Table of Content

4. Business Plan
4.1 Executive Summary
4.2 Company Description
4.2.1 Product Need/Opportunity recognition
4.2.2 Company overview
4.2.3 Mission statement
4.4.4 Vision statement
4.2.5 Organizational Structure
4.2.6 Roles and Responsibilities
4.3 Product Description
4.3.1 Products and services offering
4.3.2 Benefits of Precast homes
4.4 Entrepreneurial Assessment
4.4.1 Product definition
4.4.2 Competitive advantages from traditional construction
4.4.3 SWOT analysis of precast homes
4.4.4 SWOT analysis of Business
4.4.5 Cost comparison with traditionally built home
4.5 Marketing Plan
4.5.1 Executive summary
4.5.2 Market description
4.5.3 Marketing objective and issues
4.5.4 Segmented needs and corresponding benefits
4.5.5 Marketing strategy
4.5.6 Product awareness plan
4.6 Financial Plan
4.6.1 Initial funds
4.6.2 Initial expenses
4.6.3 Salaries
4.6.4 Office expenses
4.6.5 Sales projection
4.6.6 Income projection
4.6.7 Income proportion plan
4.6.8 Cash flow analysis
4.7 Operational Plan
4.8 Exit Strategy

4.8.1 Annual business analysis and corresponding strategies

4.8.2 Summary of exit strategies
4.9 Entrepreneurial Model

4. BUSINESS PLAN (Rapid Homes (Pvt) Ltd)

4.1 EXECUTIVE SUMMARY
Rapid Homes is a prefabricated homes construction company based in Karachi. This company is
an initiative in order to develop and strengthen a new market of prefabricated homes in
housing construction industry of Pakistan. It provides quality, economical, safe & quick new
homes construction services by utilizing a prefabricated technology.
Rapid Homes offers a complete precast concrete house on the buyers request and
manufactured according to international codes and specification. Our company will provide the
services like architectural and structural designing, site preparation, home installation and
assembling, outsourced plumbing and electrical services, and finishing services which include
doors, windows, paints, flooring etc. to its prospective clients.
Precast homes provides a number of benefits along with its application like material durability
and sustainability, variation in architectural finishes, low maintenance cost, speed in
construction, economical on mass production and quality assurance due to the manufacturing
of precast elements in yard within the controlled environment and supervision. The cost
comparison between precast houses and traditional built, depicting us on average 30% saving
as compared to traditional built house. The number of above features and cost saving will be
utilized to motivate our customers, change their perception and to build our business.
Taking advantage of current housing shortage in Pakistan i.e. 8.8 million housing units which
are escalating at an annual rate of 700,000 units, this healthy number will allow the new
housing company like Rapid Homes to enter in housing market of Pakistan and play its pivotal
role in reducing housing demand by incorporating precast technologies. There is an annual
demand of 500,000 housing units for next 20 years in Sindh Province. Karachi city (Our Business
Location) with a major proportion of population of Sindh has an annual demand of more than
100,000 housing units which is escalating rapidly due to increase in population and low speed
construction operation.
Currently there is no proper knowledge of precast homes is present in the minds of our
targeted customer. People have wrong myths associated with this product including stability
issues, architectural flexibility etc. So our primary marketing objective is to build awareness and
knowledge about precast houses among our target market through the use of entrepreneurial
marketing i.e. utilizing fewer budgets and using the channels that are within our control
including family, friends, relative etc. to market our product. To establish well regarded brand
named linked to meaningful positioning, we will have to work really hard by doing excellent

pilot projects and adding new but customer driven features in our product to create a
memorable and distinctive brand image projecting innovation, quality and customer value.
We will deploy a number of least expensive marketing techniques to spread our brands name
including public relations, website, attend trade shows and local fairs, words of mouth
marketing and conduct workshops at different places.
The best part of this business is its low investment requirement to take flight, and that is also
contributed by owners. After 2 years of pilot projects and savings of salaries, our initial
investment will be up to Rs. 740,000. We will setup our business in IBA Karachi incubation
center with an initial cost of Rs. 50,000 and monthly expenses of Rs. 15,000 excluding salaries.
The financial statements and sales projection shows a profit of Rs. 517,000 and that is
increasing after every two consecutive years due to increase in our sales. At the end of fifth
year the statement show us a total profit of Rs. 42, 70,000. At the end of each year the profit of
business will be divided in proportion for different purposes. Owners will get 10% (each), 15%
will be for business development, 25% for new product technologies and rest of the proportion
will be saved for future contingency or financial need of company.
Phase 1 of business (2 to 3 years) comprising two main activities in order to build credibility and
collecting investment for starting business includes doing jobs by potential business owners of
rapid homes and doing pilot project for the customers, we will attract from our circle of
influence. Then those customers will act as our loyal recommending agents for future potential
customers. Phase 2 consist of approximately 5 years start from launching the Rapid homes
officially by setting its office in Incubation Centre IBA Karachi. At the end of this phase Rapid
Homes will have Rs. 4.2 million by selling at least 28 homes. In this phase, company will even
make its customer which will be even outside of the initial circle of influence of business
(business owners).

4.2 COMPANY DESCRIPTION

4.2.1 Product Need/Opportunity Recognition
Pakistans current housing demand is 1.5 million per annum but only 0.6 million homes are
constructing annually. Also there is current shortfall of 8.8 million units in country. Punjab
province of Pakistan has a total population of 82 million with a residential market of 10.535
million units and current shortfall of 5 million units. This rate is increasing at an annual rate of
700,000 units. Whereas if we see the potential housing market of Sindh there is an annual
demand of 500,000 housing units for next 20 years. There is an annual demand of more than
100,000 housing units in Karachi, which is escalating rapidly due to increase in population and
low speed construction operation.
In addition to this huge lag in housing industry, there is a common complain which
customer/clients used to do is a lack of quality assurance and control of construction which
ultimately results in bad customers relation and low quality house for clients. This problem can
also be countered in the Rapid Homes product i.e. precast concreter house which will
manufacture in yard in a control environment reducing quality issues and then installed on site.

