Executive Summary
The purpose of this report is to ascertain the feasibility of setting up a business of portable rental halls. The owner is based is the UAE, an oil rich nation. Due to the increase in population and the simultaneous demand for function halls, it has become very difficult for people to find a suitable hall on their preferred dates. Moreover, the existing halls are very expensive and there are people/families who cannot afford them. So they opt for tents to be erected in the vicinity of their homes. But these tents are very risky because they may catch fire. All such facts and the increase in the birth rate and marriages gave us the idea of venturing into this field.
Mr. X will be the sole owner of the business and will be assisted by a qualified and experienced team of people. There will be two main departments – the operations department and the administrative department. Mr. X will be in direct control of these departments and the managers of these departments will report to him on a daily basis.
The existing function halls are very costly and the disadvantage for people is that in cases where they have to cancel the bookings, the advance amount is not returned. These function halls are not portable. There are some companies that have ventured into the portable rental hall field but their business is somewhat different. And even if they are of the similar kind, their head offices are situated in some foreign country; so they have a certain lead time.
Our target market will be corporate houses and the event management companies. We will try to affiliate with them and convince them to divert business to our company. But above all, we depend on mouth publicity through our patrons. There are certain risks involved in this business but we have already planned the strategy to overcome them – the risks and the strategy are explained in the report. In order to have hand-on data, we conducted a survey in which 200 people took part. The results of the survey are in the report and they are very encouraging.
The report includes financial reports such as funds, breakeven, return on investment, and cash flow statement. The total investment required for this business is AED 1,048,000 out of which Mr. X plans to invest AED 248,000 and the balance will be arranged as loan from banks. Mr. X believes that the growth rate will be very encouraging. Following are some of the projected financial aspects:
*Earnings before interest, taxes, depreciation, and amortization.
The projections show that the expected returns are very encouraging. Though there are some risks associated with this business, we shall mitigate them (as explained in the report).
Business Plan Report
Introduction
Explanation of the report contents
This report is about our proposed venture of portable rental halls. It contains the idea of our business with its characteristics and the USP. The goals and objectives are also explained in detail. The report includes the SWOT and PESTEL analysis that are a must for any business. A market survey with result shows that the proposed business has a bright future. A marketing plan with details of product positioning, pricing, and promotion strategy is also included. The financial figures and statements are included at the end of the report.
Details of the company and business goals
Business idea and description
When it comes to organizing a marriage party, funeral, birthday bash, get-together, educational lecture, conference, trade show, or any such programs, the first thing that comes to mind is a banquet hall. With the increase in population such functions or programs have also increased and so has the need for banquet halls. The type of banquet hall has a great role to play in the success of any particular function or program. It’s a typical human mentality to know where the function (in which banquet hall?) is being held before a decision is made whether to attend it or not.
Nowadays a lot many things are considered while booking a banquet hall like the location, approach, space availability, and above all the safety & security aspect. Moreover, during the festive season or days like the New Year there is a shortage of banquet halls since there are not many of them in the city. So the only option left with people (who don’t get to book a banquet hall) is either to organize the function at their homes or to fix a tent in the nearby locality. The problem with organizing functions at home is that the space is limited as is the seating arrangement. With tents, the problem is that they are not safe. There have been instances in the past where, due to lack of proper safety measures, there have been incidents of fire, as a result of which many guests were killed.
Another issue with the customary banquet halls is that once any booking is made, it cannot be cancelled. The reason given by the banquet hall management is that since the hall was booked on a specific date they did not entertain other bookings for the same date. People have to lose a lot of money in such circumstances.
The rental aspect is also worth mentioning here. Nowadays, renting a banquet hall for one night would cost around 35 to 60 thousand UAE Dirham. Well, that’s a lot of money to part with and that too for a single night. Moreover, there are several conditions that the person renting the banquet hall has to agree on.
The usual banquet halls are situated at some designated places and cannot be moved. The layout of the hall is also predetermined like the place where the stage is erected or the sitting & dining areas. In every function, the banquet halls have a monotonous arrangement. So if any person has two or more functions (in the same banquet hall) on different days, there is nothing new as far as the interior is concerned.
