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BusinessWorks Inc - A Dotcom in making

This blog is intended to stir your entrepreneurial spirit and get going with your own business. It tries to capture day-to-day issues related with a upcoming startup business. If you follow this blog long enough, it may take you from Concept to Wall Street. I invite you to submit your ideas and comments.

"BusinessWorks Blog is a must read for any would-be entrepreneur unaware of the painstaking process of building a business" - FORBES Best of Web

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Financial Plan - Assumptions - 2

Tuesday, November 30, 2004
There is a slight change since yesterday. I will not fill the Assumption table in yesterday's post. Instead, I will discuss what each variable means. This way table is more meaningful, rather than mere numbers.


Average Monthly Sales

US $000s

Here you can enter net sales value.

Desired average finished inventory

% of Sales

Does not apply to Service / Distribution business. For Manufacturing business, this variable is % of sales.

Cost of materials/goods

As % Sales

This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale.

Target materials/goods inventory

US $000s

This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale.

Average monthly direct costs

US $000s

It is set to zero for for Distribution business

Average monthly overhead expenses

US $000s

Interest and Depreciation is not included

Opening total cost of fixed assets

US $000s

This is cost as on start date of projection

Accumulated opening depreciation

US $000s

This is the value on the start date of projections

Average depreciation rate

% p.a.

This is approximated weighted average rate of all fixed assets

Planned capital expenditure for year

US $000s

Equipment purchases for the year

Interest rate for cash balances

% p.a.

This is approximated weighted average rate

Interest rate for all debt/notes

% p.a.

This is approximated weighted average rate

Opening cash balance (deficit)

US $000s

If business is started with line of credit, then this number is negative

Opening longterm debt/notes

US $000s

Total value of all long-term debt/loans/notes

Net change in longterm debt/notes in yr

US $000s

Use appropriate sign for increase or decrease in the value

Opening accounts receivable

US $000s

As of projection start date. Do not include expected bad debts

Opening accounts payable

US $000s

As of projection start date. Also include all other planned payments

Average credit given on sales

Days Sales

Use estimates with consideration of cash sales

Average credit taken for materials /goods

Days Sales

Estimate should include suppliers who do not give credit

Expected federal/state tax rate


Use Effective rate

Planned dividend for year

US $000s

Include declared dividends only

Opening number of shares


Issued shares only

Proceeds of new stock issues

US $000s

Proceeds should be net of all fund raising costs

Number of new shares issued


Add this number to opening number of shares
11/30/2004 10:11:00 PM :: ::

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November 29: Carnival of Capitalists

This wonderful event takes place every week and fellow bloggers host it. I will be hosting "Carnival of Capitalists" in the week of May 23rd, 2005. That is a long long time from now. Meanwhile you can enjoy it on Lachlan Gemmell's blog. Overall, it was wonderful reading, but my personal favourites were Ankesh Kothari's reducing risks when starting a new business, then an encouraging inverview of a small business expert Andy Birol by Anita Campbell of Small Business Trends about why US Presidential Election does not matter for small businesses.. Then there is an excellent leadership article by Steve Rucinski of Small Business CEO. There are too many to list here. Why not visit Lachlan's site and enjoy all the fine articles yourself. Oh by the way you can become a proud host for Carnival of Capitalists by visiting this Website.
11/30/2004 02:23:00 PM :: 0 comments ::

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Financial Plan - Assumptions-1

Monday, November 29, 2004
I received a comment from a Planware representative about their Excel-based products dealing with Financial projections and Business Plans. I checked out their website, they have some wonderful products, which may be used as a model for building the plan and creating projections. You will see some of those projections being used in our plan too.

Before we start with an actual Financial plan, there is a need to make some Assumptions. These assumptions will put the plan in proper perspective leaving no doubts in the mind of Venture Capitalists, when they read the plan projections. In assumptions area, you clearly get to specify average values, opening balances, percentages, tax rates and some ratios.As a start-up business, we will have very few variables that we can state in our assumptions list. I will build a template here and fill in the values tomorrow. Not all variables will be filled, as we are a service organization.

