Business Plan of Pso
Content
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BUSINESS PLAN OF PSO PETROL STATION
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Ta1le o2 Contents E3ec"ti4e S"mmar0............................... S"mmar0........................................................ .......................................... .................... ...+ + Business................... Business........ ...................... ..................... ..................... ..................... ..................... ................................................ ..................................... 3 Customers.............................. Customers.................... ..................... ..................... ..................... ..................... ............................................ .................................. 3 (. B"siness Description......................................................................* 1.1 Company Background................. Background........................... ..................... ..................... ...................................... .................................. ...... 5 1.2 Aim..................... Aim................................ ..................... ..................... ..................... ..................... ..................... ..................................... ........................... 5 1.3 Objectives.................. Objectives............................. ..................... ..................... ...................... ..................... ..................... ..................... ................... ......... 5 1.4 tart!up "e#uirements............ "e#uirements...................... ..................... ..................... ..................... ..................... ..................... ..................5 .......5
5. B"siness Opport"nities............................................... Opport"nities............................................................... .................... .... 2.1 Competitors..................... Competitors................................ ..................... ..................... ..................... ..................... ..................... ........................ .............. $ 2.2 Competitive Advantage.................. Advantage............................. ..................... ..................... ......................................... ..............................$ $
+. !ar/eting !ar/eting Strateg0....................................... Strateg0................................................................ .................................. .........6 6 3.1 %arket Ana&ysis................... Ana&ysis............................. ..................... ...................... .................................................... ......................................... ' 3.2 %arket egmentation...................... egmentation................................ ..................... ..................... ........................................ .............................. ' 3.2.1 O(ners o) ne( cars...................... cars................................. ..................... ..................... ..................................... ..........................' ' 3.2.2 *i)etime o(ners..................... o(ners............................... ..................... ..................... ..................... .................................. .......................' ' 3.2.3 O(ners o) o&d &u+ury ve,ic&es............................. ve,ic&es....................................... ..................... ........................1.............13.2.4 *oca& businesses................... businesses............................. ..................... ..................... ..................... ..................... ......................1............13.2.5 Car dea&ers....................... dea&ers................................. ..................... ..................... ..................... ..................................... .......................... 13.2. O(ners o) sports cars...................... cars................................ ..................... ..................... ..................... ...................... ........... 13.3 /argeting egmented Customers...................... Customers................................. ..................... ..................... .....................1..........13.4 0mp&ementation o) trategy.................... trategy............................... ..................... ..................... ..................... .................... .......... 11 3.5 a&es trategy and orecast............. orecast........................ ..................... ..................... ..................................... .......................... 11
'. B"siness Operations.....................................................................(5 4.1 ervices oered.................. oered............................ ..................... ...................... ..................... ..................... ..................... ................... ......... 12 4.2 %anagement..................... %anagement................................ ..................... ..................... .................................................... ......................................... 12 4.3 Personne& P&an...................... P&an................................ ..................... ..................... ..................... ....................................... ............................ 13 4.4 %i&estones.................... %i&estones............................... ..................... ..................... ..................... .............................................. .................................... 13
*. Financial Plan.......................................... Plan............................................................................... .....................................(' (' 5.1 Break!even Ana&ysis.................... Ana&ysis............................... ..................... ..................... .......................................... ............................... 14 5.2 Projected Prot and *oss................ *oss.......................... ..................... .................................................. ....................................... 14
Appen$ices......................................................................................(
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Business P&an
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E3ec"ti4e S"mmar0 Pakistan State Oil (PSO) limited is a well-known petroleum company in Pakistan having petrol stations all around the country. The company company is considered as a market leader in the oil industry and providing finest oil to public and key sectors of Pakistan since the time of its establishment in !"#. $t is believed that the PSO will get a considerable response of potential customers if it will enter in any other business.
B"siness PSO will initially introduce cash wash services at the Pothwar road petrol station to check the response of customers and then after three years the company will e%pand its services to other locations. Three types of services will be offered such as outside washing& inside cleaning& and detailing. 't this time& PSO has a small number of competitors who are not threat for the company as they are providing ust basic car wash services. PSO will offer *+ less prices compared to competitors with high ,uality services using latest technological e,uipment and machinery. 't the beginning& the company will hire minimum but competitive staff to reduce the initial costs of business operations. sing the entrepreneur skills the company will be engaged eng aged with with several several profess profession ional al bodies bodies (e.g. (e.g. accoun accountan tancy cy firms& firms& lawyers& lawyers& and other other consultants) before and after starting the car wash services.
