This report is prepared for the startup of skilled man power supply business in Vietnam specialized in Insulation, scaffolding, refractory and fireproofing industrial services. The name of the man power supply business is Verve Solution with an objective of supply of skilled man power and quality satisfaction with a brand awareness in their customers. To startup, business the main source of fund is from two sources, the proprietors saving and barrowing from his family on fixed period of return. Vietnam is one of the fastest growing countries in the world and the lack of skilled man power attracts the proprietors for this company to start up this business. This report will discuss all the critical issue regarding Verve Solution location, market opportunities, customer, competitive success factors for this organization, promotion, market strategy, pricing strategy, key personal, and their responsibilities, financial plans, financial forecast, and all the sensitive analysis for the success of Verve solution. The Organization will become successful skilled man power supply with their management team commitment and dedication toward the organization.
1.0 INTRODUCTION:
The Purpose report is to prepare a business plan to setup my own business for the supply of skilled manpower business in Vietnam. The main purpose for this business is to create a brand image for this business and core success for this organization lies in the innovative idea in this business. The organization is unique in itself with an objective based on quality services. The reason to start this business is its unique nature and high demand of this services in the developing economy of Vietnam. A recent decision on the Vietnam government in their relief to the entrepreneur to start the business in Vietnam and their investment plan for the construction projects open the door for the Verve solution and past experience for the proprietor in this field and confidence as a entrepreneur of previous successful in his restaurant business which he still own in Vietnam helps the organization for their success.
2.0 BUSINESS NAME AND ADDRESS:
Verve Solutions
Room No 3, Nam Ky khoi Nghai, Dist 1 Ho Chi Minh, Vietnam
2.1 PROPRIETOR'S NAME AND ADDRESS:
Sharique Aftab
Room No 3, Nam Ky Khoi Nghai, Dist 1, Ho Chi Minh, Vietnam
2.2 FORM OF BUSINESS:
Service Enterprises
2.3 BUSINESS ACTIVITIES:
This company specialized in supply of skilled man power supply of Insulators, Tinsmith and fabricator, Qualified QA/QC personnel and estimation and material supply of all type Insulation, Refractory, Fireproofing and scaffolding works.
In additional company is responsible to act as a Technical subcontractor to perform all kinds of Insulation work. Also, company is also providing certification and training of scaffolders and Insulation man powers.
3.0 MISSION STATEMENT:
The company provides the highest level of man power supply and subcontractor which will specifically with the need of the clients, and the company will work with that organization which really demonstrate the importance of quality and are committed to their business development.
3.1 VISION STATEMENT:
The company aims to be a multimillion dollar company providing supply of quality manpower and project solution for the diverse range of organization throughout Vietnam by 2020.The company will build an enviable reputation by providing a highly trained skilled manpower, and high quality technical solution which adding value to our clients.
3.2 OBJECTIVE OF VERVE SOLUTION:
Short Term:
Skilled Manpower supply.
To provide all quality satisfaction for the customers.
To build a trust to the customers.
Achieved the breakeven point in 1years.
Flexible with the quantity to the supply.
Immediate availability of manpower's.
Medium Term:
To create the best company in the country.
To create the brand image in the industry.
To create the best service provider with 100% customer satisfaction from the competitors.
Build the strong reputation in the markets.
To add more services in the insulation industry.
To target to supply manpower for different industry.
To open 10 training centers and 5 office in different part of Vietnam in next 5 years.
To became the specialist in the insulation industry.
Long Term:
To establish a global company.
To establish public limited company and list into a stock exchange.
To expand the business into different innovative ideas.
4.0 PEST ANALYSIS OF VERVE SOLUTION:
Political:
Single communist party.
Greater political stability.
Better change to make a good relation with the local government and negotiate with them.
Vienames government decision to developed and implement a public private partnership for the development of the country infrastructure.
Government decisions to reform in the corruption system, which are, impede the infrastructure development for Vietnam.
Economical:
The 2009 GDP(PPP) of Vietnam is US$256.584 billion
The GDP Growth for 2009 is 5.3% and the GDP by Sector is 19% for Agriculture, 42.7% for Industry and 38.4% for Service. (As per 2008).
Price leadership strategy is the best to use to cater the largest demographic which mean to sell a cheaper and more basic product than compare to premium products.
Cheap labor is available to the Vietnam market.
There is a continues inflation in the economy, present inflation rate is 7% (2010),which is the 179 rank in the world which is -73.1% from the last year.
