a9 1-2-3 locker services biz plan (1)

1-2-3 LOCKER SERVICESPrepared by A9 Team for BST525 MBA Business Plan

78 Colum Road Cardiff CF10 3EH

07-909 475 909 www.a9-123lockers.com

[email protected]

Table of ContentsI. Executive Summary..............................................................2

Business OverviewHighlightsFuture Plans

II. Description of Business........................................................5Company OwnershipLegitimacy of BusinessObjectivesMission StatementKey to SuccessLocationHours of OperationsProduct & ServicesSuppliers

Loyalty & Customer ExperienceManagement & OperationStart-Up/Acquisition Summary

III. Marketing...........................................................................13Market AnalysisMarket SegmentationCompetition

IV. Finance Management.........................................................17Start-up CostsSales ForecastsBalance SheetCash FlowIncome Statement

V. Appendices..............................................................................Miscellaneous Documents

Executive SummaryBusiness OverviewLUGGAGE-FREE TRAVELING used to be just a wishful thinking especially for daily commuters and solo travellers. Keeping luggage at current left-baggage services might incur high charges even for a shorter period of time, counters are only open up till midnight and if there is a surge of customer, just imagine the queue!

INTRODUCING THE 1-2-3 LOCKERS that come with cheaper price, self-operated and straight-through process. Our lockers are timed and we are available 24 hours. This service is a huge trend in Japan mostly found in almost all Japan JR stations. It offers the option to leave and lock your luggage away for you to enjoy the short stay in your transit cities.

HOW IT WORKS is as easy as 1-2-3. Step one, put in your luggage in an empty locker. Step two, insert coin/s according to locker size and the hours needed. Lastly, lock your locker and keep the key safe with you.

OUR UNIQUE SELLING POINTS includes:

Low price for a secure left-luggage service

Limitless operating hours

Easy to use that no customer training is needed.

Available at strategic location for customers’ convenience.

This service has a very low start-up costs, it only needs one-off asset investment and able to generate ongoing profit. At the moment, for 24 hours self-operated lockers, there are no other existing competitor and due to the nature of our selected location, we believe we have a wide range of target market and customer base.

MARKET OVERVIEW

It was tabulated that there were about over 80 million passengers annual exits and entries made between 2012 - 2013 at our initial starting locations; London Paddington, Liverpool Lime Street, Manchester Piccadilly and Cardiff Central. With commuters coming in and out of the stations, the need of storing baggage is an apparent opportunity for us to provide a self-service lockers. At the moment, the left-luggage service is only offered at major trains

1-2-3 LOCKER SERVICES - MARCH 2015 2

stations and mainly dominated by The Excess Baggage Company. However, their counters has limited operating hours.

COMPETITOR OVERVIEW

Our current and major competitor is The Excess Baggage Company but what we are offering that can distinguish our service from them are the limitless business hours as well as the straight-through, queue-free process of storing luggage. Although initially our lockers will be limited in terms of quantity but with our low price plus future plan to expand our business, we believe we are able to compete with Excess Baggage in due time.

COMPANY OVERVIEW

We are 6 self-financed partners, MBA graduates from Cardiff Business School with various skillsets, knowledge as well as personal background. When it comes to business, we believe in starting small but progressively drive the business to its full potential by wisely optimising all of our resources.

FINANCIAL OVERVIEW

All of our company’s founders agreed to pledge £10,000 as our starting capital and will work collaboratively in each of our designated function in handling day-to-day operation including customer support to ensure the success of this venture.

We anticipate to officially start our operation on July 1, 2015 with soft launch around June 1, 2015. We are allocating 20% of our initial capital to maximise the purchase our assets (the lockers) and since this is a very small and self-owned business, we plan to minimise our start-up costs and administrative expenses as much as we can. Below are the proposed distribution of our initial capital:

HighlightsBased on our financial forecasts, we expect to have loss on Year 1 but our sales are projected to steadily grow towards Year 5. We expect to breakeven on Year 2.


Figure 1: Summary of Financial Forecast

FUTURE PLANS

Short-Term

We aim to attempt and grow our business by approximately 2.5% every month in order to break-even by the end of Year 2.

This translates to 25% locker utilisation rate (LUR) per day, by 6 months (half-yearly projection)

Mid-Term

For Year 2 and 3, we plan to achieve sales incremental by 33.3% (year-on-year comparison).

We would also aim to achieve 50% daily LUR for all of our lockers by Year 2 & 75% by the end of Year 3.

We plan to expand our services to 4 more stations in Year 2, which will be London Victoria, Edinburgh, Birmingham and Brighton. And in Year 3 in London Charing Cross, London Euston, London Waterloo, Leeds, Reading and Glasgow.

