Entrepreneurship and Innovation Plan of Cool Air

Question: Discuss about the Entrepreneurship and Innovation Business Plan of Cool Air. Answer: Introduction Before launching a new business, the business experts have to face innumerable barriers to establish their wings in the current market. An effective business plan helps the experts to direct them towards right path. In this particular study, a business plan is prepared for a start-up business, which is going to operate its services in the market of Melbourne, Australia. Melbourne being one of the most recognizable cities of Australia is possessed with large number of population. On the other hand, this particular place is endowed with beautiful tourist spots where numbers of visitors come to enjoy the scenic beauty. Cool Air being an electronic fan manufacturing company has targeted the tourists primarily for selling their products and services. Therefore, it will be easier for the business experts to promote as well as sale their products and services in the city of Melbourne. Cool Air is the name of chosen business organization that primarily aims to manufacture innovative electronic portable fans. This particular product is possessed with unique features that can be operated through solar power. As a result the persons who are roaming around can easily carry this fan and use these in their needs. In this business plan, the business experts will primarily focus on three primary aspects to launch their business process in the market of Australia. The three aspects include market analysis, organizational technologies and financial planning. Description of the business Cool Air is an electronic fan manufacturing company, which will produce innovative portable fans to carry here and there. This specific product would be suitable to those persons who have to remain busy in their field work (Theodosiou, Kehagias and Katsikea 2012). Especially tourists coming from different multinational countries would be benefited from Cool Air. Fans possessed with portability are the core product of Cool Air. Based on the core feature the organization will focus to launch diversified products with superior quality of service process and colorful designs. Mini portable USB rechargeable fan is available in Cool Air. The primary feature of this particular product is it is built in rechargeable battery, which will provide service for more than eight hours. As a result, persons who have to roam around outside for their official works and facilities can purchase this products for their convenience (Aral, Dellarocas and Godes 2013). The fan will be built in three choices o f speed button including high, medium and low. With the dimension of 105 x 40 x 138 mm (approx) and 190 G weight the fan can be carried out easily. On the other hand, the business experts have focused on the product design as well to attract the customers attention. With varieties of colors such as red, green, pink, yellow, blue the product has been rendered with a new impressive look (Boons and Ldeke-Freund 2013). The specialty of Cool Air is manufacturing cap fans. People would not have to carry the product in their hands or bags. This particular fan can be attached in their head. The idea of cap fan is quite innovative that can be operated through solar power. As a result, the customers can be flexible by attaching the fan in their head. The general weight of those products would be around 100 G along with 100 x 30 x 130 mm dimension (approx). Especially this particular product would be beneficial for the tourists as well. Cool Air in order to establish their business process in the current market has rendered some innovative service process as well in order to draw the attention of customers (Chen, Chiang and Storey 2012). The organization has established a refurbishment department based on which customers can lodge their complaints as well. Electronic device may have several risk factors. The customers may find some defects after using the product (Collis and Hussey 2013). Cool Air is always flexible to take the responsibility of their defective products. The primary role of refurbishment department is to check those issues received from the customers and d eliver the proper services within time. Vision The vision of the business is to introduce the innovative product feature to the working professionals who can use this product in their daily lives. This startup company has established the vision to earn the sufficient revenues and establish the sustainable position in the competitive scenario. In order to achieve this, the startup business has undertaken the clear strategy of product innovation. Product Innovations The business plan is focusing on establishing a new business based on the product innovations. The Cool Air Company is introducing the innovative features in the product. This electronic fan has the most attractive features that are easy to use for the business professionals. This device is quite user-friendly and designed for the people who invest their quality time on fieldwork. In order to make this product achievable and demanding, the company is looking forward to adopt multiple marketing techniques. However, prior to the analysis of marketing techniques, it is necessary to concentrate on the market feasibility. The proper market analysis will ensure whether the product will be acceptable to the business professional or not. Market Analysis Before launching a new business, market analysis is highly important to get a clear knowledge about the needs and demands of the customers. People from multinational countries in summer like to visit at different tourist spots of different countries (Wynne 2016). As per the market survey, the owner of this start-up business has identified their target group based on which the product can be designed (Finch 2016). An effective market analysis would help the business experts to evaluate on how the market promotional strategies and policies the