CHAPTER 2

THE INDUSTRY AND COMPANY

2.1 The industry

Over the years, loads of stuffs have changed especially the way businesses are conducted and
the marketing strategies that people employ to market their goods and services. The advent of
the computer and later the internet gave a whole new definition of how things are supposed to
be done in our world.
Social media marketing is one of the fruits of the internet and for sure it has enabled loads of
entrepreneur to launch multi-million dollars international businesses; businesses with clientele
base that cut across geographical boundaries.
Social Media Marketing in its simplest term is the process of pulling website traffic or attention
through social media sites; they achieve this by creating content that attracts attention and
encourages readers to share it across their social network platforms. One of the major purposes
of leveraging on Social Media in marketing is that it covers a wide range of target market
compared to other marketing tolls.
The Social Media Marketing industry is quickly expanding as a share of the economy. Before the
year 2020, the Social media marketing industry value added, which represents its contribution
to the economy, is projected to grow annually at a 26.2 percent rate.
In the meantime, GDP growth is forecast to increase at a 2.2 percent average rate per year over
the same 10 year period. The growing trend which makes it easier for people to spend more
time on the internet especially on social networking sites is a major boost in the revenue
generated by social networking marketing companies. It is not common to find companies in
this industry generating an increasing amount of advertising revenue per user by developing
targeted advertising platforms and tools to measure the effectiveness of advertising.
Statistics has it that the Social Media Marketing industry in the United States of America, is
worth $11bn, with an estimated growth rate of 25.4 percent. There are about 5,607 registered
and licensed social media marketing companies in the United States and they are responsible
for employing about 66,623 people.
According to Hub spot, 95% of marketers in 2015 claimed that social media marketing was
important for their business, with 85% indicating their efforts increased traffic to their
websites. And according to Social Media Examiner, 97% of marketers are currently participating
in social mediabut 85% of participants arent sure what social media tools are the best to use.
Companies that are into social media marketing make use social media platforms to create
buzz, attract online traffic to their websites and the sell their products or services to their target
market / customers. As a matter of fact, social media marketing is perhaps the only form of
marketing that can profile consumers at each and every stage of the consumer decision
journey. Marketing through social media is just the way to go if indeed you want to push out
your product and services to the entire globe.
When compared to traditional media that are often too expensive for start ups and even
SMEs, a social media marketing approach does not require expensive and out of reach
budgeting. This is why companies make use of platforms such as Facebook, Twitter, YouTube,
LinkedIn and Instagram et al in order to reach a much wider target market as against making
use of main stream marketing tools which are expensive.
Over and above, social media marketing has become an important tool for promoting ones
businesses as it relates to products and services all over the world, not only to sell to
customers, but also to engage them. It is now easier for organization to expand their market
from local level to national and even international markets with minimum capital investment.

2.2 Industry Analysis

Over the past decade, weve seen social media marketing grow from an overlooked niche tactic
to one of the most influential digital marketing techniques used today. What began as a
method that was mostly limited to B2C companies has continued to expand across industries
and is now utilized by every type of organization, regardless of background. Theres a good
chance youve at least dipped your toes in the water of social marketing, but you might not
realize just how significant the technique has become.The Social Media Marketing industry
comprises of social networking website publishers and developers as well. It is important to
state that the industry does not include companies who majorly specialize in developing video
games, internet content, online dating websites or online forums et al.
To analyze industry, we can see the Porters five competitive forces matrix. The matrix shows
the industry situation in security service industry. The total score measures the industrys
attractiveness. The matrix is a useful tool for comparing the attractiveness of different
industries. Minimum score= 5 (Very attractive) and maximum score= 125(Very unattractive).
Table 1: Porters Five Forces Matrix

S. No. Competitive Force Important (1 to 5)(1= Threat to industry (1 Weighted

not important, 5= very to 5)(1= low,3= score (Col3x
important) medium, 5= high) Col4)

1. Rivalry among companies 3 3 9

2. Bargaining power of 2 2 4
suppliers

3. Bargaining power of 2 2 4
buyers

4. Threat of new entrants 3 2 6

5. Threat of substitute 2 2 4

Total 27
Since the total score of the above given matrix is 27, the industry is very attractive. So that it is
better to enter the industry. The detail analysis of Porters five forces matrix is done as follows:

