ELECTRON: Electronic Spare Parts & Repair Service

Business Plan
Calendar Year 2013

ELECTRON: ELECTRONIC SPARE PARTS & REPAIR SERVICES

BUSINESS PLAN CALENDAR YEAR 2013

BY: Angelica Marie S. Uy

SECTION 1 EXECUTIVE SUMMARY The name of the business will be ELECTRON: Electronic Spare Parts & Repair Services. It will be located at LandCo Business Park Legazpi City. The business will adopt a partnership form of business organization. The proprietors are Matt Lignon B. Lao and Mary Joan Lim; both are to contribute and an amount of P 140,574.06. The total projected cost is P 281, 148.12. Spare parts are offered by the firm are mainly used for repairing electronic devices such as radios, components, televisions, refrigerators and other appliances. The products to be offered by Electron include all kinds of diodes, filament soldering, soldering wire lead, transistors, Light Emitting Diodes (LED) and ICs. These will be purchased mainly from two suppliers which are Newport Electronics Center for electronic spare parts and Qualitek: Core Solder, for soldering leads. More products will be added over time depending on the demand of the customers. ELECTRON, unlike a typical electronic spare part Shop, is combined with Repair services in order to provide better service to the customers and also to provide additional income to the business. Electron aspires to provide good quality repairs and quality spare parts to satisfy and meet the demands of the customers. While there are currently three businesses offering Electronic Repair Parts in Legazpi City, none of these offers Repair Services at the same time. Electrons marketing strategy also emphasizes the quality and the availability of the products and services that it provides. All repair services will be provided by a staff trained in electronics and repairs and the staff to be hired are all graduates of electronic courses and had at least 2 years of experience in Repairs. In order to meet customer expectation and quality service, Electron aims to be accredited by different electronics manufacturer such as Sony, Samsung, Panasonic, Aiwa, and other brands. At start-up, we will have two trained staffs to provide assistance with spare parts and who will co repair services. More employees will be hired for the coming years once financing is secured. The management of Electron consists of co-partners Matt Lignon B. Lao and Mary Joan E. Lim. Both partners will be taking hands on management and operation roles in the business. Co-partner Matt Lignon will be the financial manager and Mary Joan will be the purchasing and marketing manager.to begin with, co-owner Mary Joan will be the cashier and Matt Lignon will be the assistant personnel, but more assistant personnel will be hired when the business become stable. The Sales Projections for the first year and the second year are P 840,528.00 and P882, 554.40 respectively. Sales are assumed to increase 5% annually. The monthly salary of technicians will be P6, 240. It is assumed to increase 3% annually. Each partner will have P8, 000 allowance per month. The projected net income after tax for the first year is P413,253.06 and P431,748.07 for the second year. Therefore the average net income is

P422,500.57. The rate of return on investment is 150% and the payback period is .66 year or 241 days or 7 months and 28 days.

SECTION 2 BUSINESS DESCRIPTION Nowadays, we experience great advancement in every field of study. Electronics is one of the most essential components of technological advancements. Since people now cant live without all these technology, they tend to buy and acquire these gadgets to ease their daily works. However, these devices also have downsides, just like any other non-living things, it can be broken. In order to still make use of it, skilled persons are needed for repairs and as well as maintenance of these appliances. These skilled persons are the technicians and repair mans, for them to provide repair services, electronic spare parts will be needed. ELECTRON: Electronic Spare Parts & Repair Services is an independent business formed Partnership type of organization in which the owners are the general partners. The proponents chose this type of organization because this would be an advantage since they share the same amount in the business; liabilities or losses will be lessen. All losses and liabilities will be in the extent of the partners separate assets. The net income of the company will be divided equally. In Legazpi, there are only few establishments selling electronic spare parts; however there are many customers in need of electronic supplies, such as the technicians, electricians, repairmen and other customers.

SECTION 3 PRODUCT AND SERVICE ELECTRON will provide a wide variety of electronic spare parts including minor and major repair services for the convenience of the customers. Spare parts will be purchased from the two suppliers, Newport Electronics Center for electronics and spare parts, and Qualitek, Core Solder for soldering leads. Spare parts that are offered by the firm are mainly used for repairing electronic appliances such as radios, components, televisions, and others. The products to be offered will include all kinds of diodes, filament soldering, soldering wire lead, soldering guns, soldering irons, resistors, capacitors (AC Ceramics & Electrolytic), transistors, Light emitting diodes(LED) and ICs. This would be the start-up inventories and more products will be added over time depending on the demand of the customers. With the suppliers mentioned earlier, Electron ensures products with good quality. Electron will do its best to make sure that products are available since the concept of availability is one of the secret for an effective business. Electron shall also provide product service and repair. Quality of repair shall be improved by the accreditation or tying-up with different companies like, Sony, Aiwa, Sharp and others. With the accreditations, crews and personnel shall attend the seminars and trainings resulting in better job performance. Parts for the repair shall not be burden since Electron has its own spare parts.

