History – bisness plan Essay
History – bisness plan
The owners of Excel Hygiene have been colleagues in a company which operated on a national scale, converting urban organic waste in to natural fertilizers for crop production in farms. This company has decided to focus on the rural sector and does not wish to expand its urban operations. Its major customer group is of farmers and owners of plantations. It has considered and rejected plans to enter health care lines. The agriculture and rural marketing business, while voluminous, is subject to the vagaries of nature. It is also intensely competitive, with narrow margins and uncertain demand levels.
The bio-medical waste sector, on the other hand, is a rapidly rising star on the economic horizon. Demand for health care services is growing and assured. The number of competitors, as seen earlier, is limited, and consequently the margins are relatively attractive. The sector demands very high levels of service, but pay-offs are matching. Biotechnology is versatile with many future sectors which Excel Hygiene can address. There are many useful microbes in nature and their isolation and culture is relatively easy for those in the know.
The owners of Excel Hygiene have succeeded in preparing and agreeing on a business plan. The latter has found favor with venture capitalists looking for biotech opportunities, so the company could be funded without denting the personal savings of the promoters too seriously. A crucial factor has been the timeliness of the new enterprise, though its aggression in bidding for a substantial price premium from the beginning is founded more on technical considerations of the safety advantage than any standard financial or economic wisdom. Market Definition
Excel Hygiene plans to be a niche player with a very conservative market share target of just 1%. The first reason for this is the high premium the company wishes to charge for its differentiated products and services. It is possible that hospitals and doctors who do not attach much value to safety will not be willing to pay the higher prices. Further, health care institutions are conservative customers, and will take time to accept services from a new provider. The financiers behind the new enterprise also prefer quick and assured payback with high percentage returns to large volumes and top line growth.
The entry strategy of Excel Hygiene is to secure contracts in relatively low-risk units of top quality institutions. Word of mouth promotion is very important in the health care community, so the new enterprise has to ensure that the most prestigious customers join its ranks first. The risks of switching to a new service provider are daunting in life saving units, but it is much easier to induce switches in routine areas. Excel hygiene will target waiting areas, food preparation zones, and general wards for its entry, staying away from competitive strongholds in Intensive Care and Casualty units.
Excel Hygiene plans to hold seminars and to participate in scientific meetings on infection control to ensure word of mouth promotion of its services and image. Special efforts will be made to make spokespeople out of the best known doctors, surgeons, and para-medical workers, so that branding has a firm and stable base. The financial plans provide for this first phase to last the first full year of operations, and the second year will be used to leverage the accumulated goodwill by tripling the relatively small revenues of the first year.
Excel Hygiene will invest in free demonstrations of its services for the first 6 months, backed by microbiology tests. This is to establish the reliability of the company’s services and to prove the efficacies of its novel range of biological products. The company will aim to have the results of these trials published, so that the investment can result in high growth during the second year of operations. A final element of strategy will be to liaise with regulatory authorities for endorsement of the company’s novel products.
This approach will help to consolidate the small market share that the company hopes to forge within 2 years, and to protect its revenues during the subsequent years. The company hopes to excel by defining its business scope, territorial spread, and customer definition very tightly, seeking to specialize in a niche area. The emphasis is also on reassuring financiers since the company does not have a prior establishment in the market of substantial fixed asset covers. This conservative approach may be reviewed once the company has achieved its targets for the first five years.
Quantitatively, Excel Hygiene targets net revenues of $500 thousand in the first year, rising to over $2 million by year 5. However, the major growth is expected during the second year itself. The infrastructure which has been planned will not allow full service coverage of more than 500 client units at a time within the designated territory. Hence, growth from the third year onwards will be marginal. It is typical in this business to suffer some client turnover, though it is equally possible to canvass for new contracts. Incineration and treatment capacities are other constraints to bear in mind.