2.2.1 Rivalry Among Companies

2.2.2
2.2.3
2.2.4
2.2.5

2.3 The Company and The Concept

Social Media Marketing Nepal is a Nepal based social media marketing company. We have been
able to secure a standard and well positioned office facility in a central business district in
Kathmandu. We are a social media marketing company that is set to compete in the highly
competitive social media marketing industry not only in the Nepalese market, but also in the
global market because our clientele base will not be restricted to just businesses and
organizations in the United States.
Social Media Marketing Nepal was established with the aim of maximizing profits in the Social
Media Marketing industry. We want to compete favorably with the leading social media
marketing companies in the Nepal and the world which is why we have but in place a
competent team that will ensure that we meet and even surpass our customers expectations.
Social Media Marketing Nepal is a social media marketing company that intend starting small in
Kathmandu, but hope to grow big in order to compete favorably with leading social media
marketing companies in the industry both in Nepal and on a global stage.
2.3.1 Vision
Our vision is to establish a standard and world class social media marketing company whose
services and brand will not only be accepted in Nepal, but also in other parts of the world.
2.3.2 Mission
Our mission is to provide professional and highly creative result oriented social media
marketing services and other related services that will assist businesses, individuals and non-
profit organizations in promoting their brands and reaching out to a wide range of potential
customers all over the globe. We want to build a social media marketing company that can
favorably compete with other leading brands in the social media industry.

2.3.3 Key to Success

2.3.3.1 Communication: Company will give priority for effective internal
communication as well as external communication.

2.3.3.2 Technological awareness: It is completely an IT based company, so we will

train its workforce to handle modern technological devices.

2.3.3.3 Honesty: It is the ability to act with honesty and be consistent in whatever it
is done based on the particular moral value of belief compass the company
has. Thus, the company will act with integrity.

2.3.3.4 Low cost: Offering low cost solution which will generate high- value returns
in customer satisfaction.

2.4 Service Description

The business will pursue relationship based on transparency, persistence, mutual trust, and
integrity with our employee, customers and other business partners. Our team of specialists
consistently delivers outstanding results combining creative ideas with our vast experience. We
can help customers build a sustainable, meaningful relationship with their clients by engaging
them with customers brand using social media. We will work in areas as diverse as search
engine optimization, social media marketing, email marketing and digital marketing.

As the core business, social media marketing for business customers in domestic market as well
as foreign market is expected to generate the largest share in revenue. Social media marketing
consulting and advisory services is also expected to be another important generator of
revenues, which also helps utilize invested capacity.

2.5 Entry and Growth Strategy

Social media marketing is an engagement with online communities to generate exposure, opportunity
and sales. It seems that many marketers see the social media frontier as the next marketing gold rush.
Given the low cost of entry, many marketing pros are doing more than just dipping their creative toes
into this gold-laden water. The social media marketing industry is going to be attractive but there is also
growing competition. The development of new business strategies and solutions seems critical for new
industry players to get market shares and survive in this competitive industry.

The future of a business lies in the numbers of loyal customers that they have the capacity and
competence of the employees, their investment strategy and the business structure. If all of
these factors are missing from a business (company), then it wont be too long before the
business close shop.
One of our major goals of the proposed business strategy is to build a business that will survive
off its own cash flow without the need for injecting finance from external sources once the
business is officially running. We know that one of the ways of gaining approval and winning
customers over is to offer our social media marketing services a little bit cheaper than what is
obtainable in the market and we are well prepared to survive on lower profit margin for a
while.

Social media marketing will make sure that the right foundation, structures and processes are put
in place to ensure that our staff welfare are well taken of. Our companys corporate culture is
designed to drive our business to greater heights and training and re training of our workforce
is at the top burner of our business strategy.
As a matter of fact, profit-sharing arrangement will be made available to all our management
staff and it will be based on their performance for a period of three years or more as
determined by the board of the organization. We know that if that is put in place, we will be
able to successfully hire and retain the best hands we can get in the industry; they will be more
committed to help us build the business of our dreams.
 CHAPTER 3

MARKET RESEARCH AND ANALYSIS

3.2 SWOT Analysis

3.2.1 Strengths
3.2.1.1 Ideal advertising medium

3.2.1.2 Competitive price

3.2.1.3 Effective up sell strategy

3.2.1.4 Diligent customer service

3.2.1.5 Connection generator

3.2.1.6 Effective as a loyalty program

3.2.1.7 Experienced management team

3.2.2 Weakness

3.2.2.1 New to industry, little to no market recognition at time of launch

3.2.3 Opportunities

3.2.3.1Cover large market area

3.2.3.2 Internet lends to global market

3.2.2.3 Numerous marketing channels

3.2.3.4 Staying on top of software revolution

3.2.4 Threats

3.2.4.1 Continuous software revolution

3.2.4.2 Low barriers to entry for competition

3.2.4.3 Economic Recession

3.2.4.4 Wide market variety

3.3 Customers
Social media marketing have various types of customers. The main customers would be the
business organization like travel agencies, hotels and restaurants, education consultancy, e-
commerce and financial institutions.
3.4 Market Size and Trends
Social media has become a key aspect of marketing for businesses these days, thanks to the
increasing number of internet users worldwide and decreasing rates of connected-devices
(smart phones, laptops, etc). It is actually difficult to estimate the size of social media marketing
since the market is really big and you can see 100s of businesses launching each year in
different parts of the world. However, studies on social media marketing suggest that global
spending on social media marketing will increase to USD 35.98bn by 2017, up from USD
11.36bn in 2013.

