Business Plan - BCPNP - British Columbia

Business Plan

This document has been prepared as part of the requirements to immigrate to British Columbia and will serve as the Business Plan for a business that Mr. XXXXX, an applicant for immigration under the BC Entrepreneur Program, will undertake upon his arrival in BC.

Introduction

XXXXX will be a limited liability company to be registered in Cranbrook town of the Regional District of East Kootenay in the Province of British Columbia in Canada. The Company will be involved in the business of transportation and logistics.

Products and Services

The Company will provide a wide range of services within the transportation and logistics industry like:

 Contract Transportation  Freight Shipping

 Heavy Haul Trucking  Scrap metal trucking

 Dry Van Trucking  Automobile Transportation

 Flat Deck Trucking  Customized Transportation

Key Success Factors

The Company has identified a few factors that are critical for the success of the business. These are:

 Understanding government policies and their implications: It is important for business in this industry to understand the changing customs tariffs and schedules.

 Successful industrial relations policy: Industry operators need to maintain good relationships with both industrial customers and transport firms.

 Optimum capacity utilisation: Businesses in this industry profit by buying bulk space on transport vessels and vehicles, and then consolidating goods from customers to maximise the return on that space. Operational experience, especially in the loading and use of vehicles and equipment, will increase efficiency and output.

 Market research and understanding: Companies in the industry must understand market segments and client needs to deliver strong customer service. Industry participants need to combine their knowledge of market prices and industry regulation to achieve the best outcomes for customers.

 Access to quality personnel management: Good personnel management is essential in retaining key operating personnel, including experienced drivers, who have recently become a scarce commodity.

 Ability to quickly adopt new technology: Clients are increasingly seeking forwarders with strong information technologies for tracking and monitoring purposes.

 Having contacts within key markets: Owner-operators should establish strategic links between themselves and freight forwarders to ensure a steady flow of work.

 Superior financial management and debt management: Tight financial control over costs and revenue, especially debt collection and overhead, is important to plan cash flows.

 Having a high profile in the market: Margins are small and thus large sales volumes are crucial for success.

 Ensuring pricing policy is appropriate: Effective cost management through pricing policy, such as the implementation of fuel surcharges, can help bolster profit margins.

 Output is sold under contract – incorporate long-term sales contracts: Due to strong competition in the sector, long-term contracts are advisable. If a client is tied to a distribution system that commits them to the operator’s facilities, it makes it difficult and costly for the client to transfer to a competitor.

Potential for Commercial Viability

A few factors that plays an important role in deciding the viability of a transportation business and the potential for commercial viability of XXXXX based on its ability to address each of the factors, is as given below:

 Location and Geographic Coverage of the Business: British Columbia is Canada’s Pacific Gateway, the preferred gateway for Asian trade to North America and the world. Transportation is a key support for economic growth and development.

Cranbrook is an important transportation hub due to its close proximity to the borders of Alberta and the United States. The town is also at the junction of three major highways and has the major Canadian Pacific Railway yard, which serves as a key gateway for trains arriving from and departing to the United States. Hence, Cranbrook is the apt location for this business.

 Demand for such services in the region covered: Cranbrook is a central point between many origins and destinations. The majority of the cargo travels in a north – south orientation. The cargo carried in and out of and through Cranbrook is very diverse.

This locational advantage and intermodal infrastructure –i.e. road, rail and airport create an opportunity to make the City an attractive place for collection & distribution of goods and services of various industries –i.e. intermodal hub leading to a huge demand for the services to be provided for XXXXX, in the region.

 Cost of inputs to the business: The primary input to this industry is fuel. Fluctuation in fuel price is not under the control of businesses in this industry and affects the profits of businesses in this industry. The Company will adopt various cost reduction and freight management strategies to balance out the increase in fuel costs, by absorbing the same, or transferring it to service seekers through price hike for services provided. Since, the fuel price hike will affect all businesses in this industry, which are mostly small-to-medium sized businesses; the company’s price hike will be a replica of the industry reaction to the same.

 Industry Growth: The Canadian transportation services industry grew by 3.7% in 2017 to reach a value of $43,091 million, according to MarketLine. Road is the largest segment of the transportation services industry in Canada, accounting for 71.8% of the industry's total value.