C"stomers PSO will segment the customers on the basis of car ownership. ownership. The potential potential customers customers can be divided into three chief groups such as individual owners& local businesses& and car dealers. $ndividual car owners will include owners of new cars& lifetime owners& and owners of old lu%ury vehicles& and sports car owners. ar dealers will include the businesses selling ne new w an and d us used ed ca cars rs wi with thin in th three ree to five five miles miles from from th thee Poth Pothwa warr ro road ad pe petr trol ol stati station on in $slamabad. /inally& several local businesses having vehicles for business use will re,uire e%terior washing and interior cleaning services probably during weekends. The sales and targeting targe ting strategies of the compan company y will be based on one-to-one one-to-one basis so that each customer wi will ll feel feel th that at he is a va valu lued ed cu custo stome merr of PSO& PSO& an and d th thee co comp mpany any cares cares ab abou outt hi him m in maintaining his vehicles.
PSO aims to position itself as an e%cellent car wash serving company in $slamabad. The
. e
g company has forecasted #+ net profit0sales margin in the first year& and 1 and 12+ in the a P
foll follow owin ing g ye year arss by ge gene nera ratin ting g high high gr gros osss pr prof ofit it marg margin in.. The The fo follo llowi wing ng gr grap aph h show showss forecasted sales& gross margin& and net profit of the company. Figure 1: 3ighlights 25------
2-------
15------
1-------
5------
!
ear 1
ear 2
year year 3
(. B"siness Description (.( Compan0 Bac/gro"n$
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Pakistan State Oil (PSO) is a public limited company which was established in !"# when Pakistani government ac,uired two giant oil companies such as 4awood Petroleum 5imited and Pakistan 6ational Oil. urrently& PSO is a market leader in oil and energy sectors and provides finest fuel to armed forces& power stations& railways& and other sectors. The company achieved a gross profit margin of 7s. #.8* billion in * and maintained its leadership position as a market leader in the black oil market with nearly 99+ market share. /urthermore& PSO reported 7s. !"2 billion net sales revenue at the end of *.
(.5 Aim PSO aims to offer a premium car washing service for all types of car owners in $slamabad which is the capital of Pakistan.
(.+ O1%ecti4es The underlying obectives of Pakistan State Oil (PSO) car wash service are stated below: . . 1. #.
To be known known as top top ,uality ,uality car wash wash service service in $slamabad $slamabad city To achieve and preserve preserve high high gross gross profit profit margin margin To uphold uphold a self-effacing self-effacing&& gradually gradually increasing increasing net net profit profit margin margin To e%pand e%pand to other other locations locations within within the city after three three years of service service
(.' Start7"p Re8"irements The company itself will bear the initial e%penses utilising its retained earnings from the oil business. $n Pakistan& the petrol stations are usually situated on a large piece of land and therefore some empty space can be used for car wash services. ;ut PSO station at Pothwar road does not cover a wide area as it is located in between commercial market and residential area. Therefore& the property near to the petrol station will be rented for at least three years with an option to e%tend for another three years afterwards. 'lthough& PSO is a public limited company& so it will set a meeting with maor shareholders and lawyers lawyers to discus discusss rental rental agreem agreement ent and other maor maor legal legal issues. issues. $n additio addition& n& the company com pany will will advise advise manage managers rs to make make arrange arrangemen ments ts for design designing ing logo& logo& brochu brochures& res&
letterhead& and other necessary stationary items. PSO has been involved in the oil business
$ e
gis e%tremely different service< therefore& the and not aware with the car wash business which a P
company will consult with an ac,uaintance to devise a proper and effective system to ensure efficient service delivery especially during peak time. The rent of the premises and insurance will be appro%imately 7s. *&*** (=8**) and 7s. *&*** (=1*) respectively. ;oth rent and insurance are the fi%ed monthly e%penses and therefore will be paid by direct debit. The e,uipment and machinery related e%penses usually inclu include de:: tw two o he heavy avy-d -duty uty va vacu cuum um clean cleaner ers& s& th three ree hi high gh-p -pow ower er water water pu pump mps& s& an and d tw two o computers. 'll the e,uipment and machinery are e%pected to depreciate *+ each year. The company will also need to construct a small waiting room for customers with all basic facilities. This will be constructed for nearly 7s. 1*&*** (=2**). Table shows the basic start sta rt-up -up re,ui re,uirem rement entss where whereas as fi figu gure re sh show owss es estim timate ated d startstart-up up e% e%pe pens nses& es& as asset sets& s& investments& and loans. Ta Table ble 1: ;asic start-up re,uirements Start-up Expenditures
Pak Rs.