We plan to enhance our locker system so that it can accept payment made by debit/credit/Oyster card (London only).

Long-Term

With successful expansion, we intend to place our lockers at all major cities in UK. Then we will expand our service coverage to all UK railway stations.


We would also like to invest in developing key-less locker technology as well as centralised payment panel by collaborating with experts from Japan.


Description of BusinessA9 Limited offers self-service locker facility which operates 24 hours, located strategically at selected major train stations, providing CCTV-monitored luggage storage for travelers. Our service is easy to use, fit to cater for various sizes of luggage and with limitless business hours, we offer our customers the freedom to explore the city luggage-free with some peace of mind.

Company Ownership

A9 Ltd consists of 6 international MBA students from 4 different nationalities. We are opting for Limited Partnership and each corporate members will contribute evenly and receive equal amount of shares.

Upon business set up, we have appointed a solicitor to help us ensure our partnership agreement will be done accurately, in which it will entail:

1) Manner of profit sharing2) Manner of making executive/business decision3) Description of responsibilities of each partners4) Methods to withdrew from partnership

The Founders/Management Team

Co-founder, Director - Ida Kamarudin

With 9 years working experience in banking field specialising in Quality & Customer Experience, Ida will be in-charge in leading and driving the team. Key skills including business analysis and critical problem-solving as well as an expert in interpersonal skills.Co-founder, Strategy & Business Development - Saint M. Jittrattanaphong

Being a Business Communication Bachelor’s degree holder, Saint has always shown strong business acumen. Key skills including business analysis and strategy, effective decision-making as well as advanced computer skill.Co-founder, Finance - Sakina Kalantarli

Meticulous in planning, Sakina is the key person that handles end-to-end financial management for our company. With 6 years of work experience in which 4 years was in Finance, her key skills including accounting & finance management, financial planning as well as organisation skills.Co-founder, Marketing - Dome N. Chaiyasoot

Dome has always had great eyes for marketing. With his Bachelor’s degree Business Communication, Dome has great understanding of trends and cultures. Key skills including ability to identify marketing opportunities as well as well as strong commercial awareness.Co-founder, Technology & Product R&D - Boss P. Phongnetwilai


With his Bachelor’s degree in Business Communication prior to MBA, Boss has great eyes for tech and gadgets. Key skills including advanced IT skill, dynamic team player and innovative thinking.Co-founder, Loyalty & Customer Experience - Vivian Y. Ma

Vivian is a natural in business networking. Always keen to connect to people and has a good communication and interpersonal skill. Other key skills including creative problem-solving and information search.

Legitimacy of Business

Through various research via all channels possible, we found no restriction to start our business. We even sought advice from our associate, postgraduate Law student – Miss Nur Iman Manaf to further help us ascertain any policy or law out there that restricts us from starting this locker service business. After weeks of research, we can confirm that there no policies or regulations that prohibit us from starting this particular business.

ObjectivesOur main goal is to be the first choice of left-luggage service in all of our selected locations and to expand our service to all UK train station. Our end goal is to have at least one block of lockers at every train station not just for profit gain but also to serve the public by providing hassle-free storage facility.

Mission StatementTo be the leading self-operated storage service that offers the most convenient, secure and economical choice for all users.

Keys to SuccessThis service has a very low start-up costs, it only needs one-off asset investment and able to bring ongoing profit. At the moment, for 24 hours self-operated lockers, there are no other existing competitor and due to the nature of our selected location, we believe we have a wide range of target market and customer base.

Our Unique Selling Points are:

Low price for a secure left-luggage service

Limitless operating hours


Easy to use that no customer training is needed.

Available at strategic location for customers’ convenience.


Location

To decide on our location, we have done a lot of research especially through Office of Rail Regulation (ORR) and Office of National Statistics (ONS) website for reference.Based on the table below that was obtained from the said website, we have shortlisted targeted location for our future business expansion.

Figure 2: Station Usage Infographic reported by orr.gov.uk

For Year 1 to Year 3, we have identified the exact location to place our lockers. Apart from the annual traffic, we also consider the station respective layout in deciding our locker location:

Figure 3: Identified locations for Year 1 till 3

As for Year 4 and 5, we will review the shortlisted locations the year before expansion to ensure feasibility of implementation.

Hours of Operation


Our lockers will be available for usage 24 hours a day, 7 days a week all through the year.

