1.0 Executive Summary
Introduction
It is the mission of KemResource to provide complete renewable energy/export brokerage services including purchase contracts, shipping, warehousing, and delivery scheduling. We intend to offer designs and invent innovative renewable energy solutions, rendering advice to consumers regarding environmentally sensitive conditions as well as recommendations for energy consumption. KemResource also plans to provide trade consultation services to newly started farms within the coastal and northern areas of Nigeria.
The Company
KemResource is a limited liability partnership registered with Oxhib Limited in Aba, Abia State, Nigeria for tax purposes. Its founder is Mr. Uwakeme Tochukwu, a versatile Mechanical Engineer with a strong background in renewable energy and agriculture. Mr. Tochukwu has brought together a highly respected group of individuals who are well versed in foreign trade processes.
The company has a limited number of private investors. The company has its main offices in Aba, Nigeria. The facilities include conference rooms, warehousing facilities and office spaces.
The Services
KemResource offers complete renewable energy/export brokerage services plus inventory consulting services. This includes the following:
· Supplier/buyer identification
· Purchasing, contracting and consulting
· Shipping
· Warehousing
· Delivery
· Advice regarding passive heating
· Renewable energy considerations
· Grey water usage recommendations and employee transportation options, all within the context of renewable energy channels.
The Market
KemResource will be concentrating on servicing just two types of clients, the multinational / small scale import companies across the globe, and the individual consumers. For both market segments, we have secured exclusive contracts or endorsements putting us in a unique position to service these niche firms and their needs.
Profitability in these two marketsis expected to be excellent, especially in the export section as Nigeria draws in over 100 million export quotes each year. We expect profitability in the individual consumers’ niche to be much slower in the first five years of operation, but it too will increase steadily.
Financial Considerations
Start-up assets required include expenses and cash needed to support operations until revenues reach an acceptable level. Most of the company's liabilities will come from outside private investors and management investment.
The company expects to reach profitability in year 2 and does not anticipate any serious cash flow problems. We expect that about 3,500 units per month will guarantee a break-even point.
Chart: Highlights
1.1 Mission
It is the mission of KemResource to provide complete renewable energy/export consultation and brokerage services including purchase contracts, shipping, warehousing, and delivery. The company will concentrate on agricultural and mineral exports from Nigeria and Africa at large to other parts of the world. These produce will be sourced from existing and newly started farms located within the coastal lines and northern parts of Nigeria.
It is our long-term goal to becomethe preferred export company for the unique country of Nigeria. KemResource understands that the import shops and restaurants across the globe have special needs of most unique gifts for the million tourists that visit their various towns annually. KemResource also understands that the existing and newly launched farms in Nigeria also have higher costs than most competitors and will need to export their produce at a cost that provides sufficient profit and most times do not even have access to the international market. KemResource has ample experience working in the renewable energy/export business. Our philosophy is in creating a long-term relationship with clients so that the delivery of their products becomes a seamless experience that promotes loyalty.
1.2 Keys to Success
KemResource keys to long-term success and profitability are as follows:
· Differentiate our services to our niche clients so that they realize that we are better able to serve their needs than a more generic competitor.
· Keeping close contact with clients and establishing a well functioning long-term relationship with them to generate repeat business and create a top notch reputation.
· Establish a comprehensive service experience for our clients that include consultation, product/client search, purchasing contracts, warehousing, shipping, delivery, and follow up service analysis.
1.3 Objectives
The three year goals for KemResource are the following:
· Achieve break-even by year 2.
· Retain our long-term contracts with local import shops and individual consumers across the globe through excellent customer service.
· Become the premier exporter of Nigerian and African specialty products in the world.
2.0 Company Summary
KemResource is a limited liability partnership registered with Oxhib Limited, Aba in Abia State, Nigeria for tax purposes. Its founder is Mr. Uwakeme Tochukwu, a Mechanical Engineer with vast experience in renewable energy and agro export business. Mr. Tochukwu has brought together a highly respected group of individuals who are well versed in the various aspects of foreign trade processes.
The company has a limited number of private investors. The company has its main offices in Aba, Nigeria. The facilities include conference rooms, office spaces and warehouses.
