Finance Report: Comparative Analysis of Two Business Plans

This report presents a comparative analysis of two engineering business plans: Pyramid Engineering and Rosafarbenes Nilpferd & Sons Engineering Inc (RNSE). The study begins with an introduction, followed by detailed descriptions of each business, including their vision, mission, and goals. It then delves into market research, operational strategies, products, and marketing plans. The financial aspects are thoroughly examined, including profit and loss accounts, cash flow forecasts, startup costs, and balance sheets for both companies. The report identifies the strengths and weaknesses of each business plan and concludes with recommendations for improvement. The analysis covers various aspects, from market segmentation to financial strategies, providing a comprehensive overview of the business plans and their potential for success. The report also highlights the key assumptions and financial projections for each company, offering insights into their financial viability and long-term sustainability.

Running head: FINANCE
Finance
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Introduction:...............................................................................................................................2
Description of Each Business:...................................................................................................2
Business Profiles:.......................................................................................................................3
Vision, Mission and Goals:........................................................................................................4
Market Research:.......................................................................................................................5
Operational strategy:..................................................................................................................5
Products and Services:...............................................................................................................6
Marketing Plan:..........................................................................................................................6
Market Segmentation Strategy:..................................................................................................7
Pyramid Engineering..................................................................................................................9
Profit and Loss Account:........................................................................................................9
Cash Flow Forecast:.............................................................................................................10
Start-up Cost:.......................................................................................................................11
Balance Sheet:......................................................................................................................12
Profit and Loss Account:......................................................................................................14
Cash Flow Forecast:.............................................................................................................15
Start Up Cost:.......................................................................................................................16
Balance Sheet:......................................................................................................................17
Strongest and weakest components of each business:.............................................................17
Pyramid Engineering Strength and Weakness.....................................................................17

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Recommendations:...................................................................................................................18
Conclusion:..............................................................................................................................19
References:...............................................................................................................................21

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Introduction:
The present study is based on selecting two engineering related company business
plan and providing the description of each of the company’s business plan. The report would
be providing the mission and vision of each company and would be explaining the strongest
component for each company’s planning and execution of engineering projects. The report
would also be highlighting the weakest components for each plan and a comparative analysis
of the two business plans. Finally, a recommendations will be provided as how the business
plans can be improved to facilitate the planning and execution of engineering works.
Pyramid Engineering is a company that would be specializing in mechanical,
plumbing, electrical and fire protection. The company provides engineering, design and
consulting services on government, educational, commercial facilities and educational health
care by subcontracting with the architects working on such facilities. While Rosafarbenes
Nilpferd & Sons Engineering Inc (RNSE) specializes in the segment of technology 2 system
which is physically incorporated into the product which performs a dedicated function or the
specific application. Examples of the RNSE products includes the consumer products such as
the kitchen appliances and home entertainment system while the commercial products
examples include the point of sale terminals, industrial process controls etc.
Description of Each Business:
Pyramid Engineering is a company that provides engineering services by using the
technically advanced procedure which provides greater value to the clients and enhanced
design and construction. Pyramid Engineering emphasis on fire protection, electrical and
mechanical products (Drucker, 2014). The target customers of the Pyramid Engineering are
the architectural firms. The targeted segment for work is divided in five categories namely
the education, government facilities, contractors, heath care and commercial facilities. The

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competitive edge of the company will be its vast knowledge of digital based design resources.
Superior customer service would also be the point of company differentiation. Application of
quality control and assurance program would help in providing emphasis on production.
While RNSE would look establish a strong foothold in the niche market of technology
for category one product devices. To capitalize on the increasing demand for the category one
product devices the company aims in developing technology one hardware and software
(Kirzner, 2015). The company has positioned itself as the high-end developers of devices and
targets selective telecommunication companies along with the smaller industrial automation
as well as instrumentation companies that has the strong demand for the higher performance
product of category one devices.
Business Profiles:
Pyramid Engineering was set up four years ago and it is located in the Altoona,
Pennsylvania. The company comprises of highly-qualified professional engineers. As the
company engages itself in the fields of electrical, plumbing, mechanical and fire protection
engineering services the engineers of Pyramid Engineering are registered in around 22 states
and districts of the Columbia and altogether have more than 90 years of joint work
experience. Pyramid is successful in providing expertise and leadership although the
interactive design procedure (Venkataraman, 2019). By keeping continuous communication
and integrated design concepts, Pyramid Engineering forms design that are unique to the
needs of clients.
While RNSE is a solely owned high tech business since it established in 1992. In
order to capture the rising demand for product one category devices, the company has newly
shifted its focus from providing consulting services to the creation of technology one
hardware and software (Kuratko, 2016). After consulting drop in revenue from 1998, RNSE