VariablesUnitsFirst YearSecond Year3-5 Years
Average Monthly SalesUS $000s
Desired average finished inventory% of Sales
Cost of materials/goodsAs % Sales
Target materials/goods inventoryUS $000s
Average monthly direct costs US $000s
Average monthly overhead expensesUS $000s
Opening total cost of fixed assetsUS $000s
Accumulated opening depreciationUS $000s
Average depreciation rate% p.a.
Planned capital expenditure for yearUS $000s
Interest rate for cash balances% p.a.
Interest rate for all debt/notes% p.a.
Opening cash balance (deficit)US $000s
Opening longterm debt/notesUS $000s
Net change in longterm debt/notes in yrUS $000s
Opening accounts receivableUS $000s
Opening accounts payableUS $000s
Average credit given on salesDays Sales
Average credit taken for materials/goodsDays Sales
Expected federal/state tax rate%
Planned dividend for yearUS $000s
Opening number of shares000s
Proceeds of new stock issuesUS $000s
Number of new shares issued000s

11/29/2004 09:19:00 PM :: 2 comments ::

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Financial Plan - An Introduction

Sunday, November 28, 2004
Startups or big enterprises need Financial planning as it is a lifeline for company's survival. Having an idea about your financial obligations and earnings give you an advantage in arranging your priorities. A typical Financial plan has following components:

Assumptions: Assumptions are essential and key to form a foundation of any financial plan. Averages, opening balances, depreciation rates, units are all defined here.

Income Statement: This summarizes a company's revenues and expenses for a fiscal year. It reflects a company's operating performance by identifying the sources of income and the various costs and expenses, gains and losses, which result in a final net income figure.

Cash flow Statement: This is a worksheet that shows the flow of cash in and out of a company over a month by month period. Balance Sheet: A snapshot in time of a company's assets, liabilities, and net worth.

Performance Review: This statement provides information about how a company will perform in coming year using projected figures. It contains various financial ratios which are useful in quickly gauging company's performance.
11/28/2004 10:48:00 PM :: 1 comments ::

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Revised Executive Summary

Saturday, November 27, 2004
I would like to thank one of my readers for being alert enough to point out in his/her comment, capital requirements stated in earlier post does not match with numbers stated in the last post. It is good to know, people are participating and reading my blog with interest. This also suggests, creating a Business plan is an iterative process, where you might have to go back frequently and correct the numbers, till you have a plan that can convince a Venture Capitalist and is a realistic and achievable projection of the future. Here is the revised executive summary with capital outlay.

Executive Summary: BusinessWorks Inc intends to be a complete Radio Frequency Identification solution designer/prototyper for a wide range of industry applications. BusinessWorks will create an initial prototype solution for the transportation industry using RFID and GPS systems. Once the prototype is made, it will be marketed to the transportation companies. This solution will be useful for the companies that want to track the progress of their vehicles in the city or nationwide, and conduct path, driver and other analysis based on data gathered from RFID and GPS systems. Unique aspect of BusinessWorks solution will be ability to provide complete analysis of data gathered from RFIDs and GPS and plotting of vehicle location in real time on the maps for tracking purposes.

In addition to the transportation solution, BusinessWorks will develop solutions to cater healthcare and retail segments. Businessworks will leverage their competitive advantages of skills and expertise of technically inclined management team to gain reasonable market share. BusinessWorks initial outlay of capital is 4.5 million dollars for the first two years of operations. Profitability is expected to be reached by the fourth year and is projected to bring in one million dollars of profit.
11/27/2004 02:02:00 PM :: 0 comments ::

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Business Plan - Capital Projections

Thursday, November 25, 2004
Today we will discuss Capital and Expenses requirement of the company. Although we have discussed the cost of business in our previous post, here we will talk about what Venture Capitalist wants to see in these statements and how we can present it so that investors can be convinced.

If I am a Venture Capitalist, I would like to see if my investment in the company is spent wisely to generate profits. What is my Return On Investment? What are the risks involved in this investment? What is the waiting period before I start getting my returns? Are the targets set by the company are realistic and achievable? If yes, are those targets achievable in the time frame suggested by the company?

Keeping these questions in mind, let us make our projections for the investor.

