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4/3/2012 Abdul Rehman

Lets Experience a Safe, Reliable and Learning journey

Table of Contents
Introduction ..................................................................................................................................... 4 1. Where are we now?............................................................................................................... 4 i) Identity of the business ......................................................................................................... 4 ii) The key people ....................................................................................................................... 5 iii) The nature of the business ........................................................................................................ 5 ........................................................................................................................................... Marketing 5 The Competition ............................................................................................................................. 5 Target Market.................................................................................................................................. 6 Sales Literature ............................................................................................................................... 6 2. Market research ....................................................................................................................... 6 Promotion Scheme ........................................................................................................................ 14 Marketing Scheme ........................................................................................................................ 14 Marketing Effort ........................................................................................................................... 14 Management .................................................................................................................... 14 Operations ..................................................................................................................................... 15 Sales Strategy ................................................................................................................................ 16 Financials ......................................................................................................................... 17 Financial Objectives...................................................................................................................... 18 Financial Summary ....................................................................................................................... 20 Profit and loss account statement .................................................................................................. 21 Statement of Assets, Liabilities and Equities................................................................................ 22 Cash flow statement ...................................................................................................................... 23 Payback Period=Cost of Project/Total Cash inflow per year ....................................................... 23 Break Even Analysis ..................................................................................................................... 23

Introduction
Small businesses are considered as the backbone of every economy. They ensure the circulation of money and help to give the employment to the people. Before stating any business, a business plan is made to evaluate the opportunities and threats in the surroundings and to the check the strengths and weakness of the competitors. Although, all these things are very important and significant which involves internal and external audit, but before starting any business three key questions must be answered.

1. Where are we now? 2. Where do we intend to go? 3. How do we get there?

1. Where are we now? i) Identity of the business

The name gives the sense of attachment to the university students. The company will start providing services from 1st of May. The LSE Bus Company, located in the city of Lahore is a new bus service in its formative stages. It is being organized to take advantage of a specific gap in the Lahore School of Economics bus service market, as there is currently only one bus service providing services for the limited areas. The gap exists in high quality, reasonably priced bus service to transport the students from LSE to different areas of the city. The LSE Bus Company's aim is to provide safe, reliable and efficient on time bus service to the students of Lahore School of Economics using mini buses. Nine of the buses will be open with on board Wi-Fi internet connection to provide the students with best leaning experience. The operation of The LSE Bus Company is to provide a safe, licensed transportation service for students at a reasonable price to parents. By achieving our goals, we will become a trusted, viable transportation source to students.

ii)

The key people

The company has 10 drivers on the fleet plus a reserved driver in case of emergency. The company has also two guards and an office boy. The company also has an operating manager which will check the day to day operations of the company. It includes bus timings, bus maintains and repair, student feedback and dealing with complaints. The collection of the fares will be handled by the owner of the company. All the drivers will have the license and have the driving experience of at least 5 years to ensure the safe and sound driving. The guards will be hired from the guard company and the operating manager must be intimidate and have 3 years experience in the bus service department. The future requirements includes adding more buses to the fleet and also adding new routes to the students of LSE, so that they can use bus service, hence saving time and cost. iii) The nature of the business LSE Bus Company will provide daily bus service to the students of LSE after every slot. We will start our services initially with D.H.A, Gulberg and Cantt Plus adding a route to the Ares adjacent to Thokar Niaz Baig .LSE BUS COMPANY will develop a message that touring with us is fun and we will project that message over the airwaves and in print. We will kick off our message using Comcast Cable System in the LSE area as well as hosting parties for certain tour association decision makers and the media. We plan a pre-opening marketing budget of Rs80, 000. As we profit, we will spend about 1% of gross revenues on advertisement and marketing. We will also distribute survey cards to assess what we are doing right and identify what we are doing wrong. Marketing

The Competition Our main competitors in the LSE Bus service market are: 1. Currently, there is only one competitor of the LSE bus Service, which has been operating for the last 4 years. The competitor enjoys the strong financial position as they are only bus service n the market. The name of the competitor is Al Hussain Tours. The

competitor has the large bus fleet with 15 buses currently operating and serving only to three res .i.e. D.H.A, Gulberg, Cantt. Target Market The target market of LSE is the students of LSE, who are currently using the existing bus service i.e. Alhussian tours, students who use the car pool service to come to LSE and the students who live in areas adjacent to Thokar Niaz Baig. Sales Literature Brochures to feature our services will be produced throughout the LSE, information service kiosks and the Juice Corner. Direct mail, advertisements and sales promotion literature will be utilized. 2. Market research Market research is a very essential tool of business strategy. It is very important to conduct a market research in order to get to know about the external and internal environment, knowing about the customers, competitors, suppliers, distributors working in a particular industry. My business plan is to start a new bus service in LSE as there is only one bus service operating, which is charging high fares to the students. As, there is no other bus service available, currently operating bus service is enjoying high profits and they are charging heavy amount of money. So keeping these things in mind, I have carried out a research to come with the bus service that provides best quality service in lowest possible price.

