Business Plan on maid service

Business Plan On Kathmandu Enterprise Pvt. Ltd.

Submitted to: Mr. Ashish Tiwari Mr. Bishal Shrestha Mr. Pradeep Rajopadhyay

Submitted by: Sandarva Pal

July 23, 2012

Business Plan: Kathmandu Enterprise Pvt. Ltd.

Acknowledgement

My sincere thanks goes to the faculties of Ace Institute of Management, Mr. Ashish Tiwari, Mr. Bishal Shrestha and Mr. Pradeep Rajopadhyay for providing me with study material, guiding me, providing with valuable information for completion of the business plan and helping me to make sound business development plan and giving me valuable comments during this period. Lastly I would like to thank everyone who has directly or indirectly supported me for completing my business development plan

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Executive Summary

Business venture aims to provide maid facilities for busy household of urban areas of Kathmandu valley. The venture will be conducted under the management of Kathmandu Enterprise Pvt. Ltd. This plan will serve as the financial and operational outline and plan for the first five years of the venture‟s operation. The company will obtain a loan through commercial bank in the amount of 12, 00,000. Additionally, remaining amount of Rs. 8, 00,000 will be financed by the founder.

The concept of Kathmandu Enterprise is to provide maid facilities such cooking, cloth washing, dish washing, house cleaning, baby and old age care to the households in Kathmandu valley. The venture will focus on middle, upper middle and upper class people living in both private homes and separate apartments who do not have time for such household activities. For this sake, the company plans to advertise its service facilities through various media and above all it will rely more on personal links and relationships. The venture will start from the beginning of 2013. The office will be located in Koteshwor, Kathmandu.

The concept is entirely new of its kind. Even though there are no such players with similar concept in the market, but still some indirect competition can pose a challenge to Kathmandu Enterprise Pvt. Ltd. and its business concept. The market survey conducted shows the business plan to be feasible and also financial projections for Kathmandu Enterprise Pvt. Ltd. show the potential for success and growth in the existing market.

Total initial capital investment will be Rs. 20, 00,000 with 40 % equity contribution and 60% loan.

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Table of Contents Acknowledgement Acknowledgement........................................................................................................................ i Executive Executive Summary .................................................................................................................... ii

1.

Company Overview ....................................................................................................... 1 1.1 Background of the Business ............................................................................................. 1 1.2. Basic Philosophy Philosophy ............................................................................................................. 2 1.2.1 Vision ......................................................................................................................... 2 1.2.2 Mission ....................................................................................................................... 2 1.2.3 Objectives .................................................................................................................. 2 1.2.4 Critical Success Factors ............................................................................................. 2 1.2.5 Company Values ........................................................................................................ 2 1.3 Registration ...................................................................................................................... 3

2.

BUSINESS ENVIRONMENT ANALYSIS ........................................................................ 4 2.1 Industry Analysis .............................................................................................................. 4 2.2 SWOT ANALYSIS ANALYSIS ............................................................................................................ 5 2.2.1 Analysis of Kathmandu Enterprises Pvt. Ltd. .............................................................. 5 2.2.2 Analysis of Competitors .............................................................................................. 6 2.3 PEST Analysis .................................................................................................................. 7

3.

SERVICES PROVIDED................................................................................................... 8 3.1 Services............................................................................................................................ 8

4.

MARKET RESEARCH AND ANALYSIS ......................................................................... 9 4.1 Primary Research ............................................................................................................. 9 4.2 Sampling Plan .................................................................................................................. 9 4.3 Research Instrument ........................................................................................................ 9 4.4 Target Market ..................................................................................................................10 4.5 Data sources ...................................................................................................................1 ...................................................................................................................10 0 4.6 Survey Findings...............................................................................................................10 4.7 Analysis ...........................................................................................................................11 4.8 Company strategy ...........................................................................................................11

5.

Company Profile ...........................................................................................................12 5.1 Form of Business.............................................................................................................12 5.2 Legal Status ....................................................................................................................12 5.3Organization 5.3Organization Structure ......................................................................................................1 ......................................................................................................12 2

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5.4 Recruitment Recruitment and Selection Selection ...............................................................................................14 5.5 Remuneration Remuneration and Compensation Compensation System.......................................................................14 5.6 Training and Retention Retention Plan ............................................................................................14

6.

Operational Plan ...........................................................................................................15 6.1 Quality Management .......................................................................................................15 6.1.1 Safety and security....................................................................................................16 6.1.2 Training .....................................................................................................................16 6.1.3 Securitymeasures .....................................................................................................16 6.2 Process of Service Delivery and Capacity Design ...........................................................17 6.2.1 Process of Service Delivery ......................................................................................17 6.2.2 Capacity Design ........................................................................................................17 6.3 Location strategy .............................................................................................................18 6.3.1 Site Selection ............................................................................................................ 18 6.4 Layout Design Strategy ...................................................................................................19 6.4.1 Office layout ..............................................................................................................19 6.5 Human Resource Plan and Job Design ...........................................................................20 6.5.1Job Duties and Responsibilities Responsibilities..................................................................................20 6.5.2Human 6.5.2Human Resource Personnel ......................................................................................21 6.6Management 6.6Management of Demand and Work Load .........................................................................23 6.7 Labor Supply Management..............................................................................................23 6.8Operation 6.8Operation Schedule Schedule ..........................................................................................................23 6.9 Procurement Procurement ....................................................................................................................24

7.

Marketing Plan ..............................................................................................................25 7.1 Demand Analysis.............................................................................................................25 7.2 Marketing Strategy ..........................................................................................................26 7.3 Marketing Marketing Mix Strategy ....................................................................................................27 7.3.1 Service Strategy........................................................................................................27 7.3.2 Pricing strategy .........................................................................................................27 7.3.3 Promotional strategy .................................................................................................28 7.3.4 Positioning Strategy ..................................................................................................30 7.3.5 Partnering Partnering strategy....................................................................................................30 7.4 Growth rate......................................................................................................................30 7.5 Profitability Profitability .......................................................................................................................30

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7.6 Sales Strategy .................................................................................................................30

8.

Financial Plan ...............................................................................................................32 8.1 Capital Structure..............................................................................................................32 8.2 Uses of Capital ................................................................................................................32 8.3 Pre-Operating Expenses .................................................................................................32 8.4 Service Revenue for the next five years ..........................................................................32 8.5 Operating Expenses for the next f ive years .....................................................................33 8.6 Projected Income statement for next five years ...............................................................34 8.7 Projected Cash flow Statement for the next five years .....................................................35 8.8Statement 8.8Statement of Retained Earnings for the next five years ....................................................36 8.9 Projected Balance Sheet for the next five years...............................................................36 8.10 Profitability Profitability Ratios ..........................................................................................................37 8.11 Computation of Net Present Value (NPV) ......................................................................37 ......................................................................37 8.2 Computation of Payback Period ......................................................................................37

9.

Critical Risk and Contingencies ..................................................................................38 9.1 Internal risk ......................................................................................................................3 ......................................................................................................................38 8 9.2 External risk .....................................................................................................................38

10.

Schedules and Milestones ...........................................................................................39

11.

Future Plan and Exit Strategy ......................................................................................41

11.1 Future plan ....................................................................................................................41 11.2 Exit strategy...................................................................................................................41 APPENDIX................................................................................................................................42

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LIST OF TABLES Table 1 : Industry Analysis ........................................................................................................................ 4 Table 2 : Capacity Plan for the next five years .................................................................................... 18 Table 3 : Total number of staffs and their salary ................................................................................. 21 Table 4 : Qualification and skills of staffs and management team ................................................... 22 Table 5 : Work Schedule of Maids ......................................................................................................... 22 Table 6 : Kathmandu metropolitan: Population, household size ....................................................... 25 Table 7 : Service Rate per month for each year ................................................................................ 28 Table 8 : Marketing program and expenses ........................................................................................ 28 Table 9 : Service Revenue Forecast for next five years .................................................................... 31

LIST OF FIGURES Figure 1 : Organizational Structure Chart ........................................................................................... 13

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1. Company Compan y Overview

1.1 Background of the Business Kathmandu Enterprise Pvt. Ltd plans to offer various types of household chores related services to target customers in Kathmandu through its head office. The life in Kathmandu and other cities is getting busy; people spend less time in their home and more at work place. Also the trend of nuclear family is catching on in city areas.For these reasons, city people are finding it difficult to manage timing between household chores and working life. With this in mind, Kathmandu Enterprise Pvt. Ltd will provide the helping hand to those who are seeking helpers/maids who can assist them in managing their domestic tasks. The clients can use any or all services provided by the company as per their need. The company will offerits services to everyone ranging from young professionals, elderly, busy working mums, and to disabled people in helping them to carryout day to day cleaning is being professionally taken care of. All the staff of Kathmandu Enterprises Pvt. Ltd will be CRB checked (Criminal Records Bureau). Kathmandu Enterprises Pvt. Ltd is fully dedicated to make sure that the requests of its clients will be carried out to the highest standards. Services provided by the company allow people to get rid of the burden of having to do all the household chores by themselves. Kathmandu Enterprises Pvt. Ltd will recruit and select female candidates; new and experienced. They will be given orientation and training to prepare them to suit the clients‟ requirements. The services cover maids working as housemaids, care takers, cooks, and nannies.

