New Venture Business Plan for Intelligent Cycles

Read the business plan for Intelligent Cycles, an innovative business scheme providing cycles of rent to tourists and others to tour in the city. Learn about their marketing strategy, finance planning, and electric cycles.

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New Venture Business Plan

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Executive Summary
The intelligent cycles is an innovative business scheme, it is providing cycles of rent to
tourists and others to tour in the city. The initial investment is very heavy for the business.
Moreover, there are two other firms present in the market that deliver the same service. The
firm is allowing its customers to book their ride through mobile application. The company is
a single ownership company and is operating only in London. The company is facing a loss
in the first twelve month of the business, but the owner is hoping that the sale will increase in
the next quarter.
Key words: Marketing strategy, finance planning, electric cycles

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Table of Contents
Company description.................................................................................................................5
Industry analysis.........................................................................................................................5
Industry structure...................................................................................................................5
Key factors for industry success............................................................................................5
Industry trends........................................................................................................................6
Long-term prospects...............................................................................................................6
Market analysis..........................................................................................................................6
7 Ps Analysis..........................................................................................................................6
Product...............................................................................................................................6
Price....................................................................................................................................6
Place...................................................................................................................................7
Promotion...........................................................................................................................7
People.................................................................................................................................7
Process................................................................................................................................7
Physical..............................................................................................................................8
Market Segmentation.............................................................................................................8
Demographic......................................................................................................................8
Geographic.........................................................................................................................8
Psychographic....................................................................................................................8
Behavioural........................................................................................................................8
Target Market Selection.........................................................................................................8
Estimation of total market sales.........................................................................................9
Estimation of market share.................................................................................................9
Porters five forces..................................................................................................................9
Threat from new entrants...................................................................................................9
Threat of the substitutes...................................................................................................10

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Bargaining power of the Buyers......................................................................................10
Bargaining power of the Suppliers...................................................................................10
Industry rivalry.................................................................................................................10
Marketing Plan.........................................................................................................................10
Overall marketing strategy...................................................................................................10
Sales process or sales cycle..................................................................................................10
Management Team and Company Structure............................................................................11
Management team................................................................................................................11
Board of directors.................................................................................................................11
Skills base of team...............................................................................................................11
Operations plan........................................................................................................................11
Operations model and procedures........................................................................................11
Product or service design and development plan.....................................................................11
Challenges............................................................................................................................12
Financial Plan for the First Year Of Trading...........................................................................12
Sources of funding...............................................................................................................12
Assumptions made...............................................................................................................12
Profit and loss account.........................................................................................................13
Cash Flow Forecasts............................................................................................................13
Balance Sheet.......................................................................................................................14
Break-Even Analysis............................................................................................................14
Scenario / Contingency Planning.........................................................................................15
Reference list............................................................................................................................16

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Company description
Intelligent Cycles allow its customers to rent electric cycles through a mobile application.
The company has is located in London and allows its clients to roam about the city in their
rental cycles. The company is operating locally as it is in the originating stage. The firm is a
single ownership firm and the owner is very much enthusiastic about the business. It has been
seen that demand for electric bikes has increased due to the increase in ecological
consciousness.
Industry analysis
The industry size is very small. There are only two to three firms who supply the same
product in London. Apart from local competitors the firm does not face any other sort of
competition. Limited being the number of suppliers of electric bikes, there is high level of
supplier’s power in this case; moreover intelligent cycles will have to face a price
competition for obtaining the bikes (Scarborough, 2016; Watson and McGowan, 2018;
Watson, McGowan and Cunningham, 2018; Garrette, Phelps and Sibony, 2018; Nguyen,
Phan and Phuoc, 2018). The growth rates estimated by the company are a uniform growth
rate of sixty percent of total sales every year. The sales of the firm in the first six months will
reach up to two thousand pounds and by the end of the year the sale of the company will
reach to two thousand six hundred per year.
Industry structure
The industry is a perfect example of oligopoly, there is only very few players in the market
who supply similar products.
Nature of participant firms
The main participants in the industry supplying electric bikes are mainly the local producers
of the same product found in London. Each of these firms is very large and they can easily
impact the market outcome. Every firm is competing for their market share and they are
trying to take into account the actions of their rival firms. The participants act and react
considering the actions of the other rival participants in the same industry.
Key factors for industry success
The success of this industry lies in the coordination and the collaboration among the
participants who are producing and supplying electric bikes. The number of companies is
very less and so only when the participants come together to produce a huge bulk of the