Its clear now that social media marketing is here to stay, and its massive staying power is
attributable to one key characteristicthe fact that social media keeps evolving. It responds to
new tech like mobile devices, constantly exceeds users expectations, and competes within
itself to bring us more and better features.

3.5 Competition Analysis and Competitive Edge

Social Media Marketing Pvt. Ltd. Offers international level service to its client. The main
competitors of this company are Gurkha Tech, Sharda IT Service, Weblink Nepal and Social
Aves. The following competitive grid table shows the competition in detail.

Table 2: Competitive Analysis Grid for the Company

S.N Particulars SMM Nepal Gurkha Tech Sharda IT Weblink Social

Service Nepal Aves
1. International Advantage Disadvantage Even Advantage Even
Alliance
2. Price Even Even Advantage Advantage Even
3. Facility/ Advantage Even Even Advantage Advantage
Benefits
4. Customer Even Advantage Advantage Advantage Even
5. External Even Disadvantage Disadvantage Even Even
Target
6. Training Disadvantage Disadvantage Disadvantage Advantage Even

7. Service Advantage Disadvantage Even Advantage Advantage

As shown in above table, the company has competitive advantage of international alliance,
customer retention, external target market training and service differentiation. The company
will build a competitive edge through efficient customer service and price.
3.6 Estimated Market Share and Sales
 CHAPTER 4

MARKETING PLAN

4.1 Overall Marketing Strategy

A social media marketing plan is the summary of everything you plan to do and hope to achieve
for your business using social networks. This plan should comprise an audit of where your
accounts are today, goals for where you want them to be in the near future, and all the tools you
want to use to get there. In general, the more specific you can get with your plan, the more
effective youll be in its implementation. Try to keep it concise. Dont make your social media
marketing strategy so lofty and broad that its unattainable. The plan will guide your actions, but
it will also be a measure by which you determine whether youre succeeding or failing. You
dont want to set yourself up for failure from the outset. Social media marketing use social media
platforms to create buzz, attract online traffic to their websites and the sell their products or
services to their target market/customers. As a matter of fact, social media marketing is perhaps
the only form of marketing that can profile consumers at each and every stage of the consumer
decision journey. Marketing through social media is just the way to go if indeed you want to
push out your product and services to the entire globe.

4.2 Target market

Before starting our social media marketing business, we are certain that there is a wide range of
both corporate and individual clients who cannot successfully run their businesses without the
services and support of a social media marketing company. In view of that, we have created
strategies that will enable us reach out to various corporate organizations and individual who we
know cant afford to do without our services. We have conducted our market research and survey
and we will ensure that we meet and surpass the expectations of our clients. Below is a list of the
people and organizations that we have specifically market our services to:

Banks, insurance companies and other related financial institutions

Corporate organizations
Manufacturers and distributors
Real estate owners, developers, and contractors
Research and development companies
The government (Public sector)
Schools (high schools, colleges and universities)
Hotels
Celebrities, politicians, public figures and public speakers
Sport organizations
 Religious organizations
Political parties
Television stations
Printing press (publishing houses) and authors
Branding and advertising agencies
Aspiring celebrities
Entrepreneurs and start-ups

4.3 Pricing

We are aware that there are some one- off jobs contracts which are always profitable, we will
ensure that we abide by the pricing model that is expected from contractors or organizations that
bid for such contracts. The pricing in domestic market will be done according to competitors
price and willingness to pay by the domestic customers. Foreign sector customers are more
quality conscious than the price so, if we can provide them quality service, they will pay
attractive price.

The pricing package of social media marketing for small business is Rs. 75,000 annually and Rs.
10,000 monthly which is slightly lower than what other renown companies charge. Service
charge for foreign sector is same with other companies.

4.4 Sales Strategy

The marketing manager will meet with domestic clients at their building to perform an initial
consultation and will create proposals for social media marketing based on the Clints needs. Th
e sales tactics will be to listen carefully to the needs of the clint and provide assurance. The
company will follow the following tactics to build confidence on clints.
 CHAPTER 5

OPERATIONS PLAN

5.1 Service Specification

Social Media Marketing Pvt. Ltd. will offer individual owner and business organization a quick
response, reliable source of technical support to its clients. SMM Nepal will offer services,
corresponding to what industry experts have identified as the primary opportunities in digital
advertising services. The company will provide trained skilled and semi-skilled workforce.The
business will pursue relationship based on transparency, persistence, mutual trust, and
integrity with our employee, customers and other business partners. Our team of specialists
consistently delivers outstanding results combining creative ideas with our vast experience. We
can help customers build a sustainable, meaningful relationship with their clients by engaging
them with customers brand using social media. We will work in areas as diverse as search
engine optimization, social media marketing, email marketing and digital marketing.

