"A BUSINESS PLAN FOR A START-UP;TO INTRODUCE TESLA SOLAR POWER TOTHE HOUSEHOLDS IN SRI LANKA FORCHARGING ELECTRIC VEHICLES WITHOUTUSING THE ELECTRICITY FROM THENATIONAL GRID 2 ContentsTable of Figures ............................................................................................................................................ 71.0 INTRODUCTION ............................................................................................................................ 81.1 Project topic .................................................................................................................................. 81.2 Rationale ....................................................................................................................................... 81.3 Terms of References ..................................................................................................................... 91.4 Approach ..................................................................................................................................... 101.5 Objectives ................................................................................................................................... 101.6 Concepts / Models ....................................................................................................................... 111.7 Assumptions ................................................................................................................................ 111.8 Objectives ................................................................................................................................... 122.0 THE CONCEPT OF A NEW BUSINESS ...................................................................................... 132.1 Overview ..................................................................................................................................... 132.1.1 Product or Service ............................................................................................................... 132.1.2 Target group of customers .................................................................................................. 132.1.3 Value proposition ................................................................................................................ 142.1.4 Distribution channels .......................................................................................................... 142.1.5 Positioning .......................................................................................................................... 152.2 Concept statement ....................................................................................................................... 162.2.1 Description of Product ........................................................................................................ 162.2.2 Target Market ...................................................................................................................... 172.2.3 Predominant features........................................................................................................... 182.2.4 Human resources ................................................................................................................. 192.2.5 Scale of Business ................................................................................................................ 202.3 Windows of Opportunities .......................................................................................................... 203.0 FEASIBILITY ANALYSIS ............................................................................................................ 233.1 Product Analysis ......................................................................................................................... 233.1.1 Gender based analysis ......................................................................................................... 233.1.2 Age group based analysis .................................................................................................... 243.1.3 Analysis based on the profession ........................................................................................ 253.1.4 Analysis on the monthly income level of the household .................................................... 263.1.5 Analysis on the location household..................................................................................... 263.1.6 Are they using Hybrid or not .............................................................................................. 273 3.1.7 Reasons for opting for electric cars ..................................................................................... 283.1.8 Primary purpose of using the vehicle .................................................................................. 293.1.9 Difficulties in using an electric motor car ........................................................................... 303.1.10 Will be Tesla solar power panel be accepted? .................................................................... 313.2 INDUSTRY ANALYSIS ............................................................................................................ 323.2.1 Trend in Market Shares ....................................................................................................... 323.2.2 Petroleum Sector ................................................................................................................. 333.3.3 Electricity Sector ................................................................................................................. 333.3 PESTEL Analysis ....................................................................................................................... 333.3.1 Political and Legal Factors .................................................................................................. 333.3.2 Economic Factors ................................................................................................................ 343.3.3 Social, Cultural and environmental Factors ........................................................................ 353.3.4 Technological Factors ......................................................................................................... 363.4 SWOT Analysis .......................................................................................................................... 363.4.1 Strengths ............................................................................................................................. 363.4.2 Weaknesses ......................................................................................................................... 373.4.3 Opportunities ....................................................................................................................... 373.4.4 Threats ................................................................................................................................. 373.5 Porters five force Model ............................................................................................................. 373.5.1 Bargaining Power ................................................................................................................ 