What if there is a banquet hall where you can change the settings whenever and however you want? What if you can transport the complete banquet hall to your desired place? What if proper safety measures are employed in the banquet hall? The answer to these and many more questions is the concept of ‘Portable Rental Hall’. So this is how we got the idea of the portable rental halls.
Characteristics of product/service & Unique Selling Point (USP)
We are sure that this idea will definitely prove to be a great and profitable business venture for us. Though there are a few more players in this line, the quality of service offered by them is not up to the mark. According to our information they don’t have any safety measures within the halls.
In our portable rental halls we plan to have beautiful exterior and interior decoration. We will use the best of material that is fire retardant and easy to fix. We will have the option of changing the layout of the hall as per the patrons’ requirement. We plan to install all the safety measures required during times of emergencies such as fire-fighting equipment and immediate medical aid (first-aid). UAE being an Islamic nation, we will also provide ablution units (separate for men and women). There will be special chemical toilets so that there is no bad smell and pollution. We also have a provision for shower units. During functions, people ought to have some things that they would like to keep in safe custody. Keeping this in mind, we plan to have a separate storage room. The special feature that we plan for this room is that we will install an electronic lock with number key. The person hiring the hall will be able to change the code of the lock so that he/she is satisfied of the security of his/her valuables. There will also be a designated parking area. We also plan to have a generator for the lighting purpose. Instead of the usually available plastic chairs (in banquet halls), we plan to keep good cushioned chairs for all the guests. Keeping in mind the Islamic culture, we will have separate arrangement for males and females. The children will be able to enjoy our amusement center where we plan to keep a few slides, swings and toys. Separate rooms for the bride and the groom (in case of a marriage function) are also on our plan.
Taking into consideration of the privacy of our valued clients, we propose to host only one function per day in our portable halls. This will enable the clients to have a hassle free entry and exit at all times during that day.
It is understood that sometimes the clients don’t have any idea about the best layout for their function. To solve this problem we propose to hire a qualified architect to provide free consultancy to our patrons on the design and layout, depending on the requirement. This way, our patrons can be assured of having the best deal for the occasion.
Following are some of the services that we would offer:
Event management
We plan to hire an architect who will assist our patrons in deciding the layout of the hall as per their requirements. To lessen our patrons’ burden we will have an in-house catering service. Our patrons will not have to worry at all because we will make available everything that they need. From planning to execution, everything will be our responsibility.
Marriage function hall
For wedding functions we will have separate rooms for the bride and the groom where they may relax and be ready for the grand ceremony. We will also make arrangements for the decoration of the stage with flowers and other decoration material. We will also arrange for the entertainment of our patrons. Both male and female guests will be able to view the proceedings on giant screens in their respective areas. The opted music will be played and if required a DJ will also be arranged. Our cooks will cook tasty food for the guests. Best quality crockery will be available for serving purpose.
Trade shows
Trade shows are usually conducted in open areas where various cabins have to be erected for different stalls or cabins. We will have all the resources required for a trade show. Special tables and chairs will be arranged for each cabin. Proper lighting arrangements will be made in a manner that all the cabins have ample light. Requisite security arrangements will be made so that unwanted people don’t enter the hall. An enquiry counter will be available to answer the people’s queries.
Funeral program
Considering the sad environment during such a program, we plan to have white color as the theme of the hall. A separate area will be designated for those who want to offer their prayers.
Birthday parties
For birthday parties, we will arrange a special cake that will be complimentary. In addition to this, the hall will be decorated neatly and elegantly with balloons, ribbons, banners, paper lanterns, party lights, and other hanging decoration items. If required by our patrons, a DJ will also be arranged. A dance floor will be available within the hall where people may want to chill out.
Conference hall
We will have special arrangements for conferences as well. A special projector and a screen will be arranged. The chairs will be arranged in such a manner that the complete audience is able to see the screen. Proper arrangement will be made so that there is no sort of disturbance during the conference. The ordered food and beverages will be served during the conference.
Mission statement
Our mission statement would be:
“We shall attend to even the minutest detail with a compassionate proficiency and make it simple for our patrons to enjoy every moment of the celebrations.”