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product, it would never make a huge market for itself. The product has to be known and
demanded so that the market demand is high. In fact as the product is environmentally useful
it should make people aware of its benefits and promote better use.
Industry trends
The number of producers and manufacturers of the electric bikes is very few they do not
exhibit a predictable historical market trend. The product is currently setting a positive trend
with increasing market demand. This product in few years with collaborated industrial efforts
will be facing an upward rising market demand curve.
Long-term prospects
The product, electric bikes is one which has great future prospect. Today the entire world is
facing the need of eco-friendly products and services as they are environmentally conscious.
Therefore the electric bikes can gain a huge market demand in future considering their
environmental usefulness.
Market analysis
7 Ps Analysis
Product
The primary product that would be sold by the company would actually be a service which
will be given to the customers in the form of rented electric scooters for the age groups
beginning from 18 years. The services would be provided to the consumers by the means of a
mobile application which they can use in their smartphones and can request for a scooter
from any location. The scooter will be delivered to them by an agent who would take the
security deposit money as well as the rent charges. The consumers would want to have such
services as they would help them to get cheap transportation services at low and affordable
prices. Also, the environmental pollutions can be reduced by using such scooters which
would run electronically, hence, saving the environment as well as money for the consumers.
Price
The scooter company would incur certain costs throughout their process of input gathering,
manufacturing, operations, sales and promotions. After all these costs are estimated and
analysed, the final price of the product can be determined. The important factors which would
contribute in the decision of the product’s final price are, cost of the electric bikes, cost of
other inputs, cost of basic requirements such as land, electricity, water, etc. needed during

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operations, cost of warehouses for storing the scooters, wages and salaries of labours and
employees, salaries of IT experts for application development, price of the substitute
products, demand patterns from customers, etc. The final price will be decided on the basis of
these factors.
Place
The physical place of operations is an important element in the marketing mix for a brand
(Horvath, Kotlebova and Siranova, 2018). It is the place from where the products are sent out
for sales and distribution and are accessible to the consumers. The electric scooters will be
sold by the company online, that is through its own e-commerce website and a mobile
application. However, the physical headquarters of the company would be located in London,
United Kingdom.
Promotion
The element of marketing mix which helps in communicating, persuading and influencing the
target customers for buying the product is called the promotion mix (Anderson, Sweeney,
Williams, Camm and Cochran, 2018). The various ways of promotion of its services used by
the scooter company would be Advertisements, public relations, direct marketing, content
marketing, emails, pay-per-click marketing, etc.
People
The key people of the company contribute together in characterizing its people mix. These
people are, factory labours, employees, engineers, IT experts, software developers, managers,
investors, shareholders, board of directors, the Government and the Consumers.
Process
The company’s operations would include the processes where firstly the procurement of the
electric bikes would be done by buying and importing from Alibaba suppliers of China.
These scooters would then be stored in warehouses. The engineers, IT experts and software
developers would develop the mobile application for all platforms of mobile, which are,
android, iOS and windows. The services would then be provided to the consumers by the
means of these mobile applications which they can use in their smartphones and can request
for a scooter from any location. The scooter will be delivered to them by an agent who would
take the security deposit money as well as the rent charges.

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Physical
This aspect of the marketing mix is related to the predictions and forecasting of the
company’s future numbers. It would include determining the total costs that would be
incurred by the firm, analyse if these might fluctuate in the nearby future or remain as they
are, and forecasting the potential revenues and profits that can be generated by the company.
Market Segmentation
The activities by whose means a consumer or broad market of a specific productor brand is
known as the market segmentation (Wedel and Kamakura, 2012). The market segmentation
of the company would be as follows:
Demographic
People belonging to the age group of 18-60 years. Teenagers, Adults and senior citizens;
Both the gender groups, Male as well as Female; Consumers with all occupation types as the
electric bikes would be rent at very affordable price.
Geographic
All the countries of UK, that are, England, Northern Ireland, Wales and Scotland and in all
the cities of the same.
Psychographic
Helping in reducing the environment pollution by providing electric scooters, and also
providing cheap and affordable transportation facilities to the people as these scooters will be
given on rent.
Behavioural
The behavioural aspect of the company should be associated with the production of utility
based products, electric scooters on rent at affordable prices.
Target Market Selection
The target market of the product would be selected on the basis of the positioning of the
product. Product positioning is known as the image or place of a brand or a product that is
occupied in a consumer’s mind and the way in which it differentiates from the its competitor
brands (Levy, Weitz and Grewal, 2012). The product positioning is implemented by
determining whether the product would be of high or low quality, and also evaluating if the
price of the product would be kept high or low (Blatt, Gulbin and Officer, 2018). The electric

