We would like to acknowledge the input, assistance and guidance provided by those who helped complete this report. Thank you to Universiti Tunku Abdul Rahman, for directly and indirectly pushing us to pursue a more independent course of action for the research of this final year project. With UTAR's assistance, or lack thereof, we were able to successfully complete all tasks and assignments necessary to complete this project.
Nurliyani Maludin, the coordinator of this report, for her efforts in uploading all the necessary materials for the successful completion and submission of this report.
EXECUTIVE SUMMARY
- The Opportunity
- The Description of the Business
- Competitive Advantage
- The Target Market
- The Management Team
- Brief Summary of Financial Projection
- Description of What the Business Needs
- Exit Strategy for Investors
Since SHARE is a platform accessible to the general public, the service is intended to be used by the general mass. However, our primary target audience will revolve around these 3 groups due to the potential of service adoption by individuals in these consumer groups. Lim is responsible for marketing and branding, while Mr Chong will handle public relations and customer service of the business.
As such, shares will be distributed based on the proportion of the investment in relation to the total investment of all 3 founders.
THE BUSINESS
The Description of the Business .1 Business Name, Logo and Location
The platform allows individuals to rent items and equipment from others at a low cost, while equipment owners can lease and rent their items to users in exchange for rental income. For example, items such as coffee machines, fur coats, camping equipment, camera tripod, musical instruments, etc. can be listed on the platform for others to rent. SHARE aims to reduce unnecessary waste and expenditure while fostering the culture of sharing among the local community.
The Opportunity .1 The Problem
Most Malaysians have a basic knowledge of environmental conservation and also have a mostly positive attitude towards green living. According to Rahim, Zukni & Fauziah (2012), Malaysian youths also show a positive attitude towards green campaigns and have some understanding of the term "green living", but the actual number of people practicing "green living" is relatively low. By renting instead of buying, users can save their hard-earned money and put it to better use.
In addition, owners can also earn a steady side income by renting out their goods, making full use of their goods and assets.
Competitive Advantage .1 The Business Model
In business terms, sustainable competitive advantages often refer to the assets, attributes or capabilities of an organization or company that are difficult for potential competitors to duplicate and imitate. As such, companies in the service industry need to differentiate themselves in other intangible ways. SHARE creates a sustainable competitive advantage by establishing a recognizable brand that is credible, reliable and reputable with consumers.
In the service industry, platforms like SHARE can create a strong and sustainable competitive advantage through growth and expansion of the user base.
INDUSTRY ANALYSIS
Industry Description
This represents the number of people most likely to use the platform in the Klang Valley region. This illustrates the widespread adoption of smartphones and mobile internet in the country. The concept of the sharing economy began in 2000 with the founding of Zipcar.
This therefore results in the remaining amount as profit, excluding other forms of income from insurance, advertising and logistics services.
MARKETING PLAN
Service Feasibility Analysis
Downloading and using the application is free and users do not have to pay to use the platform to perform their rental. However, SHARE does charge a transaction fee of 10% to both the owner and the tenant of the total amount of the transaction. The fee is charged in addition to the rental fee, which is paid by the tenant and also deducted before the payment of the remaining rent is made to the Owner. As a renter, you agree to pay the amount posted or accepted by the owner of the item you wish to rent, which includes the 10% transaction fee charged by SHARE for the use of the Platform.
This ensures that the cost of the platform is shared equally by both participating parties.
Channel of Distribution
Advertising and Promotion
An official Twitter account will also be created to provide the company with a channel to make statements to external parties. The presence of SHARE on major platforms like these will help the company strengthen its presence on the Internet while allowing users and customers to connect and engage with the company. As a completely online-based service, SHARE does not have a brick and mortar presence, but on-site marketing campaigns are still crucial and necessary in the company's advertising and promotional plans.
In addition, the presence of SHARE in important conventions and events also helps the company to attract talent to join the company.
OPERATION PLAN
Method of Service Delivery
Availability of Qualified Labour Pool
Customer Support
All questions and emails will be answered by the company's customer service representative within 24 hours. Should a more direct contact channel become necessary, the company may choose to contact customers by telephone to expedite communication efforts.