Capital and Expense Projections


Year 1

Year 2

Year 3




No Change

No Change







Office Space & Equipment






























11/25/2004 10:31:00 PM :: 1 comments ::

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Business Plan - Organization Structure

Wednesday, November 24, 2004
The Organization structure has a special place in the business plan as it helps in projecting operating expenses. This is one of the key numbers in the financial statements, which Venture Capitalists scrutinize heavily. Thus a well-formed organization structure is essential for the business.

Every company is different, but it can be broadly classified to have four areas:

* Sales and Marketing
* Research and Development
* Production
* Administration

So lets define our Company's Organization Structure.

Organization Structure

BusinessWorks Inc. will have have following Organization Structure:

Sales and Marketing: This team will be responsible for marketing our RFID solutions. Team will be divided in two sub-groups: one will handle Customer relations, support and service. Initially we will have 5 employees in this sub-group. The other sub-group will be Application Consulting group. There will be 5 Application consultants, who will be experts in RFID, software and marketing. They will study the client application and suggest solutions to the customers.

Research and Development: This group will be developing the RFID solution itself. In this team, there will be 4 software engineers and 2 hardware engineers. Hardware group will be responsible for RFID and GPS equipment research, selection and operations. Software engineers will develop the middleware and interface with industry standard packages.

Production: Although we will be using market standard RFID and GPS equipment, 2 employees, 1 software engineer and 1 hardware engineer will be needed to to manage the software and hardware that is already developed.

Administration: This group of 3 employees will handle human resources, payroll, billing, accounts receivable and payables and miscellaneous tasks.
11/24/2004 10:50:00 PM :: 1 comments ::

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Business Plan - Operations Intro

Tuesday, November 23, 2004
A top-notch management team is essential for a business to succeed. However an operation plan is equally important for a business to perform well. Operations plan will lay a foundation for the logistics of the company which will include

* responsibilities of the management team
* the tasks assigned to each division within the company
* capital and expense demands for smooth running of the business

We will list here two important components of the Operations Plan and discuss them in separate posts:

1. Organization Structure
2. Capital and Expense requirements of the company.

Tomorrow we will talk about Organization structure.
11/23/2004 10:29:00 PM :: 0 comments ::

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Business Plan - Marketing Plan

Monday, November 22, 2004
After market research comes preparation of marketing plan, but before that let us talk briefly about the the competition. Marketing plan cannot be made without considering competition. Many entrepreneur realize the potential of RFID and will be entering this profitable market, making it competitive. This makes it essential to have a plan to counteract the challenge.

RFID market, which is still in its infancy makes it an uphill task to build a competitive marketing plan which involves establishing pricing and promotional strategies.

Marketing Plan

Target Market: Third Party Logistics Provider (3PL), Trucking services, Air, Ocean, Rail Freighters, Warehousing facilities.

Strategy: Conventional Marketing plans cannot be used as a guideline to RFID based solutions. RFID market research shows, the biggest reason why our target market wants to go for RFID is customer compliance. This is an indicator to design a three pronged strategy.

First strategy will be to approach our target market itself with benefits of implementing RFID solutions. Promoting compliance and taking steps towards industry standards will be a big effort towards this cause as achieving these tasks itself, is battle half won.

Second strategy will be to approach customers of our target market and study their logistics and functions which results in developing solutions that will make us compliant and certified with customers. This will help us go to the target market with confidence and be one-up on competitors.

Third strategy will be to form an alliance with large ERP software providers and develop solutions compatible and aligned with their software. This will aid our second strategy while approaching customers of our target market.

Pricing: Although pricing strategy and calculations will be complex, some basic rules will be followed:
1. All prices will cover our costs.
2. Prices will reflect market changes,competition and demand.
3. Pricing method followed will be Markup pricing.

Advertising: Initial advertising plan will be low key and direct. After a successful implementation with one customer, RFID and Transportation related Trade journals will be used to advertise our solutions.

Packaging Strategy: Our services will be provided to clients as a complete solution package comprising of RFID and GPS hardware and software.