£
5egal
2*&***
12
7ent
*&***
"8*
$nsurance
*&***
1*
onsultation
1*&***
&2**
7esearch and development
1*&***
!2
Stationary& brochures& signs& logo
22&***
&**
>,uipment and machinery
#**&***
&9**
;uilding materials
*&***
"8*
*&*** 1!"#$$$
"2 %$"#
5i,uid cash needed
82*&***
2&2#2
Other short-term0current assets
!8&***
9#*
5ong-term assets
!8*&***
9&#**
Start-up inventory
2&***
92
;uilding labour Total Expenditures
(A)
Start-up Assets
Total Assets
(&)
1'#"$$$
1!#$
Total Reuire*ents
(A+&) Figure !: Start-up costs
"1%%$$$
£!$%#
'
25---
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2----
15---
1----
5---
-
7+penses
Assets
0nvestment
*oans
5. B"siness Opport"nities PSO will initially introduce cash wash services at the Pothwar road petrol station to check the response of customers and then after three years the company will e%pand its services to other locations. The Pothwar petrol station is located in between commercial market and residential area so it is believed that both car owners and business customers will be attracted. The potential customers can be divided into three chief groups such as individual owners& local businesses& and car dealers. Table Table and figure 1 illustrate the market analysis of potential customers. Table !: ?arket analysis
Annual
Estimated number of customers
Growth
Y1
Y2
Y3
Owners of new cars
10%
!000
!00
"!00
#ifetime owners
20%
20!000
2$!000
2!00
Owners of old lu&ury 'ehicles
10%
!000
!00
"!00
#ocal businesses
10%
!000
!00
(!"0
)ar dealers
%
00
2
1
Owners of sports cars
%
1!000
1!00
1!103
3(!00
$!2*
2!23$
Type of owners
Total
Figure ": >stimated market share
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O(ners o) ne( cars
*i) *i)etime etime o(ne o(ners rs
O(ne ners rs o) o&d o&d &u+ u+ur ury y ve, e,iic&es c&es
*oca& oca& busin sinesse esses s
Car dea& ea&ers
O(ners ers o) sp spor ortts cars
5.( Competitors ?any local poor children on the roads often offer car wash and cleaning services in Pakistan. 3owever& this option is suitable for price conscious people who do not like to clean their vehicles themselves. PSO will therefore target such people by offering them weekly or monthly package for car wash and cleaning services. On the other hand& the hand car wash services are offered by many garages and car companies like Toyota& 3onda& and /ord etc. ;ut they are very costly in providing such services. 'lso& the services of car companies are restricted to new car owners only for a particular time period. PSO will target these customers by offering *+ less prices and also providing them additional ,uality based hand and machine wash& and wa%ed services as they do not mind spending money for ,uality services to keep their vehicles in e%cellent condition.
5.5 Competiti4e A$4antage 's ment mentio ione ned d ea earli rlier er th that at PSO PSO ha hass a mark market et leade leadersh rship ip po posi siti tion on in th thee oi oill secto sectorr an and d providing premium oil to many sectors including the general public. Therefore& the company already has a competitive edge over other petroleum companies. This e%cellent reputation of the company will help PSO to gain competitive advantage in car wash and cleaning services as well. $n addition& a great deal of focus on developing a proper and effective system to ensure efficient service delivery especially during peak time will be a plus point for the company. urrently& no big companies are in the business of car wash& so it is the best opportunity for PSO to establish new car wash and cleaning services with e%cellent ,uality in order to retain regular customers.
+. !ar/eting Strateg0 +.( !ar/et Anal0sis
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'lthough& PSO is a nationwide organisation but it will start car wash services in the city of $slamabad because of several market benefits. /or e%ample& $slamabad is a capital of Pakistan and different from other cities in terms of modernisation& traffic& culture& social values& and economic condition of the inhabitants and e%patriates. $n most of the cities in Pakistan& 7ickshaw is used instead of Ta%i but in $slamabad Ta%i is preferred because of fluency of traffic and also due to international arrivals in foreign embassies located here. So it is believed that ta%i drivers would also get benefit from the car wash facility at PSO station. $n addition& additi on& the car wash and car detailing detailing facilities will also attract many rich people living in around the station as they often like to own and0or lease new car models.
+.5 !ar/et Segmentation PSO will segment the customers on the basis of car ownership. The following subsections describe different types of car owners 3.2.1 Owners of new cars
$n Pakistan& the new car owners often feel pride in their cars and it is believed that they will bring them for hand car washing and detailing services. PSO will aim to inform these potential customers that the company have started such services for keeping their car looking good and clean. 3.2.2 Lifetime owners
?any people in Pakistan are loyal to their cars and own them for at least five years. They will occasionally bring them for car wash when they are dirty. $n addition& some lifetime owners like cleaning and presentable look of their vehicles and for this purpose they will bring them for car wash and inside car cleaning services. 3.2.3 Owners of old luxury vehicles
These owners like to enoy rela%ed driving< so they either have old lu%ury cars for a long period of time or are not capable of affording new lu%ury vehicles. ;oth types of car owners wish to maintain their vehicles and will bring them for regular cleaning and washes.
