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 ContentsAcknowledgement...........................................................................................................................i

Executive Summary.......................................................................................................................ii

1. Company Overview..........................................................................................................1

1.1 Background of the Business................................................................................................1

1.2. Basic 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................................................................................................................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......................................................................................................................10

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 Structure........................................................................................................12

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5.4 Recruitment and Selection.................................................................................................14

5.5 Remuneration and Compensation System........................................................................14

5.6 Training and 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...................................................................................20

6.5.2Human Resource Personnel........................................................................................21

6.6Management of Demand and Work Load...........................................................................23

6.7 Labor Supply Management................................................................................................23

6.8Operation Schedule............................................................................................................23

6.9 Procurement......................................................................................................................24

7. Marketing Plan................................................................................................................25

7.1 Demand Analysis...............................................................................................................25

7.2 Marketing Strategy.............................................................................................................26

7.3 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 strategy......................................................................................................30

7.4 Growth rate........................................................................................................................30

7.5 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 five 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 of Retained Earnings for the next five years......................................................36

8.9 Projected Balance Sheet for the next five years................................................................36

8.10 Profitability Ratios............................................................................................................37

8.11 Computation of Net Present Value (NPV)........................................................................37

8.2 Computation of Payback Period........................................................................................37

9. Critical Risk and Contingencies....................................................................................38

9.1 Internal risk.........................................................................................................................38

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 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 to work under the terms and conditions of Kathmandu 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 MissionProvide 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

To provide reliable and reasonable services all year round

To create congenial working environment where all employees rights are

protected

To work towards fair competition

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

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

Increase Customer satisfaction

1.2.5 Company ValuesKathmandu 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.

Appreciate suggestions and recommendations given by customers and

employees

Regularly seek feedback from customers and improve service accordingly

All the employees can work with dignity and have gainful employment

Abide with rules and regulations of the country

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1.3 RegistrationIn order to register the company under the 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 Form, copy of the 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

2. BUSINESS ENVIRONMENT ANALYSIS

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2.1 Industry AnalysisFor 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.

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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.

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 ANALYSISSWOT 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

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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

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

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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.

2.3 PEST 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. 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.

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-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 ServicesThe company will specialize in providing following services to households

House Cleaning

Dish Washing

Cloth Washing

Cook

Care Taker

o Baby

o Old Aged

o Disabled

All the employees working as house cleaner, dish 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 ANALYSIS

4.1 Primary ResearchThe objectives of survey of the residents of Kathmandu valley towards maid service are

to:

Identify the potential size of the market

Identify the target group for providing service profitably

To know the specific needs and expectation from our service so that their

feedback would be incorporated to design our service.

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

To know the future of our service for upcoming years.

To know our potential competitors

4.2 Sampling Plan

Sampling unit

Household

Sample size

60 household from 2 wards of KTM Valley

Sampling procedure

Quota with Convenience sampling method

4.3 Research InstrumentThe 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 MarketKathmandu Enterprise have segmented its market on the basis of:

Geographical

Kathmandu Valley

Residential area (private homes, apartments and colonies)

Demographic

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

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

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 Findings1. 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%)

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 strategy1. 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 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

Quota with Convenience sampling method

Researcher administered survey

Secondary Source:

Central Bureau of Statistics (CBS): www.cbs.gov.np

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5. Company Profile

5.1 Form of BusinessThe 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 StatusThe 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 StructureI, 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 Structure Chart

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Managing Director

Administrative/Account

Human Resource / Customer Relationship

Officer

Database Operator

Maids Security Guard


5.4 Recruitment and SelectionThere 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 SystemPermanent 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 PlanManagement 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 ManagementThe 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.

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.

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

the prior maid.

Company will take full responsibility of its maids and willing to compensate

for any damages done by maids.

Only trained maids will be assigned for service to clients. Training will be

given on both vocational (if needed) and moral aspects.

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.

Customers will not have difficulty in finding the office.