 Competitors in the region: Road transport has the lowest entry barriers, especially for small businesses: it is possible to enter as a self-employed owner-driver of a single truck. Regulation typically covers matters such as driving ability working hours, vehicle roadworthiness, insurance, etc. However, these are not much more onerous than the kind of rules that a private car driver must obey. Large incumbents have competitive strengths such as multinational reach (a network of offices and pick-up points in many countries, for example), brand/reputation strength, and the ability to offer more complex and integrated logistics services. Leading players in the road transport segment include Mullen Group and FedEx, which have strong financial muscle and reputable brands. However, anyone who can afford a second-hand truck can enter the segment as a sole-proprietor business.

The company’s main competitive advantages are:

o Transparencyintransit

o Customizedservices

o Penetrativepricing

o InnovativeTechnology

XXXXX will have a competitive edge over the above companies since it will bring in the knowledge and experience of Mr. XXXXX who is well versed in this business line.

 Industry related knowledge, skills and experience of the owner: Mr. XXXXX has ample experience in managing logistics operations with a two-decade career in the field. His core competencies range from Strategic Planning to MIS, Brand Building, Product Promotion and Route Planning.

 Availability of skilled labour in the sector: British Columbia is known for its transport sector and Cranbrook is an important transportation hub. Hence, people looking for jobs in this sector head to this region, thus creating ample supply of skilled labour in this region for the transport industry.

 Availability of funds for the business: Mr. XXXXX will bring in CAD 500,000 as equity capital to fund the initial costs of the business. These funds are adequate to fund the initial costs of the business and start generating revenue to take care of the ongoing business expenses.

 Financial feasibility of the business: As reflected in the projected financial statements in the appendix, the business is financially feasible. The business reflects a revenue growth at a compound annual growth rate (CAGR) of 40% and a positive Net Present Value (NPV) of CAD 627,991. This reflects that the business is financially feasible.

Owner’s Qualifications, Skills and Experience

XXXXX will be the 100% owner and a director of XXXXX. He has about two decades’ experience in logistics and transportation industry. He has experience in managing entire Logistics Operations including development of strategies, encompassing vendor identification, development and analytical assessment. He has expertise in Logistics, Operations, New Setups, Profit Centre Operations, Business Development, Budgeting, Route Management, Team Management, etc. He is also knowledgeable about the legal formalities in movement of material & formalities.

He has achieved outstanding success in Operations entailing Human Resource, Legal Administration, MIS, Supply Chain Management, etc. He is a keen planner with skills in monitoring core departmental deliverables for completion within established deadlines. He has demonstrated abilities in expanding the Market, Brand Building and generating New Business and targeting the potential customers. He is proficient in managing various process operations as per the set parameters & standards as well as experience of developing procedures for operational excellence.

His core competencies include Strategic Planning, Sales & Marketing, Operations Management, Customer Relationship Management, Business Development, Team Management, Vendor Development / Management, Fleet Management, Human Resource, Supply Chain Management, Logistics, Inventory Control, Finance & Accounts, Warehousing, Distribution Management, Business Development, Credit Control, MIS, Brand Building, Product Promotion and Route Planning.

XXXXX is a visionary. He is a dynamic, process oriented and result-minded executive noted as an Expert Manager and motivational leader bringing in a rare level business acumen and record of achievements developed over a 20-year career. He is currently associated with DRS Logistics Pvt. Limited as Head – Operations & Regional Head. He has a Bachelor of Arts degree from Delhi University and a Diploma in System Application from NIIT, Delhi. He is proficient in managing various process operations as per the set parameters & standards as well as experience of developing procedures for operational excellence.

Rationale Behind Considering this Business Opportunity

Mr. XXXXX has always had a vision around entrepreneurship and business development. The in-depth knowledge acquired throughout the career and long-standing experience in the transportation industry, accompanied by his vision of owning a business venture has led him to grab the opportunity coming in as the Canadian Government opens the doors of the country, encouraging immigrants and boosting Canada’s growth and development.

Proposed Location and Outlay

The Company will be registered in and do business from the city of Cranbrook, the transportation hub of the region. The management will lease premises of about 600 to 800 sq.ft in a prime location within the city to have maximum visibility and accessibility. The office will be simple and compact with just the basic furniture and equipment for the staff to work efficiently. The company will also ensure the property comes with a parking space for its vehicles.