4.2.2 Company Overview

Rapid Homes is a prefabricated homes construction company. The legal status of company
will be LLC (Limited Liability Company) firm because of the advantages and protection it
provides with its business form. Like it provides the authority to raise more capital on the name
of company by hiding the name of owner, widely used and well suited for SMEs, and flexibility
to form by more than one owner. The detail comparison between different forms of business is
shown in appendix D. This company is an initiative in order to develop & strengthen a new
market of prefabricated homes in housing construction industry of Pakistan. It provides quality,
economical, safe & quick new homes construction services by utilizing a prefabricated
technology.
Rapid Homes offers a complete precast concrete house on the buyers request &
manufactured according to international codes & specification. The company will provide the
services; include designing, marketing, sales, delivering and assembling of prefab homes.

4.2.3 Vision Statement

To serve as a leader in the Prefab housing construction sector of Pakistan.

4.2.4 Mission Statement

To delight our customers by providing the quality, safe, economical & quick home construction
product, services & facilities to them.

4.2.5 Organization Structure

Organizational Structure (Assumptions)
The organizational structure of this company has been developed by taking several
assumptions:

Rapid Homes will initiate its business as LLC business with only owners as a permanent
business partner and no outside employee except legal advisor.
All business partners have equal share and equity in the business, whereas legal advisor
has fix monthly salary.
The organizational structure will come into application after 4 to 5 years when company
will have enough profit, revenue and demand of more structured organization.
The organizational structure may or may not vary depending upon the size and maturity
of an enterprise.

Organizational Structure of Company

CEO

Vice
President
Finance
External
Finance
Manager

Internal
Finance
Manager

Vice President
Sales &
Marketing
Sales
Engineer

Marketing
Manager

Site
Supervisor

Marketing
Team

Foreman

Vice President
Procurement &
Customer Relation
Procurem
ent/Contr
act
Manager

Customer
Realtions
hip
Manger

Vice
President
Technical
Design
Team

4.2.6 Roles and Responsibilities

Roles & Responsibilities of CEO (Chief Executive Officer)

CEO will be acting as a head of business.

Overall responsible for the finance issues of company.
Responsible for business development.
One must gather all the teams & company to focus them toward the companys vision.
Build and implement company policies for the betterment of customers, business
partners, and employees
Overview companys balance sheets, marketing strategies, sales figures and other
concerned issues.
Meeting with board of directors and keep them motivated by showing them the
monthly & annual financial reports of company.

Roles & Responsibilities of Board of Directors

Aligning the business in right direction.

Frequent meeting with top management of company to build & implement company
policies.
Attracting and contributing financial & business investments.
To expand and develop the business in new dimension.

Roles & Responsibilities of Vice President Finance

Keep check & balance of all business accounts.

Handle core finance management issues of company.
Look after the investment, loans, insurances, business taxation, cash flow and other
internal finance matter of company.
Responsible for inviting & attracting new business investments, opportunities &
partnerships.
Able to take key finance decisions of company.
Approve budget for marketing strategies.

Required Skills

Should be MBA finance or an equivalent level of qualification.

Min 05 years of relevant finance related experience.

Roles & Responsibilities of Vice President Sales & Marketing

Look after for the overall sales, growth, sales services before and after delivery of
product.
Build, manage and implement new marketing strategies for company & product
promotion.
Responsible for identifying, targeting & attracting potential customers.

Required Skills

Should be BE or Bsc in Civil Engg with MBA Marketing.

Min 05 years of relevant sales experience in construction product manufacturing
company.
Able to develop & implement all marketing strategies.

Roles & Responsibilities of Vice President Procurement & Customer Relationship

Responsible for overall contract management (B2B, B2C).

Responsible for attracting and maintaining relations with potential customer &
businesses.
Coordination with the Sales department in smoothing the process from product
ordering to delivering and satisfying customers need & requirements.

Required Skills

Should be BE Civil or Construction Management & MBA in relevant field.

Relevant experience in procurement of services & products.
Responsible for tender negotiation, contract management to fulfill company &
customers interest.

Roles & Responsibilities of Vice President Technical

Responsible for continuously innovating & adding values in the product to make our
offerings competent.
Responsible for approving of final designs of prefab houses before sending to the
manufacturers.
Coordinating with the Sales Engineer (Sales department) in the technical issues of
product life cycle.

Required Skills

Should be B.Arch or BE Civil & preferably Masters in relevant field.

Good Knowledge about prefabricated & precast homes technology, green technology &
other latest homes technologies.
Relevant experience of structural or architectural designing.
Proficient in different designing software.

Roles of External Finance Manager

He/she is responsible to arrange the loans.

Strong relation with banks.
To develop the contact with investors.

Required Skills

Bachelors Degree or above, major in finance or accounting.

2 years experience.

Roles of Internal Finance Manager

To maintain the balance sheet.

To control cash inflow and outflow.
Budgeting
To handle the taxation issues of business.
To transfer the salaries & bonuses of company staff.

Required Skills

B.com or ACCA,
2 years experience.

Roles of Sales engineer

Developing long-term relationships with clients

Persuading clients that a product best satisfies their needs in terms of quality, price and
delivery;
Providing pre-sales technical assistance and product education, and after-sales support
services;
Preparing reports for head of sales and marketing
Meeting regular sales targets and coordinating sales projects.
Supporting marketing activities by attending trade shows, conferences and other
marketing events.

Making technical presentations and demonstrating how a product meets client needs
Providing training and producing support material for other members of the sales team.

Required Skills

BE Civil
2 years of experience

Roles of Site Supervisor

To handle the site

Problem solving skills.
Pressure handling

Required Skills

Diploma in civil.
5 years of experience.

Roles of Foreman

Technical knowledge about assembling the pre-cast members.

Site preparation
Prepare the foundation.

Required Skills

Diploma in Civil
Relevant training of precast homes assembling

Roles of Marketing Manager

Screening and estimate the marketing strategies made by marketing team.