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

Office building has space (room) for expansion. This will help to setup

additional departments to better cater service to clients in future.

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 securityThis 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.

Provide vocational training to upgrade skills of staffs

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 DeliveryThe 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

The enquiry will be handled by the customer relationship officer

Customers will visit the company office and talk with customer relationship

officer

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

timings.

Appropriate employee (maid) will be selected and given needed training and

information on the need of the customer.

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 DesignThe 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:1.8, ***Appendix: 1.9

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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 House Cleaner Cloth WasherDish

Washer Cook Care Taker 1 8 8 8 10 72 12 12 12 15 103 18 18 18 22 154 27 27 27 33 225 40 40 40 49 33

6.3 Location strategy

6.3.1 Site SelectionBeing 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

The site should provide proximity to target business area

The office site should be located with room for future expansion

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

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

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for expansion. The office space meets the requirement of 900 square feet for the office

setup.

6.4 Layout Design Strategy

6.4.1 Office layoutThe 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 Room

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

Human Resource / Customer Relationship Officer’s Room

Maids’ Room

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 ResponsibilitiesManaging 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 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 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

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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.

6.5.2Human Resource PersonnelTable 3 : Total number of staffs and their salary

Position Number of Staffs Expected Salary (Rs.)

Managing Director 1 20,000

Administrative/Account

Officer

1 15,000

Human Resource/

Customer Relationship

Officer

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

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 Officer Bachelors Degree with atleast 3 years of

experience in related field

Human Resource/ Customer

Relationship Officer

Bachelors Degree with atleast 3 years of

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 LoadPart 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 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 ManagementKathmandu 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 ScheduleIt 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

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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 to take about three months

Preparation for site location

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 ProcurementFurniture 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

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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.

7. Marketing Plan

7.1 Demand AnalysisThe 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 No.

Population

HH size

Ward no

Population HH size

1 8464 5.01 19 7400 5.012 13655 4.27 20 8240 4.843 20782 4.55 21 12369 4.934 29539 4.36 22 5840 5.795 15340 4.29 23 8289 4.856 39316 4.48 24 5272 5.77 39530 4.24 25 4310 5.798 9434 4.36 26 3764 4.979 29263 4.36 27 7789 5.05

10 25977 4.21 28 5462 5.0211 15244 4.37 29 24543 4.412 10313 4.95 30 9896 4.85

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13 29721 4.62 31 14502 4.4614 34488 4.4 32 24355 4.2815 32441 4.36 33 21597 4.2616 45450 4.21 34 46136 4.1817 19876 4.36 35 35184 4.0418 8065 4.66 36 671846 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 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 StrategyKathmandu 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 strategyThe 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 5069Dish Washing 4200 4410 4630 5093 5602Cloth Washing 4000 4200 4410 4851 5336Cooking 6500 6825 7166 7883 8671Care Taking 7000 7350 7717 8489 9338

*rate increases by 5% in 2nd and 3rd year and then by 10% thereafter annually

7.3.3 Promotional strategyKathmandu 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 Year 1 Year 2 Year 3 Year 4 Year 5Business Cards 4,500 4,950 5,445 5,990 6,588Flyers 3,000 3,300 3,630 3,993 4,392Greeting Cards 4,250 4,675 5,143 5,657 6,222Print Advertising 45,000 49,500 54,450 59,895 65,885Electronic Media (FM; 40 sec.) 65,900 72,490 79,739 87,713 96,484Electronic Media (TV Scroll Ads.) 21,600 23,760 26,136 28,750 31,625Other Media (Newsletter etc.) 5,750 6,325 6,958 7,653 8,419

Total 150,000165,00

0181,50

0199,65

0219,61

5

Business cards and Flyers

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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.

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

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Other inexpensive and efficient strategies that Kathmandu Enterprises target will

use are Referrals, Newsletters, and Word of Mouth (WOM).

7.3.4 Positioning StrategyKathmandu 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 rateThe 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 ProfitabilityThe 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.

