This study deals with an existing company known as Bond Chem manufacturing construction chemical that is based in United Arab Emirates (Sheth and Sisodia 2015). In this particular assignment, main emphasis has been given on coming with innovative idea that will help the company to generate revenue in the business. Bond Chem will be dealing with specialty chemical formulator, toll manufacturer as well as lab agency and advertising products to business from cosmetics manufacturers to food complement marketers (Bondchem.com 2017). In addition, Bond Chem will be manufacturing as well as distributing Creatine Monohydrate that is an accepted food complement that is used for humanizing the power, muscle mass and patience at the same time. Bond Chem will be producing five other field chemicals that will be used in the text. Furthermore, Bond Chem will be appointing strong information based administration team that will be mutual by people who have 30 years of practice in the manufacturing industry (Petty et al. 2015). The study clearly explains the start-up business plan in detail and calculates the estimates sales costs for the initial cost of operations for the given company. Bond Chem deals in the chemical industry and aims at generating revenues in the upcoming financial year.
Bond Chem will have the administration team as well as chemical formulations to become a main player in the particular position that they serve (Meffert 2013). Bond Chem will be developing new skill as well as procedure that are in demand by other chemical manufacturers and by major distributors that do not have the aptitude for producing field products. Furthermore, Bond Chem aims at suitable toll and convention manufacturer where they act as a trade dealer that reaches out to the customer market with products. Bond Chem will be finding ways to gain fair and accountable profit so that they can keep the business monetarily healthy for the long-term as well as adequately recompense owner and investors for investing their money and taking risk at the same time (Kotler et al. 2016).
Bond Chem provided different products such as Creatine Monohydrate that is a dietary supplement (Hollensen 2015). Athletes for improving strength use these; muscle mass as well as endurance. Creatine has become one of the popular bodybuilding supplements in recent times. It is sold so many times through drug stores, discount chains as well as health food stores. The distribution system is complex in nature where the manufacturers sell from the layered system. Bond Chem had developed a Creatine based drink that is one of the types that begins the marketing the product and sales potential for future analysis purpose (Sheth and Sisodia 2015). Kelate Cu is one of the specialty products that is used in cosmetics and distributed by a special arrangement.
Bond Chem operates in the chemical industry and categorized by variety of companies. Either end-use markets as well as product technology generally organize Bond Chem at the same time. From past decades, it shows general trend in the industry that changes emphasis upon chemicals to biotechnology as well as pharmaceuticals. Furthermore, the cost of product development as well as need for operating factories at higher levels of capacity that causes chemical companies for outsourcing parts of the chemical as well as manufacturing process. It will be created opportunities for smaller companies for enhancing and occupying niches in development as well as contract manufacturing. Therefore, the outsource industry providers help in occupying a marker segment that identifies custom as well as toll manufacturers in a effective way (Brigham and Houston 2012).
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Bond Chem |
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Profit and Loss Statement |
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For the year ended 2017 |
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2017 |
2018 |
2019 |
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Sales |
AED 8,144,418.38 |
AED 9,747,407.40 |
AED 12,671,850.00 |
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Direct cost of sales |
AED 3,582,809.48 |
AED 3,411,592.59 |
AED 4,435,147.50 |
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Other |
AED – |
AED – |
AED – |
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Total cost of sales |
AED 3,582,809.48 |
AED 3,411,592.59 |
AED 4,435,147.50 |
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Gross Margin |
AED 4,561,608.90 |
AED 6,335,814.81 |
AED 8,236,702.50 |
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Expenses |
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Payroll |
AED 841,212.50 |
AED 918,250.00 |
AED 1,138,630.00 |
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Sales and Marketing Expenses |
AED 384,930.40 |
AED 381,992.00 |
AED 391,236.94 |
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Depreciation |
AED 132,228.00 |
AED 132,228.00 |
AED 132,228.00 |
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Leased Equipment |
AED 41,034.76 |
AED 91,825.00 |
AED 91,825.00 |
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Utilities |
AED 44,076.00 |
AED 55,095.00 |
AED 66,114.00 |
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Insurance |
AED 13,020.78 |
AED 18,365.00 |
AED – |
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Rent |
AED 107,986.20 |
AED 110,190.00 |
AED 110,190.00 |
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Payroll Taxes |
AED 126,182.24 |
AED 137,737.50 |
AED 170,794.50 |
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Other |
AED – |
AED – |
AED – |
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Total Operating Expenses |
AED 1,690,670.88 |
AED 1,845,682.50 |
AED 2,101,018.44 |
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Profit before interest and taxes |
AED 2,870,938.02 |
AED 4,490,132.31 |
AED 6,135,684.06 |
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EBITDA |
AED 3,003,166.02 |
AED 4,622,360.31 |
AED 6,267,912.06 |
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Interest expense |
AED 127,596.35 |
AED 139,041.42 |
AED 152,264.21 |
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Taxes incurred |
AED 685,833.58 |
AED 1,087,773.64 |
AED 1,567,034.03 |
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Net Profit |
AED 2,057,508.09 |
AED 3,263,317.25 |
AED 4,416,385.82 |
The sale of Bond Chem will be increasing steadily over the last 3 years. The numbers actually give up strong reference point where they look at the sales projections for the future financial years. The projected sales of Bond Chem for the first three years of the plan are shown in the assignment with proper justification (Brigham and Ehrhardt 2013).