SECTION 4 MARKET ANALYSIS Target market Electron intends to cater to people who engage in repairs and maintenance of electronic appliances since they are the ones in great need of electronics supplies and spare parts. These people are the technicians, repairmen, electricians. Other customers, such as households that need repair services for their appliances, school (for laboratory use), and students whose course are related to electronics like, Electrical Engineering and Electronics Technology, are also considered. DEMAND ANALYSIS Before organizing a business, many factors are to be considered such as: net income of people, quality of products, selling price, location of the business establishment, population growth and the percentage of the target market on the population. Aside from the fact that electronics and appliances are needed, this shows that demand for electronic supplies is high regardless of its place of dispersion, However, Electron: Electronics Spare parts & Repair Services still aims to offer electronic supplies and repair services at the most reasonable and affordable price. TABLE 1 TARGET DEMAND-SALES
Average Total YEARS population of Legazpi City percentage of persons engaging in Repair Services 2007 2008 2009 2010 2011 2012 179, 481 182, 945 186, 476 190, 075 193, 743 197,482 19% 19% 19% 19% 19% 19% 34,101 34,760 35,430 36,114 36,811 37,552 Demand each year Percentage of persons willing to avail of the products 90% 90% 90% 90% 90% 90% No. of persons demanding for spare parts 30,691 31,284 31,887 32,503 33,130 33,770 368, 292 375,408 382,644 390,036 397,560 405,250 Total Demand

Source: National Statistics Office

TABLE 2 TARGET DEMAND- REPAIRS

Percentage of Total number of YEARS households in Legazpi City households willing to avail of ELECTRONs Services 2007 2008 2009 2010 2011 2012 38,487 39,746 41,005 42,264 43,743 45,222 90% 90% 90% 90% 90% 90% 34, 638 35,771 36,905 38,038 39,369 40,700 6 6 6 6 6 6 207,828 214,626 221,430 228,228 236,214 244,200 Total households

Frequency

Total Demand

Source: National Statistics Office

Table 1 shows that according to the National Statistics Office Census as of 2007, the population of Legazpi City is 179,481 and the rate of increase from 1995-2007 is 2.00% and from 2000-2007 is 1.86%. therefore the average increase in population is 1.93% [(2%+1.86%)/2] is considered SUPPLY ANALYSIS TABLE 3 HISTORICAL SUPPLY (SALES) Number of customers Weekly 100 300 120 Monthly 400 1,200 480 Yearly 4,800 14,400 5,760 24,960 Source: Actual Interview Rate of increase or (decrease) 1% 5% 3%

Competitors Family Electronics Laytronics United Electrons Total

TABLE 4 HISTORICAL SUPPLY (REPAIRS) Number of customers Weekly 60 80 70 Monthly 240 320 280 Yearly 2,880 3,840 3,360 10,080 Souce: Actual Interview The above table (Table 3) shows the total number of customers of existing electronics spare parts shop in Legazpi city. The average rate of increase in customers yearly is 3% (9% divided by 3). Table 4 shows the total number of customers of existing accredited repair shops in Legazpi City. The average rate of increase of customers yearly is 2.33% (7 divided by 3). TABLE 5 PROJECTED SUPPLY (SALES) Total Yearly Customers 23,527 24,233 24,960 25,709 26,480 27,274 Rate of increase or (decrease) 2% 3% 2%

Competitors Sony Center B&L Sharp Center Total

YEAR 2007 2008 2009 2010 2011 2012

Frequency 12 12 12 12 12 12

Total Supply 282,324 290,796 299,520 308,508 317,760 327,288

The table shows the projected annual customers who purchase electronics spare parts. It is assumed that the number of customers will increase by 3% annually.

TABLE 6 PROJECTED SUPPLY (REPAIRS) Total Yearly Customers 9,627 9,851 10,080 10,264 10,503 10,748

YEAR 2007 2008 2009 2010 2011 2012

Frequency 6 6 6 6 6 6

Total Supply 57,762 59,106 60,480 61,584 63,018 64,488

Table 6 shows the projected annual customers of competitors who offer repair services.