My Research Objectives are as follows a) To find the strengths and weakness of the competitor b) To find the opportunities and threats, and how to capitalize the opportunities and minimize the threats c) To find the level of satisfaction of the customers who are using the Alhussnain Tours d) To find the customer preferences about the Bus service e) To find how to deliver the best value to the customers f) To find the customer preferences about the safety and security g) To find the geographic locations of the customers.

I have used the different methods to conduct the research. I have used the primary methods of research. I have used methods which make my research more clear, specific and informative. Methods used for the research are as follows

1) Observation I have started my research by observing that how many students come to LSE by bus. I closely observed them and their problems. I have found that these students have to sit for long hours waiting for bus as there is no flexible timing structure followed by the bus. Bus only drops the students at 2, 4 and 6. So the students who have makeup classes in the 1st slot have to come by bus and wait for 4 hours. Otherwise he/she has to come by his/her own car and incur extra cost. Moreover, students who live in places like Johar town, EME and areas which are located near Thokar Niaz Baig have to come all over to liberty to go to LSE by bus. Also, there are very limited stops, only three stops i.e. D.H.A, Gulberg and Cantt, offered by this bus service and the management of the bus service is more of making money than providing quality journey to the students. I also found that the students who come to LSE by other means are also suffering from very different kind of problems. They come to LSE late and therefore they often come to classes late missing the half lecture and not allowed by instructor to come in and attend the class. So, their whole cost and effort goes waste. Mostly of these students live far from LSE and no bus service is available in their area.

2) Ethnographic research Ethnographic research is another research often used by the marketers to observe the behavioral pattern of the certain group in the society. It is the observation and interaction with persons or a group being studied in the group's own environment, often for long periods of time. So, ethnographic research has been conducted as I travelled by bus to observe the atmosphere and environment of the bus and whether the security and safety standards have been met or not. Although, the environment is clean and there are no hygiene issues, but the security and safety standards have not been met properly. Driver is using the mobile phone and he has also not fastened his seat belt. Also, there are cards given to the students who use the bus service and there is no daily checking of cards. Bollywood music was blaring in the bus and most of the 7

people in the bus were enjoying it but they were some people who dont have taste of such kind of music or they simply dont want to listen to loud music on the way back to their homes. So, by conducting ethnographic research, I have gained a lot of information.

3) Interview Interview is another important mean to extract direct information from the source. I have interviewed the Sobedar (the operating manager of the bus service). He was very hesitant about sharing internal information about the Alhussnain Tours and shared very little information. According to him, fares charged by the students are reasonable and any increases in the fuel prices are already included in the fares. So, no extra money is charged if the diesel price goes up during the semester. He also added that they earn more in winters because of less fuel consumption and no usage of air conditioner as well; however, profit margin squeezes in the summer

4) Market Survey In order to further extend my research and get more clear and quantitative results, I have designed questioners. I have selected the sample size of 100 and distributed the questioners in LSE. Also I have rounded the figures to get better understanding of the results. Findings are as follows:

How do you come to LSE?

35 30 25 20 15 10 5 0 LSE Bus Service Own Car Car pool My friends pick and drop me(free of cost) Other How do you come to LSE?

As we can see from the graph, 25 out of 100 students come to LSE by Alhussnain Tours and 30 students come to LSE by car pooling system. 20 students come to LSE either free of cost or on their own car. So, there is a need of a bus that can pick and drop the students in different areas of Lahore.

Where do you live?

40 35 30 25 20 15 10 5 0 D.H.A Gulberg Model Town Johar Town Other

Where do you live?

According to the findings, 35 students live in DHA and 30 students live in Gulberg. However, Alhussnain Tours has stops in these areas. But, 35 of the students come from the areas where Alhussnain Tours has no stop, so they have to come to LSE through either by car pooling system or on their own car. 9

Monthly income
35 30 25 20 15 10 5 0 30,000 40,000 40,000 50,000 50,000 60,000 60,000 70,000 Above 70,000 Monthly income

Mostly of the students belong to the strong financial background. So, spending money for quality bus service wont be an issue for them.

