Entrepreneurship and Formulating Business Plans

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ECONOMICS ASSIGNMENT

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Executive summary
The paper contains a business plan aimed to attract the interest of the investors to invest in
the new venture. The new venture embarks on providing rental cars and bike services to the
customers. The USP of the company is to provide the services at the lower rates than the
current market rate. The business model of the company is different from the rival players
that allow the company to keep the operational cost low.

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Contents
Introduction................................................................................................................................4
The business model....................................................................................................................4
Entrepreneurial competencies....................................................................................................4
Objectives...................................................................................................................................5
The market: PESTEL factors.....................................................................................................5
Competition................................................................................................................................6
The product................................................................................................................................6
The marketing and business.......................................................................................................7
Sales and operation....................................................................................................................7
Sales forecast..............................................................................................................................8
Financial projections..................................................................................................................8
Strength and the risks of the business......................................................................................12
Conclusion................................................................................................................................13
Reference..................................................................................................................................14

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Introduction
Most of the businesses are looking to expand their operation in order to increase their
sustainability. In addition to that business expansion also increases the profitability of the
company in the long run. The objective of this paper is to pitch the new business venture to
the investors through documentation so that investment can be attracted in to the project. The
paper presents the business plan in order to make everything clear to the investors of the
market. The paper is significant for the investors who will be interested in investing their
money into the venture.
The business model
The new business venture for which the entrepreneur is seeking the investment is a car rental
online platform, New horizon car rental private limited based in Port Louis, Mauritius. The
idea is to provide the cars on rent to the customers through the online platform for a limited
time span. The customers of the market will pre-apply for the rental and have to pay the token
amount for booking the car. The customers will also provide the time for which the car will
be rented and based on the availability the company will assign the car to the customers. In
addition to that, the company will also provide bike rental services as well. The process will
be same for both the cars and the bikes, however, the rental charges will be more for the cars.
The company will partner with car providers so that their car can be shown as available in the
rent portal. The company will keep a part of the rent as a commission and the rest will be paid
to the car providing partners. The same will be for the bikes as well where the individual
partners of the company will provide the bikes in different locations of the city. The company
will take pre payment from the customers and refund the unbilled money after the successful
return of the vehicle to the company. In addition to that the company will also provide
assistance in case of breakdown of the vehicles as well.
Entrepreneurial competencies
The competencies of the owner are suitable for the entrepreneurship as the owner as
individual has taken a number of responsibilities of new businesses. In addition to that, the
academic curriculum of the individual has also provided with the necessary inputs for
running the business. The team with which the venture is being run also have the necessary
qualifications to run the business as well. The staffs working for the company has been
selected based on their experiences from similar start ups. The team management of the

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owner has been one of the core competencies that have proven to be successful in the
previous businesses.
Objectives
The objective of the business is to provide rental car and bike services to the customers of the
market at lower than 800 Mauritian Rupees. The current players only provide the normal
rental service, however, bike rental services and support is not there. The objective of this
company is to fill this gap. The quality of the rented cars and bikes has always been below
the par which has put the users in trouble. Therefore the objective of this business is to
provide quality rented cars and bikes to the customers at rents below the one charged by the
rivals of the market.
The market: PESTEL factors
Political: The changes in the policies of the government such as the imposition of added tax
can increase the operational cost of the company that can further increase the rent charged to
the customers of the market. In that case, it would be difficult for the management to
maintain that USP of providing quality cars in cheapest rates. The implementation of special
license for the operation of the business can increase the cost of operation of the company as
well.
Economical: The increase in the income level of the customers would result in higher demand
for the services of the company. Although, a part of the customer base would go onto buy
their own cars in that case, there will be customers coming from the lower segment to fill up
the market. Therefore the business does not have huge impact due to the economical changes.
Economic recession can reduce the overall demand for the goods and the services in the
economy due to which the demand for the service of this company may also fall.
Social: The social preference to reduce spending on car can increase the demand for the car
and bike rental in the market. In addition to that, increase in the migration from different parts
of the country can give rise to the demand for the rented cars and bikes. Furthermore, the
unemployment rate in the economy also have a role to play as, increase in the unemployment
rate can reduce the demand for the service of the company (Kahn and Baum, 2020). The
tastes and preferences of the customer for travelling can increase the demand for the services
provided by the company. This taste of the customer depends on the income as well.

