ENP 812

DRUNKEN SCOOTER FEASIBILITY STUDY (28098502) 1) INTRODUCTIION The idea of Drunken Scooter originated from the existent and established Scooter MAN concept in the United Kingdom. The idea behind this study is concerned with providing a much needed service primarily to students who reside within a 15km radius of the University of Pretoria (Hatfield). This service addresses the growing concern/issue of both the rise in student motor vehicle accidents while under the influence of alcohol, along with the potential possibility of being arrested by police officials in and around this vicinity on an annual basis. The following feasibility study aims at ultimately assessing the economic viability of Drunken Scooter as a proposed business, while providing insight into the various start-up costs, running supplies, cash flow and ultimately the potential profitability of the proposed concept within South Africa.

2) PRODUCT OR SERVICE VIABILITY SERVICE BASED BUSINESS- this service based business involves students who have been indulging themselves in liquor consumption in and around the bars and nightclubs of the Hatfield and Menlyn Square regions and as a result are not in the adequate state to drive or have a fear of being pulled over and potentially arrested by the police. As a result Drunken Scooter involves the individuals who are in need, calling our number (either by prior arrangement or at the end of their night) and one of our staff members going to collect that client. Our staff members utilize a small yet efficient collapsible scooter as their mode of transport to the designated area of collection, where on arrival

the scooter folds into the boot of his/her car. The client is then driven home safely, paid for the service and our staff member unfolds the collapsible scooter and drives home. LIMITATIONS Initial start-up capital to fund the scooter/s, uniforms and advertising, depending on the areas that one wishes to service initially. Fairly costly for students as they may prefer to use that additional money for more drinks or conversely they may not have the money available to spend on such a service. Long hours for staff members Predominantly reliant on word of mouth for advertisement (hence one has to build up a good reputation regarding a quality service at an affordable price). BUYING /USING DRUNKEN SCOOTER Clients may obtain our contact details (business cards) from the bars and night-clubs within the designated area of operation, and may contact us in advance for the use of our service, through setting an allocated time for collection at a pre-arranged place. The second option is to call us as and when our service is required on the chance that we will be able to assist (as clients who pre-arrange will inevitably take preference). Cash is then paid upfront to the driver before our services are rendered. SUPPLY SOURCE The supply of the service will come from the utilization of two collapsible scooters (to begin with) to satisfy the demand. RANGE OF SERVICES Transportation of clients who are incapable of driving at the end of the night Collection (by prior arrangement) and delivered to another destination (nightclubs, bars etc) Hiring out for the entire night for birthdays, bachelor parties and the like

COMPONENTS OF RAW MATERIALS 2X 70CC Collapsible Scooters with carry bags T-Shirts and Jackets with Drunken Scooter logo Fuel Business Cards PATENT AND PROTECT (INTELLECTUAL PROPERTY) Patent does not apply to this service. One must sustain a competitive advantage

CONCEPT

TESTING

(CONDUCTED

17/08/2013

VIA

TELEPHONE/10

RESPONDANTS)
CHOICE DEFINITELY WOULD BUY PROBABLY WOULD BUY MIGHT OR MIGHT NOT BUY NO. OF RESPONDENTS PROBABLY WOULD NOT BUY DEFINITELY WOULD NOT BUY

USABILITY TESTING- Due to the fact that this venture is still in the infant stages of development, the actual use of the product was not possible. Therefore a further test was conducted into how clients would prefer to use/purchase this service:
PREFFERED METHOD OF PAYMENT NO. OF RESPONDENTS 8 2 CASH ON USE OF SERVICE MONTHLY ACCOUNT TOP-UP

3) TECHNICAL VIABILITY SERVICE OPERATION 2x fully functional/equipped and maintained 70cc scooters Fuel (although minimal quantities are required)

DIAGRAM/ILLUSTRATION OF HOW THE SERVICE IS PROVIDED

PLANS TO UPGRADE/EXPAND SERVICE -From the outset, the plan is to deliver this service to all potential hotspots within the circumference of the above mentioned area. However with this is mind we would like the service to begin its expansion within the first year of operation to encompass the whole of Pretoria and potentially future growth within Johannesburg. PHYSICAL PREMISES- as for the initial start-up, no physical premises (such as warehouses and so forth will be required). Living in the Brooklyn/Hatfield region personally, allows for a significant cost saving by storing the scooters on my premises, from which our operations may be conducted with ease. INFRASTRUCTURE LOCATION- main premises for operation will be from my house in Brooklyn (Initially), combined with the fact that the collapsible scooter will be transported in the trunk of my car for easy access and customer convenience if I am not at home.