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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,

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 2nd and 3rd year and by 10%

thereafter annually.

Table 9 : Service Revenue Forecast for next five years

YearHouse Cleaning

Dish Washing

Cloth Washing Cooking

Care Taking

Total Service Revenue

2013 364,800 403,200 480,000 702,000 588,000 2,538,0002014 574,560 635,040 756,000 1,146,600 882,000 3,994,2002015 905,040 1,000,080 1,217,160 1,805,832 1,389,060 6,317,1722016 1,493,316 1,650,132 1,979,208 3,027,072 2,241,096 10,390,8242017 2,433,120 2,688,960 3,265,632 4,994,496 3,697,848 17,080,056

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*Appendix: 1.1, 1.13

8. Financial Plan

8.1 Capital Structure

Source Amount RatioSelf-contributed capital Rs. 8,00,000 40%Bank loan @13% for 6 years Rs. 12,00,000 60%Total start-up capital Rs. 2,000,000 100%

8.2 Uses of Capital

Particulars AmountPurchase of fixed assets 556,500Preliminary Expenses 55,000Working capital (50% of operating expenses) 1,388,500Total start-up capital 2,000,000

8.3 Pre-Operating Expenses

Particulars AmountFeasibility Study 5,000Registration Charges 15,000Transportation 5,000Telephone Line 10,000Training Expenses 20,000Total 55000

8.4 Service Revenue for the next five years

Service Revenue

Increased % 57% 57% 64% 64%

Year 1 (Rs.)*

Year 2 (Rs.)

Year 3 (Rs.)

Year 4 (Rs.)

Year 5 (Rs.)

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

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8.5 Operating Expenses for the next five years

Particulars

Year2013 (Rs.)

2014 (Rs.)

2015(Rs.)

2016(Rs.) 2017(Rs.)

Staff salary * 846,000 930,6001,023,66

01,126,02

6 1,238,629

Maid salary ** 1,203,600 1,981,3203,284,42

45,396,82

0 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 charges 5,000 5,000 5,000 10,000 10,000

Marketing expenses 150,000 165,000 181,500 199,650 219,615

Electricity 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 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 14,641Preliminary expenses written off 55,000

Total 2,743,900 3,601,5205,053,01

47,333,63

910,983,07

5

*Appendix: 3.4

**Appendix: 3.7

***Appendix: 3.9

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8.6 Projected Income statement for next five years

Particular

Year2013 (Rs.)

2014 (Rs.)

2015(Rs.)

2016(Rs.)

2017(Rs.)

Service Revenue#

house cleaning 364,800 574,560 905,0401,493,31

62,433,12

0

dish washing 403,200 635,0401,000,08

01,650,13

22,688,96

0

cloth washing 480,000 756,0001,217,16

01,979,20

83,265,63

2

cook 702,0001,146,60

01,805,83

23,027,07

24,994,49

6

care taker 588,000 882,0001,389,06

02,241,09

63,697,84

8

Total Service Revenue2,538,00

03,994,20

06,317,17

210,390,8

2417,080,0

56Operating Expenses

Staff salary 846,000 930,6001,023,66

01,126,02

61,238,62

9

Maid salary 1,203,60

01,981,32

03,284,42

45,396,82

08,866,70

4Depreciation 111,300 111,300 111,300 111,300 111,300Rent * 250,000 275,000 302,500 332,750 366,025Audit/Legal charges 5,000 5,000 5,000 10,000 10,000Marketing Expenses ** 150,000 165,000 181,500 199,650 219,615Electricity 20,000 20,000 20,000 20,000 20,000Telephone expenses 48,000 52,800 58,080 63,888 70,277Office Supplies/Stationery 25,000 27,500 30,250 33,275 36,602Training expenses 20,000 22,000 24,200 26,620 29,282Miscellaneous 10,000 11,000 12,100 13,310 14,641Preliminary expenses written off 55,000

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Total Operating Expenses2,743,90