Goals and objectives
Following will be the goals of our company:
- To provide a safe and elegant venue for all sorts of functions
- To try and make every function a great success
- To pay maximum attention towards customer satisfaction
- To provide our patrons with the best and memorable experience
Following will be the objectives of our company:
- To foster affiliations with businesses in the country for their requirements of managing events
- To foster affiliations with the event management companies
- To develop an eye-catching, informative and impressive online website in order to promote our business
- To place our company details in all major business directories of the country
- To strive for excellence and carve a niche for our company in the coming years
Location
Due to the incessant increase in population the number of vehicles has also increased during the past couple of years. This has resulted in frequent traffic jams and consequent snarls. People want to reach the function venue at time and with a happy mind. But such traffic jams result in frustrations and people cannot enjoy the function. Another problem faced by the guests coming to the functions is that they find it very difficult to find a parking space.
Since our company will have portable rental halls, the location of the halls will depend on the patrons’ choice and requirement. Care will be taken that the approach to the venue is hassle-free. In addition to the approach, another factor that will be considered is that ample space for parking is available.
Form of business ownership
The business will be a sole proprietorship concern with Mr. X as the owner. By virtue of his experience and the requisite qualification, Mr. X will be able to earn profits for the company from the first year itself.
General operational resources (not costs)
In order to fulfill our goals and objectives we would require certain resources, both human and capital. Talking about the human resources, we would like to appoint a part time architect who will assist our patrons in designing the layout of the functions. In order to maintain the accounts, a fulltime accountant is a must. We plan to launch our own website through which we can promote our business. So a computer operator, who is well versed with the requisite software, will also be required. We don’t want to leave any stone unturned so we plan to appoint a couple of marketing guys who will be in touch with the various businesses and event management companies that organize events. We also plan to appoint two supervisors to take care of the in-house requirements. These supervisors will be responsible to cater to the needs of our patrons. In order to make the functions hassle free for our patrons, we plan to have a separate catering department. For this we would require some well experienced cooks. The requisite utensils and crockery will also have to be arranged. Then the seating arrangement; as mentioned earlier in the report, we plan to have good quality cushioned chairs for all the guests and some special chairs for the VIPs and some exclusive chairs for the bride and groom.
Since we want our patrons to be safe during the function, we plan to employ the requisite safety devices in the halls. Our halls being portable in nature, there might be times when availability of electricity might be doubtful. In order to avoid any power problems, we plan to have a generator set – procuring diesel will not be a problem. Other important resources that will be required are lighting fixtures, carpets, flower pots, decoration material, music system, etc.
As mentioned earlier in this report, we plan to have an amusement center for the children as well. So the proposed items like swing, slide, toys, etc, will have to be arranged. But above all, the main resource required will be the best quality material for erecting the hall. The material will be fire retardant. We will have the option of different colors of the material as well. Other structures required will be separate ablution units for males and females, separate toilets, showers, rooms for the bride and the groom, and a specialized and secure storage room.
Environmental analysis
Macro environmental analysis (SWOT & PESTEL analysis)
SWOT analysis
The word SWOT means:
‘S’ for strengths
‘W’ for weaknesses
‘O’ for opportunities
‘T’ for threats
Every business has its own strengths, weaknesses, opportunities, and threats. It is critical for all businesses to do a SWOT analysis before venturing into a new project or an existing project at a new location. It is up to the business’s acumen how it perceives them in the better interests of the company. Following is a SWOT analysis for portable rental halls:
Strengths
As we plan to employ proper security measures our halls will be safe and secure. The material of our halls will be fire retardant and in case of any emergency, proper firefighting equipment will be available. Security personnel will be there throughout the functions to maintain discipline and to avoid any untoward incident.
The existing rental/function halls are very costly. They charge anything between 35 and 60 thousand UAE Dirham for a single night. We don’t want to become millionaires overnight so we have kept the rentals to bare minimum (AED 10,000 per night).
As our rental halls will be portable, we will have the option of shifting it to wherever the customer wants (provided there is ample space and the requisite permission from the concerned government department is obtained).