Bond Chem will need adequate capital that will help them to expand in the operation as well as become a major factor especially in the production of chemicals in the consumer, industrial and textile markets. The signature product of Bond Chem is Creatine Monohydrate that manufactures both powdered as well as liquid forms. Bond Chem is the company that is capable of manufacturing the product in liquid form. According to the market research, it clearly shows that the demand for the product along actually justifies the expansion of facilities (Arnold 2013).
Bond Chem aims at becoming technical niche players who deal in specialized product line that is in great demand. In addition, the main target market is the distributors who have established relationships with specialty product firms, consumer products outlets as well as textile chemical companies. Bond Chem deals in manufacturing arm for the given distributors as well as providing development service and products in desired form (Armstrong et al. 2015).
The chemical industry market has been divided into different segments namely industrial products, consumer products as well as textile products (Campbell, Jardine and McGlynn 2016).
Consumer market- One of the target market for Bond Chem is consumer market that deals with Creatine Monohydrate that is limited and ability for producing activities. In addition, Bond Chem has distributors who are begging for the product as well as backing orders from now and it is only logical as it devotes time for meeting the demand. Bond Chem looks at the potential in the market based on the growth (Sheth and Sisodia 2015).
Industrial products- One of the target market for Bond Chem is the industrial market where they sell through both distributors as well as directly to manufacturers. In addition, it is an untapped market as well as sustained through reputation and ability for meeting formulation criteria (Brigham and Houston 2012). Therefore, marketing effort in the segment that will produce sales to an equal level that aligns in the consumer market
Textile products- One of the target market for Bond Chem is textile products those should have enough experience in the given segment for understanding the manufacturing capability and devotes with an entire marketing effort. It includes both toll as well as custom manufacturing capability that is strategically attractive to all the textile manufactures (Sheth and Sisodia 2015).
In the mainstream business, it is noted that channels are mostly critical to volume. Addition to that, the manufacturers and distributors operate in the international chemical market. Bond Chem desires to achieve milestone by developing certain formulations that estimate the cost for duplicating activities. It is the creative monohydrate as well as process that is now important for future analysis purpose. There has been process that especially produces the supplement in the liquid form and seizes with the opportunity as well as beginning for marketing the product in the most appropriate way (Brigham and Houston 2012).
There is always a need for finance for any start-up business and even for developing existing business with new policies and strategies. Bond Chem plan to support growth as well as debt obligations through increased sales and cash flow. In addition, the major debt with bank is secured by personal as well as company collateral. Furthermore, the financials do not include any estimated values of proprietary chemical formulations or the value of assignable customer contracts (Sheth and Sisodia 2015).
The assumptions mainly support the projections in the tables that move to larger facilities as well as additional equipment as it results in increased production. It is about the back orders as well as new orders that are shipped for the company. Bond Chem will have excellent agreements with the primary sources of supply as well as assume that there wills no change for the given relationships. Furthermore, Bond Chem assumes strategies where the demand for Creatine as well as other products actually continues for justifying evidences from market research (Brigham and Houston 2012).
Bond Chem will be developing some of the formations where they can gain some of technical as well as market advantage than its competitors. Bond Chem need to recruit experienced marketing person who is capable to handle sales as well as is a technically perceptive individual. The marketing person should have proper knowledge about the market and should take an equity position in the project for adding marketing expertise. Therefore, with the change of technology, there is change present in the buying habits and social structure of individuals. Any major change in the areas will have detrimental effects on the business as a whole (Sheth and Sisodia 2015).
The distributors as well as customers have given an opportunity for providing products beyond the present capability. In addition, it requires to adding off the equipment, increasing stock as well as establishing marketing and support activities in the most appropriate way. Bond Chem began its operations as a custom as well as toll chemical manufacturer. Furthermore, the management team includes President, CEO, Vice President as well as marketing and physician. Bond Chem incorporated in the Corporation and owned in equal shares by the members of the management team (Brigham and Houston 2012).
Lack of funding- Bond Chem faces problem with the funding as they needed lot of money to implement the new business idea. Money is the real issue for every new business idea and is quite difficult for obtaining funding for starting and expanding the existing business. Every aspect of the business require financial attention but there are time that there will not be enough for addressing all types of business needs.