5.2 Form of ownership Chosen

The company would be a Private limited company which requires only one shareholder or
promoter. The key person/ CEO of the company is Mr. Pratap KC. It is his proven extreme
attention to detail and commitment to the work. He has years of experience in IT sector. He is
also 6 Sigma certified, meaning he has received extensive training in business process
improvement.

5.3 Location
This office will be located at the core of Kathmandu. It will be situated at Star Mall, Putalisadak,
Kathmandu. The location is appropriate for business deals and meetings. The mall has
availability for parking space. It is located in the heart of Kathmandu. Social media marketing
Pvt. Ltd. has a strong technology base and unlike it peers in other technology hubs, the lower
cost of living and warmer climate make Kathmandu the ideal location to find (and employ)
talent. The company leases building on the first floor of a large square foot rise office building.
Major social media marketing offices like Gurkha Technology, Social Aves are located in Thapa
gaun and Jawalakhel area so it is easy to attract customers of Putalisadak, which is top business
area and also it will be easy to achieve market share.
5.4 Staffing and Training

Staff will be hired according to recommendations, experience and education in their field. High
standard will be kept through the training manuals for new employees and will be given a
mentor to shadow for the first 2 weeks of arriving. Later a checklist will be drafted to monitor
their quality of service first three months. Staffing and training will be available for SMM
representative, and customer service candidates. One on one meeting will be held to discuss
and handle any arising issue regarding performance and service.

5.5 Transaction Procedures

SMM Nepal transaction will be done through face to face dealing with the required paper
works. Either the client can email or we will be available at our facebook account and page
where the desired client can write us. Office will open on Sunday till Friday from 9:30 am to
5:30 pm. The clients are required to fill the legal documents for the contract. Service level
agreement is done between SMM Nepal and the clients. Unsatisfied customers may either
email or call the company with their complaints, which will be handled by customer service
representatives.

5.6 Operating Procedure

The creation of services involves transforming or converting inputs into outputs. Various inputs
such as capital, labor and information are used to create services using one or more
transformation process. To ensure that the desired outputs are obtained, an organization takes
measurements at various points in the transformation process (feedback) and then compares
them with previously established standards to determine whether corrective action is needed
(control).
 CHAPTER 6

MANAGEMENT TEAM

6.1 Structure of the Organization

Social Media Marketing Nepal is a social media marketing company that intend starting small in
Kathmandu, but hope to grow big in order to compete favorably with leading social media
marketing companies in the industry both in Nepal and on a global stage.
We are aware of the importance of building a solid business structure that can support the
picture of the kind of world class business we want to own. This is why we are committed to
only hire the best hands within our area of operations.
At Social Media Marketing Nepal, we will ensure that we hire people that are qualified,
hardworking, creative, result driven, customer centric and are ready to work to help us build a
prosperous business that will benefit all the stake holders (the owners, workforce, and
customers).
As a matter of fact, profit-sharing arrangement will be made available to all our senior
management staff and it will be based on their performance for a period of five years or more
as agreed by the board of trustees of the company. In view of the above, we have decided to
hire qualified and competent hands to occupy the positions as given in the chart.

Figure 3: Hierarchical Structure of the Company

CEO

Manager

HR and Sales & Digital IT Business Finance

Admin Marketing coordinator Development Officer
Officer Officer
Officer

Staffs

Graphic SMM & SEO Content

Designers Expert Creator
6.2 Key Management Personnel

To launch our business, we would require the following key people and they are Chief Executive
Office, Manager, Human Resources and Admin Officer, Sales and Digital Marketing Officer,
Business Development Officer, Finance Officer and IT Coordinator.
6.2.1 Chief Executive Officer CEO
Increases managements effectiveness by recruiting, selecting, orienting, training,
coaching, counseling, and disciplining managers; communicating values, strategies, and
objectives; assigning accountabilities; planning, monitoring, and appraising job results;
developing incentives; developing a climate for offering information and opinions;
providing educational opportunities.
Responsible for providing direction for the business
Creating, communicating, and implementing the organizations vision, mission, and
overall direction i.e. leading the development and implementation of the overall
organizations strategy.
Responsible for signing checks and documents on behalf of the company
Evaluates the success of the organization
6.2.2 Manager

Accomplishes staff results by communicating job expectations; planning, monitoring,

and appraising job results; coaching, counseling, and disciplining employees; developing,
coordinating, and enforcing systems, policies, procedures, and productivity standards.
Establishes strategic goals by gathering pertinent business, financial, service, and
operations information; identifying and evaluating trends and options; choosing a
course of action; defining objectives; evaluating outcomes.
Maintains quality service by enforcing quality and customer service standards; analyzing
and resolving quality and customer service problems; identifying trends; recommending
system improvements.
Maintains professional and technical knowledge by attending educational workshops;
reviewing professional publications; establishing personal networks; benchmarking
state-of-the-art practices; participating in professional societies.