Researching and reporting on external opportunities
Identify the current and potential customer
Developing the marketing strategy and plan
Measuring marketing strategies success

Required Skills

BBA (Marketing)
5 years experience

Roles of Marketing Team

Develop innovative marketing strategies keeping in view our target market, product
offerings, unique features of our products & services.
Keep themselves up to date about new marketing methods

Required Skills

BBA (Marketing)
1 year experience/ fresh

Roles of Procurement/ Contract Manager

Float the tender for internal and external requirements of company

Responsible for outsourcing of product
Contracts between Business to business and customer to customer

Required Skills

B.E Civil
Relevant experience of 2 years or more

Roles of Customer Relationship Manager

To resolve quarries of customers

To provide friendly environment to customers & satisfy customers need on his
demands.

Required Skills

Excellent communication and persuading skills

Fresh BBA or with 1 year experience
Have pleasant personality

4.3 PRODUCT & SERVICES DESCRIPTION

4.3.1 Product & Services Offerings
Rapid Homes will provide the following products and services to its clients:
1.
2.
3.
4.
5.
6.

Architectural & Structural Designing

Site Clearance & Preparation
Precast Concrete Homes
Home Installation & Assembling
Plumbing & Electrical Services (Outsourcing)
Finishing Services

1-Architectural & Structural Designing

The company will provide architectural and structural designing services in-house. It will allow
us to facilitate our customers by delighting them with the most suitable, economical and
durable house designs that will fit their needs.
2-Site Clearance & Preparation
The company will deploy labor (hired on daily wages/subcontracting) to clear and level the site.
In addition it will include excavation (if needed), laying necessary foundation and lean concrete
so that it will provide smooth concrete finished surface to install precast homes on it.
3- Precast Concrete Homes
Rapid Homes will provide precast concrete manufactured house to his clients. The
manufacturing will be done by manufacturer. All the structural elements of house include,
slabs, wall, column, footing (if needed) will manufacture off the site and then transported to
the site for assembling and installation.
4- Home Installation & Assembling
The manufacturer will deliver the complete house from factory to site. Then Rapid Homes will
utilized the labor (hired on daily wages/subcontracting) to assemble and install the house. In
addition two of potential future business owner will also utilize their time and energy on site for
work and quality supervision. It will cut down the cost of extra helper of site supervisor.
5- Plumbing & Electrical Services
These services will be outsourced to small but good reputation contractor. The cost of material
and labor in this operation will be bear by customer. The major reason behind this approach is
every customers demand is different regarding the standard and quality of electrical and
plumbing fixtures they need in house. So to minimize risk we allow our customer to bear the
cost of these fixtures and services themselves.

6- Finishing Services
The cost of material and labor for finishing services will be incurred by our company as
mentioned in the costing budget of house. The finishing service will include paint, aluminum
windows, doors, vinyl flooring in kitchen, bathroom and store rooms while ceramic tiles in the
rooms and lounge.

4.3.2 Benefits of Precast Concrete Homes

The benefits & features associate with Rapid Homes precast concrete design would be including
resistance to fire, high winds and storm damage; reduction in home maintenance, and high
energy efficiency for homeowners.
1. Material Durability
Precast concrete housing provides exceptional long-term durability and requires little or no
conventional home maintenance, such as painting, staining, weatherproofing, or aluminum
cladding. Resistance to fire and natural disasters such as tornados, earthquakes, and flooding
are measurable benefits of a concrete domicile.
2. Variety in Architectural Finish
Numerous architectural treatments are possible with precast concrete. Many high-quality
surface textures, colors, and finishes are now available with precast plant production methods.
Permanent brick and stucco exterior finishes offer even more options for architectural
designs.
3. Lower Long term Maintenance Cost
Because precast concrete exteriors maintain their just-built look with little maintenance and
their operating costs are much lower than those of a conventional house, the concrete building
retains high resale value over time. These energy and maintenance savings, and the retention
of real estate investment value, are measurable economic benefits for any potential home
buyer.
4. Speed
Fast construction on site means the project reaches hand-over more quickly, and so the client
can occupy or let the building earlier. Consequently, there are savings in land, labor, rents,
overheads and financing costs, and a faster return on investment. Furthermore, if less time is
needed on site, then there is less pressure on the design team to find a suitably lengthy
weather window for construction activities.

5. Quality
One of the key perceptions attributed to production in controlled environments such as precast
concrete factories is that the greater degree of control (and the lesser degree of risk) will result
in a higher quality product compared to its on-site equivalent. The ability to work in a weatherindependent and controllable environment means that strength, surface quality and
consistency, and detailed design features in precast concrete components should be much
easier to achieve. Indeed both the material and dimensional properties of the product should
benefit from such a production environment.

4.4 ENTREPRENEURIAL ASSESSMENT

The entrepreneurial assessment has been done to measure the feasibility of precast homes in
order to see whether the companys product has those promising features that provide it an
edge over traditional homes or not. For this we have define company product and its relative
advantages, SWOT analysis of product and business, cost comparison between traditional and
precast homes.

4.4.1 Product Definition

The product will be manufactured from concrete in the manufacturing yard and then
transported to the site and assembled accordingly. The product will be prepared in the form of
modules and panels that will assemble to prepare a complete home on site.

4.4.2 Competitive Advantages from Traditional Construction

1. Economical on Mass Production
Precast homes are very economical when mass produced or manufactures similar homes
because of the repetitive use of molds result in the cost regaining of molds. The company will
provide almost standardized 80 sq.yd and 120 sq.yd homes with little bit customization in final
touches, or color etc.
2. Speed
Fast construction on site means the project reaches hand-over more quickly, and so the client
can occupy or let the building earlier. Consequently, there are savings in land, labor, rents,
overheads and financing costs, and a faster return on investment. Furthermore, if less time is
needed on site, then there is less pressure on the design team to find a suitably lengthy
weather window for construction activities.
3. Quality
One of the key perceptions attributed to production in controlled environments such as precast
concrete factories is that the greater degree of control (and the lesser degree of risk) will result
in a higher quality product compared to its on-site equivalent. The ability to work in a weatherindependent and controllable environment means that strength, surface quality and
consistency, and detailed design features in precast concrete components should be much
easier to achieve. Indeed both the material and dimensional properties of the product should
benefit from such a production environment.