Company and Ownership Structure

Mr. XXXXX will establish the transportation business and register the business as a Limited Liability Company in Cranbrook, British Columbia. The Company will be fully owned by Mr. XXXXX

Mr. XXXXX will bring in CAD 500,000 as initial investment in the form of equity. This being the transport business, vehicles are the primary costs for the business. These investments will fund the purchase of equipment and related expenses like fuel and repairs and maintenance. It will also fund other major costs like staff salaries, rent and utilities for a small office, marketing and admin etc. The funds will also be used to obtain licenses and permits, professional and legal costs to set-up the business.

Management Structure

Mr. XXXXX will be the sole owner and manager of the business. He will run the operations of the business with the help of skilled staff that he will recruit and train, once the company is established.

Owner’s role in the business

Mr. XXXXX will be the 100% owner of the business and will be responsible for the overall monitoring and growth of the business. He will be in charge of customer acquisition, networking within the industry and in the region, taking care of daily operations, recruitment of skilled employees and training them, and marketing. In this role he will be responsible for implementing the short and longterm business plans. He will be driving the business towards achievement of its goals.

His other job responsibilities will include Strategic planning, customer acquisition, financial management, marketing and networking.

Operations

Suppliers

The company’s suppliers include vehicle manufacturers like Daimler, Ford, Mercedez-Benz etc. who provide commercial trucks for sale through auto dealers in Cranbrook like P&R Truck Center, Dunlop Truck Centre, Cranbrook Dodge, Denham Ford Ltd., Sun Valley Nissan, Cranbrook Mitsubishi, Spring Honda, Northstar GM, Arrow Motors Volkwagen etc. Othe suppliers will include auto repair shops in Cranbrook like Cranbrook Auto Repair, Speedy Auto Service Cranbrook, EK Transmission and Auto Repair Ltd., McGibbon’s Auto & Truck Repair etc. Fuel stations in Cranbrook include Husky, Chevron, Esso, Petro-Canada, Fas Gas Plus, Shell, etc. Auto Part providers in Cranbrook include NAPA Auto Parts, Walmart Tire & Lube Express Centre, OK Tire, Integra Tire & Auto Centre etc.

Other providers include Staples Print & marketing services, Ulma Packaging, Carlton Packaging Solutions, etc.

Value Addition

The company will cater to the huge demand experienced by the region through its top-notch transportation services with integrated information technology solutions at an affordable and competitive pricing to the clients. The value addition to the country from this business would be:

 Employment positions for at least five staff members over the next three years

 Cumulative income taxes of C$370,000+ over the next five years

 Cumulative payroll taxes of more than C$124,000+ over the next five years

 Boost for the local and regional economy

 Revenue generation of C$5 million+ over the next five years, leading to increased economic activity in the locality and the region

Customers

The company’s customers will comprise of all those business enterprises and individuals in Cranbrook and surrounding areas, in need of transit of their goods across inter/intra boundaries.

Staffing

XXXXX will recruit the locals in the region since it benefits them as well as the business. By providing employment to the locals, the business contributes to the economy.

In the first year, the company will recruit three drivers who are well-informed about traffic rules, have prior experience in truck driving and handling heavy carriage as well as one staff with basic communication, order management, receivables management and paperwork, to look after the

general administrative tasks. It will recruit one additional driver each in Year 4 and Year 5, to meet the increase in the scale of operation.

Market Analysis and Risk Management

Market Analysis

The Canadian transportation services industry group had total revenues of $43.1bn in 2017, representing a compound annual growth rate (CAGR) of 1.2% between 2013 and 2017.

The Canadian industry’s performance has mirrored growth in the wider Canadian economy. The road segment was the industry group’s most lucrative in 2017, with total revenues of $30.9bn, equivalent to 71.8% of the industry group's overall value.

The Canadian export market is heavily reliant on the US, which receives over three quarters (76%) of its exports. Therefore, it is unsurprising to see that a very similar proportion of Canadian freight movement is done by road and rail.

