- Introduction
Jackson plumbing is a sole trader business that provides high quality plumbing services to newly construct residential and commercial buildings in the area at some of the most affordable rates. The business also offers high quality repair plumbing services to both commercial and residential buildings in the area. The location of the business, a low number of competitors and a growing metropolis makes the business a potentially highly profitable undertaking that is bound to experience impressive growth rate in the next few years. The business therefore presents an excellent opportunity to any institution that will invest in the business, and handsome returns for the investment are expected.
The business requires financing to cover its start up costs and the initial operating expenses for the first three months when it is expected not to make any sales. The business is seeking a debt financing of $136,000 to finance its start up. Debt financing is preferred because the cost financing through debt is relatively cheaper than financing through equity. The company is still young and may not attract equity financing, thus the decision to use debt finance, which is also easily available.
- Management profile
The business is run by the proprietor, Mr. Smith Jackson. Mr. Jackson has a wealth of experience in both management and building and construction, having been the lead supervisor in the Plumbing division of an international construction company for a period of fifteen years. He possesses a MBA from the famed Columbia Business School and a bachelor’s degree in water engineering from New York State University. Mr. Jackson has a proven track of sound management and he is fully qualified to direct the business to a path of growth both in size and earnings. With a wealth of experience and the right qualification, Mr. Jackson is the right individual to steer the business during its takeoff.
- Products and services
The business offers high quality plumbing to newly construct residential and commercial buildings in the area. The business will mainly subcontract the plumbing jobs from the major construction companies operating in the area. The business will also offer high quality plumbing repair works to both residential and commercial buildings if specifically required to do so by the clients. The business will also hire its services to the local government in its effort to improve service provision in the area. The business will offer the highest quality of service possible as a way to build up reputation and become the plumber of choice in the local area and counter any competition. The business intends to offer reliable and quality after sale services to its customers in order to retain them as potential clients. The business will also offer high quality plumbing materials at an affordable cost to those who intend to carry out their plumbing repairs domestically by stoking the plumbing tools and equipment of the highest quality.
- Goals and objectives
It is the goal of the business to be the most affordable plumber of choice in the local area in the next three years. This will be achieved through provision of high quality services and products to clients, affordable pricing of projects, aggressive and continued promotional measures and offering a high quality after sale service and customer care. These strategies will enable the business grow its niche market fast, develop visibility in the target market and achieve market dominance.
The short term goal of the business is to break even in the first quarter, achieve profitability in the second quarter and sustain a constant growth rate in profits for the second half of the year. This will be achieved by carrying out a monthly scrutiny on the achievement of the set objectives against benchmarked standards. Appropriate adjustments in operations will be made to reconcile the actual performance of the business to its projected performance. In the medium term, the business intends to increase its market share to about 40% of the target market and achieve annual profitability growth of 20% or more. In the long term, the business has a goal of becoming the dominant business in the target market, achieve the highest brand visibility in the market and record a growth in annual profitability. This will be achieved by conducting annual performance audits to compare the actual business performance with the set performance expectations and making any necessary adjustments to ensure that the business is within its growth objectives.
- Customer identification
The business seeks to service the commercial and residential plumbing needs, both light and heavy. The customer base of the business is thus wide and will range form individuals seeking minor repairs in their residential homes to large buildings requiring extensive plumbing work. The business will however seek more of the heavy commercial projects since they offer more income and are crucial to build the reputation of the business. The business customers will thus range from single young individuals to large corporate bodies.
- Competition analysis
The business has three major competitors. Lakeside Plumbing Inc is a large company that offers plumbing services and interior decorations to buildings which have just completed construction. The quality of customer service offered by the company is relatively good, and the company enjoys a fairly good reputation in the area. However, the company’s after sale service is reputed to be bad, and this is a weakness which can assist Jackson Plumbing to develop a niche market in the area. The company’s quality considerations are high and the materials used in its works are usually of the highest quality. The company has a large promotion budget and this poses a threat to Jackson Plumbing since such vast resources for promotion may not be available. Compared to Lakeside Plumbing Plc, the after sale service of Jackson Plumbing is more superior although the company does not offer interior design as its competitor.
Another competitor to Jackson Plumbing is Victory Plumbers. This is a partnership business operated by two retired plumbers. The business mainly offers plumbing repairs to residential homes in the northern part of the town. The business has not spread its services to the whole town and its main mode of promotion is through word of mouth. The quality of service offered by Victory Plumbers is high and their after sale service can be described as above average. Compared to Jackson Plumbing, the service of Victory Plumbing is spread over a smaller area and the quality of service is almost similar to Jackson Plumbing. Their service is also limited to plumbing repair work only in residential homes and do not carry out initial plumbing work in either new residential or commercial buildings. Compared to Jackson Plumbing, the Victory Plumbers do not offer a considerable business threat although the quality of their service and customer relations is better than those of Lakeside Plumbing Inc.
The third competitor is Millennium Construction. This is a large construction company based in the area that offers construction services, among them being plumbing services. The company is a privately owned company, with decades of experience in the construction industry and usually offers full construction services and does not need to subcontract for its plumbing work on its newly constructed buildings since it has a plumbing department specifically tasked with such operations. The company also offers plumping repair work, but only to those buildings it constructed. The quality of service offered by the company is of the highest standard, and it offers an excellent after sale services. The company also involves itself in intensive marketing drives in the area in order to consolidate its market hold. This company presents the most formidable competition to Jackson Plumbing, but since it only carries plumbing work on the buildings it has constructed, it may not present a lot of competition in the long run given it has constructed a small number of buildings in the area.
- Cash flow projections
The cash flow statement indicates the initial capital injection of $40,000 by the proprietor of the business. It then makes an analysis of the expected annual cash flows that will result from financing activities, investing activities and operational activities. In the first year of the business, the investing activities will take the largest net cash outflow due to the initial purchase of equipment.
The positive cash balance at the end of the year is indicative of the favorable cash position of the business, and indicate that the business will be able to meet both its short term and long term cash obligations without any difficult. These should reassure the providers of debt capital about the cash position of the business, and its ability to meet its financing cash obligations.
Jackson Plumbing
Cash flow statement
For the 12 months ending 30th April 2012
Particulars Amount ($)
Cash at the start of the period (personal financing) 40,000
Cash flows from operating activities
Project charges 605,000
Fixed operating costs (180,000)
Variable operating overheads (275,000)
Initial set up expenses (10,000)
Net cash flows from operating activities 140,000
Cash flows from financing activities
Debt financing 136,000
Interest payment on debt (10%) (13,600)
Motor vehicle hiring charge (12,000)
Pipe soldering equipment installment charge (24,000)
Pipe cutting equipment installment charge (24,000)
Electronic metal detector installment charge (36,000)
Net cash flows from financing activities 26,400
Cash flows from investing activities
Purchase of excavator (50,000)
Purchase of trencher (42,000)
Net cash flows from financing activities (92,000)
Cash at the end of the year 114,400
The business is located at the junction of Queensway and St. Teresa streets. It is open throughout all the working days and opens up to mid day on weekends and holidays. A 24 hour phone number for the business is +008-4536-67789. the business can also be contacted through .