The company's main clients will be small scale import shops across the globe and existing / start-up farms throughout Nigeria. By focusing on small niche market entrepreneurs, we believe we will be able to provide superior and more efficient service than other renewable energy /export firms.
2.1 Company Ownership
The company will have a number of outside private investors who will own 27% of the company's shares. The rest will be owned by the senior management including Mr. Uwakeme Tochukwu, Ms.Ukpabi Delight and Mr. Mbonu Chukwuemeka. All other financing will come from loans.
2.2 Start-up Summary
Start-up assets required include expenses and cash needed to support operations until revenues reach an acceptable level. Most of the company's liabilities will come from outside private investors and management investment.
Table: Start-up
Start-upRequirements
Start-up Expenses
Legal / $2,000
Insurance / $1,000
Utilities / $200
Rent / $2,000
Accounting and bookkeeping fees / $2,000
Expensed equipment / $2,000
Advertising / $4,000
Other / $8,000
Total Start-up Expenses / $21,200
Start-up Assets
Cash Required / $38,550
Other Current Assets / $15,000
Long-term Assets / $10,000
Total Assets / $63,550
Total Requirements / $84,750
Table: Start-up Funding
Start-up Expenses to Fund / $21,200
Start-up Assets to Fund / $63,550
Total Funding Required / $84,750
Assets
Non-cash Assets from Start-up / $25,000
Cash Requirements from Start-up / $38,550
Additional Cash Raised / $0
Cash Balance on Starting Date / $38,550
Total Assets / $63,550
Liabilities and Capital
Liabilities
Current Borrowing / $9,000
Long-term Liabilities / $12,000
Accounts Payable (Outstanding Bills) / $2,000
Other Current Liabilities (interest-free) / $8,000
Total Liabilities / $31,000
Capital
Planned Investment
Mr. Uwakeme Tochukwu / $15,000
Ms. Ukpabi Delight / $13,000
Mr. Mbonu Chukwuemeka / $13,000
Mr. Nnadi Anthony / $5,000
Others / $7,750
Additional Investment Requirement / $0
Total Planned Investment / $53,750
Loss at Start-up (Start-up Expenses) / ($21,200)
Total Capital / $32,550
Total Capital and Liabilities / $63,550
Total Funding / $84,750
Chart: Start-up
3.0 Services
KemResource offers complete renewable energy/export brokerage services plus inventory consulting services. As mentioned previously, this includes the following:
· Supplier/buyer identification
· Purchasing process contracting and consulting
· Shipping setup
· Warehousing arrangements
· Delivery
· Advice regarding passive heating
· Renewable energy considerations
· Grey water usage recommendations and employee transportation options, all within the context of renewable energy channels
KemResource will be exporting such things as palm kernel shells, melon seeds, kola nuts, tiger nuts, Nigerian foodstuffs, cocoa and many more from Nigeria, where Mr. Tochukwu has had extensive experience.
Our revenue model is based on a commission rate charged to our clientsscaled on the dollar value of goods moved per order.
4.0 Market Analysis Summary
KemResource will be concentrating on servicing just two types of clients, the multinational / small scale import companies across the globe, and the individual consumers. For both market segments, we have secured exclusive contracts or endorsements that put us in a unique position to service these niche firms and their more demanding needs.
Profitability in these two marketsis expected to be excellent, especially in the export segment as Nigeria draws in over 100 million export quotes each year. We expect profitability in the individual consumers’ niche to be much slower in the first five years of operation, but will increase steadily.
4.1 Market Segmentation
KemResource intends to be a dynamic renewable energy/export company focused on clients serving a niche market. Being on the verge of securing a very advantageous contract with clients on TradeKey and having gained the endorsement of the Nigerian Export and Promotion Council (NEPC), we plan to focus exclusively on these market segments. Both have such high potential that we do not see a need to expand our market reach for the foreseeable future.