Sales Forecast: First year will be spent in development. With reasonable expectations, in second year, company expects to have atleast two to three projects. Each project is expected to bring $500,000 in revenue. Sales Projection can be in the range of $1 million in second year. However company is expected to be profitable in third year.
11/22/2004 10:20:00 PM :: 1 comments ::

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Business Plan - Market Analysis

Saturday, November 20, 2004
A Venture capitalist is always looking for ways to validate the claims in Business Plans. They are expecting solid market research for the demand of your products or services in near and long term future. Once the potential of the product / service is established, venture capitalist feels much at ease to invest in your venture. So a thousand dollars spent on a market research report from a reputable source is money well spent. After all, this single report can get you millions of dollars in funding. So let us build a strong case for RFID based Solutions that BusinessWorks plans to sell. I would like to thank Steve Rucinski of Small Business CEO for pointing me to Research available on Eye For Transport .

Market Research: A reputed market research company, recently concluded a survey about RFID in transportation sector. A blend of Third-Party Logistics ProviderS (3PL), Trucking services, Warehousing, Air, Ocean and Rail Freighters were selected for this survey. Results were surprising and very favorable towards the business model, BusinessWorks plans to implement. Survey indicated 75% of the market is still untapped. Larger percentage of rest of the market was piloting a solution and a very small percentage had actually rolled out a solution. Over 90% of the untapped market is either researching the feasibility of the RFID solutions or "waiting" to see the results of other companies. Customer compliance, improved efficiency and information accuracy are the most important reasons why companies are interested in RFID solutions. This is no surprise as Wal-Mart is one customer, many companies would like to please. Second most important reasons are the prospects of winning new customers and security improvements satisfying government regulations.

Obstacles in implementing RFID solutions were also considered in this survey. Biggest impediment is high cost of RFID hardware, software and integration to achieve a fast ROI. Other barrier is lack of industry standards. Survey also indicated that respondents felt, the business case to implement RFID solutions was not strong enough. As the technology matures, these obstacles will come in focus and will be resolved in next 12 to 18 months.

Survey clearly concludes, demand for RFID solutions is clearly on the rise and is Customer driven. Indecisiveness due to lack of RFID industry standards, will soon decline, once the usage increases.
11/20/2004 05:35:00 PM :: 1 comments ::

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Business Plan - Product/Service Description

Thursday, November 18, 2004
Products/services and the management team makes the company successful. Business startup like ours, has an idea to nurture and develop it into a product or a service. A Venture capitalist, however views your idea as an outsider, hence he needs explanation of this idea in layman terms. Let me be clear, I do not intend to underestimate knowledge level of Venture Capitalists. They are smart, very smart, that is why they have deep pockets. All I say, idea should be explained in easy to understand terms to ensure there are no doubts or misunderstandings in the mind of VC.

Product / Service Description: BusinessWorks intends to create a solution, which will help transportation sector in two areas. One is tracking of commercial vehicles and other is to analyze the tracking data for the purpose of improving driver efficiency and route optimization. This solution will consist of Radio Frequency Identification (RFID) tags, Global Position System devices, RFID Readers and the software to capture and analyze the data received from these devices. Although this solution will have substantial cost attached to it, benefits will far outweigh the costs. Implementation will involve attaching either an RFID tag or a GPS module to every vehicle in the fleet. Each vehicle will then broadcast it's position and this raw data will be collected and fed to our Analysis program, which will generate meaningful reports and help in decision making process. RFID and GPS hardware will be purchased from reputed vendors and software will be developed in-house. However, complete solution will be provided to the customer with full support for the hardware and the software.
11/18/2004 10:35:00 PM :: 0 comments ::

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Business Plan - Company Description

Wednesday, November 17, 2004
If Venture Capitalist has gone past the page of Executive Summary, then you have good chances, that your venture will be financed. One must fortify the success of Executive summary with a balanced Company Description and that is what we will attempt to do in next few paragraphs.

Describing one's own company fairly can be a daunting task, when one has to curb the use of superlatives and at the same time not to undersell it. Best approach is to state hard facts and be straightforward.

