Executive Summary
The main purpose of this report is to describe all phases of managing the developing business. A hypothetical company, «Kuwait Real Estate», is chosen in this work in order to provide practical examples of the numerous stages an organization goes through on its road to prosperity. «Kuwait Real Estate» is a small, Kuwait City-based company involved in providing online real estate services to the general public. It is brick and mortar firm where customers can also receive services in case they are more interested in dealing with the agent personally. «Kuwait Real Estate» is planning to remain small in order to offer extraordinary customer attention. «Kuwait Real Estate» will be taking an active part in an exciting and developing market.
Real estate market has seen tremendous increase in Kuwait at the end of 90’s in the beginning of the 21-st century. «Kuwait Real Estate» is founded on the idea that keeping satisfied clients is essential to the financial performance of the company. «Kuwait Real Estate» is planning to be both a traditional brick and mortar organization providing quality products to the local community and working through the online services (www.realestate.com.kw). The website is designed as the modern business enterprise and it will be constantly updated to make sure that its content as well as promotional strategies are advanced. «Kuwait Real Estate» will offer such services as buying/selling and renting/letting. Property management along with basic market consultancy services will also be provided.
«Kuwait Real Estate» will start making profit from month one. Margins are projected to be at 30%, ultimately reaching 33%. Sales during Year one will be USD 350,000 for this year with a 30% increase rate for the following five years. «Kuwait Real Estate» is a great possibility that combines a customer-centric company with an explosive industry. Contacting the potential clients/buyers/sellers directly online rather than finding them through some intermediary brick and mortar company is becoming increasingly popular in Kuwait with more and more people becoming active participants in this business. Even for individuals who have some experience of the market, it seems to be prestigious to search for the best alternative online.
1.0 Introduction
Objectives
1. To make «Kuwait Real Estate» the number one company for providing real estate services in Kuwait City.
2. To attain a preliminary gross profit (GP) margin of at least 30%, growing that by at least 1% per year until becoming our final target of 33%.
3. To reach sales of USD 350,000 in products the first year.
4. To keep a steady growth rate of 30% per year for the first five years.
Mission
«Kuwait Real Estate» is devoted to offering real estate services that combine quality performance with cost effective management assistance. We desire to establish a winning partnership with our customers, our workers, and our researchers that value the interests and goals of each party. Continually striving to supply what the client is asking for, we will recurrently review what is available in the marketplace, and what has to be provided. Improving on what is accessible and offering new products and services to the areas of need will aid to ensure our success in a market driven by strong consumer demand.
1.1 Purpose of the report
The report is produced to identify and evaluate the general overview of real estate business and to clarify the important number of keys to success of the selected organization, following with the introduction of the selected business overview and evaluation of the selected business idea. Finally, outline with overview of the recommended management plan will be introduced to the real estate business.
Achievements will eventually be measured by our customers choosing us because of their confidence in our ability to meet or exceed their anticipations of price, service, and selection. To win in this business, «Kuwait Real Estate» must:
· Be a positive member of the local community: attend functions at local events, be an active participant and sponsor at regional and national shows.
· Deal with our clients on a personal level
1.2 Scope of the report
The report covers summary of the selected business and important number of crucial factors to success in the small/medium enterprise, following with the overview of the business structure, idea, and the summary of the management plan. The report contains some important information gathered from secondary data from the journal article, and textbooks.
1.3 Limitation
The limitation of this report is that it is mostly done using secondary sources such as online journals and articles, though some primary sources are employed as well. What is more, it is not possible to make adequate predictions as of the exact tendencies that will prevail on the real estate market in Kuwait. Political and economic situation in Kuwait is very volatile and even the professional market research companies may fail to account for all of the crucial factors making a real difference for the business. Finally, some of the predictions outlined in the financials sector of this report were made taking optimistic view of the future sales into account.
2.0 Business analysis
«Kuwait Real Estate» is a new organization, which upon beginning of operations will offer entry-level reasonably priced property management and rental services.
Ownership
«Kuwait Real Estate» is a Kuwait City comapny, subchapter S, owned completely by Ebrahim Al Rakhis. The owner has chosen to operate as sole proprietor to have total control over of the business..
Start-up Analysis
Major costs are USD 12,500 for buying computer hardware, setting up software getting support; USD 1,600 are office rent expenses, USD 2,500 go towards telephone system costs, about USD 1,300 are spent on office equipment and furniture, at least USD 2,700 will go to purchase various website management tools and software, USD 2,800 will be spent on leasehold improvements, and USD 7,000 will go towards buying company cars.
The business will be started up as a new operation. The reason behind choosing such strategy is because it is the cheapest way to establish a business in Kuwait. The proposed date of commencement of business is 4 Dec 2006. The business will have 6 employees working on a monthly basis and rotating in 3 shifts. We will require this 24/7 assistance in order to deliver high quality of service to the customers.
2.1 Marketing Planning
You will discover that we have about USD 60,625 additional funding required. Below in this report, when you look through the Forecasted Balance Sheet, Forecasted Cash Flow and the Forecasted Profit and Loss statements, you will find out that we do not indicate any debt or interest expense. Yet, by examining these same charts, you will find out that we project a significant amount of earnings to service a debt load.