All the maids will have have to work under the terms terms and conditions conditions of Kathmandu Kathmandu Enterprise Enterprise Pvt. Ltd. They will represent the company and the company will be responsible for the work of maids. Salaries and benefits will be given by the company as per the contract.

The current scenario shows an opportunity for Kathmandu Enterprise to provide this kind of services to households in Kathmandu Valley

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1.2. Basic Philosophy 1.2.1 Vision “To become a top class service provider to households in Kathmandu” 1.2.2 Mission Provide excellent professional services & improve its position as a leader in this field. Build & maintain a team motivated & committed workforce with high work ethos; Use customer satisfaction & act as an effective catalyst for making lives of people easier and comfortable.

1.2.3 Objectives To provide wide range of services related to domestic chores 

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To provide reliable and reasonable services all year round

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To create congenial working environment where all employees rights are protected

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To work towards fair competition

1.2.4 Critical Success Factors Ensuring availability of adequate number of manpower across different locations. 

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Continuous improvement in quality, reduce turnover of employees, reduce costs

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Increase Customer satisfaction

1.2.5 Company Values Kathmandu Enterprises will demonstrate its values through its decisions, actions and service it provides. The company believes putting values into practices creates long term benefits for customers, employees and the community at large 

Customer satisfaction will be the first priority which will be achieved through customer oriented services.

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Appreciate suggestions and recommendations given by customers and employees

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Regularly seek feedback from customers and improve service accordingly

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All the employees can work with dignity and have gainful employment

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Abide with rules and regulations of the country

1.3 Registration Registration In order to register the company under th e name of “Kathmandu Enterprise Pvt. Ltd” some of the legal formalities are done which are as follows: 

An application form is submitted along with Rs. 5 stamp at the office of the registrar which is situated at Tripureshwor. Besides this citizenship certificate of owner and alteast 5 people and the company register stamp is provided to the office of the registrar



Once the company is registered the next step is to take PAN number from the In Land Revenue Department which is situated at Lazimpat. For this necessary documents are : Application Application Form, copy of the citizenship citizenship certificate of the partners, copy of the company/firm registration certificate, two passport size photo of the partners, hand drawn sketch of the business location

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2. BUSINESS ENVIRONMENT ANALYSIS

2.1 Industry Analysis For the industry analysis Kathmandu Enterprise Pvt. Ltd has choose Michael Porter‟s industry forces model. The five forces are threat of new entrants, bargaining power of customers, bargaining power of suppliers, threat of substitutes, and competitive rivalry within the industry. Using these forces Kathmandu Enterprises found its business in the following point scale.

Table 1 : Industry Analysis Porters 5 forces

Strong

Moderate

Weak

Threat of new entrants Bargaining power of customer Bargaining power of supplier Threat of substitutes Competitive rivalry within the industry.

Competitive Rivalry: The level of competition in the market is expected to be moderate due to huge market and ability of each firm to differentiate its services

Threat of New Entrants: In present situation there are only informal groups providing the service but seeing the profit making opportunity it is expected that there will be entrance of huge number of companies trying to duplicate business plan of Kathmandu Enterprises.

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Threat of Substitutes : There arefew services that are of close substitute to the service provided by the company. Laundry and Dry Cleaners companies are the major substitutes for cloth washing and old age homes and Kindergarten for Care taker service but these are expensive compared to company‟s service. So the threat of substitutes is moderate

Bargaining Power of Supplier: For Part time maids the suppliers will have weak bargaining power since the company can directly negotiate with potential maids eliminating suppliers‟ role. Hence they will have weak bargaining power.

Bargaining Power of Customer: The ability to bargain for the price and quality in the present period will be high of customers. Also with the increase in number of new companies providing similar services will further make their bargaining power of customers strong.

2.2 SWOT ANALYSIS SWOT analysis helps to give the clear picture of the effectiveness of the company strategies. For every marketing plan of the company, the marketer needs to see the service strength, weakness, opportunity and threat.

2.2.1 Analysis of Kathmandu Enterprises Pvt. Ltd. Strength The Managing Director has experience in the field of marketing; finance will be looked after by well experienced officer. The company will provide quality service within economical price range. The service process is customer oriented and will have good database of employees. Strength will be the consistency in the quality of the service which creates the loyalty among the targeted customers. Location of the company makes it accessible to both employees and customers

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Weakness The company‟s management team does not have prior experience in this field. It does not have established connection with dispersed individual maids in the Kathmandu. It lacks better technology to maintain the record of employees and transactions.

Opportunity The changing lifestyle of people and more inclination towards nuclear family provides opportunity for huge demand for maid service within Kathmandu. Also there is an increasing trend of keeping a part time maid indicating the rising living standard of people. By the time competitors will enter the market the company will have penetrated in the major areas of Kathmandu. Moreover, so the company can get the first mover advantage.

Threat The existing businesses providing substitute services like laundry and dry cleaners, cook services and old age home centers and Kindergarten could pose a threat to the company. Also the direct hiring of individual maids by households might reduce the demand from the company and also customers will have high bargaining power.

2.2.2 Analysis of Competitors In Price/Quality dimension, Kathmandu Enterprise Pvt. Ltd will be preferable than the competitor because it is specialized in quality service. Direct competitors of Kathmandu Enterprise Pvt. Ltd are those individuals who are involved in providing house cleaning services, dish washing services, cloth washing services, cooking services, care taker services individually. There are also some companies which specialize in providing these services but only provide one or two segments of services. The indirect competitors will be laundry and dry cleaners companiesin the market.

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2.3 PEST Analysis Analysis The following general environmental analysis has been made from the survey. -Political/ Legal: Political uncertainty and instability of government with the collapse of constituent assembly can negatively affect the business plan. But favorable business scenario for investment has increased after the agreement of the Peace process and formal end of civil war. The proposed company should be registered in the Company Office of Registrar and the trademark should be taken for the product. The company should be oblique to the legal rules and regulations. Legal rules and regulation remains changing, rules such as tax, labor union acts can reduce the earning of company.

-Economic:With the liberalization of economy and commitment of government towards free market economy. There has been rise in both domestic and foreign investment. Financial sector and capital market has shown positive indication. This creates a favorable economic environment to invest at this time.

-Socio-Cultural:The country is seeing the changing family structure and rising middle and upper middle class class.. Women‟s participation in the job market and ageing population is another social changes happening in the country. This can be an opportunity for the company to commence a business.

-Technology:The advancement in the ICT has given businesses to better manage its customer profile, transactions and relationships with key stakeholders. Nepalese companies have realized the importance and power of having updated technology and have focused on Product innovations, applications of knowledge, new communication technologies. Kathmandu Enterprises can benefit from this rapid change in technology as long as the cost of new technology is reasonable.

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3. SERVICES PROVIDED

3.1 Services The company will specialize in providing following services to households 

House Cleaning

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Dish Washing

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Cloth Washing

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Cook



Care Taker o

Baby

o

Old Aged

o

Disabled

All the employees working as house cleaner, dish washer, washer, cloth washer, cook and care taker will do only those tasks for which they are assigned for and will be categorized under the „part time‟ workers and will have to do all the household chores everyday The customers will have to fill a form mentioning their need and type of service they require. Then the company will either search the maid or assign the existing maid to the customer‟s service. Customers can directly contact the company for any complaints regarding the work of maids. Customers can discontinue the service at any time. Company will provide service with experienced maids and train them if necessary.

