A business plan for launching a material handling company - HELM solutions
Thesis (MBA)--Stellenbosch University, 2014.
ENGLISH ABSTRACT: Mobile lifter (ML) is a product that is used to lift loads or materials ranging from 20–600 kilograms (kg), and to move the loads to anywhere within the factory up to a height of 2.3 metres (m). The ML is ideal for loads heavier than human comfort, dangerous to touch by hands, requiring repetitive moving and not heavy enough for a forklift. As the need for labour rises and manufactures want to increase productivity, the ML becomes the solution. Currently, there is no company that specialises in ML, and that provides good service to the customers. HELM intends filling that gap in the markets. HELM plans to acquire exclusive distribution rights with a European base supplier of MLs. HELM will become the distributor of MLs in Southern Africa. HELM will have its base or office in Cape Town (CT), but also secure subcontractors in three other provinces, namely Gauteng, KwaZulu- Natal (KZN), and the Eastern Cape (EC). HELM will sell products from its supplier partner and it will offer services and a maintenance plan to its clients at a competitive rate. The ML can be used in manufacturing, wholesale, the retail trade and motor trade, and transport and storage. The three sectors account for over 35 percent of South Africa’s gross domestic product. The manufacturing sector is the largest sector with many industries. The most attractive industries are the fast moving consumer goods, automotive, pharmaceutical and chemical manufacturing industries. Although the industry or market is fragmented, Gauteng has the largest target market with over 9000 registered manufacturing enterprise. It is followed by KwaZulu-Natal, then the Western Cape and finally the Eastern Cape. The ML industry is still in its infancy, and HELM Solutions intend to sell 25 units in the first year, 33 in the second and then 36 in the third year. The current distributors of MLs only have one point of service per distributor in South Africa and MLs are non-core products for them. HELM also intends differentiating itself from other distributors by being a solution provider to clients, and not a product distributor. HELM wants to understand the clients’ business, understand their needs, and provide them with solution that will also increase their profit. This should give HELM a competitive advantage and make it difficult for clients to substitute the HELM products and service. Franck Tshilombo is one of the three entrepreneurs who will be directly involved in the business. He will start as the only employee of the business. He has been working with MLs for the past four years. His experience ranges from selling and marketing to ordering, assembling, service and maintenance of MLs. Kevin French brings experience in the financial field of investments. He holds a B Com degree and is a CFA charter holder. He has 25 years combined experience in financial services at large corporates and smaller entrepreneurial start-ups. He owns an investment management business and two paint distribution businesses. His experience includes starting new businesses, takeovers and turnarounds in financial services, and construction and electrical engineering. Collin Ramukhubathi who has a mechanical engineering degree and is an MBA candidate, has 15 years working experience in general management in construction and the mining sector. HELM Solutions require funding for fixed assets and working capital. The fixed asset will be funded by shareholders in the form of assets worth R30 000 and cash of R15 000. The amount of external funding required is R154 000. The desired funding should be in the form of an overdraft loan, as not all the funds will be needed in the beginning. This funding will be used towards the monthly expenses for the period of three months and towards increases in sales within the first five months. The funds will be needed during sales growth as the cash conversion cycle of the business is long. The overdraft loan is based on the interest rate of 12 percent. Based on these estimates, the loan will be fully repaid within 11 months.