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scooter company would make its scooter of significant quality and they will be given on rent
to the consumers at low and affordable prices.
Figure 1: Product Positioning
Source: (Levy, Weitz and Grewal, 2012)
Estimation of total market sales
The market sales can be estimated from the forecasts about the future market demand. The
market can be predicted to some extent by considering the demand it is facing at present. To
estimate these market sales for electric scooters, the company can carry out a market survey
which will help the company and the industry to get a rough idea of their future prospects in
terms of sales.
Estimation of market share
Market share in an oligopolistic market structure can be estimated by seeing the contribution
which the firm is making towards the total industrial output (Watson and McGowan, 2018).
In this case as the number of firms is very few each firm has a considerable size of market
share. The company will continue to have a big share of the market in this structure of the
industry.
Porters five forces
The five factors of Porter’s analysis are:
Threat from new entrants
The industrial structure is that of an oligopoly. Therefore there are few firms operating under
intense competition. There is not much threat faced by the existing firms under oligopolistic
market.

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Threat of the substitutes
As it is an oligopolistic market structure, there is threat from the close substitutes as all the
producers are producing slightly differentiated goods. However the firms indulge in non-price
(advertisements, marketing strategies) to make their brand identity different from their rivals.
Bargaining power of the Buyers
The buyers enjoy very less bargaining power. The firms are few and so the supply in most
cases is less than the demand. The buyers do not face the scope of bargaining much in their
favour.
Bargaining power of the Suppliers
There are few firms and so each firm has a big market share. In fact the firms also have the
market power to influence the market prices and other conditions impacting the market
outcome.
Industry rivalry
There are few participants in the industry producing electric bikes or scooters. Thus the
rivalry is intense among these firms. They sell slightly distinct products and indulge in non-
price competition to make their position in the industry stronger than their rivals.
Marketing Plan
Overall marketing strategy
The Intelligent cycles have adopted their main strategy of highlighting to their targeted
customers the benefit of using the electric scooters or bikes over other fuel driven bikes. They
are trying to advertise and promote their market product using their eco-friendliness as the
USP.
Pricing strategy
The company aims at making their products reasonably and moderately priced so that they
can have a good market demand from their customers. They are pricing their product in such
a way so that their rivals do not gain any pricing advantage over them. Thus, the company is
not gaining any price leadership for their product. The products will be discounted during
peak seasons in order to increase their sales, this way the company can manipulate their
products demand. The price of the product for Intelligent Cycles have a profit margin of eight
percent embedded in the price thus discounting enhances the value for customers as well as

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the owners. The buyers are able to buy the electric bike at a lower price than their expectation
on the other hand the seller also enjoys surplus income by selling huge amount of the
product. The owner are trying to cut down the cost of production by simplifying the complex
manufacturing units, this way they can increase their profit margin even without raising the
price of the product.
Sales process or sales cycle
The sales process or cycle is one in which the first step is creation of brand identity. After the
brand identity is created among the industry, the company aims at promoting or advertising
their product. Post promotion the sales are increased through better quality assurance and
competitive pricing of the product (Donleavy, et al., 2018).
Management Team and Company Structure
Management team
Team management is a very important part of any company’s organisational structure
(Walton, 2018). There are various teams working on different projects which need to be
managed so that there is coordination, cooperation and collaboration among the team
members and also across the different teams or departments.
Board of directors
The Board of Directors or the direct stakeholders of the company proceed with an aim of
making their company known and sustaining their business.
Skills base of team
The team members are skilled to produce the electric bikes with least cost and maximum eco-
friendliness (Marina, 2018; Olson, et al., 2018; Hunt, 2018a; Hunt, 2018b; Woodbury, et al.,
2108). The quality is ensured by the work skills of the employees. The team leaders
guarantee proper connectivity and team work with maximum productivity of the employees.
Operations plan
Operations model and procedures
The input of the company would include the introduced capital which is $40,000, the
material, which would be the electric scooters bought from China from Alibaba suppliers, the
facilities which would be mobile applications on Android as well as iOS devices. The labour
would be warehouse handlers, whereas the time taken for intimating the plan would be 6
months. The Environment would include factors such as customers, regulation, technology,