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4. MARKET RESEARCH AND AND ANALYSIS

4.1 Primary Research The objectives of survey of the residents of Kathmandu valley towards maid service are to: 

Identify the potential size of the market

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Identify the target group for providing service profitably

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To know the specific needs and expectation from our service so that their feedback would be incorporated to design our service.

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Determine the price range they will be willing to pay for each type of service.

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To know the future of our service for upcoming years.

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To know our potential competitors

4.2 Sampling Plan 

Sampling unit 

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Sample size 

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Household

60 household from 2 wards of KTM Valley

Sampling procedure 

Quota with Convenience sampling method

4.3 Research Instrument The tool for primary data collection will be questionnaire which will be distributed to 60 households from 2 wards of Kathmandu Valley.

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4.4 Target Market Kathmandu Enterprise have segmented its market on the basis of: Geographical 

Kathmandu Valley

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Residential area (private homes, apartments and colonies)

Demographic 

Family size i.e. nuclear family and joint family.

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Age and life-cycle stage i.e. elder people, disabled people and young people

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Income ( middle and uppermiddle income group)

4.5 Data sources The research aims to collect the primary data. It will also use secondary databy accessing Central Bureau of Statistics (CBS) report to get relevant data on household survey 2012.

4.6 Survey Findings 1. Currently 38% * of the household are in need of atleast one type of maid service; it is high among household living in apartments (46%) whereas 30% among people living in single homes. 2. Age group of 27-59 wish to have maid service the most (77.77%) followed by age group of 60 and above (16.66%), it is low among age group of 16-26 (5.55%) 3. Family with 3-4 members are in need of maid service the most (50%) followed by 5-6 (32.35%). 4. In occupation, private service holders are in need of maid service the most (50%) (50%) followed by businesspersons (32.35%). 5. People with monthly income ranging 13000 to 26000 are most willing to have a maid service

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4.7 Analysis The survey of 60 households from two wards showed that 38% of the households need maid service. This shows that about 3,43,891 households/families need maid service (40,00,000/4.42=904977*38%=343891; population of Kathmandu is about 4 million and average household size taken 4.42 from ward no. 36 of table no. 6) The demand for the service is expected to increase annually as the survey shows high number of working women and nuclear family with two income households. The survey might not be representative because only 2 wards was taken as sample from 36 total wards in Kathmandu but the statistical tools used to analyze makes it statistically valid.

4.8 Company strategy 1. Make plans and strategy to serve the existing 38% informal maid service market with reliable, trustworthy and reasonable maid service. 2. Target apartments which are lucrative segment. 3. Target age group between 27-59 and 60 above 4. Target private service holders and business people. 5. Design service to better better suit the need of households with income ranging from 13000-17000, 18000-22000, 22000-26000 and above 26000.

* Appendix: 1.13 Primary source: 

Questionnaire Survey on “Peoples‟ attitude towards maid service”, Appendix: 1.1

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Quota with Convenience sampling method

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Researcher administered survey

Secondary Source: Central Bureau of Statistics (CBS): www.cbs.gov.np 11 | P a g e


5. Company Profile

5.1 Form of Business The company will be operating in the service industry. The business model is based on service revenue and direct sale of service. The company will be financed using debt and equity. All the equity finance will be contributed by the owner (Sandarva Pal). It will be a sole partnership business. The company will start in January 1, 2013; the company will consist of management professionals with background and expertise in the related fields.

5.2 Legal Status The company will be registered as private limited company under the company Act 2063 by fulfilling all the legal and administrative aspects outlined by the company Act and other administrative requirement. The owners will be personally liable for any amount owed by the company during the transaction of the business. It will be guided by company act and other rules and laws of the government of Nepal.

5.3Organization 5.3Organization Structure I, Sandarva Pal, will be the major decision maker in the overall management of the company. I will be responsible for the overview of the overall business. I will be working as managing director of the company. So I will be responsible for planning, goal setting, strategy formulation and implementation and manage daily operation of the company. The company will hire two officers; Administrative officer and Human Resource/ Customer Relationship Officer. Both the managers will be given full authority to manage and operate their respective divisions. All are independent to formulate plans and strategy for their divisions. However, final approval will be made by managing director Besides maids the total number of staffs at the initial years of operation will be four. All the staffs will be made permanent within two months of work in the organization. The detailed organizational structure of the company is as follows:

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Figure 1 : Organizational Organizational Structure Chart

Managing Director

Administrative/ Account Officer

Human Resource / Customer Relationship Officer

Database Operator

Maids

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Security Guard


5.4 Recruitment and Selection There will be two types of staffs working for the company; permanent and part time. A permanent staff consists of those working in the management team. They will be hired for post like administrative officer, human resource/customer relationship officer, database operator. Newspaper advertisement and personal referral will be used for recruitment of these staffs. Selection will be done on the basis of review of qualification, prior experience, soft skills (communication skills) and completion of interview. Part time staffs consist of maids. Personal network, referrals and agents will be used to recruit of these staffs. Selection will be done on the basis of prior work experience and no criminal records (all the maids will be checked for criminal records by using Criminal Records Bureau (CRB))

5.5 Remuneration and Compensation System S ystem Permanent staffs will be paid on monthly basis and part time staffs will be paid monthly with but on the basis of number of days worked in a month. Any permanent staffs doing overtime (OT) work will be given additional OT payment. Part time staffs working double shift will be paid according to the salary fixed for each type of service rendered.

5.6 Training and Retention Plan Management team will be given training every year through seminars and workshops related to their work. Education and coaching on customer service will also be provided to management staffs on periodic basis to handle and serve customers. It will also cover managing and mobilizing resources effectively and efficiently. In case of part time staffs, they will be given 2 to 3 days of training on code of conduct and job related tasks prior to assigning them to the work. Remuneration package will be reviewed on an annual basis and compensation will be provided to those who perform well in an annual performance review to ensure talents and enthusiasts are motivated and retained.

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6. Operational Plan

6.1 Quality Management The company will focus on continuous improvement of its service to its valuable customers. For this the company‟s quality service to its customers can be defined in terms of: 

Reliability Our service will be reliable in terms of consistency in the service provided to customers. For this the company plans to focus on following vital aspects: 

Code of conduct will be developed by the company and strictly implemented. This will prevent any unethical activities at the workplace and assures customers trustworthy maids at their service.

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Prepare a checklist containing the type and quality of work done, time of arrival and departure from client house which would be filled by the client and his/her maid at the end of every month. Any inconsistency between client and maid‟s checklist response will be discussed. This will help to monitor the work performance of the maids.

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Households with be provided with new maid within three days of leaving by the prior maid.

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Company will take full responsibility of its maids and willing to compensate for any damages done by maids.

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Only trained maids will be assigned for service to clients. Training will be given on both vocational (if needed) and moral aspects.

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Accessible Company will be located in area where prospective clients and staffs can easily reach the office. For this the company has chosen Koteshwor area. This will help company in providing quality service in following ways:

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This site location provides the best proximity to customers using public transportation.

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Customers will not have difficulty in finding the office.

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The office building is situated near the main road with good infrastructure.

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Office building has space (room) for expansion. This will help to setup additional departments to better cater service to clients in future.

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Courtesy The values of the company will guide its staffs to serve the customers with hardwork, sincerity, loyalty and devotion.

6.1.1 Safety and security This is the most vital area where the company will focus. The company will be guided by its efforts to cover all the aspects of safety of its customers. I believe the business model depends on how well and safely the company will provide services with staffs with good moral, behavior and with no criminal records. All the staff of Kathmandu Enterprise Pvt. Ltd will be CRB checked with (Criminal Records Bureau)

6.1.2 Training 

Provide one month training prior to formal operation of the service. The training will focus on teaching maids about ways to conduct activities in an effective way.

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Provide vocational training to upgrade skills of staffs

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Training will highlight on need and importance of providing reliable and satisfactory services.

6.1.3 Securitymeasures  All the staffs will be registered with the company, their criminal records will be checked with Criminal Records Bureau and company will take responsibility of any immoral activities of staffs.

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The well-being and security of the customers will be the company‟s top priority. This is especially vital for image /reputation buildingof the company.

6.2 Process of Service Delivery and Capacity Design 6.2.1 Process of Service Delivery The company will follow the following procedure in delivering the service to its valuable customers: 

The prospective customer will enquiry about the services provided by the company

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The enquiry will be handled by the customer relationship officer

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Customers will visit the company office and talk with customer relationship officer

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Customer will fill a form mentioning the type of service they need and the timings.