Keeping in view the Islamic culture of UAE, we will have separate arrangement for men and women, be it the seating arrangement, praying area, dining area, toilets, or showers. The interior and exterior of the hall will also be according to the Islamic culture and architecture.
Since our halls are portable, our patrons will have the option of changing the layout according to their choice and requirement. Nothing extra will be charged for any sort of layout. An architect will be available to assist them in deciding the layout.
Our portable rental halls will be available for all sorts of functions and programs such as marriage function, birthday bash, funeral program, trade show, educational event, conference, etc. So throughout the year we expect to have one or the other function or program.
We will also have event management consultancy so that our patrons have everything under one roof. We will manage everything from start till the end. We will make use of the modern technology and everything in our hall from the material to the decoration will be of state of the art standard.
In order to give complete flexibility and freedom to our patrons, we plan to organize only one function in a day. This way, our patrons will have a free hand and space to organize their function. There will be no restrictions for them at entry and exit points for that particular day.
To further lessen the burden of our patrons we will have in-house catering that will be able to serve the ordered food and beverages. Keeping the Islamic culture in consideration, all non vegetarian food will be ‘halaal’. The serving staff will be polite and experienced.
Since this is our first venture, we all are highly motivated and want to carve a niche for ourselves in the field of rental halls. Our PR skills are excellent and we plan to connect with most of the companies and event management groups for affiliation. Our high spirits and enthusiasm clubbed with knowledge and experience will steer us towards great heights of success.
Weaknesses
Since this is a new concept, people are hesitant to accept it due to their own inhibitions. There is very less public awareness about this concept. So it will take some time to convince the people about the benefits of portable rental halls.
There are already many banquet halls in the country that have an established name. Their services are known to people and since they have been in the market for quite some time people have a sense of confidence in them. There are a few portable rental halls as well but as compared to the traditional banquet halls, the market share of the portable ones is very less.
As far as our company is concerned, we don’t have too many corporate contacts and the ones that we have are not enough to have bookings throughout the year. Though we have plans to increase our contact base, it will take some time. We have excellent staff with experience and PR skills.
Programs like conferences and educational events are okay but when it comes to marriage functions and birthday bashes, the worst thing is the cleaning that has to be done after the functions. There is a lot of labor involved in cleaning the complete hall and even the carpets have to be cleaned very often.
Opportunities
UAE is a financially stable country with a GDP of US$ 360 billion (in 2012). In terms of GDP, the UAE is in the second position in the Cooperation Council for Arab States of the Gulf (CCASG) – Saudi Arabia is at the first place. The per capita GDP of the UAE, according to 2012 statistics, is US$ 48,158. The 2012 statistics also suggest that that there is a growth of 4% in the UAE’s GDP. These figures make us understand that the people have the spending power and they can spend lavishly on special occasions.
Though there are several banquet/function halls in the country, most of them are either located in the heart of the city (where there are several traffic jams and parking is a problem) or at the outskirts (it is time consuming to reach there). Guests want to be in a happy mood when they reach the function hall but these traffic and parking problems drain out their energy and as a result they cannot enjoy the function. Our portable halls have the option of being erected in close proximity of the customers’ choice. This saves them a lot of time and unnecessary harassment.
Threats
The biggest hindrance in erecting the portable halls is obtaining permission from the concerned department. The UAE, unlike several developing countries, has very strict rules that have to be followed without any excuse. So if permission is denied, it is impossible to erect a hall at that place. We are not aware of the situations prevailing in any particular locality – only the concerned department knows about the situation. There are several reasons that the concerned department might site while denying permission. In such circumstances there has to be an option for change of site.
Every business has its competitors and portable rental hall is no exception. There are some companies that have already ventured in this field. These companies have an upper edge because they started first and have gained experience and know the tricks of the game. Some major ones are listed below:
- Al Laith Site Services, Dubai
- All Events Services, Dubai
- Byrne Equipment Rental LLC, Dubai
- EDS Middle East LLC, Dubai
- Event Marketing Solutions, Dubai
- FreeDomes Middle East, Dubai
Electricity has become a necessity in today’s life. Unfortunately, we cannot have access to electricity at all of our sites. There are times when we have to depend on our generator. It means that we have to bear the cost of transporting the generator to the site. Also, since a generator runs on diesel, we have to bear the cost of diesel as well. It proves to be a costly affair sometimes but we cannot ask for extra money from our patrons simply because we have to use the generator.