Products & Services

We plan to purchase a steel coin-retained lockers that come with a timer function and a centralised payment unit. On our first year, the function of this locker is limited to accepting coins payment with a timer to track the duration of service. The lockers will come in a block of:

8 x Small-sized lockers 12 x Medium-sized lockers 4 x Large-sized lockers

Figure 4: Locker Block Design

For the centralised payment unit, there will be a touch-screen pad for locker selection as well as payment slot to receive coins. In Japan, the locker services are so advanced that you may add on a card payment pad at the centralised payment unit. We plan to further invest on that function during our second trading years. With the card payment function, our lockers will be able to accept debit and credit card payment apart from just coins. This function will also create an opportunity for us to launch our loyalty programme which will involve magnetic strip loyalty cards to track our regular customers’ frequency of usage. Our R&D team will sought to work collaboratively with experts from Japan to continuously enhance our lockers features.

Pricing1-2-3 LOCKER SERVICES - MARCH 2015 10

We plan to set our price the lowest in the market as we have the means and long-term capability to do so. Amongst the factors that influenced our decision are:

1) We do not have any liability – our capital is our own money therefore we do not have any other financial obligation in the long run

2) We charge our service by hour and even if a customer needs to use our locker for just 15 minutes, he or she would need to pay the standard price by hour.

3) Our locker would have a feature whereby if a customer breached the duration he or she paid upfront, the locker will not open up unless he or she paid the overdue amount for that particular locker.

Attached is the tentative initial pricing that we plan to opt. Note that the standard price by size is subject to change based on periodical review. We plan to review the price after every closing of financial year based on our sales performance as well as locker utilisation rate (LUR).

Locker Sizes Small Medium LargeCharges**Subject to periodical

review.

£1 per hour £2 per hour £3 per hour

Figure 5: Tentative Price by Locker Size

Additional notes

With the nature of our product and placement, we are able to gain side income by offering our lockers as a marketing platform for other companies to advertise their business. Advert stickers can be placed either at one unit of lockers or more, maybe even utilising the whole block of lockers. To be able to cater to this function, the type of stickers used must be suitable to our lockers surface in order to maintain the standard outlook and upkeep of our lockers.

Suppliers

We have chosen to collaborate with Eqiup4work, an office supplies retailer that is based in Dumfries. They offer free delivery for UK Mainland and the price they quoted is reasonable. However, we need to customise our locker in accordance to the sizes above and Equip4work is able to cater for that. These sizes are the exact locker sizes used in Japan and they are able to cater for all types of luggage.


Figure 6: Locker Sizes for Customisation

Other additional equipment including:

Steel bars installation to secure the lockers CCTV recording unit

Loyalty & Customer Experience

Customer Support

A centralised mini call centre will be set up in the head office to attend any issues or locker-related inquiries made by customers. During the first year, the call centre will be handled and managed by the CEO as our expected call received based on locker quantity are still manageable.On second year onwards, with the tentative opening our official head office in Birmingham, we will place a permanent, full time headcount to handle inbound calls as well as other administrative matters and we will gradually increase the headcount by year depending on the number of calls trending.In case of any problems with our lockers based on customer feedback and complaint lodge, we will send the assigned locksmith to the respective location. Our appointed locksmiths will be available 24 hour to help customer solve the issue.Since we will be performing periodical maintenance consistently, we expect there will only be one incident per location per month.

Loyalty Programme


We plan to launch our loyalty programme on Year 2 upon the introduction of the card payment system. We will use a normal magnetic strip card that will store usage of our customers and for every 10 swipes, customer will be granted an additional 30 minutes storage hour for free.

Does your business manufacture any products? If so, describe your facilities and any special machinery or equipment.

Without revealing any proprietary information, describe the manufacturing procedure.

If not already covered in the Products and Services section, describe how will you sell the products you manufacture—Directly to the public? Through a wholesaler or distributor? Other?

How will you transport your products to market?

Management & OperationSince our business is a limited partnership and we are starting small without having to get any other investors, our way of running day-to-day business will be very self-sufficient. We have delegated position and function for each members of our team and once the business is running, each one of us will also become respective area manager.

Our CEO, Ida, will operate from home office and our first year head office will be located in Cardiff. Dome will be in-charge of Liverpool, whilst Saint will be based in London and Boss will be stationed in Manchester. During this first year, we will do coins collection ourselves and upon each collection, the money will be banked in directly into our company account. As we expand on Year 2 onwards, we plan to source for secured-coin collection company to help us collect our money and deposit them into our banking account directly from each respective location.During Year 2, we plan to officially open a more location-central head office in Birmingham. During this time, our CEO will be moved to manage the office thus becoming area manager for Birmingham. Cardiff will be taken over by Vivian as we choose Cardiff to be our experimenting ground in terms of technological R&D as well as customer experience initiatives. Boss will work closely with Vivian in terms of executing pilot projects.Sakina will also remain in Cardiff as our Finance Manager and we will work closely online to ensure smoothness of our day-to-day operations.As we expand our business locations, we plan to hire more people to become area manager but our priority remains to try and run the business with very minimal manpower. This can be achieved by riding fully on various information and communication technology (ICT) platforms, outsourcing certain tasks like locker maintenance, coins collection as well as troubleshooting by locations.