4.4.3 SWOT Analysis of Precast Concrete Homes

Table 4.1 SWOT analysis of Precast Concrete Homes
STRENGTHS
WEAKNESS

Speed, Quality, Economy

Low Maintenance
Seismic Resistant
Universal Application

OPPORTUNITIES

Large market of affordable houses

Population is increasing causing
housing market expansion
Unskilled labor
Target middle class
Large Size Projects
Demand for Quality Construction
Cost efficient technology

Lack of awareness, acceptability &

availability
Resistance to Change
Fear of Unknown
Unfamiliarity of Architects and
Engineers
Lack of Exposure to the technology in
Technical Institutes

THREATS

Govt. Tax Policy, Lack of Govt. Support

& Encouragement
Bad Past Experience with Substandard
Technology & execution
Lack of Standardization
Imaginary Problems
Difficult to customize

4.4.4 SWOT Analysis of Business

Table 4.2 SWOT Analysis of Business
STRENGTHS

Excellent Customer Service

Excellent Sales Service
Calculated risk (Affordable loss)
Less Investment required
Time and cost efficient
Quality Product

OPPORTUNITIES

Market demand of 700,000 houses

annually
No Market Competitors
Standardized Housing Schemes
Product innovation and improvement
Changing trend of people towards precast
Flood and earthquake affected areas
First mover advantage
High profit margin in Mass production

WEAKNESS

Initially Low Profit Margin

Less Customization in Product
Nonexistent Market

THREATS

Wrong customer perception

High risk associated with product
Market entry barriers
Non-supportive attitude of contractors
Non-adopting attitude various industry
stakeholder
Economic slowdown
Lack of knowledge about product

4.4.5 Cost Comparison with Traditionally Built Homes

We have assumed that if manufacturer do not have the mold/precast shuttering already
prepared for the house manufacturing, it will cost them to prepare mold so we have taken Rs
400/Sft. This additional cost will incur the manufacturing cost of molds plus the profit margin of
manufacturer itself.
Table 4.3 Variable Cost of Precast 80 sq.yd House
Wall Cost
80/0.4 * 1500
Roof Cost
80 * 9 * 400
Total
300,000 + 288,000
Site Preparation
10 % * total cost
Assembling Crane
3 % * total cost
Assembling Labor
5 % * total cost
Finishes cost
25 % * total cost
Total + Finishes + Site +
Variable Cost
Crane + Labor

Rs. 300,000
RS. 288,000
Rs. 588,000
Rs. 58,800
Rs. 17,640
Rs. 29,400
Rs. 1,47000
Rs. 8,40,840

Table 4.4 Cost of Traditional Built 80 sq.yd House

Approximate Cost
Rs. 1700/ sft * 80 * 9

Rs. 12,24,000

Table 4.5Variable Cost of 120 sq.yd House

Wall Cost
120/0.4 * 1500
Roof Cost
120 * 9 * 400
Total
450,000 + 432,000
Site Preparation
10 % * total cost
Assembling Crane
3 % * total cost
Assembling Labor
5 % * total cost
Finishes Cost
25 % * total cost
Variable Cost
Total + Finishes + Site

Rs. 450,000
Rs. 432,000
Rs. 882,000
Rs. 88,200
Rs. 26,460
Rs. 44,100
Rs. 2,20,500
Rs. 12,61,260

Table 4.6 Cost of Traditional Built 120 sq.yd House

Approximate Cost
Rs. 1700/ sft * 120 * 9

Rs.18,36,000

Table 4.7 Variable Cost of 250 sq.yd House

Wall Cost
250/0.4 * 1500
Roof Cost
250 * 9 * 400
Total
937,000 + 900,000
Site Preparation
10 % * total cost
Assembling Crane
3 % * total cost
Assembling Labor
5 % * total cost

Rs. 937,500
Rs. 900,000
Rs. 18,37,500
Rs. 1,83,750
Rs. 55,125
Rs. 91,875

Finishes Cost
Variable Cost

30 % * total cost
Total + Finishes + Site

Table 4.8 Cost of Traditional Built Cost 250 sq.yd House

Approximate Cost
Rs. 1700/ sft * 250 * 9

Rs. 5,51,250
Rs. 27,19,500

Rs. 38,25,000

4.4.6 Summary of Cost Comparison

Table 4.9 Summary of Cost comparison
House Size

Traditional Cost

Precast Cost

80 sq.yd House
120 sq.yd House
250 sq.yd House

Rs. 12,24,000
Rs. 18,36,000
Rs. 38,25,000

Rs. 8,40,840
Rs. 12,61,260
Rs. 27,19,500

%
Comparison
31 % Less
31 % Less
29 % Less

Note

This variable cost only include the civil works and finishing cost including structural cost,
paint, windows, doors, ventilators and floor finishes as according to the package.
This is an approximate comparison which is an effort to depict a maximum realistic cost
comparison and it can vary with the level of customization customer want in our
standardized homes and little bit due to external factors.
This is the cost which is utilized in complete manufacturing, transportation, site
clearance and preparation, assembling and final finishes of homes.
The cost does not include the internal profit of Rapid Homes and solely representing the
manufacturers cost plus finishing cost.

4.5 MARKETING PLAN

4.5.1 Executive Summary
Rapid Homes will be a new precast homes building company envisaged to be the fast growing
precast house construction company in Pakistan. The company will offer its product as a
quality, economical and time efficient solution for home buyers and to those who are willing to
construct their homes. Our product will offers a competitively unique combination of advanced
features and benefit depending upon our targeted markets. We are targeting specific markets
including Low Class and Middle Class as defined in the table below as Aspirers and Seekers
and Strivers respectively.
Taking advantage of current housing shortage in Pakistan i.e. 8.8 million housing units which
are escalating at an annual rate of 700,000 units, this healthy number will allow the new
housing company like Rapid Homes to enter in housing market of Pakistan and play its pivotal
role in reducing housing demand by incorporating precast technologies.
Our primary marketing objective is to convince and attract potential targeted market toward
our product by removing wrong perceptions from their minds through educating and providing
awareness to them and then instilling positive brand image about precast homes by delighting
and creating customer loyalty.
Our secondary marketing objective is to sell out at least 4 housing units in 1 st year.