The UAE government has certain time limits in the night when we have to stop the functions. Sometimes it becomes very difficult to convince the customers to wind up their function. At times the customers feel offended and in such circumstances it is difficult to get the balance payment.
PESTEL analysis
The word PESTEL means:
‘P’ for political
‘E’ for economic
‘S’ for social
‘T’ for technological
‘E’ for environmental
‘L’ for legal
In addition to the SWOT analysis, the PESTEL analysis is also a must for new ventures. Unlike SWOT analysis, PESTEL analysis brings forth information about the external environment (factors) prevailing in any particular country. As we would agree the political, economic, social, technological, environmental, and legal factors have an impact on the businesses. All these factors keep on changing; this change depends on various factors such as change in the government policies, the government itself, change in global financial situation, cultural preferences, etc.). As such the PESTEL analysis should be carried out frequently in order to keep pace with the competitors and be in the race.
The UAE’s economy is probably one of the best in the western parts of Asia. By the year 2012, the country’s GDP had reached US$ 360 billion. With an annual growth rate of 4%, UAE’s GDP is expected to improve substantially over the next couple of years. The global recession of 2008-2009 had an impact on UAE’s economy as well. Most of its exports declined and most of the major construction projects came to a standstill. The country started recovering from the impact in 2011 and its going steady now.
Below is an explanation of various external factors that might have an impact on the businesses in the UAE:
Political factors
The UAE consists of 7 emirates and each one has its own government. There is one Supreme Council which has members from all the seven emirates. This Supreme Council is responsible for making the policies that govern all the seven emirates. The President of the UAE is also elected by the Supreme Council. The current President is His Highness Sheikh Khalifa bin Zayed Al Nahyan (he is the ruler of Abu Dhabi).
During the past couple of decades the country has made tremendous progress and is one of the major players in the political field. By virtue of their global insight, the Presidents of the UAE have been able to steer the country towards being tremendously developed and prosperous. Even though the country does not have a democratic form of government, the Presidents have been able to garner support of the masses in arriving at important decisions. The government has special provisions for expatriate workers in order to make it easy for local employers to employ them.
The country’s progress has helped its citizen in a great manner. Due to the massive expatriate community living and working in the country, the locals have become global as far as their insight is concerned. They have a broader perspective of life and living standards. Such factors are in favor of businesses, especially the service industry where people want services to have international standards.
Economic factors
The UAE is a Gulf nation that has natural resources such as oil and gas in abundance. If we talk about the financial performance of UAE, its GDP has increased substantially and statistics show that it is still growing at an annual growth rate of 4%. The credit goes to the finding of the natural resources way back in 1960. Today, UAE is considered to be one of the best places to live and also do business.
The country has a free economic policy and free trade zones as well. The UAE being an Islamic country, the laws are based on the Shariah. No business is allowed to do business that is against the Shariah. Sometimes it becomes tough to follow the strict rules. But overall the policies, rules and regulations have proved to be very beneficial for the public and businesses alike. It is safe to do business in the UAE because a person or a business will think ten times before cheating anyone. So the money is safe. When it comes to doing business in the UAE, the taxing system of the country is considered to be one of the best in the world.
The growing GDP has helped companies in expanding their businesses and increasing their respective turnovers. Our project can also benefit from this aspect. We hope to have a flourishing business in the coming years.
Social factors
Being an Islamic country, the UAE’s culture is Islamic. Though the main religion is Islam, people are free to practice any religion of their choice. There are certain restrictions that have to be followed by one and all. Women are given special rights and it is obligatory for everyone to respect them. The people of the UAE are liberal, open-minded, moderate, and have a global insight. They are ready to undertake challenges.
UAE’s breakthrough in oil and gas (in the year 1960) changed the economic and socio-economic scenario of the nation. The sudden discovery of oil posed a great challenge for the government because there was not enough local labor force to tackle the huge developments. Consequently, foreign labor force from developing countries had to be hired. As oil and gas brought revenue, other development works in various other fields also started and more expatriate labor force had to be hired. As years passed by, the expatriate labor force was literally all over the emirate, leaving very little scope for the local labor force. In the year 2009, unemployment (among the local population) in the UAE was at its highest, with reports of 40,000 nationals being without work.