Stable and healthy real GDP growth rates are predicted for Canada in the coming years which will impact the country’s transportation service industry positively. However, it is important to note that a potential US pull-out from the North American Free Trade Organization (NAFTA) could have serious negative implications, although it remains to be seen whether this will happen or not. In June 2018, President Trump announced steel and aluminium tariffs on Canada and in response President Trudeau has since imposed retaliatory tariffs on $12.8 billion worth of US goods. As the trade war continues to escalate, increased tensions could prove damaging to the transportation services industry due to the US being Canada’s biggest trading partner.

In 2018, growth is likely to ease but remain robust, as government spending growth tapers off. With leading Canadian exports including crude oil, natural gas, coal, and gold, recovering, prices for some of these industries should stimulate the transportation services industry.

Like many other industries, transportation services will become increasingly affected by the forces of digitization. The growth of e-commerce could also make scale a more important feature in the industry, as supply-chain requirements become more extensive. This could prove lucrative for large carriers but could place small/medium size carriers at a disadvantage, potentially leading to increased merger and acquisition activity.

Target Segment: The target market for the transport business could be from business in the automotive industry, housing and construction industry, manufacturing industry, consumer products industry, food and beverage industry, retail industry, paper products industry etc. Due to the importance of transportation services for their users there are numerous potential buyers in this region.

Positioning Strategy: Across all types of transportation services, price levels have fallen since mid2014. The company will adopt a price-quality approach in its attempt to position itself in the market as a cost-effective service provider. It will provide a holistic transport service at the best market price to build a brand around its service. To achieve the same and to remain profitable at the same time, the company will keep the costs low by adopting a lean business model.

Pricing Strategy: The company will initially adopt a penetrative pricing strategy without compromise on the quality of services provided; to gain entry into the market. As the company grows, it will adopt competitive pricing to increase its profit margins.

Promotional Strategy: The company will have a content rich website, be active on all social media sites and ensure they are al search engine optimised. The Company will advertise through radio and print and create word-of-mouth publicity in the region which is the most trusted source of getting business.

Competitive Analysis: The following are a few of the trucking and transport companies in the region which are a competition to XXXXX:

• Fox’s Transport

• Main road East Kootenay Contracting LP

• Sunrise Transport Ltd.

• Manitoulin Transport

The company’s main competitive advantages include transparency in transit, customized services, penetrative pricing, innovative technology etc.

SWOT

Strengths

 Experience and knowledge of the owner

 Increased demand for transportation services

Opportunities

 Expansion of scale of operation

 Geographical expansion

Risk Management

Weaknesses

 Increased supplier power arising from shortage of labor

 New entrant in the market

Threats

 Competition from established players

 Economic downturn

Mr. XXXXX will come up with a risk mitigation strategy based on his experience, inputs from the locals as well as advice from experts in the field. A few of the risks and mitigation strategies are as below:

Potential Risk Risk Mitigation Strategy

New to the market

The company will ensure that through its marketing and promotions, awareness is created about the company, its brand and the services it provides. The management will also network within the industry extensively to establish contacts and get referrals. The company will adopt a penetrative pricing strategy to beat competition and penetrate the transportation and trucking market in the region.

Inappropriate location

The company will do a thorough research of the localities to select the most apt location for the company’s office. In the selection process, criteria like population demographics, proximity to key customers and competitors, proximity to allied businesses and services, visibility of the office, space for fleet parking, warehouse availability to prospective customers, image and history of the locality, zoning restrictions, building infrastructure etc. will be considered.

Fleet Safety

The company will adopt best practices to ensure fleet safety. It will improve vehicle maintenance process, train employees in defensive driving, monitor driver behaviour, create safety incentive programs, start and continue the safety conversation etc.

Fuel cost increases

Risk from existing competition

The company will absorb the fuel cost increases if possible and pass it on especially in cases like customized transportation etc.

Providing top-quality service as well as providing customization options.

Accidents and Illness of staff

The working conditions for staff will be safe, healthy and hygienic. The drivers will be trained in defensive driving and safety etc.

Governing Laws, Regulations and Licensing

Provincial governments determine most of the operating conditions and the regulatory economic environment for intra-provincial carriers, example, driver qualifications, fuel taxes, vehicle weights, vehicle dimensions, rules of the road, vehicle inspection, securement of loads, vehicle licensing and mandated safety equipment.