6.2.3 Human Resources and Admin Officer

Responsible for overseeing the smooth running of HR and administrative tasks for the
organization
 Defining job positions for recruitment and managing interviewing process
Carrying out staff induction for new team members
Responsible for training, evaluation and assessment of employees
Responsible for arranging travel, meetings and appointments
Oversee the smooth running of the daily office and factory activities.

6.2.4 Business Development Officer

Identifies trendsetter ideas by researching industry and related events, publications, and
announcements; tracking individual contributors and their accomplishments.
Develops negotiating strategies and positions by studying integration of new venture
with company strategies and operations; examining risks and potentials; estimating
partners' needs and goals.
Closes new business deals by coordinating requirements; developing and negotiating
contracts; integrating contract requirements with business operations.
Protects organization's value by keeping information confidential.
Updates job knowledge by participating in educational opportunities; reading
professional publications; maintaining personal networks; participating in professional
organizations.
Enhances organization reputation by accepting ownership for accomplishing new and
different requests; exploring opportunities to add value to job accomplishments.

6.2.5 Sales and Digital Marketing Officer

Manage external research and coordinate all the internal sources of information to
retain the organizations best customers and attract new ones
Model demographic information and analyze the volumes of transactional data
generated by customer
Identifies development opportunities; follows up on development leads and contacts;
participates in the structuring and financing of projects; assures the completion of
development projects.
Writing winning proposal documents, negotiate fees and rates in line with
organizations policy
Responsible for handling business research, market surveys and feasibility studies for
clients
Responsible for supervising implementation, advocate for the customers needs, and
communicate with clients
Develop, execute and evaluate new plans for expanding increase sales
Create new markets cum businesses for the organization
Empower and motivates the sales team to meet and surpass agreed targets

6.2.6 Finance Officer

 Responsible for preparing financial reports, budgets, and financial statements for the
organization
Provides managements with financial analyses, development budgets, and accounting
reports; analyzes financial feasibility for the most complex proposed projects; conducts
market research to forecast trends and business conditions.
Responsible for financial forecasting and risks analysis.
Performs cash management, general ledger accounting, and financial reporting for one
or more properties.
Responsible for developing and managing financial systems and policies
Responsible for administering payrolls
Ensuring compliance with taxation legislation
Handles all financial transactions for Social Media Marketing Nepal
Serves as internal auditor for Social Media Marketing Nepal

6.2.7 IT Coordinator

Institute protocols for the use of IT across departments and projects

Provide advice on the most suitable IT choices
Provide technical support or training for systems and networks
Act as link between end users and higher level support
Install and configure software and hardware (printers, network cards etc.)
Monitor system and network performance
Perform troubleshooting, repairs and data restoration
Performance maintenance activities (e.g. backups)
Maintain licenses and upgrade schedules
Collaborate with other professionals to maintain standards and functionality

6.3 BOD
6.4 Board of Advisors
 CHAPTER 7

ASSSUMPTION AND CRITICAL RISKS

7.1 Assumptions

7.1.1 Sources of Service Revenue

Social Media Nepal Pvt. Ltd offers its service to different level of organizations. We target our
business to small level including start-up businesses, medium-level businesses like travel
agencies, finance companies, hotels and restaurants, schools, colleges, polyclinics to
enterprises like malls, banks, hospitals etc.

SMM Nepal categories the price list for 1 month, 3 months, half yearly and yearly. The following
table list outs the cost.

SMM Nepal also offers SEO service to its client. For SEO package, SMM Nepal charges start-up
business with Rs.25, 000 per month, professional level business with Rs.45, 000 per month and
enterprise level business with Rs.65, 000.
 CHAPTER 8

The FINANCIAL PLAN

Since the service sales and earnings are based on underlying assumptions and expectation, the
inputs for this financial plan are based on secondary and primary survey of social media
marketing companies of different size and market segments in the social media industry as well
as own estimates based on the planned business environment.

8.1 Projected Initial Investment

8.2 Projected Income Statement

8.3 Projected Statement of Retained Earning

The following statement of retained earning shows that the company will provide retained earnings
from second years of operation.

Table 4: Projected Statement of Retained Earnings

(At the end of year)

S.N. Particular Year 1 Year 2 Year 3 Year 4 Year 5

1 Opening Balance of

2 Add: Net Income

3 Less: Dividend
4 Ending Balance of R/E

8.4 Projected Balance Sheet

The balance sheet demonstrates growth in worth from retained earnings cash held in the company for a
future expansion effort. The equity is increased from Rs. at the beginning to Rs..at the end of fifth
year. The projected balance sheet is shown in next page.
Cash flow is expected to become positive from the second year of operation. The net cash flow
in the first year is Rs. but there is no need to borrow because of the beginning balance of
cash. For the second- year net cash flow is Rs.. and it is increased to Rs.. at the end of fifth
year due to full phase of operation of the business.
Table 6: Projected cash Flow Statement

(At the end of year)

S.N. Particulars Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
1 Cash from operating
Activities

Cash from customers

Cash paid for operating
expenses

Cash paid for tax

2 Cash from operating
activities

3 Cash flow from investing

Activities

Preliminary Expenses
Purchase of Assets
4 Total cash flow from
Investment activities

5 Cash flow from Financing

Activities

Share capital
Hire purchase loan
Dividend paid
Current portion of LTD
Interest Payment
6 Total cash flow from
Financing

7 Increase/Decrease of cash
8 Beginning Balance of cash
9 Ending balance of cash
8.6 projected Break Even Analysis

The break- even point is the point at which revenues cover total costs. The break- even analysis is done
with the concept of service mix. The company should earn at least Rs. service revenue to meet break-
even of the business.