03,601,52

05,053,01

47,333,63

910,983,0

75

EBIT(205,900

) 392,680 1,264,15

83,057,18

56,096,98

1Add: Interest on investment 50,000 30,000 60,000 160,000Less: Interest 156,000 137,256 116,075 92,141 65,095

EBT(361,900

) 305,424 1,178,08

33,025,04

46,191,88

6

Less: Tax @25% 76,356 294,521 756,2611,547,97

1

Net Income/(Loss)(361,900

) 229,068 883,5622,268,78

34,643,91

5

#Appendix: 3.3

*Appendix: 3.10,

**Appendix: 2.1

# Key financial assumptions on Appendix: 4.1

8.7 Projected Cash flow Statement for the next five years

Particulars Year

Pre-operating

2013(Rs.) 2014((Rs.) 2015(Rs.) 2016(Rs.) 2017 (Rs.)

Cash Inflow

Beginning Balance 1,388,500 548,715 426,154 636,906 1,208,945

Equity 800,000

Bank Loan 1,200,000

Interest on Investment 50,000 30,000 60,000 160,000

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

Total Cash Inflow (A) 2,000,000 3,926,500 4592915 6,773,326 11,087,730 18,449,001

Cash Outflow

Fixed Assets 556,500

Principal and interest payment*

300,185 300,185 300,185 300,185 300,185

Operating Expenses

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 charges 5,000 5,000 5,000 10,000 10,000

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Marketing expenses 150,000 165,000 181,500 199,650 219,615

Electricity 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

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

Tax paid 76,356 294,521 756,261 1,547,971

Preliminary 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 (A-B) 1,388,500 1,048,715 726,154 1,236,906 2,808,945 5,729,070

Investment # 500,000 300,000 600,000 1,600,000 3,000,000

Ending Cash Balance 1,388,500 548,715 426,154 636,906 1,208,945 2,729,070

*Appendix: 3.8# Investment is made for short term at the interest rate of 10%

# Key financial assumptions on Appendix: 4.2

8.8Statement of Retained Earnings for the next five years

Particular Year 1 Year 2 Year 3 Year 4 Year 5Beginning balance (361,900) (132,832) 750,730 3,019,513Add: Profit for the period (361,900) 229,068 883,562 2,268,783 4,643,915Ending Balance (361,900) (132,832) 750,730 3,019,513 7,663,428

8.9 Projected Balance Sheet for the next five years

Particulars Year

Assets Pre-Operating

2013(Rs.)

2014 (Rs.) 2015(Rs.)

2016(Rs.)

2017 (Rs.)

Current Assets

Cash 1,388,500 548,715 426,154 636,9061,208,94

52,729,07

0

Investment 500,000 800,000 1,400,0003,000,00

06,000,00

0

Total Current Assets 1,388,5001,048,71

51,226,15

4 2,036,9064,208,94

58,729,07

0

Fixed Assets

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

Less: Acc. 111,300 103,930 103,930 103,930 111,300

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Depreciation

Net Fixed Assets 611,500 445,200 333,900 222,600 111,300 0

Preliminary Expenses 55,000

Total Assets 2,000,0001,493,91

51,560,05

4 2,259,5064,320,24

58,729,07

0

Equity and Liabilities

Shareholders' Equity

Equity 800,000 800,000 800,000 800,000 800,000 800,000

Retained Earnings (361,900

)(132,832

) 750,730 3,019,51

37,663,42

8Total Shareholders’ Equity 800,000 438,100 667,168 1,550,730

3,819,513

8,463,428

Long Term Liabilities

Bank loan * 1,200,0001,055,81

5 892,886 708,776 500,732 265,642Total Long Term Liabilities 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

*Appendix: 3.2, **Appendix: 3.1

**Appendix: 3.8

# Key Financial assumptions on Appendix: 4.3

8.10 Profitability Ratios

Year 2013 (Rs.)

2014 (Rs.) 2015(Rs.) 2016(Rs.) 2017(Rs.)