Should there be any opportunity available for us to expand in a larger scale, this management and operation style will be completely transformed to cater for the business. We plan to review this one year-to-year basis depending on our actual business growth.

Below is our start-up management structure:

Figure 7: Management Structure


DirectorIda Kamarudin

Head of Strategy & Biz Development

Saint M. Jittrattanaphong

Head of MarketingDome N. Chaiyasoot

Head of Technology, Security & Product R&D

Boss P. Phongnetwilai

Head of Loyalty & Customer Experience

Vivian Y. Ma

Head of FinanceSakina Kalantarli

MarketingOverall AdvertisingWe have identified six marketing channels that we intend to use in order to market our service. We plan to allocate around £10,000 per year to support all our marketing plan. Below are the budgeted allocation by channel for each year:

Year 1 Year 2 Year 3 Year 4 Year 51. Facebo

okFOC £3325 £3325 £3325 £2960

2. Digital Advertising

N/a £5000 £5000 £5000 £5000

3. Website FOC FOC FOC FOC FOC4. YouTub

eFOC FOC FOC FOC FOC

5. Mobile App

N/a N/a £4260 £260 £260

6. Digital Escalator Panel

£1800 £1800 £1800 £1800 £1800

TOTAL £1800 £10125 £14385 £10385 £10020

Figure 9: Tentative Marketing Budget Allocation

1. Facebook We choose Facebook since it offers free Fan Page creation and the freedom to promote our business within the means of our budget.Note 1: For cost per click, if there are 10,000 clicks on our advertisement, we have to pay (0.15*10,000= £1500)Note 2: Assume that there are 10,000 clicks in year 2, 3, 4 and 5https://www.facebook.com/help/318171828273417/?ref=acdf-budgeting


2. Digital advertisingTo further increase our online exposure to target consumers, we decide to opt for digital marketing to help promote our locker service.

Note: Recipe Advertising Ltd Company will promote our company focusing on sites such as Wikipedia, Trip Advisor, Money Saving Expert and eHow which allow users to seek out information and learn. Many of these sites contain feedback forums and user generated information / reviews which can be shared with others

http://www.digitaladvertising.co.uk/digital-advertising-costs

3. Website


Website will be created free-of-charge by our co-founder Boss to feature locker and location information, other disclaimer and terms & condition as well as price and promotion.Upon launching our mobile app, the website will be enhance to feature availability of the lockers by location, which will also be linked to our mobile app.4. YouTubeWe plan to create and upload videos for free via YouTube to show how to use our lockers as well as a brief overview of our business. Videos will also be available in our company’s website.5. Application for iPhone and IPad(year3= £4,260 year4=£260; year5=£260) We plan to launch mobile app on Year 3 onwards as we expect to establish our market presence by then.On Year 3, we intend to spend £4,000 to Appfidelity Ltd Company in order to let them develop our new form of payment application. We also have to pay £195 to Apple in order to let them enable us to develop our app in that year (registration costs). We will also be charged by Apple with additional costs at £65 per year in order to maintain our app in Apple StoreYear 4- Spend £195 for registration costs to and £65 to maintain our app in Apple storeYear 5- Spend £195 for registration costs to and £65 to maintain our app in Apple store

http://www.appfidelity.com/

6. Digital Escalator PanelWe opt to only advertise using this platform only on the busiest months of the year, that is, November, December and January. This will only be done at our chosen location.


Note: £450 is only for 1 location, so there are 4 location which will cost (450*4=1,800)

POSSIBLE SIDE INCOMEAs mentioned on the earlier part About Our Product, our lockers are able to generate side income by becoming advertising platforms for other customers. Companies who wish to place a sticker on our lockers will be charged: £30 per small size locker per 3 months £40 per medium size locker per 3 months £50 per large size locker per 3 monthsOption to charge either by block or by locker.

Market AnalysisDue to the nature of our wide target of customer base, we refer to ONS to get a brief idea of train stations passengers annual exits and entries made between 2012 to 2013. The numbers of exits and entries made at our initial starting locations; London Paddington, Liverpool Lime Street, Manchester Piccadilly and Cardiff Central between 2012 to 2013 was 80 million passengers. We see this as a big advantage as the number of our targeted customers is way beyond the number of lockers we provide.