The UAE follows the guidelines of its strategy of ‘Emiratisation’. The private sector companies in the UAE, which come under the purview of the Ministry of Labor, have stringent guidelines to employ local people up to certain levels. Until January 2011, such companies were required to maintain a specific number of local employees but now, a new resolution of the Labor Ministry is in force, which makes it mandatory for all private companies to hire at least 3% local people at the higher levels. This is seen as a major step taken by the UAE government to protect the interests of its citizens.
The UAE government has categorized the private companies into three segments, namely ‘First Class’, Second Class and ‘Third Class’. The criterion for this categorization is the level up to which a company adheres to the guidelines pertaining to the local labor force. As the category of a company decreases, the amount of government fee and the bank guarantee, to be given to the government, increases. Due to this provision, all the private companies try to be ‘First Class’. This has also benefitted the local labor force.
Another good thing that the UAE government has done for its local labor force is that they have been protected from undue dismissals from their jobs. Under this provision, the employers have to notify the Ministry 30 days in advance of the termination. If the Ministry decides that the termination is not viable, the company is given 15 days to find a solution to the issue. This again is a positive step in the better interests of the local labor force.
But in spite of these measures, the businesses have to hire expatriate workers for most of the work. The plus point is that expatriate workers don’t demand as much wages as the national workers. Also, since the expatriate workers are on annual or biannual contract basis there going on vacation in between is ruled out. So the work is not hampered.
Owing to the prevailing social structure and the labor laws, we are sure to have a great team (from diverse nationalities) so that we will be able to serve people from different nationalities as well.
Technological factors
The UAE is emerging as one of the leading countries in the world in information technology expenditures. The expansion in the information technology field is assisted by the vast telecommunication network that the country has. The role of transforming the country into an information and technology hub is entrusted to Information and Communication Technologies (ICT). The government aims at becoming one of the top five countries in the world having top ranking information and technology services. In order to make its citizens sustain the global competition in their professional lives, most of the educational institutions impart education in English medium.
The increase in the GDP has increased the living standards of the local populace. They have access to the internet; this is beneficial for the businesses that advertise online. Apart from the information technology the government is investing in the modernization of its infrastructure.
The availability of latest technology in various spheres of life makes it easier for businesses to conduct hassle-free business dealings. The educated local youths provide positive contribution to their employee companies. Advertisement is one of the main tools for promoting a business. The country has various advertisement mediums to choose from.
The development in technology and availability of the latest trends will help us in giving our business a grand look. We will be able to procure the best material for our halls. We will also be able to employ the best security systems and safety devices in our halls so that our patrons start building confidence in our services.
Environmental factors
Due to the international awareness about saving our environment, nations around the globe have formulated specific policies that discourage businesses to pollute the environment. In the UAE also there are strict guidelines for environmental protection. In order to promote eco-friendly products, taxes on such products that might harm the environment are more. So if a business wants to succeed in the UAE, it is very critical for it to be eco-friendly.
The Federal Environmental Authority (FEA) is responsible for formulating the laws pertaining to environment. The Ministry of Justice is responsible for ensuring the observance of these laws. There are strict penalties for non-compliance. Such penalties may be some fine or even imprisonment (depending on the severity of the offence).
Businesses where there might be an impact on the environment need to take special permission from the concerned department. A proper survey is done by the department before issuing the permission. It is obligatory for owners of such businesses to be totally aware of the guidelines and avoid any penalties.
There is a public awareness also about being eco-friendly and saving the environment. So when people know that our portable rental halls are eco-friendly, they will probably patronize us. At the same time, we will also get benefits from the government for being eco-friendly.
Legal factors
The legal factors are the ones that relate to the legal settings under which businesses have to conduct their business. There are some legal formalities that all businesses have to complete before starting any venture. Different kinds of businesses have different rules to follow. Ours being a service oriented business involving labor, we need to strictly follow the health and safety laws issued by the concerned department.