Vietnam having 13% of the population is below poverty line (2005) and there are 48.41 million of labor force (2008).
Social:
There is a language barrier for the foreign nation as Vietnami is the main source of language in Vietnam.
85% of the populations in Vietnam are Buddhist.
Media and the internet is creating awareness in the population of vietnam.
People understand advertisement in Vietnami language only.
It is better to understand the local value and culture which offering product and service.
Technological:
Vietnam is rank 20th in the world for the internet users of 24.3 m users in 2010.
Present mode of communication will be mobile, internet and the telephone.
Website for the Verve solution can be developed as there is cheap web developer are available in Ho chi minh and Hanoi.
5.0 PROCEDURE TO START A BUSINESS IN VIETNAM:
To start a business in Vietnam there are 11 procedure which any company has to follows which take 50 days minimum and which 13.29% of the total Gross National Income(GNI) per capita which is 2790 US$.
Source: http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/profiles/country/db11/vnm.pdf
The procedure to starts any business in Vietnam is as follows:
Company name should be registered in a local registered centre under the department of planning and investment, which takes around 15 days after submitting the documents.
Once the company is registered then Seal making license is issue from the public security department, which takes around 5 days.
Making company seal that take around 5 days.
Company seal ready to pick up from them and it take one day, which is going to receive only in the evening after 3:00pm.
Next is open company bank account which take a one day.
Then have to publish company announcement in any local newspaper in Vietnam which take another one day.
Apply to the municipal taxation department of Vietnam to get the Tax code of the company to pay the company business license tax two to three days.
VAT invoice should be buying from the taxation department or you can print it also, but it is cheaper to buy from the taxation department. It takes another three days.
After that need to registered with the municipal department to declare the use of labor in nearest local office in city.
All the employees should be registered which the social insurance funds to get the benefit for the health insurance and the social insurance.
Lastly need to registered with the trade union .(Vietnam general consideration of labors)
Overall process takes around 50 day to startup of any business in Vietnam.
5.1 GOVERNMENT SUPPORT, RULES, AND REGULATION:
The government of Vietnam introduces a new private enterprises law in 1999,according to this law the minimum capital requirement to start up the private enterprise for trading and service should be 250 million VND(15000US$) .There should be two procedure ,first to obtained a established license from the government and then follows the above procedure to obtain the business registration from the government.
6.0 RATIONALE FOR LAUNCHING A BUSINESS:
The construction of second refinery with a worth of 8 billion US dollar project which is schedule to be start in 2010 and the third refinery which is schedule to start in 2014 which required a huge amount of skilled man power supply in Vietnam.
While working on the first refinery in Vietnam there was two major subcontractor for Insulation contract in which there was a shortage of skilled manpower which result in loss of contract for the second subcontractor called Prezioso ,which not able to performed their contract work on time due to the shortage of skilled manpower, which results the client back charge all the delay in work amount to Preziosio and handover the balanced contract to KAEFER to perform all the balance insulation work which result a difficulty to KAEFER to perform all the contract worth of 25 million US$ insulation for the first refinery, Due to which KAEFER hire a subcontractor from India for Manpower supply to perform the work which results in delay in completion of insulation work due to arrangement and negotiation with subcontractor to supply of 500 skilled manpower from Thailand ,200 skilled fabricator from India and 2000 skilled and unskilled manpower from Vietnam, result a huge profit to Insulation subcontractor from Thailand paid by the KAEFER to perform the works.
KAEFER and Preziosio are the major companies in Vietnam having their offices in Vietnam and France respectively. But to perform the work there is not major subcontractor to perform the work on a large scale.
Vietnam is a country, which do not have a skilled labor to complete the job. The idea to establish my companies to supply the skilled man power to bridge a gap.
According to (Global trade,2010) present situation Vietnam market is one of the emergent market in the world .Market growth is one of the fastest growing economy in the world which is expanding globally with a 5 to 8.5% per annum. There is growth of a 14-15% per annum in the industrial product.
Vietnam GDP is 5.3% in 2009, which is one of the most impressive economic growths in the world. There is a prediction for 6.5 % of GDP in 2010.In 2009 the total 40% of the GDP is added by the industry in Vietnam, followed by agriculture of 21% and the service industry of 39%.Which indicate a growth of the industry which Verve solution is targeting.
