Feasibility Report on Starting a New Business

ACTION PLAN FOR FEASIBILITY REPORT
MANAGERIAL COMMUNICATION

Group Members
Syed Saqib Feroz (5800)
Mirza Muhammad Mohsin Baig (5843)
Rahmat Ali (5923)
Muhammad Yasir Khan (5857)

(HOUSE OF ALL KINDS OF WESTERN MUSICAL INSTRUMENTS, REPAIRING & MUSIC CLASSES)

Report Submitted To:
Mr. Yousuf Sharjeel
(Course Facilitator)

Dated
30th of November 2011
CERTIFICATE OF APPROVAL

This is to certify that Syed Saqib Feroz (5800), Mirza Muhammad Mohsin Baig (5843), Rahmat Ali (5923), Muhammad Yasir Khan (5857) satisfactory carried out necessary task for developing this feasibility report on Business Plan under my supervision and need minimum requirement for making this report.

M. Yousuf Sharjeel DATE
(COURSE SUPERVISOR)

LETTER OF ACCEPTANCE Mr. Yousuf Sharjeel Managerial Communication Facilitator Iqra University Karachi

Dear Mr. Yousuf Sharjeel We are very pleased to accept the project of making a feasibility report on starting a business. Thank you very much for giving us this opportunity. We are all set to work on this project. We look forward to gather information, and analyze it under your supervision. Yours sincerely, Syed Saqib feroz (5800) Mirza Muhammad Mohsin Baig (5843) Rahmat Ali (5923) Muhammad Yasir Khan (5857)

LETTER OF TRANSMITTAL

30th November 2011 Mr. Yousuf Sharjeel Managerial Communication Facilitator Iqra University Karachi Subject: Feasibility Report on Business Plan

Dear Mr. Yousuf Sharjeel Your requested report on Business Plan is completed and ready for your comments. This feasibility report covers all the issues of starting a new business. Thank you for giving us this opportunity and great learning experience by making this report. We hope that this report will give you the clear picture of our business action plan. Yours Sincerely Syed Saqib Feroz (5800) Mirza Muhammad Mohsin Baig (5843) Rahmat Ali (5923) Muhammad Yasir Khan (5857)

ACKNOWLEDGEMENT First of all we would like to thank the almighty Allah who gave us a chance for a bright future through this MBA degree from Iqra University. Secondly, we would like to thank our parents who supported us financially and morally through this whole project. Then, we would like to thank our course facilitator Mr. Yousuf Sharjeel for giving us this opportunity to search current market, professional businessmen and each and everything which is required for starting a new business We would also like to thank the owner of Prince music centre, V-Sell musical instruments centre and THE BEATLES for giving us information about musical instruments, purchasing, selling, profit margin, bad debts, how to avoid loss in this business, how and from where to order instruments etc. We would also like to thank every member of our group for their time and contribution on this report.

TABLE OF CONTENTS Page no. * Certificate Of Approval 2 * Letter Of Acceptance 3 * Letter Of Transmittal 4 * Acknowledgments 5 * Executive Summary 8 * Introduction to the Business 9 * Objectives of the Report 9 * Mission Statement 10 * Scope of the proposed Business 11 * Limitations of the Proposed 11 * Justification of the Proposed Business 12 * Present status of the Proposed Business 13 * Historic Background of the similar Projects 13 * Proposed Company Profile 14 * Proposed Capacity including HRM and Communications 17 * Target Client Size 17 * Staff Training and Development 17 * Proposed Location 18 * Land Area 18 * Marketing strategy 19 * Proposed Equipment/Machinery Required 19 * Employee Gender Ratio 20 * Proposed Facilities 20 * Present Population to be served 20 * Direct Benefit 21 * Indirect Benefit 21 * Administrative Hierarchy 22 * Managerial Hierarchy 22 * Site Map 23 * Total Time Required 24 * Total Estimated Cost 24 * Maintenance Cycle 24 * Office Furniture 25 * Annual Recurring Expenses 25 * Graphic Representations 26 * Expected Profit Projection 27 * Expected Loss Projection 28 * Loans 28

EXECUTIVE SUMMARY WEST MUSIC WORLD (collection of all kinds western musical instruments) is a shop where people can buy quality and branded musical instruments. Music world is a shop where you can sell your used instruments/ equipments or you can also give your instruments for repairing or maintenance. Initially music world is launching in Karachi WEST MUSIC WORLD imports acoustic and semi- acoustic guitars, electric guitars, bass guitars, drum kits, guitar effect pedals and processors, tuners, guitar strings, plectrums, straps, guitar pickups, drum skins, drum sticks, bass pedals, cables and all kind of amplifiers. WEST MUSIC WORLD imports goods from Singapore from a wholesaler shop called Sweelee music warehouse, because they provide quality and original goods on very economical cost. There are so many other shops who are providing musical instruments but there is a threat of chinese made musical instruments, which are lower in quality and performance and also very common nowadays in market. WEST MUSIC WORLD welcomes customers orders and provide them their orders in maximum 15 days ( if the ordered good is available or not discontinued). WEST MUSIC WORLD is also a distributor, we will distribute the ordered goods to the shops by using our links in Singapore’s wholesale shop called The Sweelee musical instruments centre.

