥141,120.00 ¥154,920.00
Gross profit ¥157,440.00 ¥203,328.00 ¥258,298.00
EXPENSES
Equipment ¥120,000.00 ¥0.00 ¥0.00
Depreciation ¥12,000.00 ¥10,800.00 ¥9,720.00
Advertising/promotions ¥75,000.00 ¥75,000.00 ¥75,000.00
Utilities ¥3,000.00 ¥3,000.00 ¥3,000.00
Rent ¥24,000.00 ¥24,000.00 ¥24,000.00
Total Expenses ¥234,000.00 ¥112,800.00 ¥111,720.00
Net Profit -¥76,560.00 ¥90,528.00 ¥146,578.00
6. 5 Breakeven Analysis
Graph
of
Break
Even
Analysis
Figure 6.5.1 is the calculation for how many units it would take to breakeven. Figure 6.5.2 is
the visual representation of the slow rise to profitability.
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
80
480
880
1280
1680
2080
2480
Fixed
cost
Total
Cost
Sales
revenue
23. 23
Breakeven
Analysis
Sales
Sales
Price
per
Unit
299
Sales
Volume
per
Period
80
Total
Sales
Amount
3000
Variable
costs
Raw
Materials
60
Total
Variable
cost
per
Unit
60
Total
Variable
cost
per
Period
4800
Contribution
per
Unit
239
Gross
Margin
19120
Fixed
Cost
per
Period
Salary
6000
Rent
2000
Marketing
expenses
6250
Total
Fixed
Cost
per
Period
14250
Net
Profit
(Loss)
4870
Total
Fixed
cost
Equipment
&
Machinery
120000
Total
120000
Breakeven
Point
(Units)
1972
7.0 Funding
Internal funding
The five owners of E-Vita will each contribute equal amounts of 50,000 CNY to the
company each buying 20% of the company.
External Funding
There are many grants to apply for when starting a business. One that we could meet
the criteria for is the Leadership Grants for small businesses, which goes to Canadian or
American Citizens. The grants range from $1000 to $100000, depending on the
business and if the company has the ability to match the grant funds. This amount is
uncertain but will hopefully help fund E-Vita. Apart from that we also look forward to
apply for women in leadership grants, sustainable businesses grants and so on.
20% (4% from each owner) of the business is left for investors looking to collaborate
and engage in this emerging sustainable enterprise.
24. 24
8.0 Appendices
Appendix 1 (Rental space in SIP)
Space rental for a reasonable price
http://su.58.com/fangchan/21787890363426x.shtml?PGTID=14309030173660.9753443623662
951&ClickID=2&adtype=3 (Accessed: 05 May 2015)
Funding Request
Leadership Grants for Canadians and Americans
http://www.leadershipgrants.com/smallbusiness/funding_guidelines.jsp
(Accessed: 09 May 2015)
25. 25
Appendix 2 (Our Make your own pot Initiative prototype)
26. 26
Appendix 3 (Meeting Log)
Date
Duration
Attendance
What
was
discussed?
25th
of
March
1.5hours
Everyone
Brainstorming
viable
product
ideas,
Research
best
ideas
till
next
week
31st
of
March
1
hour
Everyone
Discuss
research
and
decide
on
one
product,
separate
research
tasks
till
next
week
5th
of
April
2
hours
Everyone
Discussed
Opportunity
analysis
and
research
as
well
as
management
and
operations
sections,
decided
what
was
necessary,
split
work
into
teams
Abhishek
and
Frederik
Opportunity
Analysis
and
Amanda
with
Chenghao
Management
&
Operations
14th
of
April
2
hours
Everyone
Discussed
results
of
work
prepared
and
agreed
upon
what
need
to
be
improved.
Then
discussed
marketing
section
and
each
member
is
to
fulfill
the
marketing
section
till
next
week.
22nd
of
April
1.5
hours
Everyone
Discussed
Improvements
of
Opportunity
analysis
and
compared
Marketing
section
decided
which
were
the
best
ideas
to
use
for
report,
assigned
financial
section
till
next
week
3rd
of
May
2
hours
Everyone
Agreed
upon
financials
in
order
to
be
able
to
produce
a
homogenous
financial
report
6th
of
May
1
hour
Everyone
Compared
Financial
data,
discussed
difficulties
and
decided
what
needed
to
be
improved
upon.
Amanda
was
assigned
Executive
Summary,
Mission,
Company
and
description.
13th
of
May
2
Hours
Everyone
Reviewed
the
Report,
discussed
any
possible
improvements,
discussed
fishbone
diagram.