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Appropriate employee (maid) will be selected and given needed training and information on the need of the customer.

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Enter into contract with the customer regarding the terms and conditions of employment, payment procedure, benefits to maids and termination of service.

6.2.2 Capacity Design The marketing survey entitled “Peoples attitude towards maid service” was conducted among households of Kathmandu Valley. 60 households from two wards of Kathmandu were taken as sample. Itshowed that 38% * of the households of Kathmandu Valley need maid service.**Age group of 27-59 needs maid service the most followed by age group of 60 and above and family with 3-4 members*** are in need of maid service the most. With this survey in mind, the company will provide five types of services from the beginning of its operations. However,due to manpower and capital constraints the company will commence its service with only fraction of the actual demand for the service by the households. 

Questionnaire Survey on “Peoples‟” attitude towards maid service”.

Appendix: 1.13:, **Appendix **Appendix:1.8, ***Appendix: 1.9 * Appendix: 17 | P a g e


From the second year the company plans to increase the number of employees by 50% of the previous number.

Table 2 : Capacity Plan for the next five years Year 1 2 3 4 5

House Cleaner 8 12 18 27 40

Cloth Cloth Washer Dish Washer 8 8 12 12 18 18 27 27 40 40

Cook 10 15 22 33 49

Care Taker 7 10 15 22 33

6.3 Location strategy 6.3.1 Site Selection Being a service provider the location strategy will focus on revenue maximization. The higher contact with clients means higher possibility of turning prospective clients into actual clients. So the company has given careful consideration while selecting the site location.

Factors considered while selecting the site 

Office site should be located in the area easily accessible by clients and staffs (maids) i.e. transportation facilities

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The site should provide proximity to target business area

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The office site should be located with room for future expansion

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Office should be located on the ground or at least first floor

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Office should cover space not less than900 square feetand reasonable rental charges.

Considering all the above factors, I have selected the office site inKoteshwor, Kathmandu.This site location provides the best proximity to customers using public transportation. Customers will not have difficulty in finding the office. Most importantly it provides proximity to target business area (Koteshwor is one of the most populated wards of Kathmandu). The office building is situated near the main road and has room for expansion. The office space meets the requirement of 900 square feet for the office setup. 18 | P a g e


6.4 Layout Design Strategy 6.4.1 Office layout The office layout in the case of Kathmandu enterprise is not as important to other service providers because we cater our customers outside our office premises. However, the company will have comfortable furnishings and reasonable ambience in order to attract all the visiting clients and create good working environment. Kathmandu enterprise will use a rented house of approximately 5 rooms from where to conduct business operations.

The company‟s layout consists of following areas: 

Managing Director ‟s ‟s Room

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Administrative/ Account Officer‟s Room ( with database operator‟s cabin)

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Human Resource / Customer Relationship Officer‟s Room

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Maids‟ Room

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Security Guard Room

(Layout partition is shown on appendix: 5.1)

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6.5 Human Resource Plan and Job Design Kathmandu Enterprise Pvt. Ltd will be owned, managed and run by me (Sandarva Pal) as the head and managing director of the company. The company plans to have two major divisions/departments i.e. Administrative and Human Resource (Customer Relationship) department to smoothly operate its daily activities.

6.5.1Job Duties and Responsibilities Responsibilities Managing Director: He will be responsible for the overall management of Kathmandu Enterprises Pvt. Ltd. and will take the responsibility of the risk associated with the implementation implementati on and operations of venture. Besides managing and supervision of the daily activities he will also be responsible for handling marketing/promotional of the company and its services.

Human Resource/ Customer Relationship Officer: He/She will be responsible for all the activities related to human resources in the organization. Recruitment, selections, development and training are some of the responsibility performed by Human Resource officer. He/ She will also be responsible for managing customer relationship. The duties to be performed will include: handling potential customers enquiry and existing customers complaints, search for new customers, profile customers‟ needs and maintain communication with potential clients.

Administrative/Account Administrative/Account Officer: Account Manager will be responsible for maintaining accounting records of activities carried out by the company. His duty and responsibility will be to maintain record of transactions, disburse salary and other expenses, check inflow and outflow of materials and cash, prepare financial statements and make forecasts of costs, revenue and profits.

Database Operator: He will be responsible for recording, maintaining, tabulating, categorizing data on work appraisal of staffs, approving leave and adjustment of salary and benefits. He will be responsible for the update and management of data, and disseminate decision making information to officers and managing director. He will be accountable to Administrative officer.

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6.5.2Human Resource Personnel Table 3 : Total number of staffs and their salary Position

Number of Staffs

Expected Salary (Rs.)

Managing Director

1

20,000

Administrative/Account

1

15,000

1

20,000

Database Operator

1

8000

Security Guard

1

7,500

House cleaner

8

2100

Dish washer

8

2200

Cloth washer

10

2100

Cook

9

2500

Care Taker

7

3200

Officer Human Resource/ Customer Relationship Officer

Total

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Table 4 : Qualification and skills of staffs and management team Position

Qualifications

Managing Director

MBA

Degree

with

specialization

on

finance and work experience in marketing field

Administrative/Account Administrative/Account Officer

Bachelors Degree with atleast 3 years of experience in related field

Human Resource/ Customer

Bachelors Degree with atleast 3 years of

Relationship Officer

experience

Database Operator

Bachelor‟s Degree in IT

Maids

-

Security Guard

-

Table 5 : Work Schedule of Maids Shift/type

Starting Time -Ending Time

Ending Time

1/Part time maids

6 am

9 am

2/ Part time maids

10 pm

3 pm

Shift 1/ Part time maids: It will consist of cook, dish washer, house cleaner. They will work for three hours a day.

Shift 2/ Part time maids: It consists of cloth washer and care taker. They will work for five hours a day. Kathmandu Enterprises will operate throughout a week. Maids can take leave for up to 4 days a month by giving prior notice to management

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6.6Management of Demand and Work Load Part time maid: Part time workers fall under shift 1& 2 of above work schedule. Demand for shift 1 maids will be twice than that of shift 2 maids according to the survey. Each maid in this category can also work in shift 2 if they are able and willing. Work in shift 2 starts from 10 pm so company can allocate maids in shift 1 to shift 2 according to the need. The company plans to allocate about 50% of its maids to shift 2 category Currently, the demand for shift 2 category maids is quite low. Each maid will look after single client‟s client ‟s need. need. This is a category where special skills are needed. Some of the maids in shift 2 will come from shift 1 so a single maid can work in two places in a day. Remaining 50% of maid need in shift 2 category will hired

6.7 Labor Supply Management Kathmandu Enterprise will use two sources for the supply of labor. 

Local Labor Supply: The requirement of personnel for the business will be fulfilled by local labor market. The company will make use of informal channels like local agents and also those individuals trying to find permanent job. Also it will vacancy announcement in the appropriate media to attract the maids working in the Kathmandu valley. It will also use informal channels to inform labor about the employment opportunity. The company will recruit the best personnel from the available market source.

6.8Operation Schedule It is estimated to take about five months to carry out pre-operating activities. That means starting from August 1 2012 the company will tentatively come into operations in January1 2012.

Preparation for licencing First step will be to trying to get licence to operate the business; this is expected to take about 1 month. Documentation for licencing will take another two months. Licence Approval is expected expected to take take about three three months months

Preparation for site location 23 | P a g e


Search and evaluation of the office site is expected to take about one month. Finalization of site will take tentatively one month. Completion of architectural layout design will be completed within one month. Complete layout in next one month.

Marketing/ Promotion The company will conduct all the marketing and promotional activities throughout its operational years. Also it will carry marketing activities for first one month prior to operation and continue for following months.

Office Supplies Evaluation of suppliers/Sellers, Selection and Purchase of office supplies will take about three months

Human Resource Recruitment and selection of employees will take about four months and one month for training.

Service Kathmandu Enterprise Pvt. Ltd will formally begin its operation from January 1, 2013.

