Team:SSTi-SZGD/Business Plan
SSTi-SZGD
Overview
In this section, we presented a complete Business Plan for potential realization of our project, including production procedures and relevant considerations, a thorough financial analysis right from production cost to business running cost and to sales forecast, and a brief description of promotion channels that we may engage. A summarized business model chart is also presented.
Business model
The business model chart shown below is a useful tool helps with formulating business ideas, identifying key partners, segmenting potential customers and implementing business strategies. Furthermore, by standardizing various elements and their inter-relations, business model also helps strengthen the value of our project, which is a prominent advantage for attracting external investments.
Production procedures and considerations
In the process of industrial production of biological enzymes, besides the breeding of genetically engineered bacteria, a series of treatments, such as fermentation and purification, are needed. Therefore, the basic equipment needed for the production of enzyme products is seed pots, fermenter, solid-liquid separation tanks, purification devices, liquid product units and solid product devices (including drying devices).
However it is proposed that a series of four vessels are used instead to maximize cell growth potential. Cells will initially be grown in a small (~300mL) shaker flask to maximum concentration, before being transferred to a 3L seed tank. Following a further growth period, the cells are transferred to a 35L inoculum tank, then finally to a 350L fermenter. The sizes of these vessels were back calculated based on the required size for the final fermenter.
I, Enzyme Product industrial production
Identify genes from literature and obtain sequence from PudMed → commercially synthesize the genes → insert into light-controlled expression vector → transform into E.coli competent cells → pick colonies containing vector by antibiotic selection → grow culture in seeded plant → amplify production in bioreactor → produce enzymes by blue light control → cold-shock to collect enzymes in live bacteria cells or sacrifice cells to extract enzymes → ultrafiltation, purification and concentration → low temperature drying → addition of starch and dextrin → final product
Additional materials for enzyme product
Raw materials for enzyme products mainly involve bacteria culture and growth media. In addition to the active ingredients, the accessoriess are primarily fillers. We considered the following filler chosen after consulting Shenzhen Leveking Co.
In selection of fillers, starch and dextrin are mostly used in food and pharmaceutical industries, and the prices are relatively high. Filling agent also provides means to improve material performance, or to increase weight and reduce cost for solid materials. From the considerations of both material specificity and cost issue, we concluded that using talcum powder would be more in line with our products
II, Whole cell product manufacturing
‘Whole cell product’ contains dried engineered bacterial cells and dehydrated cultural media. Its industrial production requires a large bio-reactor and drying equipment in addition to standard laboratory equipment, thus total investment cost will be significantly less than enzyme products. However customers need to have a relatively large area of farm to set up our proposed automatic spraying system (refer to Hardware). The following financial cost analysis focuses on Enzyme products only.
Financial analysis
In order to evaluate the economic feasibility of the project, we included a financial analysis for manufacturing enzyme products in real life scenario.
Alternatively, compare with establishing a factory, we may outsource the production in the first initial years, as it is both more practical and cost effective as no equipment purchasing would be required. Shenzhen Leveking Bio-engineering Co. Ltd. is a potential outsource partner to us for enzyme product manufacturing (refer to HP)
2) Business operation costs
Further to the production cost, it is also essential to estimate the start-up funds of the company, as well as calculate the fixed and variable assets.① fixed assets: including office furniture and electronic equipment
②In addition to fixed assets, we also calculated the required working capital for each month, including monthly marketing-related expenses, site rentals, staff salaries, office supplies, general utilities, travel expenses, etc.
Variable assets = marketing + management + financial expenses
Marketing and management expense forecast (monthly)
③Start-up capital is the most important aspect for the realization of any project. It includes fixed assets, monthly working capital and some one-off expenses, such as business registration fees, tax registration fees and permits fees. Based on the analysese above, the required start-up capital for our project is as follows:
Assuming industrial production part is outsourced to Shenzhen Leveking Co., we propose to hire laboratory equipment and office space at our school, Shenzhen Institute of Technology, who has considerable resources for R&D purpose. This approach will significantly reduce the investment of business operation, R&D, and manufacturing. As a matter of fact, there have been several start-up businesses renting offices and R&D space in our school, and this type of cooperation is more in line with the actual development of start-up companies for students in nowadays.