The Canadian trucking industry operates in the US as well as in Canada. Canadian carriers operating in the trans-border movement of goods must adhere to both Canadian and American customs requirements and transportation regulations. This necessitates adjustments of federal policy to maintain equitable trade. In Canada, the Canadian Trucking Alliance monitors federal regulations and lobbies the federal government to maintain a level playing field for the industry between the 2 countries.

In an increasingly competitive market, many carriers have restructured to focus on core competencies and price reduction. Carriers are establishing integrated networks and eliminating regional operations and facilities. Overall, business relationships are dominated by strategic alliances and partnerships among shippers and carriers.

It is estimated that 70% of manufactured goods moving between Canada and the US are carried by truck. Canadian carriers engaging in this international movement must, among other requirements, apply for US authorization and satisfy the requirements of both US and Canadian customs regulations.

Appendices

Appendix 1: Investment Break-down

Mr. XXXXX will bring in CAD 500,000 as initial investment in the form of equity. This being the transport business, vehicles are the primary costs for the business. These investments will fund the purchase of equipment and related expenses like fuel and repairs and maintenance. It will also fund other major costs like staff salaries, rent and utilities for a small office, marketing and admin etc. The funds will also be used to obtain licenses and permits, professional and legal costs to set-up the business.

This is the optimum investment amount since vehicle cost is the primary cost to be funded initially. The company will start with a minimum number of vehicles and acquire more from the revenues generated over the months.

The initial investment will be made within the first six months of incorporating the company to ensure the business starts generating revenues at the earliest.

Appendix 2: Proforma Financials

Projected Income Statement

Key Assumptions

 Revenue is assumed to grow at about 25% and 35% in year 2 and year 3 respectively.

 Fuel, the primary cost of services is assumed to be about 27% of revenues which is also the industry average

 Other expenses are assumed to grow at 5% per year

 Ongoing Marketing costs are assumed to be 10% of revenues.

 Depreciation has been given on vehicles and equipment for a 10-year period with additions assumed in year 3.

 Payroll taxes are 9.6% of manpower costs.

Synopsis

Visionary, Dynamic, Process Oriented and Result-minded executive noted as an Expert Manager and motivational leader bringing in a rare level business acumen and record of achievements developed over 20 years career. Currently associated with DRS Logistics Pvt. Limited as Head – Operations. & Regional Head

Growth and mission-focussed; expert knowledge in Logistics, Operations, New Setups, Profit Centre Operations, Business Development, Budgeting, Route Management, Team Management, etc. Outstanding success in Operations entailing Human Resource, Legal Administration, MIS, Supply Chain Management, etc. A keen planner with skills in monitoring core departmental deliverables for completion within established deadlines. Demonstrated abilities in expanding the Market, Brand Building and generating New Business and targeting the potential customers. Proficient in managing various process operations as per the set parameters & standards as well as experience of developing procedures for operational excellence.

Possess in-depth knowledge of Central & State Government Rules & Regulations regarding movement of material & formalities. Experience in managing entire Logistics Operations including development of strategies, encompassing vendor identification, development and analytical assessment. Excellent Interpersonal, Communication and Organizational Skills with proven abilities in Team Management, Customer Relationship Management and Planning.

Core Competencies

 Business Development

 Sales & Marketing

 Customer Relationship Management

 Fleet management

 Supply Chain Management

 Human Resource

 Warehousing

 Finance & Accounts

 MIS

 Product Promotion

 Strategic Planning

 Operations Management

 Vendor Development/ Management

 Team Management

 Distribution Management

 Inventory Control

 Logistics

 Credit Control

 Brand Building

 Route Planning

Appendix 3: Owner’s Resume

Organizational Highlights

Since Sep ‘05 XXXXX

Role

Head – Operations (ReportingtoCMD)

 Ensuring enhancement in per month kilometre running of company vehicles, generating operational MIS and interfacing with the drivers on regular basis.

 Conceptualising driver incentive programs and fleet schedule of services for all areas of Fleet Management; conducting analysis of operation cost Vs booking cost.

 Controlling Trans Shipment, Delivery, Traffic and POD; verifying & maintaining the Godowns.

 Developing & sustaining cordial relations with the vendors.

Accomplishments

Effectively acted as a Natural Facilitator & Integrator between the needs of clients & operations wings of the company.

Oct ’03 – Aug ‘05 XXXXX

Role

Head – Marketing & Networking (ReportingtoMD)

 Formulating & implementing strategies to achieve sales & operational target.