Company Description: BusinessWorks Inc was born in September 2004 with an intention of conducting business by developing and selling state of art RFID based solutions for various industry segments. The Company will be managed by the team of top-notch engineers and MBAs. Initially, BusinessWorks plans to develop a working prototype and market it to Transportation industry. This prototype will provide tracking via RFID chips and GPS modules. Tracking data can be analysed by using the Company's software. Businessworks expects to be a profitable in a short span of three years. This will be achieved with the help of aggressive development programs. Financing needs of the company are modest, which can be financed in two phases.

[Here we can include brief resumes of the management team and attach detailed resumes in appendix]
11/17/2004 10:17:00 PM :: 0 comments ::

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Business Plan - Executive Summary

Tuesday, November 16, 2004
Today, I will try to create first draft of Executive Summary, the most important part of our Business Plan. An exciting Executive Summary must contain following ingredients:
  • Description of the Company
  • Description of the service/product
  • specialty of your service/product
  • The Management Team
  • Financing needs

It is very easy to get carried away in an effort to please Venture Capitalists. So it is very essential to state facts and figures along with cautious optimism, carefully avoiding sensationalism. So lets get started with a draft, which we can refine later based on our own discoveries or suggestions from my readers:

Executive Summary: BusinessWorks Inc intends to be a complete Radio Frequency Identification solution designer/prototyper for a wide range of industry applications. BusinessWorks will create an initial prototype solution for the transportation industry using RFID and GPS systems. Once the prototype is made, it will be marketed to the transportation companies. This solution will be useful for the companies that want to track the progress of their vehicles in the city or nationwide, and conduct path, driver and other analysis based on data gathered from RFID and GPS systems. Unique aspect of BusinessWorks solution will be ability to provide complete analysis of data gathered from RFIDs and GPS and plotting of vehicle location in real time on the maps for tracking purposes.

In addition to the transportation solution, BusinessWorks will develop solutions to cater healthcare and retail segments. Businessworks will leverage their competitive advantages of skills and expertise of technically inclined management team to gain reasonable market share. BusinessWorks initial outlay of capital is three million dollars for the first two years of operations. Profitability is expected to be reached by the third year and is projected to bring in one million dollars of profit.

11/16/2004 10:58:00 PM :: 2 comments ::

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Components of a Business Plan

Monday, November 15, 2004
We have sufficient information to get started with our Business Plan. There are missing bits and pieces, we will gather those pieces as we progress with the plan. When an entrepreneur goes to a Venture Capitalist with a Business Plan, both are strangers to each other. Business Plan has to be really impressive to break the ice and get Venture capitalist interested. I will list key components of a business plan along with brief description, then define and create each component in upcoming postings. The components are as follows:

Executive Summary: This component is so important that it is listed before Table of Contents. VC reads this summary first and if it piques his interest, he may read rest of the plan

Table of Contents: Although this is second on the list, it can be complete only when all sections are done.

Company Description: This is where you can brag about the company and it must be done factually. Be honest and remember, Venture capitalist has seen enough plans to distinguish between the plans.

Product/Service:Describe the product/service in layman terms, without any jargon. Put yourself in the shoes of VC and ask yourself if you would invest large sum of money in the product/service described to you.

Market Analysis: Here you have to demonstrate that you are a old hat who knows practically all the aspects of the business. Tonnes of research is required and VCs love the research. Demonstrate how similar products and services have done well in the market and justify your claims.

Marketing Plan: Detail your selling strategies, evaluate your competition and suggest ways to overcome that competition in this component

Operations Plan: Build a solid foundation and eliminate the vagaries, which may appear in your Executive summary. Document nuts and bolts of the business operation here.

Financial Plan:The numbers game! You have to play it right by stating cash flows, profit and loss, balance sheet and sales forecasting.

Management: Propose a strong management team with summary resumes. Remember, people make the difference.

Exit Strategy: Always propose an exit plan to safeguard a path for Investor. It gives reassurance that end-result of the proposed business is either a merger or an acquisition or more exotic result i.e. Initial Public Offering (IPO).