3.2.4 Local businesses
2 1
e $n $slamabad& many cars are company owned for providing pick and drop services to g a
P staffs and for other business uses. These companies are very much concerned to preserve
their company image& so they will be regular weekend customers of PSO for e%terior car washing and interior cleaning services. 3.2.5 Car dealers
Several new and second-hand car dealers have their showrooms within three to five miles from the Pothwar road petrol station in $slamabad. $t is believed that they will also use outside car wash service before putting vehicles on sale. 3.2.6 Owners of sorts cars
Sports car owners are mostly youngsters who give high importance to the look and cleanliness of their cars. They are also arrogance about the look& cleanliness& and tidiness of their cars. Therefore& they will also prefer car wash and cleaning services at least once a week.
+.+ Targeting Segmente$ C"stomers PSO will set the targeting strategy to attract potential customers who will become regular users of its new service. service. $n fact& it will not hard to gain the attention attention of business business owners& car dealers& and retired people especially during ,uiet times i.e. weekends& summer holidays& and free time after work. 3owever& it will be hard to attract these people for car wash services during winter season as most of the people in Pakistan like to stay inside the buildings due to cold weather. $n this regard& PSO will offer special discounts on washing& cleaning& and detailing services. The targeting strategy of PSO to attract people is as follows: •
6ew car owners will be targeted through advertisements on various media channels after office timings because they are usually business people who have a very busy
•
schedule but they often have free time for themselves after work Owners of old lu%ury cars are usually retired people who often are not bound to follow particular schedules and also do not have any particular responsibilities< so they will be regular weekday customers
•
•
6ew and used car dealers will be targeted 3 by offering them special services before 1 on sale after that !'? so they will be able to put their vehicles e 5ocal 5oc al busine businesse ssess will will be target targeted ed by g offeri offering ng them special special service servicess during during the a P
weekends as they are very busy during the working days
+.' Implementation o2 Strateg0 The popular brand name of PSO nationwide is the key differentiator of its car wash services. The company has millions of loyal customers customers due to its finest ,uality fuel provision. provision. $n this regard& the company@s strategy for sales and marketing will be based on one-to-one basis& with a special focus on attracting regular and loyal customers of the business. PSO e%pects that most of the customers will come on Aword of mouth@ advertisement basis.
+.* Sales Strateg0 an$ Forecast The sales strategy will be based on one-to-one basis and thus each customer will feel that he is a valued customer of PSO& and the company cares about him in maintaining his vehicles. Ta Table ble ": Sales proection
+er'ice
Year 1
Year 2
,nit
-rice
+ales
.ull wash
!000
00
2!00!000
Outside wash
*!00
20
1!*!000
/nside cleanin
*!00
300
2!20!000
usiness fleet wash
2!000
$00
00!000
ealership detail
2!00
1!000
2!00!000
End user detail
1!000
1!00
1!00!000
Total in 4upees5 Total in G-5
Year 3
,nit "!2 0 (!3* (!3*
-rice
+ales
,nit
-rice
+ales
0
3!$3*!00
*!13
"00
$!"*!00
2*
2!*!12
11!*1(
300
3!1!"2
32
3!0$"!*
11!*1(
30
$!101!"3
2!0 0 3!12 1!2 0
$2
1!0"2!00
3!12
$0
1!$0"!20
1!00
3!21!20
3!(0"
1!"00
2!000!000
1!"3
1!10 0 1!*0 0
$!2("!* 2!""!20
11!$2!000
1!$0"!20
20!""$!0" 3
6*"!1"*
6102!*0
613*!*"0
>stimated unit increase: 2+
Table ble 1 prov provid ides es a fo fore recas caste ted d sale sale fo forr th three ree ye years ars ba based sed on th thee str strate ategy gy of mark market et segmentation. $t is estimated the sales tend to be higher in summer season and will decline in winter. /igure # below represents forecasted sales information graphically.