383.5.2 Power of Suppliers .............................................................................................................. 383.5.3 Analyzing of Threat of new Substitute’s ............................................................................ 383.5.4 Analyzing Threats of New Entrance ................................................................................... 383.6 Organizational Analysis .............................................................................................................. 393.6.1 Planning .............................................................................................................................. 393.6.2 Role ..................................................................................................................................... 393.6.3 Product ................................................................................................................................ 403.6.4 Customers ........................................................................................................................... 403.6.5 Demography ........................................................................................................................ 403.6.6 Process ................................................................................................................................ 404.0 Cost and Cost budget ............................................................................................................................ 414.1 OPERATIONAL COSTS (OPEN) YEAR 1 .................................................................................... 414.2 Capital costs (Open) .......................................................................................................................... 424 4.3 REVENUE & CASH ELOW FORECAST ...................................................................................... 434.14 Revenue & Expense forecast assumptions ...................................................................................... 445.0 The Business Model ........................................................................................................................ 475.1 Priority Customers ...................................................................................................................... 48Superior Value Proposition ..................................................................................................................... 48Channels of Distribution ......................................................................................................................... 48Key Activities ......................................................................................................................................... 49Competitive strategy ............................................................................................................................... 49Relationship ............................................................................................................................................ 49Key Partners ............................................................................................................................................ 49Value Chain Based Resources ................................................................................................................ 50Identity .................................................................................................................................................... 50Coverage ................................................................................................................................................. 506.0 Business Plan .................................................................................................................................. 516.1 Industry and Company ................................................................................................................ 516.2 Analysis of the Market ................................................................................................................ 526.3 Marketing mix ............................................................................................................................. 536.4 Development ............................................................................................................................... 536.5 The Management team ................................................................................................................ 556.6 Operations ................................................................................................................................... 566.7 Timeline ...................................................................................................................................... 576.8 Controls ....................................................................................................................................... 586.9 Financial Projections ................................................................................................................... 586.10 Critical Success Factors .............................................................................................................. 607.0 Viability Chapter ............................................................................................................................. 618.0 References ....................................................................................................................................... 629.0 Bibliography ................................................................................................................................... 675 Table of tabulationsTable 1 Terms of Reference ............................................................................................................ 9Table 2 Concepts and Models ....................................................................................................... 11Table 3 Gender based analysis ...................................................................................................... 23Table 4 Age group based analysis ................................................................................................ 24Table 5 Analysis based on profession ........................................................................................... 25Table 6 Analysis based on income ................................................................................................ 26Table 7 Analysis on location of the household ............................................................................. 27Table 8 Analysis on the type of the vehicle .................................................................................. 27Table 9 Primary purpose of the vehicle ........................................................................................ 29Table 10 Operational Cost (Open) Year 1 .................................................................................... 41Table 11 Capital Costs (Open) ...................................................................................................... 42Table 12 Revenue and cash flow forecast..................................................................................... 