BusinessWorks Inc.- A dotcom in making

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. Variables_Used_for_Assumption Units_Used Explanation_of_Variables 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 co

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 .

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. Variables Units First Year Second Year 3-5 Years Average

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

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 comp

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 Asset Year 1 Year 2 Year 3 Total Equipment $44,100 No Change No Change $44,100 Staff $1,350,000 $1,485,000 $1,633,500 $4,468,500 Office Space & Equipment $218,250 $240,075 $264,

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

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.

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

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 surpri

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 capt

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

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 solut

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

Many of you have asked for categorizing my blog entries to easily find the information needed. So here it is : Introduction Brainstorming Idea I - RFID based solutions Idea II - Nanotechnology Idea III - Biotechnology Idea Viability Biotechnology Nanotechnology RFID based Solutions Talent Availability Biotechnology Nanotechnology RFID based solutions Funding Opportunities Biotechnology Nanotechnology RFID based solutions Federal Regulations Biotechnology Nanotechnology RFID based Solutions Return vs Effort Biotechnology Nanotechnology RFID based solutions Socio-Economic Factors Biotechnology Nanotechnology RFID based solutions Summary/Comparision of all technologies Technology is selected The Big Idea Business Corporate Business Structure Business Plan Before the plan Pre-plan research Cost of Business General Market Research Transportation Market Research The Competition The Location for the business The Business Management Team Hope this i

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 a

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 .

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.

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

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.

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: Growth 2005 2006 2007 Software 30% 33% 35% Services 19% 23% 27% 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.

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. Asset Units Cost/Unit Total Cost Equipment RFID Tags 100 $1 $100 RFID Readers 20 $350 $7,000 Wi-Fi Stations 4 $500 $2,000 GPS Sets 4 $250 $1,000 Personal Computers 10 $2,000 $20,000 Vehicles (used) 4 $3,500 $14,000 Staff Software Engineers 5 $80,000 $400,000 Hardware Engineers 3 $70,000 $210,000 Marketing Consultants 5 $60,000 $300,000 Application Consultants 5 $70,000 $350,000 Office Staff 3 $30,000 $90,000 Space, etcetra Office Space 1 $120,000 $120,000 Test Area 1 $60,000 $60,00

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

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

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 busines

"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