Appendices:This is the place to insert necessary material, like manager resumes, promotional material, product photos and independent assessments.
11/15/2004 11:18:00 PM :: 0 comments ::

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Categorization of all the posts

Sunday, November 14, 2004
Many of you have asked for categorizing my blog entries to easily find the information needed. So here it is :



Idea Viability

Talent Availability

Funding Opportunities

Federal Regulations

Return vs Effort

Socio-Economic Factors

Summary/Comparision of all technologies
Technology is selected
The Big Idea

Corporate Business Structure

Business Plan

Hope this index helps all of you. Soon you will be able to see these entries on the sidebar for easy reference.

11/14/2004 11:14:00 PM :: 0 comments ::

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The Management Team

Friday, November 12, 2004
Steve Rucinski of Small Business CEO visited my blog today and provided some constructive criticism, good tips and pointers. Thanks Steve! I appreciate it very much. He also suggested to provide an explanation about what problem my business idea will solve. I will writing a special post for this explanation soon. Now onto today's topic of the Management Team.

The Management Team can make or break the company. People will be most important assets in our company and they will treated with utmost care and will be provided with best possible resources. Our Management team will be techincally savvy and will have keen business sense. They must posses excellent ability to market company's capabilities, and must have earned an enviable reputation for quality and innovation. Team will build a network of contacts among the top levels of biggest customers. Team must have rare ability to see new trends coming and should be agile enough to adjust to take advantage of them.

Generally an entrepreneur is technically savvy himself and when he/she gets involved in managing a company, he/she gets tied up between managing and performing technical tasks. However in our case, situation is unique. Although I am technically inclined, my main focus will be managing and developing business along with professional management team. I will not commit the mistake of trying to manage everything and end up achieving nothing. However top caliber management team comes with a price tag and I am willing to pay that price to get such a team.
11/12/2004 10:39:00 PM :: 0 comments ::

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Businessworks Inc featured on RFID-Weblog!

RFID Weblog, a premier source of information about RFID and related technology and Small Business CEO, an excellent source of business related information, has always been source of inspiration and resources for me. On November 11th, my weblog was featured on RFID Weblog. I consider this as a honor! Check it out here.
11/12/2004 09:03:00 AM :: 0 comments ::

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The Location

Thursday, November 11, 2004
Today I will talk about another important aspect of business and business plan. Business community is never tired of repeating "Location....Location...Location" and I totally agree with them, "Location is everything!" However, we are a "Virtual" company, so I cannot give an named locations, but I can describe what an ideal location can be.

Business Startups of technological nature are usually born in "incubators", which are generally supported and built by states, universities or private organizations to promote entrepreneur. These self contained incubators provide necessary services like conference rooms, videoconferencing facilities, secretarial services, office space, storage facilities, shipping & receiving, and most important shared lab facilities. Our business involves affixing RFIDs to vehicles and tracking them, using RFID readers. For this purpose we need a large test area and incubators can provide us this area at a nominal cost. If you recall my earlier post about working capital, we can save lots of working capital by starting the business in an incubator.

Incubator is an excellent place to start a business, but business grows and when it does, it needs a place and resources of its own. Ideal location is always decided by the nature of business. In our case, a perfect location would be in a large city, but somewhere in mid town, with reasonable access to airports and highways, access to large open space, close to housing complexes, eating joints and other professional services. All these factors help in easy client and employee access which is crucial to any business.

11/11/2004 10:23:00 PM :: 0 comments ::

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The Competition

Wednesday, November 10, 2004
Generally, with newer technologies, competition is practically non existent or there is enough room for everyone to expand and piece of the pie. Although RFID seems to be no exception, competition is closer than it appears to be. RFID services will sooner or later face same challenges that IT industry is facing. Outsourcing companies are already planning to enter the world of RFID in big way. Recent article in Optimize magazine states, two Bangalore, India based technology based service companies intend to become experts in RFID.

There are always two ways to deal with the competition. One is to face it and fight it and other is to create a niche for yourself and eliminate the competition. We will try to create a niche for ourselves by combining two technologies, RFID and GPS to come out successful in competition.