43Table 13 Turnover mix - Corporate sale ....................................................................................... 44Table 14 Turnover mix - Home user............................................................................................. 44Table 15 Coporate package ........................................................................................................... 45Table 16 Home package................................................................................................................ 45Table 17 Business Model Canvas ................................................................................................. 47Table 18 Objectives of the business .............................................................................................. 52Table 19 Development Matrix ...................................................................................................... 54Table 20 Organizational Chart ...................................................................................................... 55Table 21 Timeline of the startup ................................................................................................... 57Table 22 Inflation Rates from 2014 to 2016 ................................................................................. 59Table 23 Tax Rates ....................................................................................................................... 60 6 Table of FiguresFigure 1 Gender based analysis .................................................................................................... 23Figure 2 Age group based analysis ............................................................................................... 24Figure 3 Profession based analysis ............................................................................................... 25Figure 4 Household income based analysis .................................................................................. 26Figure 5 Location based analysis .................................................................................................. 27Figure 6 Analysis based on the type of the vehicle ...................................................................... 28Figure 7 Primary purpose of the vehicle ....................................................................................... 30Figure 8 Porter’s value chain ........................................................................................................ 56 7 1.0 INTRODUCTION1.1 Project topicA business plan for a start-up to introduce Tesla solar power to the households in Sri Lanka, forcharging electric vehicles without using the electricity from the national grid1.2 RationaleThe dynamics of transport in Sri Lanka is undergoing a phase of transformation with the public transportservices being overtaken by the personal vehicles in urban areas(Adrian, Murray & Yasawachii, 2011).More than hundred thousand motor cars have been registered only during the year 2015 in SriLanka(Central Bank of Sri Lanka, 2015). Along with the rise in using personal vehicles there appearsto be a significant rise in the need of energy sources for the same(Amaratunga, 2012). Among the motorcars registered during 2015, twelve percentages (12%) are of electric cars which are predominantlydepending on the electricity as their primary energy source. In a country which relies highly on hydropowered electricity which caters the households as well as the existing industry, the rising demand interms of the electric cars cannot be met by the same for a longer period. It is necessary to find analternative source of energy which can be a sustainable product in terms of catering the rising demands ofautomobiles as well as the other industries(Adrian, Murray & Yasawachii, 2011). Tesla solar power units are especially designed for household purposes which also in turn areused to charge electric vehicles without using the electricity from the national grid. Branded asPowerwall, the batteries utilize the built in solar panel to grab solar energy which in turnconverted as a source of electricity and saved in the inbuilt batteries. Such panels can power ahome of four individuals at a lower utility in the evening which they facilitate as backup powersources in case of power outages. The panels are simple to install, automated and independentfrom the utility grid. Powerwall Tesla solar power units also provide the consumer withadditional benefits in terms of apart from the initial investment; it becomes a life time savings ofelectricity bills. Along with that also the panels are termed to be 100% environmental free whichemits no hazardous substance to the environment unlike other power sources like coal. 8 One of the major hurdles presumed to be, to be overcome in order to introduce the Tesla solar power toSri Lankan households is the cost of initial investment where the same appears to be unbearable exceptfor less than 2% of the entire population and the same remains as a luxury product in terms of the SriLankan consumer(Central Bank of Sri Lanka, 2015). Though the product seems to be idea for thegeographical location like Sri Lanka which experiences on an average 12 hours of sunlight every day,there needs to be a sustainable solution to make the product viable for the installation in Sri Lankanhouseholds in regard to the economic circumstances. The main emphasis of this study is to develop acomprehensive business plan for the introduction of Powerwall Tesla solar panel units to the Sri Lankanhouseholds which can be utilized for charging electric card, where the electricity from the national grid isnot utilized(Central Bank of Sri Lanka, 2014). 1.3 Terms of ReferencesThe focus is on the company and theBusiness Concept respective business, its products and services,added features and other significant factors This is entitled to include aspects ofFeasibilityfeasibility in terms of the industry as well asthe market; if there seems to be a significantgap in the market and evidence of financialfeasibility which indicates the stability of thefinancial aspects for the proposed businessBusiness Model This emphasizes on the key aspects of thebusiness whereas the usage of the relevantchannels in terms of the business and as howto maintain appropriate customer relationship.This emphasizes on the analysis of theBusiness planrespective market and plan of operations. Table 1 Terms of Reference9 1.4 ApproachThis business proposal focuses on the plans to emphasize on the target group of residents whoare electrical motor cars in Sri Lanka, covering all demographics. The company is preparing anarray of different packages which can be best suited for the respective household according totheir requirements and economic status.1.5 ObjectivesThe major objective of starting up this company can be classified as below. i. Business Objective? To achieve growth as a company within the next three years? To become the one spot shop for all electrical-energy related automobileproducts and services? To expand into other types of automobiles apart from cars ii. Marketing Objectives? To create a brand recognition and brand value for the company? To increase the market spaceiii. Financial Objectives? To generate and proliferate revenue? To have the brand recognition? Increase the market offersThe company emphasizes on offering a customer friendly service which is convenient for theconsumer as well as around the clock which provides the customer with options to cater theirexpectations. Our expertise in technology will be of great resource in providing utmost service toour valuable customer. The company also emphasizing on establishing strategic partnership interms of marketing with agencies of invention providing via which the demand of the customerscan be met in terms of providing the appropriate technology for the purpose. 