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Therefore, standard of living plays a great role in determining the demand for the services of
the economy.
Technological: technological advancement will help the business to reduce some of the cost
of operation. For example if technological advancement allows the owner to keep a check on
the speeds of the car and bikes, it would result in less damage and better relationship with the
partners. The technological advancement may also allow the company in the future to
complete the transaction way faster than now. Furthermore, the technological advancement in
this field can reduce the chance of theft as well. That will make the operation safer and
transparent (Garcia, 2018).
Environmental: The protection policy of the government in terms of environment has the
opportunity to increase the demand for the rented bikes and cars. Due to the increase in the
pollution tax, the customers of the market may become unwilling to buy their cars and hence
the demand for the service of the company will increase. Stricter environmental laws and
regulations for the cars and the bikes of the company can increase the operational cost of the
company leading to a decrease in the profit margin.
Legal: The legal changes are very important for the operation of the company. If new laws
are brought regarding the rent and the damages, the company can either gain or loss from the
changes in the law. Therefore, law can influence the operation of the company. In case of any
accident or any other crime, the use of car or bike of the company can lead to the bad
reputation of the company as well.
Competition
The competition in the market is light as there are only three players in the market and all of
them are in their early stage of operation. In addition to that the experiences of the companies
already operating is not much high to provide a good combat at this moment. Furthermore,
the prices charged by the rival companies of the market are slightly high as they maintain
their own fleet of cars and bikes. However, the model of this business is slightly different
form theirs. The cars and the bikes that will be rented out will be managed by the partner
individuals and they will be paid for each of the trips taken by the customers. That will allow
this business to save on the maintenance cost of the fleet and this way the cars and the bikes
will be rented out to the customers of the market at a cheaper cost (Cojocaru, 2019). The
company will not engage in further price war with the competitors of the market as the initial

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price is already low. The company will always use the quality of the rented cars and the bikes
as the USP for the products and the services in order to combat the competitors of the market.
The product
The products that will offer to the customers of the market are the cars and the bikes in rent.
The customers of the market will pre-apply for the cars or the bikes with the dates and the
management will assign the required car or the bike as per the availability. The company will
also provide assistance in case of breakdown in the middle of the road as well. The quality of
the rented cars and the bikes will be maintained by the partners and the company will issue fit
certificate for each of the vehicles operating under the name of the company.
The marketing and business
The market segmentation will be done based on the size of the family and the income of the
individuals. The company will have three different types of car services for the customers of
the market. These will include the hatchbacks, sedan and luxury cars for the differentiated
needs of the different types of the customers. In addition to that, the market will also be
segmented based on the size of the family as well.
The main target market for the company would be the young adults who have just started
working. These people are the ones who go on frequent trips and mostly do not have their
own cars (Seeger, 2019). Therefore the main target market would be these customers. Apart
from that, families will also be another target market for the company as well. The families
require bigger car with better mileage apart from the looks which matters for the young
adults. Therefore the company will cater the different needs of the different types of the
customers of the market
The prices of the services will be kept low and the qualities will be good. Therefore, in terms
of positioning the services of the company will be the most attractive bundle among the
choices available in the market. The company will spend on the advertisement in order to
keep the services relevant to the needs of the target customers. The main aim of the company
is to create a brand reputation among the potential customers of the services of the company.
Sales and operation
The business will be operated mainly from the online platforms; however the customers can
also approach the local office as well in order to book a rented car or bike. The stakeholder of

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the company will be management, owners of the bikes and cars who will be the partner in the
business, the service providers and the mechanics for the inspection. The sales will be
operated through the online portal and the customers of the market will have to visit the
nearest partner of the company on the date of booking to get the rented car. Upon the
completion of the trip the customer will get back the additional balance which has not been
billed after the service charges and penalty if applicable. In addition to that the customers will
also receive voucher for the each safe trips which the customer can use for the next rent. The
maintenance of the cars and the bikes are the responsibility of the business partners (Flores
and Howard, 2019). The company will have inspectors that will provide the fit certificate for
the cars and the bike before renting out to the customers of the market in order to make sure
the quality is not compromised.
Sales forecast
Sales forecast of the company in coming years (In USD)
Year 1 year 2 Year 3
Revenues from car
rent
81435.6
5
91036.4
8
101254.4
8
Revenues from bike
rent
63124.7
4
72154.9
8 81124.32
Table 1: The sales forecast of the company
(Source: Developed by the learner)
The sales forecast of the company shows that it will achieve the breakeven point of the
business in the second year. The revenues of the company from the cars will be more than
that from the bikes. The highest contribution to the revenue of the company will also come
from the car rent as well.