(Operation Schedule is shown in Appendix) 6.9 Procurement Furniture and fixtures will be bought from MD furniture wholesalers in Maharajgunj. Equipments will be bought from Hirand Suppliers situated in Sundhara. Computers will be bought from Yantra Computers located in Computer Bazar, Putalisadak. Telephone sets will be bought from Mobile Centre situated in Pako, New road. Office Supplies will be bought from Yukti Office Suppliers, Maharajgunj. All the items will be bought on negotiations and bargaining, bidding will not be used.

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7. Marketing Plan

7.1 Demand Analysis The demand for maid service is increasing. The market survey conducted showed that 38% of the households need maid service in Kathmandu. With this in mind, the company plans to increase the number of maids by 50% of previous year number every year. The market size is large but supply is less and there are only informal groups providing such service in Kathmandu and people want a safe and reliable service from private company. Therefore there is huge opportunity in this sector. The demand for the maid service is related to the changing demographic and geographical factors. The following table shows the household size in different wards of Kathmandu. It is a good indicator to identify the potential wards to target and do marketing/ promotional activities:

Table 6 : Kathmandu metropolitan: Population, household size Ward HH Ward Population Population No. size no 1 8464 5.01 19 2 13655 4.27 20 3 20782 4.55 21 4 29539 4.36 22 5 15340 4.29 23 6 39316 4.48 24 7 39530 4.24 25 8 9434 4.36 26 9 29263 4.36 27 10 25977 4.21 28 11 15244 4.37 29 12 10313 4.95 30 13 29721 4.62 31 14 34488 4.4 32 15 32441 4.36 33 16 45450 4.21 34 17 19876 4.36 35 18 8065 4.66 36

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HH size 7400 8240 12369 5840 8289 5272 4310 3764 7789 5462 24543 9896 14502 24355 21597 46136 35184 671846

5.01 4.84 4.93 5.79 4.85 5.7 5.79 4.97 5.05 5.02 4.4 4.85 4.46 4.28 4.26 4.18 4.04 4.42


The above table shows the most attractive ward to target and serve is ward number 36 which has the highest population i.e. 6, 71,846. However, looking at the household size it is the ward number 22 and 25 which has the highest household size i.e. 5.79. The company can expect higher demand in these wards (22, 25 and 36).

7.2 Marketing Strategy Kathmandu Enterprise will follow Cost Focus under Porter‟s generic strategy matrix. The cost focus strategies have narrow scope and its source of competitive advantage is cost. The strategy company chooses depends upon the needs and expectation of customers, competition in the industry, and other external environmental factors

Marketing strategy in different stages of PLC 

Introduction stage 

Build buyer awareness and entering slowly towards other stages of buyer readiness stages.





Price of service kept constant for some years



Focus on inexpensive & effective marketing strategy-referrals, newsletters

Growth stage 

Number of household‟s household‟ s starts to increase at higher rate



Company will increase price of service to adjust demand pull and supply push inflation in later years



Focus will be to train employees.



Advertising/Promotion goal will shift from awareness to convincing and encouraging use of service



Maturity

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

Retaining existing customers



Reducing price according to competition and demand



Aggressive sales promotions



Strategic alliance, if possible.




Decline 

Reviewing sales, market share, and cost and profit trends on a real time basis and designing counter strategy



Maintain brand image



Reposition or revive brand to move back to growth stage, look for new segments

7.3 Marketing Mix Strategy 7.3.1 Service Strategy Kathmandu Enterprise aims at providing maid service to households of different wards of Kathmandu. Since there is a no formal provider of such services our main objective is to meet the demand with all types of services according to the need and demand of the households. All the services will be provided within three days of formal request. Customers can choose any or all services. All the maids will be trained before assigning them to customers. Any wrong doing by maids will be taken responsibility by the company. Customers can discontinue the service from our company by notifying to customer relationship officer one week ahead of decision to formally discontinue service.

7.3.2 Pricing strategy The pricing objective of Kathmandu Enterprise Pvt. Ltd is to provide service at low cost without compromising on quality service. It wants to establish as low cost leader in the industry. The price per type of service is set on the basis of cost plus profit margin.

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Table 7 : Service Rate per month for each year Service Facilities

Increased % 5% 5% 10% 10% Year 1 (Rs.)* Year 2 Rs. Year 3 Rs. Year 4 Rs. Year 5 Rs. House Cleaning 3800 3990 4190 4609 5069 Dish Washing 4200 4410 4630 5093 5602 Cloth Washing 4000 4200 4 200 4410 4851 5336 Cooking 6500 6825 7166 7883 8671 Care Taking 7000 7350 7717 8489 9338 nd rd *rate increases by 5% in 2 and 3 year and then by 10% thereafter annually

7.3.3 Promotional strategy Kathmandu Enterprise Pvt. Ltd will promote its services using different promotional tools. The company will give advertisement in the local newspaper; will distribute flyers to potential customers and greeting cards to existing customers. Local FM station and TV Channels (Scroll ads.) will be used for electronic advertisement. Informal media like word of mouth and referrals too will be used.

Table 8 : Marketing program and expenses Items Business Cards Flyers Greeting Cards Print Advertising Electronic Media (FM; 40 sec.) Electronic Media (TV Scroll Ads.) Other Media (Newsletter etc.) Total 

Year 1 Year 2 Year 3 Year 4 Year 5 4,500 4,950 5,445 5,990 6,588 3,000 3,300 3,630 3,993 4,392 4,250 4,675 5,143 5,657 6,222 45,000 49,500 54,450 59,895 65,885 65,900 72,490 79,739 87,713 96,484 21,600 23,760 26,136 28,750 31,625 5,750 6,325 6,958 7,653 8,419 150,000 165,000 181,500 199,650 219,615

Business cards and Flyers Fl yers Business Cards will be given to most potential customers and flyers will be distributed to customers visiting the company office. Office staffs will also distribute flyers to their contact people.

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

Greeting cards Greeting cards can be used as a great Marketing Tool when it comes to repeat business and referrals. Kathmandu Enterprises will use them to thank customers for accepting our services and for the continuity of the business. Kathmandu Enterprises send them greeting cards for most of the holiday occasions. Kathmandu Enterprise will try to send cards as early as possible so it can be the first in our client‟s mailbox and a way to always remember us. Kathmandu Enterprise also use handwritten messages to show more appreciation to customers



Print advertising For a maid service business it makes no sense and would be a waste of money to advertise in a large magazine or buy a TV commercial. Besides being expensive, these ads will most likely not reach our target audience. The common print ad, run in a local newspaper or shopper, is the most basic unit of advertising



Electronic media Kathmandu Enterprise plan to buy ads in electronic media especially in local FM stations and TV scroll advertisement. FM advertisements will be carried out 20 days in a year and its frequency will increase every year. TV Scroll advertisements will be carried out 135 times in a year and its frequency will increase every year. This can deliver information right to the households that need our services.



Other Media Other inexpensive and efficient strategies that Kathmandu Enterprises target will use are Referrals, Newsletters, and Word of Mouth (WOM).

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7.3.4 Positioning Strategy Kathmandu Enterprise Pvt. Ltd. will be positioned in the customers mind as a company that provides complete quality maid service at economical prices and gives top priority to safety and reliable service. The tagline for the company will be "We Are Here for Complete Maid Services".

7.3.5 Partnering strategy  Alliance with housing companies & colonies For company the ideal market would be the housing companies and colonies. Kathmandu Enterprises plans to alliance with them in a contract basis. Our prospective alliance partners will be: 

Sunrise homes



Guna colony



Civil homes



Horizon homes



Oriental Apartments

7.4 Growth rate The basis for measuring the growth of the company will be in terms of service revenue which is expected to increase by about 50% of previous year service revenue every year.

7.5 Profitability The company is expected to incur losses for first two years of operation and then earn profit from third year at a rate of about 60% every year. Profitability can be in terms of Net income generated for the company.

7.6 Sales Strategy The *survey of 60 households from two wards showed that 38% ** of the households need maid service. This shows that about 3,43,891 households/families need maid service (40,00,000/4.42=904977*38%=343891; population of Kathmandu is about 4 million and average household size taken 4.42 from wars no. 36 of table no. 6). Also,

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age group of 27-59 wish to have maid service the most followed by age group of 60 and above and family with 3-4 members are in need of maid service the most. So with this finding the company plans to target and sell its service to age group of 27-59 and family size of 3-4 (this will be give high priority groups among all) with total of 40 maids at the beginning year of its operation. And increase the number of maids by 50% annually. The company‟s strategy is to have cost focus strategy so it will not increase its number of maids aggressively. Service charge will increase 5% in 2

nd

and 3rd year and by 10%

thereafter annually.