Net profit margin (%) (14.25) 5.74 13.98 21.83 27.19ROA (%) (24.22) 14.68 39.1 52.51 53.2ROE (82.60) 34.33 56.97 59.39 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 2nd year and by 13.41 % in 3rd 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 2nd year due to increase in profits.

8.11 Computation of Net Present Value (NPV)

Year Cash Flow PV Factor @ 13% Present Value (PV)

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1 548715 0.8849 485557.902 426154 0.7831 333721.193 636906 0.6930 441375.854 1208945 0.6133 741445.965 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 Cum. Cash Flows0 -2000000 -20000001 548715 -25487152 426154 -21225613 636906 -14856554 1208945 -2767105 2729070 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.

9. Critical Risk and 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

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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.

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

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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

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 planKathmandu 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.

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11.2 Exit strategyOn 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.

APPENDIX

1. Market Research

1.1 Questionnaire Survey On Peoples’ attitude towards Maid Service

General information

Name: …………………………Gender…………Age……….. No. of family members……

Address……………………………….Occupation………………

Monthly Income Rs………………..

Specific information

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

a. Yes b. No

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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 f. All above

2. Is your maid part time or full time?

a.Part time b. Full time

3. 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 b. No

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

a. Yes 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 b. Dish Washing c. Cloth Washing d. Cooking

e. Care Taking f. Others (Please Specify)

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(Thank you for your kind cooperation)

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

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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

Above 6 9 15

Total 60 100

1.5 Frequency distribution based on Occupation

Occupation Frequency Percent

Government service 9 15

Private Service 26 43.33

Business 13 21.66

Housewife 12 20

Total 60 100

1.6 Frequency distribution based on Monthly Income

Monthly Income Frequency Percent

8000-12000 8 13.33

13000-17000 24 40

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18000-22000 11 18.33

22000-26000 10 16.67

Above 26000 7 11.66

Total 60 100

1.7 Frequency based on household having maid service

Household Frequency Percent Total

Residential Area 9 9/30=30 30

Apartment 14 14/30=46 30

Total 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)

60 and above 6(16.66) 4(16.66)

Total 36 24

1.9 Cross tabulation between number of family members and willingness to have maid service

No. of Family Members Maid Service

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Yes No

1-2 2(5.88) 6(23)

3-4 17(50) 8(30.76)

5-6 11(32.35) 7(26.92)

Above 6 4(11.76) 5(19.23)

Total 34 26

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)

Business 8(32.35) 5(26.92)

Housewife 4(11.76) 8(19.23)

Total 32 28

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

Monthly Income House

CleaningDish Washing

Cook Cloth Washing

Care Taker

8000-12000 1 3 4

13000-17000 3 8 4 8 1

18000-22000 2 3 2 3 1

22000-26000 2 2 2 3

Above 26000 1 2 1

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

Monthly Income Maid Service

Yes No

8000-12000 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 5(15.625) 2(7.14)

Total 32 28

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%)

followed by businesspersons (32.35%).

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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 Price Qty. AmountBusiness Cards 9 500 4,500Flyers 5 600 3,000Greeting Cards 85 50 4,250Print Advertising 4,500 10 45,000Electronic Media (FM; 40 sec.) 3,295 20 days 65,900Electronic Media (TV Scroll Ads.) 160 135 21,600Other Media (Newsletter etc.) 5,750Total 150,000

3. Financial Plan

3.1 Details of Office Equipment

Items No. Cost Per Unit Total CostComputer 2 40000 80,000Printer 1 20000 20,000Photocopy Machine 1 80000 80,000Telephone Sets 4 800 3,200Water Filter 1 4800 4800Total 9 188000

3.2 Details of Office Furniture

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Items Quantity Rate Per Unit Total CostChairs 5 1000 5,000Office Table 2 1500 3,000Sofa 1 set 20000 20,000Executive Chairs 4 2000 8,000File Cabinets 4 5000 20,000Carpet 1000 sq. ft 300 300,000Curtains 25 meters 300 7,500Mis 5000 5,000Total 368,500

3.3 Percentage increase in service revenue for the next five years

Service Revenue

Increased % 57% 57% 64% 64%

Year 1 (Rs.)*

Year 2 (Rs.)