marketing managers should follow to draw customers attention. After conducting an effective market analysis the business managers would get to know the current market demand (Rummler and Brache 2012). While making the market analysis the business managers of Cool Air would have to follow the specific parts. Current demand for proposed products and services As per the weather report of Australia, the people have to tolerate extreme weather. In summer the people belonging to Australia has to tolerate high temperature (Shank and Lyberger 2014). As a result, Cool Air has decided to introduce such kind of product that will help the target customers for getting a relief from summer whenever they will be in outside. Portable fan is the primary product of Cool Air. Mini researchable portable fan, folding fans with solar system, cap fan, are the core products that Cool Air manufactures within their organization. At the same time, the service facility of this specific organization is very much flexible (Eriksson and Kovalainen 2015). The customer service executives have been strictly instructed to treat every individual customer with equal priority and response. The service providers are flexible to communicate every individual customer with equal respect and dignity. As a result, people from different geographical corners would be flexible to u se the service of Cool Air. On the other hand, the business experts have decided to appoint at least 200 employees to maintain a balance between products and services. Target market Cool Air will target those customers who have to spend most of the time of their entire day outside home. People who are associated with fieldwork have to spend most of the time outside the office. On the other hand, tourists from different geographical boundaries can be targeted for the particular brand that needs airs at the time of wandering (Ford and Richardson 2013). Cool Air being a start-up business process has decided to focus on the low cost customers. Therefore, persons having average level of income status would afford the products of Cool Air. At the same time, product designers have decided to design the products in such a way that people from various cultures, beliefs and psychology can use service and products of Cool Air. The marketing managers would like to focus on both male and female customers from the age group of 20 to 50. Market niche Market niche is considered as the narrow subsection of the market from a larger market section. While running an entire process of business every organization has to focus on a specific target group whom can be designated as core customer. Cool Air before launching the business in the market of Melbourne has decided to target tourists especially. Melbourne is the city famous for sustainable tourism (Foss and Knudsen 2013). Large number of people from different countries appears in Australia to enjoy its scenic beauty in summer. Therefore, tourists or visitors are the core target group for Cool Air. Without this particular group the organization would not be able to expand their entire business process effectively. The impact of location Location has a major impact in enhancing the entire business process. Especially for a start-up business, the experts should choose such a location where the customers can easily avail. Target group belongs to the various geographical markets (Garca-Morales et al. 2012). Therefore, the business experts should not choose a remote area where the customers may have to face difficulties to visit the organization and use its services. Cool Air has chosen Melbourne as the location due to the popularity of this place. Melbourne is the heart of Australia, well developed in both technologically and economically (Rothaermel 2015). A large number of populations already exist in the heart of Melbourne. Therefore, Cool Air has decided to establish their business process in Melbourne for being available for the people of various geographical markets. Organization and technology Cool Air is established as a start-up business dealing around 200 employees including all the departments. While running the entire process of business, every organization has to follow a specific hierarchy. Cool Air is not exceptional to that. This particular organization is endowed with four managerial division primarily such as marketing division, financial division, human resource department and operational department (Grant 2016). The primary responsible of human resource department is recruiting employees to the particular post, communicating with the employees for collecting necessary feedback, providing professional and development training to the employees for enhancing their knowledge of professionalism (Pike and Page 2014). Cool Air being a new business organization has appointed four executives in the human resource department for keeping a control over entire business process. On the other hand, the marketing managers focus on the promotional activities for reaching their product concept in various geographical markets (Morgan 2012). Cool Air being a start-up business process cannot afford sufficient budget for promotional activities. Australia is out an out developed by economically, socially and technologically (Grunert and Traill 2012). Therefore, the marketing managers have decided to use the popularity of digital media only for promoting their product in different multinational countries. Technological issues After launching their business in the city like Melbourne the business experts of Cool Air have decided to launch technological resources as Australia is advanced in technology. The production managers are highly dependent on technology with the help of which the executives can manufacture large number of products in limited time. The promotional activities of Cool Air are also dependent on technology (Healy and Palepu 2012). Therefore, the concerned managers have to be very much concerned about technological issues. Any kind