Table 9 : Service Revenue Forecast for next five years Year 2013 2014 2015 2016 2017

House Dish Cloth Cleaning Washing Washing Cooking 364,800 403,200 480,000 702,000 574,560 635,040 6 35,040 756,000 1,146,600 905,040 1,000,080 1,217,160 1, 217,160 1,805,832 1,493,316 1,650,132 1,979,208 3,027,072 2,433,120 2,688,960 3,265,632 4,994,496

*Appendix: 1.1, 1.13

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Care Taking 588,000 882,000 1,389,060 2,241,096 3,697,848

Total Service Revenue 2,538,000 3,994,200 6,317,172 10,390,824 17,080,056


8. Financial Plan

8.1 Capital Structure Source Self-contributed Self-contribut ed capital Bank loan @13% for 6 years Total start-up capital

Amount Rs. 8,00,000 Rs. 12,00,000 Rs. 2,000,000

Ratio 40% 60% 100%

8.2 Uses of Capital Particulars Purchase of fixed assets Preliminary Expenses Working capital (50% of operating expenses) Total start-up capital

Amount 556,500 55,000 1,388,500 2,000,000

8.3 Pre-Operating Expenses Particulars Feasibility Study Registration Charges Transportation Telephone Line Training Expenses Total 8.4 Service Revenue for the next five years Increased % 57% Year 1 Year 2 (Rs.)* (Rs.) Service Revenue 2,538,000 3,994,200

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Amount 5,000 15,000 5,000 10,000 20,000 55000

57% Year 3 (Rs.) 6,317,172

64% Year 4 (Rs.) 10,390,824

64% Year 5 (Rs.) 17,080,056


8.5 Operating Expenses for the next five years Year Particulars

2013 (Rs.)

2014 (Rs.)

2015(Rs.)

2016(Rs.)

2017(Rs.)

846,000

930,600

1,023,660

1,126,026

1,238,629

1,203,600

1,981,320

3,284,424

5,396,820

8,866,704

Depreciation***

111,300

111,300

111,300

111,300

111,300

Rent

250,000

275,000

302,500

332,750

366,025

Audit/Legal Audit/Legal charges charges

5,000

5,000

5,000

10,000

10,000

Marketing expenses

150,000

165,000

181,500

199,650

219,615

Electricity Electrici ty

20,000

20,000

20,000

20,000

20,000

Telephone expenses

48,000

52,800

58,080

63,888

70,277

Office Supplies/Stationery Supplies/Statio nery

25,000

27,500

30,250

33,275

36,602

Training expenses

20,000

22,000

24,200

26,620

29,282

Miscellaneous

10,000

11,000

12,100

13,310

14,641

Preliminary Preliminar y expenses written off

55,000

3,601,520

5,053,014

7,333,639

10,983,075

Staff salary * Maid salary **

Total

*Appendix: 3.4 **Appendix: 3.7 ***Appendix: 3.9

33 | P a g e

2,743,900


8.6 Projected Income statement for next five years Particular Service Revenue # house cleaning dish washing cloth washing cook care taker Total Service Revenue Operating Expenses Staff salary Maid salary Depreciation Rent * Audit/Legal Audit/Legal charges charges Marketing Expenses ** Electricity Telephone expenses Office Supplies/Stationery Training expenses Miscellaneous Preliminary expenses written off Total Operating Operatin g Expenses EBIT Add: Interest Interest on investment investment Less: Interest EBT Less: Tax @25% Net Income/(Loss) Income/( Loss)

Year 2013 (Rs.) 2014 (Rs.) 2015(Rs.)

2017(Rs.)

364,800 403,200 480,000 702,000 588,000 2,538,000

574,560 635,040 756,000 1,146,600 882,000 3,994,200

846,000 1,203,600 111,300 250,000 5,000 150,000 20,000 48,000 25,000 20,000 10,000 55,000 2,743,900 (205,900)

930,600 1,023,660 1,981,320 3,284,424 111,300 111,300 275,000 302,500 5,000 5,000 165,000 181,500 20,000 20,000 52,800 58,080 27,500 30,250 22,000 24,200 11,000 12,100

1,126,026 5,396,820 111,300 332,750 10,000 199,650 20,000 63,888 33,275 26,620 13,310

3,601,520 3,601,52 0 5,053,014 392,680 1,264,158 50,000 30,000 137,256 116,075 305,424 1,178,083 76,356 294,521 229,068 883,562

7,333,639 10,983,075 3,057,185 6,096,981 60,000 160,000 92,141 65,095 3,025,044 6,191,886 756,261 1,547,971 2,268,783 4,643,915

156,000 (361,900)

(361,900)

#Appendix: 3.3

* Appendix: Appendix: 3.10, **Appendix: 2.1 # Key financial assumptions on Appendix: 4.1

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2016(Rs.)

905,040 1,493,316 2,433,120 1,000,080 1,650,132 2,688,960 1,217,160 1,979,208 3,265,632 1,805,832 3,027,072 4,994,496 1,389,060 2,241,096 3,697,848 6,317,172 10,390,824 17,080,056 1,238,629 8,866,704 111,300 366,025 10,000 219,615 20,000 70,277 36,602 29,282 14,641


8.7 Projected Cash flow Statement for the next five years Particulars

Year Preoperating

2013(Rs.)

2014((Rs.)

2015(Rs.)

2016(Rs.)

2017 (Rs.)

1,388,500

548,715

426,154

636,906

1,208,945

50,000

30,000

60,000

160,000

2,538,000

3,994,200

6,317,172

10,390,824

17,080,056

3,926,500

4592915

6,773,326

11,087,730

18,449,001

Principal and interest payment * Operating Expenses

300,185

300,185

300,185

300,185

300,185

Staff salary

846,000

930,600

1,023,660

1,126,026

1,238,629

Maid salary

1,203,600

1,981,320

3,284,424

5,396,820

8,866,704

Rent

250,000

275,000

302,500

332,750

366,025

Audit/Legal Audit/Legal charges charges

5,000

5,000

5,000

10,000

10,000

Marketing expenses

150,000

165,000

181,500

199,650

219,615

Electricity Electrici ty

20,000

20,000

20,000

20,000

20,000

Telephone expenses

48,000

52,800

58,080

63,888

70,277

Office Supplies/Stationery Training expenses

25,000

27,500

30,250

33,275

36,602

20,000

22,000

24,200

26,620

29,282

Miscellaneous

10,000

11,000

12,100

13,310

14,641

76,356

294,521

756,261

1,547,971

Cash Inflow Beginning Balance Equity

800,000

Bank Loan

1,200,000

Interest on Investment Revenue

Total Cash Inflow (A)

2,000,000

Cash Outflow Fixed Assets

556,500

Tax paid Preliminary Preliminar y Expenses

55,000

Total Cash Outflow (B)

611,500

2,877,785

3,866,761

5,536,420

8,278,785

12,719,931

Surplus/Deficit Surplus/Def icit (A-B)

1,388,500

1,048,715

726,154

1,236,906

2,808,945

5,729,070

500,000

300,000

600,000

1,600,000

3,000,000

548,715

426,154

636,906

1,208,945

2,729,070

Investment #

Ending Cash Balance

1,388,500

*Appendix: 3.8 # Investment is made for short term at the interest rate of 10% # Key financial assumptions on Appendix: 4.2

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8.8Statement of Retained Earnings for the next five years Particular Beginning balance Add: Profit Profit for the period Ending Balance

Year 1 (361,900) (361,900)

Year 2 (361,900) 229,068 (132,832)

Year 3 (132,832) 883,562 750,730

Year 4 750,730 2,268,783 3,019,513

Year 5 3,019,513 4,643,915 7,663,428

8.9 Projected Balance Sheet for the next five years Particulars

Year PreOperating

2013(Rs.)

2014 (Rs.)

2016(Rs.)

2017 (Rs.)