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Financial projections
Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20
Year-
2020
Year-
2021
Year-
2022
Year-
2023
Year-
2024
Cash flows from operating activities
Profit / (Loss) for the year40,355 39,097 44,875 -3,173 35,893 34,905 47,365 12,738 26,037 24,229 55,978 43,774 4,02,072 4,85,482 6,13,517 8,37,484 10,12,095
Interest 18,177 18,033 17,888 17,742 17,594 18,216 18,060 17,903 17,745 17,585 19,923 19,730 2,18,597 2,42,128 2,40,568 2,11,453 1,96,408
Taxation 15,693 15,204 17,452 -1,234 13,958 13,574 18,420 4,954 10,125 9,422 21,769 17,023 1,56,362 1,88,799 2,38,590 3,25,688 3,93,593
Adjustment for non-cash expenses:
Depreciation 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 19,000 19,000 1,88,000 2,63,000 3,07,000 2,50,000 2,75,000
Amortization 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 12,000 12,000 12,000 12,000
Reserves - - - - - - - - - - - - - - - - -
Changes in operating assets & liabilities
Inventory -9,652 -18,728 4,638 -8,538 3,632 3,648 1,720 -1,197 -9,171 44,783 -45,894 2,605 -32,153 -7,706 -9,478 -21,934 -24,127
Trade Receivables-10,798 -21,893 -1,663 -20,378 14,072 -185 -3,153 3,246 -20,688 84,123 -84,488 -831 -62,638 -34,611 -37,380 -50,463 -55,509
Loans & Advances - - - - - - -10,000 - 10,000 - - - - -20,000 - 10,000 15,000
Other Receivables - - - - - - - - - - - - - -7,000 - -5,000 -10,000
Trade Payables-21,061 10,957 -73 44,865 -34,810 -985 -10,475 23,530 2,827 -43,337 21,938 -1,161 -7,785 4,988 5,981 12,643 13,867
Sales Tax 12,459 28,175 -27,277 19,325 -21,241 27,329 -24,869 22,664 -27,155 25,010 -17,846 30,004 46,580 -1,156 7,402 7,629 8,436
Payroll Accruals - - - - - - - - - - - - - 1,200 1,272 1,348 1,429
Other Accruals-55,000 - - - - - - - - - - 60,000 5,000 6,000 -16,000 20,000 10,000
Other Provisions-42,000 - - - - - - - - - - 30,000 -12,000 -9,000 19,000 15,000 18,000
Cash generated from operations-35,827 86,845 71,841 64,609 45,098 1,12,502 53,067 99,837 25,721 1,77,816 -8,619 2,21,144 9,14,035 11,24,123 13,82,472 16,25,848 18,66,192
Interest paid -18,177 -18,033 -17,888 -17,742 -17,594 -18,216 -18,060 -17,903 -17,745 -17,585 -19,923 -19,730 -2,18,597 -2,42,128 -2,40,568 -2,11,453 -1,96,408
Taxation paid - - - - - -74,648 - - - - - -81,714 -1,56,362 -1,88,799 -2,38,590 -3,25,688 -3,93,593
Net cash from operating activities-54,004 68,812 53,952 46,867 27,504 19,638 35,007 81,934 7,976 1,60,231 -28,543 1,19,700 5,39,076 6,93,196 9,03,314 10,88,707 12,76,191
Cash flows from investing activities
Purchases of property, plant & equipment- - - - - - - - - --2,40,000 --2,40,000 -3,00,000 -1,80,000 -2,00,000 -3,50,000
Purchases of intangible assets- - - - - - - - - - - - - - - - -
Purchases of investments- - - - - - - - - - - - --4,00,000 -6,00,000 -5,00,000 -4,00,000
Net cash used in investing activities- - - - - - - - - --2,40,000 --2,40,000 -7,00,000 -7,80,000 -7,00,000 -7,50,000
Cash flows from financing activities
Proceeds from shareholders' contributions- - - - - - - - - - - - - - - - -
Dividends paid - - - - - - - - - - - - - -40,207 -48,548 -61,352 -83,748
Proceeds from loans 1 - - - - - - - - - - - - - - - - -
Proceeds from loans 2 - - - - -1,00,000 - - - - - -1,00,000 - - - -
Proceeds from loans 3 - - - - - - - - - -2,40,000 -2,40,000 3,00,000 1,80,000 2,00,000 3,50,000
Proceeds from finance leases- - - - - - - - - - - - - - - - -
Repayment of loans 1-5,775 -5,824 -5,874 -5,924 -5,975 -6,026 -6,077 -6,129 -6,181 -6,234 -6,287 -6,341 -72,646 -80,452 -89,097 -98,671 -1,09,274
Repayment of loans 2-3,536 -3,563 -3,591 -3,618 -3,646 -4,382 -4,415 -4,449 -4,484 -4,518 -4,553 -4,588 -49,344 -57,896 -63,484 -69,612 -76,331
Repayment of loans 3 - - - - - - - - - - -2,900 -2,930 -5,829 -63,808 -1,17,359 -1,52,788 -2,12,324
Repayment of finance leases-7,015 -7,082 -7,150 -7,219 -7,288 -7,358 -7,428 -7,499 -7,571 -7,644 -7,717 -7,791 -88,761 -99,524 -1,11,592 -1,25,124 -
Net cash from financing activities-16,326 -16,469 -16,614 -16,761 -16,908 82,235 -17,920 -18,078 -18,236 -18,396 2,18,543 -21,650 1,23,420 -41,887 -2,50,080 -3,07,546 -1,31,677
Increase / (Decrease) in cash equivalents-70,330 52,343 37,338 30,106 10,595 1,01,874 17,087 63,857 -10,260 1,41,835 -49,999 98,050 4,22,496 -48,691 -1,26,766 81,161 3,94,514
Cash & cash equivalents at beginning of year1,71,000 1,00,670 1,53,013 1,90,351 2,20,457 2,31,053 3,32,926 3,50,013 4,13,870 4,03,610 5,45,446 4,95,446 1,71,000 5,93,496 5,44,806 4,18,040 4,99,201
Cash & cash equivalents at end of year1,00,670 1,53,013 1,90,351 2,20,457 2,31,053 3,32,926 3,50,013 4,13,870 4,03,610 5,45,446 4,95,446 5,93,496 5,93,496 5,44,806 4,18,040 4,99,201 8,93,715
Table 2: the financial projection of the company
(Source: Developed by the learner)
Strength and the risks of the business
There are a number of strengths in the business that will drive to towards the success and the
breakeven point. The first and the foremost strength are the attitude and the competencies of
the staffs working for the company. In addition to that, the customer services that is in place
for the customers of the market are also an added strength for the company. The company
will make sure the customers are provided the best solution to their problem since the start of
the transaction. The product characteristics of the company are different from that of the
other players of the market and hence that provides the company a competitive edge over the
rival players. The maintenance of the cars and the bikes has been given to the partners in
exchange of higher payment for the cars and the bikes compared to the market rate.
Therefore, the company not only provides services the customers of the market, it also works
as a source of income for a section of the population.