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restricted its consulting activities and started its production for the first line product that was
introduced during 1999. RNSE products are simply off-the-shelf ready platform which
contains all the required infrastructure for the technology 1. The appliance makers can
immediately emphasis on their specific product applications.
Vision, Mission and Goals:
The mission of Pyramid Engineering is to offer high quality professional engineering
service for the construction and other related activities in order to strike balance between the
public and private customers (Noe et al., 2017). The company is committed towards higher
standard client service, employee development, ethical business practice and reasonable
profitability.
The vision of Pyramid Engineering is to be recognized by its excellent design, system
integration and commitment towards sustainability (Lasserre, 2017). The company seeks to
add value with the help of innovation and creativity, aligning itself with the customer goals
which meets their quality and cost objectives.
The goals of Pyramid Engineering are as follows;
a. Achieving a revenue of $350,000 in first year of operation
b. Attaining 10% of the market share.
Rosafarbenes Nilpferd & Sons Engineering’s mission is to form an advance product
category one solution for the appliance and equipment developers who because of the fast
growing technology are under pressure of getting their products in the market quickly
(Parker, 2018). The vision of the company is to maintain a small group of technical team,
outsourcing the manufacturing and keeping the marketing offers which would meet the
demand for the product one requirements.

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The goals of RNSE are as follows;
a. Making RNSE products compatible with the first-tier operating systems by the first
year of operations
b. Completing a thorough website redesign and get a quality mailer of 300 Value Added
Resellers by the first year of operations.
Market Research:
For Pyramid Engineering the engineering, consulting and design business comprises
of several small consulting companies and sole consultants for every few dozens of the well-
known engineering and architectural organizations (Burns, 2016). The project pricing and
billing rates are astonishingly variable. Customers and the probable customers are anticipated
to pay substantial amount of fees for the quality professional advice. Customers hardly
compare consultants directly and they generally follow the word-of mouth recommendations
or the past reputation instead of selecting from the menu of the possible service providers
(Parker, 2018). A wide and extensive base of market is available, if the company property
pursues it can easily allow the owners to attain the desired revenue and development goals.
While the market for RNSE product one category devices is vital in the production of
technology two microprocessors. More than 180 million 32-bit microprocessors are delivered
on yearly basis (Storey, 2016). According to the conservative estimation, the market is
growing by 22% yearly. Market trends have indicated that majority of the microprocessors
would be needing technology one. Currently the number of makers of off-the-shelf product
category one devices is very much less and it is not likely to meet the growing demand.
Operational strategy:
The operational strategy of the Pyramid Engineering would involve using the current
contacts with the architects, government agencies and commercial developers so that they can

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increase the word-of-mouth regarding its business (Burns & Dewhurst, 2016). The company
has the standard broacher on its expertise and specialities that would be directly sent to the
architectural firms (Lipset, 2018). Majority of the engineering work would be billed on the
hourly basis at the predetermined levels that would be dictated by the project schedule
milestones. The company has assigned a rate of $75 per hour for the basic engineering and
consultation services and $40 per hour for drafting services.
While RNSE as an operational strategy would be partnering with the technology
manufacturer. All the RNSE products containing the microprocessor chips would be placed
on the technology manufacturer website as its third party member (Barringer, 2015). The
company would be employing two low-level technicians who would be dealing with the
repairs and testing of returns. While the software engineer similar to the outside consultants
would be reporting directly to the CEO.
Products and Services:
Pyramid Engineering would be specializing its services in the mechanical, plumbing,
electrical and fire protection (Meyer et al., 2017). The company would be providing its
services in engineering, design and consulting services on government, educational,
commercial facilities and educational health care by subcontracting with the architects
working on such facilities. While Rosafarbenes Nilpferd & Sons Engineering Inc (RNSE)
would be specializing in the segment of technology 2 system that would be physically
combined in the product for performing a dedicated function or the specific application
(Morden, 2016). The main products of RNSE includes the consumer products such as the
kitchen appliances and home entertainment system while the commercial products examples
include the point of sale terminals, industrial process controls etc.