STAFF- Staff will comprise of myself and my two life-long friends for our initial start up of Drunken Scooter. TRAINING/ DEVELOPMENT/ CONTROLS & OPERATION MANUALS- little training and development is required as we have all grown up on motor bikes and hence know how to conduct ourselves on them in the correct manner, combined with the fact that we are aware of the basic mechanical procedures that are necessary to operate our machinery as well as provide our own maintenance on them. The only training and development as such would be for all three of us to acquire motor cycle driving licenses for South Africa.

BUSINESS MODEL VALIDITY REVENUE GENERATION- Drunken Scooter will generate revenue in the following ways: 1) Clients who utilize our service as and when they need it and pay cash for the service at the point of sale. 2) Clients who utilize the service regularly and have an account with us (on a top up basis per month). VALUE PROPOSITION Safety for clients instead of driving under the influence Safety for ladies who travel alone at night Better fairs than the use of ordinary taxis No need to have a designated driver (everyone can enjoy the party and know they will get home safely)

DRUNKEN SCOOTER SUSTAINABLECOMPETATIVE ADVANTAGE

UNIQUE SERVICE FEATURE -NOVELTY -CLIENTS AND THEIR VEHICLE MAY BE DELIVERED SAFELY

PRICE/ VALUE -INEXPENSIVE IN COMPARISON TO NORMAL TAXI FARES -GREAT STUDENT VALUE

CUSTOMER CONVENIENCE -CLIENTS VEHICLE IS TRANSPORTED WITH THEM IF NEED BE

COMPETATIVE ADVANTAGE

- 2 METHODS OF PAYMENT FOR CLIENTS -SERVICE IS AVAILABLE UNTIL 3AM

CUSTOMER EXPERIENCE NOTABLE SERVICE ATTRIBUTES -CONVENIENCE -VALUE FOR MONEY -RELIABILITY NB- CANT COMMENT ON DRUNKEN SCOOTER -OTHER TAXI SERVICES DO NOT OFFER THE SAME PROPOSED SERVICE

MARKET AND MARKETING VIABILITY TARGET MARKET- As there is a significantly large market available within South Africa that is linked to the night/party life; one would believe that Drunken Scooters initial target market would be students in and around the Hatfield region of Pretoria. This market as a whole has the potential for growth as there is continuous growth in numbers within the Hatfield region. This combined with the fact that if students are happy with the service they receive they will still utilize and refer our services to others once their

student life is finished and they start enjoying the more up -market nightlife (eg- Menlyn Square, Tiger- Tiger, Johannesburg etc). INDUSTRY- When targeting the Hatfield Region, the following forces are at play that will inevitably affect the demand for our service: Exam Dates (namely twice a year) Holidays (2x long holidays June/July & November/December) (2x short 10-14 day breaks April & September) Student Budgets -Hence as all the staff of Drunken Scooter are students, the seasonal strategies will be to keep the service available to students for 1 week after the last available exam dates as many students stay on to write supplementary exams and also have a good party. COMPETITION- Takes the form of the following: DIRECT- readily available taxi services, and people driving themselves home after a night out INDIRECT- friends or family coming to collect our potential clients , and people who decide to walk home as they live in close vicinity to where they party FUTURE- fellow students who may start up a similar service as Drunken Scooter, due to the limited barriers to entry MARKETING AND SALES STRATEGY Drunken Scooter services will be delivered in a professional manner with the key managers being the only staff involved (initially). They will be dresses in the appropriate black longs and white shirt, with a black tie, along with a warm jacket for the winter months. Distribution of service-

After-sales relationships- will be maintained by obtaining clients numbers that utilize our service and each week a message sent to them reminding them of our operation hours, prices. While after they have utilized the service, they receive a message the next day to thank them. Pricing strategy METHODS OF PAYMENT FIXED AMOUNTS P.O.S PAYMENT R60/CALL OUT ACCOUNT (TOP-UP) R50/CALL OUT

MANAGEMENT MODEL VIABILITY -Proposed key managers comprise of Malcolm Macdonald, Bryan Le Roux and Gregory Edmeades -Responsibilities are equally shared and operate on a rotational basis. They include the physical collection and delivery of clients, taking and receiving of bookings as and when they arise, maintenance of equipment, drawing up of the accounts at the end of each week. -Relevant background, experience and skills and requirements- all 3 proposed managers have grown up with and around the use of motorbikes and began riding between the ages of 6-8 years of age. Combined with the fact that we have the required knowledge behind the functioning and service/maintenance of motorcycles. Future requirements will be for each manager to obtain a South African Motorcycle class drivers license and for Bryan Le Roux and Gregory Edmeades to obtain their defensive driving certificate as Malcolm Macdonald has already done so.