4.5.2 Market Description

Pakistans current housing demand is 1.5 million per annum but only 0.6 million homes are
constructing annually. Also there is current shortfall of 8.8 million units in country. Punjab
province of Pakistan has a total population of 82 million with a residential market of 10.535
million units and current shortfall of 5 million units. This rate is increasing at an annual rate of
700,000 units. Whereas if we see the potential housing market of Sindh there is an annual
demand of 500,000 housing units for next 20 years. There is an annual demand of more than
100,000 housing units in Karachi, which is escalating rapidly due to increase in population and
low speed construction operation.
Above insight provide us the potential figure to start our business in any of the region of
Pakistan i.e. Punjab province and Sindh Province. We would like to base our business location in
Karachi initially because of the advantages it provides:

An annual demand of 100,000 housing units in Karachi city, increasing number of

housing schemes and big population.

The city possesses more opportunities in terms of business collaborations, associations,

investments etc.
We can also expand our services to the villages which are sprouting on the edges of
Karachi city like Abdullah Goth etc.

4.5.3 Pricing Strategy

Since we need to perform projected sales calculation, for the reason we will find the average
unit pricing. For pricing, we first need to determine the unit cost require to produce the
product;
Unit Cost

Variable Cost + Fixed Cost/Unit Sales

Fixed Cost = Cost that do not vary with the level of sales normally include rent, interest,
management salaries etc.
Variable Cost = Cost vary directly with the level of production and include cost related to the
direct production of product.
We have taken the fixed cost of Rs. 50,000 at the start of business.
For determining variable cost we have taken an average of variable costs of 80, 120 and 250
sq.yd homes already done in entrepreneurial assessment. The average variable cost has already
been determined in section 4.4.5 as:
Variable Cost =

Rs. 16, 07,200

Unit Cost

Rs. 16, 07,200 + Rs. 50,000/4

Unit Cost

Rs. 16, 19,700

This is also called the Breakeven Cost the price at which our unit revenue equals unit cost and
profit is zero. But we will add 19 % markup (profit margin) and this can be determined by:
Markup Price =

Rs. 16, 19,700 + (Rs. 16, 19,700 * 0.19)

Markup Price =

Rs. 19, 24,000

This will be an average selling price of the home.

4.5.4 Marketing Objectives and Issues

The rule of entrepreneurial marketing is to spend fewer resources and more focused on
building credibility by doing work. Due to work, our initial customer will start words of mouth

marketing which will result in the recommendation of our company. Our marketing techniques
are of slow pace but utilizing minimum resources and causing companys growth in steady and
less risky manner.
First Year Objective
To build awareness and knowledge about precast houses among our target market through
words of mouth marketing with a sales target of at least 4 houses.
Second Year Objective
To build and attract more targeted customers by spending no budget on marketing activity
formally and keeping same sales target of 4 houses.
Third Year Objective
To attract more targeted customer and retaining old one by providing excellent services, new
product features and increasing our sales target up to 6 houses
Fourth Year Objective
This year we will spend Rs. 100,000 on our marketing activity including publicity of our past
done projects, latest offerings, and unique features to attract at least 6 houses this year also.
Fifth Year Objective
This year we will increase our marketing budget for up to Rs. 200,000 to achieve the sales
target of at least 8 houses in a year.
Issues
In relation to the company and product launch, our major issue is the ability to establish well
regarded brand named linked to meaningful positioning. For this purpose, we will have to work
really hard by doing excellent pilot projects and adding new but customer driven features in our
product to create a memorable and distinctive brand image projecting innovation, quality and
customer value.

4.5.5 Segmented Needs and Corresponding Features/Benefits

Table 4.10 Segmented Needs and Corresponding Features/Benefits
Target Segment
(Annual Income)

Customer Needs

Corresponding
Features/Benefits


Aspirers
(Rs. 90,000 Rs. 200,000)

Limited Budget/Low Cost

housing
Quality Product
Less Spacing capable of
accommodating more
people

Seeker
(Rs. 200,000 Rs. 500,000)

Strivers
(Rs. 500,000 Rs.
1,000,000)

Medium-Low cost
housing
Quality Product
Medium level of
aesthetics & beauty
Less construction time

Quality Product
Aesthetics & Beauty
Fast construction of
home
More conscious of
uniqueness &
individuality of product

Standardized low cost

houses
Less customization &
features
Space saving furniture
on reasonable price
Quality product
Standardized housing
system
Medium customization
features
Quality Product
More finishing &
aesthetics
Quality & Fine product
More customization
features
More value added
features

4.5.6 Marketing Strategy

Our marketing strategy will base on the positioning of the product as a Time Efficient and
Cost Effective quality product. The cost differentiation will be done to the Aspirers as they
seek economical & quality product. The time effectiveness of our homes will be targeting the
Seekers and Strivers who need the homes to be built as early as possible with sustainable
quality and provide beautiful aesthetic look to home.
Positioning
Rapid Homes will position itself as a Precast homes Builders that manufacture, assemble and
provide quality, economical, safe and environmental friendly precast houses to its prospective
clients. Low cost housing customer will be very persuaded by the low cost standardized quality
precast homes that the company is uniquely positioned to provide. Rapid Homes provide a
good deal to the customers whose time is precious and they need house to be built as early as
possible. Rapid Home will also position itself to provide the latest innovative homes features at
a value added price that allows for reasonable profits.