INTRODUCTION TO THE REPORT This is a feasibility report of a proposed business which was asked by our Managerial communication course facilitator Mr. Yousuf Sharjeel. We have named our business as “WEST MUSIC WORLD” (House of Western Musical instruments) All the required research, survey, suggestion and expectations has been made in this report in order to get the idea that this business is feasible enough or not. This report is prepared with the interest and ideas of the whole group. OBJECTIVES OF THE REPORT The objective of the report is to give a brief and detailed report on the feasibility of business. This report covers different issues like finance, supply, marketing, economics and so many other issues which will help us in our whole MBA period. We are very pleased because at this stage you provided us an opportunity under your supervision to make such a detailed and survey based report, which will help us during the completion of our degree and in our practical lives as well.

MISSION STATEMENT The mission of our business is to provide quality and branded instruments on very economical cost, so that every music lover can enjoy music. You can find all of your desired accessories related to your instrument in our shop. We are also providing music classes along with jamming session with our professionally qualified music teacher to polish your talent and build your confidence to play live. Our business is not only about musical instruments in future we have planned that we will organize some concerts of upcoming bands to give them a platform to polish their talents and build their confidence.

(HOUSE OF ALL KINDS OF WESTERN MUSICAL INSTRUMENTS, REPAIRING & MUSIC CLASSES)

SCOPE OF THE PROPOSED BUSINESS Music is a need of almost everyone’s life nowadays. Everyone from every stage of life listen to music and some like to play musical instrument to play their favorite songs, our youth is very much in to this love of music from listening to playing their favorite songs. Most of the youngsters love to play guitar, drums, piano because these are the most famous and attractive instruments. That’s why we bring the idea of opening a Musical instruments shop, where people can buy their favorite, good quality and branded instruments at very economical costs. Not only they can buy instruments they can also sell their used instruments ( if they are worthy enough). In our shop we have also hired a professional music teacher who will teach music, arrange jamming sessions and concerts for the students to motivate and polish their talents. We have also a group of professionals for maintenance and repairing of instruments. We provide ordered goods on very short time of period (minimum 15 days if the ordered goods is available) and on the same price which is available on the internet worldwide. That’s why we are very confident that our idea will work as we planned and give us desired profit. LIMITATION OF THE PROPOSED BUSINESS We are also facing some problems because there are 3 big names in the market and to compete with them is not an easy task. Secondly the power failure issue is also a problem because most of our goods are operated by electricity so we have to spend some money in fuel expenses for the generator. JUSTIFICATION OF THE PROPOSED BUSINESS Nowadays music is a need of every child to mother, brother to sister etc. Everyone from every stage of life listen to music and some like to play musical instrument to play their favorite songs, our youth is very much in to this love of music from listening to playing their favorite songs. Most of the youngsters love to play guitar, drums, piano because these are the most famous and attractive instruments. That’s why we bring the idea of opening a Musical instruments shop, where people can buy their favorite, good quality and branded instruments at very economical costs. Not only they can buy instruments they can also sell their used instruments ( if they are worthy enough). In our shop we have also hired a professional music teacher who will teach music, arrange jamming sessions and concerts for the students to motivate and polish their talents. We have also a group of professionals for maintenance and repairing of instruments. We provide ordered goods on very short time of period (minimum 15 days if the ordered goods is available) and on the same price which is available on the internet worldwide. That’s why we are very confident that our idea will work as we planned and give us desired profit.

PRESENT STATUS OF THE PROPOSED BUSINESS Level of interest of music in our youth is growing day by day. Boys and girls of different ages are buying musical instruments like guitar, piano, drums. Unfortunately there are not so many shops available in our country, and those who provide musical instrument ask high costs which distract people because they think that this hobby is very expensive and they cannot afford it. There is a huge group of professional musicians who find difficulty in searching for their desired gear, they always go abroad or order online their equipments which costs them a lot of money. Our shop has a wide collection of professional instruments and accessories which will help these professionals and also save their shipment expenses. HISTORIC BACKGROUNG OF SIMILAR PROJECTS In our targeted city there are a few shops of musical instruments. They ran a very good business and earn so much profit. There were a few flaws in their business which sometimes leads them towards loses. We are focusing on such past experiences of these shops which leads them towards loses and we are finding solutions for such issues

PROPOSED COMPANY PROFILE WEST MUSIC WORLD provides all kinds of western music instruments like Guitars, Amplifeirs, Bass Guitars, Piano, Drums and other important accessories. In Guitars we have very classy range and brands like Fender, Ibanez, Epiphone, Minarick, Jackson and Washburn.