Though there are special courts to resolve business issues but disagreements in business are also resolved through arbitration centers that are situated throughout the country. The rise in the concept of arbitration is due to the increasing involvement of foreign companies in the country’s business transactions.
Results of market survey
For the purpose of conducting a market survey we made the following questionnaire that was given to 200 people between the age of 22 and 60.
Out of the 200 targeted people, only 185 were residents of the UAE so the remaining 15 people were ruled out from the survey. The results of the survey depict that the maximum number of people are in favor of the new concept. It is evident from the results that people are fed up with the customary function halls and want a change. The following chart depicts the results of the survey:
Online research data
Our business will mainly depend on functions like marriages and birthdays. Also, at the time of a child’s birth, it is a tradition to invite the relatives and friends and arrange a party for them. The following chart depicts the rise in child births in the emirate of Abu Dhabi. The chart shows that in 1975 the total number of child births was 6,854 and by the year 2011, it increased to 32,084.
Such functions depend a lot on the population of the surrounding area. If the population is more, the business will probably have a bright future. The following pyramid depicts the population till mid 2011 (Population and demography 2012).
The following table depicts the decade wise population, marriages and deaths in the UAE:
The following table depicts the estimated population of the UAE up to 2050 (The demographic profile of the United Arab Emirates 2009).
The figures show a steady increase in the population as well as marriages. This is an encouraging sign for our business.
Characteristics of target market. Description of process used to arrive at this information
Initially, the target market for our business would be the corporate houses and event management companies. Through these two groups we will try to tap the maximum possible customers. Gradually, as people start using our services we are sure the mouth publicity will work in the better interests of our business.
As far as the characteristics of the target market are concerned, the people of UAE like to have grand parties and invite friends and relatives. Even the corporate houses organize meetings and conferences in function houses. Considering the information mentioned under ‘online research’ the future of our business is bright. With the increase in population, the demand for our services is bound to increase.
We met many people with our survey questionnaire and the majority of the participants were in favor of the new concept of portable rental halls. The people use the services of the existing function halls because there is no other option. But if a better and economical option is available, they would definitely love to go for it. In addition to the survey, more information was acquired from the internet and the local media.
Competitor analysis of at least two major competitors
As mentioned earlier in this paper, there are a few more companies that have ventured into this field. In this paper we shall discuss about two of our competitors namely, Event Marketing Solutions and FreeDomes Middle East.
Event Marketing Solutions is a company based in Dubai, UAE. The company also deals in portable solutions for hospitality, product exhibition, training, etc. But the company mainly deals in road shows. Instead of having big halls, the company has huge trailers that are customized as per the requirement. Since we will have big halls with proper arrangements, we don’t have to be worry about this company. Though it is also a company dealing in providing portable space on rent but the space provided is small as compared to ours and is not suitable for big functions. Moreover, this company doesn’t provide services such as event management and in-house catering.
FreeDomes Middle East is again a company based in Dubai, UAE. It has collaboration with Septa Holding LLC (Saudi Arabia). The company offers rental space for organizing functions like marriages, trade events, corporate events, etc. But the drawback of this company is that since it has collaboration with a Saudi Company, the lead time is more. People have to wait in order to get the desired services. So they cannot organize urgent functions. Since our company is based in the UAE itself, we would not have any lead time and our customers will not have to wait in order to get the desired services.
Identification of at least 3 risk factors associated with running this business and how they would be mitigated
In my opinion, three of the main risk factors are as under:
- Getting permission from the concerned department
- Availability of electricity at various sites
- Transportation of the portable halls
The UAE has very strict rules when it comes to safety and security. So sometimes it becomes difficult to obtain the requisite permission due to various factors. In such circumstances, we will have to request the customer to opt for some other site for which getting permission won’t be an issue.
Another grave issue is the availability of electricity. It is quite possible that at some of the sites there won’t be any provision of getting electricity. To overcome such circumstances, we will have to keep a standby generator. But transporting the generator will be a big hassle as well as costly. Another cost that will be incurred is that of diesel.