6.1 PENETRATION OF VIETNAM MARKET:
In order to analyze the market size and growth following analysis being done:
6.1.1 SUITUATION ANALYSIS:
The present status of the business position in market with all the various opportunities from business freedom to labor freedom as compared with the average world market business in the below fig.
Source: http://www.heritage.org/index/Country/Vietnam
6.1.2 PROJECT DEVELOPMENT AND INVESTMENT PLAN IN VIETNAM:
Till 2010 there was 70 projects are working consist of small and large projects worth value of US$ 7.1 billion of investment coming from various privately sources.
There are two major project started in 1993 with the 100% investment from the private foreign investment that projects was Phu My Power plant and the natural gas power line project. In 2008~2010 under the foreign participation of infrastructure development plan the foreign investor can invest in a project under the regulation of Build Operate transfer(BOT).According to this regulation private investor can build the infrastructure and charge the tariff on the business on the agreed period of time with the Vietnam Government.
In 2010 A new draft of public private partnership (PPT) the government will invest 30% of the fund to attract more foreign investor in Vietnam, which is going to implement from 2011.Its open a new opportunities for various infrastructure construction in Road, Airways, Refinery, Power, steels, cement. Major of the Energy and gas power are own led by EVN and the Petro-Vietnam.
Majority of the fund in Vietnam infrastructure development come from Overseas Development assistance (ODA) in which Japan is the major funding source in ODA, and the active presence of Japanese companies in Vietnam. So most of the works are now contracted to the Japanese companies (First refinery EPC contactor was JGC, Japan and for the second Refinery EPC contractor is JGC(Japan) and with the help of local construction companies they are implementing the projects.
There are various upgrade of airport near Ho chi minh which is going to start in 2011 worth of 8 billion US$, All the investment is an ODA funding which open an opportunities for the skilled manpower supply.
There are major development in port sector in which companies like Hutchison, Hong Kong, Singapore port and SSA marine, USA companies are involved ,there is also a major skilled manpower demand.
The starts of second refinery in 2011, the three major power plant project, two major steel plants, and the two major steel plants open opportunities of major insulation, scaffolding, refractory and the fireproofing works.
Due to the large infrastructure in Vietnam, the best opportunity is the supply of skilled manpower which is a acute shortage in Vietnam.
7.0 LOCATION SELECTION:
Verve solution situated in Ho chi minh the financial capital of Vietnam. The total population of this city is 9 million which expected to expand by 30000 sq km which population of 20 million by 2020.The overall GDP of Ho chi minh is 20.2 %( 2010) for overall Vietnam GDP. There are more than 300,000 small and medium business office which includes fifteen industrial park, with more than 50 different banks operating with more than 100 of their branches in this cities. There are more than twenty insurance companies are operating .Around 171 medium and small market are in ho chi minh including malls, super markets.
All the major oil and gas companies, EPC contractors and all the local company head office are in Ho chi minh. This is the best place to open the manpower supplies to develop a good relation with all the major EPC contractor and the Vietnamese companies. There are major man power supplies companies but none of the companies is supplying skilled Insulation, scaffolding, refractory manpower's. This is a niche market for my business and got opportunities to develop a good relation for the manpower supply business with these companies.
8.0 TARGET CUSTOMERS:
All the major EPC contractor and subcontractor for Insulation work are the target customer. Various multinational companies are targeting the market which they do not have the manpower , Verve Solutions will build a good relation with all the major EPC companies with providing a best quality service to them and also utilized all the modern tools and technique and market relation to up to date for new potential customers. The past experience in Vietnam while working on the various project (One Petroleum refinery Project, One Aluminum Refinery, three power plant, one steel plant and one Polypropylene projects and various other onshore and offshore support projects) and maintaining a good relation with companies director with all the major subcontracting companies and understanding the business strategy while working at the various project in Vietnam.
9.0 COMPETITION OF VERVE SOLUTION:
There are three major companies in Vietnam which are also involve in the same type of business of manpower supply and technical support for the industrial services those are Viva blast, Vung Tau Insulation company(VIC) and Lilama 18.
Viva blast is a well know painting and blasting company, it is functioning in Vietnam from last five years, and they are the French Vietnami company. They have their offices in the Vung Tau industrial area,100 Km north of Ho chi minh, but they are mostly involve in the industrial painting Jobs, less experience in the insulation work.
Second competitor is VIC, which is a British Vietnami companies function in Vietnam from last 7 years and specialist in the scaffolding work for man power and material supply.