In Drums section we have Yamaha, Pearl and TAMA kits which are famous because of their rocking sound and reliablitiy. In Piano we have Roland and Yamaha. We have a wide range of Amplifiers too.

Talking about accessories west music world have all kind of accessories like Guitar cables, tuners, strings, cymbals, drum skins, plectrums, tremolos etc

WEST MUSIC WORLD also provides music classes under the guidance of professional music teacher. WEST MUSIC WORLD provides guitar brands like Fender, Ibanez, Washburn, Minarick and Epiphone. In drums section we provide Yamaha, Mapex and TAMA drum kits along with Sabuan and Zildjan Cymbals. In Piano section we have a wide range of Yamaha and Roland piano. We also have a wide range of Guitar and Bass Amplifiers like Fender amps, Ibanez Amps and MARSHALL amps WEST MUSIC WORLD also repairs your instruments by expert technician.

PROPOSED CAPACITY INCLUDING HRM AND COMMUNICATION Initially we will have around 7 employees working for the proposed business, that will include the owner of the shop, the distributor, a salesman, a technician, music teacher and a guard. TARGET CLIENT SIZE We are launching our shop in Karachi. Before launching this shop we done a survey that how many people are in to this music scene than we found a huge group of people who wants a shop where they can buy their desired instruments. Underground music scene in Karachi is rising day by day and these bands are in need of shop that will provide them quality and branded stuff because the current available shops are not providing them quality stuff. We have targeted these bands and professionals who order their instruments and accessories from abroad which cost them a lot of money and time so that’s why we are very confident that our business will do good and give us desired profit. STAFF TRAINING AND DEVELOPMENT We have a very small staff which includes a salesman, a teacher, a technician and a guard. And there is not much training required. For salesman training we will teach him how to deal with these instruments, how to play some basic things on these instruments. For motivation we will provide him free lunch and tea. For teacher we will motivate him for his services we will provide him free accessories like guitar strings, straps, plectrums etc along with lunch and tea. For technician we will provide him some instructional DVD’s or VHS for improving his skills along with free lunch and tea. For guard we will try to fulfill all his needs we will provide him free lunch and tea. PROPOSED LOCATION Our shop location is at main Shahra-e-Faisal road in front of MAKRO super store at colony gate. Reason of choosing that location is that there is no shop on Shahra-e-Faisal for musical instruments, and the shop rent is very much economical. And a huge group of people came to MAKRO super store so they will also witness our shop there, which will easily gather their attention and attraction. Our warehouse is in the apartment which is right above on the shop. LAND AREA As we are starting our business, we did not acquire a huge space right now we have rented a shop covering area about 80 yards.

MARKETING STRATEGY Marketing is very important thing in business, bad or weak marketing strategy can cause destruction for your business. We have a very nice strategy for marketing which will cover printed marketing, televised marketing, verbal marketing, and marketing through internet. PRINTED MARKETING We are printing pamphlets and ads in newspapers. We will distribute our pamphlets in concerts and other music related events. TELEVISED MARKETING We will sponsor some music videos of some famous artists in these videos we will try to promote our shop. VERBAL MARKETING We will announce our shop during concerts and we will organize competitions in concerts and give prices like acoustic guitars, guitars plectrums and strings. MARKETING THROUGH INTERNET We will upload a page on www.facebook.com and use pop ups messages on music related websites. PROPOSED EQUIPMENT/MACHINERY REQUIRED We are not manufacturing in our shop so that’s why we do not need any machinery or equipment. All we need is some shop supplies like a computer, extension wires, generator etc. EMPLOYEE GENDER RATIO In our business we do not need any female employee so there will be only males on the shop. PROPOSED FACILITIES We are providing free repairing warranty for 1 year unless the instrument is not broken or damaged. We deliver ordered goods in minimum 15 days. And we also provide free accessories like guitar bags, plectrums, piano bags, drum kit tuners etc. we are also providing 3 demo classes by our music teacher. PRESENT POPULATION TO BE SERVED The targeted population of our business is not very big because musical instruments are little expensive so that everyone cannot buy them. Present population which is to be served are, people who are doing music professionally, university colleges and school students. Underground bands of Karachi and professional musicians are the main people who will be served. These people are our main target, because in this business if someone becomes loyal with your shop he/she will remain loyal for a very long time period.