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Marketing Plan:
Marketing Strategy of Pyramid Engineering:
Pyramid Engineering would be using internet and personal contact as its sales
promotion. The company would target using direct mail and e-mail campaign which would
make major competitors in the market aware of the company’s presence (Read et al., 2016).
Pyramid Engineering would be focusing on limited advertisement budgets to promote the
community sponsored events and would also be offering technical services at the discount
rates to the non-profit organizations.
Market Segmentation Strategy:
Marketing Strategy of Pyramid Engineering
As the part of marketing plan Pyramid Engineering would be targeting its client base
from the following sectors;
Governments: State, local and county.
Private sector or commercial: To promote its product the company would target
developers, realtors, property owners and banks.
Health care and senior facilities
Educational institutions such as private and public universities
Engineering and architectural firms such as subcontracting.
Marketing Strategy of RNSE:
The RNSE marketing strategy would be concentrated towards large
telecommunication sector in the market together with the small industrial automation and
instrument sectors. The company would use high pricing strategy in order to stay consistent
with the brand image and arrangement with the technology manufacturer (Cooper & Folta,

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2017). It would also align with the first-tier developers involved in operational system to
additionally expand the company image. RNSE would make investment in advertisement for
bolstering the image among the targeted trade publication serving the selected market
segments.
Positioning statement:
As a part of marketing strategy RNSE positioning statement is to be competitive on
the cutting edge of the product category one device (Ansoff et al., 2018). The company would
target customers in the growing telecommunication, industrial automation and
instrumentation sectors.
Pricing and Promotion Strategy:
For the purpose of marketing, the pricing of RNSE products would be based on the
marketing costs at a margin of 40% sales price which would be in accordance with the COGS
of 38% for the first quarter (Lipset, 2018). While the promotion strategy of RNSE would
include partnering with major technology manufacturer as the means of promoting its product
among prime customers of category one devices.
Financial strategy of Pyramid Engineering:
The financial strategy for Pyramid Engineering needs to develop the permanent
system of receivables financing by using the established accounting system. The financial
plan is reliant on the vital assumptions such as the company assumes that there is a strong
economy without any kind of recession (Cooper, 2017). The company assumes a 60-day
average collection period with 30 days on the average for the invoice payment.

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Pyramid Engineering
Profit and Loss Account:
(4) PROFIT AND LOSS FORECAST
Pre-opening
Year 0 FY-1 FY-2 FY-3
Revenue 0 3,50,750 4,55,975 5,47,170
Cost of sales 0 1,05,225 1,10,486 1,19,325
Gross profit 0 2,45,525 3,45,489 4,27,845
Gross Margin 2,63,583 3,10,033 3,60,379
Expenses/overheads
Leased Premises Rent 25,000 25,000 25,000
Wages 35,000 42,000 52,500
Administrative Expenses 3,000 3,600 4,500
Communication Expenses 14,500 17,400 21,750
Marketing Expenses 6,500 7,800 9,750
Rates 7,500 9,000 11,250
Insurance 3,500 4,200 5,250
Other general expenses 5,000 6,000 7,500
Interest 2,750 3,300 4,125
Market survey 16,000 16,000 16,000
Prelim expenses 2,250 2,700 3,375
Total expenses/overheads 1,21,000 1,37,000 1,61,000
Profit before tax 1,24,525 2,08,489 2,66,845
Tax @ 30% 37,358 62,547 80,053
Profit after tax 87,168 1,45,942 1,86,791
Transfer to reserves 1,24,525 2,08,489 2,66,845
ROC 17% 29% 34%

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Cash Flow Forecast:
(2) CASHFLOW FORECAST
Pre-opening
Year FY-1 FY-2 FY-3
CASH INFLOWS
Cash from Sales 3,50,750 4,55,975 5,47,170
Directors loans 2,00,000 2,00,000 2,00,000 2,00,000
Capital Employed 5,00,000 5,00,000 5,50,000 6,05,000
Other cash inflows
TOTAL CASH INFLOW 7,00,000 10,50,750 12,05,975 13,52,170
CASH OUTFLOWS
Payments for materials 1,05,225 1,10,486 1,19,325
operating expenses ( ) 0
Premises (rent, rates) 0 25,000 25,000 25,000
Wages and salaries 0 35,000 42,000 52,500
General expenses 0 3,000 3,600 4,500
Interest and bank charges payable 0 16,000 16,000 16,000
capital expenditure 0 1,00,000 1,20,000 1,50,000
Corporation Tax 37,358 62,547 80,053
Market survey costs 0 2,250 2,700 3,375
Other preliminary expenses 0 3,000 3,600 4,500
capital expenditure
Plant and other capital expenditure 0 1,30,000 1,30,000 1,30,000
financing repayments
Loan repayments 16,000 16,000
TOTAL CASH OUTFLOWS 0 4,56,833 5,31,933 6,01,254
Cash flow summary
NET CASHFLOW FOR PERIOD 7,00,000 5,93,918 6,74,042 7,50,916
OPENING CASH BALANCE 0 7,00,000 12,93,918 19,67,960
CLOSING CASH BALANCE 7,00,000 12,93,918 19,67,960 27,18,876