Year 3 (Rs.)

Year 4 (Rs.)

Year 5 (Rs.)

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

3.4 Staff Salary for the next five years

Staffs/ Year 1 2 3 4 5

Managing Director24000

026400

0 290400 319440 351384

Administrative Officer18000

019800

0 217800 239580 263538Human Resource/Customer Relationship Officer

240000

264000 290400 319440 351384

Database Operator 9600010560

0 116160 127776 140554Security Guard 90000 99000 108900 119790 131769

Total846,0

00930,6

001,023,6

601,126,0

261,238,6

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3.5 Number of maids for the next five years

Year

House Cleaner

Dish Washer

Cloth Washer

Cook

Care Taker

Total

1 8 8 10 9 7 422 12 12 15 14 10 633 18 18 23 21 15 954 27 27 34 32 22 1425 40 40 51 48 33 212

3.6 Maid salary per month for each year for the type of work done

YearHouse

CleanerDish

WasherCloth

Washer CookCare

Taker1 2100 2200 2100 2500 32002 2310 2420 2310 2750 35203 2541 2662 2541 3025 38724 2795 2928 2795 3327 42605 3074 3221 3074 3660 4686

3.7 Maid salary for the next five years

Types of Service

Year2013 2014 2015 2016 2017

House Cleaning 201600 332640 548856 905580 1475520Dish Washing 211200 348480 574992 948672 1546080Cloth Washing 252000 415800 701316 1140360 1881288Cooking 270000 462000 762300 1277568 2108160Care Taker 268800 422400 696960 1124640 1855656Total 1,203,600 1,981,320 3,284,424 5,396,820 8,866,704

3.8 Loan amortization Schedule

Loan Amortization

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At D:E=60:40 (1200000:800000)

1200000=A×PVIFA (13%,6 years)

A=300185

Year Installment Int.@13% Principal Principal O/S0 12000001 300185 156000 144185 10558152 300185 137256 162929 8928863 300185 116075 184110 7087764 300185 92141 208044 5007325 300185 65095 235090 265642

3.9 Depreciation calculation using straight line method

Items Value Depreciation rate

(%)Depreciation

AmountEquipment: Computer 80000 20 16000Printer 20000 20 4000Photocopy Machine 80000 20 16000Telephone Set 3200 20 640Water Filter 4800 20 960Furniture 368500 20 73700Total 556500 111300

3.10 Rent expenses for office space

Particulars Sq. Ft. Rate Rent per month Rent per YearOffice Space 850 24.5 20,833 250,000

3.11 Cash inflow for next five years

Year 1 2 3 4 5Net Income/Loss (361,900) 229,068 883,562 2,268,783 4,643,915Add: Depreciation 111300 111300 111300 111300 111300Cash Flow -250600 340368 994862 2380083 44755215

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4. KEY FINANCIAL ASSUMPTIONS4.1 Income Statement Assumptions

Service Revenue

Customer base: It increases by 50% of preceding year demand for maids.

Service rate: It increase by 5% in 2nd 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.

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Audit/Legal Charges: It will remain constant for 1st, 2nd and 3rd year and increase by 50% of preceding year.

Marketing Expenses: It increases by 10% of preceding year expenses.

Office Supplies/ Stationery: 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 (net income) will be retained for further investment.

4.2 Cash Flow 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.

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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

Figure No.2: Layout Design

Appendix2

4.2 Operation Schedule for First Year

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Year 0 (in months) year 1 (in months)

Managing Director Room

Administrative /Account Division

Security Guard’s Room

Human Resource Division

Entrance


5.2 Operation Schedule

Type Of work 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10

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

Marketing/

Promotion

Office Supplies

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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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