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suppliers and competitors. The people who want to get cheap and environmental friendly
transportation facilities would be the customers of the company (Gear, et al., 2018). The
company would be regulated by the Companies Act, the technology used would be e-
commerce websites and mobile applications, the suppliers are Alibaba suppliers from China
and finally the competitors. As of the current scenario, there are no such companies in the UK
that are selling or even renting electric scooters, hence it would be a great competitive
advantage to the company for taking over the market.
Product or service design and development plan
Challenges
The company however is facing many challenges today while operating in the industry. The
company is facing new entrants in their industry which is increasing the level of competition.
There are also new and advanced technologies coming up in the market which are posing
threat of competition to the company. The company always has to keep researching and
developing their products and making new inventions and additions to their pre-existing
products.
Costs
The Intelligent cycles are a very cost effective company which is producing eco-friendly
products at a very low price. The cost structure gives the company an added edge over their
rivals.
Intellectual property
As the company, Intelligent cycles are producing electric bikes which are a new gift of
scientific research and development, this invention needs protection. The product has to get
their patent rights and so the Intellectual Property Rights (IRP) of the company gives its
invention protection from being copied and at the same time, it is a source of revenue earning
(Tjia, 2018).
Financial Plan for the First Year Of Trading
Sources of funding
The initial capital for starting the business is being mobilized through corporate loan from
HSBC. The firm is taking a loan of two million pounds for five years. This capital is required
to buy the initial cycles and also to develop the mobile application that will allow the
customers to book their rides from their homes. Another amount of twenty thousand pounds

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have been invested by the owner. The bank is charging an interest rate of 7.4% per annum,
and by making the investment the owner is losing an interest 6% p.a. that he was earning
from an mutual fund investment.
Assumptions made
In order to develop the business plan the owner has made some assumptions which are as
follows. The first assumption made by the owner is that the business will experience a
constant growth rate all along the first year of the business. The second assumption made by
the owner is that competitors will not change the price of their service in order to prevent a
new entry in the industry. The third assumption made by the owner is that the political
scenario of the country remains stable and thriving for the business. Finally the owner
assumes that the exchange system of the country remains stable because if it increases it can
affect the export of electric bikes.
Profit and loss account
Figure-1: Profit and loss account
Revenue 2600
COGS -12900
Net sales -10300
Operating expenses:
contract expense -2500
marketing -4500
Total operating expense -7000
Gross income -17300
Interest cost -12600
tax cost -500
net income -30400
Loss -30400
The firm is earning a loss in the first twelve month of its business. The operating expense is
way above the earning of the company. Thus the company has kept in reserves in order to
meet the short-term investments that it need to carry out in order to keep the business alive.
Cash Flow Forecasts
Figure-2: Cash flow forecast
cash flow from operational activity
sale 2600
initial investment -200000

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contract
-
2500.00
net cashflow from activity -199900
net cashflow from investment activity 0
net cash flow -199900
The cash flow statement demonstrates that firm is going to have cash outflow for the first
twelve months of the business (Alfonso, Christie, Hollie and Yu, 2018). The business is
earning from its sales but has to invest a huge amount of money in the initial stage in order to
start the business.
Balance Sheet
Figure-1: Balance sheet
current assets
sale receivables 2600
non-current asset
reserves 5000
Electric cycles 12900
total asset 20500
current liabilities
contract 2500
non-current liability
bank loan 18000
total liabilities 20500
The firm is having equal amount of liabilities with their assets after the first year than the
assets earned by it through the year. Among the assets sale receivables are the only current
assets, while in non-current assets the company has its cycles and the working capital
reserves in their hand. The contract fee paid to the repair shops and bank loan has been
treated as the long term liability of the firm. Electric cycles are the costliest asset of the firm
while the bank loan is the costliest liability for the firm.
Break-Even Analysis
Figure-4: Break-even analysis

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Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
0
100
200
300
400
500
600
700
total fixed cost
VC
Revenue
The break-even sale for the firm is 220 sales. The company has attained this sale in May. The
variable cost for the business is constantly rising through the twelve month period on the
other hand the revenue of the company has non-uniform growth through the twelve month
period. This represents the seasonal cycle affects the business of the firm.
Scenario / Contingency Planning
An organization should focus on the quality of their service as this is the only way to alive in
the industry (Abel, 2018). In order to have success in this the firm needs to have repair shops
or can enter into contract with major electric shops of the city to maintain their bikes even
during when the customer is using it. The firm needs to employ an extensive marketing
scheme in order to have a deep penetration into the market (Crowther, 2018). They need to
have friendly approach towards the foreign tourists who want to have smooth tour around the
city. The owner should have a working capital of around five thousand pounds in order to
have five thousand pounds in order to have flexibility in his investment. This is so required to
meet some short-run investments that the owner can make in order to increase his sales.

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