Do you think that bus should pick and drop the students after every slot?
60 50 40 30 20 10 0 Strongly Disagree Disagree Uncertain Agree Strongly agree Do you think that bus should pick and drop the students after every slot?

More than 50 students out of 100 are in the favor of the statement that bus should drop the students after every slot and they dont want to waste time waiting for the bus, as they are paying handsome amount of money. Students are also in favor that bus should also pick the students from different stops after every slot, so the students, who have classes at 12, dont have to get up early to catch the bus.

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Do you think that there should be more stops in other areas of Lahore other than DHA, Gulberg and Cantt?
50 40 30 20 10 0 Strongly Disagree Uncertain Disagree Agree Strongly Agree 1. Do you think that there should be more stops in other areas of Lahore other than DHA, Gulberg and Cantt?

Many of the students strongly support the statement, that there should be more stops other than the three stops, as students come from different areas of Lahore to LSE. So, bus should pick them from their locations, as it will save their time and cost.

Do you think that there should be payment system on weekly and monthly basis, other than paying full at the start of the semester?
40 30 20 10 0 Strongly Disagree Uncertain Disagree Agree Strongly Agree Do you think that there should be payment system on weekly and monthly basis, other than paying full at the start of the semester?

25 percent of respondents dont agree to statement and 30 of them agree. Also 15 students are uncertain about this. It means that there are students who want to pay full of the fees at the start,

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where as some students dont want to pay in full and want to follow a weekly or monthly system.

Would you come to LSE by bus if there is stop near your locality?
45 40 35 30 25 20 15 10 5 0 Yes No May be 8. Would you come to LSE by bus if there is stop near your locality?

40 of the students confirm that they come to LSE by bus, if there is a stop near their locality. It means that they are willing to come to LSE by bus and only problem with them is that there is no stop near their locality. So, they have to come to LSE by car.

Do you think that high speed internet i.e. Wi-Fi should be installed in the collage bus?
60 50 40 30 20 10 0 Strongly Disagree Disagree Uncertain Agree Strongly Agree 7. Do you think that high speed internet i.e. Wi-Fi should be installed in the collage bus?

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55 respondents were amazed by this technology of installing Wi-Fi in a bus and they strongly agree to the statement, where as very small percentages of the student disagree. So, it would be a comparative advantage to come with internet service in a bus.

Are you satisfied with the LSE Bus Service?

60 50 40 30 20 10 0 Yes No I dont know 9. Are you satisfied with the LSE Bus Service?

More than 50 of the students are not satisfied with the service as they have to wait for long hours. However, other 43 are satisfied with service.

Are you satisfied with the fare LSE bus service is charging?
70 60 50 40 30 20 10 0 Yes, they are charging reasonable No, they are charging high Are you satisfied with the fare LSE bus service is charging

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More than 60 students believe that bus service is charging high rates; whereas 30 of the students are satisfied with the fare Alhussnain Tours is charging as there is high inflation and diesel prices have gone very high for the last 2 years. Promotion Scheme The overall concept and design of The LSE Bus Company sets the stage for its promotion. Marketing and promotion will stress the unique buses, the fun you can have with us and quality of tours that will set it apart from the rest. Strong public relations combined with well-placed, well-designed, distinctive advertising appealing directly to people who are our prospective customers will help get the word out. Marketing Scheme Customers will be reached through traditional marketing communication methods. Research suggests that our target market customers, many will access the Web for Bus service information and may make reservations or purchases via that medium. Besides, the Internet will serve as an effective means of communication and distribution of information about our services. LSE BUS COMPANY will target our customers initially at our bus stops as we board our passengers, giving them brochures and other literature that they may share with their friends. Marketing Effort The marketing effort will employ a mix of vehicles to convey our message and presence. Print media -- brochures Misc. -- charity events

LSE BUS COMPANY, upon successful operation of two years, will begin to develop strategies and plans geared towards opening new offices and Bus service services. Management Usman Malik will be the operating manager of the LSE bus Company. He has extensive experience in the Bus service industry, working for college bus of Punjab collage and conducting walking tours around town. Mr. Usman Malik has a knack for

recognizing opportunities and developing staff members to take advantage of those 14

situations. He will assemble a staff of experienced driver professionals to start operations and market our services. Guards and Driver will receive overtime pay (currently estimated at 20%) in addition to their regular salary. Also all employees will be covered under a health, dental, and vision plan after three months of employment. At The LSE Bus Company, we believe in an incentive based entrepreneurial approach to management. To have the employee want to work and make money, we will institute programs that will benefit the employee as well as the company. For example, when we sell photographs of our passengers, the Courtesy Captains will make a commission on the photos sold during their shift. How this will benefit them is that a receipt will be processed with the CC name on it so that when a purchase has been transacted, that CC is credited with the sale, thus the commission. At this point, we will assess what commission will be paid. For the drivers, we will allow them to compete for tips as well as overtime pay. But we will also keep tabs on their attendance and appearance. At the end of the month, those drivers that have the best attendance record and appearance will be allowed to compete for the monthly bonus.