 Handling the process of Brand Building, Product Promotion, Vendor Development and Route Scheduling by optimizing Load Factors & Vehicle Availability.

 Imparting sales training for Logistics & Express Developments; administrating hub / branch operations as well as in city / intra city operations.

Accomplishments

 Played an imperative role in developing the following:

o Logistics Module for Maruti & Hindustan Motors.

o Effective Supply Chain Management System and Backward Logistics Management for various MNCs in Automobile and Durable Segment.

 Skilfully reduced claims, damages, misplace, misrouting and enhanced customer satisfaction.

 Successfully computerized the operations in order to decline the reaction time, enhance billing and vendor payment.

Oct ’01 – Oct ‘03

Role

N.E.C.C Logistics Ltd.

Corporate Manager

 Supervising all key factors of all the regions on daily, fortnightly & monthly basis; monitoring daily MIS & DIS Report.

 Developing budgets for all heads like Operation, Manpower, Communication, Brand Building, etc.

 Managing an array of operations including Vendor Development, Route Planning, Networking, Opening new offices, Business Planning and Franchisee Development

Accomplishments

 Acknowledged for developing the following:

o Milk Run Routes for corporate customers.

o National & Feeder Route throughout India.

o Hub and Spoke Setup keeping Delhi, Bangalore, Pune and Jamshedpur as Hubs.

o Feeder and Nation Routes all over the country.

 Successfully attached over 100 containers on all Feeder and National Routes.

 Proficiently made channel partners all across the country for deliveries at smaller locations as well as developed a huge Network with over 1000-delivery location.

Feb ’00 – Sep ‘01 OM Logistics Ltd.

Assistant General Manager (ReportingtoMD)

Role

 Monitoring over all operations including Deliveries, Pick Up and Hub Operations.

 Ensuring proper supervision of the following:

o Effective operation of Just In Time and Direct on Line Supplies.

o Stock Reports and other related reports to customers.

o Milk Run.

 Handling the activities of Vendor Development, Route Planning and Fleet Management.

Accomplishments

 Deftly led the entire Express Division and controlled the Credit Control Department.

 Pivotal in developing an effective DIS and MIS System.

 Efficiently handling the routing & scheduling of 40 vehicles (average) per day across the country.

Previous Assignments

Mar ’93 – Jan ‘00 Airfreights Limited Operations Executive Nov ’91 – Feb ‘93 Blaze Flash Courier P Ltd. Operator Supervisor

Academic Credentials

 Bachelor of Arts from Delhi University in 1989.

 12th from School Bhartiya Vidya Bhavan, New Delhi in 1986.

 10th from School Bharti Vidya Bhawan, New Delhi in 1984.

 Diploma in Multi Transportation & Logistics Management conducted by India Railways

IT Skills

Diploma in System Application from NIIT, Delhi

Personal Details

Date of Birth : XXXXX

Appendix 4: Purchase of an Existing Business

Not Applicable

Appendix 5: Other documentation

Cost Analysis

The primary costs of businesses in this industry are fuel to run the vehicles and repairs and maintenance for the vehicles. According to market research firm IBISWorld, industry costs are about 27%. The average fuel and repairs and maintenance costs for a five-year projected period for the business reflects the same. Another major cost includes manpower. Industry benchmark reflects 28% of the revenue as manpower costs. The business has projected these costs to average about 46% due to the need to recruit skilled manpower and pay a premium for the same.

Rent and utilities which are about 7% of the revenues, have been projected to average at 17% of the same. The company will look to acquire a prominent location with ample parking for the vehicles, hence the premium.

Marketing is also a meagre 1.1% of revenues, whereas the business reflects average marketing costs of about 17% to promote the entity and get more business.

Other costs include professional & legal, insurance and licenses, payroll taxes, administration costs etc. These are about 21% of revenues and have been projected at the same rate. Depreciation has been assumed to be about 7% on a conservative principle and the industry average is about 5.40%.

Overall, the business reflects costs on a conservative basis with a premium on rent and marketing to create awareness about the services, gain more business and capture a market share.

Return on Investment (ROI)

The ROI for Year 1 is 6% and the average ROI for 5 years is 45% as reflected in the table below.