548,715

426,154

636,906

1,208,945

2,729,070

500,000

800,000

1,400,000

3,000,000

6,000,000

1,388,500

1,048,715

1,226,154

2,036,906

4,208,945

8,729,070

Furniture *

368,500

368,500

294,800

221,100

147,400

73,700

Equipment **

188,000

188,000

150,400

112,800

75,200

37,600

Fixed Assets

611,500

556,500

445,200

333,900

222,600

111,300

111,300

103,930

103,930

103,930

111,300

445,200

333,900

222,600

111,300

0

2,000,000

1,493,915

1,560,054

2,259,506

4,320,245

8,729,070

800,000

800,000

800,000

800,000

800,000

800,000

(361,900)

(132,832)

750,730

3,019,513

7,663,428

800,000

438,100

667,168

1,550,730

3,819,513

8,463,428

Bank loan * Total Long Term Liabilities

1,200,000

1,055,815

892,886

708,776

500,732

265,642

1,200,000

1,055,815

892,886

708,776

500,732

265,642

Total Equity and Liabilities

2,000,000

1,493,915

1,560,054

2,259,506

4,320,245

8,729,070

Assets

2015(Rs.)

Current Assets Cash

1,388,500

Investment

Total Current Assets Fixed Assets

Less: Acc. Depreciation

Net Fixed Assets

611,500

Preliminary Expenses

Total Assets

55,000

Equity and Liabilities Shareholders' Equity Equity Retained Earnings Total Shareholders’ Equity

Long Term Liabilities

* Appendix: Appendix: 3.2, **Appendix: **Appendix: 3.1 **Appendix: 3.8 # Key Financial assumptions on Appendix: 4.3

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8.10 Profitability Ratios Year Net profit margin (%) ROA (%) ROE

2013 (Rs.) (14.25) (24.22) (82.60)

2014 (Rs.) 5.74 14.68 34.33

2015(Rs.) 13.98 39.1 56.97

2016(Rs.) 21.83 52.51 59.39

2017(Rs.) 27.19 53.2 54.87

Analysis: The company will have negative profit margin for the initial year. However, from second year it will increase by about 8% annually. Return on assets is high in the beginning year. It will increase by 24.42% in 2 nd year and by 13.41 % in 3 rd year but in third year it will increase at minimum rate. ROE is negative in the first year due to huge loss in year 1, it will increase positively from 2 nd year due to increase in profits.

8.11 Computation of Net Present Value (NPV) Year Cash Flow PV Factor @ 13% Present Value (PV) 1 548715 0.8849 485557.90 2 426154 0.7831 333721.19 3 636906 0.6930 441375.85 4 1208945 0.6133 741445.96 5 2729070 0.5427 1481066.28 Total Present Value 3483167.18 Less: NCO 2000000 NPV 1483167.18 Analysis: Since the NPV is positive, the business is feasible and lucrative. 8.2 Computation of Payback Period Year Cashflows 0 -2000000 1 548715 2 426154 3 636906 4 1208945 5 2729070

Cum. Cash Flows -2000000 -2548715 -2122561 -1485655 -276710 2452360

Analysis: Here the payback period for the initial investment is 4.12 years which is less than the life of the project. Therefore, from the perspective of the payback period, the project is feasible.

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9. Critical Risk and Contingencies Contingencies

For establishing Kathmandu Enterprise Pvt. Ltd, the owner should also have a clear concept and understanding of possible future uncertainties that might be created.

9.1 Internal risk Level of managerial skills of Managing director and officers 



Issues related with the manpower turnover



Low productivity of maids



Motivational level of employees



Problems of cash management and cost inefficiencies

9.2 External risk Instability in the political system 



Change in law and policies such as tax regulations and labor and employment laws



Raise in the level of competition due new entrants and informal service providers.

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10. Schedules and Milestones

Throughout the entire life cycle of a business, there are going to be a number of natural time gradients that exists, and are more than likely to be defined by the eventual and natural ebbing and flowing of the task workload and the momentum of the team‟s performance and the business of the schedule. However, it is typically helpful in attempting to assure that the business is moving effectively as well as to allow points in time for the management team to pause and look back on what has been accomplished to date.

August 

Establish conceptual ideas of maid services



Begin research of the industry and trends

September 

Business plan: This will be done as a roadmap for the organization. It will be an indispensable tool for the ongoing performance and improvement of the company.

October 

Complete Registration and Licensing: This will be done within the first three months. This includes setting up the physical office where business will be transacted.

November 

Site search, evaluation and selection



Completion of architectural layout design



Complete recruitment and selection



Select suppliers

39 | P a g e


December 

Complete layout



Training program: This will be the development of a training program for the employees. The employees will receive initial sessions of training up-front, but will undergo constant training and orientation part of our constant effort to deliver quality service.



Establish corporate relationship

January 

Begin operations

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11. Future Plan and Exit Strategy

11.1 Future plan Kathmandu Enterprise plans to serve other segments of the market especially the following ones: 

Private organizations and public corporations which usually need cleaning service



Colleges and schools which need cleaning and food preparation service



Kindergartens which need care taker service

To serve these new segments the company will hire additional employees in management and as well as hire additional maids. Provide training to maids according to the need of new clients.

11.2 Exit strategy On the basis of the present analysis all the financial parameters seems to be in the positive trend. So company should not stop its service in the future. Nonetheless, due to no entry barriers for this industry, there might exists tough competition in the market and sustaining in the market might become difficult. So if our company could not retain itself in the market, we need to pre-plan for the exit strategy. In such worst situation if the company goes in unfavorable condition, we will sell the company.

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APPENDIX

1. Market Research 1.1 Questionnaire Survey On Peoples’ attitude towards Maid Service

General information Name: …………………………Gender…………Age……….. No. of family members…… Address…………………………… Address……………………………….Occupa ….Occupation……………… tion……………… Monthly Income Rs………………..

Specific information 1.

Do you have helper/maid to do household chores? a. Yes

b. No

If, yes, then what kind of tasks does your helper (maid) do (multiple Response) a.

House Cleaning

b. Dish Washing

c. Cloth Washing

d. Cooking e. Care Taking 2.

Is your maid part time or full time? a. Part

3.

f. All above

time

b. Full time

How much do you pay for your part time/ full time maid? a. Part time: Rs……………….. b. Full time: Rs……………………

4.

Is it getting difficult to get maid in Kathmandu valley? a. Yes

5.

b. No

Would you be willing to take maid service from a private company? a. Yes

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b. No


6.

What advantages/ disadvantages you think would be in taking a maid service from private company? ……………………………………………………………………………………………… ………

……………………………………………………………………………………………… …….

7.

For what purpose you need a maid service the most? (single response) a. House Cleaning d. Cooking e. Care Taking

b. Dish Washing

f. Others (Please Specify)

(Thank you for your kind cooperation)

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c. Cloth Washing


1.2 Frequency distribution based on Gender Gender

Frequency

Percent

male

22

36.67

female

38

63.33

Total

60

100

1.3 Frequency distribution based on Age group Age Group

Frequency

Percent

16-26

5

8.33

27-59

45

75

60 and above

10

16.67

Total

60

100

1.4 Frequency distribution based number of Family Members No. of Family Members

Frequency

Percent

1-2

8

13.33

3-4

25

41.67

5-6

18

30

9

15

60

100

Above 6

Total

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1.5 Frequency distribution based on Occupation Occupation

Frequency

Percent

9

15

Private Service

26

43.33

Business

13

21.66

Housewife

12

20

Total

60

100

Government service

1.6 Frequency distribution based on Monthly Income Monthly Income

Frequency

Percent

8000-12000

8

13.33

13000-17000

24

40

18000-22000

11

18.33

22000-26000

10

16.67

Above 26000 26000

7

11.66

60

100

Total

1.7 Frequency based on household having maid service service Household Residential Area Apartment

Total

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Frequency

Percent

Total

9

9/30=30

30

14

14/30=46

30

23

23/60=38

60


1.8 Cross tabulation between age group and willingness to have maid service Age Group

Maid Service Yes

No

16-26

2(5.55)

3(12.5)

27-59

28(77.77)

17(7.08)

6(16.66)

4(16.66)

36

24

60 and above

Total

1.9 Cross tabulation between number of family members and willingness to have maid service No. of Family Members

Maid Service Yes

No

1-2

2(5.88)

6(23)

3-4

17(50)

8(30.76)

5-6

11(32.35)

7(26.92)

4(11.76)

5(19.23)

34

26

Above 6

Total

1.10 Cross tabulation between occupation and willingness to have maid service Occupation

Maid Service Yes

No

Government service

3(5.88)

6(23)

Private Service

17(50)

9(30.76)

8(32.35)

5(26.92)