Position

Salary

Bonus

Operation manager Guard Driver

Rs25,000 Rs12,000 Rs12,000

5% of gross monthly sales Monthly Customer Service Monthly Customer Service

Operations Submitting fares and dues of the buses will take place outside the LSE main gate, nest to juice corner. This site gives us great student traffic next to the university as well as ample 15

parking The buses will be stored and serviced by the driver and head by the Usman Malik, thus reducing staff cost and insuring top notch services for our customers. A small office located next between the Taheer Caf and juice Corner will serve as administrative offices. Objectives of the company are as follows 1. To provide the best value to the students of LSE by providing best quality service at reasonable rates. 2. To maximize value by adding internet on board, hence creating competitive edge. 3. To provide safe, reliable and on time journey to the students. 4. To pick and drop the students, when they want, where they want and to ensure safety standards. 5. Offering low prices than the competitors to create competitive edge. 6. Flexible timings and stops are the distinctive competencies of the LSE Bus Service. The LSE Bus Company has following policies a) There would be only cash payments in order to ensure secure money transfer b) Payment methods on weekly and monthly basis in the start of bus service. c) Separate bus for the smokers and non smokers d) Hi Speed internet connection to create competitive edge e) Flexible timings f) 8 stops in the different areas of the city

Sales Strategy LSE bus Service will aggressively sell the benefits of touring with us by implementing the following action items: In our first months of operations we will: Begin a major advertisement campaign to let the LSE area Bus service public know that there is a new tour in town. 16

We will host a party for the concierges of all the major hotels in LSE and present them with an incentives offer for referrals to LSE BUS COMPANY.

In the future we will: During the school year we will offer discount tours to area schools and during the summer we will offer discount tours to area colleges and universities for their incoming freshmen and their families. Develop special tours such as 'Lovers Only' tours at Valentine Day. Host Fraternity and Sorority night tours. Develop 'Movie Scene' tours. Host Family Reunion special tours. Develop Veterans tour specials. Host a once a year Stone Cold Family Picnic tour. Add to our product line a picture-taking ability so that before customers go on one of our tours, we will take pictures of the group and have a framed portrait waiting for their return, as well as the ability to send the picture via e-mail to anywhere in the world.

Financials Our research and projections indicate that the demand for Bus service in LSE is sufficient to provide The LSE Bus Company, with revenues of over Rs 420000/bus in its first full year of operations, utilizing 9 coaster buses and selected routes throughout the city. These sales figures are based on capturing 405 customers out of a potential customer base 2500. Second year revenues are expected to exceed Rs 6300000/bus serving over 450 customers with additional advertising and expanded tours. The LSE BUS COMPANY plan has the potential for a more rapid growth because of more routes. In short, the demands for tours in LSE BUS COMPANY's target market during the coming year will be more than enough to support LSE BUS COMPANY's anticipated market share. The first few months of formative operation 17

will burn cash until revenue can commence. This is due to the organizational and regulatory obligations of a new tour operator but aggressive marketing and promotion will readily make up for the slow start. LSE BUS COMPANY is seeking financing of Rs 12600000 to purchase 9 buses in the form of a five-year loan. Most of the planned start-up costs are apportioned to the following areas in approximately declining value: 1. Purchasing 9 45-passenger Toyota coasters Bus service buses, with on board internet service 2. Provisions of a sufficient cash reserve to assure timely payment of operating costs of the buses for the first three months. 3. Costs associated with recruiting, training, and paying operational crews. 4. Marketing, advertising, and public relations costs, including the cost of setting up a website capable of offering tour information and making online sales and reservations, and related Internet marketing, as well as conventional print and broadcast advertising, and public relations activities. 5. Administrative and legal costs incurred in setting up the business and the tour operations. 6. A reserve to cover overall operating costs, aside from bus operating costs, over at least the first three months of operations. Financial Objectives The LSE Bus Company will have as it primary objectives the following elements: To establish and operate a new LSE bus company aiming specifically at needs of the students

To implement an organizational and marketing strategy that will, beginning in the first months of operation, achieve an average load per bus of 65-85 percent depending on season and increasing thereafter to 75-100 percent, thereby maximizing revenues and return on investment while reducing risk.