Rapid Homes will use the following method to position and market itself and its product to its
potential buyers.
1. Public Relations
Rapid Homes will capitalize on all opportunities for public relations. Leveraging all of its
memberships in precast building, local contractors, green building, and different construction
associations locally. Rapid Homes will strive to be a community leader and voice for precast
homes in the local communities. All company milestones will be celebrated with press releases.
2. Website
The website will be an enormous channel of information and communication. Ease of use and
aesthetic website design will be areas in which we will heavily invest. Brochures will also be
printed that highlight the major pieces of educational material that will be most compelling.
Website content will include:

Explanations of how and why precast design, modular construction, and smart materials
are beneficial for the environment, cost and time savings.
Virtual tours of floor plans.
Questions regarding financing precast homes vs. Traditional built homes.
The timeline they can expect the project to follow.
FAQ and links to precast homes resources

3. Outreach
To reach out to our target market, we will attend trade shows, Earth Day Fairs, local festivals
that attract the local home buyers crowd in the towns and cities with the highest
concentrations of our targeted group. Taking our message to our customer will be done
through sophisticated and informative displays and brochures.
We will also provide educational seminars and workshop related to precast homes construction
and its associated technologies to local technical colleges and universities. Through this
program, Rapid Homes will be educating the next generation of home buyers, thus young
people will go home and educate their parents about the products uniqueness.
4. Words of Mouth Marketing
All of our marketing efforts are also an attempt to encourage and facilitate word of mouth
communication. Rapid Homes recognizes the significance of this channel for generating buzz,
interest and sales. Providing Rapid Homes customers with a positive experience, one worthy

enough to tell their friends and family about is our end goal. This is a very successful marketing
channel in the architectural industry.

4.5.7 Competitive Edge Strategy

Initially Rapid Homes do not have any competitive edge over our competitors except time
saving, cost efficient and quality product. But over the couple of years, business will develop
competitive edge in its product in terms unique value offering by incorporating latest
technology in our product. For this purpose the business will be spending 25% of companys
annual revenue on latest housing technologies develop locally.
In addition to this strategy we will extend our product line over the years by continuously
researching about the related products and services which our loyal customer would like to
avail and like.

4.5.8 Product Awareness Program (Pilot Project)

Objectives

To create and build a physical evidence of our product.

To build our business portfolio, experience, networking and convince targeted market.
To learn the market facts and refine our product more according to customers need
and expectations.
To do an in-depth research and study on how to offer unique value proposition in our
product.

Implementation of Pilot Project

The time period of pilot project will be approximately 2 years or until we will deliver 3 to 4
houses. The primary target customers will be our family relatives, family friends etc. until unless
we will be able to sell our houses in our circle of influence, only then we can go in market to
convince someone else. Following figure show the simplest process of ordering to delivering of
house:
Figure 4.2
Acquire Customer
Order

Designing of
House

Order to
manufacturer and
site preparation

Startup /
Handover to
Customer

Finishing /
Landscaping

House delivery by
manufacturer and
installment onsite

Outcomes

Delivering 3 to 4 quality houses means, we have developed 3 to 4 loyal customers.

Loyal customer will act as a recommending agent of our product in their circle of
influence including their relatives, family, friends etc.
We can convince customers by showing them our past projects; we will have done in
pilot project.
We can develop and update our website by putting latest projects details and pictures
along with them.

4.6 FINANCIAL PLAN

4.6.1 Initial Funds
During our pilot project, all of our business owners (three) doing jobs plus we will be selling the
houses to people in our family and relatives. The detail of pilot project has shown in marketing
plan. By doing jobs and selling 3 to 4 houses, we will have an initial self-funding detail as
follows.
We are 3 partners each will be employed for 15000 Rs/month on a civil engineering job, so total
will be 45000 Rs/month in all. If we multiplied this figure by 24 months (pilot project duration),
we get Rs. 10, 80000. Each one of us will be sharing 30 % of his earned salary for starting
business. The total of 30 % from 3 partners will become Rs. 3, 24,000. Assuming that by selling
each unit we are earning a profit of Rs. 50,000 at least. After successful sales of 4 housing unit
our profit will become Rs. 200,000. In a nutshell we will be having a self-investment of Rs.
524,000 which is a good sign as we will not seek investment from outside.
Table 4.11 Sources of initial funds
Sources
Professional Job Salaries (3
Members)
30 % Retention of Salaries
Profits from Units sold (2)

Per Month (Rs.)

45000 (each at Rs. 15000)

Per year (Rs.)

540,000

135000
-

162000
100,000

Total Funds after 2 Years

524,000

4.6.2 Initial Expenses

Our initial business expenses is primarily depend upon the approach we choose in between
selecting IBA as an office or go for self-office approach. For determining which approach is most
suitable in case of our business we have done a detail comparative analysis between both
options.
We have done a theoretical comparison of advantages and disadvantages of both choices,
which has shown in appendix A. In addition, we have also done the benefit over cost ratio
between both options and found out that IBA is much viable and handsome approach in terms
of growth and development of our business than going for self-office approach which possesses
heavy overheads and more susceptible to financial risk. The summary of net benefit/cost
comparison is shown in below figure. For detail analysis check appendix A.

Net Comparison Over 5 Years

Table 4.12 Net Comparison of Income of 5 years
Revenue
IBA
Revenue in 2 Years
11,94,000
Revenue in 3rd Year
10,70,000
th
Revenue in 4 Year
970,000
th
Revenue in 5 Year
10,14,000
Net Revenue in 5 Years
42,68,000

Self-Office
-564,000
266,000
106,000
170,000
-22,000

In case of IBA approach our initial expenses will include rent of IBA, website development and
hosting, printer registration of company, printing business cards, essential business heads,
brochures, and informative material etc. For all this we have set a budget of Rs. 40,000 with
contingency amount already added. We will bear all these expenses from our self-investment.

4.6.3 Salaries
Initially by adopting bootstrapping approach, we will not hire anyone except a legal advisor on
an annual basis by paying Rs. 5000 per month. Although we have added the salaries of owner
i.e. Rs.10, 000 per person per month, but we will not withdraw our salaries until there will be
no sale or we have positive cash flows. In the fifth year we will have hired a site supervisor at a
Rs. 20,000 per month. The detail of monthly salaries has been shown in Appendix B.