3）Sales and revenue analyses
According to cost analyses shown above, we estimated cost of our products and proposed market prices as follows
At present, there are other related enzymes products in Chinese market. Table below shows three best-seller products:
Compared with the existing products on the market, our proposed enzyme products have obvious price advantage. Given the set prices, return on investment (ROI) and monthly profit can be calculated. The cost per 500 grams of powdered enzyme is $ 4.63 and the cost of liquid enzymes is $ 5.34. The main costs of these two enzyme products are derived from the raw materials (cultural media, bacteria strain, fillers, etc), production cost (labor, consumables, equipment, etc.) and the sales management costs (including promotional expenses, staff salaries, site rents, etc.). Once the production part was outsourced, it would further reduce the cost of our products. According to a rough estimation of the Chinese market demand, the average monthly sales is about 930 bottles. As a result, the first year's return on investment would be 68.54%, gross profit would be $ 10919.00 and a net profit would be $ 8159.68. The following table shows monthly earning forecast:
Profit forecast (monthly)
We estimated the monthly net profit by taking away the fixed costs (production costs, monthly business tax and sales commission, etc.) and management costs (staff salaries, site rent, utilities and office supplies, etc.). Company income tax in China is upto 25%.
Promotion channel selections
Product promotion can be conducted through multiple channels using the existing Internet platform. We may start by engaging with the following four E-business channels:
①Company official website: An official website is the forefront of a company and often serves as the primary point of contact for new customers and aliance. Customers can be familiarized with the company concepts, the main products, methods of contact, or simply make purchases on the company website.
② Renowned E-business platforms: Settle in renowned E-business platforms, such as Alibaba/Amazon/Ebay to expose our products and services to a wide range of customers. This may quickly attract people’s attention to our products and potential turn them into potential customers. Product sales and service consultation can also be carried out on the platform. In addition, our official website address and methods of contact can also be listed on pages to divert a proportion of traffic to our own website.
③ WeChat: Wechat has become the most popular social network tool in current Chinese market. It serves as both a mean of personal contacts and business interaction for over 1 billion Chinese population. Through the establishment of WeChat public service number, and periodic releasing of pictures or articles related to our project progress, we have successfully attracted attention from potential customer, i.e. private garden owners (refer to HP). At the moment we planned to engage with the followed promotion activities, 1) customers in Shenzhen City can enjoy a free soil evaluation on pesticide residues; 2) first purchase of over RMB200 worth products enjoys free shipping; 3) second purchase of similar products enjoy a 20% discount.
④ Blogs: by building a blog on a number of well-known blog providers in China, such as Sina Blog, Netease blog, 163 Blog, etc., and regularly publishing informative, and product/service related articles, it helps building a positive image for the company brand. Reading rates of these articles can help with the ranking of our official website, thus increase visiting rates and potential purchases
Through a heavy involvement of E-business promotional model, it is assuming that we will reduce the cost of e-commerce implementation and expand the revenue source from the following four aspects.
①reduce procurement costs: by directing massive traffic to our company website, and our pages on renowned E-business platforms, we would gradually establish an automatic online purchasing system that reduces the costs of transcations involving human, material and financial resources.
② We will form long-term cooperative relationships with agricultural enterprises to establish a sensitive supply chain management system to achieve precise ordering control and timely delivery. This helps increasing operational efficiency in inventory control and management.
③ Time-saving: With the increasing in demand and expansion of the market, we can establish a unified e-commerce system to improve direct communication with customers, as well as to increase the efficiency of transactions, pre-use of logistics products in the form of outsourcing, operating costs. We may also choose a mature logistics company to reduce the turnover of the link.
④ Expand market opportunities: by establishing exploring further in online business relations, we were able to include sales channels that were originally difficult to cover by traditional marketing methods. Also, through integrating sales channels, we could reduce transaction costs, increase product competitive capacity in the market, as well as the power of online purchasing.