Third competitor is Lilama 18, which is a vietnami company; It is functioning from last 10 years in Vietnam,it is one of the divisions of Lilama group major contractors for mechanical and civil works, its Head office in Hanoi, Vietnam.
Source: http://labspace.open.ac.uk/file.php/1/kmap/1179132179/images/porter[1].jpg
Fig: Porter Five Forces
Above analysis based on the Porter Five force, new entrance threat is high due to the low startup cost for this business and entrance of new competitors can only happen after the launch of the verve solution in Vietnam.
The bargaining power of the buyer is low for the verve solution is providing a unique supply of skilled labor including all the four types of industrial service, there is a competitive advantages of the refractory and fireproofing as there is no competitors for this unique services, also the verve solution will provide the best skilled manpower's and with most competitive price strategy.
Threat of substitute product or service is low due to the highly skilled engineering work, and company will not work complete on quality and meet the target without the skilled man power.
The bargaining power of supplier is high as there is a very less skilled manpower available for this specialized work but verve solution will trained and certified its all worker which is helps to differentiate from its competitors and provide the quality works.
9.1 VERVE SOLUTION CAMPARISION WITH THEIR COMPITITORS:
ITEMS
Verve Solution
Viva Blast
VIC
Lilama 18
Skilled manpower
Scaffolding, Insulation, Refractory, Fireproofing.
Insulation
Scaffolding
Scaffolding
Price
Medium
Medium
High
High
Brand
No
No
No
No
Years
Startup
2005
2003
2000
Manpower Service
Highly specialized, skilled trained.
Unskilled manpower
Skilled
Vietnam Standard
Material supply
Yes
No
Scaffolding material only.
No
Training and Certification
Yes, All training and Certified Manpower supply
No
Scaffolding Certified
No
Specialist
Offshore certified man powers supply
No Offshore Jobs
Only Scaffolding offshore Jobs
No offshore Jobs
9.2 VERVE SOLUTION ANALYSIS:
VERVE SOLUTION STRENGTH
VERVE SOLUTION WEAKNESS
Man power supplies for all four types of industrial services for Insulation, Refractory, Scaffolding, and Fireproofing.
Management has a very good experience for the all four type of Industrial services.
Previous experience and contacts in Vietnam helps the management to arrange a good skilled man power for all the four industrial service works.
Management experience and qualification skills help them to prepared and handle all kind of situation.(MBA and Engineering)
Past successful running of business of restaurant industry by the management, helps to handle all local problem by the police, documentation work done on time and other business problem (Management still running successfully its Indian Restaurant " Tandoori Night" at the Quang Ngai Province of Vietnam).
Refractory and fireproofing are highly specialized engineering work, man power are not easily available.
Employee turnover is a major problem, various subcontractor pay high salary to the skilled worker, which is major problem with the worker left the company, and join with other companies.
Vietnam as a socialist country, there are lots of hurdle to run the business by a Expat, management have to prepared for this and use its management skills to analyze the situation and response accordingly.
Language is the major problem in Vietnam due to which management need to be very careful while communicating with the worker or customers.
In Vietnam every single Job needs a have a written contract in Vietnami, management have to be very much careful on the translation of the contract with company and with the employees.
9.3 VERVE SOLUTION CRITICAL SUCCESS FACTOR:
Highly specialized skilled man power supply, which is a niche market in Vietnam.
Working professionally with highest customer service.
The development of Vietnam and upcoming so many project for Insulation, scaffolding, refractory and fire proofing which is second biggest contact value after mechanical contract on any project oil and gas project, Construction Project(Thermal power plant, Cement Plant, Steel Plant etc.)
The increase in demand of quality works and completion of Job on the target date is the Key to success for Verve Solution.
Now big contractors companies hiring subcontractor companies to perform the works on their behalf with an agreement of supply the man power on the hourly basis or lump sum contract value and they control the quality of works and work flow with proper planning to complete the Jobs.
Proper understand the demand of the customer and provide the best service to them.
Supplying of minimum to maximum skilled peoples based on the client requirements.
Insulation and scaffolding offshore man power supply which is also a niche market in Vietnam.