Owing to the traffic regulations, transporting the portable halls to various locations will be of grave concern. In the UAE, big trucks and trailers are not allowed to pass through the city during some specific timing. This problem will be overcome by planning the shifting 2-3 days in advance and keeping in mind the restricted timing, we shall dispatch the rental hall.
Marketing plan
Product positioning
Product positioning is very crucial, especially during the launch of a new product. The fact is that the positioning of a product is the main deciding factor for a customer. Every customer has his/her own rationale while evaluating any product or service. Businesses will always talk good about their products or services but the customers have to be convinced in order to make them believe. And once they start favoring any product or service, it becomes very difficult to change their preference.
Keeping all these things in mind, we will have to build a strong reputation by giving state of the art services at economical rates. We will also have to spread the awareness about the benefits of portable rental halls. Arranging free site visits for expected customers will be in our favor. Above all, mouth publicity through our customers will be the greatest positioning factor for us.
Pricing strategy
As mentioned earlier, it is difficult to change the preference of people. But there are certain factors that can instigate people to think of a change. Better price for better products or services is one such factor that can prompt people to change their preference. We plan to keep the per night rental to the bare minimum. This will be a very reasonable rent which will not be available in any of the existing function halls.
Place/distribution strategy
Since our rental halls will be portable, there will not be any specific location. But we plan to open our main office in the main commercial area in the city with branch offices in major residential areas. This way we will be able to tap both the corporate customers and families.
Opening offices will not be enough to promote our business so we plan to do some advertisement through the local media, television, banners, and posters. We will also employ experienced and talented marketing executives who will visit the corporate clients.
Promotion strategy
We plan to promote our business mainly through the following channels:
- Corporate clients
- Event management companies
- Business directories
This will decrease the need to advertise through various channels. Once a relationship and mutual confidence is developed, these people will divert the business to our company. We also plan to have our company’s services listed in the leading business directories.
Organizational structure, HR plan & business operations
Organizational chart for the first year with summarized job descriptions
Senior Management: In addition to the initial setup and obtaining the requisite permissions and licenses, the senior management will be overlooking all the development works. The management will be directly in touch with the operations and administrative staff.
Operations Staff: The operation staff will be responsible for the workings of the business. It will be their responsibility to convince people and sell our services. Operations staff will also be responsible for the in-house working. This department will be headed by an Operations Manager.
Customer Service: The customer service executives will be responsible for the smooth functioning of all the required jobs during any function. They will also be responsible for making the customers feel comfortable and satisfied.
Facilities management: The facilities management will be directly responsible for all the in-house jobs (including procuring the required items, catering, customer service, etc.).
Administrative department: This department will be handles by an Administrative Manager who will be look after the complete administration of the business including accounts, sales & marketing and general administration.
Accounts department: An Accounts Manager will look after all the financial transactions of the business. He/she will also be responsible for renewals of permissions and licenses from time to time.
Sales & marketing: The marketing executives will be responsible for contacting corporate clients and event management companies and bring business. They will report to the Sales & Marketing Manager.
General Administration: This department will include the entire workforce responsible for the in-house activities.
Financial plan
Start-up costs
Following will be the startup costs for our business:
Following will be the source of funds:
Following is the return on investment:
Investment = AED 1,048,500
Net Profit = AED 1,824,000
Return on Investment = 1824000/1048500*100 = 173.96%
Break even analysis
In order to arrive at the breakeven point, we need to know the fixed and variable costs.
The price per unit (rental per night) and the number of units (number of days when the hall will be rented) are also required in order to calculate the breakeven point
Rental per night = AED 10,000
Number of days = 300 (We assume that our halls will be booked 25 days in a month)
The formula for breakeven point is:
(Fixed Costs / Price) – Variable Costs per unit
Let us first calculate the variable cost per unit:
Total number of rental days = 300
Total variable cost per unit = 6000 / 300 = 20
So variable cost per unit = 60000/0 = 0
Now we shall calculate the breakeven point:
(876000 / 10000) – 20 = 67.6 or say 68
It means that the breakeven point will be arrived at after 68 rental nights.
Cash flow statement for year 1
References
Population and demography 2012, Web.
The demographic profile of the United Arab Emirates 2009, Web.