Market Segmentation

Since this is a general service offered to all commuters, our target customer base is wide and with our cheap price and easy-to-use lockers, we further broaden the age range of our targeted customers. There is no customer training needed. Basically, anyone and everyone who needs to store a bag and have the means to pay for the service are able to use our facility thus, making them our targeted segment.

CompetitionOur current and major competitor is The Excess Baggage Company but what we are offering that can distinguish our service from them are the limitless business hours as well as the straight-through, queue-free process of storing luggage.


Although initially our lockers will be limited in terms of quantity but with our low price plus future plan to expand our business, we believe we are able to compete with Excess Baggage in due time.Below are the price offered by our sole competitor based on price sampling by selected location:

EXCESS BAGGAGE OPENING HOURS BY LOCATION:

London Paddington

Opening HoursMonday to Sunday 07:00 - 23:00

Manchester Piccadilly

Opening HoursMonday to Saturday 07:00 - 23:00

Sunday 08:00 - 23:00

Liverpool Lime St

Opening HoursMonday to Thursday 07:00 - 21:00

Friday to Sunday 07:00 - 23:00

Cardiff Central

Nil


Financial Management

Start-Up SummaryWe anticipate to officially start our operation on July 1, 2015 with soft launch around June 1, 2015. All of our company founders agreed to pledge £10,000 as our starting capital and will work collaboratively in each of our designated function in handling day-to-day operation including customer support to ensure the success of this venture.

We are allocating 20% of our initial capital to maximise the purchase our assets (the lockers) and since this is a very small and self-owned business, we plan to minimise our start-up costs and administrative expenses as much as we can. Below are the proposed distribution of our initial capital:

Costs

CAPITAL £60,000.00

Asset Investment - Locker Purchase £13,600.00Company registration fee £100.00Solicitor Fee for Partnership Agreement £1,000.00Software purchase £30.00CCTV £8,000.00Business Insurance £12,500.00

£35,230.00

Figure 8: List of Start-up Costs for Year 1

We considered two scenarios while making our yearly forecasts:

1) We achieve maximum LUR of full utilisation of all of our lockers within 24hours2) We achieve minimum LUR of one time utilisation per locker unit of one hour within

24hours.

In order to get the most realistic forecast, we opt for scenario 2 in explaining our expected business growth so that, we will not overestimate our revenue. Attached is the sample of Year 1 Sales Forecast per location:


Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunSmall LockerChargeable days 31 31 30 31 30 31 31 28 31 30 31 30Charge per usage £1.00 £1.00 £1.00 £1.00 £1.00 £1.00 £1.00 £1.00 £1.00 £1.00 £1.00 £1.00Year 1Average number of consumption 2 2 2 2 2 2 2 2 2 2 2 2Number of units per blocks 8 8 8 8 8 8 8 8 8 8 8 8Forecast Sales 496 496 480 496 480 496 496 448 496 480 496 480

TOTAL £5,840.00

Medium LockerChargeable days 31 31 30 31 30 31 31 28 31 30 31 30Charge per usage £2.00 £2.00 £2.00 £2.00 £2.00 £2.00 £2.00 £2.00 £2.00 £2.00 £2.00 £2.00Year 1Average number of consumption 2 2 2 2 2 2 2 2 2 2 2 2Number of units per blocks 12 12 12 12 12 12 12 12 12 12 12 12Forecast Sales 1488 1488 1440 1488 1440 1488 1488 1344 1488 1440 1488 1440

TOTAL £17,520.00

Large LockerChargeable days 31 31 30 31 30 31 31 28 31 30 31 30Charge per usage £3.00 £3.00 £3.00 £3.00 £3.00 £3.00 £3.00 £3.00 £3.00 £3.00 £3.00 £3.00Year 1Average number of consumption 1 1 1 1 1 1 1 1 1 1 1 1Number of units per blocks 4 4 4 4 4 4 4 4 4 4 4 4Forecast Sales 372 372 360 372 360 372 372 336 372 360 372 360

TOTAL £4,380.00

Year 1Sales per Location

Figure 9: Sales Projection per Location

Based on our financial forecasts, we expect to have loss on Year 1 but our sales are projected to steadily grow towards Year 3 onwards.

Same goes with our cashflow, we project consistent increase in our cashflow towards Year 5:


Details of 5 year financial forecasts are available in the attached Balance Sheet, Cash Flow and Income Statements.