10.0 VERVE SOLUTION PROMOTION AND MARKETING STRATEGY:
Verve Solution marketing and promotion plan are based on the strategic alliances and communication campaign by giving advertisement in all the major Vietnami Newspapers and English New Paper, Also company will registered his address detail in the yellow pages and some Local construction magazines. While advertizing company will develop a strong strategic alliance with some of the companies, the managing director of the Verve solution has a good relation with some of the insulation main contractor companies which he works earlier in Vietnam with them, by providing the best competitive price and best quality service helps to develop a good business relation with insulation main contractor company. Once the relation is formed them this will help to further expansion of the contacts also company will provide each manpower it own dress on which the detail of the company name and address with contact number will be printed ,which will helps to further advertisement for the companies. In Vietnam, there are three major international airports, Company will rent an advertisement holder to advertise in front of the airport as major of the company executive travel frequently, and this will help to further business contacts. Also, company will use small billboards near the project site, which will helps to promote the advertisement.
11.0 VERVE SOLUTION PRICING STRATEGIES:
Following are the standard rates for skilled the man power supply:
S.no#
Skilled Manpower Details
Price/Hrs
USD
1
Scaffolders
1.34
2
Insulators
1.39
3
Tinsmith
1.5
4
Fabricators
1.81
5
Refractory Applicator
2.1
6
Fireproofing Gunitter
2.1
7
Fireproofing Mason
1.91
The above rate is best competitive price based the recent market survey for various competitor price for skilled scaffolder rate hourly rates ranges from US$ 1.5/Hrs to US$ 2.5/Hrs and the skilled manpower available in the market. But company strategy is to trained the semiskilled man power and with best skilled and competitive price in the market.
Also managing director experience on project estimation helps to provide the best material price based on the project specification, quantity of material and the best delivery date.
Company will provide the best competitive price for the skilled man power for offshore projects.
The initial price is to recover the breakeven point for the business, After that the company performance and the brand will increased and then the volume of the sale also increased and the profit also increases so at that time price remain sale but we will add some more service like free supply of supervisors along with the certain number of group of workers.
12.0 VERVE SOLUTION EMPLOYEES DETAILS AND RESPONSIBILITIES:
Managing Director:
Sharique Aftab
Leads the organization and helps to develop the corporate culture of the organization, responsible for the day to day operation of the business, and prepared the strategic plan for the organization and responsible for investment decision, controlling of budget, managing organization assets and its resources, involved in major decision making, involved in the decision for the recruitment of their employees, responsible for the pricing strategies, promotion, marketing strategies and contract decisions, Also involved in project planning and project estimation.
Accountant
Ngoc Nheiu.
Responsible to issue of company VAT invoice, profit and loss statement, preparation of monthly cash flow, prepared and review the budget, preparation of salaries for the staff, coordinate with the government office for the accounting related policies and implementation of that, responsible to check all the expenses of the company further get approval from the managing director, responsible for the internal and external audit coordination, responsible for all the accounting discrepancies.
Supervisor/Trainer (Insulation,Scaffolding)
Mohammad Nadeem
Responsible for all the training and maintain of the progress of the job, maintaining performance of individual insulation and scaffolding workers, Also responsible for the daily, weekly and monthly progress report and submitting to the managing director, communicating and maintain the company policies with the workers, and accountability for the insulation, scaffolding material and machineries of the organization, maintain the dignity and company confidential.
Supervisor/Trainer (Refractory and Fireproofing)
Nandy Mazumdar :
Responsible for all the training and maintain of the Job progress, maintaining all the performance of individual workers, Also responsible for the daily, weekly and monthly progress report and submitting to the managing director, communicating and maintain the company policies with the workers, and accountability for the refractory and fireproofing material and machineries of the organization, maintain the dignity and company confidential, preparation for the certificate and maintaining the record certificate issued.
Office Staff
Mr.Le Quoc Vinh:
Responsible for the daily update data input in the computer, typing of contracts, and attending the calls from the client and transfer to various peoples, track record of all the letter received and dispatch, and handling some local purchase of the office stationary.
13.0 FINANCIAL PLAN:
13.1 FINANCIAL OBJECTIVE:
Breakeven point in one year
First Year return on investment by USD 45,000
Second year return on investment by USD 52,000
Third year return on investment by USD 85,000
13.2 RESOURCE OF FUNDS:
S.no
Fund Sources
USD
1
Self Cash
20,000
2
Family Cash
25,000
Total
45,000
The managing director has some saving in his account which he utilized to start up the business, Also can borrow from his parents the balance money which he can return back within one years of time, by generating the fund from the internal source help to company to save time to arrange documentation for the bank loan and this also help the company to be fully control by the managing director in term of financial resources.