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Despite the strengths are a number of risks that the company needs to deal with in order to be
successful. The first and the foremost risk associated with the operation of the company are
the physical risks. The deterioration in the quality of the fleet can adversely affect the
reputation of the company as the quality is the USP. In addition to that, the poor quality of
fleet may also require the company to invest a huge capital for the reparations. Furthermore
the strategic risks such as the deviation of the company from the overall objective can also be
concerning as well. The compliance risk is an important risk that can put the operation of the
company in halt. The compliance with the regulations of the government is important for the
operation and hence requires meticulous audits by the management. The company also has to
manage the human risks, which will require the company to provide adequate training to the
staffs of the company. Human risk management is also important to keep the employees
engaged in the production process of the business. Lastly, financial risks such as
unavailability of credits can lead to lack of liquidity in the operation of the company. This
can further lead to drop in the sales and hence the reduction in the profit margin of the
company.
Conclusion
Therefore the paper presents the business plan of the new venture which is to provide rented
cars and bikes to the customers of the market cheapest cost. The business plan talks about the
objective of the business and the sales and operation as well. The operation of the company
requires cooperation of all the stakeholders among which the partners are the most important.
The financial projection of the company states that the company is going to have good sales
in the coming years. The other financial projections are also in favour of the investors as well.
Therefore the company is a great opportunity for the investor to increase its capital while
adding a good value to the operation of the company.

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Reference
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Cojocaru, M., 2019. The Economic Argumentation of Business Plans for Agricultural
Enterprises. LABOUR.
Flores, J. and Howard, C.A., 2019. Exploring Assessments of Experiential Learning Contexts
In Business Courses with a Marketing Emphasis. Learning in Higher Education, p.31.
Garcia, C. and FCAP, M., 2018. Strategies for integrating digital pathology into your
business plans and workflow.
Kahn, M.J. and Baum, N., 2020. Entrepreneurship and Formulating Business Plans. In The
Business Basics of Building and Managing a Healthcare Practice (pp. 37-41). Springer,
Cham.
Seeger, M., 2019. Marketing the Mining Business Case: Best Practice. In Mining Capital (pp.
75-111). Springer, Cham.