The break even quantity for social media marketing is 481 clients each year. Although, company has
capacity to provide service for 600 clients each year, service will be provide for 300 clients each year
because it is not profitable and company should conduct additional consulting program for new
entrance business. Break even numbers for domestic clients is 279 which is achieved in second year of
the operation. Similarly, breakeven for foreign sector (A) is 175 which is achieved in third year of
operation and the break-even number for foreign sector (B) is 140 which is achieved within second year
of operation.

Table 7: Projected Break Even Analysis

S. No. Particulars Year 1

Training

Domestic Clients

Foreign Sector (A)

Foreign Sector (B)

1 Service Revenue

Variable cost

2 Contribution Margin

3 Weighted Average CMR

4 Fixed Cost

5 Breakeven Revenue

Training

Domestic Clients

Foreign Sector (A)

Foreign Sector (B)

6 Break even Quantity

Training

Domestic Clients

Foreign Sector (A)

Foreign Sector (B)

8.7 Projected Financial Ratio Analysis

The following ratio table compares the business over its five years of projections to the
company.

Table 8: Projected Financial Ratio Analysis

S. N. Particulars Year 1 Year 2 Year 3 Year 4 Year 5

1 Net income
2 Stockholders equity
3 ROI
4 ROE
5 Service Revenue
6 Profit Margin Ratio
7 Total Assets
8 Assets Turnover
9 ROA
10 Dividend
11 Dividend Payout
12 Debt
13 Debt to Equity Ratio
14 Interest Expenses
15 EBIT
16 Interest Coverage
 CHAPTER 9

PROPOSED COMPANY OFFERING

Social Media Marketing is a private company. The initial capital requirement is estimated to be Rs. .
The source of finance for the company will be equity from partnership.

9.1 Initial Invest

The initial investment from partners is given below:

Table 12: Initial Investment from Partners

S. No. Name Proposed Amount Experience of the promoter

1 Pratap K.C.
2
4
Total equity

Required Debt/ Investment

Total Capital

9.2 Use of Funds

The summary of use of fund is given below. Detailed of use of fixed assets is given in Appendix C and
projected costs for startup and year one in Appendix D.

Table 13: Use of Funds

S. No. Particulars Amount

1 Fixed Assets

2 Preliminary expenses

3 Working capital

Total

9.3 Investment Return

The discounted payback period of the project is 4.6 years and internal rate of return is 21.67%, average
Return on Equity is 24.86%, average Return on Investment is 41.10% and average profit margin is
14.07%. Detail discussion on return is done in Financial plan section.
 CHAPTER 10

MILESTONES AND EXIT STRATEGY

10.1 Milestones

The primary objective would be to collect financial resources to set of the company and establish the
infrastructures. After that we would start recruiting for key positions and conduct trainings.

Subsequently, we would recruit experts of SEO and SMM to provide quality service to the customers. In
context of private company, it is not mandatory to held Annual General meeting but the other general
meetings are held with employees when it requires.

Table 14: Milestone of the Company

S. No Milestone Date
1 Collect financial resources September 2017
2 Registration September 2017
3 Set up the company , procurement of required assets and other consumables October 2017

4 Hire key personnel October 2017

5 Inauguration of the company and advertisement October 2017
6 Hire required employees October 2017
7 Start to provide service to the clints November 2017
8 Achieve breakeven in service mix and starts making profit March 2019
 APPENDICS

Appendix A

Projected Service Revenue

S.N Particulars Rate Year 1 Year 2 Year 3 Year 4 Year 5

1. No of Persons Trained

2. Training Fee Per

Person
3. Revenue From Training

4.
5.
6.
7.
8.
9.
10.
11.
12. Service Charge per
Employee
13. TotalServiceRevenue
 Appendix B

Projected Operating Expenses

1. projected Salary of Employees

S.N Rank No. Monthly Year 1 Year 2 Year 3 Year 4 Year 5

1. Chief Executive
Officer

2. Manager

3. IT Coordinator

4. Sales and Digital

Marketing Officer

5. Business
Development
Officer

6. Finance Officer

7. HR & Admin Officer

8. SEO & SMM Expert

9. Graphic Designer

10. Content Creator

11. Front Desk Officer

Total

Notes:

a) A CEO will assign the projects to IT coordinator.

b) IT coordinator will allocate the task to the department head of HR and Administration,
Sales and Marketing, Business Development and Finance.