13.3 ESTIMATED SALARY DETAILS FOR THE EMPLOYEES:
S.no
Description
Monthly Salary
USD
Annual Salary
USD
1
Managing Director
1000
12,000
2
Accountant
500
6,000
3
Supervisor (Expat)I
900
10,800
4
Supervisor(Expat) II
900
10,800
5
Office Staff
300
3,600
Sub Total
3600
43,200
13.4 FIXED ASSEST:
13.4.1 MACHINERY AND EQUIPMENTS:
No.
Machinery for Insulation training
Total Price
USD
Qty. Required
Total Amount
1.
2.
3.
4.
Bending Machine
Rolling Machine
Grooving Machine
Hand tools(Pliers, Screw Driver, Electric drilling machine, etc)
1000
1200
1050
500
1
1
1
1000
1200
1050
500
Subtotal 1
3750
No.
Tools and equipments for Scaffolders Training
Total Price
Qty. Required
Total Amount
1.
2.
3
Ratchet scaffold (19X21 size)
Scaffold Tube
Clamps
5
12
3
30
50
200
150
600
600
Sub Total 2
1350
No.
Machinery for Office
Total Price
Qty.
Total
1.
2.
3.
4.
5.
6.
Table Managing Director
Chair in Managing Room
Staff Table and chair
Customer Chairs
Computers
Others (Racks, folder, Fax, Telephone, etc)
100
30
50
20
2
1
1
5
6
560
2000
100
30
250
120
1020
2000
Sub Totals 3
3,520
G' Total USD [1+2+3]
8620
13.4.2 PREMISES:
Verve solution office area needed around 1200 sqft, and workshop facilities of 1000 sq ft for the training of the man powers. The rent for the office is USD 600/month and rent for the workshop is USD 350/month. The initial agreement is for the office is for two years and workshop agreement for the one year's which can be renew before the finish of the contract. So USD 14,400 for the office rent and the USD 4200 for the workshop rents.
13.4.3 RAW MATERIAL:
The company is a service provider so there is no requirement for any raw material to maintain, so client request for any material supply ,which can be arrange based on the project specification and the client requirement.
13.4.4 START UP EXPENSES:
S.no
Particulars
Total Amount USD
1.
Insulation Machinery
3750
2.
Scaffolding Tools and Material
1350
3.
Office Machinery
3520
4.
Premises
18,600
5.
Vehicle Rents
1,200
6.
Expenses for the documentation
1,000
7.
Telephone/Mobile
800
8.
Office Expenses
1,000
9.
Salary for the staff
3,600
10.
Advertisements and promotions
4000
12.
Miscellaneous expenses
3000
Totals
41,820
13.4.5 OPERATING COST:
S.no#
Particulars
Total Amount USD
1.
Self cash
20,000
2.
Family Cash
25,000
Subtotal
45,000
3
Start up expenses
41,820
Net operating Cost
3,180
14.0 SALES FORECAST:
S.
no
Items
Quantity
(Month)
Unit Price/Hr
USD
Sale per Month
USD
Years 1
Years 2
@15% sales increased
Years 3
@30 %sales increased
1
Scaffolders
15
1.34
4824
57,888
66,572
86,543
2
Insulators
20
1.39
6672
80,064
92,074
119,696
3
Tinsmith
10
1.5
3600
43,200
49,680
64,584
4
Fabricators
10
1.81
4344
52,128
59,948
77,932
5
Refractory Applicator
5
2.1
2520
30,240
34,776
45,209
6
Fireproofing Gunitter
15
2.1
7560
90,720
10,4328
135,627
7
Fireproofing Mason
5
1.91
2292
27,504
31,630
41,119
Total
381,744
439,008
570,710
15.0 FORECAST INCOME STATEMENT:
Business Income statement from 2011 to 2014 Period: Three years
Year 1
Year 2
Year 3
Sales:
381,744
439,008
570,710
Less direct (variable) costs
Direct wages Workers
Direct Wages (Staff)
254,496
43,200
292,671
47,520
380,474
52,272
Total direct costs
297,696
340,191
432,746
Operating profit
84,048
98,817
137,964
Fixed costs (overheads):
Premises Rents
Miscellaneous
Maintenance
Telephone
Electricity
11,400
7,000
5,000
6,000
3,600