4.6.4 Office Expenses

While selecting IBA approach we will be facing following types of office expenses per month as
shown in table.
Table 4.13 Monthly office expenses
Expenditure
Office Rent
Telephone/Internet
Stationary
Misc.
Total

Cost (Rs.)
10,000
3,000
1000
1000
15,000

4.6.5 Sales Projections

We have set very realistic and achievable sales target for consecutive initial 5 years of business.
The basis for the 4 house for 1st year is to attract each customer from our past customer profile
to which we will have deliver quality precast house during our pilot project (product awareness

period). Then for the succeeding year our target remain same and to attract more customer
from the circle of influence of previous customers. After 2 years of sales we will have almost 8
houses sold, which allowed us to take a risk of expecting 6 houses in 3 rd year, based on
expecting customers from the circle and recommendation of those 8 loyal customers. Similarly
on these grounds we have recorded to be expected sales in 4th year will also be 6 houses per
annum. After building profile of loyal customers of more than 20 customers, we are assuming
that the sales for 5th year can grow up to or even beyond 8 houses.

Projected Sales Target

No of Houses

10
8
6
4
2
0
No of Houses

1st Year

2nd Year

3rd Year

4th Year

5th Year

Graph 4.1 Projected Sales Target

4.6.6 Income Projections

Fortunately our business is showing profit which is a very good sign; it is due to the fact that we
have minimized the financial expenses by acquiring office space in IBA plus reducing the office
overheads (salaries) by adopting bootstrap approach. For the 2 years we will be working at
same salaries and sales will be uniform ultimately causing same profit over twice years. The
graph is depicting increase in companys income due to increase in sales in third year. In the
fourth year the income line in graph is slightly inclining downward due to the reason we have
increased our expenses by adding marketing budget of Rs. 100,000. In the fifth year our income
will remain approximately same because the profit increase in sales will be countered by our
increase in office overheads in the form of marketing budget and appointing site supervisor.
Graph 4.2 Income Projection

Rupees

Income Projection
1200000
1000000
800000
600000
400000
200000
0
Rupess

1st Year

2nd Year

3rd Year

4th Year

5th Year

617000

617000

1071000

971000

1014000

Table 4.14 Cash Flow Projection of 5 Years

1st Year (Rs.)
76,96,000
64,29,000
650,000

2nd Year (Rs.)

76,96,000
64,29,000
650,000

3rd Year (Rs.)

1,15,44,000
96,43,000
830,000

Sales
COGM
Total
Expenses
Net Profit
577,000
617,000
10, 71,000
w/o Tax
Cumulative
577,000
11,94,000
22,65,000
Revenue over
Years
*Detail income statement of each year is shown in Appendix C.

4th Year (Rs.)

1,15,44,000
96,43,000
930,000

5th Year (Rs.)

1,53,92,000
1,28,58,000
15,20,000

971,000

10, 34,000

32,36,000

42,70,000

4.6.7 Income Proportions Plan

After paying all the office expenses, salaries and other necessary payments, whatever amount
will be left in companys bank account will divide for different utilization. We have set different
proportion of companys income for owners profit, business development, contingency,
product research and incorporating new technologies etc.
Table 4.15 Income proportion plan
Expenses
Percentage of
Income
Owners Profit Sharing
10 % (Each
Partner)
Business Development

15 %

Future Contingency

30 %

Product Research & New

Technologies

25 %

Detail
Each person will be getting 10% share on
companys annual income except their
monthly salaries.
This percent of amount will be served in
business development operations and
processes.
This 30% will be saved for future contingency
or any other financial crisis/need of company.
25% of every years income will be spent on
buying new technology, material, researching
(outsourced) etc. to build competitive
advantage in terms of unique offerings.

4.6.8 Cash Flow Analysis

We have developed cash flow analysis in order to see cash outflow and inflow for a particular
financial year. By developing this analysis we will be able to build strategies for maintaining
balance between inflows and outflows of company.

First Year Cash Flow

Cash Net Flow

700000

600000

Rupees

500000
400000
300000
200000
100000
0
-100000 Month Month Month Month Month Month Month Month Month Month Month Month
1
2
3
4
5
6
7
8
9
10
11
12
-200000

Graph 4.3 First Year Cash Flow

Corresponding Strategies

At the start of 1st year the graph is showing a cash outflow of Rs. 90,000, which we will
counter by spending from our initial investment i.e. Rs. 740,000.
In the second month there is also an office and salary expense of Rs. 50,000, which we
will pay from our initial investment, or we can choose not to withdraw our salaries until
there will be any sale.
In the third, sixth, ninth and twelfth month we will have a cash inflow by selling each
unit, also in alternate months we will bear our expenses by spending this cash inflow
amount in companys account.
The graph is showing downward slope after 3rd month, for every 2 months indicating no
cash inflow in this duration.
If there will be any risk of less sales than our expectations, then we have money in our
account to counter the expenses for almost 2 years.

Second Year Cash Flow

Cash Net Flow

800000
700000

Rupees

600000
500000
400000
300000
200000
100000
0
-100000

Month Month Month Month Month Month Month Month Month Month Month Month
1
2
3
4
5
6
7
8
9
10
11
12

Graph 4.4 Second Year Cash Flow

Corresponding Strategies

First and second month of second year showing a monthly expense of Rs. 50,000 which
will be easily paid from previous years income.
In the third, sixth, ninth and twelfth month we will have a cash inflow by selling each
unit, also in alternate months we will bear our expenses by spending this cash inflow
amount in companys account.
The graph is showing downward slope after 3rd month, for every 2 months indicating no
cash inflow in this duration.
If there will be any risk of less sales than our expectations, then we have money in our in
the form of previous year income and initial funding amount to counter the expenses
easily.

Third Year Cash Flow

Cash Net Flow

1200000
1000000

Rupees

800000
600000
400000
200000
0
-200000

Month Month Month Month Month Month Month Month Month Month Month Month
1
2
3
4
5
6
7
8
9
10
11
12

Graph 4.5 Third Year Cash Flow

Corresponding Strategies

Due to sales in second month of third year we need to bear our first months expenses
from our previous year income.
This year we have increased the salaries up to Rs. 15000 due to increase in our sales
target.
The graph is showing cash inflow in every even month of year, which is cumulatively
increasing even after subtracting cash outflows of every month.
If there would be any financial risk occurred due to low sales then we have the
capability to withstand by utilizing our financial contingency of previous two years.