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Start-up Costs
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Labels
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USD 725
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Rent expenses
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USD 1,600
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Stationery expenses
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USD 300
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Total Start-up Costs
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USD 2,625
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Start-up Assets Required
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Cash Balance (Beginning of Period)
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USD 1,000
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Beginning Inventory
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USD 50,000
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Current Assets
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USD 0
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Total Current Assets
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USD 51,000
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Long-term Assets
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USD 29,000
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Total Assets calculated
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USD 80,000
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Total Needed
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USD 82,625
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Financial support
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Investment
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Individual Investment
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USD 80,625
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Total Investment
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USD 80,625
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Current Liabilities
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Accounts Payable
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USD 2,000
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Current Liabilities
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USD 2,000
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Long-term Liabilities
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USD 0
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Total Liabilities
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USD 2,000
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Loss at Commence of the business
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(USD 2,625)
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Total Capital
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USD 78,000
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Total Capital and Liabilities
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USD 80,000
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Start-up
Company facilities
The business will trade under the registered name of «Kuwait Real Estate» and the online domain of ‘www.realestate.com.kw’. The proposed business will be located at 3rd floor in Al Salheya Building in Kuwait City. Such location will offer us good visibility along with convenient right of entry for traveling. Another benefit of this location is the lack of any major real estate agencies offering similar services. This location will comprise a meeting room and office space. All matters will be treated and dealt with at this location. We will also have large parking accessible.
2.1.1 Customer
«Kuwait Real Estate» will use the latest technology available to keep-up with constantly changing technologies and deliver quality services to website users. The online business is a service provider and the aim of this business is to provide the customers with the latest properties, services and news available to keep users up to date with the Kuwait Real Estate market. As a result customers will gain benefit by saving money and time.
2.1.2 The Market Segmentation
At present, the real estate market in Kuwait is rapidly growing. The only real danger to our business enterprise would be a similar new entry to the market. The whole industry is in a boom period. While there are a number of products/services from various suppliers available, «Kuwait Real Estate» has approached the market as a field retailer -- a source of advice and professional services to the entry-level shopper (one without any specialized knowledge in real estate). Our target client in this segment will have a broad knowledge of real estate, but our most important target clients are relatively unsophisticated in real estate peculiarities. We will mange to serve this buyer well not only by giving them properties at an affordable price, but also by offering them recommendation that ensures they get the deal settled properly, therefore improving their on-track performance.
2.1.3 The Service
To make sure that the business will survive in the future, the owner’s contribution to work hard is one of the ways to achieve the success. For a small firm getting into business is easy, however, going concern of the business depends on the clear planning, start-up and controlling it. Although our target market is the middle-income population, our product/service mix will be adequate to fill most of the needs of even the most sophisticated customers. Our experience has indicated that most entry-level shoppers’ greatest choice is for reasonable prices. We are sure we can offer services that indeed are lower in price without sacrificing the presentation and safety issues that our customers will want. The company will provide precisely the level of service that today's entry-level shopper requires.
2.1.4 The Price
Our clients are especially responsive to value. We must make sure that our price and service are seen to bring a good value to the clients. However, we do realize that someone can always beat our price. Consequently, our pricing strategy is to be reasonable within the various services ranges, but not to be based on the selling price to outshine the other advantages of doing business with our firm. We will market ourselves on the basis of an assorted line of quality services that are readily obtainable, logically priced, and backed up by our exceptional customer service. The research and consultancy products will be assessed prior to implementation and all required due dates will be met. We will aim for a gross profit margin of 30%, raising that to 33% by year four.
2.1.5 The Place
As mentioned above the office will be situated in the central area of Kuwait City. During the last decade, the city has grown in many important ways and became the centre of business in the country. The city has all the modern facilities as well as good transport links and real estate investors. This location will facilitate the communication process between the proposed business and its customer. One of the advantages that «Kuwait Real Estate» has over the competitors is providing cost effective, simple and professional online services to locate, find, and rent/let or buy/sell properties.
2.1.5 The Promotion
The company’s most important means for sales promotion will be our website, which is depicted below.
Website Layout Plan
2.2 Financial Resources Planning
Our financial resource planning is of strategic nature. We are not aiming to satisfy all real estate customers, but rather individuals who are just interested in renting/buying their houses and those who are struggling to keep with the rising costs of traditional real estate service companies. We can save our clients time and money, not because we will offer unique pricing structure, but by assessing their requirements and guiding them toward the proper property. People, by nature, are inclined to want a high-end product, when frequently a low to mid-end product will satisfy them. By always presenting products in an honest and ethical manner, we will construct customer loyalty and word-of-mouth sales will be increased also.
2.2.1 The Source Documents
The table that appears in the following paragraph and related graph indicates how our present sales forecast is structured. We are forecasting sales to grow at the paste of 30% for the following three years.
Monthly Sales
2.2.2 Books of Original Entry
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Sales Forecast
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Sales
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FY 2009
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FY 2010
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FY 2011
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Agency Fees; Refurbished Property Revenues; Managed Property Fees and Consultancy Services
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USD 350,219
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USD 455,285
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USD 591,870
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Internet Marketing
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USD 16,800
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USD 16,800
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USD 16,800
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Total Sales
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USD 367,019
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USD 472,085
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USD 608,670
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Direct Cost of Sales (including mortgage and renovation fees)
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FY 2009
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FY 2010
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FY 2011
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Agency Revenues
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USD 245,154
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USD 314,147
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USD 402,472
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Internet Marketing
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USD 0
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USD 0
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USD 0
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Subtotal Direct Cost of Sales
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USD 245,154
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USD 314,147
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USD 402,472
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2.2.3 Statement of Financial Performance
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FY 2009
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FY 2010
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FY 2011
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Plan Month
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1
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2
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3
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Current Interest Rate
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10.00%
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10.00%
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10.00%
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Long-term Interest Rate
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10.00%
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10.00%
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10.00%
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Tax Rate
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25.42%
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25.00%
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25.42%
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Other
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0
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© PrimeWritings 2006