11,400
10,000
7,000
7,000
4,000
12,540
11,000
8,000
7,500
4,000
Subtotal
33,000
39,400
43,040
Profit before interest and tax
51,048
59,417
94,924
Interest
0
0
0
Profit before tax
51,048
59,417
94,924
Taxation
5,104.8
5,941.7
9,492.4
Profit after tax
45,943.2
53,475.3
85,431.6
16.0 FORECAST CASH FLOW STATEMENT:
Year 1
Year 2
Year 3
Cash Receipts
Cash Sales
Collection form debtors
Loan
381,744
NA
NA
439,008
NA
NA
570,710
NA
NA
Cash Payments
381,744
439,008
570,710
Cash Purchases
Overhead
Cash
Revenue expenses:
33,000
8620
39400
10400
43040
13200
Net cash flow
340,124
488,808
514,470
Opening cash
0
340,124
828,932
Overdraft or short term borrowings
0
Closing cash
348,744
828,932
1,343,402
17.0 FINANCIAL HIGHLIGHTS:
Year 1
Year 2
Year 3
Turnover:
381744
439008
570710
Gross Profit
51,048
59,417
94,924
Net Profit:
45,943.2
53,475.3
85,431.6
Breakeven:
Yes
Profit
Profit
Gross Profit%
13.37%
13.53%
16.63%
Net Profit %
12.03%
12.18%
14.96%
18.0 MONTHLY CASH FLOW FORECAST:
Month
Jan
Feb
Mar
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
Sales
Receipts
Sales-cash
31812
31812
31812
31812
31812
28140
28140
28140
28140
35484
35484
39156
Sales-debtors
Capital introduced
45000
0
0
0
0
0
0
0
0
0
0
0
Total (USD)
76812
31812
31812
31812
31812
28140
28140
28140
28140
35484
35484
39156
Payments
Materials
8620
0
0
0
0
0
0
0
0
0
0
0
Wages+ salaries
21,208
21,208
21,208
21,208
21,208
18,760
18,760
18,760
18,760
23,656
23,656
26,104
Electricity
300
300
300
300
300
300
300
300
300
300
300
300
Telephone
500
500
500
500
500
500
500
500
500
500
500
500
Advertising
1000
1000
1000
1000
1000
500
500
500
500
500
500
500
Transport/travel
1200
1200
1200
1200
1200
1200
1200
1200
1200
1200
1200
1200
Stationery/postage
400
400
400
400
400
400
400
400
400
400
400
400
Miscellaneous
600
600
600
600
600
600
600
600
600
600
600
600
Total (Y)
33,828
25,208
25,208
25,208
25,208
22,260
22,260
22,260
22,260
27,156
27,156
29,604
Cash Balances
Cash Flow
39,384
6604
6604
6604
6604
5880
5880
5880
5880
8328
8328
9552
Opening Balance
0
39,384
45,988
52,592
59,196
65,800
71,680
77,560
83,440
89,320
97,648
105,976
Closing Balance
39,384
45,988
52,592
59,196
65,800
71,680
77,560
83,440
89,320
97,648
105,976
115,528
19.0 FORECAST BALANCE SHEET:
Year 1
Year 2
Year 3
Non Current Assets
Insulation Tools and machinery
Refractory Tools and Machinery
Office and others
3750
1350
3520
4500
1200
1400
3500
1000
1200
Current Assets
Cash
3180
46,376
85,431
Total Assets
11,800
53,476
91,131
Capital:
45,000
Non Current Liabilities:
Barrow return back
25,000
0
0
Current Liabilities:
10,000
12000
13000
Total: Capital + Liabilities:
30,000
12000
13000
20.0 SENSITVITY ANALYSIS FOR VERVE SOLUTION:
Based on Sales:
Let us assume that the sales for the Verve Solution in Year 20XX will be US$ 381,744 for the 80 man power supply at average rate of 1.65 USD/Hrs.
Sale
Decrease 15%
Decrease 10%
20XX sales
Increase 10%
US$
324,482
343,569
381,744
419,918
If the actual sale decrease by 10% then the average manpower decrease by 80 to 72 numbers and then the sale will be (72X 1.65X 8X30 X 12 ) US$343,569,if the sale decrease by 15% then the man power supply will decrease by 68 numbers then the sale will be US$324,482 now if the sale in the year 20XX increase by 10% then there will requirement for 88 numbers of peoples and which will increase the total sale price by US$419,918.