MANAGEMENT TEAM
Key Professional Service Providers
As a technology startup, SHARE needs various service providers in key aspects such as legislation and finance of the business. The chart below indicates the service providers required for the establishment and operation of the business, in addition to their function and purpose in the organization. Draft contract agreements, oversee and advise on legal matters relating to the regulatory aspects of the business.
COMPANY STRUCTURE, INTELLECTUAL PROPERTY AND OWNERSHIP
Organizational Chart
As a customer support manager, he has to manage the various user issues and conflicts that can arise from the rental process on the platform. Chong will work with the operations department to resolve customer issues such as payment errors, damaged items and lost goods. He must anticipate user requirements and implement new strategies and solutions to meet expected requirements and needs.
Last but not least, the Marketing Manager will be responsible for the strategic advertising and promotion strategies while monitoring the effectiveness of current marketing campaigns of the company. Lim will be expected to plan and implement new marketing campaigns and ideas for SHARE while managing and developing the brand image of the company. He is expected to develop and track relevant KPIs to measure the impact and effectiveness of the various marketing campaigns of the company.
Legal Structure
Disadvantages of the LLP form legal structure include its inability to convert into a private limited entity. If the SHARE partners decide to convert the firm into a private limited company, they are required to dissolve the existing LLP before registering for Private Limited certification instead. However, due to the nature of the business, as well as the benefits and advantages of the type of economic entity, the Limited Liability Partnership (LLP) is still considered the legal structure that is most suitable for SHARE in the beginning.
SHARE will be established as a Limited Liability Partnership, therefore the management team will contribute seed capital in exchange for ownership of the company. Since the initial capital required is RM100,000, there is no need for additional external funding to establish the business.
FINANCIAL PLAN
- Capital Requirements for the Next 3 Years
- Overview of Financial Projection
- Pro Forma Income Statement
- Cash Flow Projection
- Pro Forma Balance Sheet
- Payback and Exit Strategy
SHARE's revenue is estimated based on the potential user base from the company's target market. The advertising and promotional budget for SHARE will be allocated at the beginning of the fiscal year and as such, the marketing budget will not be tied to the company's annual revenue. As such, there will be no monthly fees for utilities and internet as they are included as part of the office space rent.
The salary of the management team will be paid at the rate of RM2,700 for each staff, with an increase of RM200 every year. After conducting a study on the value of items that people are likely to rent in their daily lives, it was found that the average rent for various items is around RM50. There will also be an annual fee of RM400 for hosting a mobile app on Apple App Store and a one-time fee of RM100 for hosting an app on Google Play.
The development of the application itself costs RM50,000, which includes both the iOS and Android versions of SHARE. The financial projection is calculated conservatively, with most expenses being at the higher end of the spectrum, while revenues are at the lower end of the spectrum. This leaves room for errors of judgment and for unexpected costs that may arise during the course of business.
In the case of SHARE, all three investors are also founders and owners of the company. As such, dissolution of the company can be used as an exit strategy if necessary.
CRITICAL RISK FACTORS
- Management Risks
- Marketing Risks
- Operating Risks
- Financial Risks
- Intellectual Property Infringement
- Other Risks as Appropriate
- Contingency Plans
Any interruption in the network of the supporting systems can critically paralyze the proper operation of the application. Hacking incidents can lead to the loss of user data, as well as the violation of the user's trust in the reliability of the platform. Inexperience and incompetence of the founding team can potentially lead to improperly allocated funds, which causes cash flow problems in the firm.
An error in judgment may also result in the company's estimated expenditure being under/overestimated. However, since the company is run by 3 different individuals, there is a risk that the ethical standards of the members of the management team are not aligned. Misconduct by the management team can lead to mismanagement and misuse of company resources.
However, in the event of political unrest or war, the normal operation of the platform may be disrupted. Management risks can be minimized by ensuring proper communication between all members of the management team at all stages of decision-making. This allows all individuals to be well informed about the direction and direction of the company.
In addition, prior consultation with external experts and/or investors before making decisions will also help the company overcome the inexperience of the management team. Cash flow issues can arise due to the inexperience and incompetence of the management team.
APPENDICES