Fourth Year Cash Flow

Cash Net Flow

1200000
1000000

Rupees

800000
600000
400000
200000
0
-200000

Month Month Month Month Month Month Month Month Month Month Month Month
1
2
3
4
5
6
7
8
9
10
11
12

Graph 4.6 Fourth Year Cash Flow

Corresponding Strategies

First month expenses will be countered by previous year income.

Fourth years graph is showing a cash inflow in every even month of a year, which is
increasing in zigzag shape due to subtraction of cash outflow in every alternate month.
Marketing budget of Rs. 100,000 has added to meet the sales target of 6 housing units.
The budget has cut into pieces of Rs. 25000 and will contribute in the cash outflow of
first, third, fifth and seventh month of the year.
If there would be any financial risk occurred due to low sales then we have the
capability to withstand by utilizing our financial contingency of previous two years.

Fifth Year

Cash Net Flow

1200000
1000000

Rupees

800000
600000
400000
200000
0
-200000

Month Month Month Month Month Month Month Month Month Month Month Month
1
2
3
4
5
6
7
8
9
10
11
12

-400000

Graph 4.7 Fifth Year Cash Flow

Corresponding strategies

This is most beneficial year in terms of our sales target of 8 housing units.
First month expenses will be countered by previous year income of company.
The graph is showing upward slope for every two months and downward slope for one
month indicating cash inflow for two consecutive months and only cash outflow for one
month respectively.
This year we have set marketing budget of Rs. 200,000 which has divided into four
pieces of Rs. 50,000 each, spend in first, fourth, seventh and tenth month of year.
If we will unable to achieve our sales target, we are able to bear our office and salaries
expenses for an year because of our profit from previous years.

4.7 Operational Plan

Customer
Acquire

Designing of
House
Phase 1
Order Secure

Preparation of
Detail Drawings

Order to
Manufacturer

Site Preparation
Phase 2

House
Delivered

House
installment &
Finishes

Phase 3

Figure 4.3

Startup

Phase 1
Phase 1 is comprises of primary operational activities starting from customers entry in the
company and put their requirement for economical and quality house, then the designer will
prepare the architectural design according to their need and requirement keeping in mind the
companys standardized house designs (already built). After the green signal by respective
clients, the company will secure its order by taking an advance payment according to the terms.
Then the designer of company will prepare detail drawings including shop drawings, structural
drawings, construction drawings, specifications etc.
Phase 2
Phase 2 starts from ordering the precast house manufacturer by sending him detail house
drawings and specification. Same time on the other hand, company will hire labors for site
preparation including site clearance, leveling, soil compaction, elevation increase, lean concrete
etc. This phase will end on the successful delivery of house onsite and site preparation.
Phase 3
Phase 3 is will continue from the delivery of the manufactured house members and elements
that will install onsite with the help of cranes and labors. After the installment finishes will be
made in house including windows, doors, ventilators, flooring, and paints. This phase will end
by handing over the complete house to the end customer/consumer.

4.8 EXIT STRATEGY

4.8.1 Annual Business Analysis and Corresponding Exit Strategy

Starting company
after pilot project
After 1 year of business

If only 1 house sold

out (worst case)

If two house sold

out

Company will not

adopt exit strategy

To get/build customers
Merger with
reputed contractor

If customers build at the end of

2nd year of business

Company will again

be separated

If not
Merger with
another contractor

If customer build at the end of

rd

3 year of business

Company will again

be separated

If not (After 3rd year of business)

Become separate
and go for investor
Money will be spend
on advertisement (customer making)
(After 4th year of business)
If Customers build

(During 5th year of business)

Go for IPO (Initial
public offering)

Figure 4.4 Flow chart of exit strategies

Continue as
separate company

4.8.2 Summary of Exit Strategies

After the 5 years of business, if the business will not make enough profit/revenue, the company
will be going to adopt one of the following exit strategies depending upon the circumstances:
1. Rapid Homes will merge with another existing strong reputation precast contractor in
order to keep itself in market.
2. Rapid homes will merge with the existing precast manufacturer.
3. Rapid homes will be acquired by another big contracting firm or precast manufacturer.
4. Rapid homes will go for IPO (initial public offering).

4.9 ENTREREPRENEURIAL MODEL

Phase One:
In Phase one, the potential future owners of rapid homes will be doing two major activities to
build credibility and initial investment by themselves. The Phase One will comprise of 2 to 3
years approximately.
1. They will be doing professional engineering jobs to gain experience, exposure, build
professional networks and credibility, at on an average salary of Rs. 15000 per month.
From that salary, they will be contributing 30% of their salary for starting business
(detail is given in section 4.6.1)
2. They will be running pilot project (detail is given in 4.5.7) by convincing, facilitating and
attracting the potential customers of the product i.e. Precast Concrete Homes from
their circle of influence including family, relatives and friends.
At the end of the phase 1 business will have been possibly achieved following outcomes:
1. Development of personal and business credibility by acquiring job experience and selling
houses in pilot project respectively.
2. Saving money by doing jobs for initial business expenses.
3. Building potential networks by working with construction industry.
4. Refinement of the product by taking feedback from pilot project customers, removing
faults which might come in actual operation and correcting product and business
assumptions.

Phase Two
The Phase two will comprise of 5 years approximately, the business will be officially launched
by acquiring office space at IBA Karachi Incubation center at as least as Rs. 10,000 per month as

rent and Rapid Homes will maintain IBA Karachi incubation for at most of 5 years. The business
will start attracting customer in the circle of already built loyal customers of pilot project.
1. At the end of this phase Rapid Homes will have Rs. 4.2 million by selling at least 28
homes.
2. In due of this phase, Rapid Homes will be establishing and projecting itself as a loyal
home construction brand.
3. In this second phase, business will even make its customer which will be even outside of
the initial circle of influence of business.
The competitive edge will be developed during this phase by continuous value addition in terms
of technology incorporation in business product and increasing product and service line. (Detail
is shown in section 4.5.6).