Even though few companies are trying to come up with canned software for handling RFID tasks, I am sure demand for the custom software and integrated solution providers will not subside. Canned software can reduce the cost of software, but due to reduced flexibility, implementation becomes more costlier, thus wiping out cost advantages.
11/10/2004 09:59:00 PM :: 0 comments ::

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Market Research - Transportation

Tuesday, November 09, 2004
Efforts to find market research data about RFID in transportation proved futile. Atleast it proves, RFID usage in transportation sector is a virgin territory waiting to be explored. However, in absence of data in terms of RFID, I did the next best thing i.e. research in growth of transportation industry. Since we will be dealing with commercial vehicles, I researched and found American Truckers Association (ATA) forecast of bullish stand on Freight volumes for the industry in year 2005. Trucking industry added 3,700 jobs in September alone and about 38,000 jobs in last year. With these figures in mind and Trucking industry's openness in embracing new technology, especially RFID and GPS systems, prospects seem good for us.

In my research today, I found an excellent source of RFID references and knowledge base called RFIDa blog. It is regularly updated and has variety of research materials.
11/09/2004 10:33:00 PM :: 1 comments ::

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Market Research - General

Monday, November 08, 2004
One of the most important things in business is ability to feel the market pulse and act accordingly in shortest possible time. I researched various sources and tried to gauge the projected growth in software and services market and here are my findings:


Percentage growth is substantial in both Software and Services sector of RFID, which is good news for our company. On the sidelines, RFID hardware is projected to grow by 48% each year, which itself is encouraging. With these statistics, I have covered overall growth of RFID. Next I will cover the sector pertaining to our area of concentration.
11/08/2004 10:56:00 PM :: 0 comments ::

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Cost of Business

Sunday, November 07, 2004
Other day I listed our initial requirements, today let me put some prices on each one of those and come up with working capital requirements.

Please note: This list is by no means complete, but it covers most of the expenses and working capital requirements. Employee salaries, benefits, equipment prices are very close to real costs but may vary from place to place.

All calculations are for one year. Approximately $1 million outlay of funds is required for the comfortable operation of this business.

AssetUnitsCost/UnitTotal Cost
RFID Tags100$1$100
RFID Readers20$350$7,000
Wi-Fi Stations4$500$2,000
GPS Sets4$250$1,000
Personal Computers10$2,000$20,000
Vehicles (used)4$3,500$14,000
Software Engineers5$80,000$400,000
Hardware Engineers3$70,000$210,000
Marketing Consultants5$60,000$300,000
Application Consultants5$70,000$350,000
Office Staff3$30,000$90,000
Space, etcetra
Office Space1$120,000$120,000
Test Area1$60,000$60,000
Fax Machine1$250$250
Phone System1$20,000$20,000
Personal Computers4$2,000$8,000
Toners & Cartridges12$200$1,200
Office - Janitorial services12$500$6,000
Phone System12$250$3,000
Employee Benefits21$20,000$420,000

11/07/2004 02:25:00 PM :: 1 comments ::

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Pre-Plan Research

Thursday, November 04, 2004
Newer technologies generally have few things in common like unclear ROI, lack of wide industry adoption and agreed upon standards. RFID is no exception. When I started research for RFID related data for the business plans, it became clear, task is not going to be easy. However, I need to start someplace, so I will begin with some "must-haves" and "would-be-great-if-we-had-it" and then go about building a list with some prices and project the costs, returns for next three to five years.

Let us start with basic requirements:
  • RFID Tags
  • RFID Readers
  • Wi-Fi Stations
  • GPS sets
  • Personal Computers
  • Vehicles (for testing RFID)

Then add the staff requirements:

  • Software Engineers
  • Hardware Engineers
  • Marketing Consultants
  • Application Consultants

Space and other Requirements:

  • Office space
  • Large test area either attached to the office or near by
  • Fax machine
  • Copier
  • Phone system
  • Personal computers for other staff

This list is just a subset of what we will need. I will add the costs and list "cost of business" and other working capital requirements tomorrow.

11/04/2004 10:10:00 PM :: 1 comments ::

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Before the Plan...

Wednesday, November 03, 2004
In my quest for resources, for preparation of a Business Plan, I came across a very interesting concept which falls in line with my "Virtual" company. It is appropriately called Virtual Incubator. Although this site is Wisconsin based, most of the resources are generally usable. It is good enough to get you started.