2. Projected Rent of Building (Putalisadak )

S.N. Building Sq.Ft. No Total Sq. Ft. Rate per Sq. Ft. Total(Rs)

1. Office
2. Tea Kitchen cum
3. Toilet
4. Practical Room
5. Class Room
Total
For 1 year (Annual)

2 (a). Allocation of Office Room in Square Feet

S.N. First Floor No Length Breadth Sq.Ft.
1. Tea Kitchen cum Store
2. Toilet/ Shower
3. Practical Room
4. Class Room
5. First Floor
6. Enroll & Record Officer
7. Marketing Officer
8. Administration & Security
Officer
9. Clerks
10. Chief Executive Officer
11. Training Coordination
12. Finance
13. Conference Room
14. Common Toilet
15. Toilets for Executives
16. SEO Officer
17. Open Space
Total

S. No Particulars Qty Rate Total

1 Third Party Insurance
2 Motorcycle 1 1,400 1,400
 3 Vehicle 2 6,000 12,000
4 Loss/ Damage cover insurance
5 Motorcycle 1 4,240 4,240
6 vehicle 2 64,204 128,408
Grand Total 146,048
3. Projected Insurance

4. Projected Depreciation

S. No Particulars Acquisition Price Rate as per Tax Depreciation/Year

Rule
1 Training Equipment 3,314,480 25% 828,620
2 Vehicles 6,632,424 20% 1,326,485
3 Office Eqpt 874,000 25% 218,500
4 Furniture 1,161,500 25% 290,375
Total 11,982,404.00 2,663,980

5. Projected Write off of Preliminary Expenses

S. No Particular Amount Write off period Write off per year

1 Preliminary expenses 792,000 5 years 158,400

6. Projected License Renew

S. No Particulars Amount
1 License fee (Renew) 20,000
2 Bank service charge (For Bank Guarantee) 25,000
Total 45,000

8. Projected stationary for Office and Training Courses

S. No Description Quantity Cost (Rs)/ Unit Total

1 Highlighter 120 25 3,000
2 Board marker 225 38 8,550
3 Nepali File 2,200 2.6 5,720
 4 Pencil 300 15 4,500
5 Eraser 300 8 2,400
6 Drawing Paper 200 65 13,000
7 Toner 12 4500 54,000
8 Printer Cartridge 24 4500 108,000
9 Photo copy Paper (Rim) 125 380 47,500
10 Stick Note Pad 200 32 6,400
11 Glue Stick 200 35 7,000
12 Dot Pen 300 18 5,400
13 Pilot Pen 960 120 115,200
14 Thumb Pin 80 2 160
15 Tipex 12 80 960
16 Inndex File 24 270 6,480
17 Coded files 36 320 11,520
Total 399,790

9. Projected stationary for distribution to Trainee

S. No Description Quantity Cost (Rs)/ Unit Total

1 Clear Bag 1 35 35
2 Pilot Pen 1 120 120
3 Note Book 1 160 160
4 Photocopy paper 12 1 12
5 Nepali File 1 3 3
6 Pencil for students 1 3 3
Total (Cost per Participant) 333
Annual 99,900

10. Projected Other Operating Expenses

S. No Description Year 1 Year 2 Year 3 Year 4 Year 5

1 Water & Electricity 250,000 262,500 275,625 289,406 303,877
2 Fuel and Lubricants 700,000 735,000 771,750 810,338 850,854
3 Repair & Maintenance 500,000 525,000 551,250 578,813 607,753
4 Kitchen items 180,000 189,000 198,450 208,373 218,791
5 Books 25,000 26,250 27,563 28,941 30,388
6 Printing and advertising 200,000 210,000 220,500 231,525 243,101
7 Emergency costs 250,000 262,500 275,625 289,406 303,877
8 Communication 350,000 367,500 385,875 405,169 425,427
9 Newspaper Purchase 60,000 63,000 66,150 69,458 72,930
 10 Allowance 350,000 367,500 385,875 405,169 425,427
Total 2,865,000 3,008,250 3,158,663 3,316,596 3,482,425

10 (a). Projected Printing and Advertising:

S. No Particulars Amount
1 Website Launch 15,000
2 Advertisement on national daily at the time of launch (6*8)black and white 50,000
(inner page)
3 Visiting card of key persons (1000 per person for 5 persons Rs. 3 each) 15,000
4 Brochure printing (1500 pieces for Rs 20 each) 30,000
5 Advertisement on online newspaper at the time of launch 15,000
6 Tender notice for procurement (6*8) in newspaper black and white (inner 50,000
page)
7 Office Board and in/ out board for key persons 25,000
Total 200,000