Figure ,: Sales forecast for three years
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25------
2------7nd user detai& Business8dea&ers,ip detai&
15------
Business 9eet (as,es 0nside c&eaning
1-------
Outside (as, u&& (as, 5------
! ear 1
ear 2
ear 3
'. B"siness Operations '.( Ser4ices o9ere$ PSO will render three types of car wash services to customers: . Outs Outsid idee car car wash washin ing< g< . $nsi $nside de car clean cleanin ing< g< an and d 1. ar deta detail ilin ing g
'.5 !anagement PSO is a public limited company and therefore has many relations with other P5s that can help the company on an official and unofficial basis. 's the company is the market leader in the oil industry from last #* years& so the management is well e%perienced and has enriched entrepreneur skills to run any business. PSO is engaged with several hartered 'ccountancy firms that will help it in finding the ways to create long-term value for the firm. $n addition& the company had the e%perience of working with several legal firms to overcome problematic issues in the past. This will conse,uently allow PSO to handle several critical regulatory issues.
'.+ Personnel Plan
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The car washing is a seasonal business and will g be e%tremely busy in summer months. $n this a P
regard& PSO will rely on less permanent and many temporary staffs. 't the beginning& PSO will employ only one specialist for full-time car wash and several trainers. A?uhammad@ will be responsible for hiring temporary staff whereas A3arris@ will be responsible for handling outside matters such as rent agreement and press releases etc. $n addition& the business manage man agerr A$ram A$ram Bhan@ Bhan@ will be respon responsib sible le for develo developin ping g marketi marketing ng plans& plans& strategi strategies& es& paperwork& and handling other internal issues. The payroll plan for the permanent staff is illustrated in table #. Ta Table ble ,: Payroll plan
+taff Admin staff
Year 1 2!000!000
Year 2 2!200!000
Year 3 2!$20!000
+ales staff
1!000!000
1!100!000
1!210!000
)ar washers Total in 4upees5
1!00!000 $!00!000
1!"0!000 $!(0!000
1!1!000 !$$!000
630!000
633!000
63"!300
Total in G-5
*+ wages0salary increase each year
'.' !ilestones /igure 2 shows the milestones and business operations of new car wash service Figure #: Cantt chart of planning and implementation activities
*. Financial Plan The PSO ompany itself will bear the initial e%penses utilising its retained earnings from the oil business. $t is believed that the company does not need to borrow any loan to bear initial e%penditures. Over the ne%t two years& the company will gradually increase its net profit
margin and after three years it will be able to open another branch on another location within
. the city. The financial plan of PSO is outlined 1 in the following subsections.
*.( Brea/7e4en Anal0sis
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/igure 9 illustrates monthly break-even analysis calculations where estimated units are taken on the %-a%is and estimated monthly revenue is taken on y-a%is. Figure : ;reak even analysis 1-----$--------4----2-----
?onthly revenue
! !2----!4----!----!$----!1------
*.5 Pro%ecte$ Pro:t an$ Loss Table 2 shows the proected profit and loss account by illustrating income and e%penses for three years. Similarly& figure 9 demonstrates net profits of the PSO ompany from year to year 1.
Ta Table ble #: Proected profit and 5oss account
Sales
(')
Dear 11,!#$$$
Dear 1#,$!#$
Dear 1 !$,$"
4irect cost of sales Other Total ost o/ sales Cross margin Cross margin + Expenses Payroll Sales and marketing 4epreciation 5eased e,uipment tilities Stationary $nsurance 7ent Payroll ta%es /i%ture and fittings 5egal fee Total operating expenses Profit before interest and ta%es >;$T4' $nterest e%pense Ta%es incurred 0et pro/it (in Rupees) 0et pro/it (in &P) 0et pro/it 2 sales 3
(;)
6 &82&*** 1 -
() E (') F
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() 0 (')
(4)
2+
(>) (/) E (>) F () (/) G ( 4) C E / % *+& 2+& 1*+ (3) E (/) F (C) (3) 0 (')
1%1#$$$ !&9*&*** 8#.+
&2#9&8"2 !#,%# &82!&1"2 81.#"+
1&22&92 "#1#!# " " 8.!!+
#&2**&***
#&!2*&***
2&##2&***
1*&*** #&*** 11&2** 22&*** *&*** *&*** 9"2&*** 1*&*** 2*&*** 11#$$ 1&#!1&2** 1&#!"&2** -
1*&*** #&*** 12*&*** **&*** *&*** 1&*** "#&2** "!%#$$ 9&21*&8"2 9&21#&8"2 -
1*&*** #&*** 1"2&*** **&*** *&*** #2&** 89&"2* '"#'#$ *&X *&9X -
9!8&"** !',%$$ =8&91 !,3
&91&"! ,%'%1# =1&92# "! 3
1&*91&"#9 1,%,1 =#"&928 "#3
Figure : 6et profit for three years
$ 1
$-----6------
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-----5-----4-----3-----2-----1-----!
ear 1
ear 2
year year 3
Appen$ices