Chart: Market Analysis (Pie)
Table: Market Analysis
Market AnalysisYear 1 / Year 2 / Year 3 / Year 4 / Year 5
Potential Customers / Growth / CAGR
NEPC businesses / 1% / 34 / 34 / 34 / 34 / 34 / 0.00%
TradeKey Clients / 5% / 72 / 76 / 80 / 84 / 88 / 5.14%
Total / 3.58% / 106 / 110 / 114 / 118 / 122 / 3.58%
4.2 Service Business Analysis
Renewable Energy
Generally, the major objectives of many industries are to determine its underlying fundamentals, understand the industry prospects and life- cycle and develop strategies to remain competitive. To achieve these objectives, there is need to do the analysis of the industry in order to provide a business idea of the complexity of a particular industry. Industry analysis involves reviewing economic, political and market factors that influence the way the industry develops. Some of the main objectives of industry analysis include understanding how industry structure drives competition which determines the level of industry profitability, to formulate strategies needed to change industry structure, improve profitability and to identify key success and failure factors. Some of the major forces that constitute a framework for analyzing an industry’s environment or structure include the threat of substitute product or service and bargaining power of the suppliers and buyers. There is also need for a business plan which defines the goals and budgets of the business and how to attain those goals. This gave rise to this particular plan which centers on the renewable energy and export business.
Since the 1970s, the world’s attention has been focused on depleting oil reserves, rising demand for petroleum products and the consequent hike in petroleum prices. It appears that the price of crude oil will remain increasing and volatile for a long time to come. The price was US$ 3.05 in 1973, currently hovering around US$ 48per barrel. Our dependence on petroleum for fuelling the transportation and other sectors of human activity threatens energy security and affects the environment and the growth of world economy.
Further, the politics of oil have caused most of the international conflicts in the last few decades and left millions of people dead and many more disabled. The issues of energy security have led governments and researchers to look for alternate means of renewable and environment-friendly fuels. Bio- fuels and other forms of renewable energy have been one of the promising and economically viable alternatives. Developing the technology to produce and use renewable energy will create fuel options that can positively influence and establish a safer, cleaner and sustainable alternative to petroleum. Gone are the days of growing crops just for food.
Exports
KemResource has made arrangements to export produce from member farmsestablished along coastal lines and northern parts of Nigeria. We are working hard to secure and preserve threatened farmland in Nigeria and move it into organic production. Our primary focus is on large, functional landscapes of local, regional and statewide importance so protection can be extended to biodiversity and wildlife habitat as well as to farmers and farming communities. Though we are independent, we have been community-supported since inception as a result of our corporate social responsibilities. We have already rescued a dozen farms within Abia State and plan to increase these projects so that by 2017 there will be at least 36 farms that come under our protection. In addition, approximately 30 farms belonging to the South eastern farmers’ cooperative have expressed interest in contracting with KemResource.
4.2.1 Competition and Buying Patterns
Competition
Competition includes all potential exporting firms that serve small enterprises such as farms and specialty gift shops. Practically speaking, this means the largest renewable energy/export firms such as Haran Resources, Simple Life Ventures, and other large, nationwide companies will not compete with us. Most other companies tend to be regionally focused. The foreign trade industry is highly fragmented, with a large number of small companies that mainly cater to small firms and a few large companies that seek the largest contracts from companies such as GE, Samsung, etc. This makes competition within the industry very intense. Through our niche strategy we intend to avoid competition and its drawbacks such as price wars, etc.
Buying patterns and needs
Companies usually enter into contracts with renewable energy/export firms based ona firm'sreputation for professionalism and service.With no proven track record, a start-up renewable energy/export company obtains a "good reputation" through its personnel, people who have experience in other businesses in the industry.Price, reliability and scope are the driving factors for accepting contracts, especially if the renewable energy/export company is small.
Our niche clients have different needs than most other firms. Our export clients need to have relatively small numbers of expensive and fragile products moved fromAfrica tolocal ports in Asia, Europe and other parts of the world. Most of these items are handmade so handling is a special issue. In addition, the small companies and shops in Nigeria depend a great deal on their export agents to alert them to new and unique product introductions overseas.
On the other end, the farms belonging to the community unions need to keep export costs as low as possible since many ofthemare start-up ventures with initially high overhead. Quite a few trade firms do not accept these types of contracts and leave it to the farmers unions to create their own exporting ventures. This can lead to higher costs as most farmers unions do not have the core competencies in renewable energy/export issues.