10 1.6 Concepts / ModelsPrinciple ObjectiveTo evaluate the level of parallel competition in terms of thePorter’s Five Forceindustry and strategy development in businessPESTEL To evaluate the aspects in terms of political, social, economic andtechnological factorsStrengths, weakness, opportunities and threatsSWOT4P To evaluate the nature and mode of marketing for the businessPorter’s value chain To evaluate the inbound operations and logistics along withoutbound operations and logistics, sales and marketing andservice regard to the new businessBusiness model Canvas To generate optimum values in the respective marketTable 2 Concepts and Models1.7 AssumptionsThe key assumptions which are to be considered in terms of developing a new business plan areenlisted below.? The target market and the market share will be captured respectively according to theexpectations? The employees recruited will be apt as the source of human resource remaining in thebusiness and will not resign? There will be no additional entries to the market who are focusing on a similar area? The market demand will remain same or grow, but not diminish? The economic status and political environment in the market will remain stable and therewon’t be unexpected dynamics regarding the aspects? The expected expenses and remunerations will remain same throughout the financial year11 1.8 ObjectivesThe key objectives of planning to start the business are enlisted below.? To provide the consumer, the most reliable, cost saving and sustainable solar power unitsof charging electric vehicles, especially motor cars? To achieve profits within the 12 months from starting? To achieve larger share of market and the base of consumer within the first two quarters? To provide the consumer the products and services at affordable price via customized anddifferentiated packaging ? To provide appropriate technology and to improve the same on a consistent basis? Concentrate on nearby geographical locations for expansion after three years of time(Maldives) 12 2.0 THE CONCEPT OF A NEW BUSINESS2.1 OverviewThe concept of the business is one of the most primordial challenges for startups in order toorganize and document the inputs and ideas. Such concept will in turn interlink with the aspectssuch as product of the business, the target group of consumers, and the proposition of value,distribution and position in terms of the business. On an overall perspective it is the bridgebetween the idea and the business plan.2.1.1 Product or ServiceIn terms of a business, the most critical element is whether it is based on a product or a service(Agnus, Geoffry & Mascarenhus, 2009). In regard to Tesla solar power panels, the consumerswill be interested in knowing the main features of the product, the capacity, the mechanismbehind its working, the benefits of using it over the other supplementary options alreadyavailable in the market for lesser initial investment, the performance of the product on a longterms basis and the requirement of any specific technical skills to use the same(Goodman &Rousseau, 2004).2.1.2 Target group of customersThe targeted group of consumers is the set of individuals to whom the product will be soldduring the course of the business, and in turn they become the most important element in eachand every business venture(Goodman & Rousseau, 2004). It is be important to conduct aresearch in terms of the consumer in order to understand what their requirements are based onthe following aspects. ? The mode of target consumers in terms of whether they are individuals, businesses,corporates or major industries, or even geographical locations as a whole.? The main motivation factor for purchasing the product provided by the business. 13 ? The demographic background of the consumer in terms of their social and economicstatus in order to purchase the product. 2.1.3 Value propositionThis emphasizes on the edge the company should possess in terms of attracting the consumertowards the products ahead of the competitive products in the market for a similar purpose andutilization(James & Lewking, 2014). Such circumstances depend on the values which are to be offered to the consumer in comparisonto the competing products, in terms of reliability, cost saving and technologicaladvancements(James & Lewking, 2014). Tesla solar power panels in turn will provide thereliability in comparison to the other product meanwhile they act as a lifetime cost savingproducts in terms of electricity consumption. Also the power panels are equipped with the latesttechnology.Another important factor in terms of value proposition is the additional benefits the consumerwill be entitled to. Apart from the latest technology, the panel also provides with easy usage andconvenience due to its compact physical nature and self-sustainable maintenance(Lepberts,2011). Also the product can be a game changer in the market which is ideally a trend setter in terms ofusage of electric vehicles in Sri Lanka as this would enhance the feasibility of many automobileowners to concert themselves to electric vehicles.2.1.4 Distribution channelsThe channels of distributions will emphasize on the modes of delivery in terms of the products aswell as the added benefits to the targeted consumer (Palmer &Bonne, 2007). On an overallperspective it ensures the mode of reach towards the end customer of the company’s product.Some of the primary aspects in terms of distribution channels in a business are enlisted asfollows. 14 ? The position of the targeted group of consumers and their mode of purchase in terms oflocation of the distributors. Such can be in the form of outlets, supermarkets, onlinevendors etc.? The mode of selling to the end customer in terms of whether the company is to sell on itsown or via intermediate distributors and agencies who in turn make the product reach theend customer. ? The maintenance of consumer relationship post selling. Such includes receivingappropriate feedback from the consumer as well as being in constant contact with thesame in order to develop a large consumer based and customer interaction.? The mode of customer service to enhance the customer eases in installation as well asusage of the product. 2.1.5 PositioningThe position which also can be termed as placing emphasizes on the fact of adequacy of theproduct (Palmer &Bonne, 2007). This includes how the product will be placed in front of theconsumer in terms of the following aspects enlisted. ? The price of the product? The differentiated packaging of the price? The location of selling and promotions? Introductory offers, discounts and special promotions? Physical appearance of the product in terms of finishing? Innovations in the product and how it gives an added egde? Mode of sales? Advertising campaigns and their modes? Marketing strategy? Customer service and Technical support15 "