Appendix C

Projected Fixed Assets

1. Projected Training Equipment

S.N Equipment Qty Unit Price Total(Rs) Remarks

1 CCTV digital VDO Recorder, 2 32,000 64,000 ZKTeco, South Africa
H264 Standalone, DVR 4 Ch
VDO
2 HQIS Box Camera, 600TVL 3 5,200 15,600 Advance Security; UK
3 HQIS Dome Camera, 600TVL 1 5,500 5,500 EGB advance security,
India
4 HQIS IR Dome Camera, 600 TVL 1 6,800 6,800 620 TVL, Blue computer,
India
5 Baggage X Ray Machine 1 2,805,400 2,805,400 Ultra-mind Technologies,
India
6 Installation Charge 5 5,000 25,000
7 RJ 59 Copper Cable (Meter) 50 30 1,500
8 Finger Print Based Time & 1 35,000 35,000 ZKTeco, south Africa
attendance System, H3 006
9 Deluxe Walk through Metal 1 246,400 246,400 Detechnology co, UK
Detector
10 Handheld metal detector 3 9,360 28,080 Aashirwad industries and
security systems, India
11 Installation charge 1 5,000 5,000
12 Earthquake Alarm 3 10,400 31,200 Alpscom Technology, India
13 Fire Extinguishers 10 4,500 45,000 Swastik Synergy, India
Total 3,314,480

2. Projected Transportation Vehicle

S. No. Vehicle Quantity Price Per unit Amount Remarks

1 Pick-up Jeep(Mahindra) 2 3,210,212 6,420,424 Mahindra Pickup cbc

2 Motor Cycle (125cc) 1 212,000 212,000 Hondacb Shine sp

Total 6,632,424

3. Projected Office Equipment

S. No. Equipment Quantity Unit Price Amount Remarks

1 Laptop 5 54,000 270,000 Dell 3567 i5 7th generation k
2 Branded Desktop 5 64,400 322,000 Lenovo Think Centre Edge
71(1607T5Q)
 3 UPS 10 7,800 78,000 Prolink 1200 via line interactive
ups
4 Printer 3 15,000 45,000 HP 2900
5 Projector with screen 2 62,000 124,000 EPSON
6 Photocopy Machine 1 23,000 23,000 Canon MF 232W
7 HP Scanner 1 12,000 12,000 HP Scanjet G3110 Photo Photo
Scanner
Total 874,000

4. Projected Furniture and Fixture

S. No Description of Furniture No Unit Price Total

1 Office Table (Seasoned Wood) 5 35,000 175,000
2 Office Table (Synthetic and metal) 10 24,000 240,000
3 Revolving chairs 5 18,000 90,000
4 Plastic Chairs 15 1,200 18,000
5 Office Chairs (wooden) 15 4,500 67,500
6 Tea Table 5 3,600 18,000
7 Sofa Set 1 42,000 42,000
8 Chairs for Class Rooms 30 5,500 165,000
9 Steel Cupboard 3 21,000 63,000
10 File cabinet 2 9,000 18,000
11 Desks for class Rooms 30 7,500 225,000
12 Kitchen Table with Rack 1 40,000 40,000
Total 1,161,500

Appendix D

Projected Capital Requirement

1. Projected Costs for Start Up and Year 1

S. No particulars Year 1
A Recurring Expenses
1 Salary 9,036,000
2 Depreciation 2,663,980
3 Write off of preliminary expenses 158,400
 4 Insurance 146,048
5 Office stationary 399,790
6 Stationary for trainee 99,900
7 Rent 1,392,720
8 License renew 0
9 Dress 1,380,000
10 Other operating expenses 2,865,000
Total Operating Expenses 18,141,838
B Preliminary Expenditure
1 Registration charge 22,000
2 Legal process charge 25,000
3 Deposit 700,000
4 License fee 20,000
5 Bank guarantee 25,000
Total 792,000
C Fixed assets
1 Training equipment 3,314,480
2 Vehicle 6,632,424
3 Office equipment 874,000
4 Furniture 1,161,500
Total 11,982,404
Grand total (A+B+C) 30,916,242

2. Projected Initial capital Requirement

S. No Particulars Amount
1 Fixed Assets 11,982,404
2 Preliminary expenses 792,000
3 Working Capital 11,025,596
Total 23,800,000

Appendix E
Projected Cash Budget

S. N Particulars Year 0 Year 1 Year 3 Year 4 Year 5

1 Cash, Beginning Balance

2 Cash receipts

Cash from Customers

3 Total cash available

4 Cash Disbursement

Preliminary Expenses

Office and other expenses

Purchase of Fixed assets

Tax Payment

Dividend Payment

Minimum cash Balance

5 Total cash requirement

6 Cash surplus/(deficit)

7 Financing segment

Equity Capital

Borrowing

Repayments

Interest Payment

8 Total of financing segment

9 Cash, ending Balance

Appendix F
Projected Amortization of Loan

Year Installment Principle Interest Carrying Value of Loan