DIRECT BENEFIT In our country there is not much scope of music that’s why there are not so many shops music schools available. But in last 10 years, a huge group of people have shown their interest in this field which rises the need for shops for musical instruments. Current market is not providing quality instruments and charging high costs and that’s why customers are not happy with them. Our shop will provide quality instruments on very economical cost so that people can find them selves comfortable while playing these instruments. INDIRECT BENEFIT Current available shops are causing distraction towards interested people by charging high cost for Chinese or china made stuff which is very much copy of original but they are not comfortable and reliable.

ADMINISTRATIVE HIERARCHY OWNERS OF THE SHOPS

OPERATIONS
FINANCE
MARKETING
HRM

SHOP WORKERS

In our administrative hierarchy we the shop owners are doing every administrative work. One is taking care of marketing strategies the other one is keeping our financial records, then the other one is doing all operations stuff and the last one is taking care of all Hr related issues. MANAGERIAL HIERARCHY During our survey we did not find any managerial hierarchy structure the owners are doing everything like purchases of goods, taking care of finance, working on marketing strategies etc, so that is why there is not much to mention in our managerial hierarchy.

SITE MAP

MAKRO

MOSQUE & GRAVEYARD

POLICE STATION PTCL EXCHANGE

COLONY GATE BUS TOP SHAHRA-E-FAISAL AIRPORT SHAHRA-E-FAISAL

PSO
PUMP
O.T HOSPITAL
WEST MUSIC WORLD APARTMENTS & SHOPS

The reason of choosing this part of the city was that, there is no shop available on shahra-e-faisal for musical instruments. People who live in these areas find difficulty when they need anything for example a single guitar string and for that they have to go to defence or other places which are very much far away from their homes.
Secondly this spot is choosen because of MAKRO super store. A huge group of people came to MAKRO for shopping so they will witness our shop easily that there is a new shop opened which is providing quality and branded instruments.

TOTAL TIME REQUIRED During all of the survey and research we have forecasted that it will take a month in establishing the whole shop and we will start our shop promotion 5 days earlier of the shop opening. TOTAL ESTIMATED COST On the basis of our computation we have estimated a cost of 25 lacs. Most of our investment is based on the instruments and accessories, shipment etc and the remaining on the advertising, furniture, shop supplies, shop rent, marketing, salaries etc. MAINTENANCE CYCLE As we mentioned above that we are not manufacturing anything so there will be no maintenance issue of any kind of machinery. Maintenance of shop does not require any special cycle etc, these issues can be solved by any normal person.

SHOP FURNITURE Furniture is a very important factor in business because it gives a good impression on the customer so we have decided that we will buy good quality and latest design furniture for the shop and at least 5 stools for students who will come for music lessons and a white board. ANNUAL RECURRING EXPENSE In the starting heavy amount will be required for advertising then after a few months that advertising expense will come down. In starting we need 1 lac for advertising in which we will print pamphlets and organize some small gigs for underground bands. After 2 or 3 months this expense will come to 50 to 40 thousand for just organizing small underground band events.

GRAPHIC REPRESENTATIONS

For the first three months we are not earning any profit because we are new in the market then after three months we are facing breakeven point (no profit and no loss) then after we have started earning profit.

EXPECTED PROFIT PROJECTION PROFIT AND LOSS STATEMENT For the period ended October 2011 | NOV | DEC | JAN | FEB | MAR | APRIL | Sales | 75000 | 88000 | 130500 | 225000 | 325000 | 455000 | COGS | 40000 | 43000 | 66000 | 120000 | 155000 | 215000 | G.P | 35000 | 45000 | 64500 | 105000 | 170000 | 240000 | Less: EXPENSES | | | | | | | Shop Supplies | 700 | 700 | 800 | 900 | 1000 | 1000 | Salaries | 22000 | 22000 | 22000 | 26000 | 26000 | 26000 | Utility Bills | 10000 | 8000 | 9000 | 8000 | 11000 | 11000 | Fuel Expense | 2000 | 1500 | 1500 | 2000 | 1700 | 1600 | NET PROFIT | 300 | 12800 | 31200 | 68100 | 130300 | 200400 |

The above profit and loss statement shows that in the first month the ratio of profit was almost zero than as time passes and our business gets fame in the market our profit ratio starts rising slowly than at the end of the statement it shows quite good profit.

EXPECTED LOSS PROJECTION When there is a business there are threats of loss. If any mishap occurred so we will bear loss. And also bear the expenses of the whole setup cost. We will try to sell our goods to other shops or if these things didn’t happened then we will move our shop to some other major city of our country like Islamabad or Lahore. LOANS We are investing 25 lacs in our business in which we will invest 15 lacs from our pockets and for the remaining we will ask bank for the loan, and we will return this loan on monthly installments as per the agreement with bank. CONCLUSION After all of the above we came to a conclusion that this business will give us very good profit ratio. This business is very attractive and people from all ages love music and also love to play instruments. And then the rise of music scene in our country and specially the rise of underground music scene will lead our business towards success so we must start this business.