Based on Variable cost:
Lets us assume that when the sale of 20XX years decrease or increase then the variable cost also increase and decrease, Average variable cost is 1.15USD/Hrs
Variable Cost
Decrease 15%
Decrease 10%
20XX
Increase 10%
US$
216,321
229,046
254,496
279,945
if the actual sale decrease by 10% then the average manpower decrease by 80 to 72 numbers and then the variable cost will be (72X 1.15X 8X30 X 12 ) US$229,046 if the sale decrease by 15% then the man power supply will decrease by 68 numbers then the sale will be US$216,321.now if the sale in the year 20XX increase by 10% then there will requirement for 88 numbers of peoples and which will increase the total sale price by US$279,945.
Based on fixed cost:
Lets us assume that when the sale of 20XX year's decrease or increase then the variable cost also increase and decrease, Average Fixed cost will remain same.
Fixed Cost
Decrease in sales 15%
Decrease in Sale 10%
20XX
Increase in Sale 10%
Rents
Miscellaneous
Maintenance
Telephone
Electricity
Wages to Staff
11,400
7,000
5,000
6,000
3,600
43200
11,400
7,000
5,000
6,000
3,600
43200
11,400
7,000
5,000
6,000
3,600
43200
11,400
7,000
5,000
6,000
3,600
43200
Total
76,200
76,200
76,200
76,200
Based on Net profit before Tax:
The Net Income is calculated by subtracting the value of Variable cost, Fixed cost from the total sale which is explain as below:
Decrease in sales 15%
Decrease in Sale 10%
20XX
Increase in Sale 10%
Sales
323,136
342,144
381,744
418,176
Variable Cost
216,321
229,046
254,496
279,945
Fixed Cost
76200
76200
76200
76200
Net Profit Before Tax
30,615
36,898
51,048
62,031
Thus with the above analysis for the Verve solution based on the various factor for increase and decrease of sale, variable cost and the fixed cost forecast that the business is profitable in the worst situation also and able to generate the profits.
21.0 REFRENCES:
http://www.marketresearch.com/product/display.asp?productid=2785206 (Accessd on 28th December'2010)
http://www.indexmundi.com/vietnam/inflation_rate_(consumer_prices).html (Accessed on 28th December'2010)
http://www.lookatvietnam.com/2010/08/vietnam-one-of-top-20-countries-for-internet-users.html (Accessed on 28th Decmember'2010)
http://en.wikipedia.org/wiki/Economy_of_Vietnam (Accessed on 28th December'2010)
http://www.google.com/publicdata?ds=wb-wdi&met=ny_gnp_pcap_pp_cd&idim=country:GBR&dl=en&hl=en&q=gni+per+capita#met=ny_gnp_pcap_pp_cd&idim=country:GBR:VNM (Accessed on 28th December'2010)
http://www.businessenvironment.org/dyn/be/docs/121/Session2.1Paper2.1.1Manh.pdf
http://www.globaltrade.net/international-trade-import-exports/f/business/text/Vietnam/Business-Environment-Doing-Business-in-Vietnam.html (Accesed on 29th December'2010)
http://www.globaltrade.net/international-trade-import-exports/f/business/text/Vietnam/Business-Environment-Doing-Business-in-Vietnam.html (Accessed on 29th December'2010)
http://www.globalpost.com/dispatch/vietnam/090403/down-and-out-ho-chi-minh-city (Accessed on 29th December'2010)
http://www.eng.hochiminhcity.gov.vn/eng/news/default.aspx?cat_id=589&news_id=38 (Accessed on 29th Decemeber'2010)
APPENDIX 1: Expense cost for the Manpower supply
S.no#
Skilled Manpower Details
Price/Day
USD
Overheads
USD
Basic Price
Unit Basic Price/Hrs
USD
Profits
@50%
USD
Unit Price/Hrs
USD
1
Scaffolders
4.16
3
7.16
0.89
0.44
1.34
2
Insulators
4.44
3
7.44
0.93
0.46
1.39
3
Tinsmith
5
3
8
1
0.5
1.5
4
Fabricators
6.66
3
9.66
1.20
0.60
1.81
5
Refractory Applicator
8.33
3
11.33
1.41
0.70
2.1
6
Fireproofing Gunitter
8.33
3
11.33
1.41
0.70
2.1
7
Fireproofing Mason
7.22
3
10.22
1.27
0.63
1.91