It is recommended to Bond Chem for implementing short-term solution to cut over the costs. It is the responsibility of the start-up entrepreneurs for looking into the solutions such as sharing office spaces, hiring of freelancers and making purchases in accordance to the current budget and not the initial plan that need in the business.
Poor Planning- It happens a lot of time when entrepreneurs get excited about the business but fails to conduct proper planning (Brigham and Houston 2012). It is necessary for the entrepreneur for conducting thorough research by investigating everything from the supplier to taxes for gaining over competitive prices. There is a slight change in the market trends that causes main effects of the business. It is needed that take an extra time for studying the market trends as well as forecasts for the niche market. It need to create a comprehensive business plan as it will address unexpected changes such as increase of the rat materials as well as introducing new tax system (Sheth and Sisodia 2015).
An entrepreneur needs to look into the problems at the time of planning the business activities. They need to anticipate the difficulties so that they encounter ways for finding intelligent ways for avoiding such problems.
Competition- Competition eventually starts when Start-up Company enters into the business while trading. Competition can be avoided by purchasing a franchise from big companies in the niche market (Sheth and Sisodia 2015).
Bond Chem will have healthy levels of revenue as well as net income during the financial year 2017, 2018 and 2019. At this point, investors should have the capacity to achieve liquidity through an initial public offering or through way of acquisition by a company in given chemical industry (Brigham and Houston 2012). The long-term goals of Bond Chem are to formulate and manufacture for the process that develops for the production of products in the specialized activities. Bond Chem has an excellent position for capturing a significant part of the $300 million for the product named as Creatine Monohydrate market. The company will be establishing a marketing program as well as beginning with ways for promoting the level of capability in the most appropriate way (Sheth and Sisodia 2015).
The main goal of Bond Chem is to analyze the market into three business segments named as specialty products, consumer products as well as textile chemicals. The company aims at becoming highly technical niche player who had develop strong alliances with the distributors who have powerful channel relationships. Hence, it even lacks manufacturing ot product development capabilities altogether (Brigham and Houston 2012).
The marketing strategy adopted by Bond Chem assumes to serve three types of distributors in three main ways. The first one is the toll manufacturers where the customer provides with the raw materials as well as formulation on what they mix with specifications. The other one is the custom manufacturers where the customer actually provides materials and formulating the process. In addition, the trade supplier where they develop as well as sell own lines of products based on customer needs and industry at the same time (Sheth and Sisodia 2015).
The break-even analysis of Bond Chem is mainly based on the running costs where they incur ways for keeping the business smooth. It is not on theoretical fixed costs and relevant if it is closing at that point of time. The projected balance sheet indicates an increase in the net worth where it expects to be making enviable profits for future analysis purpose. In addition, the financial projections indicate significant part of the net worth in the paid-in-capital as well as positive figure in the retained earnings. It increases with the assets for meeting the equipment as well as facility requirements for increasing receivables and inventory for supporting growth in sales (Sheth and Sisodia 2015).
Conclusions
At the end of the study, it is concluded that Bond Chem will be devising a business plan where they involve in manufacturing and selling products to companies from cosmetics manufacturers to food supplement marketers. The current study actually consults with new business start-ups in the chemical industry. In that way, the course work looks at innovative idea that the student desire to implement and gain experience at the same time. The marketing strategy are properly explained in the assignment in terms of segmentation, targeting. The first part explains the calculations where sales are estimated for three years of operations. Every business aim at gaining profits from the business they actually operate in given span of time. It is all about profit maximization and cost minimization with available resources. The responsibility of the specialty manufacturers carves out with specific niche of expertise and depends for products. In case of competition, it mostly lines with the level of quality performance in the most appropriate way. Bond Chem aims at achieving the level that is recognized for high standard of quality performance in an overall manner. Bond Chem operate in chemical industry that seem to be in the competition and subcontracted production that do not have ability for supply for judging the level of quality in an effective way.
References
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Arnold, G., 2013. Corporate financial management. Pearson Higher Ed.
Bondchem.com. 2017. BondChem – Home. [online] Available at: https://www.bondchem.com [Accessed 4 Jul. 2017].
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning.
Brigham, E.F. and Houston, J.F., 2012. Fundamentals of financial management. Cengage Learning.
Campbell, J.D., Jardine, A.K. and McGlynn, J.., 2016. Asset management excellence: optimizing equipment life-cycle decisions. CRC Press.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Kotler, P., Keller, K.L., Brady, M., Goodman, M. and Hansen, T., 2016. Marketing management. Pearson Education Ltd..
Meffert, H., 2013. Marketing-Management: Analyse—Strategie—Implementierung. Springer-Verlag.
Petty, J.W., Titman, S., Keown, A.J., Martin, P., Martin, J.D. and Burrow, M., 2015. Financial management: Principles and applications. Pearson Higher Education AU.
Sheth, J.N. and Sisodia, R.S., 2015. Does marketing need reform?: Fresh perspectives on the future. Routledge.
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