Business

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Housewife

Total

4(11.76)

8(19.23)

32

28

1.11 Cross tabulation between number of family members and purpose of having a maid Monthly Income

Dish Washing 3

Cook

Cloth Washing 4

Care Taker

8000-12000

House Cleaning 1

13000-17000

3

8

4

8

1

18000-22000

2

3

2

3

1

22000-26000

2

2

2

3

1

2

1

Above 26000 26000

1.12 Cross tabulation between monthly income and willingness to have maid service Monthly Income

Maid Service Yes

No

2(6.25)

6(21.42)

13000-17000

9(28.125)

15(53.57)

18000-22000

8(25)

3(10.71)

22000-26000

8(25)

2(7.14)

Above 26000 26000

5(15.625)

2(7.14)

32

28

8000-12000

Total

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1.13 Findings:

1. Currently 38% of the household need atleast one type of maid service; it is high among household living in apartments (46%) whereas 30% among people living in single homes. 2. Age group of 27-59 wish to have maid service the most (77.77%) followed by age group of 60 and above (16.66%), it is low among age group of 16-26 (5.55%) 3. Family with 3-4 members are in need of maid service the most (50%) followed by 5-6 (32.35%). 4. In occupation, private service holders are in need of maid service the most (50%) (50%) followed by businesspersons (32.35%). People with monthly income above 13000 and above 26000 are willing to have a maid

2. Marketing Plan 2.1 Marketing activities and its expenses Items Business Cards Flyers Greeting Cards Print Advertising Electronic Media (FM; 40 sec.) Electronic Media (TV Scroll Ads.) Other Media (Newsletter etc.) Total

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Price 9 5 85 4,500 3,295 160

Qty. 500 600 50 10 20 days 135

Amount 4,500 3,000 4,250 45,000 65,900 21,600 5,750 150,000


3. Financial Plan 3.1 Details of Office Equipment Items Computer Printer Photocopy Machine Telephone Sets Water Filter Total

No. 2 1 1 4 1 9

Cost Per Unit 40000 20000 80000 800 4800

Total Cost 80,000 20,000 80,000 3,200 4800 188000

Quantity 5 2 1 set 4 4 1000 sq. ft 25 meters

Rate Per Unit 1000 1500 20000 2000 5000 300 300 5000

Total Cost 5,000 3,000 20,000 8,000 20,000 300,000 7,500 5,000 368,500

3.2 Details of Office Furniture Items Chairs Office Table Sofa Executive Chairs File Cabinets Carpet Curtains Mis Total

3.3 Percentage increase in service revenue for the next five years

Service Revenue

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Increased % Year 1 (Rs.)* 2,538,000

57% Year 2 (Rs.) 3,994,200

57% Year 3 (Rs.) 6,317,172

64% Year 4 (Rs.) 10,390,824

64% Year 5 (Rs.) 17,080,056


3.4 Staff Salary for the next five years Staffs/ Year

1 24000 0 18000 0 24000 0

Managing Director Administrative Administrative Officer Human Resource/Customer Relationship Officer Database Operator Security Guard

96000 90000 846,0 00

Total

2 26400 0 19800 0 26400 0 10560 0 99000 930,6 00

3

4

5

290400

319440

351384

217800

239580

263538

290400

319440

351384

116160 108900 1,023,6 60

127776 119790 1,126,0 26

140554 131769 1,238,6 29

3.5 Number of maids for the next five years Yea r 1 2 3 4 5

House Dish Cleaner Washer 8 12 18 27 40

8 12 18 27 40

Cloth Washer 10 15 23 34 51

Coo k 9 14 21 32 48

Care Taker 7 10 15 22 33

Total 42 63 95 142 212

3.6 Maid salary per month for each year for the type of work done Year 1 2 3 4 5

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House Cleaner Dish Washer Cloth Washer 2100 2200 2100 2310 2420 2310 2541 2662 2541 2795 2928 2795 3074 3221 3074

Cook Care Taker 2500 3200 2750 3520 3025 3872 3327 4260 3660 4686


3.7 Maid salary for the next five years

Types of Service House Cleaning Dish Washing Cloth Washing Cooking Care Taker Total

2013 201600 211200 252000 270000 268800 1,203,600

2014 332640 348480 415800 462000 422400 1,981,320

Year 2015 548856 574992 701316 762300 696960 3,284,424

2016 905580 948672 1140360 1277568 1124640 5,396,820

2017 1475520 1546080 1881288 2108160 1855656 8,866,704

3.8 Loan amortization Schedule Loan Amortization At D:E=60:40 D:E=60:40 (1200000:80 (1200000:800000) 0000) 1200000=A×PVIFA (13%,6 years)

A=300185 Year 0 1 2 3 4 5

Installment

Int.@13%

Principal

300185 300185 300185 300185 300185

156000 137256 116075 92141 65095

144185 162929 184110 208044 235090

Principal O/S 1200000 1055815 892886 708776 500732 265642

3.9 Depreciation calculation using straight line method Items Equipment: Computer Printer Photocopy Machine Telephone Set Water Filter 51 | P a g e

Value 80000 20000 80000 3200 4800

Depreciation rate (%) Depreciation Depreciatio n Amount 20 20 20 20 20

16000 4000 16000 640 960


Furniture Total

368500 556500

20

73700 111300

3.10 Rent expenses for office space Particulars Office Space

Sq. Ft. 850

Rate 24.5

Rent per month 20,833

2 229,068 111300 340368

3 883,562 111300 994862

Rent per Year 250,000

3.11 Cash inflow for next five years Year Net Income/Loss Add: Depreciation Depreciation Cash Flow

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1 (361,900) 111300 -250600

4 2,268,783 111300 2380083

5 4,643,915 111300 44755215


4. KEY FINANCIAL ASSUMPTIONS 4.1 Income Statement Assumptions Service Revenue Customer base: It increases by 50% of preceding year demand for maids. Service rate: It increase by 5% in 2 nd and 3rd year and then by 10% thereafter annually. Operating Expenses Rent: It increases by 10% of preceding year expense. Depreciation: The organization will follow straight line method with depreciation rate of 20% on an average of all depreciable fixed assets of the company. On average the life of total fixed assets is assumed to be 5 years with zero salvage value. Audit/Legal Charges: It will remain constant for 1 st, 2nd and 3rd year and increase by 50% of preceding year. Marketing Expenses: It increases by 10% of preceding year expenses. Office Supplies/ Stationery S tationery:: It increases by 10% of preceding year expenses. Electricity: It remains constant throughout the year. Telephone Expenses: It increases by 10% of preceding year expenses. Miscellaneous: It increases by 10% of preceding year expenses. Interest Rate: The long term interest rate for the organization will be 13% and this interest rate is not subjected to change for 5 years. This is in accordance with the contract with the lending bank. Tax Rate: Corporate tax rate is 25%. They are paid in the year they are occurred.

Staff Salary: It increases by 10% of preceding year expenses. Maid Salary: It increases by 10% of preceding year expenses. Net Income/Loss Profits: All the profits profits (net income) will be retained retained for for further investment. investment.

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4.2 Cash Flow Assumptions Assumptions Investment: Surplus fund will be invested at 10% interest rate in marketable securities. It will not be sold for 5 years. 4.3 Balance Sheet Current Assets Investment: Investment in marketable securities will not be sold thus accumulated for each year. Fixed Assets: Furniture/ Equipment: The value of furniture and equipment decreases by 20% annually. No additional assets will be added in 5 years time. Equity and Liability Equity: Equity is not expected to change for next five years Loan: Loan will be amortized at 13% for six years

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5. Operation Plan 5.1 The actual layout design

Managing Director Room

Administrative /Account Division

Human Resource Division

Figure No.2: Layout Design Appendix2

Security Guard’s 4.2 Operation Schedule for First Year Room Year 0 (in months)

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Entrance year 1 (in months)


5.2 Operation Schedule Type Of work

Preparation

Preparation for getting Licence

Documentation for Licencing

Licence Approval

Preparation for Site Location

Search and Evaluate Site

Finalize Site

Completion of architectural layout design

Complete layout

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8

9

10

11

12

1

2

3

4

5

6

7

8

9

10


Marketing/ Promotion

Office Supplies

Evaluate suppliers/Sellers

Select and Purchase of office supplies

Human Resource Recruitment and selection Training

Service

Start Service

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Business Plan on maid service

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