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To achieve revenues of about 24,000,000 by our first full year of tour operations, also to expand into newer markets

To achieve net operating profits of 60-70 percent within the first 12 months

To gear operations, and present a professional, serious, growth-oriented image from the outset, that will set the stage for a reasoned, planned expansion, mirroring growth rates projected for the first years of operations.

As an element critical to achieving LSE BUS COMPANY's other key objectives, to identify and develop strategic alliances through the contacting the contractors of the bus companies.

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Financial Summary Start -up Capital Buses security (300,000*9) R.s 2,700,000 2,025,000 50,000 75,000 150,000 50,000 15,000 13,500 R.s 5,078,500

Buses rent in advance (3months) (225,000*9) Premises security Premises Rent in advance (3months) Payroll Office equipment Stationary and Printing exp Internet connection Total

Working Capital Fuel (100km/8*98*9*30) Overhead Repair & Maintenance Total

R.s 330,750 10,000 10,000 R.s 350,750

Cost of the Project

R.s 5429250

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Profit and loss account statement The LSE Bus Company For the year ending, 31 December

Year1

Year 2

Year 3

Fees (500*4000*12)

24,000,000

25,200,000

26,000,000

Other Expenses Rent (buses) Rent premises Salaries/payroll Fuel Overheads Internet Wi-Fi Repair and Maintenance 8,100,000 300,000 1,800,000 3,969,000 120,000 102,600 120,000 9,100,000 400,000 2,200,000 5,000,000 150,000 95,000 150,000 9,500,000 450,000 2,250,000 5,500,000 200,000 95,000 200,000

Net Profit/loss

Rs 9,489,000

8,105,000

7,80,5000

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Statement of Assets, Liabilities and Equities

The LSE Bus Company For the year ending, 31 December Current Assets Cash at bank Prepaid Rent Land Fixed Asset Office equipment Internet connections Total Assets Current liabilities Salaries payable Prepaid rent buses Owners equity Net profit Total 1,800,000 8,100,000 6,000,000 9,489,000 25,389,000 50,000 14,000 3,364,000 R.s 3,000,000 300,000

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Cash flow statement LSE Bus Company For the year ended 31, December
Jan Payments Payroll 150,000 Overheads 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 Feb Mar Apr May June Jul Aug Sep Oct Nov Dec

Rent (premises)

Rent (bus) 675000 675000 675000 675000 675000 675000 675000 675000 675000 675000 675000 675000 Internet 8550 Fuel Total 1221700 330,750 330750 350750 350750 350750 350750 360750 360750 360750 360750 360750 360750 13500 8550 8550 8550 8550 8550 8550 8550 8550 8550 8550 8550

1,204,250 1200204 1219300 1219300 1219300 1219300 1221700 1221700 1221700 1221700 1221700

Received Sales: 2,000,000 2000000 2500000 2500000 3000000 3000000 3000000 3000000 300000 3000000 3000000
3000000

1. Payback Period=Cost of Project/Total Cash inflow per year 5429250/33000000=0.16 16 days will be my pay back period

Break Even Analysis

Fixed Cost Variable Cost / unit Selling Price/ unit Break even R.s 673500 R.s 664.5 Rs 4000 202 Units monthly 23

Appendix 1. How do you come to LSE? a) Alhussnain Tours b) I come on my own Car c) Car Pool d) My friends pick and drop me. e) Other

2. Where do you live? a) D.H.A b) Gulberg c) Model Town d) Johar Town e) Other

3. Please specify your monthly income? a) 30,000 40,000 b) 40,000 50,000 c) 50,000 60,000 d) 60,000 70,000 e) Above 70,000

4. Do you think that bus should pick and drop the students after every slot?

Strongly disagree

Disagree

Uncertain

Agree

Strongly agree

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5. Do you think that there should be more stops in other areas of Lahore other than DHA, Gulberg and Cantt? Disagree Strongly disagree Uncertain Agree Strongly agree

6. Do you think that there should be payment system on weekly and monthly basis, other than paying full at the start of the semester? Strongly disagree Disagree Uncertain

7. Do you think that high speed internet i.e. Wi-Fi should be installed in the collage bus?

8. Strongly disagree

Disagree

Agree

8. Would you come to LSE by bus if there is stop near your locality? a) Yes b) No c) Maybe

9. Are you satisfied with the Alhussnain Tours? a) Yes b) No c) I dont know

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10. Are you satisfied with the fare Alhussnain Tours is charging? a) Yes, they are charging reasonable b) No, they are charging high

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