SECTION 5 STRATEGY AND IMPLEMENTATION Combining the sales of electronics spare parts and repair service is already a marketing strategy of the proponent. Meeting the customers need is the main objective of Electron: Electronic Spare parts and Repair Service and for this reason the proponents searched for a good suppliers which will offer wide variety of good quality and affordable products. These suppliers are: NEWPORT ELECTRONIC CENTER located at 541 Evangelista St., Corner Raon St., Quiapo, Manila who offers very affordable prices of electronics and spare parts compared with other electronics shop and they assure that their products are of good quality. The other is QUALLITEK, Core Solder, located at Makati, Metro Manila, which is a manufacturer of soldering wire leads. They sell soldering leads at P1,700 per kilo. This way we can resell products at a very affordable and reasonable price, while still having great profit. Another strategy is categorizing repairs into two types, minor and major repairs. Minor repairs can still be used and minor damages needs only replacement of certain parts. Major repairs usually needs replacement of almost the whole major parts of it. Another strategy is the business location which is very accessible to all especially to the commoners near Legazpi City. Availability and maintaining good communication with suppliers and customers is very useful. The business starts a small area in order to have more experience and learn customers behaviors and needs, focusing on target area and target market to meet their demand. The pricing strategy used is lower than the market or competitors price, since the proponents have found good suppliers and compared the price from average market price and discovered that even though the prices are lowered, the business will still earn good profits. Prices of the products will be raised on a regular basis; it might increase by 1% to 5% every year since certain costs always rise. REPAIR SERVICE RATE For Minor Repairs = P 200.00 per unit or appliance For Major Repairs = P400.00 per unit or appliance.

SECTION 6 MANAGEMENT TEAM ELECTRON: Electronic Spare Parts & Repair Services is an independent business formed Partnership type of organization in which the owners are the general partners. The proponents chose this type of organization because this would be an advantage since they share the same amount in the business; liabilities or losses will be lessen. All losses and liabilities will be in the extent of the partners separate assets. The net income of the company will be divided equally. The owners are also the manager and cashier. They will supervise all the business transactions. The source of the funds for the business will come from the personal and family savings of the proponents.

ORGANIZATIONAL STRUCTURE

MANAGER SUPERVISOR

ELECTRONIC TECHNICIAN
Figure 1

SALES PERSONNEL

ORGANIZATIONAL CHART

DUTIES AND RESPONSIBILITIES AND EMPLOYEES STANDARD QUALIFICATIONS MANAGER (OVER-ALL FINANCIAL MANAGER/ SALES PERSONNEL) Matt Lingnon B. Lao DUTIES AND RESPONSIBILITIES Responsible for Bookkeeping and Preparation of financial reports, such as income statements, balance sheets and analyses of future earnings or expenses, that summarizes and forecast the businesss financial position Managing budgets Supervising cash management activities Responsible for monitoring the collections and past due accounts Monitors and controls the cash flows and predicting future trends Formulating strategic and long-term business plans Assists the electronic technician and takes charge of getting the ordered products from the stock room Cleans and arranges the supplies according to order

SUPERVISOR (PURCHASING AND MARKETING MANAGER/ CASHIER) Mary Joan E. Lim DUTIES AND RESPONSIBILITIES Responsible for order placements to suppliers Responsible for buying and approving the acquisition of supplies and inventories needed by the business Seeking reliable vendors and suppliers to provide quality goods at reasonable prices Responsible for negotiating prices and contracts Responsible for determining quantity and timing of deliveries Responsible for keeping track of the inventories and supplies Responsible for developing and maintaining marketing strategies to ensure market share and profitability of products and service Effective management of the marketing, advertising and promotional activities of the business

Analyzing the competitors and market trends Takes charge of payments by the customers Takes charge of collecting bills Prepares daily report of cash receipts and cash payments Accountable for any cash shortage on daily sales

ELECTRONIC TECHNICIAN Hiring requirements: Highest Educational Attainment : College graduate of any course related to electronics preferably a graduate of Eletrical Engineering or Electronic Technology Experience Age Civil Status Others : At least one year : 20-40 years old : Single or Married : a) knows all electronic spare parts and its uses b) Honest and Trustworthy c) Hard working d) Friendly and has pleasing personality DUTIES AND RESPONSIBILITIES Responsible for assisting the customers for their ordered products/ spare parts Responsible for getting customer orders and getting the ordered items from the stock room Responsible for assisting and guiding the owners about the spare parts and their uses Responsible for arranging the supplies according to order Responsible for repairs of appliances

COMPENSATION TABLE 7 EMPLOYEES SALARIES Wage per Worker No. of Workers *Owner* 6,240 2 12,480 149,760 Monthly Salary Annual Salary

Position Cashier Electronic Technician Assistant Personnel Total

*Owner*

P 12, 480

P 149,760

Source: DOLE

TABLE 8 PARTNERS ALLOWANCES Owners LAO LIM Total Monthly Allowance P 8,000 P 8,000 P 16,000 Annual Allowance P 96,000 P 96,000 P 192,000

Note: a. Bicol Region minimum wage rate, effective March 2009, on establishments employing not more than 10 workers in Legazpi City is P 208.00 per day.