of technical barrier can demolish the entire process of business (Padgett and Powell 2012). At the same time, the human resource managers would focus to provide proper training in technological skill. As a result, the employees can handle any kind of sudden technological barrier while communicating with the customers (Morgan 2012). The primary advantage of using advanced technology within the business organization is maintaining systematic service procedure and arranging chronological data record. Financial analysis Income Statement Amount (in $) Year 1 Year 2 Year 3 Revenue for the year 77,500.00 81,375.00 91,140.00 Closing stock 3,500.00 6,575.00 6,000.00 Less: Direct expenses Purchase of materials (21,800.00) (22,890.00) (24,492.30) Carriage inward (1,500.00) (1,500.00) (2,750.00) Gross Income 57,700.00 63,560.00 69,897.70 Less: Indirect expenses Salaries and wages (21,200.00) (23,000.00) (24,500.00) Maintenance charges (4,750.00) (4,500.00) (4,500.00) Rent for the factory (2,700.00) (2,500.00) (2,500.00) Rent for the office (4,200.00) (3,500.00) (3,500.00) Depreciation (5,150.00) (4,279.00) (4,075.00) Advertisement cost (5,100.00) (2,700.00) (3,550.00) Distribution cost (2,150.00) (2,750.00) (3,750.00) Other expenses (1,450.00) (2,050.00) (3,150.00) Net income 11,000.00 18,281.00 20,372.70 Balance Sheet Amount (in $) Year 1 Year 2 Year 3 Assets: Fixed assets: Machineries 31,000.00 27,900.00 25,110.00 Equipments 20,500.00 19,475.00 18,501.25 Other financial assets 15,425.00 15,000.00 14,450.00 Total fixed assets 66,925.00 62,375.00 58,061.25 Current assets: Debtors 4,600.00 5,000.00 5,250.00 Cash in hand 6,500.00 4,200.00 4,500.00 Closing stock 3,500.00 6,575.00 6,000.00 Total current assets 14,600.00 15,775.00 15,750.00 Total assets 81,525.00 78,150.00 73,811.25 Liabilities: Long- term liabilities: Long- term bank loan 35,500.00 35,500.00 35,500.00 Current liabilities: Creditors 5,375.00 3,250.00 1,150.00 Provisions 3,400.00 3,400.00 1,500.00 Total current liabilities 8,775.00 6,650.00 2,650.00 Total liabilities 44,275.00 42,150.00 38,150.00 Owner's capital: Capital 35,500.00 35,500.00 35,500.00 Reserve 1,750.00 500.00 161.25 Total Owner's capital 37,250.00 36,000.00 35,661.25 Projected Cash Flow Statement Amount (in $) Year 1 Year 2 Year 3 Income from the operations 11,000.00 11,550.00 12,936.00 Cash flow from operating activities: Add: Increase in current liabilities 2,100.00 0.00 0.00 Less: Decrease in current liabilities 2,125.00 4,000.00 Less: Increase in current assets (2,500.00) 1,175.00 0.00 Total cash from operating activities 10,600.00 8,250.00 8,936.00 Cash flow from investing activities: Purchase of machinery and equipment (51,500.00) 0.00 0.00 Sale of machinery or equipment 0.00 0.00 0.00 Total cash from investing activities (51,500.00) 0.00 0.00 Cash flow from financing activities: Bank loan taken 35,500.00 35,500.00 35,500.00 Capital provided by the owner 35,500.00 35,500.00 35,500.00 Total cash from financing activities 71,000.00 71,000.00 71,000.00 Net cash inflow 30,100.00 79,250.00 79,936.00 Start-up cost: The company will arrange 50% of the total required fund from the external source and that is bank loan and the other 50% will be contributed by the owner. Further, the organization acquired machineries and equipment for the manufacturing purpose that would be financed by the borrowed amount. Source of financing: The borrowed amount will be financed by taking bank loan at prevailing interest rate provisionally @6% while the organization has estimated the value of financial assets as a source of finance (Parks, Olson and Bokor 2015). Besides, it has been estimated that the company has sufficient value of current assets to be used for working capital. Operating cost: In view of the projected income statement companys direct operating cost estimated to $23,300 in the first year while it reflects increased value by 4% and 11% during the next second and third years respectively. Besides, indirect cost during the second year has been estimated at lower value since the advertisement cost estimated to decline in the next year. Revenue projection Income statement of the organization reflected revenues at increasing trend in all the three years at 5% and 12% in the second and third years respectively (Mengel and Wouters 2015). In addition, the organization estimated closing stock at increased value in the second year but at decrease value in the third value. Profitability analysis Estimated sales revenue at increased percentage and considering direct cost and indirect expenses reflected increased income. During the second year, gross profit reflected increased value at low percentage while net income at higher percentage (Dmitriev et al. 2014). On the other hand, during the third year, companys estimation reflected increase in gross income at high percentage and net income at lower percentage. Therefore, it has been analyzed that the company is required to evaluate the indirect costs during the third year so that the net income percentage can be increased. Conclusion Cool Air has made an effective business plan for launching a start-up electronic manufacturing company in the market of Melbourne. An effective business plan is constituted with three major aspects including market analysis, organization and technology and financial analysis. This particular organization aims to launch portable fans endowed with rechargeable battery or solar power. In the market analysis the expected target market is selected based on which the products and services will be prepared. With the help of a proper financial analysis the organization would be able to make a proper budget. The primary purpose of making a business plan is to control the entire business process. References Alhabeeb, M.J., 2014.Entrepreneurial finance: fundamentals of financial planning and management for small business. John Wiley Sons. Aral, S., Dellarocas, C. and Godes, D., 2013. 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