ECONOMIC & FINANCIAL MODEL FIXED COSTS 2X SCOOTERS R9 500/EACH (SUNK COST INITIAL INVESTMENT) MAINTENANCE (CONTACT FOR 12 VARIABLE COSTS FUEL

MONTHS @R250/Month) MARKETING (BUSINESS CARDS & POSTERS) (R2 500 FOR 5000 FLYERS & 1000 CARDS)

NB- No salaries or wages will be paid out as all managers have agreed to break even before they draw from Drunken Scooter

FINANCIAL PROJECTIONS EXPECTED INCOME AND EXPENSES: -Operating 2x scooters 4 nights a week (Monday, Wednesday, Friday & Saturday) with 2 appointments per scooter per night with P.O.S Payment due to start up: 4 appointments x R60/Appointment = R240/Night Therefore R240/Night x 4 Nights/week= R960 (Expected income/week) R3840 (Expected income/month initially for first 4 months)

Expenses= 2X Scooters R9 5 00/Each -Each scooter is capable of 25KM/Litre with their 5-10 litre tank capacities -Fuel expenses/month for service delivery and personal use: R 928 -3X Uniforms with company name/logo= R400/Each

-2X Helmets= R400/Each TOATL FIXED COSTS= R 26 500 TOTAL VARIABLE COSTS/MONTH= Fuel (4 trips/night x 4 nights/week x 4 weeks/month @ +/- 1 litre/call out= (R928)

BREAK EVEN POINT (Fixed costs/ charge per call out)- (variable costs per call out) = (R26 500/ R60 Per call out) - (R14.50 Per litre of fuel) Break even in= 583 call outs (or 9 months)

CAPITAL REQUIREMENTS & STRATEGY -All managers having worked while studying have the required capital needed to start this venture (Initial outlay of R10 000 Each)

SWOT ANALYSIS STRENGTHS

1)MANAGERS CAPITALISE ON STRENGHTS INCENTIVES/ BONUS STRUCTURE

2)CAPITAL AVAILABILITY

ALLOWS FOR QUICK DECISION MAKING

WEAKNESSES
1)PERIOD TO BREAK EVEN

ADDRESS WEAKNESSES DONT LOOSE SIGHT OF BIGGER PICTURE MAINTAIN SAME LEVEL OF INITIAL ENTHUSIASM MAINTAIN A QUALITY SERVICE OFFERING

OPPORTUNITIES
1)MARKET POTENTIAL

MAXIMISE ON OPPORTUNITIES MARKET SIZE ALLOWS FOR GROWTH & EXPANSION (MANY UNIVERSITIES/COLLEGES) KEEP SERVICE UNIQUE

2)NICHE SERVICE

THREATS
1)INCREASE IN FUEL PRICE

MINIMISE ON THREATS PURCHASE BULK FUEL TO ASSIST INITIALLY CHARGE A HIGHER PRICE TO COMPENSATE FOR FUEL INCREASES MAINTAIN A HIGHER STANDARD OF SERVICE + VALUE FOR MONEY

2)SIMILAR COMPETITION

RISKS POTENTIAL FOR GROWTH- Rapid growth and the expansion of our service to other regions across South Africa may result in the quality of the initial service being lost as more staff is required to meet the demand (they may not share as much enthusiasm as the managers). Secondly trying to increase the service charges to try cover our fixed costs more rapidly may result in scaring off our clientele. PROFITABILITY- the dominant risks involved when assessing profitability for Drunken scooter are: Charging the acceptable price for students and if price alterations are necessary due to increases in variable costs, that they are still appealing to our market (therefore this must be taken into consideration when pricing) Not losing sight of providing a quality service to students in the quest for pure profit seeking

CRITICAL RISK FACTORS Going into business with 2 lifelong friends (they say dont let business ruin a friendship) Rapid growth and expansion may ruin the purpose behind Drunken Scooter Fear of someone else starting up the same service within Hatfield Economic Recession/ Further devaluation of the Rand Currency

 Loosing focus/motivation of the bigger picture as it does take 9 months before profits may be gained

CONCLUSION In conclusion to this feasibility study on the business venture Drunken Scooter, one may believe that this certainly may be a feasible option to pursue even further as it seems to have the potential for growth given the significantly large market that may be serviced, not only in Pretoria but within South Africa as a whole, with a focus on student/university regions across the country. From the relevant data gathered while conducting the study, it may be concluded that Drunken Scooter is both a feasible and viable service with a relatively strong likelihood for success. However it should be kept in mind that the projections reveal a 9 month period until profits may be seen provided the estimated numbers of call outs are reached within that period. Possible recommendations may therefore be to raise the prices of the service slightly in-order to speed up the process. Secondly, attention may be drawn to Menlyn Square type (more up -market) clientele, so as steeper prices may be charged without too much concern of there being a loss of interest. Therefore Drunken Scooters managers need to be highly motivated and committed on their path to ensuring that this venture becomes a sustainable business as time progresses.

DONT DRINK & DRIVE TOOT & SCOOT WITH DRUNKEN SCOOTER