Let us talk about Business plan. A business plan is a written document that glues a business concept, market potential, opportunities, growth strategies, financial requirements, and management for a company. It also identifies potential risks, problems, and trade-offs. It's an excellent way to help evaluate opportunity and guide a start-up or existing business. It forces the founder to consider every facet of a proposed business or growth idea and places approval and funding decisions on paper, where they can be evaluated and considered by all interested parties.

Sitting down and developing the business plan requires the entrepreneur to think critically and plan. Writing a business plan forces the owner and management team to review various aspects of a business and challenge assumptions. A business plan may also lead the owner to examine and re-think the consequences of different strategies, as well as the personnel and financial requirements needed to launch or grow a business.

A business plan is a document that should be used as a management tool to operate a business rather than as a strict blueprint that must be implemented exactly. A business plan can help an owner pinpoint great ideas and clarify goals. With written goals, both the owner and employees will find it easier to take the business seriously. The process of analyzing the business and setting goals will enable an owner to better understand and clarify risks, thereby uncovering new ways to manage or reduce risks.

Our next step would be to gather some RFID-specific statistics.
11/03/2004 09:03:00 PM :: 0 comments ::

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What next?

Tuesday, November 02, 2004
I have received few e-mails requesting further details about the operations of the company, about the idea I proposed yesterday and about the business plan. I will discuss those things here and more.

Businessworks will target automobile manufacturers, airplane manufacturers, ship manufacturers, transportation companies, package shipping companies to sell complete RFID solutions. As I said in earlier posts, company will not get involved in manufacturing, instead the company will setup ties with RFID and GPS hardware manufacturers and develop "middleware" software in-house.

Although company has access to $1,000,000 as working capital, operational costs and capital requirements will be decided after an elaborate business plan is made. I anticipate 1-2 year time frame for complete solution development.

Immediate tasks on hand are:
  • make a business plan
  • place to conduct business
  • hiring employees
  • buying equipment

So our next step will be to gather some data for the business plan, which we will continue to do tomorrow. Meanwhile here are two interesting RFID websites. One is RFID.org and another is a blog. Both provide excellent coverage of the subject.

11/02/2004 11:47:00 PM :: 0 comments ::

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The Big Idea!

Monday, November 01, 2004
"Daring ideas are like chessmen moved forward; they may be beaten, but they may start a winning game." - Goethe, Johann Wolfgang von

With this said, let me present the outline of Product and Services that Businessworks Inc will be providing to the industry:

Objective:Develop a wireless system that can manage and track vehicles, tools and other assets either on a shopfloor or anywhere in city or larger areas.

Description:A complete solution is to be developed for tracking vehicles or tools using wireless locators. Matching of those vehicles or tools with the task being performed, and ensuring the availability and accountability of tools using a management system is a must. Wireless locators are small devices that can be attached to pieces of vehicles or tools to know their whereabouts at all times. These small devices will automatically alert the network if tampered with or removed. We will develop the solution based on two types of systems that wirelessly track the assets. One will use the Global Positioning System (GPS) and cell phone technology to report the location. The other one uses the less expensive radio frequency identification (RFID) for tracking. A tracker who wants to discover the location of a trackee should be able to submit a request through a web page on the server or using a phone to talk to the server.

In the GPS-based system, the server then "calls" the locator, asks for a position fix, and then draws a map showing the current location of the tracking device. In the RFID-based system, the location is identified by an array of antennas that sense the location of small tags with built-in radio transmitters. Although RFID systems lack the ubiquitous coverage of GPS-based technology, but the cost of RFID systems can be much less. Backend Management software will be common to both technologies except for the interface portion.

This proposed solution, based on either GPS or RFID, will include asset management, attempt to match tools with specific repairs, match vehicles with destinations, path optimization, practicality of path selected and driver management. Process will preclude data mining to allow predictive analysis on the usage of vehicles and tools. By combining the current asset tracking technologies with process management software and a work portal, we can ensure that tools are always available and maintain a relationship between tool and task, vehicle is always being used for task assigned and is on proper path. Such a system helps in capturing the knowledge about vehicle and tool usage in the context of a task, in addition to tracking and managing the assets on a large shop floor or larger cities or beyond.
11/01/2004 09:32:00 PM :: ::

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