TABLE 9 PROJECTED EMPLOYEES/ EMPLOYERS SSS MONTHLY CONTRIBUTION Monthly Salary 12, 480 Monthly Contribution Total Employee 415.58 Employer 632.74 1,048.32

Position Electronic Technician Total

415.58

632.74

1,048.32

Source: Social Security System

TABLE 10 EMPLOYEES/ EMPLOYERS MONTHLY PHILHEALTH CONTRIBUTION Monthly Salary 12, 480 Monthly Contribution Total Employee 156.00 Employer 156.00 312.00

Position Electronic Technician Total

156.00

156.00

312.00

Source: Phil Health

GANTT CHART

PLANS Preparation of the feasibility study Registration Acquisition of tools and equipment Hiring and training of employees Acquisition of inventories Renovation and interior decoration Normal operation of the business

Dec

Jan

Feb

March

April

May

June

July

Aug

Figure 2 GANTT CHART

SECTION 7 FINANCIAL ANALYSIS

This section provides information about the allocation of funds of Electron. Financial Statements and Financial Assumptions are also included in this section. This section also shows the Financial Status of Electron and the Computations of the Rate of Return (ROI), Payback Period, Break-even Alanysis and Current Assets to total Assets Ratio. ELECTRON: Electronic Spare Parts & Repair Service TOTAL PROJECTED COST Projected Cost for 3 months Fixes Assets Furniture and Fixtures Tools and Equipments Total Working Capital Inventories Operating Expenses Office and Store Supplies Utitlities Telephone Installation Fee Salaries Expense Partners Allowances SSS Contribution Medicare Pre-operating Expense Total Operating Expenses TOTAL PROJECTED COST 609.00 3,908.00 1,250.00 37,440.00 48,000.00 1,898.22 156.00 3,321.00 P P 96,582.52 281,148.12 116,325.60 p 44,520.00 23,720.00 P 68,240.00

Partners Capital Contribution LAO LIM Total Investment P p 140, 574.06 140, 574.06 281, 148.12

FINANCIAL ASSUMPTIONS 1. The Cost of Inventory and cost of sales will increase 3% annually. 2. Annual sales is assumed to increase 5% annually due to increase in cost of sales 3. Salaries are assumed to increase 3% annually 4. SSS expense increases 3% annually 5. Phil Health expenses increases 3% annually 6. Income tax rate will be 30% 7. Estimated useful life of Furniture and Fixtures is 15 years 8. Estimated useful life of Tools and Equipments is 10 years

FINANCIAL ANALYSIS

RATE OF RETURN ON INVESTMENT (ROI)

PAYBACK PERIOD

BREAK-EVEN ANALYSIS

CONTRIBUTION MARGIN

CURRENT ASSETS TO TOTAL ASSETS

Year August 2010 July 2011 August 2011- July 2012

Current Assets Php 631,501.18

Total Assets Php 694,401.18

Net Profit Margin 90.34 % 94.89 %

Php 1,068,589.25

Php 1,126,589.25

CRITICAL ANALYSIS Every business encounters problems and risks and Electron is no exemptions. The expected risks though are still manageable, like in case of brown-outs, Electron doesnt have generators because it is not practical for the business to purchase one but to ensure continuous business operation. As a result, claiming date of some repairs may be extended Spare parts defects are also inevitable. These items shall be returned replaced by the suppliers. Competition is also one of the risks since there are existing businesses of the same type here in Legazpi City. Acceptance by the public is another risk, whether they will continuously avail of Electrons products and services or not.

APPENDICES

APPENDIX A SUPPLIERS

NEWPORT ELECTRONIC CENTER 541 Evangelista St., Corner Raon St., Quiapo, Manila QUALITEK, Core Solder Makati, Metro Manila

ALLIED ELECTRICAL 675 G. Puyat St., Quiapo, Manila 733-1777

DEE HWA LIONG ELECTRONICS EQUIPMENT CORPORATION (DEECO) 605-607 Sales St., Sta. Cruz, MNL p: (02) 733.1749 f: (02) 733.1756

WATSONS ELECTRONICS 533 F. Torres, Sta Cruz, Manila 733-0032